Putin Pleased As Desperate UK Turns To Russian Natural Gas

We said two days ago that it’s been a tough week for anybody who needs to heat their home or put gasoline in their cars in Britain. The litany of negative events and mishaps includes extremely low temperatures, the shutdown of the Forties pipeline due to a hairline crack and an explosion at one of the Europe’s biggest gas hubs in Austria, which further tightened UK supplies. As we noted, the price of gas futures surged by the most in 8 years. The timing of the gas hub explosion, as we head into Winter, couldn’t have been worse either. (Click to enlarge) However, adding insult to injury, the UK lacks gas storage capacity and the web of interconnections that link markets across Continental Europe. And…Centrica is closing the nation’s biggest storage site after more than 30 years. The question was, where could the UK secure alternative supplies. It takes […]

Russia Wins in Arctic After U.S. Fails to Kill Giant Gas Project

14 Dec 2017   LNG, Russia

Sanctions created ‘deadlock’ for Yamal LNG, says Total Novatek plans new projects to challenge Qatar for scale Building the $27 billion Yamal liquefied natural gas project meant shipping more than 5 million tons of materials to construct a forest of concrete and steel 600 kilometers north of the Arctic circle, where temperatures can drop to -50 degrees celsius and the sun disappears for two months straight. Yet those challenges weren’t as tough as the U.S. sanctions imposed in 2014, forcing a complete refinancing just as construction was about to start. Jacques de Boisseson, head of the Moscow office of French energy giant Total SA, which has a 20 percent stake in Yamal LNG, said there were “various moments” when he thought the project may never happen. “We were too much advanced to stop. We were in a deadlock: we had to go ahead and we didn’t know how,” de […]

Russia ready to consider easing arms embargo for Libya: Ifx cites diplomat

13 Dec 2017   Libya, Russia

Russia is ready to consider easing an arms embargo for Libya, the Interfax news agency cited Russian Deputy Foreign Minister Gennady Gatilov as saying on Wednesday. Libyan Prime Minister Fayez al-Sarraj said this month he was hopeful that a U.N.-imposed arms embargo would be partially lifted against some branches of the country’s military. The Libyan government is allowed to import weapons and related materiel with the approval of a U.N. Security Council committee overseeing the embargo imposed in 2011.

U.S. Criticizes Germany’s Support of New Russian Natural Gas Line

13 Dec 2017   Germany, Pipelines, Russia

The top State Department official overseeing Europe offered harsh words Tuesday for Germany over the country’s continued support for a new Russian gas pipeline to Europe, while praising Denmark for passing a law that could hamper the project. A. Wess Mitchell, assistant secretary of State for European and Eurasian affairs, said the formation of a new government in Germany offers an opportunity for the U.S. to make a renewed case against the Russian pipeline, known as Nord Stream 2, which Washington says will give Moscow more leverage over Europe’s energy supply. He said the new government gives the U.S. a chance to call on Germany “to show responsibility in a European context.” “On energy security, Germany gets it wrong,” Mr. […]

Russia Aims To Challenge Qatar LNG Dominance

12 Dec 2017   LNG, Qatar, Russia

Vladimir Putin officially launched on Friday the Yamal LNG project in the Arctic—Russia’s second LNG plant and its push to challenge the dominance of Qatar and Australia, and the U.S. in the future, on the global LNG market. The first tanker from the US$27-billion project will be shipped to China’s CNPC, in what the majority holder of the project, Russia’s Novatek, said in October is “in recognition for their overall contribution to the project and the importance the Asian Pacific market represents as a key-consuming region.” Novatek is the majority shareholder of Yamal LNG with 50.1 percent, France’s oil and gas supermajor Total has 20 percent, CNPC holds another 20 percent, and China’s Silk Road Fund owns the remaining 9.9 percent. All LNG production will be sold to customers in Europe and Asia under 15- to 20-year contracts, Total says. Novatek, which has been on the U.S. list of […]

After Wintershall merger, Russia says Nord Stream ready to go

9 Dec 2017   Russia

There are enough contracts in place to start construction on expansions to the twin Nord Stream gas pipeline through the Baltic Sea, Russia’s Gazprom said. Gazprom plans to double the capacity for the Nord Stream pipeline system, which runs through the Baltic Sea, and crosses into European territory before it makes landfall in Germany. A Gazprom statement carried by Russian news agency Tass said there were enough contracts signed to move to the construction phase. “Preparation for gas pipeline construction start is in full swing,” the statement read. “Contracts were executed for the time being for all basic materials, equipment and services needed to implement construction work.” The expansion will largely follow the path of […]

First LNG cargo ready to leave the Russian Arctic

9 Dec 2017   LNG, Russia

French supermajor Total said Friday the first cargo of liquefied natural gas is leaving an Arctic facility in Russia, one of the largest in the world. The French company holds a 20 percent stake in the Yamal liquefied natural gas project, alongside China National Petroleum Corp., with a 20 percent stake, and Novatek, Russia’s largest independent gas company and the majority stakeholder. Total said the first cargo of LNG was ready for shipment as of early Friday. “Together we managed to build from scratch a world-class LNG project in extreme conditions to exploit the vast gas resources of the Yamal peninsula,” Total Chairman and CEO Patrick Pouyanné said in a statement . The Yamal LNG project has the capacity to produce about 16.5 […]

Russia Skirts U.S. Sanctions With $27 Billion Arctic Gas Plant

9 Dec 2017   LNG, Russia

The Yamal LNG plant on the Yamal Peninsula in the Arctic circle. The project took years to find financing from China that didn’t violate U.S. sanctions on Russia over Ukraine. MOSCOW—Russian President Vladimir Putin launched a giant Arctic gas project that is a symbol of its efforts to overcome Western sanctions and strengthen ties with China. The $27-billion Yamal LNG facility on Friday started loading its first tanker, which will take liquefied-natural gas from an icy Arctic peninsula to the Asian market. The project took years to find financing from China that didn’t violate U.S. sanctions on Russia over Ukraine. Yamal marks a departure for Russia’s gas exports, which have long focused on state-owned PAO Gazprom delivering fuel via pipeline into Europe. Mr. Putin granted special permission to export gas to Yamal, which will use ice-breaking ships to transport LNG along the northern coast of Siberia during the summer […]

Gazprom’s natural gas exports to Europe, Turkey move past 2016 levels to fresh record

Russia’s Gazprom is set to exceed on Friday the level of exports to Europe and Turkey that was recorded in 2016 as demand for Russian natural ss and cold weather across the continent. Sales to Europe, Turkey to reach 179.8 Bcm Friday CEO points to ‘unconditional reliability’ of supplies Nord Stream set for 87% utilization rate in 2017 Taking into account the nominated volume for Friday, Gazprom will have exported 179.8 Bcm to what it calls the Far Abroad — Europe and Turkey, but not the countries of the former Soviet Union — higher than last year’s then record high of 179.3 Bcm. Russian gas has been in strong demand through 2017, with a prolonged cold snap in January and February seeing supplies peak, while deliveries remained robust through the summer as European buyers looked to refill heavily depleted storage stocks. Cold weather in Europe in late November and […]

Russia’s Novatek now a world player with Yamal LNG

6 Dec 2017   LNG, Russia

Russian energy company Novatek said a new era for one of the world’s largest gas suppliers has begun with the start of LNG operations on the Yamal Peninsula. Novatek said production of liquefied natural gas started at the Arctic facility, which has a design capacity of about 5.5 million tons of LNG per year. The first cargo for delivery is already scheduled for Friday. “This event marks a milestone accomplishment for the Yamal LNG project,” Novatek Chairman Leonid Mikhelson said in a statement . “The commencement of LNG production begins a new chapter in our corporate history.” Novatek, one of the largest gas producers in Russia, apart from Gazprom, signed a memorandum of understanding with the China Development Bank to cooperate on steering […]

Saudi Arabia and Russia reach compromise on oil pact: Kemp

Ministers from OPEC and their allies have agreed to extend their production pact all the way to the end of 2018 but with a review in June that will take into account market conditions and progress toward rebalancing. The outcome represents a successful compromise between de facto OPEC leader Saudi Arabia (which wanted to announce an extension throughout 2018) and non-OPEC heavyweight Russia (which wanted to avoid giving such a long commitment). Sponsored The decision was in line with traders’ expectations and there has been little change in either outright crude prices or calendar spreads since the decision was announced on […]

Oil in mid-$60 per barrel range fair, Russian company says

2 Dec 2017   Prices, Russia

A price range for crude oil of between $60 and $65 per barrel is a good point on which to base a budget, the head of Russian oil company Lukoil said Friday. CEO Vagit Alekperov said Friday that, for ministers from the Organization of Petroleum Exporting Countries and non-members, the mid-$60 range was preferable for now. “The budget for 2018 is based on $60 dollars [per barrel],” he was quoted by Russian news agency Tass as saying. Russia is party to an effort led by OPEC to balance an oversupplied market with coordinated declines in production. Russia is the largest contributor to the agreement outside of OPEC and helped steer negotiations this week that led to a nine-month extension to a deal set to expire in March. From […]

Russia Ups Oil Price Forecast For 2018

2 Dec 2017   Prices, Russia

Russia’s Economy Ministry will increase its forecast for the price of the country’s Urals oil blend for 2018, following the extension of the OPEC/non-OPEC production cut agreement extension, announced yesterday in Vienna. Economy Minister Maxim Oreshkin said the new price level the ministry will work with will be above US$50. Previously, it was US$43.80 a barrel. Oreshkin recently warned the production cut agreement was harmful for the Russian economy as it discouraged oil companies from making new investments. Yesterday, OPEC and its partners from the Vienna Club, which last year agreed to reduce crude oil production by a combined 1.8 million bpd to relieve the global supply glut and improve prices, extended the cuts until the end of next year, with a review of the latest deal planned for June 2018. The decision was expected, despite some last-minute worry that Russia might be reluctant to sign up for a […]

Lukoil CEO says oil markets won’t overheat

2 Dec 2017   Prices, Russia

Oil markets will not overheat as they did during a price spike in the last decade as global demand is rising fast and the alliance of OPEC and non-OPEC countries is working well, the head of Russia’s top private producer Lukoil said. Vagit Alekperov, the long-serving chief executive and top shareholder of Lukoil, told Reuters he expected global oil demand to rise by 1.8 million barrels per day next year. Sponsored In addition to that, the supply of crude from producers who are not participating in production cuts is estimated to rise by 0.8 million bpd next year, he said. “We still have plenty of excessive stocks globally […]

OPEC, Russia agree oil cut extension to end of 2018

1 Dec 2017   OPEC, Russia

OPEC and non-OPEC producers led by Russia agreed on Thursday to extend oil output cuts until the end of 2018 as they try to finish clearing a global glut of crude while signaling a possible early exit from the deal if the market overheats. Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn’t flip into a deficit too soon, prices don’t rally too fast and rival U.S. shale firms don’t boost output further. Sponsored Russia needs much lower oil prices to balance its budget than OPEC’s leader Saudi Arabia, which is preparing a stock market listing for national energy champion Aramco next year and would hence benefit from pricier crude. The producers’ current deal, under which they are cutting supply by about 1.8 million barrels […]

Russia sees poverty as a ‘striking problem’

1 Dec 2017   Russia

Russian Prime Minister Dmitry Medvedev says poverty is a “striking problem” in the country. Russia, whose economy relies heavily on oil and natural gas revenue, needs to take “real steps” at combating poverty, the prime minister said. “It is important that with our consolidated efforts we take real steps aimed at combating poverty,” Russian Prime Minister Dmitry Medvedev was quoted by Russian news agency Tass as saying. The World Bank found the Russia’s poverty level last year was the highest it’s been in more than a decade. Last year, 13.5 percent of the population lived at or below the poverty line. “Declining inflation and growing real wages led to a modest decline in Russia’s poverty rate in the first half of 2017, compared to the same period last year,” Andras Horvai, the bank’s country director for Russia, said in a […]

Denmark passes law that could ban Russian pipeline from going through its waters

30 Nov 2017   Denmark, Russia

Denmark passed a law on Thursday that could allow it to ban Russia’s Nord Stream 2 gas pipeline from going through its waters. The measure allows the government to ban pipeline projects on the grounds of security or foreign policy. Previously, foreign and security policy issues were not valid grounds for regulators to ban pipelines in Danish territorial waters.

Exclusive: Rising Russian Sakhalin-1 oil output may threaten OPEC deal compliance

28 Nov 2017   Russia

Oil output from Russia’s Sakhalin-1 project is set to rise by about a quarter to 250,000-260,000 barrels per day (bpd) from January, sources with knowledge of the plan said, signaling Moscow may find it hard to comply with an extended OPEC output cut. Russia and the Organization of the Petroleum Exporting Countries will meet in Vienna on Thursday to discuss an extension of the pact to curb output, possibly to the end of 2018. The Sakhalin-1 project, operated by ExxonMobil off the coast of Sakhalin island in Russia’s Far East, currently produces about 200,000 bpd. Sponsored “From January, total oil production from Sakhalin-1 and a small stream from Rosneft’s separate block will be about 250,000 bpd,” said one of the sources. A second source said production will increase to 260,000 bpd in the March quarter from about 190,000 bpd in 2017. A third source said […]

Russia expects to keep oil output flat at 550 million T until 2035: minister

27 Nov 2017   Russia

 Russia plans to keep its oil production broadly unchanged at around 550 million tonnes per year, or 11 million barrels per day, until 2035, Russian Energy Minister said in an interview with RBC TV channel aired on Monday. Novak also said the government had no plans to reduce the number of domestic oil producers when asked whether the Kremlin-controlled oil giant Rosneft might acquire its smaller peers, Lukoil and Tatneft.

Putin Crowns Himself OPEC King

25 Nov 2017   OPEC, Russia

For more than half a century, Saudi Arabia’s oil minister could move markets with a few choice words about what OPEC may decide at its next meeting, generating millions if not billions of dollars of profit for insiders. Not anymore. While OPEC’s gatherings still influence prices, it’s not Saudi Arabia’s voice that matters most, but the voice of a non-member: Russia, specifically Vladimir Putin. Since engineering Russia’s pact with the Organization for Petroleum Exporting Countries to curb supplies a year ago, Putin has emerged as the group’s most influential player. As one senior OPEC official put it on condition of anonymity, the Russian leader is now “calling all the shots.” The Kremlin’s growing sway within the cartel reflects a foreign policy that’s designed to counter U.S. influence across the globe through a wide mix of economic, diplomatic, military and intelligence measures. That strategy, which is undergirded by Russia’s vast […]

Russia ready to support oil output deal as OPEC meeting looms

25 Nov 2017   OPEC, Russia

 Russia said on Friday it is ready to support extending a deal among oil producers on cutting output, less than a week before OPEC meets in Vienna to discuss policy, although it has yet to say how long it should be for.  Russian Energy Minister Alexander Novak said that Russia would discuss the details of an extension of the global deal on Nov. 30, but made no mention of how long this should last beyond its March expiry. “We see that 50 percent of oil stockpiles have been removed, the oil price has reached its balance,” Novak told RBC TV. The Organization of the Petroleum Exporting Countries, Russia and several other major producers have cut their combined output by about 1.8 million barrels per day […]

Russia is ready to discuss extension of OPEC deal in Vienna: TASS cites Novak

24 Nov 2017   OPEC, Russia

Russia is ready to discuss an extension of a global deal between OPEC and other countries to cut oil output in Vienna on November 30, TASS news agency quoted the Energy Minister Alexander Novak as saying on Friday. “We are ready to discuss this issue, and I think we will be able to discuss it at the meeting in Vienna by the 30th (of November),” Novak said.

Oil Production Cuts Taking A Toll On Russia’s Economy

24 Nov 2017   Russia

The OPEC/non-OPEC production cuts hurt Russia’s economic growth in October, Economy Minister Maxim Oreshkin said on Thursday in the first negative comment about the pact from a high-ranking Russian official. “Because of the OPEC deal we have a negative direct impact from oil production, as well as indirect effects related to low investment activity due to production limits,” Oreshkin said, just a week before OPEC and its non-OPEC allies led by Russia meet to decide on the extension of the deal. Just after the pact was extended for the first time in May, it was Oreshkin who said that the deal was working and that Russia was “ready to live forever at oil prices $40 or below.” Back then the market was not convinced that the cuts were working, but now that Brent oil prices are above $60, Russia looks hesitant to lend its support to a nine-month extension […]

Russia’s budget deficit indicative of growth

23 Nov 2017   Russia

Russia’s budget deficit is moving in a direction indicative of economic recovery even as oil prices remain low by historic standards, a minister said. The budget deficit will be around 2 percent of the national gross domestic product, or possibly even less, by the end of the year. Russian Economic Development Minister Maksim Oreshkin said that, despite oil prices falling below $40 per barrel in recent quarters, the economy was on the road to recovery. “What is being discussed now is the issue of economic growth,” he was quoted by Russian news agency Tass as saying. The Russian Central Bank said inflation is holding steady at it’s target rate of around 4 percent, but moved in a range […]

Russian minister says OPEC oil deal hurting domestic economy

23 Nov 2017   OPEC, Russia

Russia’s economic growth in October was negatively affected by a global deal between members of OPEC and Russia to curb crude oil production, Russia’s economy minister said on Thursday. Maxim Oreshkin’s comments are the first by a senior Russian official giving a negative assessment of the deal, in which Russia joined OPEC and others in cutting output from January by about 1.8 million barrels per day (bpd) to end a supply glut. Sponsored The minister was speaking a week before Russia and the Organization of the Petroleum Exporting Countries meet in Vienna to discussing an extension of the pact to curb output, possibly to the end of 2018. It is now due to expire on March […]

Gazprom Speaks Out Against OPEC Production Cut Extension

22 Nov 2017   OPEC, Russia

While OPEC is said to be mostly leaning toward a 9-month extension of the production cuts, Russia’s Energy Minister Alexander Novak and major Russian oil companies discussed last week a six-month extension after March 2018, and all but one company said they were ready to extend, Russia’s TASS news agency reported on Tuesday, quoting two sources who had attended the meeting. A possible six-month extension proposal from Russia is shorter than the market is largely expecting—nine months through the end of 2018. It could also put Russia on a collision course with Saudi Arabia, its key partner in the OPEC/non-OPEC deal to curb production to erase the glut and prop up oil prices. In early October, Russia’s President Vladimir Putin said that Russia was open to extending the production cut deal, but echoed other officials’ comments at that time that it was too early to decide. “If we speak […]

Russia finds 1,000-times normal level of radioactive isotope after nuclear incident claims

22 Nov 2017   Nuclear, Russia

Russia’s meteorological service said on Tuesday it had measured pollution of a radioactive isotope at nearly 1,000 times normal levels in the Ural mountains, the first official Russian data supporting reports that a nuclear incident had taken place. The data appears to back up a report by the French nuclear safety institute IRSN, which said on Nov. 9 a cloud of radioactive pollution over Europe had indicated some kind of leak had taken place at a nuclear facility either in Russia or Kazakhstan in the last week of September. Neither Russia nor Kazakhstan has acknowledged any accident. Sponsored Russian state weather service Roshydromet said in a statement it had found “extremely high pollution” of ruthenium 106 in samples from two meteorological stations in the southern Urals region in late September and early October. At the Agrayash weather station the levels were 986 times those of the […]

Europe’s Toxic Radiation Cloud Remains A Mystery

22 Nov 2017   Nuclear, Russia

One month after a mysterious radiation cloud was observed over Europe, whose source remained unknown last week speculation emerged that it may have been the result of a “nuclear accident” in Russia or Kazakhstan, on Tuesday Russian authorities on Tuesday confirmed the previous reports of a spike in radioactivity in the air over the Ural Mountains. In a statement, the Russian Meteorological Service said that it recorded the release of Ruthenium-106 in the southern Urals in late September and classified it as “extremely high contamination.” Earlier this month, France’s nuclear safety agency earlier this month said that it recorded a spike in radioactivity, and said that “the most plausible zone of release” of this radioactive material “lies between the Volga and the Urals” from a suspected accident involving nuclear fuel or the production of radioactive material. The agency noted, however, that it is impossible to determine the exact point […]

Oil Price Drop Imminent If Moscow Says “No” To Extension

21 Nov 2017   Russia

As the November 30 meeting in Vienna of OPEC and its partners in the oil production cut deal nears, worry has returned among traders: one of the brokers of the deal might decide to walk out on the deal instead of participating in another extension. We’re talking about Russia, the world’s top producer and exporter, who many believe played OPEC and specifically its leader, Saudi Arabia, by agreeing to a relatively minor production cut from its nearly record-high rate of production. Reports emerged last week that Russia is considering a delay on the decision to extend the cut. That’s after Energy Minister Alexander Novak hinted more than once that from Moscow’s perspective, this decision is far from urgent. With a budget based on Brent at US$40, Russia is indeed in a sweet spot compared with its partners in the deal: it can remain in the black at any price […]

Russia to determine position on oil output deal in November: Novak

21 Nov 2017   Russia

Novak said he would discuss the possible deal extension with Russian oil producers on Tuesday.

Russia reviews LNG options with Japan

21 Nov 2017   Japan, LNG, Russia

Russian energy company Gazprom said it was reviewing the opportunity to expand its only operational liquefied natural gas plant with its Japanese partner. Gazprom Chairman Alexei Miller hosted a delegation from Mitsubishi Corp. to review LNG opportunities in the Far East market. “The parties reviewed issues related to joint efforts under the Sakhalin II project, including the construction of the third train of the LNG plant,” the Russian energy company stated. The so-called train is the facility that turns natural gas into the super-cooled liquid form. Economies in the Asia-Pacific region are expanding faster than developed nations and taking on more oil and gas resources as a consequence. Island nations like Japan, meanwhile, have few resources of their own and rely on imports from major producers […]

Oil, gas tax revenue driving Russia forward

21 Nov 2017   Russia

Revenue collected from the oil and natural gas industry in Russia is in part behind the 19 percent gain from last year, a federal tax director said Monday. Mikhail Mishustin, the head of the Federal Taxation Service, told Russian President Vladimir Putin that the budget has received $240 billion in tax collections over the last 10 months, which was 19.1 percent higher than during the same period one year ago. “I would like to note that the increase is largely due to the oil and gas industry that accounts for 60 percent of the revenue increase,” he said. Total Russian crude oil production is up 1.8 percent from January. The nation’s energy ministry published no data for natural gas […]

Russia’s Rosneft confirms oil supply deal with China’s CEFC

20 Nov 2017   China, Russia

Rosneft had signed an oil supply deal with CEFC China Energy Company Ltd, Russia’s largest oil producer said in a regulatory filing on Monday, confirming a Reuters report last week.  Access to Russian crude could help China, the world’s top crude importer, in its ambition to create a globally integrated oil supply chain. As well as extending Russia’s lead over Saudi Arabia as China’s top oil supplier, the deal will make CEFC, a hitherto little-known fuel trader, a top-10 global oil merchant. It will also make CEFC a dominant player in the ESPO crude market and may enable it to challenge dominant Western […]

EU’s Tusk calls for swift decision on Russian pipeline

17 Nov 2017   Europe, Pipelines, Russia

The head of the European Council, Donald Tusk, has urged EU nations to swiftly adopt a change of rules to help the bloc in its attempt to regulate Russia’s planned Nord Stream 2 pipeline. The European Commission is proposing to extend EU internal energy market rules to cover offshore gas pipelines, which it sees as undercutting EU efforts to reduce dependence on Moscow and its support for Kiev. “I would like to encourage you to proceed swiftly with this proposal,” Tusk said in the letter, seen by Reuters and dated Nov. 10, to the heads of the bloc’s 28 nations. “Time is of the essence, if we are to achieve the objectives of our Energy Union.” Tusk has […]

Rosneft board approves oil deal with China’s CEFC: source

17 Nov 2017   China, Russia

Russia’s Rosneft has approved a 2018 deal to supply CEFC China Energy about 12 million tonnes of crude oil as part of the Chinese firm’s $9.1 billion investment in the Russian oil major, a Chinese source with direct knowledge of the matter said on Thursday.  Of the total supply, CEFC expects to receive 8 to 10 million tonnes of ESPO crude from Russia’s Far East, said the source, in a deal that will make the Chinese firm a dominant player in the ESPO crude market and may enable it to challenge dominant Western oil traders like Vitol and Trafigura. The source, who declined to be named due to not being authorized to speak […]

Russia and Venezuela agree $3bn debt restructuring

16 Nov 2017   Russia, Venezuela

Russia has come to the aid of Venezuela with a deal to restructure $3.15bn of sovereign debt, allowing Caracas to meet obligations to other creditors and underlining Moscow’s role as the crisis-hit country’s main foreign backer. Rating agencies this week declared Venezuela in default on several of its international bonds, worth more than $60bn in total. The country has said it will have to restructure the debt as part of what is set to be one of the largest sovereign defaults in history.

“Venezuela is advancing towards the recomposition of its external debt, to the benefit of its people,” Simon Zerpa, Venezuela’s economy minister, said from Moscow. The intervention by Moscow allowed Venezuela to sidestep major western creditors, and analysts said the country was emerging as a “test case” for sovereign defaults, which are normally handled through a group of postwar institutions like the International Monetary Fund and the Paris Club.

Both Russia, which is a member of the Paris Club of international creditors, and China, which is not, are emerging as alternate venues for embattled countries seeking to avoid debt restructuring managed by traditional economic powers like the US and Western Europe. “There is now the possibility of a lot of bilateral sovereign and quasi-sovereign [credit] exposure that is not being transparently reported”, said Douglas Rediker, a former US representative on the IMF board. “No longer do you have the certainty that the Paris Club is going to reflect [the positions of] the vast majority of creditors”.

Venezuela Signs $3.15B Debt Restructuring Deal With Russia

16 Nov 2017   Russia, Venezuela

Russia is throwing a life-line to defaulting Venezuela after the two countries signed on Wednesday a deal to restructure US$3.15 billion worth of Venezuelan debt owed to Moscow. Under the terms of the deal that Russia’s Finance Ministry announced today, Venezuela will be repaying the debt over the next ten years, of which the first six years include “minimal payments”. “The debt relief provided to the republic from the restructuring of its liabilities will allow funds to be allocated for the country’s economic development, to improve the debtor’s solvency and increase the chances of all creditors to recoup loans granted earlier to Venezuela,” the Russian ministry said. However, the deal doesn’t include funds that Venezuelan companies—including state oil firm PDVSA—have borrowed from Russia, Venezuelan Economy and Finance Minister Simon Zerpa said, as quoted by Reuters . According to Venezuela’s vice president for economics, Wilmar Castro Soteldo, the terms of […]

Venezuela wins Russia and China backing as it says it is honoring debt

16 Nov 2017   Russia, Venezuela

Venezuela won easier debt terms from Russia and got a vote of confidence from China on Wednesday, as the oil-rich country said it had starting making interest payments on bonds after a delay that had threatened to trigger a default. A debt restructuring deal with Russia that allows Caracas to make “minimal” payments to Moscow in the next six years, together with a separate statement from the Chinese Foreign Ministry that Venezuela was capable of handing the debt issue “appropriately,” underlined the reserve of support its socialist government enjoys from both countries. Venezuela has borrowed billions of dollars from Russia and China over the years, primarily through oil-for-loan deals that have crimped the country’s hard currency revenue by requiring oil shipments to be used to service those loans. If backed by more debt forgiveness like that offered by Russia on Wednesday, the two countries could provide […]

China’s Mysterious Arctic Silk Road

16 Nov 2017   China, Russia

The Silk Road, renamed the Belt and Road Initiative (BRI), is developing infrastructure along land and sea trade routes. However, little is known about China’s initiative in the Arctic Circle, which represents a new route that Beijing is now able to develop thanks to technology together with the strategic partnership with Russia. Involving about 65 countries and affecting 4.4 billion people, constituting thirty percent of the world’s GDP, together with a total investment from Beijing that could surpass a trillion dollars, this is an immense project that requires a lot of imagination to grasp the intentions of the Chinese leadership. With a host of projects already in progress, and some almost completed (the Sino-Pakistan Corridor known as CPEC is archetypical), the overland and maritime routes are developing side by side. Plenty of ink has been used detailing Beijing’s intentions regarding the East-West connections of the super Eurasian continent. Pipelines, […]

U.S. sees LNG as a way to contain Russia

16 Nov 2017   Europe, Russia, USA

 A national defense measure passed in the U.S. House of Representatives aims to promote energy trade in Europe as a means to contain Russia. The National Defense Authorization Act for the current fiscal year passed out of the House, largely with the support of Republican leadership in the chamber. Seventy members of the full house voted against it. On energy security, the measure said U.S. efforts should promote energy security in Europe, stating Russia uses energy “as a weapon to coerce, intimidate and influence” countries in the region. European natural gas production is on the decline, leaving the broader energy market vulnerable to export markets. Russia is the largest gas exporter to Europe and most of that gas runs through Soviet-era […]

Production for Russian oil producer up 5 percent

16 Nov 2017   Russia

Russian oil producer Gazprom Neft said its net profit over the first nine months was up more than 25 percent, while output increased about 5 percent. “The company is continuing to implement a growth strategy aimed at further strengthening its position as an industry leader in efficiency and return on investment,” Board Chairman Alexander Dyukov said in a statement Wednesday. Gazprom Neft is the oil division of Russian energy major Gazprom and the fourth largest oil producer in Russia. Production during the first half of the year was 322.6 million barrels of oil equivalent, an improvement of 5.2 percent from the same period last year. For the first nine months of the year, total production was around 491.5 million barrels […]

Can Russia Break Its Oil Dependence?

16 Nov 2017   Russia

Despite improving oil prices, Russia’s economic growth is slowing, with GDP rise for the third quarter at 1.8 percent on an annual basis, versus 2.5 percent for the second quarter, Russia’s state statistical bureau, Rosstat, said earlier this week. Analysts say it’s the latest indication that Russia’s economy needs major reforms. Let’s state the obvious: Russia needs an economy overhaul that will reduce the contribution of oil to its budget revenues. This overhaul is something that the central bank governor Elvira Nabiulina put a price tag on last year, warning that without it, GDP won’t be able to grow at a rate of more than two percent even if oil prices jump to $100 a barrel. There is ongoing work on that overhaul, but it needs to speed up. Even so, analysts have points to make regarding that Q3 figure, and these notes aren’t about oil. For starters, Capital […]

Russian Hackers Target British Energy Industry

Russian hackers have attacked targets from the British energy industry over the last 12 months, the head of the country’s National Cyber Security Center, Ciaran Martin said. The warning, according to the New York Times , suggests that the number of attacks coming from Russia has been much greater than previously estimated by British and U.S. officials. Martin did not specify the names of any potential targets, which, he said, also included businesses from the media and telecoms industries. He also didn’t specify the number of attacks identified by his agency. Earlier this year, U.S. security agencies reported that they had detected network breaches by Russian hackers into companies operating nuclear power facilities in the United States. The combination of nuclear power and cyberattacks is enough to raise any government’s hackles, and Britain’s PM Theresa May wasted no time in accusing Moscow directly, saying “We know what you are […]

Russia exports most of its crude oil production, mainly to Europe

15 Nov 2017   Russia

OECD is the Organization for Economic Cooperation and Development. Russia exported more than 5.2 million barrels per day (b/d) of crude oil and condensate and more than 2.4 million b/d of petroleum products in 2016, mostly to countries in Europe. Exports of crude oil and petroleum products represented nearly 70% of total Russian petroleum liquids production in 2016. Russia’s oil and natural gas industry is a key component of Russia’s economy, with revenues from oil and natural gas activities—including exports—making up 36% of Russia’s federal budget revenues. Crude oil trade is important to both Russia and Europe: about 70% of Russia’s crude oil exports in 2016 went to European countries, particularly the Netherlands, Germany, Poland, and Belarus. Similarly, Russian imports provided more than one-third of the total crude oil imported […]

Russian oil company eying Gulf of Mexico opportunities

14 Nov 2017   Offshore, Russia, USA

Russian oil producer Lukoil said it may be setting up a partnership to work in the Mexican waters of the Gulf of Mexico. File photo by A.J. Sisco/UPI Nov. 13 (UPI) — Russian oil producer Lukoil said Monday it was vetting the possibility of teaming up with a Mexican company for work in the Gulf of Mexico. Vagit Alekperov , the chief executive officer at Lukoil, said he was meeting with authorities at Petróleos Mexicanos, known also as Pemex, to discuss a potential partnership for offshore oil in North America. His announcement came after Washington enacted more sanctions on Russia, though the CEO said that was irrelevant. “No, [sanctions] do not affect [this],” he was quoted as saying by Russian news agency Tass. The U.S. Office of Foreign Assets Control in early November amended Russian sanctions with respect to the energy sector, blocking U.S. entities from helping with companies […]

Rosneft, China To Deepen Strategic Cooperation

11 Nov 2017   China, Russia

Russia’s state-controlled oil giant Rosneft and Chinese energy company CEFC—which has agreed to buy 14 percent in Rosneft—are deepening their strategic cooperation by signing an agreement to study the possible construction of a petrochemical facility in China’s Hainan province. Rosneft and CEFC will set up joint working teams “to discuss technical configurations of the project as well as commercial and economic matters,” the Russian company said in a statement on Friday. The two companies plan to conduct a joint analysis of long-term supply of feedstock for the petrochemical facility in Hainan and to explore various options for monetizing the products, Rosneft noted. The joint petrochemical project would be the latest sign of closer ties not only between Rosneft and CEFC, but also between Russia and China. In early July, Rosneft and CEFC signed the strategic cooperation deal to collaborate in exploration and production, oil refining and petrochemicals, crude oil […]

Paradise Papers Reveal U.S. Selling Russian LNG In Europe

11 Nov 2017   LNG, Russia, USA

The new massive data leak that has been making headlines for several days now has revealed that a company with U.S. ownership has been buying Russian gas and selling it in Europe at higher prices. According to a report in Belgian daily Le Soir, taken up by other media outlets, such as The Guardian and Eurasia Review, Wilbur Ross holds a 35-percent interest in Navigator Holdings, a shipping company registered in the Marshall Islands. According to the leaked documents, four cargo carriers owned by Navigator Holdings were used to load Russian natural gas at the port of Ust Luga before heading to the Anwerp LNG terminal in Belgium. The documents suggest that a company with U.S. ownership is buying Russian gas from petrochemical giant Sibur, and then selling it—at a profit, of course—to the European Union, which is in a rush to build as many LNG terminals as it […]

Russia Unfazed By U.S. Oil Sanctions

10 Nov 2017   Russia

Most Russian oil companies don’t expect sanctions to be scrapped anytime soon—an assessment espoused by the political elites of the country, too. The sides even seem to have resigned their minds to the current frosty relations. The Russian economy has swung back to growth this year, with an anticipated 1.7 percent GDP increase this year, and the ruble solidified following a disastrous 2015-2016 period. Russian oil companies have mostly overcome the lending obstructions U.S. sanctions present by finding new partners in Asia and taking use of their free cash flow, and were it not for the OPEC+ agreement, they would ramp up production even more swiftly than the 4-5 percent since the sanctions regime kicked in. As a consequence, the current consolidation will soon move to a new phase: testing the sanctions unity of the United States and European Union. The Black Sea isn’t particularly famous for its oil […]

Russian Oil Exports Could Be Looming Problem for Prices

8 Nov 2017   Prices, Russia

Russia, the world’s largest oil producer, has ramped up its crude exports this year, potentially undermining a deal with the Organization of the Petroleum Exporting Countries cartel that has helped raise oil prices. OPEC’s agreement with Russia and nine other countries was meant to reduce global oil output by 2% and has helped to raise Brent crude prices by roughly 5% this year, to over $60 a barrel. “The Russians are putting more oil on the market and cashing in,” said Georgi Slavov, head of research at commodity brokerage Marex Spectron. As a result, he said, the country is “delaying the effect the OPEC deal could have on the market.” The scrutiny of Russia’s actions highlights the growing importance that oil investors are giving to big producers’ exports sold on the global market and […]

Russia reaches Turkish waters with gas pipeline

7 Nov 2017   Russia, Turkey

Russian energy company Gazprom said construction of a new gas pipeline has entered Turkish territory. File Photo by tcly/Shutterstock Nov. 6 (UPI) — Construction for a pipeline slated to bring Russian gas through Turkish territory moved into official Turkish waters, Russian media reported. Russian news agency Tass reported construction vessel Pioneering Spring moved into the Turkish exclusive economic zone to lay sections of the so-called Turkish Stream pipeline during the weekend. “The Pioneering Spirit laid one line to the [exclusive economic zone] border, and then returned to Anapa (Russia) to begin the deep-water laying of the second line,” the report read. Russian energy company Gazprom said construction of a pipeline known variably as TurkStream or Turkish Stream started in May The pipeline’s route would mirror the now-abandoned South Stream project and run under the Black Sea to Turkey and then to the European market. South Stream was scrapped because […]