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Gene Ellis

How Putin Forged a Pipeline Deal That Derailed - NYTimes.com - 0 views

www.nytimes.com/...eline-deal-that-derailed-.html

shared by Gene Ellis on 05 Feb 15 - No Cached
  • How Putin Forged a Pipeline Deal That Derailed
  • The pipeline, known as South Stream, was Mr. Putin’s most important European project, a tool of economic and geopolitical power critical to twin goals: keeping Europe hooked on Russian gas, and further entrenching Russian influence in fragile former Soviet satellite states as part of a broader effort to undermine European unity.
  • The bill that Parliament took up on April 4 was arcane. But it swept aside a host of European regulations — rules that Mr. Putin did not want to abide by — for a pipeline that would deliver gas throughout southern Europe. Continue reading the main story Related Coverage In Diplomatic Defeat, Putin Diverts Pipeline to TurkeyDEC. 1, 2014
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  • In France, the leader of the far-right National Front, Marine Le Pen, recently acknowledged that her party had received a loan for 9 million euros, or about $11 million, from a Kremlin-linked bank.
  • Faced with punishing sanctions, a petro-economy pushed to the brink by plunging oil prices and the wildly gyrating value of the ruble, Mr. Putin this month halted the project.
  • Geological surveys suggested that Bulgaria could be sitting atop an underground ocean of natural gas, enough to be self-sufficient for years, enough to eclipse the advantages of South Stream.
  • On April 4, 2014, soon after Mr. Putin annexed Crimea, Bulgaria’s Parliament gave initial passage to a bill that effectively exempted South Stream from a number of European Union regulations, most important, the one that would have forced Gazprom to allow non-Russian gas to flow through the pipeline.
  • “If I hear one more word about competition, I’m going to freeze your you-know-whats off,” Mr. Putin reportedly shouted.
  • The anti-fracking movement became so broad that in January 2012, Parliament banned not only the extraction of shale gas, but even exploration that would quantify the country’s reserves.
  • When the Bulgarian government refused, the European Union cut off tens of millions of euros in regional development funds.
  • In desperate need of the European funds, the prime minister announced the next day that South Stream would be halted until it had full European Union approval.
  • While “he overreached, and he underestimated the response” to his intervention in Ukraine, said Mr. Gray, the former American diplomat, the Russian leader has been “quite effective” in countries like Bulgaria.“He won a great deal by getting Nabucco stopped,” Mr. Gray said. “Ultimately, his goal is to keep as much control over the former parts of the Soviet empire as possible.”
Gene Ellis

IMF's Blanchard: Global Economy Gripped By Meta-Uncertainty - WSJ.com - 0 views

stream.wsj.com/...SS-2-33475

shared by Gene Ellis on 17 Jul 12 - No Cached
  • In 2008-09, there was a collapse of global trade. We were all very surprised. Output was not doing well, but the collapse in global trade was enormous. We realized at the time that the elasticity of trade with respect to global output was not 1, as you might think, but more like 3 to 4. So this explained it. And then it recovered like crazy.
  • This is still true. If global output goes down by 1%, global trade goes down by 3% to 4%.
  • What Europe needs to do:
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  • These countries have to do what they need to do. There’s no question there has to be fiscal consolidation. We can discuss the pace, but it has to happen. The other is competitiveness, which I see as much tougher of the two.
  • It has to be through a combination of structural reforms, hoping they will work, and nominal wage adjustments, although one cannot be incredibly optimistic about the scope there. We know that that’s going to take a while.
  • Take the big two, Italy and Spain. You can always dream of more, but I think they’re serious about doing it, both on the fiscal front and the structural-reforms front. I think it may well be that even if they do everything they can, and do it right, it’s still not enough. They have to have help — I would say when needed rather than if needed.
  • The banks have to be recapped, and they have to be recapped not using sovereign money. I think that is really very, very high on the agenda. I don’t think they can make it without help to the banks.
  • If the banks were healthier, I think they would lend at lower rates
  • And the sovereigns have to be able to borrow at reasonable rates. As long as they behave and they do all the things they’re asked to do, they have to be able to borrow at lower rates than they currently do. Some way has to be found to do it.
  • It’s not that I don’t care about the way it’s done. But I care about the result. These countries, if they’re doing the right things, they have to be able to finance themselves.
  • Some people say a euro depreciation would help Europe a lot. I think there is an argument for it, even in a multilateral context. You have to depreciate vis-a-vis somebody, so somebody has to appreciate. My sense is we would like most of the depreciation to be vis-a-vis emerging-market countries. Even if there was a depreciation vis-a-vis the dollar, I still think it would be a good thing.
  • We’ve done simulations. Other people have done simulations as well. 10% real depreciation would lead to a 1.4% increase in growth for a year — which at this stage, given the numbers, would be nice. The footnote, and it’s a very big footnote, is that … how much you benefit depends on how big your exports are related to your GDP and where you export — whether you export in the euro zone or outside. Unfortunately the countries that benefit the most are the countries that really don’t need it — Germany, the Netherlands. The countries that benefit the least are Greece, Portugal, Italy, Spain
  • There’s no question, the periphery countries have to improve their competitiveness. That’s not something even monetary policy at the level of the euro or fiscal policy can do. This they have to do through productivity improvements or nominal wage adjustments.
  • It is no secret that they have tended to respond to crises rather than be much more proactive.
  • And now there’s a sense in which they’re thinking about the full architecture.
  • At this stage I think there is a genuine commitment to thinking about the whole beast. That’s why these words — fiscal union, banking union — have come in.
  • Where I think there is still a problem is that all these things will take a lot of time. And some of these things may not happen because they’re unpopular. And meanwhile, there is a fire in the house. So they have to be willing to do more in the short term.
Gene Ellis

Russia Presses Ahead With Plan for Gas Pipeline to Turkey - NYTimes.com - 0 views

www.nytimes.com/...or-gas-pipeline-to-turkey.html

shared by Gene Ellis on 18 Feb 15 - No Cached
  • Russia Presses Ahead With Plan for Gas Pipeline to Turkey
  • But in recent weeks, the Russian state-owned company Gazprom has shown signs that it is serious about proceeding with what it calls Turkish Stream.
  • Gazprom’s chief executive recently made it clear that Turkey is its new focus — and that if Europe wants more Russian gas then it will need to find its own way to tap into it.
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  • Industry analysts estimate that the cost of Turkish Stream would be about $10 billion for Gazprom, which so far has spent an estimated $4.7 billion on the Black Sea project.
  • Another potential sticking point is Turkey itself. For one thing, the country obtains about 60 percent of its gas from Russia, a dependence the government is not necessarily eager to increase.
  • Mr. Putin already publicly offered a 6 percent reduction to Turkey. But Ankara, which pays substantially more for Russian gas than Germany does, is pressing for a better deal.
Gene Ellis

Is Europe's gas supply threatened by the Ukraine crisis? | World news | The Guardian - 0 views

www.theguardian.com/...raine-crisis-russsia-pipelines

shared by Gene Ellis on 04 Mar 14 - No Cached
  • Is Europe's gas supply threatened by the Ukraine crisis?
  • more than a quarter of the EU's total gas needs were met by Russian gas, and some 80% of it came via Ukrainian pipelines. Austria, France, Germany, Hungary, Italy and Poland soon reported gas pressure in their own pipelines was down by as much as 30%.
  • While it was eventually resolved through a complex deal that saw Ukraine buying gas from Russia (at full price) and Turkmenistan (at cut price) via a Swiss-registered Gazprom subsidiary
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  • But three years later, the same row erupted again: Gazprom demanded a price hike to $400-plus from $250, Kiev flatly refused, and on New Year's day 2009, Gazprom began pumping only enough gas to meet the needs of its customers beyond Ukraine.
  • Again, the consequences were marked. Inevitably, Russia accused Ukraine of siphoning off supplies meant for European customers to meet its own needs, and cut supplies completely
  • several countries – particularly in south-eastern Europe, almost completely dependent on supplies from Ukraine – simply ran out of gas.
  • Bulgaria shut down production in its main industrial plants; Slovakia declared a state of emergency
  • Many industry experts, though, point out that the world has changed since 2009, and that there are any number of reasons why Moscow's natural gas supplies may not prove quite the potent economic and diplomatic weapon they once were.
  • higher than normal temperatures are forecast to continue for several weeks yet, significantly reducing demand for gas and leaving prices at their lowest for two years
  • since the first "gas war" of 2006, many European countries have made huge efforts to increase their gas storage capacity and stocks are high. Some countries, such as Bulgaria, Slovakia and Moldova, which lack large storage capacity and depend heavily on gas supplies via Ukraine, would certainly suffer from any disruption in supplies
  • New Gazprom pipelines via Belarus and the Baltic Sea to Germany (Nord Stream) have cut the proportion of Gazprom's Europe-bound exports that transit via Ukraine to around half the total, meaning only about 15% of Europe's gas now relies on Ukraine's pipelines. Gazprom is also planning a Black Sea pipeline (South Stream), expected in 2015, meaning its exports to Europe will bypass Ukraine completely. Ukraine itself has cut its domestic gas consumption by nearly 40% over the past few years, halving its imports from Russia in the process.
  • Europe is increasingly installing specialist terminals that will allow gas to be imported from countries such as Qatar in the form of liquefied natural gas – while Norway's Statoil sold more gas to European countries in 2012 than Gazprom did. "Since the Russian supply cuts of 2006 and 2009, the tables have totally turned," Anders åslund, an energy advisor to both the Russian and Ukrainian governments, told the Washington Post.
  • Europe accounts for around a third of Gazprom's total gas sales, and around half of Russia's total budget revenue comes from oil and gas. Moscow needs that source of revenue, and whatever Vladimir Putin's geo-political ambitions, most energy analysts seem to agree he will think twice about jeopardising it.
Gene Ellis

Greek Euro Exit Unavoidable if IMF, Euro Zone Can't Agree- IMF Stream - WSJ.com - 0 views

online.wsj.com/...4799904578053992740095654.html

greek euro imf zone

shared by Gene Ellis on 14 Oct 12 - No Cached
  • principle
  • So the need for an agreement between the euro zone and the IMF is paramount. The IMF as a senior creditor can't accept losses of its own in the Greek program and it has to convince unhappy members from the emerging world that lent it money to continue financing Greece that the country's debt is sustainable. For this to happen, about 50 billion euros ($65 billion) must be forgiven from Greece's giant debt and the decision for such action including the political backlash is squarely in Europe's court.
  • There are ways that the Europeans can make it happen. One would involve the European Stability Mechanism, a newly activated bailout mechanism that would take over the recapitalization of Greek banks, which is set to cost €50 billion, instead of the amount being added to the country's debt.
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  • In typical fashion the creditors are demanding from Athens another set of painful austerity cuts which the country can't afford and the IMF is openly saying that it won't sign off on the loan payment before a haircut takes place.
  • Another way would be the European Central Bank accepting losses to the Greek bonds it holds.
    • Gene Ellis
      Gene Ellis on 14 Oct 12
       
      Meaning:  that the IMF sees that austerity will kill Greece off, and wants to provide some breathing room...
Gene Ellis

Ukraine crisis: Gas prices leap on Russia's Crimea move - FT.com - 0 views

www.ft.com/...f2-11e3-9685-00144feab7de.html

shared by Gene Ellis on 25 Apr 14 - No Cached
  • Ukraine crisis: Gas prices leap on Russia’s Crimea move
  • “Gazprom’s Nord Stream pipeline has an additional 32bn cubic metres of unused capacity, based on last year’s operating levels, meaning that half of Ukraine’s gas volumes could be substituted into this pipeline,” wrote analysts at Bernstein Research in a report.
Gene Ellis

EU energy market: Pipe dream - FT.com - 0 views

www.ft.com/...3c-11e3-afb3-00144feabdc0.html

shared by Gene Ellis on 18 Feb 15 - No Cached
  • EU energy market: Pipe dream
  • A more competitive market also means importing new sources of gas from Azerbaijan and the eastern Mediterranean, as well as building terminals for liquefied natural gas.
  • France’s nuclear industry was also reticent about cheap renewable energy streaming into the French grid on an uncertain timetable.
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  • Spain’s grid is barely connected to France so its wind farms cannot export their production when it exceeds domestic demand. Similarly, solar and wind energy from southern Italy is wasted because it is not effectively linked to the industrial north.
  • Full energy convergence needs more than interconnectors. Widely divergent electricity prices are often determined by national tax rates. Grids that can respond to demand further afield in a continent-wide “supergrid” will need more direct (rather than alternating) current infrastructure. While it took Spain and France more than three decades to build a 64.5km interconnection, some 52,000km of lines need to be built or upgraded across the continent.
  • Poland argues that Gazprom has confidential data on each country it deals with, knowing its gas prices and infrastructure vulnerabilities. It can then use this data to its advantage, pushing some countries into more onerous contracts than others.
  • The advantage of a hub would become more apparent when new supplies from Azerbaijan and the eastern Mediterranean are integrated into the market by means of the so-called southern corridor supply route.
  • Geoffrey Feasey of the European Network of Transmission Systems Operators for Electricity says one-third of the most vital projects to connect Europe are being held up by “permitting and public acceptance”.
Gene Ellis

Europe risks 'significant' gas shortages this winter - FT.com - 0 views

www.ft.com/...2e-11e4-acd8-00144feab7de.html

shared by Gene Ellis on 05 Feb 15 - No Cached
  • Europe risks ‘significant’ gas shortages this winter
  • Eastern European nations are working on ambitious plans to develop terminals to import liquefied natural gas but these will not be ready by the winter.
    • Gene Ellis
      Gene Ellis on 05 Feb 15
       
      Dubious, given that the danger is not gas deliveries through Ukraine, but Russian reductions in total supply in hopes of cowing the EU...
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  • Still, Europe is in a stronger position now than in 2009. Five years ago, 80 per cent of Russian gas was piped across Ukraine, whereas now less than 50 per cent takes that route, thanks to the Nord Stream pipeline under the Baltic sea.
  • Total executives have predicted that Russia will be the largest contributor to the group’s oil production by 2020.
  • Total has also indicated that it intends to increase its stake in Novatek, one of whose major shareholders, Gennady Timchenko, is on the US blacklist.
  • “Novatek is not subject to sanctions. So we work with Novatek as before and we will continue.”
Gene Ellis

Gazprom Cuts Russia's Natural Gas Supply to Ukraine - NYTimes.com - 0 views

www.nytimes.com/...on-ukraine-in-gas-dispute.html

shared by Gene Ellis on 05 Feb 15 - No Cached
  • The gas flowing into Ukraine as of Monday was meant only to transit the country to Europe. “Gazprom supplies to Ukraine only the amount that has been paid for, and the amount that has been paid for is zero,” Gazprom’s spokesman, Sergei Kupriyanov, told reporters.
  • Gazprom, which has sought for the past decade to convince the Europeans that it is a reliable supplier and not an arm of Russian foreign policy, painted the dispute as strictly commercial.
  • Second, Gazprom has provoked economic ire in Europe over its plans to build an alternative gas route under the Black Sea for the company’s exclusive use, contradicting Europe’s open access laws. That has put the future of what is known as the South Stream pipeline in doubt.
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  • About a fifth of the European Union’s supply of natural gas flows through Ukraine. Ukraine itself imported from Russia 63 percent of the natural gas it consumed in 2012, producing the remaining 37 percent domestically, according to the United States Energy Information Agency.
Gene Ellis

A European Energy Executive's Delicate Dance Over Ukraine - NYTimes.com - 0 views

www.nytimes.com/...licate-dance-over-ukraine.html

shared by Gene Ellis on 19 Feb 15 - No Cached
  • A European Energy Executive’s Delicate Dance Over Ukraine
  • Major Western oil companies like BP and Exxon Mobil have extensive exploration deals in Russia that they fear could be jeopardized if the United States and European Union impose stiffer sanctions on the Putin regime.
  • “This is by far the toughest time for European energy security that I have seen,” said Mr. Scaroni. “This issue might stop the supply of Russian gas.”
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  • The goal is to be able to ship gas to Ukraine at an annual rate of more than three billion cubic meters by the time the heating season begins in the autumn, increasing the flow to up to 10 billion cubic meters annually by next spring. Last year Ukraine imported nearly 30 billion cubic meters of gas, according to a recent report by the Oxford Institute for Energy Studies.
  • Part of his message is that, even though gas demand in Europe has been weak because of sluggish economies, imports from Russia actually rose last year by about 16 percent as other sources of supply including Norway and Algeria declined. Europe, he warned, is simply not prepared to do without gas from Russia.
  • But with the gradual introduction of more competitive pricing in the European markets, the gas business has become much less attractive for ENI and other big gas middlemen. They are stuck with high-priced long-term contracts to a handful of suppliers like Gazprom and Sonatrach, the Algerian state-owned company, while their customers are able to secure gas at often lower spot market prices — assuming the gas is flowing.
  • The pipeline would be a major new source of Russian gas for energy-hungry Europe. But European Union authorities have become deeply skeptical about the South Stream plan, seeing it as just another way of making Europe more dependent on Russian energy.
  • Given the balance of interests, tighter sanctions by Western governments might more likely aim to stem the technology that Russia needs to increase its future production, rather than to cut off gas supplies to Europe,
  • hose outages in 2006 and 2009 are a top reason that the European Union had already been trying to chip away at Europe’s dependence on Russia even before the Crimea annexation.
  • One of the most acrimonious battles is between the bloc’s antitrust authorities and Gazprom. That standoff began in 2011 when the European Commission carried out surprise raids on natural gas companies across Europe, including Gazprom affiliates, seeking evidence of blocking access to networks, charging excessive prices and raising barriers to diversification of supplies.
  • That is partly because powerful Eastern European countries like Poland argue that such clean-energy policies would impede their ability to reduce Russian dependence by mining more coal or developing their own shale gas resources.
  • nd this month, the European Commission issued rules aimed at reducing the subsidies that governments use to support the wind and solar industries,
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