A Lada Trouble
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IN THE NEWS
COLUMN: Energy Outlook
In typical fashion, Rosneft has managed to bend the rules by pushing for tax breaks on the Samotlor field that take effect a full year ahead of other competing firms’ older oilfields through MinEnergo. It’s significant for a few reasons: Rosneft wanted the tax break as part of its privatization package and likely rammed this through as the CEFC deal came together to please its Chinese partners. Samotlor accounts for over 10% of the company’s production and budget losses are estimated at 60-80 billion rubles from Samotlor alone, though revenues would go up starting in 2020.
As such, MinFin looks to be losing out on setting rational policies, in part, because of the increasing distortion effect China has on Russia’s energy sector: Rosneft is now looking to increase exports to China from 10 million to 18 million tons through Kazakhstan and Rosneft is seeking to buy assets from Sinopec in Argentina to improve the relationship between Russia and China’s state-owned firms. Igor Sechin has gained considerable policy power by taking command of Russia’s oil relationship with China.
After Saudi King Salman’s visit to Moscow last Wednesday, Gazprom has signed a MoU with Saudi Aramco on cooperation for natural gas projects and Lukoil’s trading arm Litasco reached a deal to trade Saudi crudes in the Mediterranean. Gazprom has begun showing signs that the aborted Shtokman field project off the coast of Murmansk is back in its development plans and Saudi Aramco would be a fantastic partner to help break down the effects of sanctions. Total remains involved but is limited in its ability to circumvent them.
Lukoil would be able to maintain an active presence on Mediterranean markets while selling off its assets and pivoting to follow through on its most recent offshore development agreement with Iran. Iran is everything for the company’s international portfolio and a huge bet for CEO Vagit Alekperov since it gives him a key policy imperative in Moscow to try and use as leverage for negotiations on domestic policies like the oilfield taxbreaks. Its initial investment proposals for the onshore Abteymour and Mansouri oilfields in Iran are currently under review by the National Iranian Oil Company.
Otkritie capital hole reaches $3.38 billion
According to the Russian government's Fedresurs database, Otkritie Bank's capital hole currently stands at 157.9 billion rubles ($3.38 billion). On top of that, Trust Bank, which Otkritie had been cleaning up in the run-up to its own failure, faces a deficit of 157.9 billion rubles ($2.72 billion). Over September, Otkritie's capital shrank by some 347 billion rubles. This was due to the creation of additional reserves as well as the downward revaluation of the bank's bond portfolio and financial assistance to subsidiaries, according to manager Aleksandr Dmitriev. The development means that the bank's shareholders are likely to forfeit their remaining 25% stake, which was threatened in the case that the bank faces a capital deficit.
Vladimir Putin's All-Russian People's Front (ONF) is bringing its weight to bear against corruption perceptions. The group published what it calls the 'extravagance index', measuring automobile purchases by state corporations and alleging that wasteful spending on fancy cars continues unchecked. (Photo: Aleksandr Vainshtein / Kommersant)
Ivanovo governor out in 10th firing
Ivanovo Oblast governor Pavel Konkov has become the tenth governor to 'resign' in two weeks as Russia's gubernatorial shakeup continues. Vladimir Putin has named deputy economy minister Stanislav Voskresenskiy acting head. Konkov's resignation follows several days of rumors to the effect, with a source in Ivanovo Oblast reporting a full-scale office cleaning effort in process. Konkov was included in a list of governors likely to be dismissed by Putin compiled by Minchenko Consulting.
Turkey places new limitations on Russian food imports
Just when it was thought the Russian-Turkish tomato war was drawing to a close, a new chapter in the ongoing saga has begun. Russian traders report that Turkey will select only several companies that will be allowed to supply Russian foods following the limited relaxation of Russia of measures limiting tomato imports: nine Turkish firms will be selected to deliver the fruits. Turkey's new limitations primarily concern grains, and particularly wheat, for which Turkey is Russia's second largest importer. Moreover, Turkey is requiring the mandatory certification of grain shipments from Russia at the Turkish trade representative - a step that will draw out the export process, though it is unclear by how long. According to Aleksandr Vasilyev at the Russian Academy of Science's Eastern Studies Institute, Ankara's measure is a direct response to Russian actions.
Chart: Where the Grain Goes
OPINION AND ANALYSIS
Andrei Kolesnikov writes on state efforts to formulate a single narrative of Russia's history. The problem, however, is that this unified collective memory is not acceptable to all Russians, and has as a result stoked social divisions. [ENG]
Andrey Pertsev examines the ongoing rumors of a presidential run by TV anchor and opposition figure Ksenia Sobchak. The rumors, he argues, demonstrate the style of Putin's administration and that of Navalny's team. [ENG]
Joshua Yaffa pens (yet another) fantastic piece on the history of his Moscow apartment building, known for its popularity with the Soviet elite back in the day and expats as of more recently. It also has a darker reputation: the building with the most arrests per capita during Stalin's purges. [ENG]
Eliot Borenstein issues a warning on the excesses of 'Russiagate,' noting that Russia is not responsible for every social ill in the United State, and that Putin does not personally decide everything that happens in Russia. "Just because they’re out to get you," he quips, "doesn’t mean you’re not paranoid." [ENG]
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