Is Putin Getting Russia's Economy All Wrong?

[ceo_energemsier + 1,818]

41 minutes ago, 0R0 said:

Any idea how much crude has been rejected so far? It will be a week this weekend, should give us a fair idea of how effective the Saudi "deny revenue" campaign is working. 

I know of atleast 5 tankers of URALS that didnt get a home just in the  last few days.

 

https://ca.reuters.com/article/businessNews/idCAKBN20Z2LH

 

3/12/2020

 

LONDON (Bloomberg) --Saudi Arabia is unleashing a wave of crude toward Europe, traditionally the backyard for Russian oil sales, pledging to supply regional refineries with as much as triple their usual intake from the kingdom.

The Saudi shipments, coupled with unprecedented discounts, are turning the European oil market into the most bitterly fought corner of an increasingly acrimonious oil price battle between Riyadh and Moscow. Saudi Arabia is offering its flagship Arab Light crude into Rotterdam for roughly $25 a barrel, a massive discount to the price of Russia’s Urals.

European refiners including Royal Dutch Shell Plc, BP Plc, Total SA, OMV AG, Repsol SA and Cepsa SA have all received crude allocations from state-owned Saudi Aramco significantly above their normal levels, according to people familiar with their operations. The range of extra supplies was between 25% and 200%, depending of the company, the same people said.

The Saudi discounts are so big that Arab Light will “push out” Urals and other crude streams “from regional refiners’ diet” unless their relative price also falls, Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. said in a note to clients.

The increase in volumes, known in the industry as nominations, was confirmed by Aramco to the European oil companies on Wednesday, the same people said, asking not to be named discussing private information. One of Europe’s major refiners got double its normal allocation, a person with knowledge of the matter said.

All the companies either declined to comment or didn’t immediately respond to a request for comment.

Saudi Aramco announced on Tuesday that it was lifting production to 12.3 million barrels a day for April, just days after enticing refiners to buy more with record cuts to its official selling prices -- the discounts or premiums at which the kingdom sells relative to regional benchmarks.

The supply hike -- more than 25% higher than last month’s production -- put Aramco above its maximum sustainable capacity, indicating that the kingdom is even tapping its strategic inventories to dump as much crude on the market as quickly as possible.

Aramco hasn’t disclosed the regional split of the output increase, but the volumes European refiners have been told to expect indicate the region is a central part of Saudi Arabia’s exports boost. Traditionally, Aramco sells a small share of its crude to the continent, with the bulk of sales going to Asia. Aramco shipped just 10% of its crude to Europe in 2018, the latest year where full data are available, according to the U.S. Energy Information Administration,

As well as supplying cargoes direct from Saudi Arabia, Riyadh can also use its strategic oil stocks to boost supplies at very short notice to European clients. Aramco keeps crude in Rotterdam, on the doorstep of the biggest refining hubs in northwest Europe, and also at the Egyptian port of Sidi Kerir in the Mediterranean Sea, a few days’ sailing to large refineries in southern Europe.

Over the weekend, Aramco cut its official selling prices by the biggest amount in more than three decades. The company made its biggest cuts for buyers in northwest Europe. An $8 a barrel reduction in most grades amounts to a direct challenge to Russia, which sells a large chunk of its flagship Urals crude in the same region. Aramco will sell Arab Light at an unprecedented $10.25 a barrel discount to Brent in Europe.

Discounts for Russian crude immediately ballooned. Vitol Group and Trafigura Group Ltd. failed to find buyers on Monday when they offered to sell Urals crude at the deepest discounts to a regional benchmark in almost two months.

“The latest Saudi OSPs had a strong hint of having been set with a political rather than technical strategy in mind,” said JBC Energy GmbH, a consultant based in Vienna.

 

 

 

[Chris555 + 8]

8 minutes ago, ceo_energemsier said:

I know of atleast 5 tankers of URALS that didnt get a home just in the  last few days.

 

https://ca.reuters.com/article/businessNews/idCAKBN20Z2LH

 

3/12/2020

 

LONDON (Bloomberg) --Saudi Arabia is unleashing a wave of crude toward Europe, traditionally the backyard for Russian oil sales, pledging to supply regional refineries with as much as triple their usual intake from the kingdom.

The Saudi shipments, coupled with unprecedented discounts, are turning the European oil market into the most bitterly fought corner of an increasingly acrimonious oil price battle between Riyadh and Moscow. Saudi Arabia is offering its flagship Arab Light crude into Rotterdam for roughly $25 a barrel, a massive discount to the price of Russia’s Urals.

European refiners including Royal Dutch Shell Plc, BP Plc, Total SA, OMV AG, Repsol SA and Cepsa SA have all received crude allocations from state-owned Saudi Aramco significantly above their normal levels, according to people familiar with their operations. The range of extra supplies was between 25% and 200%, depending of the company, the same people said.

The Saudi discounts are so big that Arab Light will “push out” Urals and other crude streams “from regional refiners’ diet” unless their relative price also falls, Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. said in a note to clients.

The increase in volumes, known in the industry as nominations, was confirmed by Aramco to the European oil companies on Wednesday, the same people said, asking not to be named discussing private information. One of Europe’s major refiners got double its normal allocation, a person with knowledge of the matter said.

All the companies either declined to comment or didn’t immediately respond to a request for comment.

Saudi Aramco announced on Tuesday that it was lifting production to 12.3 million barrels a day for April, just days after enticing refiners to buy more with record cuts to its official selling prices -- the discounts or premiums at which the kingdom sells relative to regional benchmarks.

The supply hike -- more than 25% higher than last month’s production -- put Aramco above its maximum sustainable capacity, indicating that the kingdom is even tapping its strategic inventories to dump as much crude on the market as quickly as possible.

Aramco hasn’t disclosed the regional split of the output increase, but the volumes European refiners have been told to expect indicate the region is a central part of Saudi Arabia’s exports boost. Traditionally, Aramco sells a small share of its crude to the continent, with the bulk of sales going to Asia. Aramco shipped just 10% of its crude to Europe in 2018, the latest year where full data are available, according to the U.S. Energy Information Administration,

As well as supplying cargoes direct from Saudi Arabia, Riyadh can also use its strategic oil stocks to boost supplies at very short notice to European clients. Aramco keeps crude in Rotterdam, on the doorstep of the biggest refining hubs in northwest Europe, and also at the Egyptian port of Sidi Kerir in the Mediterranean Sea, a few days’ sailing to large refineries in southern Europe.

Over the weekend, Aramco cut its official selling prices by the biggest amount in more than three decades. The company made its biggest cuts for buyers in northwest Europe. An $8 a barrel reduction in most grades amounts to a direct challenge to Russia, which sells a large chunk of its flagship Urals crude in the same region. Aramco will sell Arab Light at an unprecedented $10.25 a barrel discount to Brent in Europe.

Discounts for Russian crude immediately ballooned. Vitol Group and Trafigura Group Ltd. failed to find buyers on Monday when they offered to sell Urals crude at the deepest discounts to a regional benchmark in almost two months.

“The latest Saudi OSPs had a strong hint of having been set with a political rather than technical strategy in mind,” said JBC Energy GmbH, a consultant based in Vienna.

 

 

 

Ahhh, really? And Russia has armed, financed and protected its allies like Iran and Syria in the region just to watch the situation unfolding, from the sidelines, hasn't it, one-key?

[zextaz + 20]

Russia was making 11,000,000x70$ in 2018~2019 770,000,000$ a day with OPEC deal now they want to increase by 500,000 and reject deal they will make 11,500,000X 20 $ in 2020 appx 230,000,000$ a day so unless they can increase production to 40,000,000 a day they are losing tons of money with corona virus they should cut oil production shale is already going down they will need a 5 million barrel a day until air plane are back on track or else they will create another glut that will propel price down so much that oil will no longer be traded as much no trade mean real price real price mean 10$ a barrel if there is no money to be made with oil market / economy will switch to a more profitable venture

they should follow toilet paper business those toilet paper maker are making a fortune everyone think they will run out of it if oil was looking as a rare resource again maybe the price would be up. high oil price is good for business and planet in general we will use less and it will last longer. creating a coronva virus gas and oil shortage would be better than flooding market with oil

[zextaz + 20]

what they should do is say that since corona virus attack most oil worker are in quarantine and production drop to lowest level in 300 years once price reach 100 a barrel they give ultimatum to all shall business if you don't downclock your spending we are flooding not flooding when oil is already at low level make no sense no one win in this the end point is bigger usa business will eat smaller business and creat mega oil business that can pump oil at mega cheaper price 

[zextaz + 20]

its like selling gold at lowest price when market are booming and no one care about gold and you suddenly decide to flood market with gold it would make sense if Russia had either short interest in oil or had interest to buy USA/CANADA oil and gas asset at cheap price since market collapse most asset are down over 50% of lowest level ever as per example OVV (Encana) used to be the biggest corporation of Canada and is now trading at 2.50 a share it was over 50$ 4 months ago and 80$ 2 years ago and it can barely move back up it drop down 75% in 1 single day while they bought 1.8 billion$ of share in 2018 the entire cap float is under 700 millions now does that make sense? a business that bought 10% back of stock float in 1 year for 2x the amount of 100% what they worth now...

[zextaz + 20]

more than 100% they bought 200% of current value imagine Russia bought entire float and just site on asset and force them to take 500,000 barrel a day that would be cheaper than flooding market no?

[zextaz + 20]

at current price of oil and gas stock opec+ could just buy them out and idle them to do nothing and cut production of USA by millions this make no sense

[zextaz + 20]

oil and gas price of stock drop so much that opec+ could buy them out and idle production while owning the land and make twice the profit 

[0R0 + 6,251]

It isn't going to pass regulatory muster. Not Russia nor China.

[Uvuvwevwevwe Onyetenyevwe Ugwemuhwem Osas + 96]

[Chuckipedia + 2]

For having lived and worked in Moscow for four years, I find it incredibly presumptious to opine with predictive substance about anything related to the Russian economy. There are two main reasons for my opinion:

1. Any Russian leader is obsessed with the dream of restoring Russi'a grandeur, power or influence. The USSR was a sordid concoction to impose Russia's will on dozens of other sovereign countries and Russi will never ever be able to restore or rebuild an obedient coalition of the sort.

2. Corruption coupled with the desire to work around the system is a passion harbored by the average Russian, never mind the national interest, the citizen's interest comes and always will come first.

Russia with or without Putin cannot marshall enough resources to lift itself at a level where its influence would be anything other than a pipe dream. So, a dream to power Europe is risible and disconnected with reality at any level.

[Prometheus1354 + 178]

On 3/11/2020 at 4:40 PM, ronwagn said:

California has more natural gas stations than any other state. It is not against natural gas. Los Angeles has very poor leadership and is going deep green. They will end up with many more blackouts and much higher energy prices. There will be a backlash. I spent half of my life in California and distributed petitions for Proposition 13 which has saved taxpayers billions of dollars. The mayor has disregarded his energy advisors and told them no more natural gas plants. 

I visit my relatives yearly and it will be fun watching the apocalypse. 

Spot on!  Sadly though it's not just an LA issue but the whole state is in the grip of 'Green stupidity'...  The politicos making all these 'decisions' will be long gone from the scene an thus the responsibility for them come 2045.  Former Senate Pro Tem  De Leone was the driver pushing Gov. Brown (already a Mo) to adopt the idiocy that will cripple the state.  Mayor Garcetti (LA) is a mirror of Brown.  Scary as it is, the guy who is considered the front runner to replace Garcetti (term limits) is even more of a loon... I'm making plans for my escape as soon as possible.  Born & raised here in CA.  'Bama bound (Huntsville)...

[ronwagn + 6,290]

37 minutes ago, Prometheus1354 said:

Spot on!  Sadly though it's not just an LA issue but the whole state is in the grip of 'Green stupidity'...  The politicos making all these 'decisions' will be long gone from the scene an thus the responsibility for them come 2045.  Former Senate Pro Tem  De Leone was the driver pushing Gov. Brown (already a Mo) to adopt the idiocy that will cripple the state.  Mayor Garcetti (LA) is a mirror of Brown.  Scary as it is, the guy who is considered the front runner to replace Garcetti (term limits) is even more of a loon... I'm making plans for my escape as soon as possible.  Born & raised here in CA.  'Bama bound (Huntsville)...

I grew up in a great time for Los Angeles 1950 to 1962 when I went into the army at age 17. We called it smogville back then! I always lived on the eastern fringe of L.A. county in a semi-rural area when I bought my first house. Then in the foothills of the Sierra and then Bakersfield. Tried Seattle, but it was too urban and we moved to corn country and a town of 500 souls. We are still in that area after 34 years and very happy to be out. We visit California yearly to see relatives and friends.  My property, if it were in California, would be worth five to ten times what it is here. 

I still love California for the beauty and the weather, but know when and where to go to avoid the mess of the cities. There are still great places to live but the government is as bad as Illinois which is where I live. Even Texas, Arizona, Missouri, and Georgia are in danger of becoming Blue states. Only the most rural states are safe havens in the long run. Too many people want to live jammed into cities and adopt left wing politics.

[ronwagn + 6,290]

On 3/12/2020 at 2:28 PM, pscoughlin said:

Having worked in both Saudi and Russia I'm of the opinion that the average Russian citizen will have a greater tolerance for potentially harder economic times than the average Saudi citizen.  I look for Saudi to blink first in this situation. From what I've seen Russian television is putting the blame for the current situation at the feet of Saudi and the US. I doubt Putin will lose much if any support over this.

Both the Saudis and the Russians are afraid to say anything to anyone. They are in survival mode and very worried about their future. They should be. Both have dictators that do not want the masses to have honest input. The nail that stands out gets hammered. 

[ronwagn + 6,290]

On 3/12/2020 at 3:16 PM, Prometheus1354 said:

No kidding!  I am truly surprised that any large scale solar projects are planned for MN or Any of the upper Midwest states.  I know Iowa has had solid success with a multitude of Wind power projects. But Solar?  Can't see it.

In fact, I'd say it's plausible those states along the I-40 corridor would in large part be solid locations for Wind Farms.  

Not sure but it would be my guess the upper Midwest states (i.e. the Corn/Soybean Belt) should be getting pretty decent pricing for the Propane needed to run driers come harvest time do too their proximity to the Bakken...

Developing solar for drying would be the height of stupidity IMO. Propane or natural gas make sense, not electricity. 

[ronwagn + 6,290]

17 hours ago, ceo_energemsier said:

I know of atleast 5 tankers of URALS that didnt get a home just in the  last few days.

 

https://ca.reuters.com/article/businessNews/idCAKBN20Z2LH

 

3/12/2020

 

LONDON (Bloomberg) --Saudi Arabia is unleashing a wave of crude toward Europe, traditionally the backyard for Russian oil sales, pledging to supply regional refineries with as much as triple their usual intake from the kingdom.

The Saudi shipments, coupled with unprecedented discounts, are turning the European oil market into the most bitterly fought corner of an increasingly acrimonious oil price battle between Riyadh and Moscow. Saudi Arabia is offering its flagship Arab Light crude into Rotterdam for roughly $25 a barrel, a massive discount to the price of Russia’s Urals.

European refiners including Royal Dutch Shell Plc, BP Plc, Total SA, OMV AG, Repsol SA and Cepsa SA have all received crude allocations from state-owned Saudi Aramco significantly above their normal levels, according to people familiar with their operations. The range of extra supplies was between 25% and 200%, depending of the company, the same people said.

The Saudi discounts are so big that Arab Light will “push out” Urals and other crude streams “from regional refiners’ diet” unless their relative price also falls, Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. said in a note to clients.

The increase in volumes, known in the industry as nominations, was confirmed by Aramco to the European oil companies on Wednesday, the same people said, asking not to be named discussing private information. One of Europe’s major refiners got double its normal allocation, a person with knowledge of the matter said.

All the companies either declined to comment or didn’t immediately respond to a request for comment.

Saudi Aramco announced on Tuesday that it was lifting production to 12.3 million barrels a day for April, just days after enticing refiners to buy more with record cuts to its official selling prices -- the discounts or premiums at which the kingdom sells relative to regional benchmarks.

The supply hike -- more than 25% higher than last month’s production -- put Aramco above its maximum sustainable capacity, indicating that the kingdom is even tapping its strategic inventories to dump as much crude on the market as quickly as possible.

Aramco hasn’t disclosed the regional split of the output increase, but the volumes European refiners have been told to expect indicate the region is a central part of Saudi Arabia’s exports boost. Traditionally, Aramco sells a small share of its crude to the continent, with the bulk of sales going to Asia. Aramco shipped just 10% of its crude to Europe in 2018, the latest year where full data are available, according to the U.S. Energy Information Administration,

As well as supplying cargoes direct from Saudi Arabia, Riyadh can also use its strategic oil stocks to boost supplies at very short notice to European clients. Aramco keeps crude in Rotterdam, on the doorstep of the biggest refining hubs in northwest Europe, and also at the Egyptian port of Sidi Kerir in the Mediterranean Sea, a few days’ sailing to large refineries in southern Europe.

Over the weekend, Aramco cut its official selling prices by the biggest amount in more than three decades. The company made its biggest cuts for buyers in northwest Europe. An $8 a barrel reduction in most grades amounts to a direct challenge to Russia, which sells a large chunk of its flagship Urals crude in the same region. Aramco will sell Arab Light at an unprecedented $10.25 a barrel discount to Brent in Europe.

Discounts for Russian crude immediately ballooned. Vitol Group and Trafigura Group Ltd. failed to find buyers on Monday when they offered to sell Urals crude at the deepest discounts to a regional benchmark in almost two months.

“The latest Saudi OSPs had a strong hint of having been set with a political rather than technical strategy in mind,” said JBC Energy GmbH, a consultant based in Vienna.

 

 

 

What is an OSP?

[Andrew N. + 3]

March 10.

- The OPEC + alliance does not cease to exist and will work under the Charter on Perpetual Cooperation, under which it is expected to jointly respond to the situation on the oil market if necessary, and the next alliance meetings are scheduled for May-June.

- Now the panic has subsided, but it may take several months to restore oil quotes.

Head of the Ministry of Energy of the Russian Federation Alexander Novak: “Firstly, I want to say that the doors are not closed. The fact that the agreement has not been extended after April 1 does not mean that we cannot continue to cooperate with the OPEC and non-OPEC countries. It was signed last year, the Charter, and as part of it, we will continue this interaction. We are planning regular meetings in May-June in order to assess the market situation. Now our task is to quickly respond to the situation in the markets in order to mitigate the maximum consequences and continue monitoring".- https://tass.ru/ekonomika/7934893

March 12.

The Ministry of Energy of Russia considers it appropriate in the current environment to hold the next OPEC + Technical Committee (JTC) in a teleconference format.

Minister of Energy of the Russian Federation Alexander Novak: “Most likely, in the mode of a conference (teleconference), this is most appropriate in the current conditions.”

The minister did not confirm the date of the JTC, which was earlier announced by the head of the Ministry of Energy of Kazakhstan, on March 18. "We need to clarify whether we have officially received this offer."https://tass.ru/ekonomika/7956751

March 13.

- Russia can restore the oil production reduced due to the OPEC + agreement in April 2020 - by 200 thousand barrels per day. Further growth will take time.

A. Novak: “We do not see the conditions for such proposals [on a new agreement]. We do not see the prevailing conditions. You see how OPEC participants behave, therefore, movement is hardly possible against this background. You can quickly restore it production, which was reduced in connection with the agreement [OPEC +] in relation to October 2018. As regards additional production, it will take some time to ensure investment costs. I think the total amount that was reduced is 200 thousand [barrels] can be restored. e and the market may be a variety of offerings. But I am sure that our delivery and our company more efficient".

.Novak added that he himself had not yet heard of such proposals from the side of the Saudis. “We do not have such information,” he said. .https://tass.ru/ekonomika/7972883

[ronwagn + 6,290]

20 hours ago, ceo_energemsier said:

Without oil revenues, Russia will  suffer a major economic loss and Rootin Tootin Putin will lose his power grab.

Russia cannot afford to compete in wind turbines. That is just my guess, no data. They are overextended with pipelines that may not be of as much value as thought. Chinese demand is down and now European demand will be down. 

[ronwagn + 6,290]

3 hours ago, Chuckipedia said:

For having lived and worked in Moscow for four years, I find it incredibly presumptious to opine with predictive substance about anything related to the Russian economy. There are two main reasons for my opinion:

1. Any Russian leader is obsessed with the dream of restoring Russi'a grandeur, power or influence. The USSR was a sordid concoction to impose Russia's will on dozens of other sovereign countries and Russi will never ever be able to restore or rebuild an obedient coalition of the sort.

2. Corruption coupled with the desire to work around the system is a passion harbored by the average Russian, never mind the national interest, the citizen's interest comes and always will come first.

Russia with or without Putin cannot marshall enough resources to lift itself at a level where its influence would be anything other than a pipe dream. So, a dream to power Europe is risible and disconnected with reality at any level.

You leave out the military might of Russia and their history of taking little bites of territory. Their nuclear might is awesome and their technology is close to the best. I do question their future foreign influence due to their weak economy and the people's poverty. They are possibly the most astute at spying in Asia and Europe but without economic might it seems that they will be a receding power. I cannot imagine China not paying the lowest price for their oil and gas imports.

The reelection of President Trump will insure that they are not able to get away with land grabs for four more years and the health of our energy industry, though at a lower level of profit due to the glut of oil, natural gas, and associated gases. 

[0R0 + 6,251]

16 minutes ago, ronwagn said:

Russia cannot afford to compete in wind turbines. That is just my guess, no data. They are overextended with pipelines that may not be of as much value as thought. Chinese demand is down and now European demand will be down. 

Yes, I think the lack of China support for additional pipeline trans siberia and the newly built North Sea pipeline have much reduced economic benefit due to the drop in LNG prices in Europe and their crash on the East Asian basin. The return on these investments does not look anywhere near as good as it had. 

 

[ronwagn + 6,290]

4 minutes ago, 0R0 said:

Yes, I think the lack of China support for additional pipeline trans siberia and the newly built North Sea pipeline have much reduced economic benefit due to the drop in LNG prices in Europe and their crash on the East Asian basin. The return on these investments does not look anywhere near as good as it had. 

 

How would you compare that to the situation in Canada?

[0R0 + 6,251]

Just now, ronwagn said:

You leave out the military might of Russia and their history of taking little bites of territory. Their nuclear might is awesome and their technology is close to the best. I do question their future foreign influence due to their weak economy and the people's poverty. They are possibly the most astute at spying in Asia and Europe but without economic might it seems that they will be a receding power. I cannot imagine China not paying the lowest price for their oil and gas imports.

The reelection of President Trump will insure that they are not able to get away with land grabs for four more years and the health of our energy industry, though at a lower level of profit due to the glut of oil, natural gas, and associated gases. 

The poverty in Russia is directly related to the seeking of power and the means by which Putin attempts to grab it. The counter to his oil based Ruble is precisely this poverty. As a result, Russia has seen declining population and despite direct efforts to subsidize child rearing costs, letting the Ruble exchange be dictated by oil has undone the entire push so that Russia is again in declining births. In 10 years there would not be enough people to maintain the Russian army at its current size.

 

[0R0 + 6,251]

Just now, ronwagn said:

How would you compare that to the situation in Canada?

Canada is in an odd situation since their West development has been frozen in court and in red tape for a decade.

They have not made the investment, so don't have to book a loss. The overall tar sands frac gas and oil and pipeline and LNG ports project was supposed to be $32-3 Billion. Not being fully funded yet. Buffet just withdrew. 

Can't lose money on an investment you didn't make. 

[ronwagn + 6,290]

13 minutes ago, 0R0 said:

The poverty in Russia is directly related to the seeking of power and the means by which Putin attempts to grab it. The counter to his oil based Ruble is precisely this poverty. As a result, Russia has seen declining population and despite direct efforts to subsidize child rearing costs, letting the Ruble exchange be dictated by oil has undone the entire push so that Russia is again in declining births. In 10 years there would not be enough people to maintain the Russian army at its current size.

 

I have read that the disguised invasion of Ukraine and Crimea disclosed the poor condition of the actual Army equipment versus the disguised special forces. The people also, reportedly complained very loudly about loss of lives of their children and relatives despite efforts to silence them. 

[ceo_energemsier + 1,818]

1 hour ago, ronwagn said:

What is an OSP?

Official Selling Price