Russia’s Revenues From Gas Still High Despite Supply Cuts To Europe By Tsvetana Paraskova - Jun 23, 2022, 12:00 PM CDT Russia continues to earn more than $100 million per day from gas exports to Europe. Russian revenues from gas exports are believed to be equal to the revenue last year. Moscow decided to cut deliveries to large customers in Germany and Italy last week. Join Our Community Russia is to be earning more than $100 million every day from the gas it sells to Europe despite the slashed deliveries to major EU consumers in the past week, according to data from Independent Commodity Intelligence Services (ICIS) cited by Bloomberg. Due to the rallying natural gas prices, Russian revenues from gas exports are believed to be equal to the revenue last year, when Moscow wasn’t limiting gas flows to Europe and wasn’t (yet) on a collision course with the EU. “It’s shocking to see that, despite the 75% cut in daily supply by Gazprom to Europe, the daily receipts are still in line with where they were a year ago, and certainly higher than pre-Covid times,” Tom Marzec-Manser, head of gas analytics at ICIS, told Bloomberg. Over the past week, Russia has significantly lowered supply to major European consumers, including the biggest customers, Germany and Italy, despite the fact that their buyers bowed to Putin’s demand to open accounts in rubles at Gazprombank for processing of the payments the way Russia wanted to. Moreover, the annual maintenance at Nord Stream is coming and will completely halt deliveries through the pipeline for two weeks in July, leaving Europe further scrambling to fill gas storage sites to adequate levels before the winter. Despite the EU embargo on Russian seaborne oil, to take effect by the end of the year, and the drastically reduced pipeline gas supply, Russia continues to benefit from the high oil and gas prices. Despite Western sanctions designed to hurt Russia’s oil revenues and war chest, Moscow is still getting a lot of additional billions of U.S. dollars in oil and gas revenues. In June alone, Russia expects to receive as much as $6.37 billion in additional oil and gas revenues in June, its finance ministry said earlier this month, as energy commodity prices have rallied since the Russian invasion of Ukraine. By Tsvetana Paraskova for Oilprice.com
What’s the impact of a Russian debt default? Here’s what to know https://www.marketwatch.com/story/r...n-its-debt-so-what-does-that-mean-01656280474 Russia is poised to default on its foreign debt for the first time since the 1917 Bolshevik Revolution, further alienating the country from the global financial system following sanctions imposed over its war in Ukraine. The country faces a Sunday night deadline to meet a 30-day grace period on interest payments originally due May 27. But it could take time to confirm a default. “While there is a possibility that some magic could occur” and Russia gets the money through financial institutions to bondholders despite sanctions, “nobody’s making that bet,” said Jay S. Auslander, a top sovereign debt lawyer at the firm of Wilk Auslander in New York. “The overwhelming probability is they won’t be able to because no bank is going to move the money.” Last month, the U.S. Treasury Department ended Russia’s ability to pay its billions in debt back to international investors through American banks. In response, the Russian Finance Ministry said it would pay dollar-denominated debts in rubles and offer “the opportunity for subsequent conversion into the original currency.” Russia calls any default artificial because it has the money to pay its debts but says sanctions have frozen its foreign currency reserves held abroad. “There is money and there is also the readiness to pay,” Russian Finance Minister Anton Siluanov said last month. “This situation, artificially created by an unfriendly country, will not have any effect on Russians’ quality of life.” Tim Ash, senior emerging market sovereign analyst at BlueBay Asset Management, tweeted that the default “is clearly not” beyond Russia’s control and that sanctions are preventing it from paying its debts because it invaded Ukraine. Here are key things to know about a Russian default: How much does Russia owe? About $40 billion in foreign bonds, about half of that to foreigners. Before the start of the war, Russia had around $640 billion in foreign currency and gold reserves, much of which was held overseas and is now frozen. Russia has not defaulted on its international debts since the Bolshevik Revolution more than a century ago, when the Russian Empire collapsed and the Soviet Union was created. Russia defaulted on its domestic debts in the late 1990s but was able to recover from that default with the help of international aid. Investors have expected Russia to default for months. Insurance contracts that cover Russian debt have priced a 80% likelihood of default for weeks, and rating agencies like Standard & Poor’s and Moody’s have placed the country’s debt deep into junk territory. How do you know if a country is in default? Ratings agencies can lower the rating to default or a court can decide the issue. Bondholders who have credit default swaps — contracts that act like insurance policies against default — can ask a committee of financial firm representatives to decide whether a failure to pay debt should trigger a payout, which still isn’t a formal declaration of default. The Credit Default Determination Committee — an industry group of banks and investment funds — ruled June 7 that Russia had failed to pay required additional interest after making a payment on a bond after the April 4 due date. But the committee put off taking further action due to uncertainty over how sanctions might affect any settlement. What can investors do? The formal way to declare default is if 25% or more of bondholders say they didn’t get their money. Once that happens, provisions say all Russia’s other foreign bonds are also in default, and bondholders could then seek a court judgment to enforce payment. In normal circumstances, investors and the defaulting government typically negotiate a settlement in which bondholders are given new bonds that are worth less but that at least give them some partial compensation. But sanctions bar dealings with Russia’s finance ministry. And no one knows when the war will end or how much defaulted bonds could wind up being worth. In this case, declaring default and suing “might not be the wisest choice,” Auslander said. It’s not possible to negotiate with Russia and there are so many unknowns, so creditors may decide to “hang tight for now.” Investors who wanted out of Russian debt have probably already headed for the exits, leaving those who may have bought bonds at knocked-down prices in hopes of profiting from a settlement in the long run. And they might want to keep a low profile for a while to avoid being associated with the war. Once a country defaults, it can be cut off from bond-market borrowing until the default is sorted out and investors regain confidence in the government’s ability and willingness to pay. But Russia has already been cut off from Western capital markets, so any return to borrowing is a long way off anyway. The Kremlin can still borrow rubles at home, where it mostly relies on Russian banks to buy its bonds. What would be the impact of Russia’s default? Western sanctions over the war have sent foreign companies fleeing from Russia and interrupted the country’s trade and financial ties with the rest of the world. Default would be one more symptom of that isolation and disruption. Investment analysts are cautiously reckoning that a Russia default would not have the kind of impact on global financial markets and institutions that came from an earlier default in 1998. Back then, Russia’s default on domestic ruble bonds led the U.S. government to step in and get banks to bail out Long-Term Capital Management, a large U.S. hedge fund whose collapse, it was feared, could have shaken the wider financial and banking system. Holders of the bonds — for instance, funds that invest in emerging market bonds — could take serious losses. Russia, however, played only a small role in emerging market bond indexes, limiting the losses to fund investors. While the war itself is having devastating consequences in terms of human suffering and higher food and energy prices worldwide, default on government bonds would be “definitely not systemically relevant,” International Monetary Fund Managing Director Kristalina Georgieva has said.
It's default time... (article originally from Bloomberg - using Financial Post as source to avoid the firewall for readers) Russia defaults on foreign debt for the first time since 1918 Default mostly symbolic for Russians dealing with double-digit inflation and worst economic contraction in years https://financialpost.com/news/econ...918/wcm/c19b1d9a-b6d9-4890-8ad8-b11a24cc05d8/ Russia defaulted on its foreign-currency sovereign debt for the first time in a century, the culmination of ever-tougher Western sanctions that shut down payment routes to overseas creditors. For months, the country found paths around the penalties imposed after the Kremlin’s invasion of Ukraine. But at the end of the day on Sunday, the grace period on about US$100 million of snared interest payments due May 27 expired, a deadline considered an event of default if missed. It’s a grim marker in the country’s rapid transformation into an economic, financial and political outcast. The nation’s eurobonds have traded at distressed levels since the start of March, the central bank’s foreign reserves remain frozen, and the biggest banks are severed from the global financial system. But given the damage already done to the economy and markets, the default is also mostly symbolic for now, and matters little to Russians dealing with double-digit inflation and the worst economic contraction in years. Russia has pushed back against the default designation, saying it has the funds to cover any bills and has been forced into non-payment. As it tried to twist its way out, it announced last week that it would switch to servicing its US$40 billion of outstanding sovereign debt in rubles, criticizing a “force-majeure” situation it said was artificially manufactured by the West. “It’s a very, very rare thing, where a government that otherwise has the means is forced by an external government into default,” said Hassan Malik, senior sovereign analyst at Loomis Sayles & Company LP. “It’s going to be one of the big watershed defaults in history.” A formal declaration would usually come from ratings firms, but European sanctions led to them withdrawing ratings on Russian entities. According to the documents for the notes whose grace period expired Sunday, holders can call one themselves if owners of 25 per cent of the outstanding bonds agree that an “Event of Default” has occurred. With the final deadline passed, focus shifts to what investors do next. It’s going to be one of the big watershed defaults in history They don’t need to act immediately, and may choose to monitor the progress of the war in the hope that sanctions are eventually softened. Time may be on their side: the claims only become void three years on from the payment date, according to the bond documents. “Most bondholders will keep the wait-and-see approach,” Takahide Kiuchi, an economist at Nomura Research Institute in Tokyo. During Russia’s financial crisis and ruble collapse of 1998, President Boris Yeltsin’s government defaulted on US$40 billion of its local debt. By some measures it approached a trillion dollars in today’s money, according to Loomis Sayles’ Malik, who is also author of Bankers and Bolsheviks: International Finance and the Russian Revolution. By comparison, foreigners held the equivalent of almost US$20 billion of Russia’s eurobonds as of the start of April. “Is it a justifiable excuse to say: ‘Oh well, the sanctions prevented me from making the payments, so it’s not my fault’?” Malik said. “The broader issue is that the sanctions were themselves a response to an action on the part of the sovereign entity,” he said, referring to the invasion of Ukraine. “And I think history will judge this in the latter light.” Finance Minister Anton Siluanov dismissed the situation on Thursday as a “farce.” The last time Russia fell into default vis-a-vis its foreign creditors was more than a century ago, when the Bolsheviks under Vladimir Lenin repudiated the nation’s staggering Czarist-era debt load in 1918. With billions of dollars a week still pouring into state coffers from energy exports, despite the grinding conflict in east Ukraine, he reiterated that the country has the means, and the will, to pay. “Anyone can declare whatever they like,” Siluanov said. “But anyone who understands what’s going on knows that this is in no way a default.” His comments were prompted by the grace period that ended on Sunday. The 30-day window was triggered when investors failed to receive coupon payments due on dollar- and euro-denominated bonds on May 27. The cash got trapped after the U.S. Treasury let a sanctions loophole expire, removing an exemption that had allowed U.S. bondholders to receive payments from the Russian sovereign. A week later, Russia’s paying agent, the National Settlement Depository, was also sanctioned by the European Union. In response, Vladimir Putin introduced new regulations that say Russia’s obligations on foreign-currency bonds are fulfilled once the appropriate amount in rubles has been transferred to the local paying agent. The Finance Ministry made its latest interest payments, equivalent to about US$400 million, under those rules on Thursday and Friday. However, none of the underlying bonds have terms that allow for settlement in the local currency. So far, it’s unclear if investors will use the new tool and whether existing sanctions would even allow them to repatriate the money. According to Siluanov, it makes little sense for creditors to seek a declaration of default through the courts because Russia hasn’t waived its sovereign immunity, and no foreign court would have jurisdiction. “If we ultimately get to the point where diplomatic assets are claimed, then this is tantamount to severing diplomatic ties and entering into direct conflict,” he said. “And this would put us in a different world with completely different rules. We would have to react differently in this case — and not through legal channels.” (Article has additional graphics - original source is Bloomberg)
I don't think this plan is going to work out very well for the West. G7 leaders are weighing an aggressive and untried plan to manipulate oil prices, an admission that sanctions haven’t dented Russian revenues. The plan would allow Russia to keep selling oil to the world but would sharply limit the price https://www.nytimes.com/live/2022/06/27/world/russia-ukraine-war-news Monday, June 27, 2022 10:58 AM ET KRUN, Germany — Struggling to choke off the revenue that enables Russia to finance its invasion of Ukraine, and hoping to shield consumers at home from the war’s economic pain, leaders of the Group of 7 nations on Monday moved close to embracing an aggressive but untried plan to manipulate the price of oil, the largest commodity market in the world. The plan — which would allow Russia to keep selling oil to the world but would sharply limit the price — is an acknowledgment that the embargoes the United States and allies swiftly imposed on Moscow’s lucrative energy exports have not dented Russian oil revenues. And they have driven up gasoline and other fuel prices, prompting consumer backlash in the United States and Europe. At the same time, the broader economic sanctions the West put in place to try to cripple the Russian economy have so far fallen short, though economists forecast that it will shrink almost 10 percent this year. The ruble has fully recovered from sharp early losses. Militarily on Monday, Moscow pushed forward with slow but steady gains in Ukraine’s east, imposing heavy casualties on Ukraine’s army, while also maintaining persistent shelling of cities both on the Black Sea coast and in the north near the Russian border. On Sunday, the G7 leaders said they were banning imports of Russian gold, another sign that the West is looking for new ways to isolate Moscow from the world financial system. The effort to put a price cap on Russia oil is the brainchild of Janet L. Yellen, President Biden’s Treasury secretary. The details are likely weeks or more away from being finalized, requiring intense negotiations by G7 finance ministers, private companies and leaders of countries in Latin America, Africa and elsewhere that buy Russian oil. And there is no guarantee that the plan will come together quickly, or at all, or that it will succeed as the G7 leaders hope. There is also a potential political downside in Europe and possibly the United States: To succeed, the plan will need to give China, India and other countries that have not joined the G7 in opposing Russia’s invasion of Ukraine the ability to buy oil at a much lower price than America or much of Europe can. But American officials believe that the details of the plan could be worked out quickly, and that the plan could drive down both Russia’s revenues from oil and the price per barrel on global markets. “I think it can be done relatively quickly,” Jake Sullivan, President Biden’s national security adviser, told reporters at the summit. Ms. Yellen is an economist by training, and her idea rests on a sort of economist’s logic: that countries will seek to pay as little as possible for a crucial commodity like oil, no matter where their leaders stand on the Ukraine war. It also rests on an idea that might seem jarring to anyone who watched Mr. Biden and allies take aim at Russian oil exports soon after its president, Vladimir V. Putin, launched the invasion of Ukraine. Instead of seeking to drive Russian oil off the world market, the price cap would try to keep Moscow’s oil exports flowing — but at a cut rate. The United States has already banned Russian oil, and in coming months European allies will prohibit most Russian oil exports. The Europeans will also reduce their own gas imports from Russia by the end of the year. Any price caps would not interfere with these existing bans. Despite the sanctions, Russia’s revenues from oil sales havebeen on the rise, a function of soaring fuel prices, while consumers around the world have faced mounting pain at the gasoline pump.
Another Twit genius: 79 crude shipments into Rotterdam, Netherlands Europe's largest crude oil terminal. Oh BTW Netherlands also have 5 other large terminals. All feed out to other countries, like France, Switzerland, etc. Just like cargo moved by containership Rotterdam is one of the largest in the world for dry cargo too. That's what they do.
That Russian general there looks like he might have visited Mickey D's a few times, eh. Oh yeh. Some Chicken McNuggets to hold you over until your Big Mac comes. Them waz the days. And the toy potato that came with your Happy Meal. What more could a Ruskie ask for? If Mickey D's served vodka they would think they had died and gone to heaven. When they kill that mofo, I think he should count for two.