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Russia

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.

Markets

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.

Markets

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.

Markets

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.

Markets

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.

Oil & Gas

BP shares rise on back of Rosneft talks

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.

Markets

Gazprom cuts spending by more than $200million

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.

Markets

Rosneft feels sanctions’ chill in failed oil-unit deal

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.

Markets

Russia bank bailout amid falling oil prices

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.

Oil & Gas

Rosneft repays $7 billion and sees no need to buy dollars

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.

Oil & Gas

Putin says Russian economy should be ready for $40-a-barrel oil

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.

Oil & Gas

Second stage of Siberian gas field begins

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.

Markets

Russia currency drop continues as oil price slides

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.

Other News

Oil, the ruble and Putin are all headed for 63

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.

Oil & Gas

Russia warns of recession amidst falling oil exports and sanctions

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.