SAKHALIN OFFSHORE CONTRACT FOR PRISCO

OAO Primorsk Shipping Company (PRISCO) and specialized shipping company Rieber Shipping AS (Norway) signed a long-term contract with Exxon Neftegas Limited and Exxon Mobil Corporation for charter party of an ice class tugboat.

As PRISCO's press release says, the contract will be valid during 15 years plus an option starting from September 2006.

The tugboat will provide icebreaker assistance to oil transportation and take part in mooring operations at the oil complex in De-Kastri port. The ship will operate in extreme navigational conditions and, therefore, will be built up to strict environmental requirements of Sakhalin-I Consortium and International Maritime Organization (IMO) conventions. It will be equipped with extra fire fighting hardware. - Olga DOBROLYUBOVA.

PRIMORYE GOVERNOR TELLS ABOUT MEETING WITH PRESIDENT

At a press conference held on 28 February, Governor Sergei Darkin told about details of his meeting with Vladimir Putin in Khabarovsk.

"I presented to him a technical substantiation for the reconstruction of Shkotovo intake waterworks and construction of Pushkinskaya Depression reservoir, and after this the president gave orders to acting premier Kudrin to provide federal funds for these projects."

Sergei Darkin's euphoria was so far-reaching that he even promised to lift restrictions on cold water supply in April. Hot water was not mentioned, but cold water also raised many questions. Why did the governor report to Vladimir Putin about the region's financial contribution, whereas lawmakers voted down relevant amendments to the regional budget at their latest session?

However, the governor was affirmative: "Funds will be earmarked this way or other. Disputes between the legislative assembly and regional administration have been caused by reductions affecting some other budget line items." Sergei Darkin further assured that budget cuts will not affect social programmes.

"At any rate, capital construction will not be cut and we have finally made an agreement with Vladivostok mayor to build an ice sports palace in Minny Gorodok area."

Speaking on other results of his trip to Khabarovsk, Sergei Darkin said he managed to reach agreement with OAO Russian Railways president Gennady Fadeyev on reducing rail tariffs for the Far East by 5% on boiler fuel and by 20% on fish produce. He believes these reductions will help bring fish processing operations back to the Russian shore.

Breaking news of the press conference was introduction of Yevgeny Ovechkin as a new vice governor, who came from the real sector and will replace Fedor Novikov.

Yevgeny Ovechkin will be in charge of liaison with media, public relations, legislative assembly and municipalities. In his brief speech after the press conference, he noted that his priority is relationship buildup on the basis of constructive understanding and confessed that he had known Sergei Darkin since student years in a higher marine school.

By the way, Fedor Novikov will not leave the governor's team. By somewhat vague wording, he will handle fishery issues for the State Council. We will learn soon what that actually means. - Yevgeny ITAROV.

SOCIAL BUDGETS CUT

The latest session of Primorsky Krai legislative assembly was a severe trial for lawmakers. They were offered to shoulder the regional administration's responsibility for cutting social budgets but refused to do so.

Though speaker Sergei Sopchuk said that budget revisions have become a bad tradition, he admitted that this time the regional administration was forced to revise budget line items.

The reason is that in the final version of the federal budget for 2004, subsidies to Primorsky Krai have been reduced by 364,354,000 rubles. Another large hole (626,339,000 rubles) emerged in the budget item of internal revenues due to cancellation of fish quota auctions. As a result, with almost billion rubles deleted from budget revenues, expenditures also must be cut.

It is a blow for the regional administration, because the 2004 budget had been announced a social budget and was to become an electoral locomotive for the seating governor.

Arrears in children's allowances will be cut 15 times, programmes "Young Family" by 37.7%, "Healthy Child" by 2.5 times, school construction by 3.5 times, health care by 25.3%, housing upkeep and utilities by 25.2%, culture and arts by 17.6%.

Cuts in the health care sector will affect regular repairs of medical facilities, sanitary surveillance, centralized procurement of upholstered furniture and clothing. In the social sphere, motor transport compensations for disabled persons will be cut by 5 million rubles. The agroindustrial complex will receive 14.5% less, and the fund for financial support to municipalities will be reduced by 379,137,000 rubles.

Legislators voted down these amendments proposed by the regional administration. - Igor NIKITIN.

BOCHKOV'S KILLERS WILL STAY IN JAIL

The Supreme Court of Russian Federation rejected the writ of appeal submitted by lawyers of the two men convicted for murder of OAO Vostochny Port director general Leonid Bochkov.

In March 2003, Primorsky Krai court found Sergei Zubov and Yury Zhernikov guilty and sentenced them to 22 years in prison each to be served in a correctional colony with a high security level. This sentence remains in force. Curiously, the convicts rejected a proposal to take part in the Supreme Court's session through a teleconference. - Igor NIKITIN.

POSYET PORT HAS NEW OWNER

The port's new owner will be Mechel holding.

The coal and metallurgical holding Steel Group Mechel, established in spring 2003 on the base of the Russian assets of entrepreneur Igor Zyuzin, claims for control of Primorsky Krai's fourth-largest port OAO Trade Port Posyet.

68.7% in Posyet port belongs to OAO Siberian Coal and Energy Company (SCEC), member of the MDM Group, with shares of stock entered directly on its books. SCEC produces about 35% of Russian coal and uses the port for exporting coal to Japan. Posyet's cargo turnover grew by 37.4% (up to 845,000 tons) in 2003.

Though SCEC took over control of the port, it did not intend to use its capacity solely for handling in-company cargoes. In particular, Posyet is also used for coal exports to Japan by Mezhdurechie company from Kemerovo.

By ZR's data, SCEC passed to Steel Group Mechel only part of shares in Posyet, retaining a blocking package and the right for handling its own cargoes for at least one year. It is most likely that Mechel's representatives will be elected to the board already at an annual shareholders meeting and director general Dmitry Polezhayev will be replaced by a new manager.

Alexey Sotskov, Mechel's head of press service and information department, gave no comments and MDM Group's spokesman did not deny the fact of transaction. - Oleg KLIMENKO.

ANDREW FOX QUITS SPASSKCEMENT

British citizen and businessman Andrew Fox, who represented interests of foreign portfolio investors in the Far East, relinquished his last significant asset in Primorsky Krai.

As "ZR" was informed by Vostok-Capital deputy director general Alexander Tyapin, Lymex Holdings Limited (Cyprus) having 60% in SpasskCement bought out 25.57% nominally held by ZAO ING Bank Eurasia from companies controlled by Andrew Fox.

Tiger Securities financial director Alexander Starodubtsev representing Andre Fox admitted the fact of this transaction but did not divulge the price. He noted, however, that receipts were considerably less than the money spent on buying SpassCement's shares some time ago.

It should be noted that the status of another 10.28% attributed to OOO KB City-Bank T/O remains unknown. "No news has been heard from this American shareholder for several consecutive years and we don't know the status of the shares belonging to them. We're not interested," Alexander Tyapin said. - Oleg KLIMENKO.