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Old 12-10-2016, 10:25 AM   #1
andy
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Default Russia is Running Out of Cash

Putin went for "Broke". Now he is going Broke.

http://money.cnn.com/2016/09/16/news...article_footer
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Old 12-10-2016, 11:09 AM   #2
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I've been saying for months I wondered how Russia was paying for all of this military modernization and their Syrian adventure.
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Old 12-10-2016, 01:51 PM   #3
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He can start borrowing money like we do every day.
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Old 12-10-2016, 03:29 PM   #4
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Russia may be going broke, but America is bankrupt.

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Old 12-10-2016, 08:04 PM   #5
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Quote:
Originally Posted by oldasrocks View Post
He can start borrowing money like we do every day.
Uhhh, no he can't... at least from any Western entity... from the article...

The slump in oil prices has hit Russia at the time it was already suffering because of economic sanctions imposed by Western countries over its role in the crisis in Ukraine.

They've cut off Russia's most important companies from European financing, banned imports of certain products and froze funds of key officials.


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Old 12-11-2016, 09:22 AM   #6
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You can buy a lot of toys when you produce 10million bpd of oil (about the same amount as Saudi Arabia).
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Old 12-11-2016, 10:41 AM   #7
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Oh come on guys.
When Trump pays them off for winning the election they'll be cash flush..
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Old 12-11-2016, 02:22 PM   #8
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Turkey and Russia start trading in domestic currencies ...
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Old 12-11-2016, 05:48 PM   #9
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Quote:
Originally Posted by penguinzee View Post
Uhhh, no he can't... at least from any Western entity... from the article...


Franc (penguinzee)
He might not be able to borrow but...

(Long article but it gives a good illustration of how Putin, et al., works.

And then there's Tillerson too. Call me cynical but if he's confirmed as SecState, I predict many of the sanctions will be repealed. Doing that might be a tough sell, even with a Republican Congress, because most Americans are still rooting for Ukraine in a vague, general way - Ukraine good, Russia bad. So I'm curious to see if Congress gets by-passed and how many sanctions get repealed by Executive Orders.)


NY Times: Despite Sanctions, Russia Finds Buyers for $11 Billion Stake in Rosneft

Quote:
DEC. 7, 2016

The Russian government announced Wednesday that it will sell nearly 20 percent of its state oil company, Rosneft, to the Swiss commodity trading firm Glencore and the sovereign wealth fund of Qatar.

The deal defies expectations that no investor would dare buy a share in the Russian asset, given Western sanctions against the government of President Vladimir V. Putin.

But the emergence of foreign money suggests that investors are reassessing the sanctions after the election of Donald J. Trump, who has advocated warming ties with authorities in Moscow and is considering the chairman of Exxon Mobil, Rex W. Tillerson, as a candidate for secretary of state.

Mr. Tillerson criticized the sanctions as harmful for business after they halted an Exxon joint venture with Rosneft to drill for oil in the Kara Sea, in Russia’s sector of the Arctic Ocean.


The deal will bring Moscow $11.3 billion to help plug a widening budget deficit as Russia fights two wars, in Syria and Ukraine, and has struggled to meet pension payments and public-sector payrolls.

The agreement came as a surprise twist in the privatization of Rosneft. With an end-of-the-year deadline looming, no buyers had come forward for the 19.5 percent share in the world’s largest publicly traded oil company, as measured by production and reserves. The apparent lack of bidders was a pessimistic sign for investor interest in Russia.

The Russian government had for most of the year planned to sell shares back to the majority state-owned company itself, which would hardly have qualified as a genuine privatization.

The United States decided in 2014 to impose sanctions on Rosneft and other Russian companies in response to Russia’s intervention in the war in eastern Ukraine..

The sanctions limit long-term lending and transfer of American technology for drilling offshore and shale oil deposits.

The deal carries other risks as well. Both Glencore and the Qatari fund, the Qatar Investment Authority, have extensive investments in emerging markets. The Qatar fund is also an investor in Glencore.

The announced price valued Rosneft at $58 billion, slightly less than the company’s stock market value at the close of trading in Moscow on Wednesday, of just under $59 billion.

Both the market price of shares and the sale price for the 19.5 percent stake announced Wednesday are a relative bargain, indicating the Russian government’s eagerness to cut a deal to shore up its finances.

Rosneft pumps 4.7 million barrels of oil and the energy equivalent in natural gas a day, compared with 4.3 million by Exxon. For comparison, Exxon’s market value was $364 billion during trading Wednesday — six times Rosneft’s value.

...In a statement, Glencore said it was in “final stage negotiations” over the deal. The company said it would contribute 300 million euros, or $323 million, of its stock to the purchase, with the remainder of the funding coming from the Qatari fund and bank financing. Under the terms, Glencore would gain access to an additional 220,000 barrels a day of Rosneft’s oil to trade.

...Under Mr. Putin, the Russian government took oil and gas fields that had been privatized in the early post-Soviet period by companies including Yukos and TNK, and reassembled them under a behemoth state-owned company, arguing that the government should steer policy for these strategic assets.

The government effectively nationalized Yukos in lawsuits over unpaid taxes after its founder, the oil tycoon Mikhail B. Khodorkovsky, was jailed on fraud charges brought with political overtones.


Rosneft bought the assets of TNK and its foreign partner, BP, for about $60 billion in 2013, when oil prices were still buoyant. Now the government is selling shares into the depressed global oil market for a fraction of what it paid three years ago.

A state holding company, Rosneftegaz, is the largest shareholder, with 69.5 percent, which will drop to 50 percent after the sale to Glencore and the Qatari fund. A state property agency holds a voting share to retain majority state control.

BP, the British oil giant, owns a 19.75 percent, and the remainder is traded on the London Stock Exchange and in Moscow.
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Old 12-12-2016, 11:41 AM   #10
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And ze plot, it thickens...

Rosneft to Pay Up to $2.8 Billion to Join Egyptian Gas Block



Quote:
Russian state-run producer to buy initial 30% stake from Eni
Rosneft has option to buy a further 5% in Mediterranean block

Rosneft PJSC agreed to pay as much as $2.8 billion to buy up to 35 percent of a natural-gas project off Egypt, joining Eni SpA and BP Plc in the largest discovery in the Mediterranean Sea.

Rosneft will pay $1.13 billion for an initial 30 percent stake in the Shorouk concession, which includes the Zohr find, plus $450 million for past expenditures, Eni said in a statement on Monday. The Russian state-controlled energy producer has an option until the end of 2017 to acquire an additional 5 percent, which would also require payments for past spending, Eni said.

...Rosneft, which pumps more than 40 percent of Russia’s crude and over 10 percent of its gas, has planned to expand its gas business for years. It has been seeking assets and contracts overseas, while at home challenging the piped-gas export monopoly of state-run giant Gazprom PJSC. In May, Rosneft supplied its first liquefied natural gas cargo to Egypt.

...The acquisition comes after last week’s $11 billion deal under which Glencore Plc and the Qatar Investment Authority agreed to buy a 19.5 percent stake in Rosneft from the Russian government. The Egyptian gas project could make sense for a Rosneft venture with Glencore and Qatar’s sovereign wealth fund due to their expertise in natural gas...

...Rosneft may feel it has some “spare money” as the stake acquisition by Glencore and Qatar means Russia’s biggest oil producer won’t have to finance a buyback of its own shares...

BP, Rosneft’s largest shareholder after the Russian government, agreed to buy a 10 percent interest in the Zohr field from Eni in November for $375 million. It will also refund some past costs once the deal closes and has an option to purchase a further 5 percent before the end of next year.

Rosneft will get a 15 percent share of a joint venture with IEOC Production BV and Egyptian Natural Gas Holding Co., which operate the Shorouk project, according to a filing. It has an option to buy a further 2.5 percent in the venture.

This isn't just about high finance. This purchase gives Russia an official State interest in the Med, and in an area that is on the boundary of the Leviathan field, which Israel, Cyprus and Greece are working to develop. You might recall that when the field was discovered, Erdogan's navy aggressively harassed the test drilling rig and the boats that serviced it. And now that Putin and Erdogan are such close pals, it will be interesting to see what they'll do, together or separately, to promote peace and goodwill in the Med.




NOTE: In this image, the red drilling rig marks the Zohr find.
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Old 12-13-2016, 08:37 AM   #11
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Russia was previously alleged to be backing Syria so strongly
in order to prevent Qatar and presumably other states building
gas pipelines through Syria to Europe . Thus threatening
Russian gas sales to Europe .

Presumably that is also why Qatar and SA have been funding
and supplying ISIS to over throw Erdogan .

However of course all of the above had nothing to do with Qatar giving
Bill Clinton a Million$ when Hillary was Sec of State .

It seems to me quite likely that a crime of epic proportions may
have been perpetrated against the Syrian people and I hope that
when Trump comes to power he investigates cash flows from
SA and Qatar to all leading politicians ( including Obama ) .

..



..
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Old 12-13-2016, 08:46 AM   #12
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gee wonder what happened to all those tonnes of gold russia and china have been snapping up over the past 8-10 years or so?
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Old 12-14-2016, 03:36 PM   #13
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Turkey and Russia start trading in domestic currencies ...
Iran and Russia start trading in domestic currencies

If Russia is running low on USD, this may be a good way out of the situation.
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Old 12-14-2016, 03:43 PM   #14
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Iran and Russia start trading in domestic currencies

If Russia is running low on USD, this may be a good way out of the situation.
They are both oil and natural gas exporters, so I am struggling to see how this will help them out of the situation. Now, if China, Russia and Iran start trading in local currencies, that is quite a different matter. But who wants to hold yuan at this point? Chinese are doing anything they can to get into dollars, euros and yen.
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Old 12-14-2016, 03:49 PM   #15
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Sys : There is a trend of not using USD as the stock currency and this seems to be spreading .. I don't follow the details but I hear China is into it as well.
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Old 12-14-2016, 03:57 PM   #16
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Sys : There is a trend of not using USD as the stock currency and this seems to be spreading .. I don't follow the details but I hear China is into it as well.
As long as China doesn't let the yuan float, that is completely irrelevant. No one will want to hold on to a currency that has a significant risk of a catastrophic devaluation.

Anyways, I couldn't care less. I say more power to 'em.
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Old 12-14-2016, 04:11 PM   #17
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it is not that irrelevant.

One of the main reasons why Saddam was hanged because he declared he would sell Oil not by USD but by Euros. Being the stock currency of the glove gives you enormous leverage to fund your huge deficit (which in most part goes to global military hegemony), if enough countries drop USD in all of a sudden, it will be relevant
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Old 12-14-2016, 06:02 PM   #18
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it is not that irrelevant.

One of the main reasons why Saddam was hanged because he declared he would sell Oil not by USD but by Euros. Being the stock currency of the glove gives you enormous leverage to fund your huge deficit (which in most part goes to global military hegemony), if enough countries drop USD in all of a sudden, it will be relevant
Well, pretty much every currency and bond trader in the world disagrees with you. I am pretty confident they have better information and instincts than you do. The idea that the US is beholden to foreign powers who hold t-bills and the like is a tired old theory, that has been discredited a number of times.

First, contrary to popular belief, only about 40% of US public debt is held by foreign investors, and many of those are private individuals, banks and corporations and not foreign governments. Second, given approximately $6T of exposure, do you think foreign governments and investors are going to do anything to rock the boat on that issue? If anything, the power is in the hands of the US because the US has the power to devalue its own currency and make their holdings worthless. Third, in terms of financing US military spending, by and large that is for goods and services provided by US soldiers and contractors. So, it does not matter one bit what happens to the US dollar in terms of being able to continue to finance military spending. Fourth, no other government seems to be able to get its own fiscal house in good enough shape to even come close to challenging the US dollar as the largest reserve currency. It is not a case of the US dollar being a good reserve currency; it is simply that at the moment it is the least bad alternative. That doesn't mean it will always be this way, but for now it is.

Frankly, I wish that investors (foreign and domestic) could apply more pressure on the US government to rein in deficit spending. I hate deficit spending, and I particularly hate spending on useless things like pointless wars in the Middle East. But, alas, they do not have that power. I don't like the fact that the US dollar is the de facto reserve currency of choice. Among other things, I think it hurts US exports and encourages us to have an artificially soft monetary policy. Being a consistent saver, I would much rather have 5% or higher interest rates out there in the marketplace.
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