Category: Russia

Schlumberger’s bid would give it a 45% stake in EDC, with an option to buy the rest of the company at a later date, an unusually large investment by a U.S.-listed company in Russia’s oil industry at a time of heightened tensions between Moscow and the West over Ukraine. It would help strengthen the presence of the world’s largest oil-services company in Russia and give it a base from which to grow in the region. EDC operates the largest fleet of onshore drilling rigs in Russia and is vital to operations at the country’s oil fields, where companies are ramping up output to compensate for the recent decline in oil prices. Russia’s economy is highly dependent on oil and gas, the sales of which account for around half its federal budget revenue. The transaction was proposed in January , accepted by EDC and originally expected to close by the […]

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Russian President Vladimir Putin is expected to hear U.S. concerns about eastern Ukrainian rebels. The White House says Russian isolation and low crude oil prices creating major economic problems. File photo by David Silpa/UPI WASHINGTON, Sept. 25 (UPI) — Though low crude oil prices are playing a part, the White House said Russia’s refusal to meet international expectations is leading to economic decline. U.S. President Barack Obama is set to meet Russian President Vladimir Putin at the United Nations next week. White House spokesman Josh Earnest said Russian intervention in Ukraine, where pro-Russian rebels continue their operations, will top the agenda. "Russia’s international isolation and their continued refusal to abide by basic international norms, particularly when it comes to these combined Russian separatist forces, has taken a significant toll on their economy," Earnest said during his regular press briefing Thursday. The U.S. Treasury Department’s Office of Foreign Assets Control […]

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The ruble strengthened in a third week of gains, heading toward a resistance level that Sberbank CIB said could be surpassed as crude prices stabilize and companies convert export earning to pay taxes. Russia’s currency climbed 0.8 percent to 65.5670 per dollar by 4:32 p.m. in Moscow. That’s closing in on an “important multi-month” range of 65.30-65.50, Tom Levinson, chief currency and interest rates strategist at Sberbank CIB in Moscow, said in e-mailed comments. "Although it is too soon to signal the all clear for the ruble, it is currently well supported by an oil price that looks more upwardly mobile and the regular end of the monthly tax period," Levinson said. If oil gets “traction” above $50 a barrel, the ruble can keep its gains even without the support from tax payments, he said. The ruble has recovered 8.1 percent from a record-low close a month ago as […]

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When the head of the Kremlin’s oil major Rosneft, Igor Sechin, went to see Prime Minister Dmitry Medvedev last month to report on his achievements, he proudly boasted about a bullish report from the U.S. investment bank Goldman Sachs. Goldman’s analysts said they had spotted a buying opportunity in the Russian oil sector. While energy companies around the world had been hit hard by a global fall in prices, Russia’s oil companies had been spared some of the damage thanks to a collapse in the rouble which lowered their costs. In fact, Goldman said, Russia’s oil industry, the world’s biggest by volume, was also its most profitable. A month later, investors don’t yet seem to have heeded Goldman’s advice to buy in. Most are still spooked away from Russia by international financial sanctions imposed by the United States and EU over the conflict in Ukraine. But the taxman has […]

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Russian stocks headed for their longest streak of losses in more than a year as the nation’s biggest oil and mining companies fell on concern they may be targeted in a government drive to extract more taxes to cover a budget shortfall. Uralkali PJSC, Russia’s largest potash company, fell 2.8 percent, contributing to the benchmark Micex Index’s 0.8 percent drop. The gauge has lost almost 7 percent in the last six days, trimming its advance this year to 16 percent. The ruble traded little changed against the dollar at 66.3860 by 5:02 p.m. in Moscow. The ruble’s 50 percent devaluation against the dollar since the start of 2014 has boosted exporters’ foreign-currency earnings and Finance Minister Anton Siluanov on Wednesday said it’s time for the government to take a share of the windfall. While the ministry has proposed boosting the tax on oil companies to bring in more than […]

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Yamal LNG, a $27 billion project on a Russian peninsula jutting into the Kara Sea, has been beset by questions over how to pay for it since the lead partner, OAO Novatek , NVTK -3.40 % was hit by U.S. sanctions following Russia’s annexation of Crimea last year. With most western financing cut off, the partners have turned to Chinese state banks for $12 billion in loans but none have been approved yet. The project has become a test of whether complicated, expensive Russian energy developments are possible in an era of stringent American sanctions on the country’s oil-and-gas industry. This month, China’s $40 billion Silk Road Fund said it would finance part of the project, a development Total CEO Patrick Pouyanné called “a clear commitment by China” in an interview Wednesday. The price paid for Silk Road’s 9.9% stake in Yamal wasn’t disclosed. Silk Road, a state-owned infrastructure […]

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Russian President Vladimir Putin says budget planners need to work to counter the impact of low crude oil prices and other external pressures. File photo by Luo Xiaoguang/Pool MOSCOW, Sept. 23 (UPI) — A Russian economy struggling under the dual pressures from sanctions and low crude oil prices needs to work to overcome recession, the Russian president said. "In the present environment, it is particularly important to provide a set of measures to overcome the economic recession and maintain the role of the federal budget as one of the leading development tools," President Vladimir Putin said in a statement. The Russian economy teetered on the brink of recession when entering fiscal year 2015. In early September, the Bank of Russia said it was keeping the key rate at 11 percent annually because of higher inflationary risks and "persistent risks of considerable economy cooling." The International Monetary Fund in January […]

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Russia’s Economy Ministry criticized a proposed tax increase on the nation’s main revenue source, crude producers, saying it may hurt output and the budget in the long term. The oil-extraction tax formula proposed by the Finance Ministry last week would hurt “the economics of working deposits and in fact would ’kill’ production at the most efficient fields in terms of tax performance,” Deputy Economy Minister Nikolay Podguzov said in an e-mailed statement. “Clearly, if production decreases, taxes also fall.” Struggling with its first recession in six years, Russia’s budget may gain more than 600 billion rubles ($9.1 billion) of additional revenue next year if the government raises the crude output levy, according to the Finance Ministry. That’s a “significant” overestimation, Podguzov said. While President Vladimir Putin told the government to weigh the tax proposal on Tuesday, there’s no final decision yet, Finance Minister Anton Siluanov said. Shares in the […]

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Ratings agency questions durability of Russian plans to twin existing Nord Stream gas pipeline through the Baltic Sea. File photo by Kodda/Shutterstock MOSCOW, Sept. 22 (UPI) — Funding and market challenges could get in the way of further progress in Russian plans to add on to an existing European gas pipeline, Fitch Ratings says. The existing twin Nord Stream pipeline through the Baltic Sea to Germany carries about 1.9 trillion cubic feet of gas per year to the European market. An expansion, Nord Stream II, would relieve geopolitical constraints on conventional gas network through Ukraine, which hosts about a quarter of the Russian gas headed to Europe. "We believe raising multi-billion dollar project financing for Nord Stream II in the capital markets would probably be much harder now," Fitch Ratings said in a statement. "This is because Western sanctions have significantly hindered international funding to Russian corporations, even those […]

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