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Sunday, 13 July 2014

Flame 2014: There is no longer a gas boom on the Russian domestic market.

Flame 2014: There is no longer a gas boom on the Russian domestic market.:



"The Russian natural gas market is undergoing “huge, tremendous changes,” according to Tatiana Mitrova, Head of Oil and Gas Department, Energy Research Institute, Russian Academy of Sciences, who spoke at Flame in Amsterdam, the Netherlands in a session devoted to markets and developments regarding Russian gas.



Her graph showed that Russia's “Golden Age of Gas” was applicable until the economic crisis hit in 2008. Everything was growing, she recalled, including gas production, imports, exports and domestic consumption by 4%/annum. “It was positive development which has stopped in 2008-09 and then the situation changed dramatically.”



The growth rates now, she said, were much much slower and there was no longer a “gas boom.”"



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MIDEAST STOCKS-Upbeat Kuwait hits one-month high; Saudi mixed after earnings | News by Country | Reuters

MIDEAST STOCKS-Upbeat Kuwait hits one-month high; Saudi mixed after earnings | News by Country | Reuters:



"Kuwait's bourse stood out in an otherwise sluggish region on Sunday as investors were encouraged by government spending plans, a positive outlook for the banking sector and a string of debt settlement deals.



The Kuwaiti index climbed 1.5 percent to a one-month closing high of 7,179 points, its biggest daily gain since October. Trading volume picked up to its highest level since mid-May, a positive technical sign.



Fouad Darwish, head of brokerage services at Global Investment House in Kuwait, said investors' optimism was fuelled by expectations for higher state investment in long-delayed infrastructure projects, as well as signs of recovery in the corporate and banking sectors."



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Libya will exhaust monetary reserves in 5 years - Al-Monitor: the Pulse of the Middle East

Libya will exhaust monetary reserves in 5 years - Al-Monitor: the Pulse of the Middle East:



"The Central Bank of Libya recently reassured all Libyans worried about the breakdown of the country’s national economy and the collapse of the dinar’s exchange rate that such an eventuality would never occur as a result of the bank’s large reserves in foreign currencies, valued at $113 billion, bolstered by an additional 116 tons of gold.



However, the International Monetary Fund (IMF), which confirmed that Libya possessed important reserves that would help it overcome the crisis in the short term, also warned of the imbalance seen in oil production, and the increase in expenditures, which would drain those reserves in less than five years.



In this regard, the director of the Libyan Stock Exchange, Misbah al-Akkari, stated that available liquidity surpassed 4.6 billion dinars ($3.8 billion), both inside and outside the country, with state accounts holding more than $110 billion abroad. But, according to him, the problem still revolved around the ability to move required liquidity from the central bank to commercial banks as lawlessness continued to spread."



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EconoMonitor : EconoMonitor » Russia Stalls

EconoMonitor : EconoMonitor » Russia Stalls:

From Reuters today:
Russia’s economy is stagnating as data showed on Wednesday that capital worth $75 billion has left the country so far this year following sanctions on Moscow over its involvement in Ukraine.
“We have for now a period of stagnation, or a pause in growth,” Deputy Economy Minister Andrei Klepach was quoted as saying in an interview where he also said that GDP was flat from April to June after shrinking 0.5 percent in the first quarter.
Here are some indicators of stress from political uncertainty, from the IMF’s recent Article IV report on the Russian Federation.
russia_rec
And here is an updated version of GDP growth.
russiagdpgrowth1
Figure 1: Russian q/q annualized GDP growth, in 2000 prices. Source: OECD via FRED through 2013Q4, Reuters for 2014, and author’s calculations.
From the report:
Net private capital outflows increased significantly in the first quarter of 2014 to US$51 billion (Figure 2 and Box 3). Reserves at the CBR experienced additional downward pressures following the sharp increase in FX intervention in early March. The increased level of FX swaps and correspondent accounts between the CBR and domestic banks has temporarily cushioned the level of reserves, which have not declined by the total amount of interventions. While FX swaps were used to access CBR liquidity, the increase in the level of correspondent accounts at the CBR has reflected increased foreign assets repatriation by domestic banks amidst increasing geopolitical uncertainties.
Geopolitical tensions are negatively weighing on the cost and access to financing. Since March, sovereign and private issuances have declined very sharply, with borrowing rates increasing by an average of 100–150 basis points (Figure 2). The government has also cancelled a number of domestic auctions. Moody’s and Fitch revised the outlook on Russia’s sovereign BBB rating from stable to negative while S&P downgraded the sovereign rating by one notch to BBB-, its lowest investment grade category. This downgrade forced similar ratings cut on major Russian corporations such as Gazprom, Rosneft, and VTB bank, as well as subsidiaries of international banks. The geopolitical uncertainty has also given rise to dollarization pressures.
The outflow of $75 billion means that $24 billion worth of capital left Russia (on net) in the second quarter. While this means the pace of outflows is declining, it also means that the first half of the year witnessed a greater outflow than in the entirety of 2013. For certain, Russia seems on the way to the $100 billion outflow for 2014 that some had warned of.
How much of this outflow, and hence weakness in growth, is due to the imposition of sanctions, or the uncertainty associated with the possibility of additional sanctions? FromReuters:
Deputy Finance Minister Sergei Storchak said on Tuesday that sanctions were having a serious indirect impact” and warned of retaliation against further measures by the West.
“The real damage to the economy is potentially much more serious and comes from the voluntary self-sanctions taken by foreign investors, credit providers and some foreign companies active in Russia,” Chris Weafer, a partner of Macro-Advisory, a consulting firm in Moscow, said in a note published by the European Leadership Network.
“While not compelled legally to restrict activities in Russia it is clear that many investors and big international companies have suspended new deals in Russia and have cut risk exposure.”
In other words, the impact has been greater than some skeptics have asserted, and perhaps more in line with my earlier views. [1]
This piece is cross-posted from Econbrowser with permission.


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Israel Shares Rise on Gas Boost Amid Gaza Strike; Kuwait Climbs - Bloomberg

Israel Shares Rise on Gas Boost Amid Gaza Strike; Kuwait Climbs - Bloomberg:



"Israeli stocks rose after energy companies raised estimates for reserves at the Leviathan gas field by 15 percent, even as the conflict between Israel and militants in the Hamas-controlled Gaza Strip intensified.



The TA-25 Index (TA-25) increased 0.9 percent, the most in almost a week, to 1,384.02 at 1:36 p.m. in Tel Aviv. Delek Group Ltd., which owns stakes in the Leviathan field via its Delek Drilling LP and Avner Oil Exploration LLP units, advanced 1.3 percent. Kuwait’s SE Price Index (KWSEIDX) added 1.5 percent, the most since October. Dubai’s DFM General Index climbed 0.1 percent.



Shares rallied as investors speculated fighting between Israel and militants in the Gaza Strip will have limited impact on the economy. Leviathan’s offshore resources are as much as 21.94 trillion cubic feet, up from 19 TCF, Delek Drilling and Avner said in a stock exchange filing and e-mailed statement today, citing petroleum consultants Netherland, Sewell & Associates, Inc. Israel expects the Leviathan field, discovered in 2010, to meet its gas needs for 25 years, while bolstering export earnings."



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SCA board approves new rule for brokerage firms | GulfNews.com

SCA board approves new rule for brokerage firms | GulfNews.com:



"The board of directors of the Securities and Commodities Authority, SCA, has approved a new regulation for brokers and amended two other regulations.



The board approved the new draft regulation for brokers, which was prepared in coordination with the UAE markets and all other stakeholders and concerned bodies in the securities industry.



The 34-article regulation classifies brokerage firms into those which engage in trading only while the clearance and settlement operations are conducted through clearance members and those which engage in trading clearance and settlement operations for their clients."



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Iran Talks Bogged Down on Enrichment as Kerry Arrives in Vienna - Bloomberg

Iran Talks Bogged Down on Enrichment as Kerry Arrives in Vienna - Bloomberg:



"Iran’s uranium enrichment, the industrial process used for nuclear power and bombs, is the focus of disagreement among diplomats at Vienna talks ahead of U.S. Secretary of State John Kerry’s arrival.



Eleven days into negotiations between world powers and Iran over the Persian Gulf country’s nuclear program, significant gaps remain, according to a U.S. official who asked not to be identified following diplomatic rules. Kerry will weigh whether enough progress has been made to strike a long-term accord when he arrives today, the official said.



Diplomats have until July 20 to reach a deal that could ease the decade-long conflict over Iran’s nuclear work. The Persian Gulf country, home to the No. 4 proven oil reserves, says it wants the right to expand its enrichment capacity. The U.S. and its allies want Iran to reduce uranium production now and limit output in the future."



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Djibouti Opposition Blames Politics for DP World Concession Row - Bloomberg

Djibouti Opposition Blames Politics for DP World Concession Row - Bloomberg:



"Djiboutian opposition leader Abdourahman Boreh blamed his rivalry with President Ismail Omar Guelleh for the government’s decision to cancel DP World (DPW)’s concession at the country’s port.



Boreh, a presidential candidate in elections in 2011, also denied any wrongdoing during his tenure as chairman of the Djibouti Ports and Free Zones Authority. Djibouti’s government accuses Boreh of misusing his position to obtain “significant personal advantages” and is claiming $150 million in damages from him in proceedings in London, Dubai, Paris and Singapore.



“The allegations against me are all false,” Boreh said in an interview yesterday from Dubai, where he lives in exile. “I have been victimized. This is a personal vendetta by the president.”"



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Iraq Kurds Use Army to Boost Control of Kirkuk Oilfields - Bloomberg

Iraq Kurds Use Army to Boost Control of Kirkuk Oilfields - Bloomberg:



"Iraq’s semi-autonomous Kurds increased their control over oil resources in the north of the country after deploying armed forces to the Kirkuk and Bai Hassan oilfields.



Kurdish Peshmerga forces took control of the two sites at the country’s fourth-biggest oil field today and ordered workers from Iraq’s state-run North Oil Co. to leave, the Oil Ministry said in an e-mailed statement. The Kurdistan Regional Government said in response that it acted to prevent the central government damaging an oil export pipeline. The Oil Ministry in Baghdad denied the claim. 




“Given the political context, the Kurds are solidifying their control,” Richard Mallinson, an analyst at consultants Energy Aspects Ltd., said by e-mail from London. “The Kurds have signaled their intentions to start moving Kirkuk oil through their pipeline network,” and this is another step toward making their ambitions a reality, he said."



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