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Moscow Halts Gas Supplies as Kiev Suspends Russian Gas Purchases

RT | July 1, 2015

Gazprom has confirmed the suspension of gas supplies to Ukraine from 10:00am MSK on July 1. Russia’s gas monopoly will not supply gas to Kiev without prepayment, no matter what price, said company CEO Aleksey Miller on Wednesday.

After trilateral Russia-EU-Ukraine gas talks in Vienna failed on Tuesday, Ukraine’s Naftogaz reported it would cease purchases of Russian gas starting from Wednesday as it didn’t agree on the price. The three parties gathered in Vienna to discuss the terms of the gas deal for the next three months as the previous ‘summer package’ expired.

The Ukrainian company stressed that Kiev would continue gas transit to Gazprom’s customers in Europe “in accordance with the existing transit contract”.

Russia offered Ukraine a discount of $40 per thousand cubic meters on Monday. The price of Russian gas with the discount was $247.18 per 1,000 cubic meters. The same price Ukraine bought gas in the second quarter.

However, Naftogaz refused to sign the deal, saying Kiev was dissatisfied with the price and the discount.

Ukraine’s wish to get more than a 40 percent discount is “groundless”, Russia’s Energy Minister Aleksandr Novak told Rossiya 24 TV channel on Wednesday.

The $100 discount Kiev is asking for, worked when the price neared $495 per 1,000 cubic meters, said Novak.

Ukraine’s decision to halt gas purchases from Russia is politicized, not justified by economic reasons, he added.

Last week, Russian President Vladimir Putin said Moscow could no longer provide generous gas discounts to Kiev due to low crude oil prices in the world.

On April 1, 2015 Russia and Ukraine signed a ‘summer package’, deal on gas supplies for the second quarter. The agreement replaced a similar ‘winter package’ signed at the end of October, 2014.

Russia switched Ukraine to prepayment terms last summer after the country’s ‘chronic’ failure to pay its massive debt. Naftogaz paid Gazprom $247.18 per 1,000 cubic meters of gas. The price included a $100 discount.

READ MORE:

Russia prices gas for Ukraine at $247, cuts discount

Russia can’t give another gas discount to Kiev; price should match Poland’s – Putin

July 1, 2015 Posted by | Economics | , , | Leave a comment

BP and Rosneft to make $700mn deal despite sanctions – FT

RT | June 15, 2015

Russian oil major Rosneft and BP are close to signing a $700 million deal for BP to acquire a 20 percent stake in the Taas-Yuriakh Siberian oilfield, reports the FT. The deal could be announced this week at the St. Petersburg International Economic Forum.

The introduction of EU sanctions against Russia hasn’t scared off the largest European companies, working in the fuel and energy sector, according to the Financial Times.

Besides BP, Italy’s Eni and Norway’s Statoil have already received governmental approval to continue working on joint projects with Rosneft. Shell continues to work with Gazprom Neft over the Salym project in the Siberian Khanty-Mansiysk area and is seeking Dutch government approval for other joint ventures.

The news comes as the G7 claimed they are ready to extend sanctions last week. The announcement was also made just days prior to the St. Petersburg International Economic Forum, dubbed the ‘Russian Davos’.

The heads of BP, Royal Dutch Shell and Total will visit the event which starts on Thursday. America’s Boston Consulting and Ernst & Young are also expected to attend, which could be a sign Washington and Brussels want dialogue with Moscow.

As EU sanctions are not so diehard as American, European companies with pre-existing contracts have a possibility to even expand their activities in Russia and don’t want to miss the opportunity, says James Henderson, senior fellow at the Oxford Institute for Energy Studies.

“European companies are finding ways and are certainly freer to do business than their US counterparts… US companies are going to be hugely disadvantaged as we go forward because EU sanctions are not retroactive and US ones are,” Henderson told the FT.

“We stay out of the politics… We have a lot of experience in Russia … our commitment is to remain,” BP CEO Bob Dudley told CNBC this month.

Statoil is planning to drill two wells with Rosneft at the onshore Siberian North Komsomolskoye field this summer, and two wells in the Okhotsk Sea on the edge of the Pacific in summer 2016.

Eni has not disclosed any plans, but the FT, referring to sources familiar with the situation, assume the Italians may continue work on a Black Sea license with Rosneft.

June 15, 2015 Posted by | Economics | , , , , | Leave a comment

Canada adds Russia’s Rosneft, Rostec CEO to sanctions list

RT | February 18, 2015

Canada has added Russia’s largest oil producer Rosneft, and the CEO of Rostec, to a sanctions blacklist along with 37 Ukrainians and 17 Russian and Ukrainian organizations. They are all covered by economic sanctions and travel bans.

It’s a coordinated move with the European Union and the United States, who have already imposed a number of sanctions on Russia, according to Canadian Prime Minister Stephen Harper.

“In coordination with our EU and US partners, Canada is once again intensifying its response to the situation by announcing further sanctions against Russian and Ukrainian individuals and entities,” Harper said in a statement on his official website on Tuesday.

Canada has been trying for months to resist the pressure on taking any further restrictive measures against Russia, despite the fact it had already sanctioned 80 Russian and Ukrainian officials last year.Last May, the country decided not to impose sanctions against Rosneft and Rostec because it didn’t want politics to hurt Canada’s biggest business projects.

Russia’s oil giant Rosneft owns about 30 percent of an ExxonMobil oil field in the Canadian province of Alberta. Rosneft purchased a stake in the Cardium basin deposit in 2012; the deal became Russia’s first Canadian presence and was expected to benefit Canada’s economy by accelerating resource development.

Russian state-owned industrial and defense firm Rostec, and Canadian plane and train maker Bombardier signed a $3.4 billion deal two years ago. The companies had decided to establish joint venture to produce Q400 aircraft, which Canada recognized as a “landmark opportunity for the Q400 NextGen aircraft program.” The venture intended to build 24 aircraft a year, with some 250 constructed by 2030. The deal was postponed last year due to the anti-Russian sanctions imposed then by the Canadian government.

Read more: EU adds more Russians, eastern Ukrainians to sanctions list after successful Minsk talks

February 18, 2015 Posted by | Economics | , , , | Leave a comment

Finance, energy & defense sectors: EU and US set to impose new Russia sanctions

RT | September 11, 2014

Barack Obama says he is joining the EU initiative to impose a new round of sanctions on Russia. Both Washington and Brussels say the sanctions will target finance, energy and defense sectors – yet can be revoked if the situation in Ukraine improves.

The US is to provide details of their sanctions on Friday.

“We will deepen and broaden sanctions in Russia’s financial, energy, and defense sectors. These measures will increase Russia’s political isolation as well as the economic costs to Russia, especially in areas of importance to President [Vladimir] Putin and those close to him,” US President Barack Obama said in a statement on Thursday.

The US says that Russia has sent heavily armed forces to Ukraine. Obama added that the US may withdraw sanctions if Russia fulfills obligations under the Minsk agreement.

“We are watching closely developments since the announcement of the ceasefire and agreement in Minsk, but we have yet to see conclusive evidence that Russia has ceased its efforts to destabilize Ukraine,” Obama said. “If Russia fully implements its commitments, these sanctions can be rolled back.”

While details officially remain unknown, a Reuters source has alleged that the US intends to sanction Russia’s largest bank, Sberbank, and tighten restrictions on other Russian banks.

Previously, access to the US capital market was restricted for five Russian banks – VTB, Gazprombank, Bank of Moscow, Russian Agricultural Bank and Vnesheconombank (VEB). The Aug. 1 sanctions restricted Sberbank’s activity in the EU.

EU sanctions to take immediate effect on Friday

As for the European Union, the bloc will list their new limitations in the official journal Friday, which will mean they will come into effect immediately. Brussels will add 24 individuals to the list which blocks travel to the EU and asset freezes. Russian leaders and businessmen, as well as politicians in Crimea and the Donbass, will be added to the blacklist.

According to the official document, the EU will halt services Russia needs to extract oil and gas in the Arctic, deep sea, and shale extraction projects.

Three of Russia’s major energy companies and the country’s three largest defense entities will be restricted from raising long-term debt on European capital markets, Van Rompuy said.

Five major Russian state-owned banks will also be banned from any long-term (over 30-day) loans from EU companies.

Major Russian defense companies will be barred from debt refinancing, and the EU will also ban the export of any technology considered military “dual-use” to nine Russian companies.

Meanwhile, an EU source told RIA-Novosti news agency that the fresh European Union sanctions won’t affect the Russian gas sector.

“The energy sector affected by these sanctions is limited to the oil sector,” the source said.

On July 16, the US blacklisted several defense sector companies include Almaz-Antey Corporation, the Kalashnikov Concern and Instrument Design Bureau, as well as companies such as Izhmash, Basalt, and Uralvagonzavod.

If the EU follows the US lead on hitting Russian companies that also supply the Russian military, the above mentioned will be blocked from debt financing.

The European Commission has agreed to amend or suspend the sanctions in accordance with progress in Ukraine. A ceasefire was agreed by the Ukrainian government and rebels in the East on September 5.

“Thus, if the situation on the ground can be trusted, the European Commission and the EU Foreign Service will request to amend, suspend, or cancel sanctions, either in part or in full,” Van Rompuy said, as quoted by ITAR-ITASS.

Media sources suggest Gazprom Neft, Transneft, and Rosneft will all fall under Friday’s sanctions.

Gazprom Neft is the oil subsidiary of Russian gas giant Gazprom.

Transneft is Russia’s state-owned oil pipeline company that exports all of Rosneft’s crude oil, and exports 56 percent of Russia’s total crude exports.

Rosneft, Russia’s largest oil producer was put on the US sanctions list on July 16 and later added to the EU list on July 29. In July, Russia’s largest independent natural gas producer, Novatek was also added to the blacklist which bans the export of hi-tech oil equipment needed in Arctic, deep sea, and shale extraction projects to Russia.

Russian respose to ‘de facto choice against peace’

Russia said it will respond to Western sanctions with equal strength, and last week Prime Minister Dmitry Medvedev said that closing Russian airspace to European airlines was an option being considered.

President Putin’s spokesman, Dmitry Peskov, said that new EU sanctions make no sense, as they are being introduced when Russia is making vigorous efforts to stop the bloodshed in southeastern Ukraine.

“The EU doesn’t see, or prefers not to see, the real state of events in [Ukraine’s] Donbass and doesn’t want to know about the efforts aimed at settling the conflict,” Peskov said.

“We regret the EU’s decision to impose new sanctions. We repeatedly expressed our disagreement and incomprehension about the sanctions that were implemented earlier, which we considered and will consider illegal,” he added.

Russia’s Foreign Ministry said Thursday that the EU was apparently very much against any peaceful resolution of the crisis in Ukraine.

“By taking this step, the European Union has de facto made its choice against a peaceful resolution of the inter-Ukrainian crisis,” the ministry said in a statement.

September 11, 2014 Posted by | Economics | , , , , , | 1 Comment

European businesses call for no more sanctions

RT | September 4, 2014

The Association of European Businesses has urged the governments of the European Union and Russia to protect foreign investors from any “further retaliatory measures.”

The Moscow-based lobby group represents the interests of more than 600 European businesses in Russia, and has written a letter to all 28 heads of state and governments of the EU, as well to the Russian and Ukrainian leadership stressing that among its members “are global companies with businesses in sectors which would be directly affected by these measures.”

The group has requested a meeting with European Commission President Jose Manuel Barroso in Kiev next week.

“The introduction of such measures could lead to a serious decline in production and jobs, affecting not only manufacturers, but also suppliers and retailers working in these sectors,” the letter, published Thursday, reads.

The lobby group says it’s politically neutral, but is interested in keeping business between the two functional.

“All this would harm not only the business of the companies concerned, but also fiscal revenues through the loss of tax and duty payments,” the letter said.

Sanctions are putting a brake on business activity in Europe which is plugged into the Russian economy. Trade between Russia and the EU is $440 billion and thousands of companies do regular day-to-day business in Russia.

The EU has imposed three rounds of sanctions against Russian individuals and business, most recently expanding the blacklist to include sanctions against key industries- energy, banking, and weapons.

Russia retaliated with an embargo on agriculture products from the EU, which could cost $6.6 billion per year in lost exports.

EU ministers will meet on Friday to discuss new sanctions against Russia for its perceived role in the Ukraine conflict.

September 5, 2014 Posted by | Economics | , , , , | Leave a comment

Rosneft to take 30 percent stake in Norwegian driller

RT | August 22, 2014

Russia’s biggest oil company Rosneft has agreed to purchase a stake in Norway’s North Atlantic Drilling (NADL) through an asset swap, which appears to show businesses remain undeterred by political sanctions.

Rosneft has agreed to take a 30 percent of North Atlantic in return for 150 onshore drilling assets in Russia, and some cash. The final terms of the deal, including the amount of investments in the Norwegian company, will be set after it passes due diligence, which is expected to be done by the end of the year, Rosneft said in a statement Friday.

Rune Magnus Lundetrae, Chief Financial Officer of Seadrill, which owns 70 percent of North Atlantic, told Bloomberg Rosneft would also buy 100 million new shares at $9.25 apiece.

The deal comes amidst sanctions tension between Russia and the West and shows that foreign businesses still want to cooperate with Russia, leaving politics aside.

“We’re very pleased with the execution of this important transaction and welcome Rosneft as an equity partner and to our board of directors,” Alf Ragnar Lovdal, CEO of North Atlantic, said in a statement.

“We’re not very worried” that the sanctions will affect any part of these deals, Lundetrae told Bloomberg by phone. “Rosneft is a very good and constructive partner for us.”

Friday’s deal marks the second step under a framework agreement signed in May. Last month, just days before the EU imposed tighter economic sanctions against Russia; the two companies completed the lease of offshore rigs. Under the July agreement, Rosneft and NADL will cooperate in shelf drilling, with the Norwegian company providing Rosneft with six sea drilling units till 2022 to conduct shelf drilling in harsh weather conditions.

ExxonMobil and Norway’s Statoil have also confirmed they would continue offshore Arctic drilling with Rosneft, despite politicians in the EU and the US seeking to make Russia change its policy over Ukraine by putting on economic pressure.

On Thursday, the Financial Times reported Vitol, the world’s largest independent oil trader, was shelving its $2 billion deal with Rosneft.

August 22, 2014 Posted by | Economics | , , | Leave a comment

Latvia urges Europe to stop ‘war of sanctions’ before it ruins world economies

RT | August 19, 2014

The “right steps” politicians in the West and Russia are now taking against each other are very similar to what was happening before World War I, Latvian MEP Andrejs Mamikinsh warned EC President Jose Manuel Barroso in a letter Tuesday.

It’s crucial to stop reciprocal sanctions before they throw people into poverty and ruin the economies altogether, the European Parliament member wrote.

“In 2014 exactly 100 years have passed since the beginning of World War I that killed millions of people and left Europe in ruins. On the eve of that war similar processes occurred when countries took “the right” steps against each other and eventually were not able to stop. It is doubtful that in the end of that war anyone remembered for what good intentions it had started,” Mamikinsh wrote in his letter.

These would be ordinary people, not politicians, who’ll be hit first and hardest by a so called “risky poker” played by politicians in the West and Russia, the Latvian MEP, added.

Latvia is expected to suffer the most from the tit for tat sanctions imposed by the West and Russia, Mamikinsh said.

Further escalation of a “sanctions war” would erode about 10 percent of Latvian GDP, which means thousands of people could be left out of work with shrinking living standards.

August 19, 2014 Posted by | Economics | , , , , | 1 Comment

Bulgaria halts South Stream gas pipeline project for second time

RT | August 18, 2014

All operations on Russia’s Gazprom-led project South Stream have been suspended, as they do not meet the requirements of the European Commission, Bulgaria’s Ministry of Economy and Energy said on its website.

“Minister of Economy and Energy Vasil Shtonov has ordered Bulgaria’s Energy Holding to halt any actions in regards of the project,” the ministry said. This specifically means entering into new contracts.

There has been mounting pressure from the EU to put the project on hold, and now the European Commission will be consulted each step of the way to make sure it complies with EU law.

European ‘anti-monopoly’ laws prohibits the same company to both own and operate the pipeline. However, Gazprom and Bulgaria had previously struck a bilateral agreement regarding that aspect of the project.

This is the second time Bulgaria has called for a suspension of the South Stream project. In early June, the country’s Prime Minister Plamen Oresharski ordered the initial halt.

Bulgaria is the first country traversed by the pipeline on land, after a section that runs beneath the Black Sea from Russia. The branch that begins in Bulgaria is planned to continue through Serbia, Hungary, Slovenia and Austria.

Other participating countries have confirmed their commitment to the South Stream’s construction.

Gazprom’s $45 billion South Stream project, slated to open in 2018 and deliver 64 billion cubic meters of natural gas to Europe, is a strategy by Russia meant to bypass politically unstable Ukraine as a transit country, and help ensure the reliability of gas supplies to Europe.

August 19, 2014 Posted by | Economics | , , , , | 1 Comment

Ukraine’s Parliament adopts law allowing sanctions against Russia

RT | August 14, 2014

Ukraine’s parliament adopted Thursday legislation allowing more than 20 sanctions to be applied against Russia, including a halt to energy transit through the country.

The new law on international sanctions was supported by 244 members of parliament, with 226 votes needed for a majority.

The adoption of the legislation doesn’t mean the special economic restrictions will be applied automatically; it just creates the legal basis for applying them.

The law provides the option to introduce more than 25 types of sanctions on other countries, foreign legal entities and individuals, which according to Kiev are involved in financing terrorism and support the separation of Crimea from Ukraine.

The sanction options include blocking and freezing assets, a ban on business activity in Ukraine, barring participation in privatizations, halting the use of licenses and all transit through its territory. Special economic measures also involve a ban on financial transactions, as well as a ban on entry and movement across the country.

The legislation says sanctions could be applied if, “the activity of a foreign state, a foreign legal entity or individual, other entities that create real and potential threats to national interests, national security, sovereignty and territorial integrity of Ukraine, its economic independence and/or violate the rights and freedoms of its citizen, the interests of society and the state, leading to the occupation of the territory, expropriation or restriction of property rights, property damage, creating obstacles to sustainable economic development or the fulfillment by Ukrainian citizens of their rights and freedoms.”

According to the law, sanctions must be approved by the National Security Council and are introduced by presidential decree. This applies to all of them, except those sanctions related to international treaties. Those decisions will be made by the country’s parliament, the Rada.

On Tuesday the parliament adopted the first reading of sanctions against Russia as members disagreed on a number of issues and needed further debate.

August 14, 2014 Posted by | Economics | , , , | 1 Comment

Who is hit hardest by Russia’s trade ban?

RT | August 8, 2014

Germany and Poland will lose the most trade with Russia, and neighboring Finland and Baltic states Lithuania and Latvia will lose a bigger proportion of their GDP. Norway will see fish sales to Russia disappear, and US damages would be very limited.

Russia has banned imports of fruit, vegetables, meat, fish and dairy products from the 28 countries of the EU, the US, Canada, Norway, and Australia for one year.

EU trade is heavily dependent on Russian food imports. Last year Russia bought $16 billion worth of food from the bloc, or about 10 percent of total exports, according to Eurostat.

In terms of losses, Germany, Poland and the Netherlands- the top three EU food suppliers to Russia in 2013 – will be hit hardest. Food for Russia makes up around 3.3 percent of total German exports.

French Agriculture Minister Stephane Le Foll said his government is already working together with Germany and Poland to reach a coordinated policy on the new Russian sanction regime.

Last year, Ireland exported €4.5 million worth of cheese to Russia, and not being able to do so this year is a big worry, Simon Coveney, the country’s agriculture minister, said.

Farmers across Europe could face big losses if they aren’t able to find alternative markets for their goods, especially fruit and vegetables.

Some are already demanding their governments provide compensation for lost revenue.

“If there isn’t a sufficient market, prices will go down, and we don’t know if we can cover the costs of production, because it is so expensive,” Jose Emilio Bofi, an orange farmer in Spain, told RT.

August 8, 2014 Posted by | Economics, Video | , , , , , , , , , , , , | 2 Comments

How sanctions will affect the West’s $35bn invested in Russian oil

RT | July 30, 2014

The US and EU have banned the export to Russia of hi-tech oil equipment needed in Arctic, deep sea, and shale extraction projects. This will leave Western companies, which have an estimated $35 billion invested in Russian oil, in a bind.

New stage three sanctions won’t immediately slash Russian oil production, which at 10.55 million barrels per day is the world’s largest, but could derail future foreign investment in Russia’s oil industry. Russia is home to the largest combined oil and gas reserves in the world.

The US and the 28 EU countries hope to influence Moscow’s foreign policy in eastern Ukraine.

New restrictions “will make it more difficult for Russia to develop its oil resources over the long term,” President Barack Obama said as he unveiled the new tough regime.

The sanctions will hit the heart of Russia’s economy- oil, but not touch the gas sector. Together, the two make up more than 50 percent of revenues for the Russian state. Russia has an estimated $7.5 trillion in oil and gas resources, many of which require Western oil technology to extract.

Obama said he wanted the sanctions “to bite.”

The sanctions won’t only bite at Russia, but Western oil companies like BP and ExxonMobil, and equipment suppliers may fall victim to the oil technology ban.

Introduction of EU sanctions against the Russian energy sector will drive up European energy prices, the Russian Foreign Ministry warned on Wednesday.

BP

BP is one of the most exposed to the Russian market, after the UK-based company bought a 19.75 percent stake in the state oil company Rosneft, a company already on Obama’s sanctions list.

Previously, BP insisted it was “business as usual” with Russia, but the sectoral sanctions could derail the company’s strategy in Russia, where it sources nearly one-third of its global oil production.

“Any future erosion of our relationship with Rosneft, or the impact of further economic sanctions, could adversely impact our business and strategic objectives in Russia, the level of our income, production and reserves, our investment in Rosneft and our reputation,” BP said on Wednesday, before the heavy-handed sanctions were announced.

The same day, the British energy company reported a big bump in second quarter profits, which rose 25.3 percent to $3.23 billion.

In June, Rosneft agreed to supply BP with up to 12 million tons of oil and oil products over 5 years. The deal assumes a prepayment of at least $1.5 billion.

ExxonMobil

ExxonMobil has been present in the Russian market for over 20 years. In partnership with Rosneft, the Texas-based oil major has many projects in Russia underway- including the $500 billion exploration of the Bazhenov oil field in Western Siberia, and a $15 billion liquefied natural gas terminal in Russia’s Far East.

If forced to quit Russia, Exxon could pull out as much as $1 billion in funds intended to go to offshore Arctic and fracking projects in Siberia, Bloomberg News reported.

After the sanctions were announced, Rosneft Chairman Alexander Nekipelov said ExxonMobil may suspend cooperation with Rosneft, but only in an extreme situation.

“As far as we know, Exxon does not have plans to stop cooperation with Rosneft, and we hope the situation will not go that far,” Nekipelov said.

“We are assessing the impact of the sanctions,” Alan Jeffers, an Exxon spokesman, told Bloomberg News via email.

Nekipelov said the American company doesn’t want to give up its joint projects with Rosneft- it has already invested too much.

In May, the two companies agreed on four Arctic exploration projects. Additionally, ExxonMobil and Rosneft will operate a new joint offshore drilling rig in the Kara Sea, where the two companies have rights to over 11.3 million acres of Russia’s Pacific Ocean waters. The company also has a substantial stake in the Far East Sakhalin oil project, which covers 85,000 acres.

Exxon CEO Rex Tillerson hasn’t made any official comment on the new sanctions.

Total

France’ oil major and largest company, Total, has huge operations in Russia, its fourth largest market. The morning after the sanctions, the group’s stock dipped 2.66 percent in Paris. On Wednesday, the company reported an estimated second quarter net profit drop of 12 percent

Total owns about 18 percent of Novatek, Russia’s second largest gas producer, which was affected in the previous round of US sanctions.

“We stopped buying shares in Novatek the day of the airplane accident after considering all the uncertainty that it created,” the French company’s CEO said in the earnings call on Wednesday.

Novatek leads the $27 billion Yamal LNG project with Total, along with China’s CNPC. The South-Tambeyskoye field has an estimated 492 billion cubic meters of proven gas reserves.

Russia is “a great oil and gas country and we’ll have to wait and see the nature of these new sanctions first,” the CEO said on Wednesday, adding it was a “crucial” market.

The project is highly dependent on US technology and will experience serious difficulties if sanctions are imposed.

Total expects its hydrocarbon production in Russia to rise to 400,000 barrels a day from 207,000 barrels in 2013.

Halliburton and Schlumberger

Blocking the exports of specific goods and technology to Russia is going to squeeze the world’s largest oil service and equipment companies- both US-based- which depend on Russia for sales.

Halliburton relies on Russia for 4-5 percent of global sales, and Schlumberger generates 5-6 percent, according to an estimate by RBC Capital Markets.

Both oilfield service groups, which provide Russia with horizontal drilling and hydraulic fracturing technology, could lose sales because of sanctions, but they won’t be driven out all together.

The stock price has dropped for both companies after the sanctions were announced- Halliburton is down 1.95 percent, and Schlumberger dipped 0.70 percent.

Dick Cheney, former US Vice President, and avid Russia critic, served as Halliburton’s CEO through 2000.

READ MORE: EU and US impose new round of sanctions on Russia over Ukraine

July 30, 2014 Posted by | Economics | , , , , , | Leave a comment

Hague court had no authority in Yukos case, ruling politicized – Moscow

RT | July 28, 2014

The Hague’s arbitration court was not legally empowered to view the case of Yukos Oil Company v. Russia, and the court’s “one-sided” ruling disregards previous Strasbourg court decisions on the issue, the Russian Finance Ministry said in a statement.

Viewing the case, filed by shareholders of former Russian oil giant Yukos against the Russian government, was not in the jurisdiction of the Permanent Court of Arbitration (PCA) in the Hague, as Russia has not ratified the Energy Charter Treaty, the ministry said on Monday.

The statement, following the court’s sensational Monday ruling that ordered Russia to pay $50 billion in damages, also provided a detailed list of issues, which, according to the ministry, make the decision “opportunistic” and “politically biased.”

First of all, The Hague court ignored the previous decisions of the Strasbourg-based European Court of Human Rights (ECHR), which in September 2011 ruled that the Russian authorities had carried out “legitimate” and not politically motivated actions against Yukos “to counter the company’s tax evasion,” the ministry noted. The ruling contradicted Yukos shareholders’ claims that the company’s assets were purposefully expropriated by Moscow.

The Russian Finance Ministry meanwhile blasted the arbitration ruling as based on “one-sided investigation with one-sided application of evidence.”

The Hague court in effect reviewed the decisions of Russian courts on Yukos “as if the arbitration court was an additional authority for appealing the court orders,” the ministry said. It has made “theoretical speculations not supported by evidence” over the motivation of the Russian authorities’ actions in the case of Yukos, it added.

The international body failed to note that the people who controlled Yukos, including the oil tycoon Mikhail Khodorkovsky released from jail in December, were apparently aware of financial machinations aimed at a mass-scale tax evasion in favor of the company, the ministry stressed. The tax evasion scheme, which involved the creation of numerous bogus companies, was not properly considered in the court.

The arbitration court went as far as to judge “what Russian tax legislation should be like” as opposed to what it required in reality, the ministry said. The court refused to pass several controversial issues on taxes for review by Russian, UK or Cyprus competent authorities despite relying on the Energy Charter Treaty that outlines a need for such reviews, it added.

While in effect saying The Hague court decision was not legally binding for Moscow, the ministry added that “the Russian Federation will challenge the arbitration court’s decisions in the courts of the Netherlands.”

According to the ministry, “the arbitration court failed to approach the adjudication with common sense, which is required from the judges in such situations,” which resulted in an nonobjective and biased decision.

“Such an approach undermines the authority of the Arbitration court and the Energy Charter Treaty, which are being applied in increasingly politicized manner and, as in this case, have become the objects of abuse on behalf of domestic investors trying to evade taxes,” the ministry said.

ECHR is expected to announce a fresh decision on Yukos’ multi-billion dollar claim against Russia on Thursday, as the defunct company’s shareholders have filed a separate application with the Strasbourg court, Reuters reported.

Background: ‘Mega-arbitration’: Court orders Russia to pay $50bn in Yukos case

July 28, 2014 Posted by | Economics | , , , , , , , , | Leave a comment