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Switzerland mirrors EU sanctions against Russia

RT | August 28, 2014

Switzerland has issued an expanded sanctions list against Russia which includes 5 banks, several companies and 11 Russian citizens. The move comes as the country doesn’t want to be used to bypass European sanctions on Moscow.

On Wednesday the Swiss Federal Council decided to widen its policy against Russia and to take all the measures required “to ensure that the most recent sanctions imposed by the European Union cannot be circumvented via Swiss territory,” the State Secretariat for Economic Affairs said in a statement.

The cabinet didn’t name the five Russian banks, but in July, the European Union sharply reduced the abilities of Sberbank, VTB, Gazprombank, Vnesheconombank and the Russian Agricultural Bank.

The affected financial institutions will have limited access to the capital markets of Switzerland. Moreover, Russian banks will require approval to issue long-term financial instruments in Switzerland, the statement said.

Bern also said it had added a further 11 individuals and a number of firms to the list without specifying them.

In addition, Switzerland has banned the import of materials for military purposes, the export of equipment for the oil industry, and limited the opportunity for investment in Crimea and Sevastopol.

The statement also said that the cabinet won’t try to promote any agricultural exports to Russia. Following the Russian food embargo, several European agricultural producers tried to re-export their goods through Switzerland, which were not included in the Russia ban.

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

Russia will do whatever necessary to protect its legitimate interests – Lavrov

RT | August 25, 2014

Russia doesn’t want to escalate tit-for-tat sanctions with the West, but is ready to do whatever is necessary to protect its legitimate interests, including those of national security in all its dimensions, Russia’s FM told The Daily Telegraph.

Peace in Ukraine can only be attained through a broad national dialogue that includes all regions and its terms cannot simply be dictated by a “government of the winners,” Russian FM Sergey Lavrov said in an interview with The Daily Telegraph.

“The point is for Kiev to stop war games and to abandon the illusion that the deep crisis in Ukraine can be resolved by winning the war against your own people,” Lavrov said, reiterating that with support from US and EU, Kiev continues to ignore its numerous commitments to a “government of national unity.”

“Unfortunately, the logic of “the winner takes it all” remains the thrust of Kiev’s actions resulting in thousands of victims among civilians, hundreds of thousands of refugees and displaced persons, as well as almost totally destroyed social infrastructure in many cities and towns in Eastern Ukraine.”

A house in Donetsk destroyed by shelling. (RIA Novosti / Maks Vetrov)

A house in Donetsk destroyed by shelling. (RIA Novosti / Maks Vetrov)

Speaking further on the humanitarian catastrophe, Lavrov once again said it is “crucial to ensure immediate supply of humanitarian aid to the people of south-eastern Ukraine.”

The first convoy of Russian aid was ready to move as early as 17 August, but was delayed “primarily due to procrastination tactics employed by Kiev authorities,” he added, urging the Ukrainian government “to deliver on its promises and to facilitate safe and unhindered passage of future humanitarian assistance.”

Lavrov also spoke about the “meaningless tit-for-tat vicious circle” started by unilateral sanctions imposed on Russia, and called them “counterproductive” and “contradicting” the norms and principles of the international law.

“It is absolutely unacceptable to talk to Russia – and to anyone, for that matter – in the language of ultimatums and coercive measures,” the minister said, emphasizing that Russia’s response was balanced.

“It is not at all our choice, but there should be no doubt that we will do whatever is necessary to protect our legitimate interests, including the interests of national security in all its dimensions.”

Lavrov also touched on the topic of the dragging Malaysian MH17 airliner tragedy, reminding that a number of simple questions which could shed some light on the incident still remain unanswered.

“Unfortunately, from the very beginning we have been witnessing attempts to conceal evidence and to hinder the implementation” of the resolution adopted by the UN Security Council, the minister said. “Russia is the only country which officially presented to the international community the data related to the incident as received through our space monitoring capacity.”

“We hope to get answers to these and other questions both from the states which took the leading role in the international investigation and from those who made unsubstantiated public statements,” Lavrov said. “We must not allow the investigation of MH17 crash to be manipulated into oblivion like already happened to investigations of many Ukrainian tragedies, including the sniper assault against civilians in Kiev in February, massacres in Odessa and Mariupol in May and others.”

In the meantime, Lavrov once again rejected groundless speculation about Russian troops crossing into Ukrainian territory as obviously “part of an information war.”

“Unfortunately, the mass media continue to spread rumours, distorted information and even outright lies. Recently there were claims by Ukraine that its artillery destroyed an armoured column that had allegedly crossed from Russia into Ukraine,” he said. “No evidence, however, was presented, and even the US State Department could not confirm the incident.”

READ MORE: Malaysian Boeing disaster – Russia’s questions to Ukraine

August 25, 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

Russia launches China UnionPay credit card

RT | August 15, 2014

Forget Visa and MasterCard. After the two American credit system payment companies froze accounts without notice in March, Russia has been looking for an alternative in China UnionPay.

China UnionPay plans to have 2 million cards in Russia in the next three years.

Instead of seeing the small Visa and MasterCard logo on credits cards, ATMs, and retail outlets, Russians will start to see the three words “China. Union. Pay.”

China UnionPay first emerged in 2002 on the domestic Chinese market as an alternative to Visa and MasterCard, but quickly expanded internationally, and now is already number one in terms of quantity of cards in the world.

Russia’s biggest banks – VTB- Gazprombank, Promsvyazbank, Alfa Bank, MTS, and Rosbank- are already making technical preparations, running tests on Union Bank cards.

“VTB24 already serves China UnionPay cards in its ATM network and now the bank is in negotiations with this payment system to start acquiring retail merchants,” VTB24’s press office said in a statement.

Most banks just began their relationship with China by offering clients corresponding services- none of the bankers imagined that they would be issuing Chinese credit cards.

In March, both Visa and MasterCard blocked the accounts of cardholders at BankRossiya and SMF Bank, both which were sanctioned by the US over Russia’s involvement in Crimea.

Russian financiers who used to keep their assets in dollars and euros were shocked by the event, and moved their capital back to Russia out of fear one day all their assets would be blocked by politicians in Washington DC.

“Visa and MasterCard have 100 percent trust, but right now, there is no trust in the system, and many, even our clients, have shifted their transactions from American dollar and Euro to Yuan. They are eager to receive this card- we already have a big list of people waiting to get this card instead of MasterCard and Visa,” Denis Fonov, Deputy Chairman at LightBank, a small Moscow-based bank, told RT.

LightBank was working with UnionPay long before it knew the cards would be coming to the Russian market – and ordered 10,000 cards pre-emptively as a side service for clients.

As a result of the freeze, Visa and MasterCard will now have to pay a security deposit to Russia’s Central Bank, which is estimated to be billions for each company. Similarly, once UnionPay begins operating in Russia, it will also put down a security deposit with Russia’s Central Bank, about $3-4 billion, Fonov said.

$5.3 trillion in payments

There are already 20,000 cards in circulation in Russia, and a second order of 100,000 cards is planned for September. In Russia many banks accept UnionPay cards, but not merchants, that’s the next step.

By the beginning of 2014, the payment system had already issued 4.2 billion cards, mostly in China.

In terms of total world trade turnover, China UnionPay is the leader in debt cards, with over $5.3 trillion in payments, or about 47 percent of the market share, whereas Visa has 40.6 percent, and MasterCard only 12.2 percent, according to the Nilson Report.

In overall transactions, Visa is still the leader with $4.6 trillion, and China UnionPay comes in second with $2.5 trillion in transactions in the first half of last year.

UnionPay already successfully operates in Australia and Canada, with their deposits tied to both the local currency and the yuan. In total, UnionPay operates in 142 countries.

China’s UnionPay will be a temporary solution for Russia to detach from the West while it prepares to launch its own payment system, which officially isn’t slated to begin operating for another 16 months, and according to sources in the industry, it could even be 2-3 years out.

August 15, 2014 Posted by | Economics | , , , , , , , | Leave a 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

‘Ukraine committing economic suicide by thinking to stop gas transit’

RT | August 11, 2014

The Bulgarian government is under enormous pressure from the US to cancel the South Stream project, and so Bulgaria is the place to watch now, Daniel McAdams, executive director of the Ron Paul Institute for Peace and Prosperity think tank, told RT.

On August 8, Ukrainian Prime Minister Yatsenyuk announced that Kiev had prepared a list of 172 Russian citizens and 65 companies, predominantly Russian, to put under sanctions for “sponsoring terrorism, supporting the annexation of Crimea, and violating the territorial integrity of Ukraine.” Proposed sanctions include asset freezes, bans on certain enterprises, bans on privatizing state property, refusing to issue licenses, and a complete or partial ban on gas transit and air flights through its territory. Ukraine’s parliament will vote on the final measures on August 12.

RT: Kiev is expected to vote on the sanctions on August 12. Do you think they’ll go through?

Daniel McAdams: I think given the bellicose nature of Prime Minister Yatsenuk and the reckless manner in which he is governing I would certainly expect them to. What Ukraine is doing is committing economic suicide, and the US itself demanding that the EU applies its own sanctions is demanding that the Europeans commit economic suicide. So it makes no sens,e but I suspect it would probably go through in a short term. Remember that Ukraine is spending 6 million dollars a day on its war against the people in the east of that country. This money is borrowed money, the money it expects to make up for not allowing transfer of gas. They are also expecting the IMF, i.e. the American taxpayers, to pony up.

RT: Who do you think will be hardest hit, should Ukraine impose these sanctions?

DM: I find it ironic that the most bellicose of nations, and I’m thinking particularly of Poland and its Foreign Minister Radosław Sikorski… he is the one who is taking the most pleasure in sticking it to Russia, the average Pole is going to have an awfully bitter winter this year, thanks to Sikorski. Poland has around 90 percent of its gas from Russia, so they will be cut off. The Baltic States are also heavily dependent, they are also particularly bellicose against Russia, so they are cutting their own noses to spite their faces.

RT: Ukraine has already lost Russia’s gas. Is the threat to prevent Europe from getting supplies as well, an act of desperation or a carefully planned move?

DM: You have seen Ukraine escalating the situation continuously from the beginning of this government in Kiev and there has been no one to tell them to put the brakes on. However, what are you seeing now in West European media? I think the panic has started to set in. When Russia first announced sanctions on the food items, there was a panic. The Europeans said: “This is not fair, this is playing politics” just after the day they followed the US demand to apply sanctions. The publisher of the huge German economic journal, Handelsblatt, with a very powerful column, yesterday criticized the German government for its sanctions. You saw on Monday an article in the BBC highlighting all of the companies: Scottish fish exporters, Irish cheese makers who are going to take enormous economic hits in these tit-for-tat sanctions. Energy is not different, the only person that will do it well is ironically the US vice-president ‘s son, Joe Biden’s son, who you know is on the board of one of the largest Ukrainian energy companies, who are selling their line to the Ukrainians to make up for all of this by fracking and other alternative sources, which is just a joke.

RT: Do you think this move could speed up the construction of the currently-frozen South Stream?

DM: On one hand, it’s in its interest [Bulgaria] without question to continue with the South Stream and to have as good relations as it can because it gets almost all of its energy from Russia. However, I can imagine there is enormous pressure from the US. One can only imagine the pressure to cancel the South Stream project. So Bulgaria is the place to watch now.

August 11, 2014 Posted by | Economics | , , , , , | Leave a comment

Ron Paul: US ‘hiding truth’ on downed Malaysian Flight MH17

By Robert Bridge | RT | August 10, 2014

Former Congressman Ron Paul said the US knows ‘more than it is telling’ about the Malaysian aircraft that crashed in eastern Ukraine last month, killing 298 people on board and seriously damaging US-Russian relations in the process.

In an effort to inject some balance of opinion, not to mention pure sanity, into the ongoing debate over what happened to Malaysian Flight MH17, Ron Paul is convinced the US government is withholding information on the catastrophe.

“The US government has grown strangely quiet on the accusation that it was Russia or her allies that brought down the Malaysian airliner with a Buk anti-aircraft missile,” Paul said on his news website on Thursday.

Paul’s comments are in sharp contrast to the echo chamber of one-sided opinion inside Western mainstream media, which has almost unanimously blamed anti-Kiev militia for bringing down the commercial airline. Incredibly, in many cases Washington had nothing to show as evidence to incriminate Russian rebels aside from references to social media.

“We’ve seen that there were heavy weapons moved from Russia to Ukraine, that they have moved into the hands of separatist leaders,” said White House spokesman Josh Earnest. “And according to social media reports, those weapons include the SA-11 [Buk missile] system.”

In another instance, State Department spokeswoman Marie Harf told reporters “the Russians intend to deliver heavier and more powerful rocket launchers to the separatist forces in Ukraine, and have evidence that Russia is firing artillery from within Russia to attack Ukrainian military positions.” When veteran AP reporter Matthew Lee asked for proof, he was to be disappointed.

“I can’t get into the sources and methods behind it,” Harf responded. “I can’t tell you what the information is based on.” Lee said the allegations made by the State Department on Ukraine have fallen far short of “definitive proof.”

Just days after US intelligence officials admitted they had no conclusive evidence to prove Russia was behind the downing of the airliner, Kiev published satellite images as ‘proof’ it didn’t deploy anti-aircraft batteries around the MH17 crash site. However, these images have altered time-stamps and are from the days after the MH17 tragedy, the Russian Defense Ministry revealed, fully discrediting the Ukrainian claims.

In yet another yet-to-be explained event, Russian military detected a Ukrainian SU-25 fighter jet approaching the MH17 Boeing on the day of the catastrophe. No acceptable explanation has ever been given by Kiev as to why this fighter aircraft was so close to the doomed passenger jet moments before it was brought down.

“[We] would like to get an explanation as to why the military jet was flying along a civil aviation corridor at almost the same time and at the same level as a passenger plane,” Russian Lieutenant-General Andrey Kartopolov demanded days after the crash.

Paul has slammed the United States government for its failure to provide a single grain of evidence to solve the mystery of the Malaysian airliner despite its arsenal of surveillance technologies at its disposal.

“It’s hard to believe that the US, with all of its spy satellites available for monitoring everything in Ukraine, that precise proof of who did what and when is not available,” the two-time presidential candidate said.

“Too bad we can’t count on our government to just tell us the truth and show us the evidence,” Paul added. “I’m convinced that it knows a lot more than it’s telling us.”

Although no sufficient evidence has been presented to prove that the anti-Kiev militia was responsible for the downing of the international flight, such an inconvenient oversight has not stopped the United States and Europe from slapping economic sanctions and travel bans against Russia.

Moscow hit back, saying it would place a ban on agricultural imports from the United States and the European Union. Russia’s tit-for-tat ban will certainly be felt, as food and agricultural imports from the US amounted to $1.3 billion last year, according to the US Department of Agriculture. In 2013, meanwhile, the EU’s agricultural exports to Russia totaled 11.8 billion euros ($15.8 billion).

After the crash, Ron Paul was one of a few voices calling for calm as US officials were pointing fingers without a shred of evidence to support their claims. Paul has not been afraid to say the painfully obvious things the US media, for any number of reasons, cannot find the courage to articulate.

“They will not report that the crisis in Ukraine started late last year, when EU and US-supported protesters plotted the overthrow of the elected Ukrainian president, Viktor Yanukovych,” Paul said. “Without US-sponsored ‘regime change,’ it is unlikely that hundreds would have been killed in the unrest that followed. Nor would the Malaysian Airlines crash have happened.”

Paul also found it outrageous that Western media, parroting the government line, has reported that the Malaysian flight must have been downed by “Russian-backed separatists,” because the BUK missile that reportedly brought down the aircraft was Russian made.

“They will not report that the Ukrainian government also uses the exact same Russian-made weapons,” he emphasized.

August 10, 2014 Posted by | Deception, Mainstream Media, Warmongering | , , , , | 4 Comments

ExxonMobil, Rosneft start joint Arctic drilling exempt from sanctions

RT | August 9, 2014

US oil giant ExxonMobil and Russia’s Rosneft will continue joint exploitation of the Russian Arctic despite Western sanctions, the American company said as the two giants launched exploration drilling in the Kara Sea.

“Our cooperation is a long-term one. We see great benefits here and are ready to continue working here with your agreement,” Glenn Waller, ExxonMobil’s lead manager in Russia, told President Vladimir Putin during a videoconference call.

The Russian leader hailed the exploration project as an example of mutually beneficial cooperation that strengthens global energy security.

Rosneft head Igor Sechin said the launch of the Universitetskaya-1 well drill is one of the most important events for the company this year.

“We hope that this work will discover a new oil reserve here in the Kara Sea. The development of the Arctic shelf would have a big and positive effect for the Russian economy,” he said.

Optimistic company forecasts put oil reserves in the Kara Sea as high as 13 billion tons, more than in the Gulf of Mexico, or the whole of Saudi Arabia.

The drilling is being done by the West Alpha oilrig, built by Norway’s North Atlantic Drilling. It has a deadweight of 30,700 tons and can drill wells in the shelf up to 7 km deep.

The rig was equipped with an advanced iceberg warning system, which tracks potentially dangerous icebergs, giving enough time for either support ships to tow them away, or for the rig itself to seal off the well and evacuate to safety.

Rosneft is one of the Russian companies targeted by Western nations, imposed to punish Moscow for its stance over the Ukrainian crisis. Russia’s retaliation so far has been to ban the import of foodstuffs from the countries that approved anti-Russian sanctions.

August 9, 2014 Posted by | Economics, Malthusian Ideology, Phony Scarcity, Video | , , , , , , | 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

Switzerland will not blindly follow EU sanctions against Russia – Swiss economy minister

RT | August 4, 2014

For Switzerland to copy and paste EU sanctions against Moscow is unwise, and would jeopardize the country’s role as a mediator, said Swiss Economy Minister Johann Schneider-Ammann.

The Swiss government has no plans to follow in the EU’s footsteps and impose sanctions against Russia, Schneider-Ammann said in an interview with the Swiss newspaper Schweiz am Sonntag.

Schneider-Ammann said that choosing a side would undermine the country’s neutrality in the matter.

“This role [as mediator] will be weakened, if we duplicate EU sanctions,” Schneider-Ammann said, adding that Switzerland holds the chairmanship of the Organization for Security and Co-operation in Europe (OSCE), which is vitally important for peace talks between Russia and Ukraine.

Another main concern for Switzerland, home to many Russian nationals, is any economic blowback from sanctions.

The economy minister warned that shutting out Russia could “result in a domino effect” which will “have a negative impact on our economy.”

Unlike its European neighbors who are dependent on Russia for natural gas, Switzerland is financially tied to Russia. Switzerland is home to an estimated $15.2 billion in Russian assets as of 2012, and oil exchanges in Geneva account for 75 percent of Russian crude exports, Reuters reports. Many Russians live in the country.

In March, after Crimea reunited with Russia and the US unveiled its first round of sanctions, Switzerland said it would take measures if needed.

Switzerland has however frozen assets of ousted Ukrainian President Viktor Yanukovich and other former Kiev government officials.

The minister plans to visit Moscow in October to discuss Swiss-Russian bilateral economic cooperation. Schneider-Ammann is a member of Switzerland’s Free Democratic Party, and was first elected to the Swiss National Council in 1999.

August 4, 2014 Posted by | Economics | , , , , | 1 Comment

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

9 EU countries ready to block economic sanctions against Russia

RT | July 15, 2014

France, Germany, and Italy are among EU members who don’t want to follow the US lead and impose trade sanctions on Russia. US sanctions are seen as a push to promote its own multibillion free-trade pact with Europe.

“France, Germany, Luxembourg, Austria, Bulgaria, Greece, Cyprus, Slovenia, and EU President Italy see no reason in the current environment for the introduction of sectorial trade and economic sanctions against Russia and at the summit, will block the measure,” a diplomatic source told ITAR-TASS.

In order for a new wave of sanctions to pass, all 28 EU members must unanimously vote in favor. EU ministers plan to discuss new sanctions against Russia at their summit in Brussels on Wednesday, July 16. Even if only one country vetoed, sanctions would not be imposed. With heavyweights like France and Germany opposed to more sanctions the measure will likely again be stalled, the source said.

According to the source, the US sees slapping Russia with sanctions as a way to promote its own trade agenda with Europe, a side rarely explored in mainstream media. The Transatlantic Trade and Investment Partnership (TTIP) between the US and Europe would create the world’s largest free trade zone, but some worry it could balloon into an “economic NATO” or could end up putting corporate interests above national.

“Last year the EU and the US started difficult negotiations on a free trade agreement, which would force the EU into serious concessions, in particular, agricultural quality standards and regulation on genetically modified products. In this circumstance, restrictions against Russia will force EU countries to expand trade with the US,” the source said, citing shale gas as an example.

On June 20, Czech President Milos Zeman came out against sanctioning Russia, saying there is “no reason” to further “isolate” the country.

America was successful in getting Europe to toe its sanctions agenda at the height of the Ukraine crisis, but now Russia has removed its troops from the Ukraine border and promised peace in the region, Europe isn’t interested in further sanctions.

The EU initially followed the US cue when it imposed sanctions on Russia after the reunification of Crimea in March, but these measures were limited to politicians and businessmen. The EU unleashed a second round which expanded the list to over 72 individuals, who cannot enter the EU or access any assets there.

Boomerang effect

Russian officials maintain that sanctions are counterproductive, and will end up hurting the West more than they will Russia.

Another reason EU countries are wary of slapping Russia with economic sanctions is the possible spillover effect. Unlike the US, European countries rely heavily on Russia as a trading partner, especially for natural gas. The World Bank estimates that if sanctions escalate European gas prices could jump 50 percent.

Europe clearly has much more to lose by punishing its neighbor, with annual trade in goods and services worth $330 billion. American trade with Russia, by contrast is just a tenth of that at $38.1 billion.

Deals with UK-based BP, US-based Weatherford International, and ExxonMobil, continue to show that most countries continue to do business with Russia, politics aside.

Italy was the first country to speak out against Russian sanctions. Rosneft, the world’s largest listed oil company, recently acquired a 26.2 percent stake in Italian tire company Pirelli. Igor Sechin, boss of Rosneft and on the US sanctions list, joined the board of the Milan-based company. Three other Rosneft representatives, as well as the CEO of Russia’s second largest bank, VTB, sit on the board.

July 15, 2014 Posted by | Economics | , , , , | Leave a comment

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