Thursday, December 18, 2014

Russia economic crisis tidbits...UPDATE

This is another in a series of articles on the crisis in Russia and why I think it will end badly.

First up is a vid from CNN...



I don't know the guys name but the Brit gives the best and simplest overview of the economic troubles in Russia.  Did you notice that he said it was both political and economic?  Remember that.

Next is this report from Business Insider note that the date is August of this year...
As-Safir said Prince Bandar pledged to safeguard Russia's naval base in Syria if the Assad regime is toppled, but he also hinted at Chechen terrorist attacks on Russia's Winter Olympics in Sochi if there is no accord.

''I can give you a guarantee to protect the Winter Olympics next year. The Chechen groups that threaten the security of the Games are controlled by us,'' he allegedly said.

Prince Bandar went on to say that Chechens operating in Syria were a pressure tool that could be switched on and off.

''We use them in the face of the Syrian regime but they will have no role in Syria's political future.''

President Putin has long been pushing for a global gas cartel, issuing the ''Moscow Declaration'' last month to ''defend suppliers and resist unfair pressure''.

Mr Skrebowski said it is unclear what the Saudis can really offer the Russians on gas, beyond using leverage over Qatar and others to cut output of liquefied natural gas.
Prince Bandar is an old skool operator.

Whats new is that the a global commodity is being manipulated by governments (ok, its not really new at all but this is the most overt example of it...remember the American people have been sold the bill of goods that its a free market) and in this case a small country that is dealing with a regional problem!

I liken this to the United States suddenly throwing the entire world into turmoil and affecting another nation because, for example, Mexico isn't help stem illegal migration across the border.

Its just that crazy!

Whats even more troubling and should immediately be verified by major news is the claim that Saudi Arabia is sponsoring Chechen terrorists.

If thats the case then sanctions should be slapped on Saudi Arabia not only by Russia but by the US and EU.

Saudi Arabia putting on this price squeeze.  The US must have given its blessing.  The EU must be involved in allowing it to proceed....and a Russian Bear being pushed into a corner.  And all this has been in motion since August of this year!

Do you really think this will end well?

UPDATE (special hat tip to Bayou Man for the links):  Some have expressed the idea that the Saudi action is aimed at the US.  I've come to the conclusion that its bullshit.  Don't believe me?  Check out whats happening to emerging markets, via the Telegraph...
The US Federal Reserve has pulled the trigger. Emerging markets must now brace for their ordeal by fire.
They have collectively borrowed $5.7 trillion in US dollars, a currency they cannot print and do not control. This hard-currency debt has tripled in a decade, split between $3.1 trillion in bank loans and $2.6 trillion in bonds. It is comparable in scale and ratio-terms to any of the biggest cross-border lending sprees of the past two centuries.
Much of the debt was taken out at real interest rates of 1pc on the implicit assumption that the Fed would continue to flood the world with liquidity for years to come. The borrowers are "short dollars", in trading parlance. They now face the margin call from Hell as the global monetary hegemon pivots.
The Fed dashed all lingering hopes for leniency on Wednesday. The pledge to keep uber-stimulus for a "considerable time" has gone, and so has the market's security blanket, or the Fed Put as it is called. Such tweaks of language have multiplied potency in a world of zero rates.
You want that barney style?  Whoever bet on a weak dollar is about to screwed...royally screwed.

Want more?  Check this out from the BBC on North Sea Oil....
The UK's oil industry is in "crisis" as prices drop, a senior industry leader has told the BBC.
Oil companies and service providers are cutting staff and investment to save money.
Robin Allan, chairman of the independent explorers' association Brindex, told the BBC that the industry was "close to collapse".
Almost no new projects in the North Sea are profitable with oil below $60 a barrel, he claims.
'Everyone is retreating'
"It's almost impossible to make money at these oil prices", Mr Allan, who is a director of Premier Oil in addition to chairing Brindex, told the BBC. "It's a huge crisis."
I never took the time to add one other fact to my theory about globalization being a contraption built to fail.

It depends on a weak dollar.

Any move that strengthens the dollar pulls another thread on the globalization scheme.  Any real effort to lower the debt?  Globalization takes a hit.  Any effort to become energy independent?  Globalization is in trouble.

But back to the original subject.  With all these moving parts do you really believe that this will end well?  Do you think that they will be able to "get things" back to normal now that prices have been allowed to fall?  Do you think that people are spending more or just maybe they're using the breathing space to get down debt and maybe frugality isn't in fashion but neither is extravagant spending....and that's in developed countries.  BRIC nations are in a hurt locker.  Developed nations are in full panic mode.

We'll be lucky to avoid a war.

70 comments :

  1. Check US Shale oil situation ,Saudis are not combating Russia but US shale that threatens to cut US dependance on middle east oil. But at the same time hitting Iran . Russia is colateral in this game.

    As for Saudis sponsoring islamic terrorists nothing new

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    1. thats a false indicator. as soon as the price of oil rebounds then you'll see people right back in those fields with a quickness. that's just the way it is. they can't kill US oil. the concept has been proven and you can't put that genie back into the bottle. additionally i notice everyone talks about US oil production but what about Canada, Venezuela, Nigeria, etc???? the US will become energy independent within 10 years. that can't be stopped.

      but what can happen before all that? Russia could launch a punitive strike against Saudi Arabia. would the US intervene? probably but what if its a one off to send a message?

      you have to start looking past preconceived and convenient notions on this stuff. as much as we want to see the US as the master of the universe, you're starting to see a world where super power doesn't mean as much...especially when that super power has weak leadership.

      have you noticed what happened with discussion of the new "relaxed" stance with regard to Cuba? it knocked the oil issue off the front page! the business pages if no one else was beginning to really dive deep into what was happening. this knocked them off their stride. their is alot more to this than we all know.

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    2. Not sure Russia has any real ability for a punitive strike against Saudi Arabia. They could send down one of their 4-5 ship combat groups, but it would be a suicide run with US ships all over the place. ICBMs would be off the table for obvious reasons.

      If there is a retaliation, it will be through other means. Such as attacking the petrodollar with a new gold-backed currency for oil sales. Or converting their own currency to a gold-backed one.

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    3. @Whats even more troubling and should immediately be verified by major news is the claim that Saudi Arabia is sponsoring Chechen terrorists.@
      Solomon, I’m surprised that this surprised you. Not only Saudi.
      Further I give (if you don't object.) a google-translation of 2005 about chechenian rebels financing (I guess that more fresh info is forbidden to be speed, but nothing was changed principally, I guess):
      Part 1
      In February 1992, Turkish Prime Minister Suleyman Demirel delivered a keynote speech in which he declared that as a result of the collapse of the Soviet Union opened up bright prospects for the creation of "a giant of the Turkic world, stretching from the Adriatic to the former Great Wall of China." Soon, the North Caucasus has become a major "pain point" of Russia and Chechnya - the center of the ethnically-separatist terrorism ...
      Evidence that for the Chechen terror are interested external forces abound. For example, in 2002, during the raid on Staff Aslan Maskhadov, the Defense Ministry commandos carried out in Chechnya, captured documents found among the so-called ledger. In the chapter "Parish", in particular, noted the proceeds from numerous organizations based in Turkey, Jordan and Pakistan.
      Small sum - 4,995,378 USD. Another 50 thousand. Dollars. The activities of illegal armed groups gave the late former president of Chechnya Zelimkhan Yandarbiyev.
      According to the Russian Interior Ministry, in the provision of financial and material assistance to Chechen rebels were involved in more than 60 international Islamic extremist organizations, 100 foreign firms and 10 banking groups. Among other financial support was carried out: the international organization "Sakir International", which operates in several European and Asian countries and has a multi-million dollar budget, "Muslim Brotherhood", "Islamic World", "The Jordanian Committee for Aid to the Chechen Republic", "Jamaat-e-Islami "" Al-Qaeda "," Al-Haramain "," Hizb-ut-Tahrir "," Pakistan solidarity Committee with Chechnya. "
      A Minister of Foreign Affairs of the Government of the movement "Taliban" Mullah Wakil Ahmad Mutawakkil in due time at all "confessed" once that while "many Muslim states provide assistance with money and weapons Chechnya, but they hide it," Taliban "openly declare their support "Chechen separatists. Recall, this is the "Taliban", which was created by the CIA, together with the Interior Ministry of Pakistan.
      Actively funded militants in Dagestan and Chechnya representatives of the North Caucasian diaspora in the USA (New Jersey, Illinois and Maryland). Help came through charitable, religious and educational organizations. In the United States today there are more than 50 pro-Islamic community non-profit organizations that collect voluntary donations and financial contributions to support "financial and humanitarian assistance" Chechnya.

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    4. Part 2
      Anyway, there is officially a "lit up" at least 17 wide variety of international organizations. Both political and official, religious and others. For example, the missionaries have been there "Agency for the release of the Adventist" (ADRA). Where they are found in the Caucasus Mountains Adventists? Were such as international corporation "Mercy" and the Norwegian "Church Aid."
      Only a few months of 2000, a little-known organization "Help Germany" gave 350 thousand Chechens. US., The Danish Refugee Council - 700 thousand. US., "Islamic liberation" - 1 million. 400 thousand. US., "Norwegian Council internally displaced persons "- 500 thousand. dollars." Polish Humanitarian Action "- 75 thousand. dollars. not so little for a few months. And that's just the official donation. The German organization "Help" in 2000, "allocated" Chechnya 7 million. Brands and a million in January 2001
      How much money did "black cash", we can only guess. Because the origin of most of these organizations is covered with darkness. Sources of funding are unknown: Belgian organization "MSF" - private contributions, "Norwegian Church Aid" - the same thing. The dark history and the Dutch "MSF", "Salvation Army", "Kar Anamur" and many other structures, "work" in Chechnya.
      January 9, 2001, Chechen terrorists kidnapped a US citizen Kenneth Gluck, who worked for an international organization "Doctors Without Borders", officially funded by the Dutch government and unknown sponsors who quietly transferred to the account of organization millions of dollars. As it turned out, it helps to get into the "hot spots" not only to physicians. According to Russian intelligence services, in the first Chechen campaign "Doctors Without Borders" and without medical education engaged redeployment was still living in various parts of Dudayev warring Chechnya. And mentioned the German organization "Help" at their bases trained Chechen militants mine explosives.
      Known scandal with the British organization "Helo-Trust" (private military company). Theoretically "Helo-Trust" established in the UK in the late 80s. as a charitable non-profit organization engaged in rendering assistance in mine clearance of areas affected by armed conflict. In practice, on the testimony of detainees Chechen fighters and instructors of this "Helo-Trust" since 1997 has trained more than a hundred specialists mine blasting work. It is known that the funding "Helo-Trust" carry DFID, the US State Department, the European Union, the Governments of Germany, Canada, Ireland, Japan, Finland, as well as private individuals.
      Conducting "demining" they began with a full-scale topographic survey the entire territory of the Chechen Republic with reference to the settlements NATO coordinate system.

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    5. Part 3
      Then, in the "Helo-Trust" began actively pursuing the issue of illegal transfer of a variety of equipment on the territory of Chechnya. In May 1998, the coordinator of the activities of "Helo-Trust" in the North Caucasus Richard Baylis reported to his superiors in London: "Helo-Trust" is not registered and, in this regard, can not produce the clearance of goods at the Russian customs ... "." peace "while the British decided to use the smuggling routes that brought loads for Chechen fighters. Charlie Emma (employee of the branch" Helo-Trust "in Abkhazia) informed London in March 1998 .:" I intend to ask for help in supplying equipment to Basayev. "
      I wonder how the British government would have reacted if someone threw a kind of "equipment" for the IRA? Or prepared for her 100 sappers?
      The report of one of the coordinators of "Helo-Trust" says: "The first batch of deminers is now undergoing training. All of them - former militants of the Achkhoi-Martan." This program has been implemented on the territory of Germany and was funded by the German government ... that at one time discussed in the German press.
      It was found that employees "Helo-Trust was" actively engaged in Chechnya gathering intelligence on the socio-political, economic and military matters.
      This story is about Chechen terrorism involving subjects of Her Majesty the Queen of Great Britain is not the only one.
      In April 1997, in Washington was registered Caucasian-American Chamber of Commerce (KATPP), headed by the offender and former "head of foreign intelligence" in the government Dudayev Hozh Ahmed Nukhaev. KATPP took up the project "Caucasian common market" and two months later published their practices in integration of Chechnya into the global financial system. At the end of June of the same year, at an international forum Kreitz-Montana in Switzerland project was approved and found a sponsor in the person of Lord Alistair Makalpayna, a representative of the financial group Goldsmith, acting under the auspices of Margaret Thatcher.
      Currently, according to data from the Internet in Russia have their representative offices and branches all sorts of funds and research centers in the US, Germany, UK and NATO scattered throughout our country, a number greater than the number of all subjects of the federation.

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    6. Part 4
      The category of "strange" organizations can be attributed "Peace Corps" (US Government, acting on the territory of the Russian Federation since 1992). Currently in our country there are about 200 American volunteers, they work in nearly 30 regions of Russia. In the ranks of the organization have been identified 30 employees who collected information on the socio-political and economic situation in the Russian regions, employees of government and administration, elections, etc.
      Turkish religious-nationalist sect "Nurdzhular" operates in Russia through it created the company "Serhat," "Eflyak" funds "Toros", "Tolerance" and "Ufuk", to solve a wide range of tasks in the interests of the Turkish intelligence. Generally in Turkey (US ally, a member of NATO) is one of the largest centers of international transfer of "charity" money to Chechnya.
      Important role in smuggle money to buy arms and ammunition to the Chechen fighters played Intelligence Service of Qatar "Mukhabarat" to operate in Russia under the "charitable legend."
      Saudi Arabia's intelligence services use organizational structures of Islamic extremist organizations operating in other countries - Morocco, "Al-Adl wal-Iskhan", "Al-Shabib al-Islam" et al., Including providing financial assistance to various kinds of extremist organizations, including Chechen separatists. In 1992-1994. Chechnya, Kabardino-Balkaria, Karachay-Cherkessia, Bashkortostan and Dagestan Saudi organization through established structures they discovered a network of clandestine paramilitary camps in which the intense ideological and military training "future defenders of Islam."
      Details: http://vpk-news.ru/articles/645

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    7. Can't kill US shale oil and can't kill Canadian shale and oil sands production. This dramatic drop in price will slow down permits for new well heads and work and maybe some production. But long term, it is here to stay. This low price of oil is not sustainable even for Saudi. I believe they actually need around $85 barrel just to keep their own country operating.
      Besides, the most important fact is that almost all of domestic North American shale oil production is consumed domestically. The only reason it isn't a 100% is because of oil flows and pipeline availability. The bottom line is we consume all of what we make and will for a long time to come.

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    8. well the other hmmm in this ocean of guess work is the decision to place US oil on the world market. we once kept all we pumped. with prices going low you can expect it to be questioned if oil zooms back up. the worst outcome that could happen from this? US oil is "priced appropriately", and world oil is sky high.

      in other words i'm talking about a competitive advantage for US companies and manufacturing (and i'm not talking multi-nationals but real US firms). either way this is going to blow up in the Saudi's faces.

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    9. Yes, but even if all of the US shale oil is consumed locally, that still affects the price of what the US pays for imports, and by extension the world market price.

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    10. Another interesting thing here is the 2018 World Cup (soccer), which is to be held in Russia. This means billions required in stadiums and infrastructure. The Russian economic situation plus sanctions will be a serious problem. There has been light talk about some of the major Euro teams potentially boycotting the 2018 World Cup because of the Ukraine situation. As it stands I doubt many fans from Europe and NA will be all that eager to go to Russia to watch the world cup.

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    11. My brave Canuck! Don't be afraid, president Putin already declare that the World Cup will even bigger and better then Soczi.

      Panem et circenses!

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    12. Canuck Fighter.....come on man.....I thought with Canada's British/French oriented culture you guys would call it Football and not soccer.
      :)

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    13. "Not sure Russia has any real ability for a punitive strike against Saudi Arabia. They could send down one of their 4-5 ship combat groups"

      This will never happen but correct me if I am wrong, as far as I know Russia had some nuclear suitcases, one of those going off in the face of Abdullah would be pretty fun and rightgeous. S. Arabia supports islamic terrorist monsters, putting them down would benefit everyone.

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    14. @No

      Polonium in his tea would be more exacting, and less likely to trigger a war outside of Russia's zone of strength.

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  2. Btw: "Smolnyj" leave Saint-Nazaire with Russian sailors. So "Vladivostok" will not join Pacific Fleet this year.

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    1. Collateral question is – will refuse India their order in France of jets (and may be submarines).

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    2. Nah... India is playing in the middle, they would react only if there order would be in danger. For now, it's look like they act in form of "Suck to be you Russia"... and what we can get from that situation. Maybe it will be some leverage? Or... shiiitttt that would be some crazy surprise if India would buy out those ships from France.

      But I know this will be a problem, too many Russian tech in them, and I think there was some part of Russian "secret" ice breaking tech in Sevastopol(?) That forbid France to sell it without permission of Russia.

      ... but again... if economy will squeeze Rubel balls more hard, Kremlin would look at some extra cash from possible sell of Mistrals. Who knows, crazy enough?

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    3. @shiiitttt that would be some crazy surprise if India would buy out those ships from France. @
      interesting idea.
      @I think there was some part of Russian "secret" ice breaking tech in Sevastopol@
      never read about such secrets in the ships.

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    4. @never read about such secrets in the ships.

      There was some info or rumors that elements of hull build in Baltiysky Zavod are specially design to operate in heavy ice covered waters and act like icebreaker. And Russia from pretty long time build the best icebreakers in the world, not to mention they build the first one on the world.

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    5. I looked into the issue of Mistral sale to India. That will not happen. Our Ship building lobby in the Govt. is pretty strong especially with Narendra Modi in charge. They would like to build those ships in India rather than buy them off the shelf even it it costs more money which is debatable. We saw this policy of making in India when than 197 Light Utility Helicoptor order was scrapped and now all helicoptors in a 450+ Light Utility Chopper deal must be made in India. The same goes for our FICV. If i were a betting man, I would bet against India buying the current Mistrals but I would definitely put money on Mistrals being made in India. The Scorpene submarine deal is also between a rock and a hard place becasue of work share issues.

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    6. P.S- If you are a Sikorsky Fanboy, watch India closely.

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  3. The price is manipulated
    The supply is controlled.

    Banksters don't set the price of oil but the Saudis do have a big say on level of production.

    Price is a function of supply and demand
    Demand is down
    Saudi is forcing the supply up

    That craters the price

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    1. The price is not
      Stupid sausage fingers

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    2. Banksters just add their pot buying oil cheap storing it on tankers full of crude waiting for price spikes financed by cheap money from Fed

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    3. Any bankster who bought a tanker full of oil at $150 barrel has had a very bad week...

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  4. . I have no doubt shale oil will kick back when oil prices go up but til then its unprofitable and companies will go bust ,same for Canada oil sands these projects depend on expensive oil till, oil prices rebund US & Europe stays dependent on middle east oil. US can only be energy independent with high oil prices that is a fact.

    You have to remember that middle east oil is cheap to extract and 60$ barrel is not low for them price of oil was below 40$ region till about 2005 when OPEC cartel decided to slow down production to kick the price up. 60+$

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    1. Yes and no.
      They make money on $50 oil
      They provably make Money on $20 oil

      They don't make enough money though.

      At 5% interest and $50 oil, petrobras is still profitable, but 18% of its income goes on interest payments.
      That's money that isn't profit, so isn't taxed, so can't be spent on welfare.

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  5. His name is Richard Quest, and he's CNN's chief business affairs correspondent.

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  6. Oil going down -- US oil extraction industry losing profits, but everything else is thriving on a cheap gas. Oil goes up -- US oil and natural gas(fracking) extraction will make huge profits. Its a win win scenario for US.

    But for Russia cheap oil is a political death sentence. Putin said "we will sell our oil and natural gas to China for yuans, exclude dollars from the trade, and will prosper, just wait for 2 years". Of course, SURE, chinese are not idiots and they will not buy oil and natural gas from Russia for higher prices than from arabs. There is no difference who to sell oil to, if global oil price will be 20$, everyone will buy it for 20$ and not for 140$ equivalent in yuans as Russia hopes.

    Here in Russia situation now is slowly shifting from usual everyday SNAFU condition(pretty normal environment for average russian citizen since 90s), to a more disturbing TARFU stiuation with rouble getting "halved". Halved rouble was a wakeup call for russians who got used to watch popular TV Series "CrimeaIsOurs" and "Ukrainian fascists eating russian babies in Donbass" after returning from job and was completely unprepared to actually pay from their pockets for Crimea annexation.

    "Putin have raised Russis from the knees" mantra now becoming less nad less popular and more russians starting to see at last, that a FUBAR is actually looming on the horizon and it is a good time to start stockpiling food in their homes.

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    1. I can send you some jam and juice from apples, I did some good ones... but I'm afraid they would be "intercepted" by always watchful border guards and labeled as contraband. Because you know, I made them from our apples. ;D

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    2. Thank you but i have already made food reserve for a month. Call me paranoid :D

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  7. This comment has been removed by the author.

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  8. Canuck you are optimist if you think you can't kill the shale ,shale and tar oil booms are both driven by high oil price and started when oil prices spiked past 70$ ,its basic economics if shale is more expensive why would any one buy it ?Domestic or not ,should they start labeling filing station at your gas pump 1$/gallon made in US and 0.6$/gallon import what will you buy. Shale boom did not happen due to technological breaktrough but due to high priced oil that made it commercially viable.If north sea oil is straining you can be certain shale and tar sands are hurting more .

    And if anyone can afford the price war is the Saudis they have a huge surplus lots of cash at hand and investments spread world wide. After the gulf war they sold their oil for round 25$. It depends how the rest of the OPEC does Nigeria is already in deep shit

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    1. The "high" price of shale gas extraction using both hydraulic fracturing and directional drilling technologies, is highly overrated.
      While the inital phase of "fracking" is rather costly, ability to use single set of eqiupment for multiple grouped wellheads brings it to the same price tag as traditional oil and gas extraction.

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    2. Depends of the site
      http://stockguy22.com/2014/11/26/breakeven-oil-prices-for-u-s-shale-analyst-estimates/

      http://www.rystadenergy.com/AboutUs/NewsCenter/PressReleases/global-liquids-cost-curve

      http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/11/20141107_shale.jpg

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    3. This is not only true with shale, but also off shore drilling.

      If it costs more than it does per barrel to extract and process it than what you can sell it for, then there is no profit, and no oil production.

      EROEI is a mean bitch that way.

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  9. Russia's problems have been exaggerated, especially compared to the US and Europe. Russia has $439 billion in foreign currency reserves, the National Welfare Fund has a balance of $85 billion and it has a strong debt-to-GDP ratio of just 13%. Compare to the US, deep in debt and a 72% debt/GDP. A weaker ruble will help Russia exports.

    Oil normally sells in dollars, and Russia has a willing buyer in China. It's cost of petroleum production is much lower than for US shale oil, where the real hurt is. The shale producers were operating in deficit even before the oil price dropped.

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    1. @Oil normally sells in dollars, and Russia has a willing buyer in China.

      And now way to deliver them that oil because whole infrastructure will be ready in a decade or two. China will buy from Saudis, from US and from everyone who can DELIVER them oil... in opposite to Russia in this moment.

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    2. @Shas
      Wrong. Russia ships a considerable quantity of crude oil to China via Eastern Siberia-Pacific Ocean oil pipeline, and will increase it.

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    3. Make up your mind, ships or pipeline... and you know that pipeline have an transfer limit? And they pomp oil at full power to China for a rather long time already?

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    4. @Shas
      Both, actually, the original ESPO route ended (if you had actually read my comment you would know) at the Pacific coast where it is shipped to China. I understand that there is a new spur pipeline that goes from ESPO to China.

      You are wrong again, on capacity. They are continually adding pumping stations to increase flow. They plan to increase capacity 80% by 2018.

      I guess we took care of this:
      Shas: "And now way to deliver them that oil because whole infrastructure will be ready in a decade or two." --Dead wrong.

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    5. don cacon, i agree with you on the exaggeration of russia's crisis. while the problem is real for russia, the influx of news from western main stream media enforcing the "russia is doomed" narrative are so similar to previous effort by western media to put russia in bad light...

      i also noticed in other forums i frequent the increase of anti russian posts or people who gleefully / joyfully laugh at russia's problem.. as if this is some kind of kid's game..

      My take on the situation, this will just make russia closer to china , and who knows what russia will do in the middle east later.. the world situation will be worsened by the amateurs in white house / state dept..

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    6. Changing oil buyer for Russia won't solve anything, it will be sold for the same worldwide 20$ price(current 60$), chinese aren't idiots. And increased extraction would deplete working wells quickly, and to dirll more wells Russia needs access to modern technologies from GB and US, which is unavailable. The problem is oil price, not the oil buyer.

      " i agree with you on the exaggeration of russia's crisis" -- it seems you don't live in Russia, where now rouble value is HALVED, and all(almost) prices is DOUBLED(Real estate, cars, computers, smartphones, clothes. So far only food prices more or less controlled by government). Unlike Russia US does not need to trade oil to have any source of dollars. This halved rouble is a Putin's attempt to prevent russian citizens to spend precious dollars on imported goods, which is 90% total(!), to save dollar reserves. Now Putin just praying for oil prices goes up before dollar reserves will be spent, but we have period when oil was sold by 20$ for more than decade, so this fcker is finished along with his fcked Crimea.

      US "amateurs" by dropping oil prices, delivered multivector attack against Iran, Venezuela, Russia, Iran and god who knows else without endangering US economy whatsoever. Recent Cuba U-turn toward US is direct consequence of it.

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    7. @Don

      In 2018 they will increase to 80% the flow... good, good... by the way, you know that this is still a year 2014 and in couple of days will be, without to much surprise the year 2015? Couple of years to that 2018 still, and now it was rather obvious (it was?) that they still did not "negotiate" who will pay for gas infrastructure in planed Siberian pipeline, as Russian partner don't have such money and China don't want to pay for works that will be done in 90% outside there territory. This put on hold other plans for serious investments in crude oil pipelines as from somewhere you will need to take that cash and put in new project.

      So key word in your statement is "the plan is". So you know I speak about present and in present you are Wrong. In the future of 2018 IF they expand installation I would be Wrong. For now... I have at least 3 years of being perfectly right and you perfectly wrong.

      Of course not to mention the still unresolved argue between CNPC and Transneft about payment for delivery.

      China for now take it's crude oil mainly from Middle East, then from inside production and other suppliers and then some from Russia. To aiding to the topic, if Russia would try to destabilize that flow from Middle East... the Dragon would not support her, more it would probably stand against Russia. Oil must flow and everything that would try to stop that is direct hit in to China economy and industry.

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    8. @it seems you don't live in Russia, where now rouble value is HALVED, and all(almost) prices is DOUBLED(Real estate, cars, computers, smartphones, clothes@

      Bggg. Would you be so kind an example of doubled real estate in Russia? Can you prove with numbers that double downed ruble means double times rise of FMCG prices?

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  10. IMHO last time I checked the sanctions were very small in terms of economic impact. The biggest factor by far is the oil prices which will mainly affect their governments budget, but they have considerable national savings that they can draw down on, and despite the massive debt being racked up by western governments to pay for the big welfare-states it has not been the end of the world.

    To sum it up this is a massive over-reaction, at this price the Russian dollar is severely under-priced. Eventually it will bottom out and return, it might not return to its previous levels but it will appreciate significantly.

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  11. A weaker rouble to the dollar is pretty good in a twisted way. And I am here to re-inforce Don Bacons view that it will actually help Russian Exports with one particular project/export in mind. India is and will be investing in the PAKFA/FGFA project not in our currency The Rupee but in US Dollars. And the US dollar being strong vs. the Rouble is good news as far as this aircraft is concerned.

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    2. For every(!) russian, salary is now halved. Just imagine that your income just dropped by two times withing month, like it happen this December in Russia.

      PAK FA most likely would never enter mass production, it is a traning project for new generation of avitation engineers, same as training project for armored vehicles engineers -- Armata.

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    3. The PAKFA might not enter Mass production in Russia but the FGFA will most certainly enter mass production in India.

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    4. On this i agree, but most likely indian FGFA will be based on reverse engineered Su-30MKI, modified to 5th gen standards, like adding internal weapon bays, some stealth improvements and updated eletronics, all locally produced in India. Similar to chinese Su-27/F-35 hybrid J-31.

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    5. @Just imagine that your income just dropped by two times withing month@
      Only if all your outcome is connected with dollar. «It seems you don't live in Russia, where now» (citation of some great and indisputable live-in-Russia expert) vast majority of population consume mostly domestic FMCG.

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    6. The wages of aircraft engineers are a lot more fluid than that of low lever assembly workers.
      They are more likely to move country.

      But even if they accept their pay cut, Russia might sell more PAKFAs, it won't sell 100x as many.

      A $100 drop in oil costs Russia a billion dollars *per day*
      Is it going to sell an additional 7-10 pakfas per day?

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    7. But here is the thing....Russia doesnt sell PAL-FA's alone. It sells a million other things. Just like when the Indian rupee gets cheaper India doenst just sell more IT....it sells more Fords, GM's, Hyundai's, Suzuki's, textiles, other engineering goods, precious stones, spices, pharma products etc. I am sure with a cheaper rouble, the Chinese will find Russian gas and oil that much more appealing than Saudi oil and gas. Heck....even Iranian oil and gas.

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    8. And the last time i checked, Russia exported a whole lot more than just PAK-FA's. Its got Kilos, Akulas, RAC Mig's, Sukhois, T-Series tanks, BMP series, Kalashnikovs, Krivarks, Mi-series, Kamovs, Radars, Vodka, turbines and other engineering goods, cement, etc.

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    9. @Russia exported @
      And such a “technically easy” and “cheap" thing as Atomic plants and all collateral goods like equipment and fuel elements. Rosatom have orders-case for atomic plants at 100 milliards $ for the next decade (not to mention fuel elements and so on).

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    10. @vast majority of population consume mostly domestic FMCG@
      Like smartphones, desktops, notebooks, TV, washing machines, microwave ovens, printers, cameras, fridges? All consumer electronics products in Russia is imported form abroad, and already prices on such products have doubled, with the exception of some leftovers bought from suppliers before rouble downfall. Its easy to check in any onlline shop like aliexpress.com or amazon.com

      Oh, it is not a "FMCG" products like a basic food products? Since vast majority of russian population working only for food? Well there is a surprise is coming even for them, prices for FMCG will be doubled in a few months too or they would disappear from the shelves since it would be unprofitable to produce them("Deficit" is back).

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    11. @prices for FMCG will be doubled in a few months too@
      We will see.. Prices depend on region sometimes…
      Where in Russia do you personally live?

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    12. he never step outside his own country , let alone visited russia.. he just saying he lived in russia to back up his laughable comments.. for example he listed 'imported electronicc price doubled' as a reason to show russian is in dire strait.. did russian ate PC or TV or refrigator or microwave to stay alive ? what kind of twisted logic would think a rising electronic-good price would impact daily lives of average russian ?

      i lived under the most horrible currency devaluation in 1998 asian financial crisis, the currency devaluate worse than the ruble , yet it didnt impact daily lives of people in the slightest , the impact is gradual for primary stuff like food , not instantly like most of these russian haters said..

      heck i am asian but i really loath all these hatred toward russia.. it feel's like they are believing/supporting the current obama goverment's narrative about russia being evil and it is ok to hate russia...

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    13. Also if Vladimir Putins recent visit is to be believed, we can expect a multi billion dollar deal for Russian Nuclear reactors and tech. to be sold to India. Another deal like that is on the cards with the French. In any bidding war, the cheaper rouble is going to tilt in favor of the Russians vs. the French if the technology is the same.

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    14. Looks like mr Modi know how to play the game for india's interest.. He knows the american overtures toward india are just that, to counter russian influence instead of looking after india's interest :

      "This brings us back to Obama’s visit. Expectations are rising against the backdrop of Putin’s visit. As I wrote earlier, Will Obama come bearing gifts?

      No, not gifts of even bigger dollops of dizzying rhetoric, but in terms of solid outcome that can be assessed in money terms – plainly put, an outcome that meets the needs of aspirational India and Modi’s development agenda alike. We would like to know, for example, how many jobs Obama can help create — in India."

      http://blogs.rediff.com/mkbhadrakumar/2014/12/12/run-obama-run/

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  12. Sarab
    Russias exports are 70% oil and gas.
    Were anyway....

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    1. haha, true that. But thats where a cheaper rouble will literally jolt the russians and force them to concentrate and be competitive in other sectors and not rely on the Energy Mafia in their country. Even for Putin, he will be a lot happeir politically when 70% of his war chest is not being financed by just one section of the economy.

      If I were to point to one economy which the Russians will also see beneficial to themselves it is Australia. They make maximum benefit out of their natural resources with a small population base just like Russia. But not one industry in the natural resources sector gets to completly dominate Australian politcs like Russian Oil and Gas in Russia. Small population but kick ass capabilities as anyone who has played any Sports with them will testify. Their agriculture based industry is also something that the Russians can take inspiration from. Pharma as well. While I am not preaching for a ctrl+C,ctrl+V of the Australian economy in Russia, you get the main point of it all.

      The Soviet Union might have crumbled away like Alexander's empire but if there is one man who can make a Seleucid ish rise of the Russians......it is Putin.

      And this might make me sound anti-american but the world will decend into even greater chaos without Putin and his Russia doing their very best to counter the US. Checks and Balances.

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  13. Weak Rouble is bad thing, but people are overblowing stuff. My mothers country suffered from the same shit during the 80's, a devaluated coin thanks to low oil prices, it went even lower than the ruble. but after 6 years of economic "decency" the country was growing again and fast (its GDP doubled in 10 years) and has quintupled since then, and another plus was the fact that the economy became much less dependant on oil. There is always a silver lining.

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    1. as a person who worked and lived under massive currency devaluation in asia 1998 (way way more than the ruble devaluation) , i have to say this , all those BS about russia suffering horrible is just wrong... currency devaluation is not something that instantly changed daily lives or prices , saying that mean you are lying.. and those who blatantly lied about living in russia , shame on you ..

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  15. for everyone who is interested in Russian economy - I strongly recommend this source -
    Russian Economy in 2013. Trends and Outlooks. (Issue 35)
    http://www.iep.ru/ru/publikatcii/publication/6850.html

    It is a huge science work on 500 pp – for free and in English

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