Page 18 - RusRPTSept22

payment failed to go through. Gazprombank, which handled the payment, informed Transneft that the payment had been rejected because of EU restrictions, the pipeline operator said.
Under new EU sanctions, European banks must receive approval from a relevant government authority instead of deciding on their own whether to enable a transaction, and this has complicated the payment process.
Meanwhile, a repaired Siemens turbine that Gazprom has claimed needs to be returned to operate the pipeline properly has remained in the German port of Muelheim der Ruhr. As a result, Nord Stream’s capacity has been limited to just a fifth of its capacity, the Russian company claims.
Germany’s government has said all the paperwork is in place to allow the return of the turbine to Russia and blames Gazprom for delaying the delivery. But Gazprom insists that sanctions still make its return impossible.
The stoppage will reduce oil flows to Europe at a time when the volumes of oil exports from Russia had just recovered to pre-war levels, according to the European Central Bank’s latest economic bulletin.
In Europe, seaborne Russian oil exports recovered to 2021 average levels in early July after falling 15% in March, with demand driven by a deep discount on the Russian Urals blend, according to the ECB.
However, the discount on Urals of around $35 to the benchmark Brent blend is now falling and is currently closer to $10, reports Kommersant and that is having an effect on demand. Exports to both China and India have slowed in the last month, according to reports. A reduction in oil exports to Europe will negatively affect the Russian budget. Gas export tariffs fell sharply in June after Gazprom reduced flows of gas to Europe by 60% but oil revenues remain extremely strong. Russia’s budget is currently running a surplus of 0.5% of GDP, but Russian Finance Minister Anton Siluanov said in April that most of the state support spending for the economy will come in the fourth quarter and he expects Russia to have a deficit of some 2% by the end of the year – an amount that can easily be covered by reserves in the National Welfare Fund (NWF). Thanks to the strong oil revenues other economists believe that Russia’s deficit at the end of the year could be less than 2%.
2.6 “Yuanization” of Russian economy continues as volumes of yuan trading on the Moscow Exchange rises
The yuan became the third most traded currency in terms of volume of foreign exchange trading on the Moscow Exchange in July and will soon take second place, The Bell reported on August 8.
Cut off from the international financial system, Russian businesses have been swapping to the unsanctioned yuan and other currencies in their effort to ditch the dollar. Russian banks too that have accumulated significant reserves of
18 RUSSIA Country Report September 2022 www.intellinews.com