Archives for July 2015

ExxonMobil Q2 profit plunge 52% to $4.2bn, worst in 6yrs

July 31, 2015 by NewsMaker Leave a Comment

“Our quarterly results reflect the disparate impacts of the current commodity price environment, but also demonstrate the strength of our sound operations, superior project execution capabilities, as well as continued discipline in capital and expense management,” said an ExxonMobil statement issued Friday.

The company had a profit of $1 per share compared with $2.05 a year earlier, while Wall Street analysts expected a profit of $1.11 per share.

Upstream or exploration and production business profit, plunged 74 percent to $2.03 billion. Production improved 3.6 percent to 4 million oil-equivalent barrels per day, according to the statement.

Chemical earnings were higher by 48 percent than in the second quarter of 2014 at $1.2 billion.

Corporate and financing expenses were $593 million for the second quarter of 2015, down $60 million from the previous year’s result, the company said.

Capital spending fell to $8.26 billion from $9.8 billion a year earlier.

Exxon reduced spending on major projects like floating crude platforms and gas export terminals by 20 percent to $6.746 billion during the quarter.

Other oil majors could not escape the carnage. Earlier this week, BP reported an almost 64 percent drop in its quarterly profits, while Shell announced Thursday it’s cutting 6,500 jobs and reducing capital spending by 20 percent this year. All of them blamed the oil price collapse.

The companies are also among energy majors that have put off $200 billion in spending on 46 major oil and gas projects as a result of the price slump.

Crude fell to near four-month lows this week after a better than 30 percent rebound in the first quarter of 2015.

Brent crude for September in Friday trading was down 51 cents at $52.80 a barrel. West Texas Intermediate (WTI) lost 70 cents at $47.82.

Article source: http://www.rt.com/business/311282-exxon-profits-slump-oil/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Filed Under: Global Business

Wintershall to join Russia-led Nord Stream-2 gas pipeline

July 31, 2015 by NewsMaker Leave a Comment

A memorandum of understanding was signed by BASF/Wintershall and Gazprom Friday.

“Taking into consideration the growing demand of the European Union, the expansion of the gas transportation infrastructure that links the gas fields in Russia directly to European markets, will further enhance the security of gas supply to the European continent,” said Gazprom Deputy Chairman Aleksandr Medvedev in a press release Friday.

E.On, OMV and Royal Dutch Shell have already agreed to participate in expanding Nord Stream. A memorandum of intent was signed by the companies at the 2015 St. Petersburg Economic Forum (SPIEF) in June.

The preliminary cost of construction of the Nord Stream-2 is €9.9 billion, said Gazprom CEO Aleksey Miller earlier in July. The construction consortium is planned to be launched by this September, with the project itself expected to be started by the end of 2019.

According to Miller, the consortium may be soon joined by Engie of France (formerly GDF Suez).

The Nord Stream-2 project is expected to follow the line of Nord Stream. Gazprom will retain a 51 percent stake in the project, while other shares will be divided between foreign shareholders.

Construction of the 1,224-kilometer Nord Stream pipeline began in 2010. The two adjacent pipelines have been operational since 2011 and 2012, with the annual gas throughput expected to reach 55 billion cubic meters.

Wintershall is a subsidiary of chemical giant BASF, and is the largest crude oil and natural gas producer in Germany.

Biggest gas customer

In a Friday press release Wintershall confirmed its forecast of 0.8 percent annual growth in gas demand in the EU which would continue until 2040 and gas production in the region would fall 2 percent annually. This would help Russia retain its position of the main provider to the market.

In May 2015 Germany purchased 68 percent more gas compared to May 2014, Gazprom CEO Aleksey Miller said at a meeting with President Putin in June.

“This points to the fact that the demand for Russian gas is growing and there is no doubt that the issue of new contacts for long-term Russian gas supplies to the European market is on the agenda of talks with our European partners,” he said.

Germany has been the biggest customer of gas from Gazprom, buying 38.7 billion cubic meters in 2014. This is roughly a third of all Gazprom exports to Western Europe.

Article source: http://www.rt.com/business/311257-russia-nord-stream-germany/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Filed Under: Global Business

Creditors offer Ukraine 5% debt write-down

July 31, 2015 by NewsMaker Leave a Comment

The proposal was made this week by Ukraine’s largest creditor Franklin Templeton Investments which holds about $8.9 billion in bonds, the Wall Street Journal cited two people close to the negotiations Thursday. It was agreed by other members from the committee of the country’s major bondholders.

“As long-term investors in Ukraine, the committee has led efforts to ensure a rapid, mutually acceptable and sustainable debt restructuring, while also retaining the country’s vital access to capital markets,” one person said.

Ukraine recently indicated it is ready to agree to a less severe ‘haircut’ than it has previously asked for, according to the second person familiar with the talks. The country had asked for a 40 percent haircut worth about $15 billion.

“The creditors have bitten the bullet,” Jakob Christensen, an analyst at Exotix Partners in London told Bloomberg. “It’s give and take from here, so a compromise is probably the most realistic. I don’t think the IMF and the government will be satisfied with a small principal haircut. They will need more like 25 percent.”

Kiev has been trying to persuade foreign private creditors to make concessions as the country has to meet the conditions for the next $2.5 billion tranche of the IMF’s $17.5 billion loan. The fund will release money only if it’s satisfied with the economy, budget and monetary reforms in the country. The IMF board of directors is holding a meeting to discuss theissue on July 31.

The country’s GDP is expected to shrink 9 percent this year, with annual inflation expected to jump to 46 percent, the IMF warned. The debt will hit 95 percent of GDP this year, according to the National Bank of Ukraine.

Ukraine avoided a technical default earlier this month by making a $120million coupon payment on its Eurobonds. The next key bond payment of $500 million is due in September.

Payments on foreign debt should amount to $257 million this month. $98 million will be payments on official loans of $159 million from international financial institutions.

Article source: http://www.rt.com/business/311252-ukraine-debt-creditors-haircut/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Filed Under: Global Business

Russia cuts key rate to 11% despite weak oil and ruble

July 31, 2015 by NewsMaker Leave a Comment

“Major macroeconomic indicators demonstrate further economy cooling. The Bank of Russia estimates GDP decrease in 2015 Q2 compared with the similar quarter last year to be more significant than that in Q1 2015,” the Central Bank of Russia (CBR) said in a statement Friday.

The regulator expects consumer price rises will continue to slow amid slack domestic demand.

“Annual inflation will fall below 7 percent in July 2016 and reach the 4 percent target in 2017. The Bank of Russia will further decide on its key rate depending on the balance of inflation risks and risks of the economy cooling,” CBR added.

The Russian ruble continued its decline on Friday following the Central Bank’s rate cut decision, trading at 61.09 against the dollar and 67.72 against the euro on the Moscow Exchange at 17:37 MSK.

READ MORE: Ruble tumbles before Central Bank key rate decision

While helping balance the effect of falling oil prices on the Russian budget, the weaker ruble means more expensive imported goods.

The regulator also said that “the economic situation in Russia will further depend on the dynamics of world energy prices and the economy’s ability to adapt to external shocks”. The scenario of oil prices remaining below $60 per barrel for a long time is more probable than it was in June, the bank added.

The next rate setting meeting of the Bank of Russia Board of Directors is scheduled for 11 September 2015.

In June, the Central Bank of Russia cut the key interest rate from 12.5 to 11.5 percent, citing lowering inflation risks as the economy was cooling. The bank then predicted annual inflation by June 2016 would be under 7 percent and would reach the 4 percent target in 2017. It also said that it would continue to cut the interest rate as inflation continued to slow down.

In December the Central Bank hiked the key interest rate to 17 percent in an attempt to curb inflation risks and ruble depreciation. The measure only temporarily calmed the ruble which then lost more than 20 percent, with one dollar buying 80 rubles on the day.

The Russian currency rebounded in the first quarter of this year to an average of 55 against the greenback. This week the ruble fell to a 4-month low, trading at 60 against the dollar and 66.5 against the euro. The currency weakened due to falling oil prices and the stock market crisis in China.

Article source: http://www.rt.com/business/311244-russia-cuts-key-rate/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Filed Under: Global Business

US imposes further sanctions on Russia over Crimea, east Ukraine conflict

July 30, 2015 by NewsMaker Leave a Comment
Among the newly included firms are affiliate companies of Russian oil giant Rosneft, as well as several organizations linked to one of the country’s major banks – Vnesheconombank.

Sanctions were also imposed against five Crimean commercial ports located in the towns of Sevastopol, Feodoisa, Kerch, Evpatoria and Yalta, as well as the Kerch ferry service.

The US embassy to Russia said that Washington regards the new sanctions not as an escalation of tensions between the countries but rather as a “routine step” in strengthening current US policy.

The embassy said the restrictions are not linked to Russia vetoing the resolution on an MH17 tribunal.

The new US sanctions also targeted a Ukrainian businessman from Donetsk, Oleksandr Yanukovich, son of former Ukrainian President Viktor Yanukovich, who was toppled by the Maidan protests in 2014.

Along with Yanukovich’s son, the list also included the environment minister from his cabinet, Eduard Stavytsky.

Another target of the new US sanctions was Roman Rotenberg, the son of the Russian businessman Boris Rotenberg and the member of the Kontinental Hockey League Executive board.

The US sanctions also targeted Russian arms industry and arms export as the new list targeted the Kalashnikov Concern.

The US sanctions will not affect the corporate activities of the Kalashnikov Concern, as the production of the Izhevsk Mechanical Plant that has been added to the sanctions list has not been delivering to the US for more than a year, the press-service of the Kalashnikov Concern said.

“This is evidence indicating that the United States does not only impose sanctions against the state but also seek to put pressure on the private enterprises. This is evidence of unfair competition and protectionist measures the USA is using amid the growing demand for Russian light weapons as well as the growing sales of Russian weapons on the US market,” the Kalashnikov Concern spokesperson said as reported by TASS.

Adding of two managers of the company to the sanctions list “also caused astonishment and resentment, as these two people are responsible for selling only civilian industry products,” the spokesperson added.

“These new sanctions were imposed to ensure the efficacy of the existing sanctions, these are not new sanctions,” the Department of the Treasury’s spokesman said, adding that “it is a common practice… as sanctions could erode over time without such measures.”

READ MORE: West looks to close loopholes in anti-Russian sanctions – media

“This is not common practice, and this is no coincidence… The US is getting back into the game of competing with Russia,” Gregory Copley, editor of the Defense and Foreign Policy Journal, told RT.

“The sanctions are not helping anybody… they are also reinforcing the growing rift between the United States and the European Union and that will have profound negative effect over their relations as Europe is already split over the sanctions,” he added.

‘Sanctions are hostility, economic warfare’

US sanctions on Russia are a hostile act and there is nothing “routine” about it, a political analyst from the anti-war ANSWER Coalition, Richard Becker, told RT.

“The sanctions are linked to the very aggressive policy that the United States government has been carrying out in Ukraine and against the government of Russia. [It] represents another form of that aggressive behavior that the United States has imposed on so many countries,” Becker said. “It is not ‘routine.’ It is an action of hostility, it is an action of economic warfare.”

“The US does not routinely impose sanctions on other countries which are in gross violation of international law and human rights, like Saudi Arabia or Jordan, which are its allies,” the pro-peace activist added.

Becker also questioned America’s position on issuing sanctions against other countries, given that it is, itself, a nation that violates international laws abroad.

“The US claims it is doing it because Russia violates the international law, but the US continues to violate the international law in its illegal occupation of a number of countries, including Iraq. Yet there are no sanctions against the US by other countries, which is due to its power and has nothing to do with justice or abiding by international law or not,” he said.

Becker believes that it is uncertain whether other European countries will join in further sanctions due to their close economic ties with Russia.

Article source: http://www.rt.com/business/311201-us-expands-russia-sanctions/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
Filed Under: Global Business

IMF won’t join Greece’s rescue unless creditors agree on debt relief

July 30, 2015 by NewsMaker Leave a Comment
The fund will not decide whether to agree a new program for Greece for months or even until next year if IMF negotiators do not “participate in policy discussions,” according to a four-page “strictly confidential” summary of Wednesday’s IMF board meeting obtained by the Financial Times.

The fund said it will only decide whether to participate during ‘stage two’ after Greece has “agreed on a comprehensive set of reforms” and after creditors have “agreed on debt relief.”

READ MORE: Greece was forced to accept ‘recessionary’ bailout deal – Tsipras

This puts at stake the future of the rescue deal for Greece, that many hope should eliminate the risk of Greece leaving the euro and jeopardizing the whole currency bloc.

The IMF’s involvement in the deal is crucial for some European countries, especially for Germany. Earlier this month Germany’s Finance Minister Wolfgang Schaeuble said some members of the government in Berlin would have preferred that Greece take a “time-out” from the eurozone rather than give it another bailout.

The IMF board’s announcement comes as negotiations are held between the creditors and Athens. Last week Greek lawmakers backed a second package of austerity measures demanded by the country’s lenders.

A 3-year financial aid deal which requires tax hikes and raising the retirement age caused much debate and criticism in the Greek government.

Greek Prime Minister Alexis Tsipras on Thursday claimed the country faced a dilemma between a difficult compromise and a disorderly default when agreeing the deal. He said that a Grexit was not a choice while the deal was also not of their choice.

Earlier this month Greece repaid €6.8 billion to the ECB and the IMF, after it received a €7 billion bridging loan from international creditors.

Greece intends to finish the talks by August 20, when a €3.2 billion bond repayment to the ECB is due.

The IMF has repeatedly said European creditors should write-down a massive amount of Greek debt or give Greece a 30-year grace period if they want it to recover and repay. The fund called Greece’s debt unsustainable, warning the €86 billion program will not save Greece from financial collapse.

Article source: http://www.rt.com/business/311193-imf-greece-bailout-concerns/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
Filed Under: Global Business

West looks to close loopholes in anti-Russian sanctions – media

July 30, 2015 by NewsMaker Leave a Comment
According to the newspaper, the US and the EU are gathering information about the structures affiliated with sanctioned Russian entities. The West is also looking into loopholes used by blacklisted companies to evade the sectoral sanctions. In the US this work is done by the Department of the Treasury, in the EU – by national authorities and the European Commission.

The newspaper’s diplomatic sources do not directly speak about imposing new sanctions against Russian citizens and companies if such schemes are found, but say that “all necessary leverage could be used.”

Market participants acknowledge such circumventions, primarily in the engineering industry. However, finding evidence is difficult, as Western suppliers are eager to continue working with Russian business.

“There are ways to deliver equipment by stating in the documents that it is not meant for the offshore oil fields. It’s easy to do, for example, with oil pipes. Of course, foreigners are aware, but they also understand that they have to earn the money,” said the newspaper’s source.

READ MORE: ExxonMobil admits $1bn lost from anti-Russia sanctions

The newspaper investigation failed to find large-scale schemes to get around the sanctions. Restrictions on financial markets have been fully implemented, and their participants unanimously confirm this. Oil sanctions have also been working, as Rosneft and ExxonMobil froze their relationship.

In June, the EU extended economic sanctions against Russia for a further six months, which followed the EU’s decision to extend sanctions against Crimea for another year. The sanctions will remain in force until January 31, 2016 to ensure the Minsk agreement is implemented.

READ MORE: EU extends economic sanctions against Russia for 6 months – official

As a counter, President Putin signed an order to extend Russia’s measures in response to Western sanctions for a year starting from June 24, 2015. Moscow has been repeatedly saying that it is giving reciprocal measures to Western restrictions and is ready for dialogue.

Article source: http://www.rt.com/business/311180-anti-russian-sanctions-evasion/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
Filed Under: Global Business

Oil prices will not fall lower – OPEC chief

July 30, 2015 by NewsMaker Leave a Comment
“At the last meeting, in June, we agreed that we will not reduce production quotas. It is 30 million barrels a day, and will remain so,” said El-Badri, responding to a question on whether there is an understanding within OPEC on reducing production quotas.

The global oil demand will increase by 7-11 percent a year until 2020, said Novak. The growth will continue even after 2020, he added.

The Russian Energy Minister said that the situation in the crude market will improve in 2016, as Russia and OPEC share the same views on many questions.

“Despite continuing uncertainties, there are possible signs of achieving a more balanced situation in the oil market and to stabilize it by 2016, which is a mandatory requirement for the continuity of timely and sufficient investments,” said a joint statement released after the meeting.

READ MORE: Shell cuts 6,500 jobs investment by 20% over weak oil

The pricing policy of Russia and the OPEC oil production cuts were not discussed at the meeting with El-Badri, said Novak.

“A number of countries do not want to do this, so OPEC decided to maintain the production volume. The balance of supply and demand must be brought into line by the market,” he added.

Speaking about decreasing demand from world’s biggest energy consumer, China, El-Badri said OPEC doesn’t fear it.

“China has a problem with oil reserves, there is some speculation there. But their economy is growing,” said the OPEC head.

The next meeting between Russia and OPEC could take place in Vienna in the second half of 2016.

Return of Iran

Commenting the Iran nuclear deal, the OPEC chief said the world market will be able to take up the volume of oil that will come from Tehran after the removal of sanctions. “We will certainly be able to accept the new amount,” said El-Badri.

He said the organization welcomed the lifting of sanctions against Iran.

READ MORE: Energy sanctions on Iran can be lifted by November – deputy oil minister

The oil market could change by 2016 because of the Iranian comeback, said El-Badri. Iran also wants to develop new fields and develop new projects, but “it will begin to occur within 5-6 years,” he added.

Article source: http://www.rt.com/business/311159-opec-oil-production-russia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
Filed Under: Global Business

Greece was forced to accept ‘recessionary’ bailout deal

July 30, 2015 by NewsMaker Leave a Comment
Speaking to the Syriza committee in Athens Thursday, Tsipras tried to defend Greece’s €86 billion bailout deal with the international creditors, saying that Grexit was not a choice. It would have forced Athens into devaluation and going back to the IMF for support, he added.

READ MORE: 5 key points in landmark Greek debt accord

“If someone believes another government could have brought back a better deal they should say so,” Kathimerini newspaper quoted Tsipras as saying.

READ MORE: Anti-austerity protest in Athens as MPs vote for second bailout reform package (PHOTOS, VIDEO)

The PM added that Syriza’s efforts had managed to stir up the EU.

“We created the first cracks in Europe’s neoliberal hegemony. We have to give a definitive answer on whether a leftist government can exist in a liberal, conservative Europe,” Tsipras said.

This month, Tsipras reached an agreement with the troika of creditors on a €86 billion 3-year financial aid deal. The offer demands further austerity including tax hikes and raising the retirement age.

READ MORE: No to ‘EU colony’: Tsipras faces opposition from govt people against bailout deal

Many members of Syriza, including former finance minister Yanis Varoufakis, openly consider Alexis Tsipras’ policy contradictory to the results of the July 5 referendum, in which 61 percent voted against austerity. The lack of unanimity in the Greek parliament may put an end to the coalition and thus lead to new elections.

The Greek parliament has already adopted two packages of changes, which allowed Athens to kick off negotiations with creditors on unlocking the bailout.

Greece intends to finish the talks by August 20, when a €3.2 billion bond repayment to the ECB is due.

“There is a viewpoint the blackmail (by creditors) was not real, and there should not be an agreement. This view cannot wait until the extraordinary congress,” Tsipras said, suggesting a ballot on the issue on Sunday.

LISTEN MORE:

Article source: http://www.rt.com/business/311143-tsipras-bailout-deal-creditors/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
Filed Under: Global Business

Shell cuts 6,500 jobs & investment by 20% over weak oil

July 30, 2015 by NewsMaker Leave a Comment
“We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery. We’re taking a prudent approach, pulling on powerful financial levers to manage through this downturn, always making sure we have the capacity to pay attractive dividends for shareholders,” said CEO Ben van Beurden on Thursday.

Alongside the 6,500 job cuts, the company is going to reduce its investments by $7 billion from last year’s $30 billion.

Shell also reported net income of $3.84 billion in the second quarter, 37 percent down from $6.13 billion a year earlier, but up from the $3.25 billion in the first quarter.

The company is going to make some big asset disposals. On top of the $20 billion cut in assets between 2014 and 2015, Shell said that an additional $30 billion worth of assets would be sold in 2016 -2018. This includes the disposal of 33 percent in Japan’s second-biggest oil refiner, Idemitsu Kosan for $833million.

As of the acquisition of BG, Shell said the $70 billion deal was on track.

READ MORE: Oil slump leads to $200bn cut in new energy projects – study

This decision comes at a time of other cost cutting in the industry. About $200 billion investment in major energy projects has now been frozen since the crude prices started falling again. The fall in prices was accelerated by OPEC’s decision not to cut crude oil output. Another reason is bad data from Beijing, the world’s biggest energy consumer.

Another oil giant, BP, announced Tuesday, that its underlying replacement cost profit for the second quarter was $1.3 billion 64 percent lower than a year earlier, and 50 percent below the first quarter. The company explained the decline on low energy prices, a reduced contribution from Rosneft, and unrest in Syria. Another key factor was the company’s settlement with the US authorities over the 2010 Deepwater Horizon oil spill. The company is to pay $18.7 billion over 18 years.

Article source: http://www.rt.com/business/311142-shell-cuts-6500-jobs-cut/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
Filed Under: Global Business

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