Saturday, November 8, 2014

Russia Focus ( November 8 - 9 , 2014 ) Ukraine situation / state of play updates ( gas wars on hold until March 2015 and Europe gets its gas for the Winter ) , Russia makes moves with China and to withstand sanctions regime.....

Zero Hedge.....

Russia, China Sign Second Mega-Gas Deal: Beijing Becomes Largest Buyer Of Russian Gas

Tyler Durden's picture

As we previewed on Friday, when we reported that "Russia Nears Completion Of Second "Holy Grail" Gas Deal With China", moments ago during the Asia-Pacific Economic Cooperation forum taking place this weekend in Beijing, Russia and China signed 17 documents Sunday, greenlighting a second "mega" Russian natural gas to China via the so-called "western" or "Altay" route, which as previously reported, would supply 30 billion cubic meters (bcm) of gas a year to China.
Among the documents signed between Russian President Vladimir Putin and Chinese leader Xi Jinping were the memorandum on the delivery of Russian natural gas to China via the western route, the framework agreement on gas supplies between Russia's Gazprom and China's CNPC and the memorandum of understanding between the Russian energy giant and the Chinese state-owned oil and gas corporation.
“We have reached an understanding in principle concerning the opening of the western route,” Putin said. “We have already agreed on many technical and commercial aspects of this project, laying a good basis for reaching final arrangements.”
RIA adds, citing Gazprom CEO Alexei Miller, that the documents signed by Russia and China on Sunday define the western route as a priority project for the gas cooperation between the two countries.
"First of all these documents stipulate that the "western route" is becoming a priority project for our gas cooperation," Miller said, adding that the documents provide for the export of 30 billion cubic meters of Russian gas to China annually for a 30-year period.
Miller noted that with the increase of deliveries via the western route, the total volume of Russian gas deliveries to China may exceed the current levels of export to Europe in the medium-term perspective. In other words, China has now eclipsed Europe as Russia's biggest, and most strategic natural gas clientMore:
Miller, who heads Russia's state-run energy giant, told reporters that "taking into account the increase in deliveries via 'western route,' the volume of supplied [natural gas] to China could exceed European exports in the mid-term perspective."

This came after Russian and Chinese energy executives signed on Sunday a package of 17 documents, including a framework deal between Gazprom and China's energy giant CNPC to deliver gas to China via the western route pipeline.

Miller said Gazprom and CNPC were in talks on a memorandum of understanding that would see Russia bring gas to China through the western route pipeline, as well as a framework agreement between the two state-owned companies to carry out the deliveries.
The western route will connect fields in western Siberia with northwest China through the Altai Republic. Second and third sections may be added to the pipeline at a later date, bringing its capacity up to 100 billion cubic meters a year.
The facts and figures of the Altay deal are broken down in the following map courtesy of RT:
Also of note, among the business issues discussed by Putin and Xi at their fifth meeting this year was the possibility of payment in Chinese yuan, including for defense deals military, Russian presidential spokesman Dmitry Peskov was cited as saying by RIA Novosti. More from RIA:
Russia's President Vladimir Putin and China's President Xi Jinping have discussed the possibility of using the yuan in mutual transactions in different fields of cooperation, Kremlin spokesman Dmitry Peskov said Sunday.

"Much attention has been paid to the topic of mutual payments in diverse fields ... in yuans which will help to strengthen the yuan as the region's reserve currency," Peskov said commenting on the meeting held between Putin and Xi on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Beijing.

On October 13, Russian Economic Development Minister Alexei Ulyukayev announced that Russia was considering Chinese market to partially substitute access to the financial resources of the European Union and the United States.

The European Union and the United States have imposed several rounds of economic sanctions on Russia over its alleged involvement in the Ukrainian crisis, a claim Moscow has repeatedly denied. The restrictions prohibit major Russian companies from seeking financing on western capital markets.
Meanwhile, as China and Russia keep forging ahead in a world in which the two becomes tied ever closer in a symtiotic, dollar-free relationship, this is how the US is faring at the same meeting: "China, U.S. Parry Over Preferred Trade Pacts at APEC: Little Progress Made on Separate Trade Deals at Asia-Pacific Economic Cooperation Forum."
The U.S. blocked China’s initiatives because it worried that launching FTAAP talks would impede progress on a separate trade deal, the Trans-Pacific Partnership. The ministers’ statement said that any FTAAP deal would build on “ongoing regional undertakings”—a reference to TPP and other regional trade deals.

The Chinese got all they could expect—a reaffirmation that we all share in the vision of having a regional integrated model” for trade, said U.S. Chamber of Commerce Executive Vice President Myron Brilliant.

U.S. Secretary of State John Kerry said Saturday that negotiating the TPP “is a battle that we absolutely must win.” Ministers from the 12 TPP nations met Saturday afternoon to try to narrow differences, including disputes between the U.S. and Japan over agriculture and auto trade. On Monday, the leaders of the TPP nations are again scheduled to discuss the trade deal, although no breakthrough is expected.

The U.S. is trying to tie an ITA deal to progress on other trade deals with China, as a way to increase its leverage with Beijing. “How the ITA negotiations proceed is an important and useful data point” on China’s ability to negotiate an investment treaty with the U.S., Mr. Froman said.

Trade analysts say the U.S. also hopes to use China’s desire to have the Beijing conference produce concrete results as leverage. This is the first major international summit held in China since Xi Jinping took over as Communist Party chief in 2012, and the government wants to use the session to affirm China’s greater role in the world.
Good luck trying to "increase US leverage with Beijing" using a trade conference being held in Beijing as the venue.
In other words instead of actual trade agreements, the US merely jawboned and "shared visions."
Then again, as noted here since 2010, in a world in which one can merely "print one's way to prosperity", what is the need for actual trade? Surely, which China and Russia are expanding their commercial ties at the expense of Europe, the US can continue to pretend it is the world's only superpower and has no need for either Russia or China. After all, Mr. Chairmanwoman can always go back to work and print some more of that "world reserve currency."

Russia Nears Completion Of Second "Holy Grail" Gas Deal With China

Tyler Durden's picture

Six months ago, something few had expected would take place in 2014, or even in the coming years, happened: under Western pressure and out of a desire to diversify away from an increasingly hostile European market, Russia signed the so-called "Holy Grail" gas deal with China, pivoting away from the west and toward with Beijing.
As part of the deal, the two nations reached a $400 billion agreement to construct the Power of Siberia pipeline, which will deliver 38 billion cubic meters (bcm) of gas to China. The compromise was a lower price than Gazprom would have otherwise hoped for, however in taking a cue right out of Amazon, "Russia would make up in volume what it lost in price." This eastern route will connect Russia’s Kovykta and Chaynda fields with China, where recoverable resources are estimated at about 3 trillion cubic meters.
And then today, with little fanfare, Russia's president Putin - whose economy is said to be reeling as a result of a plunging currency, paradoxically something Japan would love to be able to achieve on such short notice - told the media ahead of his visit to the Asia Pacific Economic Conference on November 9-11, that Moscow and Beijing have agreed many of the aspects of a second gas pipeline to China, the so-called western route, or as some already are calling it, the "second holy grail."
We have reached an understanding in principle concerning the opening of the western route,” Putin said. "We have already agreed on many technical and commercial aspects of this project laying a good basis for reaching final arrangements,” the Russian President added.
As RT reports, the opening of the western route, the Altai, would link Western China and Russia and supply an additional 30 bcm of gas, nearly doubling the gas deal reached in May.
Once the Altai route is completed, China will become Russia’s biggest gas customer, able to receive up to 68 bcm of gas annually, surpassing the 40 bcm Russia supplies Germany each year.

Furthermore, now that the western embargo against Russia has made any ongoing cooperation between the western majors and Russia, especially in the Arctic region, virtually impossible if only for the time being, Russia has no choice but to entice China to accept the part of the provider of capital investment and technical know how (arguably reverse engineered from the best western firms). Which is why Russia has already offered Chinese companies a stake in large energy fields. In September, Russia’s largest oil company, Rosneft, offered China a share in its second-largest oil field, Vankor in the Krasnoyarsk region in Eastern Siberia. The area is estimated to have reserves of 520 million metric tons of oil and 95 billion cubic meters of natural gas.
“We have built and put into operation an oil pipeline from Russia to China and concluded agreements providing for the increase in crude oil supplies,” Putin said.

China will participate in joint exploration and extraction of crude oil and coal in Russia, and work on a jointly funded oil refinery in China has started.
And while Putin will be planning how to further expand the Russia-China energy symbiosis without losing too much of his own leverage, he will be joined by Russia's Foreign Minister Sergey Lavrov, who will reportedly meet with his US counterpart John Kerry. Judging by the recent escalation in Ukraine, the two will have much to discuss.
And yet, it is increasingly the case that Russia is happy to leave the west and its petrodollars behind (something Obama is hardly excited about), instead chosing to be paid in Gas-o-yuans or rubles.
“Strengthening ties with China is a foreign policy priority of Russia.Today, our relations have reached the highest level of comprehensive equitable trust-based partnership and strategic interaction in their entire history. We are well aware that such collaboration is extremely important both for Russia and China,”Putin President said.
And as Europe slowly slides into depression having lost a major trade partner, China's trade with Russia, and obviously vice versa, is surging: overall trade between Russia and China increased by 3.4% in the first half of 2014, reaching $59.1 billion, and the two neighbors expect annual trade to reach $200 billion by 2020. China is Russia’s second-biggest trading partner after the EU.
And just in case the two host central banks opt out of wiring or reciving USD-denominated payments, or are prohibited to do so should SWIFT escalate and expel Russia from the organization, recall that the central banks of the two countries recently signed a three-year ruble-yuan currency swap deal worth up to $25 billion, in order to boost trade using national currencies and lessen dependence on the dollar and euro.
Said otherwise, front page coverage of Russia, and its Chinese pivot, may have slowed down in recent weeks, but the motions behind the scenes are anything but over. And while the developed world is increasingly withdrawing from trade with itself and the BRICs, instead relying increasingly more on outright currency devaluation to boost "wealth", it is the two superpowers of China and Russia that are approaching the future the right way. The "exorbitant privilege" of having their own reserve currency will arrive in due course.

Russia Today....

US, NATO say no evidence of new 'Russian invasion' of Ukraine

Published time: November 08, 2014 02:44
Edited time: November 08, 2014 04:39
Russian soldiers are pictured next to tanks in Kamensk-Shakhtinsky, Rostov region, near the border with Ukraine. (Reuters/Alexander Demianchuk)
Download video (21.38 MB)
Both Pentagon and NATO are aware of a “Russian invasion” rumor produced by Kiev official, but said they have no evidence to back it, instead claiming that Russia again boosted military presence along the border in yet another potentially threatening move.
On Friday a spokesman for Ukraine’s National Security Council, Andrey Lysenko, has announced that Russia has sent 32 tanks, 16 howitzers, 30 trucks of ammunition and three trucks with radar equipment to rebel-held areas – offering no evidence of his claim.
After the news made headlines in the western media, NATO rushed to reassure the press that the alliance was aware and “looking into these reports,” which if confirmed “would be further evidence of Russia's aggression.”
Speaking to journalists, Pentagon spokesman Rear Adm. John Kirby also could not confirm the reports.
“I don’t have any independent operational reporting that would be able to confirm that report that these formations have crossed the border,” Kirby said.
Russian FM Sergey Lavrov also confirmed that there are no Russian troops in eastern Ukraine, adding that “even Jen Psaki said that the US State Department has no information about it.”
After a meeting with the US Secretary of State John Kerry on Saturday, Lavrov reiterated that “the ceasefire agreement was signed between the militias and the government of Ukraine, and they need to complete this process.”
Yet both the US and NATO have tried to save face claiming, that even though reports have yet to be verified, Russia is still guilty of building troops along the 2,295-kilometer border.
“What we do see is a continued presence of significantly capable and ready Russian battalion tactical groups right across that border. And they are close. And they are very capable,” Kirby added.
“We can confirm a recent increase in Russian troops and equipment along the eastern border of Ukraine,” RT was told in an official statement, attributed to a NATO military officer. “These vehicles appear to be unmanned, but represent a potential for significant reinforcement of heavy weapons to the Russian backed separatists.”
A Russian soldier stands next to a tank ready to be loaded on a truck in Kamensk-Shakhtinsky, Rostov region, near the border with Ukraine. (Reuters/Alexander Demianchuk)
A Russian soldier stands next to a tank ready to be loaded on a truck in Kamensk-Shakhtinsky, Rostov region, near the border with Ukraine. (Reuters/Alexander Demianchuk)

What the US and NATO also agree on is that Russia is somehow destabilizing the situation.
“Russia continues to demonstrate its lack of regard for international agreements and its determination to further destabilize Ukraine,” NATO said, while Kirby concurred saying “they are doing nothing to decrease the tension.”
The accusations of Russia’s “provocative” deployment of additional troops along its border with Ukraine provoked a sarcastic response from the Russian Defense Ministry, which said any concerns should better be addressed to those producing the rumors, rather than to Russia.
“All such provocative ‘reports’ aimed at further escalating the tension over the civil conflict in southeast Ukraine have a single source. The source is not Ukrainian, although it currently operates from one of the governmental buildings in Kiev,” the statement said, apparently alluding to the heavy presence of American personnel in the Ukrainian Security Service.

Sunday Tweets....

MORE: Russian gas supplies to China could exceed deliveries to Europe - Gazprom CEO

is not considering attracting advance payment from China

MORE: 'Western route' becomes priority project for Russia-China gas cooperation - CEO

MORE: , discussed possibility of using yuan in mutual transactions

MORE: , signed framework deal to sell 10% of Vankorneft shares to China

MORE: Russia, China signed memorandum on natural gas delivery via western route

Putin to attend two major summits and meet several foreign leaders next week

Russia emergencies ministry preparing new batch of humanitarian aid for Donbass

Ukraine’s minister confirms criminal proceedings against him - media

OSCE confirms shelling school in Donetsk made from side of Ukrainian military - diplomat

Ukraine’s prosecution begins criminal investigation of energy minister - agency

Saturday Tweets.....

MORE: Ruble's exchange rate will strengthen in short-term - Economic Development Minister

MORE: Russia's Central Bank's plan to transfer ruble to floating exchange rate is rational

: US, Russia agreed to continue their dialogue on current situation in Ukraine

MORE: Russian government should support VTB Bank targeted by Western - Minister