Soaring oil prices have helped make Russia rich, but the flood of petrodollars means Russians face double digit price inflation. Dmitry Pankin, Russia’s deputy finance minister, sees a trade off in a recent market selloff: Russian companies might have trouble raising capital, but billions of dollars in capital outflows may be just the thing to help cool inflation. 

Russia’s Finance Ministry and central bank have been put on the defensive for investing the national reserves in U.S. mortgage agency debt. Deputy Finance Minister Dmitry Pankin tells the Reuters Russia Investment Summit that Fannie Mae and Freddie Mac were propping up Russia’s finances, not the other way around.

The chief executive of Russian developer PIK Group sees one guarantee of his future success in an emergency decision made by the Soviet government of Nikita Khrushchev in the 1950s. Back then, tens of thousands of cramped communal flats were unpacked and whole families residing in single rooms were resettled into their own bright and new flats in hastily constructed five story kit buildings which came to be known as khrushchevki. 

“It solved a problem for millions of Soviet citizens but the lifetime of these buildings is coming to an end,” Kirill Pisarev told the 2008 Reuters Russia Investment Summit.  “Over a million square meters of housing are in these khrushchevki, which had a planned lifetime of 20-30 years. Now they are 40-50 years old. They will survive another three, five, seven years maximum.”

The resulting housing gap is his to fill. Pisarev, whose company builds flats for Russia’s rapidly expanding middle class, believes the global credit crisis will cut the pace of new housing construction this year, while demand will remain strong, keeping housing prices in Russia on the rise through 2009-10.

President Dmitry Medvedev is the former chairman of Russia’s state gas export monopoly Gazprom, and the company is viewed as a powerful instrument of the Kremlin’s foreign and domestic policy, but the company’s deputy chief, executive, Alexander Medvedev, says it is not so. 

Even at the height of Russia’s brief war with Georgia over the breakaway territory of Abkhazia, Gazprom was steadily pumping gas to Georgian consumers, Alexander Medvedev said.

 The two Medvedevs are not related, by the way!

A quarter of the gas that heats European homes and powers European industry is piped in thousands of kilometres from the Russian tundra. By 2015, Russia’s share of European gas supplies will rise to at least one third. That powerful lever of influence over Europe’s economy raises the stakes in its confrontation with Russia over its invasion of Georgia.

But Alexander Medvedev, deputy chief executive of Russia’s state gas export monopoly Gazprom, opened the Reuters Russia Investment Summit on Monday with a reminder that even the mighty Gazprom is not invulnerable to Europe and the West, relying as it does on foreign revenue and capital.

 Boris Jordan, president and CEO of $2 billion investment fund the Sputnik Group, said political interference in business remains a serious concern in Russia.

The government is starting to emerge as a ‘competitor’ against private business in areas such as the oil industry, acting as a brake on development, Jordan told the Reuters Russia Investment Summit.

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Russia’s mobile phone industry should continue to outgrow the wider economy for years to come, reckons Alexander Izosimov, CEO of the country’s No.2 mobile phone company Vimpelcom.

Even though the market is nearing saturation point, Izosimov told the Reuters Russia Investment Summit that expanding infrastructure, increasing useage and the growing sophistication of clients will ensure strong growth rates.

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Rosneft, Russia’s largest oil firm, plans no major acquisitions for now and and its chief focus is on integrating assets is has bought recently, Chief Financial Officer Peter O’Brien told the Reuters Russia Investment Summit.

State-controlled Rosneft has this year snapped up production and refining assets of fallen oil major YUKOS auctioned off by Russia’s receiver. O’Brien, an American, dismissed speculation that Rosneft was interested in Russia’a No.4 oil firm Surgut or midsized player Russneft.

But if refining assets in Russia’s autonomous republic of Bashkiria do come up for sale, Rosneft would be interested, O’Brien said.

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Rosneft, Russia’s largest oil company, is considering a return to the Eurobond market after postponing an offering in July due to market volatility, Chief Financial Officer Peter O’Brien told the Reuters Russia Investment Summit.

The Eurobond would be “benchmark” sized, or worth around $2 billion, and Rosneft is looking for a maturity of 5-10 years.

Rosneft plans to refinance a “very large share” of an $11 billion bridge loan it raised for acquisitions by the end of this year, and the remainder by September 2008, O’Brien also said in a wide-ranging interview.

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