Category: Russia

Pro-Russian rebels drive a mobile anti-aircraft system Strela-10 in Donetsk on Tuesday. ENLARGE Photo: maxim shemetov/Reuters WASHINGTON—Nearly a year after Russia began its military campaign in Ukraine, the U.S. and its European allies find themselves in a familiar predicament: struggling to devise a strategy to get Moscow to back off. While Western economic sanctions, combined with a steep drop in the price of oil, have inflicted heavy damage on the Russian economy, they’ve done nothing to temper the Kremlin’s support for eastern Ukraine’s separatist insurgency, U.S. officials acknowledge. “It’s fair to say that costs haven’t risen high enough for the Russian leadership to rethink their course of action,” a senior Obama administration official said. As Secretary of State John Kerry travels to Ukraine to meet with President Petro Poroshenko and other Ukrainian leaders this week, policy makers in Washington are re-examining their decision not to supply weapons to Ukraine […]

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Russia envisages a marginal increase in oil production in 2015 despite the global slump in prices, according to the Ministry of Energy’s latest projections. The oil price rout has battered Russia, one of the world’s biggest oil producers along with Saudi Arabia and the U.S., at a time when its economy was already suffering from sanctions imposed by the West over the conflict in Ukraine, as well as the depreciation of the ruble. Russia produced an average of 10.58 million barrels of crude a day in 2014, a level of output not seen since the end of the Soviet Union. The Ministry of Energy expects average daily output in 2015 to reach 10.6 million to 10.7 million barrels a day, “approximately at the same level” as last year, a ministry spokeswoman said. The spokeswoman said the government’s forecasts will be updated next week. Oil output in January reached 10.66 […]

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Rosneft , the Russian state-owned energy company, has sought to mitigate the heavy blows of falling crude oil prices and the volatile rouble by changing its accounting systems to record foreign currency fluctuations when they materialise, rather than every quarter. The company has yet to announce its fourth-quarter results but the move, which was backdated to October 1 2014, has benefited BP , which owns 19.75 per cent of the Russian company. Analysts were expecting BP to suffer losses of hundreds of millions of dollars in earnings and dividends but on Tuesday it reported a $470m fourth-quarter profit from its stake in Rosneft. Rosneft said the change was approved by the board’s audit committee “with the involvement of the independent auditor Ernst & Young”, but it is not clear if EY actually approved it. The “increased foreign exchange volatility of the Russian rouble . . . can distort the effect of the actual […]

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MOSCOW — With oil prices down more than 50 percent in the past year, the ruble having lost more than half its value, a recession looming and the country already dipping into its rainy-day funds, the Russian economy is in a race against time. But one would be hard pressed to grasp the depth of the troubles from the Kremlin’s prescriptions. Anton Siluanov, the finance minister, laid out the government’s long-promised “anti-crisis” package in a live broadcast on state television last week, a laundry list of half-measures and a vague promise of a 10 percent budget cut that economists almost unanimously dismissed as inadequate. “That plan is nonsense,” the Russian oligarch Aleksandr Y. Lebedev said in an interview, describing it as throwing away money to rescue some of Russia ’s worst companies. “Lots of words and little specific.” President Vladimir V. Putin weighed in briefly, repeating that along with […]

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(Bloomberg) — Russian oil production remained near the post-Soviet record reached last month, as the collapse of crude prices since June has so far failed to visibly disrupt growth, and exports jumped. The country’s output dropped less than 0.1 percent from December to 10.657 million barrels a day, according to preliminary data e-mailed today from the Energy Ministry’s CDU-TEK group. Oil prices have fallen to the lowest since 2009 amid surging U.S. output and a November decision by OPEC to abandon its role as the global swing producer. Russia, which depends on the oil and natural gas industry for half of its budget, is on the brink of a recession, pressured by crude’s bear market and U.S. and European Union sanctions. Crude output will probably remain on par with 2014, although the current low prices present a risk, Energy Ministry Alexander Novak said last month, citing producers’ plans. Selling […]

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(Bloomberg) — The message some Russia watchers are getting from Friday’s surprise interest-rate cut is this: Start listening more to what President Vladimir Putin’s aides say about monetary policy and less to central bankers. Here’s the key evidence. In comments made just nine days ago, the country’s central bank chief indicated she saw no chance of a rate cut any time soon after inflation soared to a five-year high. A week earlier, though, one of Putin’s most vocal economic aides urged the exact opposite, saying a reduction was needed to bolster the ailing economy. So when the Bank of Russia shocked traders and analysts alike by announcing it was lowering the benchmark rate from an 11-year high, the words spoken by that aide, Andrey Belousov, left many to speculate that the Kremlin is exerting more pressure on central bank policy makers. The rate cut — to 15 percent from […]

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ENLARGE Russian gas giant Gazprom has reported a sharp drop in third-quarter profit, hit by the slide in the ruble and a lack of deliveries to Ukraine. Photo: Reuters MOSCOW—Russian state-controlled gas group OAO Gazprom said net profit plunged 62% in the third quarter of 2014 compared with same period the previous year, hit by the slide in the ruble and a lack of deliveries to key customer Ukraine. Net profit fell to 105.7 billion rubles ($1.56 billion) from 276.1 billion rubles in the third quarter of 2013. Revenue dropped 6% to 1.13 trillion rubles, the company said on Thursday. Shares in Gazprom, which reports its earnings well after other listed Russian companies, were up 0.6% in early trading in Moscow after the results were released, broadly in line with the market. Write to James Marson at [email protected]

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ENLARGE Lower gas prices have made it harder for Gazprom to dictate terms to European consumers. Above, Chairman Alexei Miller in June 2014. Photo: European Pressphoto Agency The collapse of oil prices—added to the weight of Western financial sanctions—has hammered Russia’s economy. But Moscow is also suffering from the fall in prices of another important energy export: natural gas. Gas represented 14% of Russia’s export revenues in 2013, compared with 54% for crude oil and oil products. But its gas is more important to Europe and Ukraine. Gas is more than a commodity for Moscow: It has been a political tool that has helped it assert its influence in Central and Eastern Europe and beyond. Because of pipeline architecture, some European Union countries have had few alternatives to buying gas from Russia. But its grip over Europe’s gas markets is weakening. As natural-gas prices have fallen in the European […]

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