Russia???
Front Page has an excellent overview of Putin's Russia, their oil and gas problems, their sudden weaknesses, and condition. Really worth a read.....BTW, they say that Russia lost in their battle with the Ukraine.
Front Page has an excellent overview of Putin's Russia, their oil and gas problems, their sudden weaknesses, and condition. Really worth a read.....BTW, they say that Russia lost in their battle with the Ukraine.
4 comments:
Read the article - this is BS, in my opinion.
First, on a question who won. The reality is that it's impossible to tell today. The agreement for market prices for gas and transit is definitely in favor of Russia. Russia's interest in having Ukraine to pay full price and Ukraine's lack of desire to do so (combined with a strong negotiations leverage in a form of a transit system) is what has started the conflict in a first place. If you believe that commodities will shoot back up on a burst of a Treasuries bubble (as I do), Russia will be a winner (but not for long, as I am sure that Ukraine will find a way to reneg on the agreement it just signed should the price be "intolerably" high). If crude prices stay low for a long time (and gas prices are derived from it with a 6-9 months lag), Ukraine could be the winner.
Second, a popular view that Russia is blaickmailing "freedom-loving" administration of Yuschenko has no merit. Yes, his regime is not friendly to Russia (in large part due to his desire to join NATO). In this situation, why Russia should continue to subsidize Ukraine by selling its commodity less that half price that what European countries do ($179 vs. $400-4050 in 2008)? Pure mercatile interest dictates that Russia demand a fair price for its product. Of course, the conflict has a political component, but so does any serious trade issue (think Chinese "currency manipulatons", NAFTA, agricultural subsidies, etc.)
The lifting costs for Russian oil are between fifty and five dlrs per barrel. Once on the needle, like Venezuela (Lifting costs are $70 per barrel), and England where North Sea oil lifting costs are very high, no country can stop selling oil because they need the money. They hope the oil price will rise to above lifting costs and save them. Ukraine won and make no mistake because Europe woke up to the fact that Russia cannot be trusted and they will not agree to new pipelines across their countries.
Your estimates for the lifting costs are way over the board, I believe. I don't know about Venezuela, but in Russia it's $10-20/barrel. Russia has been selling oil for many decades at price much lower than $50 and has been making money on it.
You still did not tell me why Russia should sell its gas to Ukraine below market price.
Contrary to ourstatement that Russia can't be trusted anymore, FYI Russia has been extremely reliable supplier for dozens of years before Ukraine started leveraging its ownership of the pipeline to extract enourmous discounts from Russia.
Lifting costs for Russian crude are $45 and change. Look it up. Also while they have adequate supplies of crude, they have almost no natural gas production???? The dispute with the Ukraine had to do with delivery of natural gas, period. I've traded energies for twenty years and I assure you, I know my shit. BTW,Ukraine consumes far more NG than they produce. They use more than all four Eastern Block countries combined.
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