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European Official Not Ready to Stiffen Russia Sanctions

BRUSSELS — Rattled by a newly aggressive Russia but still loath to confront the reality of violent conflict, Europe needs to draw clear lessons from the war in Ukraine in order to respond to a new and dangerous era, according to Donald Tusk, the former prime minister of Poland who took over recently as representative of the European Union ’s 28 leaders. Mr. Tusk, who will meet President Obama in Washington on Monday in his role as president of the European Council, said in an interview that Europe was not yet ready to further tighten sanctions against Russia despite continuing provocations by President Vladimir V. Putin. But he said he was eager for Europe to take a more robust stance alongside the United States in countering Russian efforts to redraw the borders of Ukraine, in dealing with chaos in countries like Libya, and in confronting the threat of jihadist […]

Posted On : Published By : Tom Whipple
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Rosneft Posts Sharply Lower Net

MOSCOW—Russian state oil company OAO Rosneft’s net profit in 2014 fell by more than a quarter, the company said Wednesday, citing lower oil prices, a weaker ruble and slowing growth at home. Its net income dropped 28.5% to $9.3 billion, although revenue declined just 0.1% to $146.7 billion. Earnings before interest, taxes, depreciation and amortization, or Ebitda, were down 1.7% at $29 billion. Rosneft didn’t provide fourth-quarter figures. The company said its hydrocarbon production climbed 4.8% to 5.12 million barrels of oil equivalent per day last year. It said it modernized production facilities, allowing it to pump more oil at older “brownfields.” Rosneft said it has begun drilling in the Universitetskaya-1 field in Russia’s Arctic Kara Sea, despite U.S. sanctions that bar American companies from providing services, goods and technology for Arctic drilling projects in Russia. Rosneft and Exxon Mobil Corp. ’s joint venture found major amounts of oil […]

Posted On : Published By : Tom Whipple
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Russia’s economy isn’t in tatters

Western politicians and pundits should be more careful with their predictions for the Russian economy: Reports of its demise may prove to be premature. Bashing the Russian economy has lately become a popular pastime. In his state of the nation address last month, U.S. President Barack Obama said it was “in tatters.” And last week, Anders Aslund of the Peterson Institute for International Economics published an article predicting a 10 percent drop in gross domestic product this year — more or less in line with the apocalyptic predictions that prevailed when the oil price reached its nadir late last year and the ruble was in free fall. Aslund’s forecast focuses on Russia’s shrinking currency reserves, some of which have been earmarked for supporting government spending in difficult times. At $364.6 billion, they are down 26 percent from a year ago and $21.6 billion from the beginning of this year. […]

Posted On : Published By : Tom Whipple
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Russia Agrees Dispute Over East Ukraine Gas Won’t Endanger EU Supply

The energy ministers of Russia and Ukraine agreed Monday that a dispute over natural-gas deliveries to some rebel-controlled territories in eastern Ukraine won’t affect supplies to the rest of the country and the European Union. The spat between Ukrainian state gas company OAO Naftogaz and its main supplier, Russia’s OAO Gazprom , had endangered an EU-mediated deal that was meant to secure gas supplies during the cold winter months. It also raised questions on whether the two sides would be able to negotiate a follow-up arrangement to regulate deliveries over the summer months once the winter deal expires at the end of March. The agreement, following talks between the two ministers in Brussels, doesn’t resolve the question of who will ultimately pay for gas delivered by Gazprom to the Donetsk and Luhansk regions but not authorized by Naftogaz. Russian has been backing the rebels in those regions. The pact […]

Posted On : Published By : Tom Whipple
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Oligarch’s oil deal caught in sanctions crossfire

North Sea oil rig or gas platform As first days at work go, Monday was eventful even by the standards of someone as experienced as Lord Browne. The former BP head took over as executive chairman of L1 Energy, a new $10bn oil and gas investment fund backed by Russian billionaire Mikhail Fridman, to find an unfolding row between his oligarch boss and UK energy secretary Ed Davey at the top of his in-tray. The peer, whose appointment completes a remarkable rapprochement with Mr Fridman, a one-time foe, will use his decades of energy industry expertise and extensive contacts book to lead a hunt for partnership deals and acquisitions. The assets acquired by Mr Fridman’s LetterOne group in a €5bn purchase completed on Monday of RWE Dea, the oil and gas arm of Germany’s RWE , are meant to form the cornerstone of an international energy business. There will […]

Posted On : Published By : Tom Whipple
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Russia to Avoid Using Global Debt Markets in 2016, Minister Says

(Bloomberg) — Russia doesn’t expect to access international debt markets in 2016 after already ruling out issuing foreign bonds in 2015 to help finance its budget deficit, Finance Minister Anton Siluanov said. The country, which has issued more than $22 billion of bonds abroad since 2010, is facing higher borrowing costs in global markets amid U.S. and European Union sanctions after President Vladimir Putin’s annexation of Crimea a year ago. Russia previously planned to borrow as much as $7 billion in 2016 and another $7 billion in 2017, according to the most recent budget approved by Putin. “We should be more realistic and put in our budget internal borrowings as sources” to cover the deficit, Siluanov told reporters Monday in Moscow. Russia’s credit rating was cut below investment grade by Moody’s Investors Service and Standard & Poor’s this year as policy makers struggle to keep economic growth. Russia may […]

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Exxon’s Russia Exposure Surges as Long View Outweighs Sanctions

Rex Tillerson, Chief Executive Officer of Exxon Mobil Corp., is scheduled to brief a gathering of investors and analysts on the company’s growth outlook at the New York Stock Exchange on Wednesday. Photographer: Andrey Rudakov/Bloomberg (Bloomberg) — Exxon Mobil Corp. shook off the chill of sanctions and has continued to snap up oil drilling rights in Russia, giving it larger exploration holdings in Vladimir Putin’s backyard than in the U.S. Taking the long view, Exxon boosted its Russian holdings to 63.7 million acres last year from 11.4 million at the end of 2014, according to data from U.S. regulatory filings. That dwarfs the 14.6 million acres of rights Exxon holds in the U.S., which until last year was its largest exploration prospect. While U.S. and European Union sanctions against Russia forced Exxon to shut down an Arctic drilling project in October, the producer is staking claims to areas that […]

Posted On : Published By : Tom Whipple
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Russia ETF Swells to Record as Ruble Advances Amid Truce

A worker clears snow from the sidewalk outside a store in Moscow. International sanctions linked to the separatist conflict in Ukraine are helping to push Russia’s economy toward its first recession since 2009. Photographer: Andrey Rudakov/Bloomberg (Bloomberg) — Investors are boosting wagers on the largest exchange-traded fund tracking Russian stocks to a record as easing tension in Ukraine and a rebounding ruble lured them back to the cheapest equities in emerging markets. The number of outstanding shares in the Market Vectors Russia ETF soared 14 percent from mid-February to 107.3 million at the end of the month, driving its total assets to $1.88 billion. The fund, which lost half of its value in 2014, has surged 19 percent this year. ETFs focusing on Russian stocks and bonds collected $222.2 million in February, the biggest inflows in emerging markets, data compiled by Bloomberg show. After deserting the nation’s stocks last […]

Posted On : Published By : Tom Whipple
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Oligarch’s oil deal caught in sanctions crossfire

North Sea oil rig or gas platform As first days at work go, Monday was eventful even by the standards of someone as experienced as Lord Browne. The former BP head took over as executive chairman of L1 Energy, a new $10bn oil and gas investment fund backed by Russian billionaire Mikhail Fridman, to find an unfolding row between his oligarch boss and UK energy secretary Ed Davey at the top of his in-tray. The peer, whose appointment completes a remarkable rapprochement with Mr Fridman, a one-time foe, will use his decades of energy industry expertise and extensive contacts book to lead a hunt for partnership deals and acquisitions. The assets acquired by Mr Fridman’s LetterOne group in a €5bn purchase completed on Monday of RWE Dea, the oil and gas arm of Germany’s RWE , are meant to form the cornerstone of an international energy business. There will […]

Posted On : Published By : Tom Whipple
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How Much More Economic Pain Can Vladimir Putin Take?

Vladimir Putin speaks at a news conference in Budapest on Feb. 17. It’s been a little more than six months since the full brunt of Western sanctions took force against Russia . The punishment, while slow in coming, has proven devastatingly effective—especially when paired with the crash in oil prices . Last summer, of course, U.S. and European Union officials had no way of knowing an epic oil selloff was right around the corner. But in hindsight the coordination seems uncanny. Oil prices peaked less than a month before the sanctions were announced. By November, the combination of cheap oil and tighter sanctions was bleeding Russia of billions in budget revenue and had cut it off from the world’s largest capital markets. In December, state-owned oil giant Rosneft  had to get a loan backed by the Central Bank of Russia, which is sort of like the U.S. Fed giving a loan to ExxonMobil. Recent news reports suggest Russian President Vladimir […]

Posted On : Published By : Tom Whipple