Page 11 - RusRPTJun19

Russia’s Ust-Luga oil port on shores of the Gulf of Finland. About a third of all crude oil exported from Russia goes through the Druzhba pipeline. Oil going to customers in Western Europe can alternatively be shipped via Baltic and Black Sea ports. Even with these alternatives, Russia has had to lower output somewhat to accommodate the decreased flow of oil. Profitability of refineries in Central and Eastern Europe is dependent on oil coming through the pipeline, even if they can procure oil supplies via oil tanker or use their own stockpiles.
The contaminated oil has been found almost throughout the entire length of the pipeline. Estimates put the amount of spoiled oil at more than onemn metric tons, a half-bn dollars in oil at current prices. The fouled oil may be salvaged by diluting it with untainted crude and selling it at a discount. As these measures apply to the entire length of the pipeline, oil will have to also be shipped by rail to the oil ports. At least some Chinese companies seem to be keen on purchasing the cheap oil. Despite these measures, cleaning of the pipeline, disposal of the tainted oil, identification of the culprits and recovery of damages could take months or years.
2.1 Russia’s real estate sector back in play
Russia’s real estate market is back in play after investment rose by 30% y/y in the first quarter of this year, reports JLL – the best result in the last three years.
Russia’s real estate investment volumes reached $967m in Q1 2019 up from the $742m, invested in the same period a year earlier.
“A significant investment volume increase at the beginning of the year can be explained by a few large transactions which were postponed from 2018 to 2019. Nevertheless, investors are still cautious and are adopting a ‘wait and see’ approach,” Natalia Tischendorf, Head of Capital Markets, JLL, Russia & CIS said in a report.
“The market faces a shortage of real estate products available for purchase and, despite the fact that economy and debt market are recovering, and senior debt financing is available at relatively low interest rates, the volume of deals under negotiations has not increased.”
11 RUSSIA Country Report June 2019 www.intellinews.com