February 29, 2024

Russia Skips Hybrids in Push for Natural Gas Cars

MOSCOW — Igor A. Samarsky of the southern Russian city of Krasnodar gets fuel economy on his 1998 Lada sedan that would make a Prius owner green with environmental envy.

For all of 120 rubles — about $3.80, or a little more than a gallon of regular unleaded fuel in the United States — he can drive 140 miles. The Toyota hybrid would need three gallons of gas to drive that distance.

The only drawback in Mr. Samarsky’s mind is his wife’s lingering fear that the car, which runs on methane gas, will explode on the way to the grocery store. “My wife was afraid, but I didn’t mind,” Mr. Samarsky, a mechanic, said of the methane fuel kit he installed himself by placing a high-compression tank in the trunk and a hose snaking to the engine.

“She said, ‘I won’t drive this car, it will blow up.’ But then she saw the savings, and she calmed down.”

Gazprom, the state-owned energy monopoly better known for heating houses and powering factories in Europe, is making a bet that natural gas cars are an alluring market for future growth, at home in Russia and in other European countries that have bought its gas. All the ingredients are in place for adoption of natural gas vehicles in Russia, the world’s second-largest gas producer after the United States, with economic and environmental payoffs.

Economically, it’s no contest at the pump compared with gasoline because natural gas, whose main component is methane, is so abundant and cheap in Russia. It costs about $2 a gallon less than gasoline. (For such comparisons, compressed gas is measured by its cost for a volume containing the same amount of energy as a gallon of gasoline.)

Lax regulations in Russia have already provided a foothold for natural gas for cars. Even before the auto industry officially joined in, do-it-yourself kits were readily available. Unlike the hybrids and plug-ins produced by brand-name automobile companies, many of the natural gas cars in Russia are aftermarket conversions. In Russia, a complete system can be bought for less than $1,000 at a roadside repair shop in parts of the country where natural gas is commonly used, like the region around Krasnodar.

Natural gas fuel systems in the United States, in contrast, are handled with extraordinary care. High standards are set for the tanks of compressed gas.

An advocacy group, Natural Gas Vehicles for America, estimates certified aftermarket kits are available for about 40 models of cars and trucks and cost $12,000 to $18,000. Four factory-equipped natural gas and dual-fuel cars are for sale in the United States today: the Honda Civic NG, the Dodge Ram 2500, the Chevy Silverado and the Ford F-250.

Long-haul truckers, fleet car operators and railways are adopting methane, Dave McCurdy, president of the American Gas Association, said in a telephone interview.

In Russia, natural gas has been adopted by lower-income and rural drivers, along with farmers and operators of light-duty trucks, said Yevgeny N. Pronin, director of the National Gas Motor Association of Russia, and also an executive at Gazprom in charge of marketing gas for transportation.

Gazprom, though, would like to see wider adoption. A large Russian carmaker, Russian Machines, this year announced a policy, endorsed by Gazprom, to include natural gas systems as standard on buses and light utility trucks, like the Gazelle.

The Russian government and Gazprom, though, are just now pressing aggressively for a switch to natural gas at home, where prices are about tied with the United States as the lowest in the world.

The wholesale price for natural gas at the Henry Hub in Louisiana, a standard contract for gas in the United States, was $3.33 per million British thermal units in February; the government-set domestic natural gas tariff in Russia this year is expected to average $3.87 for the same quantity.  

This is about one-quarter of the wholesale price of natural gas in other industrialized countries, like Britain or Germany, according to a study of Russia’s gas market released by Bank of America Merrill Lynch in February, meaning vehicle owners in Russia and the United States have the most to gain from converting to natural gas from gasoline or diesel.  

The biggest issue in Russia, as it will be in any country that tries a conversion, is where drivers can refuel.

In both the United States and Russian conversions, a dashboard switch allows a driver to choose the fuel type, and most drivers keep their gasoline tanks filled as a reserve.

Article source: http://www.nytimes.com/2013/04/12/business/energy-environment/russia-skips-hybrids-in-push-for-natural-gas-cars.html?partner=rss&emc=rss

DealBook: Russia’s Main Stock Exchange Begins Trading

MOSCOW — Russia’s main stock exchange has garnered enough investor interest for an initial public offering, another milestone in the country’s capitalist evolution.

The Moscow Exchange, better known by its original name, Micex, for the Moscow Interbank Currency Exchange, is scheduled to begin trading Friday in Moscow on its own trading platform.

The stock will price near the bottom of the expected range, valuing the company at slightly more than $4 billion, a financial industry official briefed on the plan said Thursday evening.

The listing drew interest from specialized investors in financial services companies and institutional investors in the United States and Europe, the official said. Micex has also benefited from the publicity of mergers and acquisitions in the stock exchange business worldwide, including the announced sale of the New York Stock Exchange.

The seesaw fortunes of the Russian companies that list on Micex have made it one of the world’s most volatile markets. From its inception in 1992 until the start of the 2008 recession, the Russian stock market had been in either the top five performing markets in the world or the bottom five in every year except one.

The company managing the exchange, though, has made an argument that it is a far safer bet than the companies it lists because it earns fees on both long and short trades and from foreign currency deals, its original niche.

The Russian central bank founded Micex as a market for trading rubles into foreign currency legally, something that had been tightly regulated in the past. That was the best thing that ever happened to early post-Soviet financiers, who knew which way that bet would go and made easy fortunes on Micex.

The exchange evolved to trade stocks when they appeared in Russia in the early 1990s and presided over the panic selling of state bonds in the 1998 default. By 2011, it had become the dominant exchange after merging with a rival, the Russian Trading System. The main product of the Russian Trading System was a dollar-denominated derivative of an index fund for the Russian market, used primarily to short the entire country’s economy, a position sometimes used as a hedge by nervous companies making other investments. Last year, this product accounted for 34 percent of all derivatives trades on Micex.

Other revenue streams are interest income from obligatory deposits that brokerage firms place with the exchange to trade, fees charged to issuing companies and data sales.

The central bank will remain the largest shareholder after the issue of 10 to 15 percent of the shares. The organizing banks are expected to announce the size of the float on Friday.

Mattias Westman, founder of Prosperity Capital Management, the largest foreign portfolio investor in Russia, which manages $4.5 billion in stocks and other assets, many of which are traded on Micex, said owning shares in the stock exchange was also a way to bet on the strengthening domestic financial system.

Micex’s offering, he said, “is a symptom of the whole market maturing,” 20 years after the end of the Soviet Union.

Bruce Bower, portfolio manager at Verno Capital, a Russia-focused fund, said the exchange’s mix of offerings for investors wanting either long or short positions, its interest earnings and its fees for currency exchange made it a relatively safe stock as “the financial utility for Russia.”

Article source: http://dealbook.nytimes.com/2013/02/14/after-strong-i-p-o-russias-main-stock-exchange-begins-trading-2/?partner=rss&emc=rss

DealBook: Sberbank of Russia Starts $5.1 Billion Share Sale

The Moscow headquarters of the Russia's largest bank, Sberbank.Sergei Chirikov/European Pressphoto AgencyThe Moscow headquarters of the Russia’s largest bank, Sberbank.

LONDON — The Russian government announced on Monday that it would sell a 7.6 percent stake in the country’s largest lender, Sberbank, in a rights offering that could raise around $5.1 billion.

The move would be one of Russia’s largest share sales in recent years as the government aims to reduce its stakes in a number of the country’s largest companies.

Investors have long awaited the announcement of Sberbank’s rights offering, which had been hampered by volatility in global financial markets and the recent depressed performance of Russian stocks.

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Under the terms of the deal, the Russian central bank said it would sell up to 1.71 billion shares in Sberbank, and had set the price range of between 91 rubles, or $2.99, and the firm’s market price when the offering closes, according to a joint statement from Russian authorities and the bank.

At the lower end of the range, Sberbank would raise around $5.1 billion. In early afternoon trading in Moscow, the bank’s share price had fallen 1.1 percent, to 95.99 rubles.

The rights offering, which is expected to close this week, will reduce the Russian government’s holding in Sberbank to just over 50 percent. Authorities also raised around $3.3 billion by selling a 10 percent stake in another Russian bank, VTB Group, last year.

The share sale will take place in Moscow and London, with 10 percent of the rights to be offered to domestic investors and the remaining 90 percent holding offered to international clients, Sberbank said.

As part of the deal, the Russian lender said it might buy back stock worth up to 20 billion rubles at the same price as other investors.

‘‘The offerings represent an opportunity for us to further diversify Sberbank’s investor base and secure an international stock exchange listing,’’ Sberbank’s chief executive, Herman Gref, said in a statement.

Earlier this year, the Russian bank agreed to buy the Turkish lender DenizBank for around $3.5 billion as part of an expansion outside its home market.

Sberbank also has bought Volksbank International, a subsidiary of the Austrian lender Oesterreichische Volksbanken, for 505 million euros, $661 million.

Credit Suisse, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Troika Dialog, a Sberbank subsidiary, are coordinating the rights offering.

Article source: http://dealbook.nytimes.com/2012/09/17/sberbank-of-russia-launches-5-1-billion-share-sale/?partner=rss&emc=rss