Market info

Russian oil tax burden falls on new rules, weak ruble, PwC says


A stable ruble and new tax rules are likely to support Russian oil producers’ profitability even after a slump in the price of oil, the country’s main source of export revenue, according to PricewaterhouseCoopers. The fiscal burden declined in the first quarter, contrary to concerns Russian oil companies had expressed about rules introduced in January, Andrey Soldatenko, tax director for PwC in Moscow, said in an interview. “If key macroeconomic factors like oil prices and the ruble exchange rate remain relatively stable, the trend may continue beyond the first quarter,” Soldatenko said last month in Ufa, Russia. The ruble is likely to remain stable “given the latest efforts of the Bank of Russia,” he said.

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Oil billionaire makes $450 million bid on Russian solar ramp-up


Billionaire Viktor Vekselberg is out to prove that solar has a place in Russia, the world’s largest exporter of oil and gas. Hevel Solar, a venture between Vekselberg’s Renova and OAO Rusnano, plans 22.5 billion rubles ($450 million) of solar farms through 2018 and says diversifying power generation will benefit the country. “You don’t have to eat potatoes all the time,” Hevel Chief Executive Officer Igor Akhmerov said in an interview in Moscow. “You can have some salad as well.” At first glance, solar in Russia makes little sense. The country has surplus energy, and the sun barely crests the horizon in midwinter in Moscow. Yet it does shine along the nation’s southern border with Kazakhstan, where Hevel completed its second solar farm in the Orenburg region last week.

Oil & Gas

Russia gas fields key to crude output after sanctions hit Arctic


With Siberia’s aging oil fields slowly running dry, Russia is turning to a natural gas by-product to help maintain crude production and meet President Vladimir Putin’s target of 10 million barrels a day. As companies including OAO Gazprom, OAO Novatek and OAO Rosneft get new Siberian gas fields up and running, they’re also boosting output of condensate, a prized, ultra-light form of crude that’s a common component of underground gas reserves. Condensate is especially important now because it’s not covered by sanctions on Russia’s oil industry that have targeted Arctic drilling and shale projects.

Market info

Russia economy recovering as oil reliance eases, Dvorkovich says


Russia’s economy showed signs of recovery in the first and second quarters amid a declining dependence on oil, Russian Deputy Prime Minister Arkady Dvorkovich said. “Oil prices are not as important to the Russian economy as before,” Dvorkovich told Bloomberg TV Monday at the World Economic Forum on East Asia in Jakarta, adding that other factors such as the global environment and Russia’s own polices influence its economy. “As far as oil prices are concerned, we can live with different prices and still grow.” US-traded Russian stocks last week posted their longest streak of weekly gains in two years as higher oil prices and a stronger ruble boosted the outlook for companies that depend on domestic demand.

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Putin’s Mideast gains trump $27 billion loss from Iran agreement


As Russian President Vladimir Putin has shown in Crimea and eastern Ukraine, he’s willing to take an economic hit to expand his political influence. He’s taking the same approach with Iran. Lifting sanctions and allowing Iranian oil onto global markets would threaten to deepen the plunge in crude prices, curbing revenue from Russia’s biggest export. The cost: about $27 billion, based on estimates from the central bank in Moscow. “The strategic benefits are much more important for Russia,” said Nikolay Kozhanov, an expert at the Royal Institute of International Affairs in London and a nonresident fellow at the Carnegie Moscow Center. “Incorporating Iran into pro-Moscow organizations, Russia is hoping to secure its share in this market or divide zones of influence.”

Oil & Gas

Ukraine requests to triple gas import from Russia


The Russian Energy Minister Alexander Novak said Ukraine has requested one billion cubic metres of gas imports from Russia this month. It would treble the amount received in March and comes after Naftogaz and Russia’s Gazprom signed an interim deal for cheaper supplies of gas from Russia. The deal, which is expected to last three month, could help provide some time as both country’s debate energy costs.

Market info

Gazprom Neft strikes deal with PetroVietnam


Gazprom Neft has signed an agreement which will see the company purchase a 49% stake in PetroVietnam. A deal was signed with the state oil and gas group's chief executive Nguyen Xuan during a visit by Russian Prime Minister Dmitry Medvedev to the Vietnam.

Market info

Russia said to keep $50 oil outlook in budget after crude gains


Russian President Vladimir Putin’s government told its economic team to stick to a conservative budget for this year as crude oil prices began rising, according to two officials in Moscow. The government rejected new forecasts prepared by the Economy Ministry this week as too optimistic, the officials said, asking not to be identified as the discussion isn’t public. Earlier this week, the ministry raised its estimate for this year’s average crude price to $60 a barrel from $50, they said. Oil and natural gas contribute about half of Russia’s budget revenue.

Oil & Gas

Russia sets terms for Schlumberger’s Eurasia bid amid sanctions


Schlumberger Ltd. must satisfy a list of conditions, in part linked to sanctions, to gain approval for its $1.7 billion bid to buy Russia’s largest oil driller. Russia’s commission on foreign investment will meet the U.S. oil-services company to go through the conditions in the next 10 days, Igor Artyemev, head of Russia’s anti-monopoly service, said Thursday in Moscow. Schlumberger’s planned acquisition of Eurasia Drilling Co. comes as the US and Russia face off over Russia’s annexation of Crimea and its support for a separatist insurgency in Ukraine.

Oil & Gas

Russian given seven day deadline over North Sea assets


Energy Secretary Ed Davey has given Russian oligarch Mikhail Fridman seven days to explain why he should be allowed to retain ownership of newly acquired oil and gas fields in the North Sea, or face being forced to sell them. Upping the ante in a standoff that could deter other Russians from investing in Britain, Mr Davey wrote to Mr Fridman saying he was considering forcing him to sell North Sea assets just acquired from German utility RWE. RWE finalised the sale of oil and gas production unit RWE Dea to Mr Fridman's investment vehicle, LetterOne, earlier this week, ending months of uncertainty over whether the £3.7billion deal would go ahead.

Oil & Gas

Rosneft profits drop by 10%


Rosneft said its net profit for 2014 was $5.7billion – a 10% decrease year-on-year – caused by current economic conditions. Russia’s top oil producer said its earnings before EBITDA were up 11.6% from the year before to 1.06trillion rubles.

Market info

Lukoil profits fall by 39%


Lukoil said profit fell 39% last year as crude prices slumped and Russia’s second-largest oil producer reported asset impairments from Kazakhstan to West Africa. Net income dropped to $4.75 billion from $7.83 billion in 2013, the Moscow-based company said in an e-mailed statement on Tuesday. Impairments of $2.34 billion were partly countered by a $1.89 billion hedging gain from oil trading. The results come after OAO Gazprom Neft posted a 31% decline in profit on Monday as oil prices plunged and a weaker ruble led to foreign-exchange losses, while OAO Novatek last week said earnings dropped 66 percent. Lukoil has cut total spending, while maintaining development deadlines for Caspian and Siberian projects.

Oil & Gas

Russian closes deal to buy North Sea oil and gas assets


German utility RWE yesterday closed the sale of oil and gas production arm RWE Dea to Russian billionaire Mikhail Fridman, ending months of uncertainty over whether the £3.7billion deal would go ahead. But it causes embarrassment for the UK Government, which tried to block part of the transaction at the 11th hour, citing possible sanctions against the new owner. It remains to be seen how Westminster will respond to RWE Dea’s UK North Sea assets – now owned by new company L1 Energy – falling into Russian hands.

Oil & Gas

Russia could cut gas off this week


Russia could cut off supplies to neighbouring Ukraine by the end of the week if it does not get further payments from the country, a spokesman for the gas company Gazprom has said. Sergei Kupriyanov said in televised remarks that “if no new funds are received from Kiev, then naturally we cannot continue delivering gas to Ukraine”. He did not specify the sum. Following a bruising dispute over prices and debt that raised fears of supply disruptions in Europe, Russia and Ukraine signed a deal in October requiring Kiev to pay in advance for gas shipments. Mr Kupriyanov said that discussions with Ukraine’s gas company, Naftogaz, were ongoing, but gave no other details about the talks.

Oil & Gas

Sanctions don’t bar oil-service giants bidding in Russian Arctic


US and European suppliers to the oil industry are still able to seek work in Russia’s Arctic despite sanctions designed to limit their involvement because the rules don’t apply to foreign subsidiaries. Schlumberger Ltd., based in Houston and the world’s largest oil services company, and Baker Hughes Inc. have used units based outside the US to bid for business in Russia’s Arctic, according to a Russian government website. Offshore projects in the Arctic are among those targeted by US and European sanctions against Russia’s oil industry.

Oil & Gas

Russian stocks and ruble advance on oil amid Ukraine peace talks


Russian stocks gained for a fifth day and the ruble strengthened after oil’s biggest weekly advance in four years and as talks on a ceasefire in Ukraine continued. The Micex Index of stocks rose 2% to reach the highest level since April 2011 with food retailer Magnit leading the advance. The ruble jumped 2% against the dollar. Government bonds climbed after central bank governor Elvira Nabiullina said policy makers are unlikely to reverse last month’s surprise interest rate cut. Russian assets have been pummeled by falling oil prices and intensifying fighting in Ukraine. Today’s rebound follows a rally in the price of Brent and the prospect for a lasting agreement to end the fighting.

Market info

Russian trouble to hit oil major’s results


Oil giant BP is expected to reveal a plunge in full-year profits due to the collapse in oil prices, analysts have warned. BP, which is due to unveil its fourth quarter and full year results on 3 February, could see annual earnings slashed by 60% to £6.2billion on 2013, says BMO Capital.

Market info

Russia suffers new rouble decline


The fall in the Russian rouble has accelerated amid a new decline in the price of the country’s oil exports. The currency was down more than 4% in afternoon trading in Moscow, at around 66 roubles per dollar. The rouble hit a record low of 80 per dollar in mid-December before a slight recovery, but has been falling steadily since the start of the year. The sale of oil is Russia’s main revenue earner, so the months-long slump in energy markets has weighed on the country’s economic outlook and markets. The price of Brent crude has plunged from 115 dollars a barrel in June to around $47.

Market info

Gazprom to buy out partners in canceled South Stream Project


OAO Gazprom (OGZD), the world’s biggest natural-gas exporter, agreed to buy the 50% it doesn’t own in South Stream Transport BV from Italy’s Eni SpA (ENI), Electricite de France SA and the Wintershall unit of Germany’s BASF SE (BAS). No purchase price was disclosed in statements issued by EDF, BASF, Eni and Moscow-based Gazprom. Eni, owner of a 20% stake, and BASF and EDF, which each own 15% stakes, said they’re recovering their investments in the proposed $45 billion Black Sea pipeline that Russia scrapped this month.