Page 16 - FSUOGMWeek142020

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per barrel and RUB70-RUB75 per US dollar. Previously, Finance Minister Anton
Siluanov had expected a budget deficit of 0.9% of GDP in 2020, to be financed by
a RUB600bn injection from the National Welfare Fund (NWF), but the official macro projections are still being revised.
ING currently expects Russian GDP to contract by 2-3%, in line with a recent analyst survey by RBC business portal and the forecasts of BCS Global Markets. Currently the fiscal support against the coronavirus (COVID-19) epidemic in Russia is seen at a modest 2% of GDP (versus 10% in the US and 10-15% in EU).
In a separate report Reuters wrote that Gazprombank analysts expect Russia’s current balance of payments account to drop 3.5-fold due to lower oil prices and COVID-19, but it is still believed to remain in surplus.
The bank estimates that $25 per barrel
oil prices would result in an average ruble to US dollar rate at RUB80, and the CA surplus would register $20bn, or 1.8% of GDP, versus $70.6bn seen in 2019. The trade balance, as well as exports of services, would be hardest hit, but the weaker ruble would also curb imports, Gazprombank believes.
Net capital outflow is forecasted to increase to $40bn from $26.7bn in 2019, to be neutralised by about $20bn worth of currency interventions by the Central Bank of Russia. “Even given extremely low oil prices of $10 per barrel, [the CBR] has sufficient reserves to finance the CA deficit and capital outflow,” the bank argues, as cited by Reuters.
EASTERN EUROPE
Ukraine’sNaftogazlooksto replace top exec – report
Ukraine’s state energy company Naftogaz is allegedly looking a replacement
for executive director Yury Vitrenko, Ekonomicheskaya Pravda reported.
According to the report, an expected top management reshuffle is linked to the recent appointment of Otto Waterlander as the company’s chief transformation officer.
Quoting unnamed sources close to the
company, the report suggests that Vitrenko could fall prey to a major reorganization in the company, initiated by Waterlander, who is believed to be chairman of the board Andrey Kobolev’s new right-hand man.
Vitrenko’s replacement would be tasked with representing the company in its lawsuit in the Hague against Russia over the takeover of Chernomornefgegaz, Naftogaz’ division operating in Crime before Russia’s annexation six years ago.
The report also alleged that Naftogaz’ former head of the natural gas division, Andrey Favorov, has left the company over differences with Waterlander.
Meanwhile, Vitrenko has shrugged off allegations that this days with Naftogaz could be numbered and that he is having issues with Waterlander.
“As for Otto Waterlander, allegedly on whose initiative they are looking for a person to replace me, we have a great relationship,” he was quoted as saying by Interfax Ukraine. “And actually, together with him, we developed a transformation program for Naftogaz two years ago, which we need to translate into life, which is what Otto is doing now.”
Vitrenko was appointed Naftogaz’ executive director in November 2018.
CENTRAL ASIA & SOUTH CAUCASUS
Azerbaijan‘saysnoplansto change2020oiloutput’
Azerbaijan has said it is not planning to change its oil production plans for 2020.
The statement comes despite the collapse of an OPEC+ output deal last month, the RIA news agency said, citing the country’s energy ministry.
Cooperation with OPEC+ oil producers would continue, the ministry reportedly added.
The proposed OPEC+ agreement failed to move forward after Russia and Saudi
Arabia did not agree terms, sparking an oil price war that has sent the price of crude to low levels not seen in nearly two decades.
Kazakh oil producers to re-
route flows away from CPC
pipeline
Kazakh oil producers are hoping to re- route their flows away from a traditional private pipeline running to the Black Sea due to widening historic gaps of CPC Blend discounts, four industry sources told Reuters.
Kazakhstan is using the Caspian Pipeline Consortium (CPC) pipeline to send its barrels to the Black Sea and Russia’s Transneft for exports via the Baltic Sea along with the Black Sea region. Oil blended for the CPC route is known as CPC Blend, whereas Kazakh barrels sent to the Transneft destination are mixed with Russian grades and sold as Urals Blend.
The CPC Blend discounts to Urals demonstrated all-time records in late March amid severely hit demand for the grade, as refineries worldwide are cutting output.
A sharp fall of the Russian ruble made the Transneft route, which sets tariffs in roubles, more attractive than the CPC pipeline as it charges in US dollars.
Armenia requests talks on gaspricecutfromRussia
Armenia has requested that Russia start talks on cutting the price of provided gas.
Deputy Prime Minister Mher Grigoryan on March 31 confirmed the request has been sent to Russia.
Armenia has also stated that it desires to pay for the imported gas in Armenian drams instead of dollars.
The South Caucasus country currently pays Russia $165 per 1,000 cubic metres of gas.
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Week 14 08•April•2020