June 18, 2018

Russia in talks to build gas pipeline uniting the Korean Peninsula

“The political situation has changed, and the South Korean side has contacted Gazprom regarding the resumption of this project. A series of talks has been held, and these negotiations are continuing,” said Deputy Chairman of the Management Committee Vitaly Markelov.

South Korea looks to boost economic ties with Russia

The project to unite the Korean Peninsula with a gas pipeline has been discussed for a long time, but official talks started in 2011. The negotiations were frozen after relations between Seoul and Pyongyang deteriorated.

In March, Seoul announced that it is ready to resume the project. According to South Korea’s Foreign Minister Kang Kyung-wha “if the North participates in talks on Northeast Asia energy cooperation, it would serve as a catalyst that helps ease geopolitical tensions in the region.”

Energy-hungry South Korea is currently forced to buy more expensive liquefied natural gas (LNG) shipments. If the pipeline is built, it would halve the costs of gas coming to the country, analysts have estimated.

South Korea’s only land border is with North Korea. In the past, Seoul has been concerned that, if the pipeline is built, Pyongyang could employ blackmail tactics or even block the transit.

South Korea is interested in buying 10 billion cubic meters of gas per year from Russia. At the moment, it already buys about 1.5 billion from Russia’s Arctic LNG plant in Yamal. The pipeline, if implemented, will be 1,100km long, of which 700 km should pass through North Korean territory. The project cost was estimated at $2.5 billion back in 2011.

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Tit-for-tat: Beijing vows ‘immediate’ response as Trump backs $50bn in tariffs on Chinese goods

Trump will reportedly give details on the measure later on Friday. The President signed off on the step after discussing the tariff list with senior White House officials, national-security officials and senior representatives of the Treasury and Commerce Department, the Wall Street Journal reports citing people familiar with the issue.

‘Trump feels he is breaking free of the shackles of Russia collusion nonsense’ – Jim Jatras

Though it’s not clear yet when the tariffs will come into force, Chinese authorities have warned of a fast response to protect China if Washington hurts its interests.

“If the United States takes unilateral protectionist measures and harms China’s interests, we will respond immediately and take necessary measures to firmly safeguard our legitimate rights,” Chinese Foreign Ministry spokesman Geng Shuang said during a news briefing.

The US tariffs package reportedly includes 800 product categories, down from a previously approved 1,300, an administration official and an industry source familiar with the list told Reuters. Chinese goods are set to be subject to 25 percent export duties.

Beijing had previously pledged to respond to Washington’s tariffs with retaliatory levies on $50 billion of goods form the US, including cars, planes and soybeans. Shortly after Chinese authorities warned of retaliation, the White House threatened tariffs on a further $100 billion of Chinese exports.

Trump has repeatedly accused Beijing of putting pressure on US firms to transfer technology to Chinese competitors. “We have a tremendous intellectual property theft problem. It’s going to make us a much stronger, much richer nation,” the US president said earlier this year.

Trade tensions between the world’s two largest economies have been steadily escalating over recent months as Trump began tariff fights with long-standing US allies Canada, Mexico and the European Union over steel and aluminum production.

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Erdogan threatens ‘operation’ against Moody’s for Turkey review

“God willing, we will conduct an operation against Moody’s after June 24,” Erdogan told the Ankara-based Anadolu Agency. “Moody’s is making unnecessary statements despite the fact that we are not a member of it. What a shame.”

Turkish lira touches record low as Erdogan pledges more govt control of economy

According to the Turkish president, the US rating agency was pointedly putting Turkey in a difficult situation. The comments come two weeks on from Moody’s putting Turkey on review for a downgrade just months after it cut the country’s credit rating. On June 1, the rating agency said that a lack of clarity about Turkish economic policy had put at risk the country’s Ba2 ratings.

The decision was reportedly taken amid “expectation that the recent erosion in investor confidence in Turkey will continue if not addressed through credible policy actions following the June elections.” The agency also said that “the credibility of Turkey’s policy institutions has been undermined by the ineffectiveness of monetary policy, in part reflecting political interference in the policymaking process.”

Last month, the Turkish lira hit a record low of 4.92 against the US dollar, forcing the country’s central bank to raise rates to tackle a potential currency crisis. Despite that, Turkey managed to raise 4 billion dollars through a bond sale earlier this year, according to the country’s treasury. However, investors are alarmed by the upcoming elections and Erdogan’s promise to take tighter control of monetary policy.

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China plans to create a $78bn natural gas giant

That would allow third-party access to the gas pipelines and would help Beijing in its efforts to cut pollution by using more natural gas instead of coal.

For several years, China has been studying merging the oil and gas pipeline assets of three of its state-held energy giants—China National Petroleum Corporation (CNPC), China Petrochemical Corporation (Sinopec), and China National Offshore Oil Corporation (CNOOC).

Now the regulators are targeting to announce before the winter a decision to merge the three companies’ pipeline assets, estimated to be worth around $78 billion (500 billion Chinese yuan), according to people with knowledge of the plans who spoke to Bloomberg.

Digging to China: Russia’s mega gas pipeline nears completion

Sanford C. Bernstein Co analysts have estimated that the Chinese gas pipeline network is 70,000 kilometers (43,500 miles), and the three state energy giants own 66,000 kilometers (41,000 miles) of it.

CNPC’s listed arm PetroChina—the country’s biggest gas producer and importer—owns some 70 percent of the gas pipeline network, Bernstein analyst Neil Beveridge told Bloomberg.

The Chinese authorities and regulators plan to have both state-owned and private funds invest capital in the new gas pipeline giant so as to lower the combined stake of the three energy giants to some 50 percent, according to Bloomberg’s sources, who said that an initial public offering (IPO) is also being considered.

Nothing is finalized yet and plans could be subject to change, but creating a gas pipeline giant would be a major overhaul of China’s gas market as it would open the gas network to suppliers other than the current owners of the pipelines. The so-called third-party access could help smaller gas producers purchase available capacity on the pipeline network. Currently, independent producers find it hard to gain access to the network operated by their giant state-held competitors.

Large industrial plants and city gas-distribution networks are currently stuck with buying gas from the gas supplier that owns the pipeline, according to Lu Wang, a Hong Kong-based Bloomberg Intelligence analyst.

If gas pipeline assets could be separated from the state giants, then “all gas will be treated equal,” Wang said.

Energy-hungry China to ramp up imports of Russian natural gas

“If you look at every liberalized gas market, there is a clear separation of pipeline ownership and gas supply,” Bernstein’s Neil Beveridge told Bloomberg. “Pipeline reform becomes key.”

The pipeline ownership overhaul would be another step to a liberalized market, after China announced last month plans to harmonize residential and industrial city-gate gas prices. Under the reform, residential gas prices will rise gradually by 20 percent by June 2019—a first increase of residential prices in eight years. The move is expected to incentivize domestic natural gas production and gas imports, because the current residential prices are lower than the costs for both domestic and imported gas supply.

“LNG procurement costs in the international market have remained persistently high this year, which means sending imported LNG to downstream residential users is currently a loss-making business,” a gas distributor in southern China told Platts last month.

Chinese authorities have been discussing the overhaul of gas pipeline ownership at least since 2014, but they could be now close to announcing this year the plans to create a pipeline giant in a major gas market reform.

This article was originally published on Oilprice.com

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Russia World Cup to generate a staggering $6 billion for FIFA

The figure is 10 percent higher compared to the revenues FIFA projected for the tournament, and $1.3 billion more than the earnings generated by the 2014 World Cup in Brazil, documents seen by The New York Times reveal.

The organization increased revenues from television rights sales by two percent from the projected $3 billion. At the same time, FIFA’s sponsorship deals brought an additional $200 million to the association’s coffers. FIFA initially expected to get $1.45 billion from the contracts.

Foreign tourists to shell out almost $2bn in Russia during World Cup

The growth was mostly boosted by the whole range of deals with Chinese investors with seven out of 20 companies financing the tournament from China. FIFA also raised annual royalties from EA Sports, the producer of the popular FIFA video game franchise by 233 percent. Last year, the company paid FIFA $160 million.

The organization expects to make more than $100 million during the four-year period after the Russia World Cup. During the preceding three years FIFA reported losses of $997 million, while estimated profits for the current year at $1.1 billion.

The losses in previous years were reportedly caused by legal costs associated with the criminal corruption cases in the organization and a costly internal investigation that followed, as well as the increased grants for member nations.

Among FIFA’s commercial partners are multinationals such as Adidas, Coca-Cola, Wanda Group, Gazprom, Hyundai, Qatar Airways and Visa. The 2018 World Cup is sponsored by Budweiser, Hisense, McDonald’s, Mengniu Dairy, Vivo – with Russia’s diamond producer Alrosa, state-run Russian Railways, Alfa-bank and Rostelecom among the regional sponsors.

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Low debt & high reserves: Russia’s economic strategy paying off

The sovereign debt of Russia is a fraction of that in developed countries like the UK or US. Russia’s foreign debt now stands at $525 billion, compared to $7.5 trillion in Britain, $5 trillion in France, $4.8 trillion in Germany, and an eye-watering $21 trillion in the United States.

US paper gold suppression allowing Russia China to buy real gold at discount prices

Russia has not only managed to keep foreign debt in check, but last year also paid off the balance of debt inherited from the Soviet Union. This covers Russia and 14 currently independent countries that used to make up the USSR.

“The developing markets have found themselves in a bad fix with money going out and high dollar-denominated debt negatively impacting the national economies. In Russia, this risk is virtually nonexistent,” TeleTrade currency strategist Aleksandr Yegorov told Sputnik.

At the same time, Russia has gradually increased its foreign reserves to $450 billion, just about enough to cover the country’s foreign debt.

This year, Russia is also expecting a $16-billion budget surplus. It will be the first time Russia spends less than it makes in seven years.

Russia’s low debt was acknowledged by the head of the International Monetary Fund Christine Lagarde at the St. Petersburg International Economic Forum (SPIEF) in May.

“Russia has put in place an admirable macroeconomic framework – saving for a rainy day, letting the exchange rate float, introducing inflation targeting, and shoring up the banking system,” she said. “As a result, it was able to weather tough times well, and today it has virtually no fiscal deficit, a solid current account balance, and very little debt.”

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Germany slaps Volkswagen with $1.8bn fine in emissions cheating scandal

The €1 billion (US$1.8 billion) fine was ordered by the prosecutor’s office in the German city of Braunschweig. It’s the latest move against the car manufacturer, which admitted in 2015 that it had equipped cars with software that turned on emissions controls when vehicles were undergoing anti-pollution tests in the US. Those controls were later reduced during normal driving.

Dieselgate: Volkswagen ex-CEO charged with fraud in emissions scandal

Volkswagen said it would not be appealing the fine, which was imposed due to organizational deficiencies in supervision which failed to prevent “impermissible software functions” from being installed in 10.7 million cars between 2007 and 2015.

“Following thorough examination, Volkswagen AG accepted the fine and it will not lodge an appeal against it. Volkswagen AG, by doing so, admits its responsibility for the diesel crisis and considers this as a further major step toward the latter being overcome,” the company said in a statement.

The prosecutor’s office made it clear that the €1 billion fine does not address any additional civil claims or claims by vehicle owners.

The latest fine comes on top of some $20 billion in fines imposed on the car maker, in fines and civil settlements in the US. The Wednesday announcement also comes just two days after prosecutors in Munich widened an emissions cheating investigation into Volkswagen’s luxury carmaker Audi, to include the brand’s chief executive officer among those suspected of fraud and false advertising.

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Russian ‘Smart City’ among finalists to host Expo 2025

Ekaterinburg, a city of 1.5 million in the Ural Mountains, faces off against the Japanese city of Osaka and Azerbaijan’s capital Baku, after France officially withdrew the candidacy of Paris. The three finalists presented their bids on Wednesday in Paris, during a meeting of the Bureau of International Expositions (BIE). The Russian plan involved building a “Smart City” on an area of 555 hectares adjacent to Ekaterinburg.

Monorail build over the Iset River would connect the Expo Park with the rest of the city, and the new district would also be accessible by boat, according to the governor of Sverdlovsk region Evgeny Kuyvashev. At the heart of Expo Park would be a glass dome 2 kilometers in diameter, which would contain flora from across the world. The new district will be serviced by electric buses.

More than 37 million people would be expected to visit the Expo if the Russian bid wins, Kuyvashev told the BIE. Among the presenters of Russia’s bid was cosmonaut Sergey Prokopyev, who addressed the audience by a video link from the International Space Station.

While Russia has never hosted the Expo before, it has all the required infrastructure, resources, and experience to host big international events, Deputy Minister of Industry and Trade Georgy Kalamanov told RT.

“We already hosted the [2014 Winter] Olympics, and tomorrow the FIFA World Cup kicks off,” Kalamanov told RT. “We have to work hard to have such a high-level event in Russia as well.”

The world fair, now known as the Expo, has been held annually in different parts of the globe since the mid-19th century, beginning with London in 1851. The most recent Expo was held in Astana, the capital of Kazakhstan, in 2017. The BIE will decide on the winning bid in November.

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Bitcoin’s skyrocketing growth was ‘fraud and manipulation’ – report

Do Rothschilds control cryptocurrencies? – Etherium founder asks

Griffin, who has 10 years of experience in detecting financial fraud, examined millions of transactions on cryptocurrency exchange Bitfinex. In his paper, Griffin says that the US dollar-pegged cryptocurrency tether was used to buy bitcoin at the times that the latter was falling, which helped “stabilize and manipulate” the cryptocurrency’s price.

“Fraud and manipulation often leave footprints in the data and it’s nice to have the blockchain to track things,” Griffin told CNBC. Whenever bitcoin fell, tether was used to buy it to prop up the price of the leading crypto.

“It was creating price support for bitcoin and, over the period that we examined, had huge price effects,” Griffin said. “Our research would indicate that there are sophisticated people harnessing investor interest for their benefit.”

Bitcoin started 2017 at below $1,000 and at one point reached $20,000. Now, it is trading near the $6,000 mark. Tether is the 11th largest cryptocurrency and is pegged to the US dollar. Some critics say tether owners don’t have enough fiat currency to back its $2.5 billion market capitalization.

Bitfinex CEO J.L. van der Velde told CNBC that neither the exchange nor tether helped to boost bitcoin prices. “Bitfinex nor tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of bitcoin or any other coin/token on Bitfinex,” he said.

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US paper gold suppression allowing Russia & China to buy real gold at discount prices

Net central bank purchases in the first quarter of the current year surged by 42 percent compared to the same period a year ago, totaling 116.5 tons, according to data compiled by the World Gold Council (WGC). The number reportedly represents the highest quarterly total since 2014.

Russian reserve fund to get a $35 billion boost – Finance Ministry

Over the past two decades, Russia has been ramping up the purchases of physical gold. In May, the country’s gold reserves surged to 1,909 tons, Russia’s Finance Ministry reported. Since 2000, the country’s gold reserves have surged by 500 percent.

Russia remained the most prolific purchaser of gold in the first quarter of 2018. The country’s holdings currently account for 18 percent of total reserves, according to the WGC.

Last month, Russia managed to force China out of the top five gold holders, which also includes the United States, Germany, Italy and France. However, China is not far behind, with a reported 1,843 tons of gold held in its national reserves.

China and Russia, along with Turkey, India and other countries have been aggressively accumulating gold reserves in a bid to diversify their reserve financial assets from the greenback that currently serves as the global reserve currency.

The tendency presents a perfect opportunity for investors to buy gold or shares in gold mines, while putting the US dollar’s dominance at risk as the main global reserve currency.

Many gold investors say the price of the precious metal is artificially curbed because of the paper gold trading on Western exchanges.

According to Claudio Grass of the Precious Metal Advisory in Switzerland, the total trading volume in the London Over-the-Counter (OTC) gold market is estimated at the equivalent of 1.5 million tons of gold. Only 180,000 tons of gold have actually been mined up to today.

“The paper scams in London and New York will either blow up when the paper price of gold drops to zero or when just a fraction of investors insists upon receiving physical gold in return,” Grass told RT.

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