Category:

Russian economy falters

Oil-dependent economy in Vladimir Putin’s Russia in period of sharp contraction because of sanctions and low crude oil prices. UPI/Ma Ning/Pool MOSCOW, Dec. 2 (UPI) — Russian economic growth is expected to fall below 1 percent in part because of investment uncertainty and sanctions pressure, a minister said Tuesday. Deputy Economy Minister Alexei Vedev said he was revising the outlook for the economy next year, downgrading from an initial expectation of 1.2 percent growth. "We have revised this year’s gross domestic product forecast to a 0.6 percent growth against 0.5 percent growth in the previous forecast," he said. "Also, we considerably reconsidered the GDP forecast for next year — the current version is based on the assumption of a 0.8 percent fall." Kremlin officials have said Russian oil output might be curbed by market mechanisms resulting from the low price of crude oil, while Russian President Vladimir Putin said […]

Posted On : Published By : Tom Whipple
Category:

EU to Seek South Stream Pipeline Solution With Russia

A construction launch ceremony for the South Stream gas pipeline in Serbia last year. The… ENLARGE A construction launch ceremony for the South Stream gas pipeline in Serbia last year. The EU said Tuesday that a meeting on the South Stream gas pipeline would go ahead as planned “regardless of the announcement by Russia to stop the project.” European Pressphoto Agency BRUSSELS—The European Union said Tuesday it will continue to work with its member states on finding a deal with Russia to build a gas pipeline though southeastern Europe, despite an announcement by Russia’s president, Vladimir Putin , that the project has been abandoned . “The next meeting [on the South Stream pipeline] had been planned for the 9 December 2014 and it will take place regardless of the announcement by Russia to stop the project,” the EU’s vice president for energy, Maros Sefcovic, said. “Obviously this new development […]

Posted On : Published By : Tom Whipple
Category:

Russia Forecasts a Recession in 2015, Signaling a Toll From Sanctions and Oil Prices

MOSCOW — After months of insisting that Russia can weather sanctions and plunging oil prices, Moscow for the first time is acknowledging that the economy could fall into a recession next year. The Ministry of Economic Development, which publishes the government’s economic outlook, on Tuesday revised its forecast for 2015 to show a contraction of 0.8 percent, compared with a previous projection of 1.2 percent growth. The combination of sanctions and plummeting oil prices is catching up with Russia’s economy, wobbly in the best of times because of its heavy reliance on commodity exports. In the face of the weakness, the ruble has been in a free fall, driven by Russians’ fears of economic isolation and their eagerness to change rubles into dollars or euros to move wealth out of the country. The ruble opened at 52 to the dollar and slipped to around 53 in trading on Tuesday. […]

Posted On : Published By : Tom Whipple
Category:

After scuttling South Stream, Russia plans line to Turkey instead

12/02/2014 This article was updated Dec. 2. Russia has decided against the construction of the 930-km South Stream natural gas pipeline across the Black Sea from Russia to Bulgaria, citing delays on the part of the European Union in taking the steps necessary to move forward. Press reports have OAO Gazprom Chief Executive Alexei Miller as confirming the decision originally announced by Russian President Vladimir Putin. Miller and Mehmet Konuk, chairman of Botas Petroleum Pipeline Corp. , signed a memorandum of understanding Dec. 1 on instead building an offshore gas pipeline from the Russkaya compressor station (also South Stream’s starting point) under construction in the Krasnodar Territory across the Black Sea to Turkey. Putin and Turkish President Recep Erdogan witnessed the signing. Turkey in July had approved South Stream’s environmental impact assessment, including pipelay for the 63-billion cu m (bcm)/year project’s four parallel strings in its exclusive economic zone […]

Posted On : Published By : Tom Whipple
Category:

Oil, the Ruble and Putin Are All Headed for 63. A Russian Joke — for the Moment

Heard the one about Vladimir Putin , the oil price and the ruble’s value against the dollar? They will all hit 63 next year. That’s the joke doing the rounds of the Kremlin as the Russian government digs in to weather international sanctions over the conflict in Ukraine. According to at least five people close to Putin, pressure from the U.S. and Europe is galvanizing Russians to withstand a siege on their economy. The black humor is part of an image of defiance not seen since the Cold War . As the economy enters its first recession in more than five years, the ruble depreciates to records and money exits the country, Putin’s supporters are closing ranks and say he’s sure to run for another six-year term in 2018. “We are becoming poorer, our savings vanish, prices grow, however we see an opposite effect to the one that is […]

Posted On : Published By : Tom Whipple
Category:

Kiev Says Limited Truce With Pro-Russian Separatists Reached

KIEV, Ukraine—The Ukranian government said Monday that it had reached a truce with pro-Russian separatists in one of the hottest spots of the monthslong conflict in eastern Ukraine, potentially signaling progress in the implementation of frequently violated peace accords. The fighting around the airport of the eastern city of Donetsk—the only outpost of the government forces in the area—ceased as Ukrainian and Russian military officials negotiated a cease-fire in the area, according to the Ukrainian press-center for the military operation in the eastern regions. Rebels didn’t immediately commented on the announcement, adding to the uncertainty about this latest effort. Multiple previous attempts to agree on “quiet periods” on top of the existing peace accords have often quickly broken down. A representative of the self-proclaimed Donetsk People’s Republic’s hotline said he wasn’t authorized to speak on the matter, and other spokesmen couldn’t immediately be reached. Donetsk airport, a spot of […]

Posted On : Published By : Tom Whipple
Category:

Rouble suffers worst fall since 1998 crisis

The rouble nosedived on Monday, suffering its worst daily fall since Russia’s 1998 crisis amid renewed fears over the impact of tumbling oil prices on the country’s economy. The currency hit Rbs52.38 against the dollar in Moscow morning trading, down almost 6 per cent from its Friday close. This takes its decline since the beginning of the year close to 40 per cent. The plummeting currency raises the pressure on the central bank to resume market intervention, from which it had abstained since floating the rouble in early November. On November 10, the Bank of Russia abolished the band in which the rouble had so far traded and ended the daily interventions through which it had been propping up the exchange rate. But the central bank said it was reserving the right to intervene if it saw a risk to financial stability. Analysts said that while the bank’s move […]

Posted On : Published By : Tom Whipple
Category:

Russia to abandon South Stream pipeline, says Putin

Russia’s President Vladimir Putin (R) and Turkey’s President Tayyip Erdogan review a guard of honour during a welcoming ceremony at the Presidential Palace in Ankara, December 1, 2014. Putin arrived for talks expected to focus on trade and energy issues. REUTERS/Umit Bektas (TURKEY) President Vladimir Putin said on Monday that Russia would stop construction of the South Stream gas pipeline , shelving a strategically important project that Moscow was counting on to cement its influence in south-eastern Europe. Speaking after talks with President Recep Tayyip Erdogan, his Turkish counterpart, in Ankara, Mr Putin said Russia would abandon the project to bring Russian gas to Bulgaria under the Black Sea, bypassing Ukraine, unless the EU dropped its opposition. The European Commission has refused to give Gazprom the exemption it would need to operate the pipeline at full capacity, viewing it as a potential further tool for the Kremlin to exert […]

Posted On : Published By : Tom Whipple
Category:

In Diplomatic Defeat, Putin Diverts Pipeline to Turkey

MOSCOW — President Vladimir V. Putin said Monday that he would scrap Russia ’s South Stream gas pipeline, a grandiose project that was once intended to establish the country’s dominance in southeastern Europe but instead fell victim to Russia ’s increasingly toxic relationship with the West. It was a rare diplomatic defeat for Mr. Putin, who said Russia would redirect the pipeline to Turkey . He painted the failure to build the pipeline as a loss for Europe and blamed Brussels for its intransigence. The decision also seemed to be a rare victory for the European Union and the Obama administration, which have appeared largely impotent this year as Mr. Putin annexed Crimea and stirred rebellion in eastern Ukraine. Russia had long presented the $22 billion South Stream project as a sound business move. But Washington and Brussels had dismissed it as a thinly veiled attempt by the Kremlin […]

Posted On : Published By : Tom Whipple
Category:

Moody’s: Russian oil-tax change helps exporters

HOUSTON, Dec. 1 12/01/2014 A new adjustment to Russian oil and gas taxation will benefit oil companies that export most of their crude oil and high-grade oil products but hurt domestically focused producers, refiners, and petrochemical manufacturers, says Moody’s Investors Service . The change seeks to redistribute Russia’s tax burden between export and domestic sales by cutting nearly 50% of export duties on crude and oil products over 3 years while increasing the mineral extraction tax by factors of 1.7 for oil and 6.5 for gas condensate, Moody’s reports in a Dec. 1 comment. The law, which was signed Nov. 25 and starts taking effect Jan. 1, also increases the excise on high-grade fuels and imposes a 22% tax on Gazprom’s gas sales to Turkey through the Blue Stream pipeline . The tax burden on oil exporters will fall 2-3%, the credit analyst says. Rosneft , Lukoil , and […]

Posted On : Published By : Tom Whipple