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Eurasian Business Briefing Russia

Russian credit rating edges upwards as Moscow keeps budget deficit in check

Russians and rouble signRussian credit rating: With its economy moving up through the gears and the government in Moscow managing to keep the budget deficit in check, S&P announced that it was upgrading the Russia’s credit rating from stable to positive, leaving its foreign-currency rating one step short of investment grade at BB+.
“External pressures (more…)

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New investment fund set to strengthen ties between Russia and Turkey

Putin and ErdoganThe flourishing political and economic alliance between Russia and Turkey wracked up a notch this week with the announcement that the two countries had now formally agreed to set up a joint Russia-Turkey Investment Fund.
The two signatories to the agreement (more…)

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More Russian IPOs planned as investors return to Moscow

Detsky MirForeign investors are being lured back into Russia by businesses seeking to tap the public equity and bond markets, the Financial Times reports today, after almost three years when they have shied away over concerns of the impact of sanctions as well as worries over the economy.
(more…)

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Indian Railways gives new push to North-South Transport Corridor

Indian RailwaysState-owned Indian Railways is to host a meeting of the heads of its fellow South Asian railway companies next week to discuss the possibility of pushing forward the development a transcontinental rail freight service that would run through Iran and Turkey. If the 6,000 km project were to be realised, (more…)

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Turkish Stream #2 gets sign-off

Gazprom and Switzerland’s Allseas are reported to have signed an agreement for the construction of a second, 900km Turkish Stream pipeline running from its Siberian gas fields along the the bed of the Black Sea to Turkey.
The two companies (more…)

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GCC investors buy stake in Russian Helicopters

Russian HelicoptersA consortium set up between the Russian Direct Investment Fund (RDIF) and a group of GCC investors has bought a 12% stake in Russian Helicopters, it announced yesterday. The deal entails an up-front investment of $300m with a further $600m to follow at a later date.
The cash injection (more…)

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India and Russia close to reviving two-year Kamov helicopter JV deal

Kamov Ka 226 helicopterNew Delhi and Moscow are finally getting close to signing off on the $1bn joint venture for the construction of Kamov-226 helicopters after the idea was revived two years after it was first suggested by President Vladimir Putin. 140 of the 200 helicopters in the initial order will be built in India as part of Prime Minister Narendra Modi’s drive (more…)

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Putin signs up to Turkish Stream

Putin ratifies Turkish Stream 080217The new axis that has been developing between Istanbul and Moscow in recent months appeared to strengthen even further yesterday when President Vladimir Putin signed a bill ratifying the construction of the Turkish Stream pipeline that will eventually carry natural gas from Russia under the Black Sea to Thrace on Turkey’s border with Greece.
Turkish Stream (more…)

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Russian recession near end

Russian recession: Russia is edging closer to the end of its longest recession in almost two decades as mining, manufacturing and agriculture along with stabilising oil prices, to help to steady the economy.
GDP contracted by 0.2% last year after an upwardly revised decline of 2.8% in 2015, according to data released by the Federal Statistics Service yesterday. with rising exports and rebuilding of stocks among the key drivers. Manufacturing grew by 1.4% while production of oil, gas and other natural resources was up by 0.2%. Buoyed by restrictions on imports and the ruble devaluation, agriculture grew by 3.5 %. although consumers continued to struggle, with wholesale and retail trade down 3.6 %. Construction was also off the pace and contracted by 4.3%.
“We can expect growth of 1-1.5 % [this year] and maybe even 2% if things go well”, First Deputy Prime Minister Igor Shuvalov predicted last month.
President Vladimir Putin was less sanguine, however, and has warned ministers that the country was not yet out of the woods and pressed them to find new sources of stimulus.

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Now QIA eyes up Novatek JV

Putin greets Al-Thani watched by Messina (Intesa) and Glasenberg (Glencore) 250117Following its acquisition of a 19.5% stake in Rosneft via its shareholding in the Anglo–Swiss multinational commodity trading and mining company Glencore last month, the Qatar Investment Authority (QIA) is thought to be on the verge investing a further $2bn in the Russian energy sector. After Russian President VladimirPutin and Rosneft CEO Igor Sechin met with QIA chief Abdullah Bin Mohammed Bin Saud Al Thani in Moscow yesterday, speculation was rife that the Qatari sovereign wealth fund could be about to buy Fund Energy’s 49% share in the Yargeo joint venture that it set up with Novatek to develop the Yarudeyskoe oil field on the Yamal peninsula in Northern Siberia.
Igor Yusufov, CEO Fund EnergyThe QIA had made “another deal that will mean additional investment of $2bn”, Al-Thani said before the meeting, although neither side would give further details. However, industry insiders are claiming that Fund Energy, the investment fund set up and run by former Russian energy Minister and Gazprom board director Igor Yusufov, was looking to sell its stake in Yargeo, the JV in charge of the largest oil asset in Novatek’s portfolio.
Yarudeskoye field, Yamal PeninsulaLaunched in December 2015, the field has an annual production capacity of 3.5m tonnes or 9,700 tons of crude oil a day, while the JV also runs a central oil treatment facility, oil and gas gathering systems, a pumping station and gas and crude oil pipelines. After treatment, the oil is transported 350km south to Purpe where it is injected into Transneft’s trunk pipeline system.
In December, Russia’s President Vladimir Putin took to the TV airways to celebrate the news that the commodity trader Glencore and Qatar’s QIA sovereign wealth fund had agreed to buy Moscow’s 19.5% stake in the state-run Rosneft oil giant for a figure Putin put at $11bn, boosted by what he described as “the rising trend in oil prices.”

 
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Russia overtakes KSA as No. 1 Chinese oil supplier and tops investment charts

Transneft oil containersHaving overtaken Saudi Arabia as China’s top oil supplier over the course of 2016, Russia has got off to a cracking start to 2017and has more inflows of foreign portfolio money than any other global emerging market fund so far this year.
According to data released yesterday (more…)

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Gazprom pumps $1.8bn into Nord Stream as German exports hit new high

Nord Stream2 pipesGazprom underlined its determination to go ahead with the construction of the controversial Nord Stream 2 gas pipeline this week with the announcement that it is planning to invest $1.9bn in the project over the course of the next 12 months. (more…)

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World Bank urges Russia to diversify

World BankRussia needs to improve its investment climate, diversify its oil-dependent economy and boost productivity growth if it wants to catch up with the global economy, the World Bank urged Moscow this week, at the same time as forecasting that (more…)

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Trump victory gifts Russian oligarchs $29bn as energy share prices soar

Gennady TimchenkoRussian oligarchs: Rising share prices and a resurgence in the value of the rouble brought on partly by the prospect of a Trump administration have added approximately $29bn to the fortunes of some of Russia’s richest men, making President Putin’s inner circle among the chief beneficiaries of last November’s presidential election, according to figures compiled and released by Forbes this week.
Among the biggest winners (more…)

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Nabiullina named best European central banker as purge continues

CBR Chief Elvira NabiullinaThree years into her purge of the country’s banking sector which to date has seen 276 financial institutions driven out of business and a further 28 put through the regulator’s financial rehabilitation programme, the Central Bank of Russia’s Elvira Nabiullina has been named Europe’s best central banker for 2016 by the UK magazine The Banker. (more…)

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Obama hits Trump with new Russian sanctions and Arctic drilling ban

Navy Day Parade SevastopolOutgoing US President Barack Obama this week did his best to thwart his successor Donald Trump’s plans to improve relations with Moscow and to increase US oil and gas production by extending the sanctions imposed on Russia over its 2014 annexation of Crimea while almost simultaneously withdrawing (more…)

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Italian regulators probe finances behind Glencore-Rosneft deal

Intesa SanpaoloFinancial regulators in Rome are examining whether Intesa Sanpaolo’s financing of Glencore‘s recent investment in Russian oil group Rosneft complies with sanctions imposed on Western companies conducting business with Russian concerns after the annexation of Crimea in 2014, it emerged yesterday.
Two weeks ago, (more…)

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EU extends Russian sanctions – but rift widens with Tillerson appointment

Polish Foreign Minister Radoslaw Sikorski

Polish Foreign Minister Radoslaw Sikorski

Russian sanctions: As widely anticipated, European Union leaders last week voted to extend economic sanctions against Russia over the ongoing conflict in Ukraine for a further six months. There were, however, signs of a rift beginning to emerge between some East European countries – led by Poland (more…)

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Tillerson ready to question sanctions as Merckel and Hollande back extension

Exxon Mobil CEO Rex TillersonTillerson: German Chancellor Angela Merkel and French President Francois Hollande yesterday put their collective weight behind a six-month extension of the package of economic sanctions imposed on Russia after its annexation of Crimea nearly three years ago; but the long-term future of the strategy is looking increasingly uncertain in the light of Donald Trump’s choice of Exxon Mobil Chairman and CEO Rex Tillerson as his Secretary of State. Tillerson has long been known to have a good personal relationship with Russian President Vladimir Putin and to be sceptical about the efficacy of the sanction strategy and this week claims have also emerged in several US media outlets that he had visited the White House more than 20 times in an effort to ensure that his company was not put at a competitive disadvantage by the manner in which the sanctions were imposed. The oil chief was said to be concerned that European nations might not apply the restrictions as strictly as the US. (more…)

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Eni sells Zohr stake to Rosneft and gives Qatar a foothold in the Med

Rosneft HQJust weeks after snapping up the Russian government’s stake in Bashneft for around $5bn and days after the Qatar Investment Authority and Glencore announced that they were to buy a 19.5% stake in the energy giant from the Russian government for $11bn, Rosneft was in the news again today as it announced that it had agreed to pay Italian oil and gas group Eni $1.125bn for a 30% stake in the offshore Shorouk concession. Zohr Oil Field
(more…)

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