|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||7.59 - 7.81|
|52 Week Range||4.28 - 8.50|
|Beta (3Y Monthly)||0.21|
|PE Ratio (TTM)||2.29|
|Forward Dividend & Yield||0.50 (6.45%)|
|1y Target Est||9.80|
(Bloomberg Opinion) -- Russian President Vladimir Putin’s so-called national projects — spending plans meant to restart economic growth in Russia — appear to be stuck. Surprisingly, money isn’t the problem: There’s cash to fund them, but the Russian bureaucracy won’t spend it, apparently fearing responsibility for bad outcomes.The projects envisage a total outlay of 25.7 trillion rubles ($400 billion) until 2024. They aim to boost Russian quality of life in the broadest sense, from providing better health care and schooling to making Soviet-built cities more livable. Putin has noted his sliding popularity, and he’s out to prove to Russians by the end of his current presidential term, which ends in 2024, that he’s good for more than a muscular foreign policy. But the program, first announced last year, has gotten off to a slow start. Earlier this month, the Accounting Chamber, Russia’s budget watchdog, published a report on the state of federal spending in the first nine months of 2019. According to the document, while total budget spending reached 62.9% of annual allocations (the lowest at this time of year since at least 2010), spending on the 12 national projects, plus a related plan to modernize Russia’s “backbone infrastructure” such as ports and railroads, only reached 52.1% of what’s been earmarked for the year. On some of the projects, in particular the effort to boost Russia’s digital economy, barely any of the available funds have been spent. And the total spending on the procurement part of the projects, as distinct from other forms of spending such as subsidies or transfers to regional authorities, has only reached 14% of the planned amount for the year.Russia regularly fails to spend its entire budget in a given year. At the end of 2018, 778 billion rubles ($12.1 billion) was left over. This year, Accounting Chamber head Alexei Kudrin expects 1 trillion rubles to be left, in large part because of the underspending on the national projects. Kudrin, a former finance minister, is the most prominent of Russia’s “system liberals,” Putin loyalists who favor more progressive government policies. He said this to the Russian parliament on Wednesday:Why aren’t we spending 1 trillion rubles, or 1% of GDP? Of course one can’t say we have too much money and that’s why we can’t spend it. I think it’s because of low-quality government. In 2017, Kudrin and fellow economist Alexander Knobel published a paper arguing that Russia was spending too much money on programs where expenditure is weakly or negatively correlated with economic growth, such as defense and security, and too little on those that drive expansion, such as education. The national projects are at least partly Putin’s response to Kudrin’s and Knobel’s thinking. Kudrin’s statement to parliament implies that bureaucrats simply don’t know how to run growth-friendly projects. It’s more likely, however, that they’re merely scared of spending the allocated money in ways that could land them in trouble. Because the national projects are Putin’s personal plan, they enjoy the attention of the president’s increasingly powerful and well-funded enforcement apparatus. Putin wants to make sure the allocated money won’t be stolen. That, however, is not easily done. As Sergey Aleksashenko, a former deputy central bank governor and now a Putin opponent, tweeted earlier this week, the requirements for spending budgetary funds are written so that they’re “impossible to execute without breaking rules. When an official asks himself if he wants to deal with the prosecutor’s office, the answer is obvious — to hell with these national projects!”A select group of Putin's friends can still profit from government spending. For example, earlier this week, the chief executive of a company owned by Putin’s judo sparring partner Arkady Rotenberg said the government-funded construction of a bridge between mainland Russia and Crimea would be merely a break-even project. But not long ago, Rotenberg sold one of the companies involved in the construction to the state-controlled natural gas producer Gazprom for a reported 75 billion rubles; he’d bought the five firms he merged into that company for 8.3 billion rubles in 2008 — from Gazprom.Of course, not everybody can pull of such schemes. Russian bureaucrats and subsidy recipients are regularly arrested and sentenced for misspending government funds even when they have achieved satisfactory results. Kirill Serebrennikov, a prominent theater director and darling of the Moscow intelligentsia, spent 19 months under house arrest on charges of embezzling government money, though he was able to show videos of the performances for which the funding was used in strict accordance with the contract. He still hasn’t been fully cleared.Earlier this month, the Prosecutor General’s office announced it had found 2,500 different irregularities in the administration of the national projects, mainly involving the distribution of subsidies and procurement. Some of these will end in criminal cases; no wonder the procurement budget was only 14% spent by the end of September.The creeping nationalization of Russia under Putin, and the accompanying empowerment of enforcement agencies, has created a dilemma. There’s not enough private initiative and private investment to boost growth beyond 1% to 2% a year, but not even Putin believes in the efficiency of government spending because of endemic corruption. As a result, government money still goes to players with good enough connections to avoid prosecution, but it’s being withheld elsewhere. Russia’s unique mixture of a grasping state, a graft culture and excessive centralized control continues to keep it from realizing its economic potential.To contact the author of this story: Leonid Bershidsky at firstname.lastname@example.orgTo contact the editor responsible for this story: Tobin Harshaw at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Nord Stream 2 may have become one of the most geopolitically charged energy projects in history, but its completion was inevitable since before construction even begun
(Bloomberg Opinion) -- Russian opposition leaders rejoiced at the forced resignation of Bolivian President Evo Morales, while the Russian foreign ministry branded it an “orchestrated coup.” The interest in the drama playing out so far from Moscow is understandable, and not just because Morales had handed lucrative projects to Russian state companies. In 2024, President Vladimir Putin faces the same choice that Morales faced this year — to obey the constitutional term limit or to sweep it aside and try to keep power.Bolivia has a long history of military coups and aborted presidencies. Carlos Mesa, the current opposition leader, resigned after two years as president in 2005 amid mass protests. That paved the way for the first electoral victory of Morales in December of that year. The new president declared that power now belonged to the indigenous people of Bolivia and that the country’s natural resources would be nationalized — a decision that had been backed by a referendum held during Mesa’s presidency but not implemented by him.Morales, who doesn’t have a college degree, has turned out to be the most successful leader in Bolivia’s dolorous history of poverty, strife and military defeat. Poverty declined during his rule.Per-capita economic output, meanwhile, rose faster than the regional average.Morales, however, was an authoritarian ruler who quickly found rapport with the leaders of Cuba and Venezuela — and with the Putin regime in Russia, which finds it easy to do arms and energy business with autocrats. Rosatom Corp., the Russian state nuclear monopoly, got a contract to build a $300 million nuclear center near La Paz, the Bolivian capital, and began negotiating a concession to develop Bolivia’s large lithium reserves. Gazprom PJSC, the Russian state-controlled natural-gas company, has been present in Bolivia since 2010. Russia also has been trying to sell weapons to Bolivia, especially helicopters; Putin himself has tried to talk Morales into it, but actual sales have been held back by Bolivia’s shortage of funds.Bolivia’s constitution has included a two-term limit for presidents since 2009, meaning Morales could serve for three terms because his first one started before the limit took effect. In 2016, he tried to remove the cap but lost a referendum.Morales appeared to accept that he’d have to leave, but in 2017, the country’s constitutional court controversially ruled against the term limit, and he was allowed to run again. Rosatom reportedly even sent a team of Russian election experts to back his campaign and thus protect the Russian state companies’ interests. On Oct. 20, however, Morales was still unable to beat Mesa by the margin he needed to avoid a runoff, and then major vote-counting irregularities became so obvious that mass protests erupted and even Bolivia’s labor unions turned against the president.But Morales only resigned when the military said it wouldn’t crush the protests and urged him to go. Clearly, Bolivian generals have learned the lessons of 2003, when they followed then-President Gonzalo Sanchez de Lozada’s orders to use force against protesters demanding the nationalization of the country’s natural-gas deposits. At least 67 people were killed and some 400 injured; Lozada was sued by the victims’ families in the U.S., where he lives now, but was cleared last year because the judge found the evidence of his culpability insufficient. (Mesa, who served as Lozada’s vice president, had opposed the violence).Morales described the events that forced him to resign as a coup, and his words were echoed not just by Russia, whose contracts in Bolivia are at risk now, but by a roster of international leftists, ranging from U.S. Congresswoman Ilhan Omar to U.K. Labour Party leader Jeremy Corbyn. Putin’s opponents in Russia were, on the contrary, encouraged.Corruption fighter Alexei Navalny tweeted a photo of Morales with Putin, accompanied by this caption: “A corrupt president who was illegally holding on to power through lies and falsifications, has fled the country. For now, just the one on the left.”Leonid Volkov, another leading opposition figure, tweeted, “I really wish we could be like Bolivia.”The jubilation and the envy won’t pass unnoticed in the Kremlin. Putin has more than four years to explore his options for 2024, when his own presidency comes up against a constitutional term limit, but there is no obvious quasi-legitimate scenario that would allow him to stay in the Kremlin. There appears to be no appetite for a risky move to a parliamentary republic, which would make the prime minister’s office the most powerful and allow Putin to get re-elected as many times as he can. And ruling by proxy, as Putin did during Dmitry Medvedev’s presidency between 2008 and 2012, clearly disappointed Putin himself since he moved to undo Medvedev’s feeble attempt at liberalizing the country.The most obvious option is simply to alter the constitution to remove the term limit. But the Morales example shows the pitfalls of this strategy. While he’s respected and his contribution to reducing poverty is widely acknowledged, even his supporters are tired of him after 13 years in power; it’s only natural for people to grow restless without change. When that happens, critical decisions must eventually be taken by the military and the police.In Venezuela, President Nicolas Maduro has managed to keep the military loyal, and he still hasn’t been deposed. In Bolivia, Morales had retained the military’s support throughout his rule because he didn’t demand too much from his enforcers. But when popular protest reached a high point, the generals wouldn’t move against them, and Morales was finished.All this Latin American experience, closely monitored in Moscow because of state companies’ business dealings in the region, will serve to convince Putin that an authoritarian’s natural term limit isn’t the one specified in the constitution. In reality, he can rule until his enforcers decide they can’t afford to follow his orders. That means Putin must keep buying the loyalty of Russia’s vast security apparatus, which is already costing the government about 10% of its non-classified budget. The National Guard, which includes riot police, is slated for big spending increases in the next four years.To contact the author of this story: Leonid Bershidsky at firstname.lastname@example.orgTo contact the editor responsible for this story: Jonathan Landman at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
A Russian tanker headed to the United States to pick up a cargo of liquefied natural gas (LNG) could prove an embarrassment to President Vladimir Putin who has accused the U.S. of undercutting his country's gas exports. U.S. seaborne LNG is seen as a threat to Kremlin-controlled gas company Gazprom's dominance of the gas market in Europe where it accounts for more than 35% of supplies.
U.S. Secretary of State Mike Pompeo said on Friday NATO must grow and change or risk becoming obsolete, a day after French President Emmanuel Macron said the alliance was dying. German Chancellor Angela Merkel has rejected Macron's comments, in an interview with British weekly The Economist, as "drastic" and Pompeo said on Thursday the alliance was perhaps one of the most important "in all recorded history".
As the Nord Stream 2 inches closer and closer to completion, it’s becoming increasingly clear that Europe isn’t planning on ditching Russian gas anytime soon
Nord Stream 2 is arguably the world’s most controversial and politically charged energy project, but market forces have meant that its completion is all be inevitable
Plans for the expansion of Russia's Sakhalin-2 liquefied natural gas (LNG) plant have been put on hold, according to three sources involved in the project, a potential setback to Russia's ambition to lift its global LNG market share. The main reasons for the hold-up are the lack of gas resources and international sanctions, the sources said, but plans of Russian gas giant Gazprom to boost its pipeline gas supplies to China, have also had an impact. Equity holders in the Sakhalin Energy consortium include Gazprom which controls the project with a majority share, as well as oil major Royal Dutch Shell, Japan's Mitsui and Mitsubishi Corp.
(Bloomberg Opinion) -- Nord Stream 2, the controversial Russian natural-gas pipeline project, has received the last permission it needs to close the distance between the Leningrad Region and the Baltic coast of Germany. It’s now probably too late for the U.S. to prevent Russia from finishing the project by the end of this year.Nord Stream 2 is part of Russian President Vladimir Putin’s plan to send natural gas to Europe without needing to go through Ukraine. The new pipeline will be able to carry 55 billion cubic meters of natural gas, more than half of what Russia now pumps through the Ukrainian system, and would mean for Ukraine a loss of $3 billion a year in gas transit revenues. The U.S. would like to prevent this, and also keep relatively cheap Russian gas from becoming an obstacle to increasing exports of U.S. liquefied natural gas to Europe. President Donald Trump has argued that Germany is too dependent on Russian gas, and has repeatedly threatened European companies involved in the project with sanctions.Why the World Worries About Russia’s Natural Gas Pipeline: QuickTakeMeanwhile, Russia has rushed to lay the pipe. On Oct. 1, Gazprom, the Russian gas export champion, said construction was 83% finished, with 2,042 kilometers (1,270 miles) laid across the bottom of the Baltic Sea. There had been a snag, though: For two years, Denmark put off granting permission for the section that was to pass through its territorial waters. On Wednesday, Denmark finally granted it, allowing the pipeline to take the shortest possible route, and Gazprom says that section can be built in five weeks.This is a blow to Ukraine, albeit not a surprise. “We expected it this fall,” Andriy Kobolyev, chief executive officer of Naftogaz, the Ukrainian state company that runs the pipeline system, posted on Facebook. “Denmark’s principled position held back the project for some time, but geopolitical weapons cannot be stopped by means that regulate pure trade relations.”It’s true that Denmark could not have held the fort forever while the U.S. dithered. The recent spat over Trump’s interest in buying Greenland did little to encourage the Danish government to keep dragging its feet.Kobolyev called for Western sanctions as the next step. And in that, he’s supported by some American legislators. Republican Senator Ted Cruz promised to push his colleagues to pass the bill he has proposed with Democratic Senator Jeanne Shaheen, which would impose sanctions on vessels laying the pipeline. That bill, however, is unlikely to delay the construction by much. Although Gazprom has used a Swiss-based contractor, Allseas Group SA, to lay the pipe, it can use its own vessel, the Akademik Cherskiy, for the final stretch. So it’s too late for the U.S. to act. Sanctions against financing the pipeline could have been effective at the stage before European companies — Royal Dutch Shell, Engie, Uniper, OMV and Wintershall — provided what was needed. Sanctions against pipe-laying vehicles could have made a difference before the construction work began. In any case, they could have given Ukraine more time to renegotiate its gas-transit contract with Gazprom, which runs out at the end of this year.A completed Nord Stream 2 will at least help Germany’s plans to stop using coal to generate power by 2038 — plans that cannot rely entirely on renewable energy, at least not until storage technology advances. (Most of the coal that will be replaced, by the way, is Russian coal.)Now Ukraine, backed by the EU, wants a 10-year year contract to pump 40-60 billion cubic meters of natural gas. But Russia insists that any long-term agreement should resolve Ukraine’s billion-dollar legal claims on Gazprom, and for now is likely to agree only to a short-term, placeholder deal. Meanwhile it will keep working on bringing both Nord Stream 2 and the Turkish Stream project, meant to supply gas to southern Europe, to full capacity. To contact the author of this story: Leonid Bershidsky at firstname.lastname@example.orgTo contact the editor responsible for this story: Mary Duenwald at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
President Putin looks set for another big win over the U.S. as the Nord Stream 2 pipeline clears the final major regulatory hurdle by earning permission to pass through Danish waters
(Bloomberg) -- In a major boost for Russia’s effort to tighten its grip over natural gas supplies to western Europe, Denmark said it will allow the controversial Nord Stream 2 pipeline to pass through its territory.The decision removes the last important hurdle for the $11 billion project, which is slated for commissioning by the end of this year and bolster gas flows from Siberia into Germany. The link has drawn the threat of sanctions from the U.S., which wants Europe to buy its liquefied natural gas. It risks reigniting a feud between Donald Trump and Danish lawmakers that erupted in the summer after the U.S. president’s offer to buy Greenland.Russian President Vladimir Putin welcomed the pipeline decision. “Denmark showed itself to be a responsible participant in international relations, defending its interests and sovereignty and the interests of its main partners in Europe,” he told a briefing in Budapest, where he was on a visit.The green light gives Gazprom PJSC, Russia’s gas export champion and already Europe’s biggest supplier, yet another route to one of the world’s most liquid gas markets. While Trump has accused Russia of using its natural gas as a political weapon, it’s ultimately a commercial deal over which Washington has little influence, according to Raffaello Pantucci, Director of Security Studies at the Royal United Services Institute in London.“It’s frankly too far advanced,” Pantucci said. “Who are they going to sanction?”The approval also gives Russia more clout in ongoing talks with Ukraine on a new gas transit deal, increasing the risk of a disruption from Jan. 1. Uncertainty about whether those two nations can agree on time has been weighing on forward prices in Europe and sending incentives for traders to stockpile gas as a cushion against disruption.“If Gazprom are confident in Nord Stream 2’s imminent completion, it may encourage a tougher negotiating stance on any new Ukrainian transit deal,” said John Twomey, a gas analyst at BloombergNEF in London. “If anything, the risks of a disruption on Jan. 1 have gone up as a result of this.”The pipeline has divided EU governments, with nations led by Poland concerned about the bloc’s increasing dependence on Russian gas.“It is not too late to stop NS2,” an official at the U.S. embassy in Germany said. “There are clear negative energy security and geopolitical implications for Europe from Putin’s pipeline. The U.S. government agrees with the European Parliament, the U.S. House and nearly 20 European countries in our opposition to NS2.”Russia, Ukraine, Europe Pledge New Gas Deal by Year-EndDenmark said on Wednesday it will allow the pipeline to pass southeast of the island of Bornholm in the Baltic Sea. The company behind the pipeline submitted the route plan in April. Denmark had been conducting a security and environmental review of the project.Trump had objected to the link, instead urging the European Union to diversify the sources of its energy and dilute Putin’s economic influence over the region. U.S. officials have also warned that project partners are at an elevated risk of U.S. sanctions.The approval is another snub of Trump by the Nordic country after it ruled out his proposal to buy Greenland this summer. The president responded by canceling a state visit to Denmark.The Danish approval covers 147 kilometers (91 miles) of the project. Nord Stream 2 said in its statement that it has already completed 87%, or 2,100 kilometers, of the pipeline in Russian, Finnish and Swedish waters as well as most of the German part. Dan Jorgensen, Denmark’s minister for climate, energy and utilities, declined to comment on Wednesday.Nord Stream 2 said it will continue its “constructive cooperation with the Danish authorities to complete the pipeline.”Six WeeksGazprom CEO Alexey Miller said that the pipeline is expected to be completed on time by the end of the year. “The remaining 147 kilometers -- that’s five weeks of work,” Miller told reporters in Budapest.A statement from the company highlighted some uncertainties in that timetable. Nord Stream 2 said Wednesday the actual start of the construction depends on a number of legal, technical and environmental factors, which will “take a few weeks” and the project aims for completion “in the coming months.”Gazprom can’t use the permit for the next four weeks when all involved parties have leeway to make a complaint under Danish law. Those issues left analysts anticipating some delay beyond Jan. 1 for the completion of the link.“It’s unlikely that Nord Stream 2 is online in time for Jan. 1, so Ukrainian transit disruption risks remains,” said Twomey.While Gazprom owns the pipeline, half the financing of the 8 billion-euro capital cost comes from five European companies: Uniper SE and Wintershall of Germany, OMV AG of Austria, Engie SA of France and Royal Dutch Shell Plc.Dutch gas for the first quarter declined to the lowest since at least 2017 as the region is oversupplied with the fuel, storage sites across Europe are full, and LNG imports surge.(Updates with Putin comment in third paragraph.)\--With assistance from Dina Khrennikova, Vanessa Dezem and Ilya Arkhipov.To contact the reporters on this story: Morten Buttler in Copenhagen at firstname.lastname@example.org;William Wilkes in Frankfurt at email@example.com;Anna Shiryaevskaya in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Christian Wienberg at email@example.com, ;Tasneem Hanfi Brögger at firstname.lastname@example.org, ;Nick Rigillo at email@example.com, Gregory L. White, Reed LandbergFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Russia's Gazprom is interested in cooperating with Saudi Arabian companies in the field of natural gas, Russian Energy Minister Alexander Novak told Arab News. The two countries may sign agreements totaling $1 billion during the visit of Russia's President Vladimir Putin to the kingdom, he said in an interview published on Monday by the Saudi newspaper. ''The interest in cooperation with Saudi companies is shown by many Russian oil and gas companies, such as Gazprom and Sibur,'' he said.
The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). To keep it practical, we'll...