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To: MonsieurGonzo who wrote (3486)	8/17/1998 1:13:00 PM
From: MonsieurGonzo	Respond to of 11051

RE:" Oil firms hail rouble move, commodities to benefit " From Yahoo; By Sebastian Alison MOSCOW, Aug 17 (Reuters) - Several Russian oil companies on Monday welcomed the government's effective devaluation of the rouble and analysts said the move was broadly positive for the commodities sector although some strings were attached. Russia's second largest oil producer YUKOS (YUKO.RTS) said the decision showed the government and central bank had ''realistically assessed the situation'' facing producers and were looking for a way out of the current crisis. The Tyumen Oil Company (NZGZ.RTS) said the decision was correct, although overdue while SIDANKO (CHGZ.RTS) oil company was reported by Interfax news agency as saying the move was a reasonable measure to support exports. Prime Minister Sergei Kiriyenko said earlier that recent falls in world oil and gas prices, damaging Russia's balance of payments, had been one of the key reasons for the decision to let the rouble slide in value against the dollar. Prices of other key commodities, especially metals, on which Russia is heavily dependent for revenues, have also been weak. Svetlana Smirnova, metals analyst at United Financial Group in Moscow, said metals producers would benefit from the devaluation overall although there would be some drawbacks. ''Companies will win because local costs are generally in roubles, and when they export metals they get hard currency revenues,'' she said. But she added that companies with foreign loans would suffer by having to pay interest on the loans in dollars. She also said that most Russian metals producers imported key equipment from abroad, and the cost of this would rise following the devaluation. ''But in general companies will benefit from this,'' she said. ''I'm not sure that in volume terms metals exports will increase, but revenues in dollars and roubles will increase.'' Eugene Khartukov of the International Centre for Petroleum Business Studies in Moscow said the impact on the energy sector would definitely be positive. He added that low oil prices in dollar terms were causing serious problems to producers and the exchange rate had exacerbated this. ''Bringing export revenues from crude oil, petroleum products and partly from gas back to the country and having to change them into roubles at the very depressed rate of six to the dollar meant exporters were suffering additional losses,'' he said. He added that the energy sector was the only ''real, solid force'' to have lobbied consistently for rouble devaluation. Ruslan Nickolov, equities analyst at Nomura International in London, agreed the devaluation would benefit the cash flows of large oil exporters but that it came with ''strings attached.'' He said devaluation was likely to lead to cuts in corporate capital expenditure, which may lead to cuts in production and possibly exports, so hampering future development programmes. But he said devaluation was a positive factor in the short term and should push share prices up. "That's exactly what we're seeing," he added. Nickolov warned that the government statement on its decision to allow the rouble to slide imposed a moratorium on repayment of debts to non-residents of Russia. It was still uncertain if this applied to repayment of collateralised loans issued against export revenues, he said. ''If that happens it could affect the perception of Western lenders of the risk involved in lending to Russian oil companies,'' he said. ''Also the crisis of confidence will affect the overall credibility of Russian borrowers,'' he said. He suggested that a proposed syndicated loan of $1.5 billion or more sought by Russia's biggest producer, LUKoil (LKOH.RTS), could be in jeopardy. ''Western lenders fear the unpredictable actions of the Russian government,'' he said, adding that just two days ago there had been promises that there would be no devaluation. -Steve