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Russian Oil Seen Heading East Not West in Crimea Spat

The Crimean crisis is poised to reshape the politics of oil by accelerating Russia ’s drive to send more barrels to China , leaving Europe with pricier imports and boosting U.S. dependence on fuel from the Middle East. China already has agreed to buy more than $350 billion of Russian crude in coming years from the government of President Vladimir Putin . The ties are likely to deepen as the U.S. and Europe levy sanctions against Russia as punishment for the invasion of Ukraine. Such shifts will be hard to overcome. Europe, which gets about 30 percent of its natural gas from Russia, has few viable immediate alternatives. The U.S., even after the shale boom, must import 40 percent of its crude oil , 10.6 million barrels a day that leaves the country vulnerable to global markets. The alternatives to Russia also carry significant financial, environmental and geological challenges. […]

Posted On : Published By : Tom Whipple
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Funds cut Russian holdings after sanctions

Days after Washington imposed sanctions against an additional 20 Russian individuals and a top-20 Russian bank , investors are still reeling from the news and beginning to wonder what the long-term consequences of the heightened geopolitical conflict will be for Russia Inc. Unlike the US’s first group of sanction targets, who were Russian officials with little to no business holdings, the second group includes businessmen who own shares in some of the biggest Russian stocks, many of which are traded in London and New York and sold to US and UK institutional investors. While the sanctions are only meant to target assets which the individuals have control over, many funds are now pondering whether they can justify holding on to stocks, which count such individuals as their minority shareholders. A portfolio manager at a UK asset management group says his fund is “staying clear of any company involved with […]

Posted On : Published By : Tom Whipple
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Kiev Blamed for Blackout in Capital of Crimea

A power failure plunged much of the Crimean capital, Simferopol, into darkness on Monday, the second partial blackout in two days, as the Ukrainian government in Kiev appeared to retaliate against Russia’s occupation and annexation of the peninsula by sharply cutting electricity supplied from the mainland. Homes and businesses went dark across a large swath of the city, underscoring the vulnerability of the geographically isolated peninsula, which is dependent on mainland Ukraine for many vital services, including electricity and much of its water supply. Officials here and in Moscow had anticipated such a move by the Ukrainian government. In recent days, regional officials said they had acquired 900 generators to provide electricity to vital buildings, including hospitals. It was not immediately clear if those generators were in use. The state-run Ukrainian national energy company, Ukrenergo, issued a statement attributing the blackouts in Crimea to emergency repairs […]

Posted On : Published By : Tom Whipple
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Russia Is Slowly Turning The NatGas Tap Off To Europe

While Naftogaz (Ukraine’s gas pipeline operator) states that all gas transportation from Russia to Europe is running normally, Bloomberg reports that Russian natgas exports to Europe are declining. Shipments are down over 4% from the prior week and also lower to Ukraine . This ‘adjustment’ follows increased sanctions by the West as Medvedev’s notable statement this morning that Ukraine owes Russia $16bn. NatGas output is tumbling The good news: Gazprom today said natgas transit to Europe via Ukraine, supplies for Ukrainian consumption   But Pay Up… Ukraine owes Russia $11b after collapse of 2010 deal, Russian Prime Minsiter Dmitry Medvedev says to President Vladimir Putin at Security Council meeting, according to transcript on Kremlin website.   Medvedev adds $3b Ukraine bonds bought in Dec., ~$2b debt to Gazprom for natgas supplies   NOTE: In 2010, Russia agreed to sell natgas at discount in exchange for extending lease to Black […]

Posted On : Published By : Tom Whipple
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U.S. could start energy war with Russia

Debate has raged over whether the United States can fight Vladimir Putin on the Russian president’s most favourable ground: energy politics. It can, and it should, particularly because there’s an obvious path forward that coincides with American — indeed, world — economic interests. That path is lifting irrational restrictions on exports and making it easier to build natural gas export terminals. For years, Putin has used his nation’s wealth of oil and natural gas as a cudgel to bully his neighbours. At present, the European Union’s large imports of Russian natural gas discourage a forceful Western response to Russia’s aggressive actions in Ukraine. Meanwhile, the United States is tapping massive reserves of unconventional natural gas. […]

Posted On : Published By : Tom Whipple
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Russia Steps Up Economic Pressure on Kiev

KIEV, Ukraine — Russia and Russian state companies have increased the economic pressure on the new pro-Western government in Kiev over the past week, closing the border to most trucks, shutting a Ukrainian factory in Russia and yet again raising the price of natural gas . The actions revive an array of Russian economic foreign policy tools used for years and made possible by Russia’s robust domestic consumer market and the country’s energy exports. About a quarter of all Ukraine ’s exports go to Russia, and factories here have benefited from a growing demand in the defense sector and rising consumer purchasing power. Russia’s manipulation of gas prices under various pretexts has for a decade proved to be a particular headache for pro-Western Ukrainian governments. Russia is now asking close to $500 for 1,000 cubic meters of gas, the standard unit for gas trade in Europe, which is a […]

Posted On : Published By : Tom Whipple
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What does U.S. know about Putin’s oil wealth?

The most startling part of Washington’s sanctions on Russian businessmen loyal to President Vladimir Putin may be a single sentence that contains an explosive allegation: that Putin himself profits from the world’s No. 4 oil trading company, Gunvor. Among the people the United States sanctioned on Thursday as part of its drive to put pressure on Russia for its intervention in Ukraine was businessman Gennady Timchenko, a long-time acquaintance of Putin and, until this week, co-owner of Geneva-based Gunvor, which trades nearly 3 percent of the world’s oil. In announcing the sanctions, the Treasury Department went a step further, adding a single sentence that hits squarely at one of the most controversial topics that Putin has faced in 13 years as the Kremlin ruler and head of the government. "Timchenko activities in the energy sector have been directly linked to Putin. Putin has investments in […]

Posted On : Published By : Tom Whipple
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What does U.S. know about Putin's oil wealth?

The most startling part of Washington’s sanctions on Russian businessmen loyal to President Vladimir Putin may be a single sentence that contains an explosive allegation: that Putin himself profits from the world’s No. 4 oil trading company, Gunvor. Among the people the United States sanctioned on Thursday as part of its drive to put pressure on Russia for its intervention in Ukraine was businessman Gennady Timchenko, a long-time acquaintance of Putin and, until this week, co-owner of Geneva-based Gunvor, which trades nearly 3 percent of the world’s oil. In announcing the sanctions, the Treasury Department went a step further, adding a single sentence that hits squarely at one of the most controversial topics that Putin has faced in 13 years as the Kremlin ruler and head of the government. "Timchenko activities in the energy sector have been directly linked to Putin. Putin has investments in […]

Posted On : Published By : Tom Whipple
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UK urges EU to cut energy reliance on Russia

The British government is pushing EU leaders to back a new energy security plan to wean Europe off Russian energy over the next 25 years by ramping up imports from new sources, including shale gas from the US and natural gas from Iraq. The proposal, distributed to European capitals ahead of a summit in Brussels beginning on Thursday, also calls for speeding up development of a pipeline route through Azerbaijan and Turkey that would bring gas to Europe from the Caspian Sea, avoiding Russian territory. “ Crises in Ukraine in 2006, 2009 and more recently have repeatedly illustrated the need to ensure Europe is not over-reliant on a limited number of sources of energy or vulnerable to external pressure,” reads the paper, referring to the current stand-off with Russia as well as previous crises where state-owned Gazprom cut off supplies to Ukrainian pipelines over pricing and unpaid debts. […]

Posted On : Published By : Tom Whipple
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After annexing Crimea, Russians move to carve up the spoils

While the people of Simferopol celebrated Russia’s annexation of Crimea , 10 minutes’ drive from the city centre on Balaklava Street another Russian invasion was under way – this time of a private business. A group of heavily-armed suspected Russian soldiers in ski masks on Tuesday stormed the Bogdan Avto-Salon, a Hyundai and Subaru dealership in a quiet suburb of the city, taking control of its offices and salesrooms. The men, who later stood guard along the salon’s perimeter fence, refused to identify themselves to reporters and waved them away with guns. Critics of Moscow have been warning for weeks now that Russia’s attacks on Ukrainian military facilities in Crimea were just the start, and that commercial business on the peninsula would be the next target. Events on Balaklava Street suggests they might be right. “It’s clear there’s going to be a new carve-up of property here now that […]

Posted On : Published By : Tom Whipple