Archives for September 2014

Article source: http://rt.com/business/191872-ebay-expanding-commerce-russia/

A French farmer drives his tractor as he harvests apples in a 8 hectare apple orchard at the Verger d’Epinoy near Cambrai, northern France September 3, 2014. (Reuters/Pascal Rossignol)

The EU has announced emergency funding for perishable fruit and vegetables hit by Russia’s EU food ban as part of efforts to help cover part of the farmers’ losses that are estimated at billions of euros.

The cash strapped European Commission has stumped up €165 million
($209.4 million) to help fruit and vegetable farmers hit by the
Russian food ban, officials said Monday.

“I am pleased that the Commission has managed to mobilize a
further €165 million to help ease the market pressure for fruit
and vegetable growers following the Russian ban,” Dacian
Cioslos, the EU’s agricultural minister, said in a statement. He
added that the financial package would provide “short-term
relief.”

The €165 million is in addition to €125 million announced in August. The August package was
suspended on 10 September because of the EU’s full budget for
that period had already been allocated.

The new plan includes products like pears, apples, cucumbers and
carrots. It will run until the end of the year and is estimated
to cover up to 400,000 tons of products.

Drop in the ocean

The amount is based on the average exports to Russia during the
last three years for the period since the food ban was announced.
Amounts have been deducted to take into account of volumes which
have already been claimed under the initial €125 million euro
scheme.

The true amount of losses that EU farmers will have to bear is
difficult to accurately calculate as some will be able to find
other markets for their products, while some will find it more
difficult.

In August Vygaudas Usackas, the EU’s ambassador to Russia,
estimated that Europeans could lose as much as $12 billion from
the Russian ban.

READ MORE: EU farmers complain €125 million compensation
is just drop in ocean

Figures are not yet available on how much
money EU farmers have lost since August 7, when Moscow imposed
the trade ban. On average EU farm exports to Russia were worth
about €11 billion a year, which is equivalent to ten percent of
all EU agricultural sales.

READ MORE: Russia’s import ban means big business
for Latin America

Article source: http://rt.com/business/191896-eu-russia-sanctions-farmers/

Andrey Kostin, President – Chairman of the Board, member of the Supervisory Council, VTB Bank. (RIA Novosti/Mihail Mokrushin)

​Two to three years would be enough time for Russia to switch to international settlements to the ruble, Andrey Kostin, head of Russia’s second-biggest bank VTB, said.

“Two to three years is enough, not only to launch
[settlements in rubles], but also to complete these mechanisms.
But much will depend on how banks will cope with the task,”
Kostin said in an interview with Izvestia newspaper.

Kostin first put forward the idea of switching to national
currencies in international settlements about a decade ago, which
means a move to the ruble shouldn’t be considered a
counter-sanction measure.

“I did not find understanding in this matter with the
previous leadership of the Central Bank [10 years ago ] They
believed that since the [US] dollar works, we shouldn’t do
anything, and settlements in rubles will just bring additional
risks. Under the new leadership the position of the Central Bank
changed. I think that soon we will achieve a major
breakthrough,” Kostin said.

Creating a national payment system and establishing a domestic
rating agency are among other priorities for the bank, the VTB
head added.

SWIFT action

The media has reported on the possibility of the US and EU
widening sanctions to exclude Russia from the SWIFT global money
transfer system.

Kostin said the move would become “a point of no return”
and that any further dialogue would be impossible if SWIFT was
cut off.

“If you look at Iran’s experience, shutting down SWIFT only
happens when all relations; political, economic, cultural, even
diplomatic, break down,” the VTB boss said.

“I don’t know how [Western] banks could block SWIFT and then
expect cooperation in the fight against terrorism and nuclear
disarmament.”

However, replacing SWIFT within Russia won’t be difficult, Kostin
said.

“We have a [similar] system at the Central Bank of Russia and
others. The Central Bank has tested this system, and we can
switch to it at any moment.”

He said that domestic payments account for about 90 percent of
VTB settlements and won’t be affected. Across the entire Russian
banking system the share of domestic payments is even higher,
Kostin explained.

Article source: http://rt.com/business/191804-russia-ditch-dollar-2-years/

AFP Photo/Josep Lago

Online auctioneer eBay and online money transfer service PayPal are to become two separate companies, with the goal of getting PayPal publicly traded in 2015.

The eBay-owned and California-based online money giant PayPal
will become a separately traded company by the middle of next
year, according to a statement published on PayPal’s website on
Tuesday morning.

“The company expects to complete the transaction as a
tax-free spin-off in the second half of 2015, subject to market,
regulatory and certain other conditions,” the statement
says.

The move was largely advocated by investor Carl Icahn, who has
long lobbied for a PayPal spinoff. According to the press
release, PayPal revenue grew 19 percent over the last year to
$7.2 billion. EBay’s revenue of $9.9 billion is still bigger, but
expanding at a slower pace.

EBay purchased then up-and-coming PayPal on July 8 2002 in a $1.3
billion stock deal. PayPal was founded in 1998 by Stanford alumni
Peter Thiel and Ken Howery and University of Illinois graduates
Ukrainian-born Max Levchin and Polish-born Luke Nosek, and later
joining with Elon Musk’s x.com in 2000.

“For more than a decade eBay and PayPal have mutually
benefited from being part of one company, creating substantial
shareholder value. However, a thorough strategic review with our
board shows that keeping eBay and PayPal together beyond 2015
clearly becomes less advantageous to each business strategically
and competitively,” eBay head John Donahoe said in the
statement.

“We believe eBay and PayPal will continue to do so as
separate, independent companies. Tremendous opportunities exist
for each business,” he added.

Donahoe will step down as CEO of eBay once the split is final and
Devin Wenig, who is the current president of eBay Marketplaces,
will become the new eBay boss. Donahoe will stay with the
company.

Before the announcement was made, both companies denied rumors of
the juncture.

Up until now, PayPal has acted as an insurer for eBay products,
so if a product gets lost in the mail or a seller is a fraud;
PayPal is responsible for returning money to the eBay buyer.

Article source: http://rt.com/business/191828-paypal-ebay-split-2015/

Reuters/Sheng Li

US liquefied petroleum output is set to overhaul Saudi Arabia in September or October, for the first time since 1991. In terms of crude oil production, the US is still in third, with Russia in the lead.

US production of liquid petroleum reached 11.5 million barrels
per day, on track to outpace Saudi Arabia’s 11.6 million barrels in the
next few months, according to August data from the International Energy Agency,
published on September 10.

The sanctions will also create problems for Western companies
like ExxonMobil, BP, Shell and others, who have joint ventures
worth billions of dollars in Russia.

Oil prices have already hit record lows this year as supply
outweighs demand due to the conflicts in Ukraine, and the Middle
East, as well as the reintroduction of Libyan production into the
market.

So far, Brent crude has fallen from about $108 a barrel at the
start of the year to about $96.50 today.

Article source: http://rt.com/business/191764-us-overtake-saudi-arabia-petroleum/

Igor Sechin, president, chairman of the management board and deputy chairman of the board of directors at OJSC Rosneft.(RIA Novosti / Vladimir Astapkovich)

Drilling in the Kara Sea will continue into next year, even if sanctions prevent US firm ExxonMobil from participating, Russia’s Deputy Energy Minister Kirill Molotsov said Monday.

According to Molotsov, Russia can independently go ahead with the
necessary drilling in the Kara Sea in 2015 with the help of
drilling platforms owned by Russian companies. Russia’s largest
oil company, Rosneft has opened a large deposit of oil and gas in
the area.

“In total, we have about eight units of 100 percent
Russian-owned platforms,” the deputy energy minister said.

In the event Exxon leaves, work in the Arctic will continue,
Rosneft CEO Igor Sechin has confirmed.

“Of course we’ll do it on our own and attract the necessary
technologies and different partners who don’t have limitations on
cooperation,” the Rosneft CEO said in an interview with
Bloomberg News.

On September 12, the US banned Western companies such as BP,
Shell, Exxon, and Total from working on Arctic, deep-sea, and
shale oil projects in Russia in an attempt to punish Moscow for
its perceived meddling in the Ukraine conflict.

At the same conference, Molotsov also said that the Russian
government is prepared to financially support energy companies
such as Rosneft that are feeling the squeeze of sanctions. Other
energy companies sanctioned are Gazprom (but only by the US),
Gazprom Neft, Lukoil, Transneft and Surgutneftegaz.

Rosneft and Exxon launched a new drilling well,
Universitetskaya-1, in the Kara Sea on Saturday. However, Exxon
will have to wind down operations before the October 10 deadline
set by the US government. Exploration and development will have
to be continued by Rosneft without Exxon, or be put on hold until
sanctions are lifted.

Billion-barrel field

On Saturday, Rosneft’s CEO Igor Sechin, along with Russian
President Vladimir Putin, were present at the unveiling of the
northernmost oil well in the world, which is estimated to have
cost over $700 million. Oil output from the field may begin in
the next five to seven years, Sechin said.

Though no exact estimates are available to date, experts believe
it could hold up to 1 billion barrels of oil or crude equivalent,
bigger than offshore reserves in the Gulf of Mexico, Alaska or
Canada. There are also more than 300 billion cubic meters of
recoverable gas reserves.

Recoverable oil is just important to Rosneft as to ExxonMobil,
both of which are facing production shortages, and need to find
new sources to replace old and depleted ones. Russia and the US
are neck-and-neck in claiming to be the world’s biggest oil and
gas producer, a title Russia currently claims but America is
close to taking over.

The Kara Sea field will be named “Pobeda” or “Victory.”

“We will continue drilling here no matter what,” Sechin
told Bloomberg News.

Both Rosneft and Sechin are targets of the US and EU sanctions
against Russia.

Article source: http://rt.com/business/191460-russia-drill-exxon-arctic-sechin/

Reuters / Adrees Latif

The European Commission in Brussels is preparing to accuse the world’s biggest company of getting special treatment from the Irish government in exchange for creating jobs. It could result in a record fine of several billion euro.

The iPhone maker could receive the record fine after paying a
corporate tax rate of less than 2 percent between 1991 and 2007,
an arrangement made after the company had operated without any
taxes since it arrived in Ireland in 1980, the Financial Times
(FT)reported. The FT said Apple has kept $137.7
billion in cash out of the reach of American tax
authorities.

The EU is expected to publish a report on the Apple inquiry on
Tuesday, according to Reuters.

Allegedly, the Silicon Valley company struck the deal with Irish
authorities at the end of its tax-free era, which resulted in a
20 year period where it still received preferential treatment,
whereas local Irish companies did not.

The Commission will investigate whether the deal violates EU
rules. Apple said that it hasn’t broken any laws with the
agreement.

“There’s never been any special deal, there’s never been
anything that would be construed as state aid,” Luca
Maestri, Apple’s chief financial officer, told the FT.

The inquiry also involves Starbucks, which has its European base
in the Netherlands, and Fiat Finance and Trade in Luxembourg.

The formal investigation was announced in June, after an informal
probe last September, which focused more on the low taxes US
firms were able to operate under in Ireland.

In May, the US Senate accused Apple, the world’s richest company, of
hiding $74 billion in profits from US tax authorities over the
previous four years.

Apple has denied claims of tax evasion, and said that since a
majority of revenue comes from international sales, foreign funds
are needed for expansion, promotion and competition.

The California-based company is one of Ireland’s largest
employers, especially at its Cork headquarters, and has invested
$100 million into its Irish operation in recent years, the FT
reported.

Article source: http://rt.com/business/191428-eu-apple-tax-fine/

Russia’s President Vladimir Putin (R) with European Commission President Jose Manuel Barroso.(Reuters / Yves Herman)

The EU says it is ready to discuss changes to its trade pact with Ukraine if Kiev asks for revisions. The statement came after Vladimir Putin sent a letter to the presidents of the European Commission and Ukraine, calling for changes to the deal.

Brussels is ready to
discuss both the implementation of the Association Agreement and
its effects on Russia, José Manuel Barroso, President of the
European Commission, told the Wall Street Journal in an
interview Thursday.

“If the Ukrainians, listening to Russian concerns, want to
discuss some matters with us, of course we are ready to
listen,” he said.

READ MORE: 5 facts you need to know about the
Ukraine-EU trade deal

Barroso emphasized that a constructive cooperation was “in
the interests of everybody.”

He added: “We are open and we are constructive and are
pragmatic.”

Putin’s letter

Barroso statement was made after President Vladimir Putin sent a
letter to him and Ukraine’s president, Petro Poroshenko, in which
he urged his counterparts to revise the agreement.

Putin said a 15-month delay in bringing the agreement into force
would enable negotiating teams to make wholesale changes to the
deal.

READ MORE: EU-Ukraine integration pact postponed
till 2016 after talks between Moscow, Kiev Brussels

“We still believe that only systemic adjustments of the
Association Agreement, which take into account the full range of
risks to Russian-Ukrainian economic ties and to the whole Russian
economy, will allow [us to retain] existing trade and economic
cooperation between the Russian Federation and Ukraine,” the
Financial Times cited Putin as saying in the
letter.

The letter was sent to the EU and Poroshenko on September 17, a
day after both Ukraine and the EU ratified the Association
Agreement.

READ MORE: Ukraine and EU ratify landmark
Association Agreement

On Friday, Yuri Ushakov, an aide to President Putin, confirmed to
RIA Novosti that Putin had sent the letter to the EU and
Poroshenko, without disclosing any details.

In turn, European Commission spokeswoman Pia Ahrenkilde Hansen
confirmed Friday that Barroso had received Putin’s letter, adding
that he needed time to reply.

Article source: http://rt.com/business/190908-eu-association-agreement-putin/

On the evening before
gas talks, Russian Energy Minister Aleksandr Novak warned that
that supplies to Europe would be threatened if
customersre-exported any Russian gas.

“We know that Gazprom has never welcomed reverse supply,
because it is unrealistic in terms of overall legitimacy and
abnormal in terms of gas business,” Aleksandr Pasechnik,
head of research at the National Energy Security Foundation, told
RT.

The statements were made during another round of gas talks in
Berlin held by Russia, the EU and Ukraine on Friday.

Drawn – out negotiations

Earlier rounds of EU-brokered gas talks between April and
mid-June failed to produce results.

Gas price for Ukraine has been a stumbling block, as Kiev still
insists it is too high. Russia has offered Ukraine a final price
of $385 per 1,000 cubic meters, a price lower than it sells to
any other European customer.

In June, Gazprom switched Ukraine to a prepayment system after
Kiev refused to pay its billion dollar debt or agree to price
negotiations. Russian gas still flows through Ukraine to Europe,
but Kiev cannot take off any gas they don’t pay for up front.

Ukraine’s debt to Gazprom has been accruing over the year.
After Crimea rejoined Russia in March, the Russian gas giant
canceled Kiev’s discount, and the price skyrocketed from $268.50
per 1,000 cubic meters to $485 per 1,000 cubic meters, a nearly
80 percent increase in price.

Chill winter looming?

Meanwhile, the current gas situation is not helping millions of
people in Kiev, who are bracing themselves for a tough winter.
With temperatures plunging below zero, without hot water and heat
their apartments will be unbearably cold.

“We are strengthening the doors and windows to help save heat
– but how’s that going to help if it becomes really cold?”
an old women from Kiev told RT.

Kiev authorities have already turned off hot water throughout the
city in an attempt to save gas for the winter months.

“We have a kid and it’s already difficult enough without hot
water – we have to boil it ourselves using gas or electricity. In
case of more disruptions – I don’t know what we’ll do,” said
Alla, a young mother.

The Kiev city administration is reportedly considering three
future possibilities: a complete shutdown, supplying hot water at
lower temperature, or switching to a scheduled hot water supply.

People are now rushing out to buy electric-powered boilers for
their energy needs.

“We never planned to buy a boiler but now I’m forced to
borrow money from my relatives to afford one,” a local woman
said.

But despite the inconvenience people are bearing with utility
bills doubling.

The Ukrainian gas distribution company Naftogas warned that gas
prices may quadruple by the end of the year as the company plans
to set a unified price for all consumers.

Article source: http://rt.com/business/190952-gas-talks-russia-berlin/

Reuters / Laszlo Balogh

Natural gas deliveries to neighboring Ukraine have been halted “indefinitely”, said Hungary’s prime minister, Viktor Orban, a day after securing a new deal with Russian gas giant Gazprom.

Hungary’s gas pipeline network operator FGSZ suspended gas supply
to Ukraine as of 4pm GMT on Thursday, citing a need to meet
increased domestic demand.

“FGSZ Ltd interrupted the gas transmission to Ukraine through
the separate pipeline from Testveriseg (Brotherhood) pipeline on
the afternoon of the 25th September 2014 for an indefinite
period,” the company said in a statement.

Naftogaz, Ukraine’s state-owned oil and gas company, called the
shutoff of supplies “unexplainable and unexpected.”

On Friday, PM Orban, who in the past has likened sanctions with
Russia to “shooting oneself in the foot”,
announced the country had reached agreement with Gazprom CEO
Aleksey Miller to increase gas deliveries to Hungary to fill
storage centers before winter. He made the announcement on
Hungarian public radio, four days after meeting with Miller in
Budapest.

Russia is Hungary’s sole source of natural gas, and in 2013 sent
6 billion cubic meters. Gazprom’s new South Stream pipeline, due
to be complete in 2018, will cross through Hungary. The project
will reduce the unreliable passage of Russian gas to Europe
through Ukraine.

Earlier in September, Poland was also forced to turn off reverse gas flows to Ukraine, after
it claimed Gazprom decreased supplies, which the Russian company
denied. A day later, Poland resumed full deliveries to Ukraine.

READ MORE: Re-export of Russian gas unacceptable
– Energy Minister

Article source: http://rt.com/business/190840-hungary-stops-gas-ukraine-gazprom/