Top stories in the Russian press on Tuesday, July 2, prepared by TASS

Kommersant: OPEC+ extends deal on curbing oil production

Moscow has decided in favor of maintaining fiscal stability, supporting Saudi Arabia’s efforts to extend the deal on curbing oil output until the spring of 2020. OPEC countries on Monday agreed with this position of the leaders of the agreement, and OPEC+ countries will have to formalize it on July 2, Kommersant wrote. The parameters of the deal will remain the same, which means that Russian oil companies, including Rosneft protesting against the agreement's extension, will not be able to increase production. Meanwhile, analysts doubt that the deal will stop oil prices from falling for long.

Currently, Russia's oil production will remain approximately at the level of 2018, that is, 555-556 mln tonnes. At the same time, Rosneft, which accounts for about 40% of Russian oil production, with the extension of the agreement, is expected to see its production rise by 1%, and if the deal had been annulled, it would have gone up by 3-4%. According to Kommersant, the OPEC+ accord threatens the company’s strategy, in which oil output is seen rising to 250 mln tonnes by 2022.

Without the deal, production in 2018 could reach 570 mln tonnes, Daria Kozlova from Vygon Consulting told the newspaper. However, revenues from the lost volumes for companies were offset by a near doubling in oil prices, and additional budget revenues due to the actual price of oil exceeding the cut-off price under the budget rule ($40 per barrel plus inflation) amounted to 6.5 trillion rubles ($103.16 bln) since the deal became effective. "Without this, right now it would be hardly possible to bargain for compensation for a damper or mining benefits for Western Siberia," the expert said.

On the other hand, the question still buzzing is whether the current deal can actually provide higher oil prices. In the second half of the year, oil prices may strengthen, Chief Economist at Argus David Fyfe told Kommersant. However, prices may decline in 2020 due to the cyclical slowdown of the global economy. Thus, OPEC+ may be forced to reconsider limiting supply, the expert believes.

Nezavisimaya Gazeta: US recognizes North Korea as a nuclear state

Both President of the United States Donald Trump and North Korea's leader Kim Jong-un praised the latest negotiations between the two countries. The talks may resume in July. According to Nezavisimaya Gazeta, behind the scenes, the US might be considering a new approach. Washington would agree to a freeze, not a complete elimination of Pyongyang’s nuclear forces, while North Korea would have to hand over the control of the facilities for processing fuel for the nukes, and in exchange receive sanctions relief. This practically means recognizing North Korea as a nuclear state, the paper wrote.

According to the newspaper, this approach would make it possible to stop the buildup of a nuclear arsenal. That being said, the conditions laid out by the Americans are quite tough. However, a freeze would involve a major departure from the task that US Secretary of State Mike Pompeo had set out on last fall. He demanded the denuclearization of North Korea by January 2021.

"The situation where North Korea does not develop anything new is normal. Because the alternative is war, and this is too risky," Leading researcher at the Institute of Far Eastern Studies of the Russian Academy of Sciences Konstantin Asmolov told Nezavisimaya Gazeta. "As for Russia and China, the freezing option suits them, since it corresponds to the Russian-Chinese proposals for a ‘double freeze’. The essence of this two-state initiative is as follows: the North Koreans refrain from nuclear and missile tests, and the United States refrains from actions that exacerbate the situation in the region," he added.

Head of the Korea and Mongolia department at the Institute of Oriental Studies of the Russian Academy of Sciences Alexander Vorontsov told the newspaper that some experts in the United States spoke in favor of a more flexible approach to North Korea, which was rejected by the pro-White House establishment.

Izvestia: Russia’s Defense Ministry to set up mobile reserve unit for air defense

Russia is getting ready to seriously reform the country's air defense system. A mobile reserve unit from the air defense regiment will appear in each branch of the Air Force and Air Defense, Izvestia wrote. These units would be formed from scratch and would receive Pantsir missile systems, sources in the Defense Ministry told the newspaper. The new regiments are expected to cover important strategic facilities and will strengthen deployed air defense units. Before the end of 2019, these regiments will be created within the structure of the Russian Aerospace Forces.

Lieutenant-General Aytech Bizhev, former deputy head of the Air Force for the Joint CIS Air Defense System told Izvestia that mobile units would fill voids in defense and would be of use in ambushes. "The command, based on intelligence data, must determine in advance the level of threats and assign tasks to mobile air defense units," he said.

In modern warfare, when air defense systems cannot protect every single vital facility, the role of mobile reserves will be beefed up, military expert Anton Lavrov told Izvestia. If necessary, new mobile air defense regiments can be transferred in a few hours not only to any part of the country, but also outside it.

Izvestia: Turkey can turn to other arms markets if US introduces sanctions, warns politician

Ankara does not rule out that it would deploy S-400 systems near the border with Syria and Northern Cyprus, Vice-President of the Turkish group at the NATO Parliamentary Assembly, member of the international committee of the Turkish parliament Ahmet Berat Conkar told Izvestia. According to him, rocket systems may be deployed at strategic points, but there is no final decision on the matter yet. He also warned that if the Western countries keep pressuring Ankara over weapons supplies, the country would reorient itself towards purchasing military equipment from Russia.

Talking about S-400s in Turkey, the politician did not elaborate on their exact location, since this decision has not yet been finalized. However, the missiles will be placed where it will be optimal in terms of covering the country’s borders, he added.

In light of the mounting discord with the United States, Ankara will keep a close watch on the moves of its allies, Conkar told the newspaper. If the F-35 fighter jets are called off, or if some kind of embargo on the purchase and sale of weapons is placed on Turkey, the country would naturally turn to other manufacturers, noting that the global arms market has much to offer. The politician stressed that Ankara’s main priority is the security of Turkish people, not the interests of the United States. At the same time, cultivating trustworthy bilateral ties with Russia has always been a priority for Turkey, he added.

Kommersant: Russian 5G operators look for new partners

Russian telecom operators are looking for startups to step up the development of 5G in Russia, Kommersant wrote. Thus, MTS is launching an incubator for the startups in 5G with Nokia as a partner, the company told the newspaper. According to experts interviewed by the newspaper, startups can help operators form a pool of profitable businesses, but it is necessary to carefully evaluate their patents in order to avoid legal problems.

According to Kommersant, MTS is interested in cloud services, including cloud gaming, new video streaming and computing formats, Internet-of-Things solutions and data storage. The best projects will receive grants to continue their development. However, later on MTS could pour in investments or buy out technology and a startup team. The operator plans to invest 100 mln rubles ($1.58 bln) in the project before the end of 2020.

Their competitors, Vimpelcom, Rostelecom, and MegaFon, are planning similar projects Kommersant reports. So far, Rostelecom and MegaFon announced investments into 5G only within a joint venture created this year.

Startups may be useful for operators to implement new business cases, create applications and user services, ZTE senior vice president in Russia Tigran Poghosyan told the newspaper. "The potential for startups is huge, but when working with them it is important to evaluate the existing patents on 5G," he noted.