Page 50 - BNE_magazine_05_2020

50 I Eastern Europe bne May 2020
head of the Texas Railroad Commission that serves as the state's energy regulator. The Republican politician urged the USonApril8tocutatleast4mnbpdof supply within the next three months to avoid storage running out.
Texas accounts for more than 40% of US national oil production. While antitrust laws prevent US producers from co-ordinating supply, the state could in theory legislate to cap output. Even so, this would leave authorities at risk of being sued by operators claiming losses as a result of the restrictions.
The US would also have to impose
a cut unilaterally rather than through an explicit agreement with other producers, to ward off accusations of collusion. Such anti-competitive activity is banned by the Organisation for Economic Co-operation and Development (OECD), of which the US is a member.
Norway, another OECD member, has in a similar vein said it would consider a unilateral cut to production if OPEC+’s deal comes into force. The country, which lifted 1.75mn bpd of crude in February, was among seven
to attend the group’s talks last week as an observer. The others were Argentina, Colombia, Ecuador, Egypt, Indonesia and Trinidad & Tobago.
What next?
Unilateral cuts would, of course, help tighten the market. But as non-OPEC+ countries will not be party to a formal agreement committing them to quotas, they will be able to ramp production back up when it suits them. This is likely to sow distrust among OPEC+ members, especially those pledging the biggest reductions: Saudi Arabia and Russia.
A chief cause behind the collapse of OPEC+’s previous production pact
in early March was growing frustration among the group that other producers were profiting from their actions by raising their own supply. Those same anxieties could re-emerge and derail the pact, plunging the industry once more into chaos. Either the deal could fall through, or OPEC+ members could simply flout their commitments.
This article is from Newsbase’s FSUOGM monitor, a bne IntelliNews sister company that produces weekly reports on the oil and gas sector in the former Soviet Union countries.
Newsbase produces a family of newsletters that cover the energy sector worldwide.
A premium service, you can take a free month’s trial by sending an email to subscription’s director Stephen Vanson. See a sample here.
EBRD drops a COVID-19 dambuster
on Russian sanctions
Jason Corcoran in Moscow
Amodest investment by the European Bank for Reconstruction and Development (EBRD) in
a Russian travel company may prove to be the sanctions dambuster that the Kremlin has been longing for.
The London-headquartered bank announced on April 7 it would provide finance to a Russian travel aggregator Travelata as part of its €1bn coronavirus (COVID-19) funding programme, which is designed to help existing portfolio companies with liquidity, trade finance and restructuring of short-term debt. This is the first fresh capital injected by the EBRD in
www.bne.eu
any Russia company since July 2014, when Western sanctions were triggered by the Kremlin's annexation of Crimea.
“This is actually a huge deal and may smash the sanctions dam and open the floodgates,” a former EBRD banker told bne IntelliNews. “The Russians, as shareholders of the bank, have been lobbying like hell for this to happen for a long time but probably thought it was never coming.”
The world’s biggest investment banks, fund managers and insurers closed their Moscow operations and shut their
Russia funds after the US and Europe introduced tough sanctions in 2014 to penalise the Kremlin’s aggression in Ukraine. The roster list of departing Wall Street and European investors got longer and longer over the years as sanctions starved the country’s energy and banking sectors of financing and helped prolong Russia’s recession.
The EBRD tried to downplay the significance of the new investment, which must have been mulled over with a fine-tooth comb by the lender's army of lawyers. “No new investments, not a change of strategy – just helping