October 21, 2020

US expands sanctions against Russia’s Nord Stream 2 gas pipeline

“Such activities subject to sanctions pursuant to PEESA (the Protecting Europe’s Energy Security Act of 2019) or other authorities may include, but are not limited to, providing services or facilities for upgrades or installation of equipment for those vessels, or funding for upgrades or installation of equipment for those vessels,” the State Department said on its website.

The US administration has repeatedly criticized and threatened to impose sanctions on the Nord Stream 2 pipeline, aiming to derail the project that will carry Russian natural gas to Germany via the Baltic Sea.

At the same time, Washington plans to boost sales of American liquefied natural gas (LNG) to Europe. US Secretary of State Mike Pompeo told Germany’s Bild last month that Washington is creating a coalition to hamper the Russia-led project.

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The new pipeline, which was designed to boost gas supplies to Germany and other European states by 55 billion cubic meters (bcm) per year, is currently nearing completion in the Baltic Sea. Russia had to dispatch its own vessels to lay the final kilometers of the route, after Swiss-Dutch company Allseas withdrew its ships due to the threat of US sanctions in December 2019.

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Article source: https://www.rt.com/business/504015-nord-stream-2-us-sanctions/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Democratic elections sweep may be good for stock market in the short-run, but ‘the dollar is going to get KILLED’ – Peter Schiff

“Donald Trump being president was bullish for stocks because of what Trump was doing – if Biden was threatening to undo all that, and to increase taxes and have more regulation – you would think that Wall Street would think that’s a negative,” he said on his latest podcast.

Schiff talked about the Bank of America’s (BoA) best-case scenario for the stock markets, which is a Democratic Party clean sweep. With this outcome, there certainly would be corporate tax increases as well as more regulatory red tape with Democrats in complete control, he said. None of that would be good for the economy, but the reason BoA likes that outcome is that it would likely mean the most fiscal stimulus, Schiff believes.

“What we want is no gridlock. We want the same party controlling Congress. And since there’s no way the Republicans are going to get the House, the only way to have clear sailing, no gridlock at all, to have the most amount of stimulus go through Congress and get signed by the president is if we have a Democrat sweep.”

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He goes on: “And so even though the Democrats are going to raise taxes, this is still good for the stock market. Because this analyst realizes that the Fed and the stimulus trumps earnings. Earnings are secondary. The main game is stimulus. It’s the Federal Reserve that is playing the music that everybody on Wall Street is dancing to. And so, what this analyst is saying is we just need more of this music. The party is going to rage on if we get more stimulus.”

Schiff said this proves that they know the entire stock market boom is artificial. He agrees that the Democrat sweep scenario might be good for the stock market, at least in the short-run, but says it’s the worst possible outcome for America and for the dollar.

“The dollar is going to get killed. All that stimulus, all the deficits that are going to be the result of no gridlock – the traffic is going to flow, meaning the red ink is going to flow. And so that is definitely the worst outcome for the dollar.”

READ MORE: Stock markets will fall dramatically if US election results contested, Mark Mobius warns

According to the economist, “Anything that slows down what government wants to do is a positive. Because government wants to do harm. Government wants to damage the economy. So, to the extent that a divided government minimizes the damage, that’s a positive.”

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Article source: https://www.rt.com/business/503978-democratic-sweep-killing-dollar/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Chinese billionaires boost their fortunes at record pace despite coronavirus crisis

This year has seen the biggest wealth increase in the 22-year history of the Hurun China Rich List, according to researcher Rupert Hoogewerf, the founder of Hurun Report and ‘godfather’ of the rating. The list includes the wealthiest people in China – those whose fortunes exceed two billion yuan, or nearly $300 million.

“Stock markets booming and a flurry of new listings have minted five new dollar billionaires in China a week for the past year. The world has never seen this much wealth created in just one year,” Hoogewerf said in a statement on Tuesday.

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The Chinese super-rich featured on the list increased their fortunes by $1.5 trillion this year – roughly half the size of Britain’s gross domestic product (GDP). The billionaires now own a combined fortune of $4 trillion, more than the gross domestic product of Germany, the world’s fourth-biggest economy, the report says.

Richest 1% cause more than double CO2 emissions of poorest half of humanity – Oxfam Richest 1% cause more than double CO2 emissions of poorest half of humanity – Oxfam

This year’s edition of the China Rich List also highlights that “new economy” sectors like e-commerce and fintech are gaining momentum. Over one third of the wealthiest people in China made money from those industries, while 64 percent generated cash from traditional sectors like manufacturing and real estate.

Founder and former head of online retail giant Alibaba, Jack Ma, retained the top spot for the third consecutive year. His net worth has nearly doubled to $58.8 billion, with his new fintech platform Ant preparing for a blockbuster IPO and Alibaba recording a strong performance.

Two other billionaires – the CEO of internet giant Tencent, Pony Ma, and the founder of popular bottled water brand Nongfu, Zhong Shanshan – also made it into the top three. The trio runs almost neck and neck, the report noted, as Pony Ma’s and Zhong Shanshan’s fortunes amount to $57.4 billion and $53 billion respectively – but Jack Ma took the official top spot on the China Rich List.

The trend of the rich getting richer during the pandemic is not exclusive to China. Many of the world’s wealthiest individuals did extremely well during the crisis, especially those who control the tech sector that flourished amid lockdowns.

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Article source: https://www.rt.com/business/503968-china-billionaires-fortunes-record/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Russia invites BRICS partners to join country’s massive Arctic oil & gas projects

Novak said hydrocarbon reserves in the Russian Arctic are estimated at 7.33 billion metric tons of oil and 50.45 trillion cubic meters of natural gas. That is 24.7 percent and 72.1 percent of Russia’s total recoverable reserves, respectively.

According to Novak, who held a video conference meeting with the BRICS ministers of energy last week, Russia ranks first in the world in terms of proven reserves. Last year, the country became one of the top five global LNG producers, and by 2035 Russia is expected to increase production from the current 29 million to 140 million metric tons of LNG per year.

The Russian energy minister said that natural gas will be one of the most promising and environmentally friendly hydrocarbons of the 21st century and that in the foreseeable future, conventional energy sources will continue to account for the most significant part of the global energy balance.

Also on rt.com Russia to set up oil deposits cluster to tap huge Arctic energy reserves

“According to the BRICS Energy Research Cooperation Platform forecast, by 2040, the share of fossil energy sources will account for more than 70 percent of our countries’ energy balance,” he said.

“I invite our BRICS partners to participate in the implementation of joint oil and gas projects in the Arctic. We are already cooperating with non-Arctic states such as Japan, China and France,” he added. 

He explained that Arctic hydrocarbons have a significant competitive advantage due to the convenience of the Northern Sea Route as the shortest sea route to bring Arctic hydrocarbons to consumers. According to Novak, four out of eight new liquefaction plants planned in Russia will be located in the Arctic (Obsky LNG, Arctic LNG, Arctic LNG 2 and Arctic LNG 3). Two will be built in Russia’s Far East (Far East LNG and Vladivostok LNG), and another two on the Baltic Sea coast (Baltic Chemical Complex and LNG Portovaya).

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China rolls out red carpet for US firms, promising to create fair market environment

The announcement by Xiao Yaqing, head of China’s Ministry of Industry and Information Technology, was made during a video meeting of the US-China Business Council.

Executives from companies including General Motors and Qualcomm took part in the meeting, alongside the heads of the council. The participants discussed the market prospects in areas like 5G technology and new energy vehicles, among other issues.

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Last month, the Chinese Ministry of Commerce also invited US firms to expand their investment in China, saying that it had worked hard to create a sound environment for the enterprises of the two countries. It noted that Beijing has been earnestly implementing the first phase of the China-US economic and trade agreement.

A recent study by the American Chamber of Commerce found that 92.1 percent of American companies in China have no plans to leave the country, despite the Trump administration’s threats to “decouple” the two nations’ trade.

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Article source: https://www.rt.com/business/503897-china-welcomes-us-companies/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Russia could face double-digit drop in gas exports as pandemic cripples demand

Global demand for blue fuel may contract between four and five percent in 2020 compared to the previous year, marking the worst decline in the last 11 years, Russian newspaper Kommersant reported on Monday, citing the agency’s estimates.

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The drop in demand comes amid ongoing efforts to contain the spread of the coronavirus, and as European countries are expected to have a warm winter. As a result, Russia’s energy market could shrink as much as 6.4 percent this year, compared to the global contraction of five percent, according to the NRA’s forecast.

In the first nine months of 2020, Russia pumped half a trillion cubic meters of natural gas, meaning that production fell by eight percent year-on-year. Average daily production is also down by more than 15 percent, mostly due to the fall in production of Russia’s key gas exporter, Gazprom, according to analysts’ estimates. 

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While Russia’s gas exports are set to drop between 15 and 16 percent in total this year, analysts anticipate that they will recover in 2021, when shipments will reach pre-crisis levels of 220.2 billion cubic meters. The recovery will be driven by growing demand from the world’s biggest importer of gas, China, as well as other Asian markets.

The steep decline in energy prices is projected to cut the revenues of Russian energy firms fourfold, while net sales in the country’s oil and gas sector could contract by a third. However, the situation is still expected to improve as soon as next year when prices return to growth.

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Article source: https://www.rt.com/business/503891-russian-gas-exports-2020/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Big Banks could lose billions in the global energy transition

JP Morgan pledged to help clients align their business with Paris Agreement emission targets. HSBC announced up to a $1 trillion in green energy funding. An investor group worth $20 trillion in assets urged heavy emitters to clean up their act. Another group, worth $5 trillion, said it will set lower-emission targets for its own investment portfolio. These are stories from just the last two weeks and they seem to point in the same direction: banks and other financial institutions are growing sour on oil and gas. Could they go all the way?

The trend is not exactly new. US banks began to grow reluctant about continuing to provide loan financing to oil and gas companies before this year’s price collapse and the pandemic. Well productiveness was turning out lower than forecast and borrowers were sinking deeper into debt. Banks had to protect themselves. But this year, the trend has intensified considerably as the green energy movement got a major push from post-pandemic recovery plans, with their originators arguing the only recovery that made sense was a green recovery. Lenders smelled the new opportunities.

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The European Union, for example, has tied the distribution of its pandemic recovery fund of $878 billion (€750 billion) to the requirement that at least 37 percent of the money is used for green energy projects. But Europe is not the only one. Investments in renewables this year have proved more resilient than those in fossil fuels. There has been a decline, true, but it has been lower than that in the fossil fuel sector. So banks are following the money. It might, however, be premature to follow it all the way out of oil and gas. According to industry insiders from both oil and banking, they are unlikely to do that.

A widespread divestment from oil and gas would be harmful for the industry but it would also be harmful to the banks’ new emissions targets, the President of the US Petroleum Equipment Services Association, the national trade association of the oilfield services and equipment industry, told Oilprice.com.

“Renewable energy technology isn’t fully developed at scale to provide the power the world needs, and even if it were, oil and natural gas are an important part of the renewable energy supply chain,” Leslie Beyer explained, adding that the energy transition that is currently underway was not about replacing one form of energy with another but rather getting all forms of energy, the entire ecosystem of energy to work together to provide the world with cleaner, reliable, and affordable energy.

Indeed, the shift to an entirely renewable energy future will be challenging.

“I wouldn’t describe the shift into renewables as ‘grave’ for the oil and gas industry as a whole. While it’s true that a shift started from fossil fuels into renewable energy decades ago, the cost to power the planet from clean energy alone would be very expensive,” said Andrew Goldstein, president of commodity brokerage Atlas Commodities.

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Goldstein did note, however, that despite the challenges, renewable energy is drawing greater attention from Big Oil—and banks—because they see demand for such energy grow in the future.

“In a way, Big Oil is moving in tune with banks: As banks move their investments into renewable projects, those who have put themselves into a position to capitalize on those projects will benefit,” Goldstein told Oilprice.com.

But there is something else about the energy transition that seems to get ignored: it won’t happen in a flash. And if banks are ignoring that, they risk getting burned by their enthusiastic embrace of renewables and shirking of oil and gas.

“A lot of the noise is being generated around the energy transition but it needs to be appreciated that the transition is just that – and it won’t happen overnight,” says Paul Stockley, Head of Oil and Gas at UK-based law firm Fieldfisher. “There is a danger that the banks and others are jumping on the bandwagon too readily and that the role of oil and gas is being lost in the frenzy.”

Acknowledging there has been a definite trend of banks and other financial services providers curbing their exposure to the oil and gas industry, Stockley added that a complete exit would be harmful to lenders, as well as borrowers.

“Banks turning away from oil and gas could lose out on business opportunities as a result, including energy transition opportunities if they base lending decisions on a sector rather than technology,” he told Oilprice.com.

It is a fact that many at the pro-renewables end of the energy scale tend to overlook but the oil and gas industry is in a good position to help the energy transition.

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“A billion people lack access to electricity around the world. Energy demand will rise 25 percent by 2040. That means scale and infrastructure matter,” PESA’s Leslie Beyer told Oilprice.com. “We need the technological expertise of the men and women of the oil and gas industry, who have delivered power to the world through the years, to help provide solutions we need for the future. Excluding us would be short-sighted and unwise.”

To be fair, banks are not turning their backs on oil and gas all on their own. They are being guided in that direction by rising ESG investing appetite and investor pressure for lower-emission lending, as well as by new regulations aimed at advancing the Paris Agreement agenda. It bears noting, however, that even the International Energy Agency, a vocal proponent of the green energy transition, expects oil and gas to be around for a long while and supply energy to the growing number of people who need it as the global population continues to rise.

Yet in the unlikely event that banks completely cut off oil and gas companies from their list of clients, the industry will still have alternatives. Commodity traders are one such alternative, according to Oliver Abel Smith, banking partner at Fieldfisher. Another is private debt funds and yet another is sustainability-linked loans. These are not yet something that is available on the market of debt instruments but would be a natural development of current trends.

Over the past year, five of the largest US banks pledged to stop financing Arctic oil and gas drilling. The news was certainly not welcome by the industry but it bears noting that the pledge was specific, focusing on an area of drilling that is not exactly a priority for drillers. Arctic drilling is expensive, the outcome is, as always, uncertain, and a pandemic is definitely not the best time for it.

It may well be that banks are being more talk than action when it comes to oil and gas. Banks, after all, are, or at least should be, pragmatic institutions rather than ones guided by ideological concerns. As such, they are unlikely to completely turn their backs on oil and gas. Some may well minimize their exposure to the industry, however, in search of greener financial pastures.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/503887-big-banks-lose-billions-oil/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

China’s economic rebound strengthens amid global struggle with Covid-19 crisis

The preliminary estimates show that China’s GDP totaled 72.3 trillion yuan (around $11 trillion) through September this year, the agency announced on Monday. That brings growth for the first nine months of 2020 to 0.7 percent year-on-year.

China showed its first signs of recovery in the previous quarter, when it avoided falling into a recession like most of its peers, and its GDP jumped 3.2 percent. That came after the country’s economy, which was the first to feel the impact of the coronavirus outbreak, shrank by a record 6.8 percent in the first three months of the year.

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The positive results came after consumer activity picked up in September, with the data showing 3.3-percent growth in retail sales compared to a year ago. While the key sector posted the first positive quarterly growth this year, total retail sales of consumer goods were still down by 7.2 percent year-on-year. The unemployment rate also dropped to 5.4 percent in September, 0.2 percent less that it was a month earlier.

The latest figures released by China’s statistics agency show that industrial production increased by 6.9 percent in September from a year earlier after a 5.6-percent rise in August.

China will be the only major economy to see growth this year as world braces for long recovery from Covid-19 crisis – IMF China will be the only major economy to see growth this year as world braces for long recovery from Covid-19 crisis – IMF

Strong export growth in the third quarter, spurred by global demand for medical equipment and electronics, may have helped the positive GDP results.

“Generally speaking, the overall national economy continued the steady recovery and significant results have been delivered in coordinating epidemic prevention and development,” the NBS said in a statement.

“However, we should also be aware that the international environment is still complicated and severe with considerable instabilities and uncertainties, and that we are under great pressure of forestalling epidemic transmissions from abroad and its resurgence at home,” the bureau said, noting that the recovery process is ongoing.

Despite missing economists’ forecasts for a 5.5-percent expansion, China is still the only major economy that has managed to rebound during the worst global slump since the Great Depression.

The International Monetary Fund (IMF) earlier said that it expects China to be the only major economy to record annual growth this year. The IMF forecasts it to grow 1.9 percent, while global GDP is set to plunge by 4.4 percent.

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Article source: https://www.rt.com/business/503876-china-economy-recovers-coronavirus/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The $16 TRILLION bug: Pandemic could cost US economy its entire annual output

While most studies assess the costs of the deadly virus by its impact on the national gross domestic product (GDP), a paper published in the Journal of the American Medical Association earlier this week offered a different approach.

The authors of the study – former Treasury Secretary Lawrence Summers and Harvard University economist David Cutler – also took into account losses associated with those who have died due to the virus, in addition to the purely economic costs.

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With the number of coronavirus infections in the US nearing eight million and deaths surpassing 215,000, the researchers believe that the outbreak may result in an estimated 625,000 cumulative deaths in the country through next year. Given the theoretical “conservative value of $7 million per life,” premature deaths linked to the coronavirus could wipe out nearly $4.4 trillion, according to their calculations.

Dump the dollar: Goldman warns US currency could plummet Dump the dollar: Goldman warns US currency could plummet

The virus is believed to have long-term effects on health, especially for survivors with severe or critical disease. As those complications lead to increased risk of premature death, they also have far-reaching consequences for the entire economy, with losses amounting to another $2.6 trillion for cases forecast through the next year, the authors noted.

Even those who did not contact the deadly virus could also be affected by it, the paper adds. Suffering caused by the possible death of loved ones, as well as the effects of isolation and loneliness, may lead to deteriorating mental health conditions. This also takes its toll on the economy, which could lose approximately $1.6 trillion due to mental health impairment, according to the research.

The rest of the losses – nearly half of the total – are associated with a drop in income due to the coronavirus-triggered recession. The authors cited a previous estimate from the Congressional Budget Office, which projects a total of $7.6 trillion in lost output during the next decade.

“The economic loss is more than twice the total monetary outlay for all the wars the US has fought since September 11, 2001, including those in Afghanistan, Iraq, and Syria,” the study reads. “The total cost is estimated at more than $16 trillion, or approximately 90% of the annual gross domestic product of the US,” it concludes, adding that the estimated loss for a family of four would reach nearly $200,000.

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The paper comes as US lawmakers debate another stimulus package, set to mitigate damage from the virus. The research stressed that any such economic relief should allocate at least five percent of the funds for increased testing and contact tracing, as an investment of approximately $6 million leads to averted costs of an estimated $176 million.

“Increased investment in testing and contact tracing could have economic benefits that are at least 30 times greater than the estimated costs of the investment in these approaches,” the study said. It added that financial support for health measures should not be dismantled even when the concerns about the pandemic begin to recede.

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Article source: https://www.rt.com/business/503350-coronavirus-costs-us-economy/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

China’s oil imports are falling as storage fills up

In the final quarter of the year, Chinese crude oil imports could shed 14.5 percent from the third-quarter levels, equal to 1.7 million bpd, Reuters reported, citing IHS Markit associate director Shi Fenglei.

China began to stock up on cheap oil immediately after the benchmarks crashed following Saudi Arabia’s declaration of what was effectively a price war against Russia that coincided with the initial spread of the coronavirus. Traders and refiners continued buying until reports emerged that China’s oil storage may be close to filling up.

Despite these reports, however, strong buying continued until the end of the third quarter, with the September average up 2.1 percent on August at 11.8 million bpd. This increase was helped by new refining capacity coming online in the independent refinery segment, as teapots still have unused import quotas they rushed to fill. But now, quotas are running out, too, and this could spell another oil price decline.

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“The recovery in China’s demand has been very, very strong, and so if you remove part of that strength, that would have a bearish impact on the (global oil) market,” NAB’s head of commodity research, Lachlan Shaw, told Reuters.

According to the report, China’s average daily rate of crude oil imports stood at 11.36 million bpd in the second quarter of the year and 11.68 million bpd in the third quarter. In the current quarter, it would be state energy giants that will keep on buying cheap foreign oil as the independents wrap their purchases for the year. Refiners, state and private alike, are also cutting run rates because of the excess supply of fuels that, combined with slow demand growth, has shrunk margins.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/503717-china-oil-imports-falling/?utm_source=rss&utm_medium=rss&utm_campaign=RSS