The Russian economy (catch all)

[OUTLAW 09]

Firn---this one is especially for you---check out the last sentence and tell me if you think they slipped and told the truth or is it a bad translation on their part?


Taken from Interfax today:
April 02, 2014 15:32 Russia should settle in rubles with all trade partners - Kostin

MOSCOW. April 2 (Interfax) - It would make sense for Russia to switch to settlements in rubles with all trade partners, Andrei Kostin, the head of VTB (MOEX: VTBR), said at the Congress of the Association of Russian Banks.

"It's an old topic, the broader transition to settlements in rubles with our trading partners. We need to start at once. Not just with settlements in the framework of the customs Union and CIS, but also in relations with trade partners like China and Western Europe," Kostin said.

He said the transition to ruble payments ought to be one of the key tasks for the banking system, Central Bank and government.

The euro zone and dollar zone currently account for half of Russia's export and less than half of the country's import, "and the United States as such just 2% of export and 5% of our import," Kostin said. He said exporters, particularly state ones, above all ought to make the switch.

"Aggregate exports by Gazprom (MOEX: GAZP), Rosneft (MOEX: ROSN) and Rosoboronexport are almost $230 billion a year, which is 44% of Russia's entire export, Kostin said.

He said the departure from settlements in dollars was long overdue and that the topic should be re-addressed now. "For a month now we have been hearing calls from senior figures in the West to isolate Russia after virtually destroying our banking sector, using the modern financial 'nuclear arsenal' of dollar settlements," Kostin said.

Firn---so a slip of the tongue or the truth?

Doubt seriously most EU or US companies would settle in Rubles and if they did the exchange rates would be a determent to Russia.

[OUTLAW 09]

Firn---another one for you---this time I was happy to see a reference to the Ukrainian shale gas coming online as it has been reported that the Ukraine sits atop a massive dome which when producing will lower greatly their dependence on Gazprom---there were rumors that the Russian via Gazprom wanted to into that particular dome in order to get cheaper gas as their own pricing is actually on the high side when compare to world prices currently.


Soon, Buyers Will Use Gas as a Weapon
By Yulia Latynina
Apr. 01 2014 20:03
Last edited 20:04

Taken from The Moscow Times today:

Three weeks ago, just as Russia was in the early stages of annexing Crimea, I wrote in this space that the most strategic move the West could take against President Vladimir Putin would be to help lower world oil and gas prices. On Wednesday, U.S. President Barack Obama announced that Washington was prepared to supply gas to Europe in place of Russia.

After Russia unleashed its "gas war" against Ukraine in 2006, Europe realized that the Kremlin was an unreliable supplier and that it used gas as a weapon, not a commodity. Therefore, even before the advent of the shale gas revolution, Europe began making every effort to reduce its dependency on Russian gas. As a result, from 2006 to 2013, the share of Russian gas in Europe's overall consumption fell from 39 to 25 percent.

Actually, Russia's most hawkish patriots suggested that Moscow stop supplying Europe gas and sell it to China instead.

To get an idea of whether Russia could really make good on such a threat, consider the following: In 2013, China extracted only 200 million cubic meters of shale gas, but it expects to extract 6.5 billion cubic meters in 2015 and up to 60 billion to 100 billion cubic meters by 2020.

What's more, Beijing built a 6.4 thousand-#kilometer gas pipeline from Turkmenistan to China at a cost of $6.5 billion, or about $1 million per kilometer. By comparison, Gazprom built the Bovanenkovo-Ukhta pipeline at a cost of $18 million per kilometer, or 18 times higher than China's.

Shale gas production in the U.S. now costs from $100 to $130 per thousand cubic meters. Chinese extraction costs probably will not exceed that figure, even though its gas generally is located much deeper underground. Although the exact figure is a commercial secret, China probably pays Turkmenistan about $100 to $140 per thousand cubic meters of gas. In other words, between Turkmenistan and its own shale deposits, China has plenty of inexpensive gas to cover its needs.

Throughout recent years, Gazprom never reached an agreement on price to begin selling gas to China — and that was even before Beijing began exploiting its own shale gas and buying from Turkmenistan.

In other words, China is unlikely to agree to buy Gazprom gas for more than $100 to $120 per thousand cubic meters — that is, for less than it costs on the Russian domestic market.

The cruel irony is that ever since 2005, when officials signed the contracts for the Nord Stream project, the Kremlin's entire policy toward Europe has been based on gas — that is, on gas as a weapon.

Gas really is a weapon, but only in the hands of a highly sophisticated buyer, not in the hands of a "petrocrat" who exports oil and gas and imports everything else. In the end, the buyer can always find a new supplier for what has become a highly politicized commodity. But the seller — at least in the case of Russia — cannot even provide gas to its friend and ally, Venezuela.

I suspect that the Kremlin is trying to divide Ukraine primarily for fear that Ukrainian shale gas, which is scheduled to start production late this year, will weaken Russia's perceived gas weapon not only on the Ukrainian market, but even on the European market.

It seems that Putin's actions have actually helped hasten the very scenario that he had been scheming so hard to prevent.

[Stan]

Taken from Interfax today:
April 02, 2014 15:32 Russia should settle in rubles with all trade partners - Kostin

Outlaw,
Pretty simple, they have been frozen out of USD exchanges, but not Rubles.

Russia-Idaho-trading in limbo

Russia was a promising destination for the trade mission. The U.S. exported nearly $11.8 billion in goods and services to the country in 2013. That made Russia only the 28th-leading destination for American exports, but the total was up 20 percent from 2012, when Russia joined the World Trade Organization.

Idaho exports to Russia remained flat at $20.5 million in 2013.

Russia appeared particularly ripe for the nine agriculture companies, including Heyburn's Double L, which makes potato harvesting and handling equipment.

More at the link

The intent and purpose of links, quotes, etc. is to back your posts and give credit to the authors that wrote this Sierra. It also provides readers with a place to go.

I'm from 5th, where are you from ?

[Stan]

Hmmm, far too much speculation for me at this point...

A Bad Start

Since mid-2011, industrial production growth in Russia has been weakening. In January, IP fell a further -0.2% year over year. The leading drivers of the softness in IP have been electricity and gas, two favorites of Russian equity investors.