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.
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.
ExxonMobil said production has begun at the Sakhalin-1 project’s Arkutun-Dagi field. The company said it is the last of the three fields to be developed, with peak daily production from the field expected to reach 90,000 barrels.
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.
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.
A leak on a major Russian oil pipeline has caused a spill in the Black Sea. Officials said stormy weather had hampered efforts to assess the incident.
Shares in oil giant BP have increased by 0.5% on the back of reports its set to close a deal with Rosneft to develop fields in eastern Siberia. The potential agreement has been reported by Moscow-based newspaper Kommersant, which says that Rosneft has signed a "strategic partnership" with BP to explore oil fields.
Russian energy company Gazprom said it was cutting expenses by more than $200million in an effort to streamline operations going forward. The board of directors said it was cutting expenses by $238.7 million and expecting around $1.65 billion in foreign loans. The Russian Central Bank last week raised its key interest rate by 6.5% to 17% in an effort to arrest the decline of the nation's currency.
Morgan Stanley’s failure to complete the sale of its oil storage, trading and transport unit shows the chilling effect US sanctions are having on Russian companies including OAO Rosneft. The US bank and Rosneft, the Russian state-owned oil giant, said Monday that their deal, for an undisclosed amount, had expired after the companies failed to win regulatory approval. Morgan Stanley had warned in October that the agreement might not be completed.
Russia has bailed out a mid-sized bank to save it from bankruptcy - a clear sign that the slide in the value of the rouble in the wake of falling oil prices is straining the banking system. The Central Bank said it will give Trust Bank 30 billion roubles (£350 million) that will allow it to continue operating as normal. It will also place Trust Bank under its own supervision until it finds an investor. Major Russian banks said they had no interest in acquiring Trust, a top 30 Russian bank with about £3.2 billion in assets.
OAO Rosneft (ROSN) repaid $7 billion in debt and said it is generating enough dollars to meet the obligations taken on to buy TNK-BP last year and become the world’s largest traded oil producer. The state-led company, hit by sanctions on Russia from the US and European Union limiting access to capital markets, said it has settled $24 billion this year in line with credit agreements. Rosneft has sufficient foreign currency to cover debt, Chief Executive Officer Igor Sechin said in a statement.
The Russian economy must adapt to the reality of oil prices that could fall as low as $40 a barrel, President Vladimir Putin said as he faces the worst financial crisis since coming to power in 2000. “I don’t know how quickly it will happen if prices stay at today’s level, or if they will drop lower than $60, $40,” Putin said today at his annual press conference in Moscow. “The economy will structure itself accordingly, however much is necessary.” The US and Saudi Arabia, which with Russia are the world’s three biggest crude producers, may be colluding to push down the price of oil, Putin said.
The SeverEnergia joint venture involving Russian company Novatek and state-run Gazprom Neft has launched the second stage of the Urengoyskoye field. It lies within the Samburgskiy area and includes the second train of the gas condensate de-ethanization unit.
The ruble has continued to slide even after Russia’s Central Bank sought to ease the selling pressure on the currency following the drop in oil prices by raising interest rates again. The Central Bank raised its key interest rate by a percentage point to 10.5%, citing an increasing rise in consumer prices and “significant inflation risks”. The bank said inflation is expected to hit 10% for 2014 and rise further in the first quarter of 2015.
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 US 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.
The Russian government has acknowledged that the country will fall into recession next year, battered by the combination of Western sanctions and a plunge in the price of its oil exports. The news caused the stock market to drop and pushed the ruble to a fresh record low against the dollar. The economic development ministry today revised its GDP forecast for 2015 from growth of 1.2% to a drop of 0.8%. Russian households are expected to take hit, with disposable income seen declining by 2.8% against the previously expected 0.4% growth.
Oil and gas contractor Saipem said it was not given formal notice the South Stream Offshore Pipeline contract would be scrapped. Russia said the 40 billion euro pipeline link to Europe was to be dropped due to tension between the European Union and Moscow over the crisis in Ukraine.
President Vladimir Putin said Russia scrapped a proposed $45 billion Black Sea pipeline to carry gas to Europe, the latest sign economic ties with the European Union are breaking down as the Ukraine crisis persists. Shelving the South Stream project ensures pipelines through Ukraine will remain vital supply links to Europe for years to come. The route under the Black Sea would have offered Russia’s OAO Gazprom a more direct path to feed the continent’s gas needs, a plan the EU objected to because it would reduce Ukraine’s leverage against its neighbor.
Russian President Vladimir Putin has said he believes peace in Ukraine is possible but that neither side is fully upholding a peace deal struck in September. In an interview with German television, Mr Putin said he is convinced it is possible to end the deadlock in east Ukraine, where pro-Russian rebels have been battling Kiev’s troops in a conflict that has claimed at least 3,500 lives since March. But he also said that neither the rebels nor Ukrainian troops had fully withdrawn from key locations in the region to create a buffer zone, a key part of a truce deal agreed to in September.
The chief executive and deputy of Russia’s Vnukovo airport have both resigned following the death of Total boss Christophe de Margerie. In a statement the airport said it had accepted the resignations of Andrei Dyakov and his deputy Sergei Solnstev.
Gas talks between Russia, Ukraine and the European Union will be held in Brussels later this month. The Russian Ministry of Energy made the announcement after a prolonged period of US and European sanctions were imposed on the country.
Russian investigators are seeking 190billion rubles ($4.75billion) from arrested businessman Vladimir Evtushenkov’s AFK Sistema and an affiliated unit for “illegal” gains relating to oil producer OAO Bashneft.
A major contract has been awarded to Philippines fabricator Atlantic Gulf and Pacific Company (AG&P) to build process modules for one of the world's largest LNG projects in Russia. The company will carry out work on the Yamal liquefied natural gas(LNG) project and is based in the estuary of the Ob River which is ice-bound nine months of the year.
Russian oil output rose to near a post-Soviet record last month, a sign the biggest source of revenue for President Vladimir Putin’s government has yet to be eroded by US and European sanctions.
Tensions over claims to the Arctic Circle's energy resources have risen after Russia sent a naval convoy to reopen a military base in support of Vladimir Putin's claims to the area.