Category: Russia

MOSCOW, Sept 21 (Reuters) – Russia’s government has been discussing ways to tackle the tough economic environment if oil falls to as low as $30 per barrel next year, RBC daily reported on Monday, citing government sources. That scenario was discussed at a government meeting chaired by Prime Minister Dmitry Medvedev earlier this month, the newspaper cited two unnamed government sources as saying. The price of oil is crucial for the Russian budget, which normally generates half of its revenues from oil and gas sales. The Russian Economy Ministry forecasts that oil prices will average $52 per barrel in 2015 and $55 in 2016. On Friday, a deputy energy minister said if crude falls below $40 a barrel from around $50 currently, Russian oil production may drop. Oil prices rose by around one percent on Monday as U.S. drilling slowed and analysts estimated that $1.5 trillion worth of planned […]

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BRUSSELS—OAO Gazprom on Monday said it has submitted proposals to the European Commission to settle accusations that the Russian energy giant hindered competition and charged unfair prices in several Eastern European countries. If accepted, a settlement could help the company avoid billion-dollar fines, but would likely require it to fundamentally change the way it has done business in its former backyard since the collapse of the Soviet Union. The commission in April filed formal charges against Gazprom , saying the state-controlled company broke European Union antitrust law in eight countries where it is the dominant gas supplier—Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia. The commission, which acts as the European Union’s antitrust watchdog, said restrictive terms in Gazprom contracts forced territorial constraints on customers, for instance by prohibiting them from re-exporting gas to another country. It also objected to Gazprom’s practice of tying the price of […]

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The rally in Russian stocks traded in Moscow probably won’t last much longer as the benchmark index re-establishes its correlation with oil, which has plunged to less than half its five-year average price, according to Pavilion Global Markets Ltd. The ruble-denominated Micex Index has gained 22 percent this year, compared with a 13 percent drop in the MSCI Emerging Markets Index. In dollar terms, the Russian gauge is up 3.5 percent in 2015. The equity rally comes as Brent crude, the benchmark used to price the country’s exports, sells for less than $50 a barrel, about 30 percent below this year’s high. Slumping oil prices and sanctions linked to the Ukraine conflict have pushed the world’s largest energy exporter into its first recession since 2009. While the depreciation of the ruble, which has weakened 19 percent in the past three months, might explain some of the resilience in locally […]

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The Russian government may raise taxes on its main source of revenue — crude producers — to narrow its budget deficit next year, two people with knowledge of the matter said Friday. The authorities in Moscow have started discussions with companies about changing a crude-extraction tax formula, one of the people said. Both asked not to be identified because the information isn’t public yet. Modifications are also possible in the export duty formula, the news service Interfax reported, citing an unidentified person familiar with the situation. Together with the extraction levy, that would raise the tax burden on oil producers by about 600 billion rubles ($9.04 billion), according to Interfax. "The producers haven’t been impacted by the drop in prices while the government take has fallen a great deal," said Sarah Emerson, managing director of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts. "We won’t know if there […]

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The ruble declined as oil dropped and the Bank of Russia’s economic outlook bolstered speculation for more interest-rate cuts this year. The exchange rate weakened 0.6 percent to 68.043 per dollar by 2:14 p.m. in Moscow. Brent crude, the nation’s main export earner, declined 2.1 percent to $47.86. The central bank forecasts the economy will shrink by 3.9 percent to 4.4 percent in 2015, it said in a statement after keeping borrowing costs unchanged at 11 percent following five reductions since January. The decision was expected by all but three of 36 economists polled by Bloomberg. “It’s clear that the central bank hasn’t made a U-turn in its policy, but temporarily halted its easing cycle,” Tatiana Orlova, a Russia & CIS economist at Royal Bank of Scotland Group Plc in London, said by e-mail. “We continue to believe that the next policy move will be a cut.” The central […]

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The Central Bank of Russia keeps interest rate unchanged, but frets over trajectory of energy prices. Photo by DyMax/Shutterstock MOSCOW, Sept. 11 (UPI) — The Bank of Russia said Friday it would keep key interest rates unchanged, but said future momentum may depend on global energy prices. The bank’s Board of Directors said it was keeping the key rate at 11 percent annually because of higher inflationary risks and "persistent risks of considerable economy cooling." The Russian economy teetered on the brink of recession when entering fiscal year 2015. The Russian currency, the ruble, has been pressured by a weak economy in general and sanctions targeting the Russian energy sector. "The depreciated ruble will continue to put pressure on prices in the next few months," the bank said. Russian oil company Rosneft reported second-quarter profits at $1.99 billion, about 22 percent lower than the same period last year. The […]

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