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Russia: Global Shale Output Decline Will Stabilize Oil Market

MOSCOW, Sept 10 (Reuters) – Russia’s energy minister expects that cuts in global shale oil production, which has been hard hit by lower oil prices, will help stabilize the fragile oil market. Alexander Novak also reaffirmed that Russia, one of the world’s top oil producers, would not cut its own production as it would lead only to a short-term recovery with risks of subsequent slumps in prices. The Organization of the Petroleum Exporting Countries, which accounts for around a third of global oil output, changed its policy in 2014 to defend market share and discourage competing supply sources, rather than cut its own output in the face of lower prices. "Shale oil has been leaving the market bit by bit. This is a good and positive signal, which allows one to say that the market will stabilize in mid-term," Novak told Rossiya-24 TV in an interview aired on Thursday. […]

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Why Vladimir Putin Won’t Be Helping OPEC to Cut Oil Production

Few things have more potential to spook the oil market than the prospect of Russia joining forces with OPEC. Speculation that such a move was afoot last month drove crude to its biggest three-day gain in 25 years. Despite the market buzz, there are sound economic and technical reasons why this is unlikely to happen. “Russia and OPEC have talked about cooperation in cutting production many times in the past, but the results of that were always dismal and disappointing,” said Nordine Ait-Laoussine, president of Geneva-based consultant Nalcosa and former energy minister of Algeria. “Russia has assumed that when oil prices go down, OPEC countries are in a weaker position and are more likely to be the first to cut its production, and they always did.” Russia vies with Saudi Arabia and the U.S. for the title of world’s largest oil producer. When Venezuelan President Nicolas Maduro said last […]

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Cheap Russian Gas Tempts EU Buyers as LNG Import Growth Stalls

Europe lowered purchases of liquefied natural gas for a third month in August as buyers boosted purchases of oil-linked fuel through pipelines from Russia. LNG imports by 10 nations in the region that receive the tanker-delivered fuel dropped 3.4 percent from a year earlier in August, after reaching a two-year high in March, according to data from Genscape Inc. Russian pipeline supplies soared about 20 percent from a year earlier in August, remaining at the highest level this year, tracking declining crude prices, according to data from Gazprom PJSC, the world’s biggest gas producer. Europe, which imports as much as 70 percent of its gas needs, has increased shipments from Russia as contract prices declined because they follow crude with several months delay. Traders bought more LNG as they waited for pipeline gas prices to drop further in the third quarter, encouraged by a slump in Asian LNG prices […]

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U.S. Moves to Block Russian Military Buildup in Syria

Photo Foreign Minister Sergey V. Lavrov of Russia has expressed surprise at receiving a call Saturday from Secretary of State John Kerry warning Moscow not to expand its military role in Syria. Credit Yuri Kochetkov/European Pressphoto Agency WASHINGTON — The United States on Tuesday moved to head off preparations for a suspected Russian military buildup in Syria as Bulgaria agreed to an appeal from the Obama administration to shut its airspace to Russian transport planes. The planes’ destination was the Syrian port city of Latakia. The administration has also asked Greece to close its airspace to the Russian flights, Greek and American officials said, but Greece has not publicly responded to the request. The apparent Russian military preparations and the Obama administration’s attempt to block them have escalated long-running tensions between the White House and the Kremlin. Although the United States and Russia agree that the Islamic State is […]

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Russia Dismantles Fiscal Rules as Oil Volatility Rattles Budget

Step by step, Russia is undoing the budget policy assembled during the past decade as it tries to ride out turmoil on the energy market. The government is halting the so-called budget rule a week after announcing plans to drop three-year fiscal plans in favor of a one-year program for 2016. That rule, which went into effect in 2013 and sought to cap public spending based on average long-term oil prices, may be modified, reinstated or dropped entirely, Economy Minister Alexey Ulyukayev told reporters Tuesday in Paris. The world’s biggest energy exporter is tearing down its fiscal mechanisms as it contends with fluctuations in the price of oil, which together with gas accounts for about half of budget revenue. Crude is down more than 25 percent from this year’s closing peak in May, helping deepen Russia’s first recession since 2009 and putting the budget on course for its widest […]

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Moscow Bourse Outage Interrupts Ruble’s First Gain in Six Days

The ruble strengthened for the first time in six days as crude oil rebounded and investors bet on a pause in the Bank of Russia’s rate-cutting cycle. Equipment failure on the main bourse in Moscow knocked out currency, stocks and bond trading for two hours. The Moscow Exchange switched to backup systems after the shutdown at about 3 p.m. in Moscow, the latest in a string of interruptions this year. When trading resumed, the ruble continued its advance, appreciating 1.6 percent to 68.0490 against the dollar by 7:15 p.m. in Moscow, the biggest rally among emerging markets tracked by Bloomberg. Oil surged 4 percent in London, helping lift the Micex index of stocks to a second day of gains. The ruble is getting some relief as the biggest currency slump in emerging markets this quarter raises the odds that Bank of Russia Governor Elvira Nabiullina will end a string […]

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Move Over Exxon, Russian Drillers Are Oil World’s Top Performers

At a time when the collapse in crude prices pushes Russia’s economy into a recession, the nation’s oil producers are managing to beat their western counterparts. On measures including cash flow, profit margins and share prices, OAO Rosneft, Lukoil PJSC– Russia’s two largest oil producers — and OAO Gazprom Neft are performing better than Royal Dutch Shell Plc, BP Plc or Exxon Mobil Corp. “When oil goes down, the western companies are hurt more than the Russian companies,” said Maxim Edelson, a Senior Director at Fitch Ratings in Moscow. Because Russian tax rates adjust automatically to lower prices the nation’s companies enjoy a buffer to the slump in crude while “a lot of the hit is taken by the government.” The oil industry is struggling to adapt after prices fell to the lowest level in six years amid a global supply glut. While energy producers have fallen more than […]

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Rouble decline stokes fears of Russian credit crunch

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Melting Ice Isn’t Opening Arctic to Oil Bonanza

Photo An Orthodox cross in Teriberka, Russia, a poor village on the Barents Sea that the Kremlin had hoped would be a hub for the expanded operations of its energy giant, Gazprom. But despite the melting ice, getting oil and gas out of the Arctic remains a daunting challenge. Credit James Hill for The New York Times TERIBERKA, Russia — The warming Arctic should already have transformed this impoverished fishing village on the coast of the Barents Sea. The Kremlin spent billions in the last decade in hopes of turning it into a northern hub of its global energy powerhouse, Gazprom. It was once the most ambitious project planned in the Arctic Ocean, but now there is little to show for it aside from a shuttered headquarters and an enormous gravel road carved out of the windblown coastline like a scar. “There are plans,” said Viktor A. Turchaninov, the […]

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Ruble Swinging Most in Four Months Triggers Putin Budget Switch

The ruble fell with oil prices, retreating for a fourth day as market turmoil that’s driven the strongest swings in the Russian currency since May forced Vladimir Putin’s government to cut its budget planning horizon from three years to one. The ruble weakened 0.6 percent against the dollar to 67.6170 by 5 p.m. in Moscow, heading for a 3.3 percent retreat for the week. The currency’s one-month historical volatility rose to 38.3, the highest since May and almost four times the level in October before the central bank stopped managing the exchange rate. Concern over a slowdown in China, Russia’s biggest trading partner, has pummeled commodity prices and rattled emerging markets that are bracing for an outflow of funds as the Federal Reserve weighs its first rate increase since 2006. Putin said on Friday he’s asking parliament to support a switch back to a one-year budget horizon because it’s […]

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