|Bid||N/A x N/A|
|Ask||N/A x N/A|
|Day's Range||7.15 - 7.15|
|52 Week Range||6.00 - 8.00|
|Beta (5Y Monthly)||0.93|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||0.42 (5.85%)|
|Ex-Dividend Date||Oct 09, 2019|
|1y Target Est||N/A|
(Bloomberg) -- There are already signs that the latest U.S. sanctions thrown at Venezuela are failing.Rosneft Trading SA, the top buyer of Venezuelan crude last year, was sanctioned on Feb. 18 for helping sell the commodity that bankrolls the regime of President Nicolas Maduro. Now, another company affiliated with Moscow-based oil giant Rosneft PJSC that isn’t sanctioned -- and thus can trade freely -- is ramping up shipments from Venezuela.TNK Trading International SA is scheduled to load 14.3 million barrels of Venezuelan crude in the first two months of 2020, compared with 5 million in all of 2019, according to shipping reports compiled by Bloomberg. That may offset any lost oil revenue for the Maduro administration, underscoring the difficulty of shutting Venezuela’s access to the global market.The reports show TNK Trading has eight tankers destined for Asia that are loaded, or set to load. Meanwhile, Rosneft Trading -- which accounted for about half of Venezuela’s 874,649 barrels a day in exports in January, before being sanctioned -- has had no shipments since Jan. 29.Rosneft took control of TNK Trading in December 2017, according to Rosneft’s disclosures in its International Financial Reporting Standards filing that year. And both TNK and Rosneft Trading are registered in Geneva at the same address, the company’s filings show.“If Rosneft or any other companies play games like that with OFAC, all that will happen is additional companies will get sanctioned,” said Elliott Abrams, the U.S. special envoy for Venezuela. “If they act this way, we will react.”Rosneft PJSC didn’t respond to several requests for comment. In the past, Rosneft has said the U.S. sanctions are illegal, that its operations in Venezuela are commercial, not political, and that other international companies, including American ones, operate there. The Russian government said the sanctions won’t affect its international relations with Venezuela or any other country.A spokeswoman for the U.S. Treasury Department declined a request for comment.Read More: Rosneft, PDVSA Can Get Around U.S. Sanctions For Now: TeneoU.S. President Donald Trump began escalating Venezuela sanctions in 2019 when he endorsed opposition leader Juan Guaido as the country’s legitimate leader. The measures accelerated an ongoing collapse of an oil industry already suffering from years of corruption and mismanagement.Trump’s State of the Union speech earlier this month was attended by Guaido, and the president promised then to break Maduro’s “grip on tyranny.”Even as the U.S. sanctioned Rosneft Trading, it refrained from sanctioning the parent company, a move that’s kept at bay disruptions to the global oil business.Moscow has been a crucial supporter of the Maduro regime over the years. Rosneft owns stakes in five oil and natural gas ventures in Venezuela, and has loaned $6.5 billion to the country’s state-owned energy company, Petroleos de Venezuela SA, or PDVSA, between 2014 and 2017 to be repaid in crude oil and products. At least some of that oil was delivered to TNK Trading as payment.The outstanding debt was about $800 million at the end of the third quarter. The Russian oil giant stopped publishing updates on the debt payment after the U.S. imposed sanctions on Rosneft Trading. The trader has also been importing gasoline to Venezuela, which has been suffering from shortages amid a collapse in its refining network that at one time was a major supplier to the U.S.Rosneft’s “work is solely about returning in full the earlier prepayments” made to PDVSA, Otabek Karimov, vice president for commerce and logistics at the Russian oil producer, said during a Feb. 19 call, response to a question about the benefits for shareholders from Rosneft’s operations in VenezuelaTNK is no stranger to Venezuela. It loaded 16.8 million barrels of crude in 2017, the data show, before purchases tapered off in the past two years.\--With assistance from Jack Farchy and Nick Wadhams.To contact the reporters on this story: Lucia Kassai in Houston at firstname.lastname@example.org;Peter Millard in Rio de Janeiro at email@example.comTo contact the editors responsible for this story: Lynn Doan at firstname.lastname@example.org, ;David Marino at email@example.com, Reg Gale, Christine BuurmaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Oil prices fell on Friday as OPEC+ decided not to move its March meeting forward while Russia indicated that it currently has no intentions to cut production further
The United States on Tuesday blacklisted Rosneft Trading S.A. (RTSA) and its president and board chairman Casimiro. Washington believes RTSA, which has emerged as an intermediary for the sale of Venezuelan oil, provided a financial lifeline to President Nicolas Maduro's government.
(Bloomberg Opinion) -- Australia’s richest man Andrew Forrest cherishes his reputation as one of the good guys. That makes his intimate involvement in one of the world’s most polluting industries a problem.The founder of the world’s fourth-biggest iron-ore miner Fortescue Metals Group Ltd. has done spectacularly well from riding the Chinese steel boom of the past two decades. Net income at Fortescue increased nearly fourfold to $2.45 billion in the first half of the year, the company said Wednesday, delivering A$828 million ($554 million) of interim dividends to Forrest and Minderoo Group Pty., which he controls. The financial bonanza has been blessedly free of the scrutiny that ESG-focused investors such as BlackRock Inc. and Norges Bank Investment Management have devoted to thermal coal in recent months.That's rather remarkable. For all the attention on thermal coal, producing a metric ton of steel in a blast furnace releases almost as much carbon as burning a ton of coal for energy. Globally, the steel industry accounts for about 2.8 billion metric tons of annual emissions, compared to 10.1 billion tons for thermal coal. The world’s major iron ore producers are responsible for some of the largest volumes of end-use emissions globally, equivalent to those of the very biggest independent oil companies.While Fortescue doesn’t disclose such Scope 3 emissions (unusual for a company that values its reputation for responsible business practices), a back-of-the-envelope calculation suggests it accounts for around 250 million tons of carbon pollution each year. That puts the company somewhere between Rosneft Oil Co. and Glencore Plc. The 35% stake held by Forrest and Minderoo equates to annual emissions similar to those from the entire country of Bangladesh.How have steelmakers and iron miners evaded the attention of climate-focused investors? A large part of the explanation may be the perception that there’s no alternative to carbon-intensive blast furnaces to provide the world’s steel needs, rendering measures to reduce this emissions burden futile. That’s increasingly not the case, though. Electric arc furnaces making recycled metal from scrap have swept through the U.S. steel industry in recent decades to push dirtier blast furnaces aside. The same technology can be adapted to make non-recycled steel, too, and using hydrogen to burn off the oxygen from iron ore can potentially almost entirely decarbonize the steelmaking process.Swedish steelmaker SSAB AB this month announced plans with miner LKAB AB and utility Vattenfall AB to develop just such a fossil-free steel plant. While the product would cost 20% to 30% more than traditional blast furnace steel, it would be competitive at a carbon price of 40 euros ($43) to 60 euros a metric ton, according to a 2018 study — not that much more than current prices of around 25 euros in Europe’s carbon market. That would look still more attractive if falling prices for renewable electricity and hydrogen, plus wider deployment of electric furnaces, further drove down costs.Forrest is in a unique situation to push miners, steelmakers and governments to accelerate this transition. Unlike the boards and management of BHP Group, Rio Tinto Group and Vale SA, he’s the founder and chairman of his company and has a dominant shareholding.Forrest has made similar stands in the past. When he found at least 12 suppliers employing forced labor — an obvious conflict with his campaign against modern slavery — he promised to drum them out of business if they didn’t change.To date, that same principled approach hasn’t extended to the role that Fortescue and its customers play in climate change. Despite donating A$70 million to aid recovery from the bushfires which have swept Australia in recent months, he’s vacillated between citing the role of global warming in the disaster, repeating bogus claims that arson played the “biggest part” in the fires, and making questionable arguments around reducing forest litter.Pressed repeatedly in an interview with CNN last month to clarify what more he could be doing, he denied, implausibly, that the mining industry had “lobbied hard” against climate policies and said that “the science has to be done” on how to mitigate the fires. In a subsequent article for the Sydney Morning Herald, Forrest said that climate change is real and is intensifying natural disasters.Fortescue is unusually well-placed to benefit from any shift in the steelmaking industry toward a lower-carbon route. The big loser from a move away from blast furnaces would be coking coal — but unlike BHP and Vale, Fortescue doesn’t produce any. Its iron ore is of lower quality than its larger competitors, so would have most to gain from being upgraded to the iron briquettes that would be consumed by electric primary steel mills. Forrest has invested A$20 million to develop hydrogen export capacity for Australia. Using that gas for upgrading ore would represent a much better use of the technology.The risk for iron ore miners like Fortescue is that they’re betting everything on the odds that blast furnaces continue to dominate global steel production. With demand approaching a plateau, a glut of Chinese scrap looming, and rising attention on industrial carbon emissions, that’s no longer such a sure thing. A decade ago, miners were similarly full of confidence that wind and solar power could never supplant the role of thermal coal in electricity generation. How did that prediction turn out? (Corrects the second paragraph of column first published Feb. 19 to show that Minderoo Group Pty. is the entity that receives dividends; clarifies Forrest’s position on climate change in the 12th paragraph.)To contact the author of this story: David Fickling at firstname.lastname@example.orgTo contact the editor responsible for this story: Rachel Rosenthal at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Oil jumped to the highest in almost four weeks as U.S. crude exports surged and the expansion of domestic inventories slowed dramatically.Futures rose 0.9% in New York on Thursday. American oil exporters shipped the equivalent of more than one-fourth of the nation’s output to foreign buyers, a government report showed. Meanwhile, U.S. oil stockpiles rose by 415,000 barrels last week, well below the 3.2 million forecast by analysts.That government report followed supportive macroeconomic and geopolitical developments including Chinese fiscal stimulus and new threats to supplies from Africa and Latin America.“Exports were up much more than expected,” said Bob Yawger, futures director at Mizuho Securities USA. “We also have Libya and Venezuela taken off the books for supply that’s giving markets some support.”West Texas Intermediate for March delivery, which expired Thursday, rose 49 cents to settle at $53.78 a barrel on the New York Mercantile Exchange.Brent for April settlement advanced 19 cents to close at $59.31 on the ICE Futures Europe exchange.Amid the escalation in crude supply risks, the Organization of Petroleum Exporting Countries sent invitations for a meeting between the cartel and allied producers early next month. Investors are watching to see if the March gathering yields stricter output controls.“There is hope that OPEC is taking necessary actions to keep oil demand in balance and appears to be positioned to take additional action if necessary,” said Rob Thummel, a portfolio manager at Tortoise.\--With assistance from Grant Smith, Saket Sundria and James Thornhill.To contact the reporter on this story: Jackie Davalos in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: David Marino at email@example.com, Joe Carroll, Jessica SummersFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The United States on Tuesday redoubled efforts to oust Venezuelan President Nicolas Maduro by barring U.S. dealings with Rosneft Trading S.A., a subsidiary of Russia's state oil major Rosneft , which Washington said provides him a financial lifeline. The ban will likely hit some U.S. direct purchases of Urals, typically a medium sour blend, from Rosneft Trading and could make it more difficult for refiners in Asia and Europe to buy from the firm.
Washington's move this week to sanction a trading unit of Russian oil giant Rosneft for its ties with Venezuela's state-run PDVSA escalated threats facing non-U.S. firms and will likely spur "overcompliance" by companies, analysts and industry sources said. The U.S. government on Tuesday blacklisted Rosneft Trading, SA, the Geneva-based trading arm of Rosneft that has emerged as one of PDVSA's main intermediaries since previous rounds of sanctions targeted the Venezuelan company last year, in an effort to oust President Nicolas Maduro. The measure explicitly prohibited U.S. companies from dealing with Rosneft Trading after a three-month wind-down period.
(Bloomberg) -- Oil climbed to the highest level this month as investors weighed supply disruptions in Venezuela and Libya.Futures advanced 2.4% in New York on Wednesday. Venezuela’s ability to export crude is in jeopardy after the U.S. sanctioned a unit of Rosneft PJSC, the country’s main oil shipper. Meanwhile, Libya’s cease-fire talks were suspended after the capital’s port was shelled by forces loyal to military commander Khalifa Haftar, who has forced a blockade of the country’s crude exports.“It’s a big turnaround,” said Mike Hiley, head of OTC energy trading with LPS Partners. “There’s no doubt the market is getting a lift from Libya and sanctions.”Amid the geopolitical tensions, prices shrugged off an industry report showing a build in U.S. crude stockpiles last week. The American Petroleum Institute reported that inventories rose 4.16 million barrels, according to people familiar with the data. Distillate supplies fell 2.63 million barrels while gasoline stockpiles declined by 2.67 million barrels, API said.The U.S. Energy Information Administration will publish its weekly petroleum report on Thursday, a day after its usual release due to the President’s Day holiday on Monday. The crude stockpile gain would be the fourth consecutive build, the longest streak since November, if government data confirms it.West Texas Intermediate for March delivery traded at $53.56 a barrel at 4:38 p.m. after ending the session at $53.29 on the New York Mercantile Exchange.Brent for April settlement climbed $1.37 to settle at $59.12 a barrel on the ICE Futures Europe exchange, putting its premium over WTI at $5.63. The structure of the futures market is also showing signs of tightening. Brent’s prompt spread rose 16 cents to its strongest level this month, signaling concerns of oversupply may be easing.The Organization of Petroleum Exporting Countries sent invitations for a meeting between the cartel and its allies on March 5 and 6, signaling that plans for an emergency gathering to address the coronavirus have faded away.To contact the reporter on this story: Jackie Davalos in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: James Herron at email@example.com, Catherine Traywick, Pratish NarayananFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
MOSCOW/LONDON (Reuters) - The United States on Tuesday ramped up pressure on Venezuela by blacklisting a subsidiary of Russian state oil major Rosneft that Washington said provides a financial lifeline to President Nicolas Maduro's government. The U.S. sanctions threaten Venezuela's ability to export oil but pose only a limited risk to Rosneft's broader business. U.S. sanctions will make it more difficult for Venezuela to export oil, particularly to countries such as China and India, where Rosneft part owns an oil refiner, Nayara Energy.
(Bloomberg) -- If Hollywood were to cast the character of an oil trader, he would look just like Didier Casimiro.The head of Rosneft Trading SA, sanctioned on Tuesday by the U.S. government for his role shipping Venezuelan crude, epitomizes the stereotype of the urbane commodity trader: charming and calculating. His deals are all about money, but often have a political impact.Impeccably turned out in bespoke suits and sporting a slicked-back mane of silver curls, Casimiro looks as much at ease discussing the minutia of an oil contract as he would be at a presidential palace. In meetings, he switches from faultless English to any of the other six languages he speaks, making smalltalk about trips to Caracas or Geneva.For those who know him well, Casimiro is a clever trader who has thrived in the chaos of the Russian energy sector of the last two decades. He has played a key role expanding the international reach of Rosneft PJSC, the state-controlled Russian energy giant. His deals stretch from India to Venezuela to the Middle East.Born in a Brussels suburb in 1966 to Portuguese parents, Casimiro started his oil career at BP Plc in 1996, before joining TNK-BP, the venture between the British oil company and a group of Russian oligarchs. From there, he joined Rosneft in 2012, climbing to the top trading position in 2015.At Rosneft, Casimiro forged a close relationship with Igor Sechin, the mercurial chief executive who’s a tight ally of Russian President Vladimir Putin. When the pair debate a business deal, they often switch from Russian to Portuguese -- joking that the trick might thwart eavesdroppers. Casimiro learned the language from his parents, while Sechin mastered it as a translator in communist Mozambique and Angola, where the Soviet Union wielded enormous power during the two countries’ civil wars.Global ExpansionSechin had long had the ambition of building a trading business to complement the oil fields, refineries and fuel stations that Rosneft owns -- similar to the trading units that BP, Royal Dutch Shell Plc and Total SA operate. Casimiro was the answer.“As you expand the asset base internationally, it is quite important to have a system in trading,” Casimiro said in an interview with Bloomberg News in 2017. He declined to comment on Wednesday, as did Rosneft.After American sanctions on the Russian oil giant foiled its bid to acquire Morgan Stanley’s oil-trading business in 2014, the company has slowly grown its unit organically. Rosneft Trading is, nonetheless, a relatively small part of its much larger parent. It handles only a small portion of its petroleum sales, focusing on international deals rather than Russian crude, according to executives familiar with the matter and shipping data.The oil deals that are his hallmark are driven by business, but they also often strengthen the reach of Moscow in world affairs -- at the expense of Washington.In Venezuela, Rosneft Trading has been the main exporter of the country’s crude, providing an economic lifeline to the embattled administration of Nicolas Maduro. The merchant accounted for about half of the Latin American country’s 874,649 barrels a day of exports in January. The bulk of deliveries last year went to buyers in India and China. While the U.S. has imposed extraterritorial sanctions on Venezuelan oil exports, Rosneft says its business is legal.Perilous DealsIn the semi-autonomous region of Kurdistan, the Russian oil company financed a key pipeline to move about 400,000 barrels a day and provided hundreds of millions of dollars to the regional government in advance of future oil sales. Both deals were key to propping up Kurdish officials in their fight for more autonomy from Baghdad, and effectively gave the Kremlin a seat at the table in Iraq.The deals are often perilous, but Casimiro makes sure Rosneft gets a hefty return for risking its money. In Venezuela, for example, Rosneft advanced the country’s state-owned company $6.5 billion between 2014 and 2018, which cash-strapped Petroleos de Venezuela SA has to repay with shipments of crude. Risky but worthwhile, Casimiro told investors. “You can see that these contracts carry actually very high interest,” he said in 2018.In Kurdistan, Rosneft is receiving a return close to 20% on its pipeline financing deal, according to a person familiar with the structure of the deal. And that accounts for a very profitable business. Rosneft Trading reported net income of $407 million in 2018, according to documents reviewed by Bloomberg News. With net equity of just $1.55 billion, the company was delivering a return on its capital of 26%.One trader, who’s been on the other side of Casimiro’s deals, summed up the grudging respect his peers have for him for the path he has charted in the ruthless world of Russian oil.“He’s a survivor.”\--With assistance from Andy Hoffman, Jack Farchy and Dina Khrennikova.To contact the reporter on this story: Javier Blas in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Will Kennedy at email@example.com, Emma Ross-Thomas, Helen RobertsonFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Russia's main home-grown passenger jet, the Sukhoi Superjet 100, conceived as a rival to Airbus, Bombardier and Embraer, has no confirmed orders this year beyond a long-standing deal with state carrier Aeroflot, two sources told Reuters. The aircraft, which entered service in 2011 and was the first passenger jet built in Russia since the fall of the Soviet Union, has had a troubled history despite the state pouring billions of dollars into its development. Sukhoi Civil Aircraft, which is controlled by Russian state holding company Rostec, had hoped to sell hundreds.
Russia's main home-grown passenger jet, the Sukhoi Superjet 100, conceived as a rival to Airbus, Bombardier and Embraer, has no confirmed orders this year beyond a long-standing deal with state carrier Aeroflot , two sources told Reuters. The aircraft, which entered service in 2011 and was the first passenger jet built in Russia since the fall of the Soviet Union, has had a troubled history despite the state pouring billions of dollars into its development. Sukhoi Civil Aircraft, which is controlled by Russian state holding company Rostec, had hoped to sell hundreds.
(Bloomberg Opinion) -- Nascar legend Dale Earnhardt, who died in an accident at Daytona Beach, Florida, 19 years ago this week, once said “finishing races is important, but racing is more important.”Which brings us in a roundabout way to U.S. sanctions on Rosneft Oil Co. PJSC.President Donald Trump visited the Daytona International Speedway this weekend, taking what might be called a presumptive-victory lap of his own. Florida is a swing state Trump won in 2016 with a margin of victory of just 1.2%. In the 2018 midterms, while Republicans won the gubernatorial and a senate race, they did so with exceedingly tight margins. Meanwhile, Democratic candidates flipped two House seats. A campaign stop at the Great American Race is critical with November just nine months away.Which brings us to Rosneft. Two days after the Nascar festivities, the State Department announced it would sanction a subsidiary of the Russian oil major for violating U.S. sanctions on Venezuela. Rosneft has become an increasingly important factor in the Trump Administration’s efforts to oust President Nicolas Maduro. As state-owned Petróleos de Venezuela SA, or PDVSA, has crumpled under the weight of mismanagement and sanctions, so Rosneft has stepped in with loans and, U.S. officials allege, help in shipping Venezuelan barrels in defiance of sanctions. In response, the U.S. is taking action against Rosneft Trading SA, the company’s Switzerland-based trading arm, and the subsidiary’s chairman.Journalistic cliche deems sanctions are “slapped” on a company or individual. In this case, it’s more of a slow, gentle caress. The State Department went out of its way to clarify the parent company wasn’t being touched — a move that would roil global oil markets, given Rosneft accounts for about 5% of global output. Non-U.S. entities appear to be exempt. That, along with a three-month period for U.S. persons and entities to wind down existing dealings with Rosneft Trading, suggests this is a carefully calibrated escalation on Washington’s part.Kevin Book of ClearView Energy Partners, a Washington-based analytics firm, suggests viewing this process through the prism of U.S. election politics. He notes that Trump feted Venezuelan opposition leader Juan Guaido at the State of the Union address earlier this month. While Guaido has made limited progress in dislodging Maduro, he is a sympathetic figure around whom Trump can rally support for, and advertise, his Venezuela policy. Two key constituencies in that regard are Cuban-American and Venezuelan-American voters clustered in southern Florida. As Book puts it: “Trump won the Daytona 500. He’s yet to win the Miami Herald.”It is highly doubtful the administration has appetite for full-on confrontation with Rosneft — with all that would entail for oil — in an election year. The same goes for adventurism in Caracas. But intensifying pressure, or the appearance of it, on America’s adversaries is a different story.In that sense, when it comes to sanctions pertaining to Venezuela, Trump may be more focused for now on the racing rather than winning the race. Oil traders may take that as a signal to relax somewhat about the prospects for sudden, Venezuela-inspired disruption between now and November. The question they should be asking themselves is what happens after that.To contact the author of this story: Liam Denning at firstname.lastname@example.orgTo contact the editor responsible for this story: Mark Gongloff at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
on Swiss-based Rosneft Trading SA, a subsidiary of Russia’s state-controlled oil company Rosneft, which it said plays a key role in trading Venezuelan oil. Tuesday’s move marks the first time that Washington has targeted a non-Venezuelan oil company for facilitating trade with Caracas and presents a direct challenge to Moscow, which has been one of Mr Maduro’s key supporters.
(Bloomberg) -- U.S. sanctions on Rosneft Trading SA threaten Venezuela’s ability to export oil, but pose only a limited threat to the Russian energy giant’s wider business.The Geneva-based trading arm of Rosneft PJSC, was targeted by the U.S. for helping to sell the commodity that bankrolls the regime of President Nicolas Maduro. The move could have a significant effect on the flow of Venezuelan crude to China and India, where the Russian energy giant has a stake in a refinery. Yet there were no signs yet that oil supplies to Europe will be hit.“For Rosneft as a whole there shouldn’t be too much interruption,” said Brian O’Toole, a senior fellow at the Atlantic Council and who previously worked in the Treasury Department’s sanctions unit. However, the company’s Swiss unit appears to be “largely kaput,” he said.Rosneft denounced the sanctions, saying its operations in Venezuela don’t violate any international laws. The Kremlin said the pressure on Russia’s largest oil company won’t change the country’s relationship with Venezuela.Able to AdaptThe sanctions imposed on Rosneft Trading are the toughest in the U.S. Treasury’s arsenal, making it effectively untouchable to international companies, including shipowners, insurers and banks. That creates a headache for its Russian parent, but not an insurmountable problem.“Rosneft shouldn’t face any significant negative financial effects,” said Salih Yilmaz, a global energy analyst at Bloomberg Intelligence. “The company should be able to adapt by creating a new trading unit before the May 20 deadline” when the sanctions kick in, he said.Rosneft Trading accounted for about half of Venezuela’s 874,649 barrels a day of exports in January, according to shipping reports and tracking data compiled by Bloomberg. The potential loss of Venezuelan cargoes because of the sanctions helped push oil prices higher on Wednesday. Brent crude, the international benchmark, rose as much as 1.5% to $58.61 a barrel.“Every layer of cost, of difficulty that this adds, means less cash flow for PDVSA,” said Francisco Monaldi, a lecturer in energy economics at Rice University’s Baker Institute for Public Policy, and an expert on Venezuela’s oil industry. He estimated Rosneft Trading is making more than $1 billion a year on Venezuelan oil, because PDVSA has to sell its oil at a steep discount. “By sanctioning a Russian company, I think the clear message is for the Russians to sit at the negotiating table,” he said.International DealsIn recent years, Rosneft’s Swiss unit has also been involved in a variety of other international relationships. It has forged an oil-supply deal with Kurdistan, a liquefied natural gas contract with Egypt and delivered gasoline shipments to Asia, according to the company’s website.There was no sign that Rosneft’s core business of selling Russian oil on the global market would be affected. Recent company documents offering crude and refined products for sale didn’t mention the Switzerland-based trading arm, the counterparty was the Moscow-based parent.Rosneft Trading was listed as the counterparty for a contract to supply crude to Germany through the Druzhba pipeline from 2017 to 2018, according to a company disclosure. A spokeswoman for the PCK Schwedt refinery in Germany said the oil it processes is supplied by its owners -- Rosneft, Eni SpA and Royal Dutch Shell Plc -- but declined to comment further.Even if Rosneft’s direct legal exposure to the sanctions is limited, such measures by the U.S. can often have a chilling effect on trade as companies grow increasingly wary of counterparty risk.“It is only the Geneva-based company that is targeted, not the mother company,” Olivier Jakob, managing director of consultant Petromatrix GmbH said in a note. “Still, risk managers and compliance officers will probably make it difficult to trade with any structure that looks too similar in form to Rosneft Trading.”\--With assistance from Patricia Laya, Peter Millard, Serene Cheong, Debjit Chakraborty, Rachel Graham, Ilya Arkhipov and Sarah Chen.To contact the reporters on this story: Lucia Kassai in Houston at firstname.lastname@example.org;Jack Farchy in London at email@example.comTo contact the editors responsible for this story: David Marino at firstname.lastname@example.org, James Herron, Helen RobertsonFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Russia’s state-owned oil producer Rosneft has said it will continue to do business with Venezuela despite the US bringing sanctions against its trading arm for buying and selling the country’s crude. Washington on Tuesday sanctioned Swiss-registered Rosneft Trading SA and the brokerage’s president for trading Venezuela’s oil, a measure designed to increase pressure on the regime of President Nicolás Maduro, which the US says is illegitimate. Rosneft, which is controlled by the Kremlin but counts oil major BP and Qatar’s sovereign wealth fund as big shareholders, has handled billions of dollars worth of crude shipments from the South American country over the past two years.
The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) has added another entity of Russian oil shipper Rosneft to its growing list of sanctioned companies that continue to conduct business with the Maduro regime of Venezuela. Specifically, OFAC placed Russian-controlled oil brokerage Rosneft Trading S.A., based in Geneva, along with the company's chairman, Didier Casimiro, on the Specially Designated Nationals and Blocked Persons (SDN) List.
(Bloomberg) -- The U.S. sanctioned a unit of Russia’s largest oil producer, Rosneft PJSC, for maintaining ties with Venezuela’s Nicolas Maduro and state-run oil company PDVSA.The Treasury Department’s Office of Foreign Assets Control is acting against Rosneft Trading SA, the company’s Swiss-incorporated brokerage firm, as well as its Chairman Didier Casimiro. The U.S. restrictions come with a three-month wind-down period that expires May 20.The move represents the latest escalation in the Trump administration’s campaign to oust Maduro and rally international support behind Venezuelan opposition leader Juan Guaido. For the oil market, it means disruption and increased legal costs for companies, though the wind-down period gives operators time to adjust to the new regime.Oil futures erased a decline, with Brent crude settling 8 cents higher at $57.75 a barrel, after falling as much as $1.37. The ruble and Russian bonds fell. Rosneft share tumbled in Moscow, closing 2.7% lower.The Russian government said the sanctions won’t affect its international relations with Venezuela or any other country. Rosneft said the sanctions are illegal, that its operations in Venezuela are commercial, not political, and that other international companies, including American ones, operate there.“By operating in Venezuela, Rosneft is not violating any international or national law,” the company said, adding the U.S. government presented no proof of illegality. The operations are part of contracts signed before the introduction of sanctions and “are aimed at returning previously made investments and the implementation of long-term commercial interests,” it said.Rosneft is handling over half the oil coming from Venezuela and helping the country evade sanctions, according to U.S. officials who briefed reporters on condition of anonymity. Rosneft recently facilitated a shipment of 2 million barrels of Venezuelan oil to West Africa, one of the officials said.Rosneft has been evading sanctions by using ship-to-ship transfers to obtain Venezuelan oil, a U.S. official said. In other cases, they’ve changed names on ships to avoid detection, or lied about the source of the oil.The sanctions affect assets in the U.S. But those engaging in transactions with Rosneft Trading and Casimiro worldwide run the risk of being sanctioned, an official said.The restrictions are more narrowly targeted than Washington’s 2018 sanctions against metals group United Co. Rusal, which threw global aluminum markets into turmoil. Tuesday’s sanctions don’t prohibit deals with Rosneft Trading’s parent company or its other units, the Treasury said in a Q&A. That assurance, together with the three-month wind-down period, should limit the disruption to the flow of oil from Russia.Existing U.S. sanctions already prohibit providing financing to Rosneft for longer than 60 days, meaning that traders have for several years been wary of striking longer-term deals with the Russian company.President Donald Trump personally signed off on the sanctions and Secretary of State Michael Pompeo discussed the matter on Saturday with Russian Foreign Minister Sergei Lavrov, an official said.In the wake of U.S. sanctions on Venezuela, Russia has become the second-largest source of American oil imports. The nation’s crude and oil product exports to the U.S. climbed to 20.9 million barrels last October, the highest since November 2011, according to U.S. government data.Rosneft is currently subject to some U.S. market-sector sanctions, although those measures aren’t as far-reaching as the sanctions against businesses associated with the Maduro regime and don’t prevent Rosneft from entering into transactions for Venezuelan oil.Rosneft LoansRosneft has been Venezuela’s main shipper of crude, which goes predominantly to refineries in India and China. The Moscow-based company, controlled by Russian President Vladimir Putin’s government, has loaned $6.5 billion to Petroleos de Venezuela SA, the Latin American country’s state-owned oil company, in exchange for crude.Venezuelan oil sales fell to a 34-year-low in 2019 after sanctions cut off trade with the U.S., until then the country’s biggest customer.Notably, the U.S. Treasury Department has exempted Chevron Corp., allowing the company to conduct business with PDVSA. Chevron has ramped up output at a key Venezuelan oil project to levels not seen in almost a year. Its current waiver from sanctions expires in April.Rosneft Trading has been involved in a variety of international relationships for the Russian producer. It’s been the counterparty for an oil-supply deal with the semi-autonomous Kurdistan region, a liquefied natural gas contract with Egypt and gasoline shipments to Asia, according to the company’s website.The impact on Rosneft’s core business of selling Russian oil on the global market is unclear. Recent company documents offering crude and refined oil products for sale don’t mention the Switzerland-based trading arm. However, Rosneft Trading SA was the counterparty for a contract to supply crude to Germany through the Druzhba pipeline from 2017 to 2018, according to a company disclosure.(Adds comment from Rosneft in fifth and sixth paragraphs)\--With assistance from Saleha Mohsin, Sayer Devlin, Dina Khrennikova, Olga Tanas, Jack Wittels and Jake Rudnitsky.To contact the reporters on this story: Ben Bartenstein in New York at email@example.com;Jack Farchy in London at firstname.lastname@example.org;Josh Wingrove in Washington at email@example.comTo contact the editors responsible for this story: Simon Casey at firstname.lastname@example.org, Carlos Caminada, Steven FrankFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The United States on Tuesday ramped up pressure on Venezuela by blacklisting a subsidiary of Russian state oil major Rosneft that President Donald Trump's administration said provides a financial lifeline to President Nicolas Maduro's government. The U.S. Treasury Department imposed sanctions on Rosneft Trading SA, the Geneva-based trading unit of Rosneft, as Washington targeted Moscow over its backing of Maduro's government.
The Trump administration on Tuesday announced sanctions on Rosneft Trading S.A., a unit of Rosneft Oil Co. over operating in Venezuela's oil sector. Treasury Secretary Steven Mnuchin said Rosneft Trading and its president brokered the sale and transport of Venezuelan crude oil, aiding the regime of Venezuelan President Nicolas Maduro. The Trump administration considers Maduro illegitimate. The sanctions freeze any U.S.-based assets of both Rosneft Trading and its president, Didier Casimiro.
The United States on Tuesday tightened financial restrictions on Venezuela, blacklisting a subsidiary of Russian oil firm Rosneft that President Donald Trump's administration has said provides a lifeline to President Nicolas Maduro's government. The Trump administration has accused the subsidiary, Rosneft Trading SA, of propping up the Venezuelan oil sector and actively evading American sanctions.
to oust Venezuela’s President Nicolás Maduro from power. “As the primary broker of global deals for the sale and transport of Venezuela’s crude oil, Rosneft Trading has propped up the dictatorial Maduro, enabling his repression of the Venezuelan people,” said Mike Pompeo, US secretary of state.
(Bloomberg Opinion) -- The official slogan of BP Plc’s climate event on Wednesday was “reimagining energy.” The unofficial one, based on new CEO Bernard Looney’s liberal use of the phrase, could be WE GET IT.That “it” contains multitudes. Carbon emissions from fossil fuels must fall rapidly. BP is viewed as both a source of the problem and an obstacle to fixing it. Targets set for 2050 sound good; but, let’s face it, 12 months is a long time in this business. And so on.Looney was also addressing multitudes, ranging from the activists perfecting the art of shutting down BP’s headquarters to the politicians that may one day shut down its projects or markets. These are exceptionally interesting times for any new oil CEO. While the world remains heavily dependent on oil and gas, the implacable challenge of climate change suggests the industry is mortal after all.That an oil major of BP’s stature acknowledged this reality represents a milestone for the industry. Milestones are markers, though, not terminals. As Looney also acknowledged upfront, much of the detail is TBD, with an analyst day due in September.The big question for investors (and, indeed, activists) is what this means for the thing that defines any oil major: how it deploys capital.There is a tension in funding energy transition with revenues from oil and gas: The objective is inherently bearish for oil, while the thinking behind the funding is necessarily bullish. The added twist here is that, as Looney intimated at one point, oil majors have gotten an F from investors in the management of that core business over the past decade, as return on capital collapsed.In effect, investors already doubtful of the industry’s capabilities in its core business are being asked to believe it can profitably invest in a set of new activities. What’s more, the old and new businesses have fundamentally different return profiles (at least as currently constituted), which is why Looney fielded so many questions about BP’s dividend.Oil and gas exploration and development is traditionally a higher-return, long-duration business. When oil majors are regarded as rock solid, this is great. Consider a project with an internal rate of return of 20% and a life span of 30 years on an 8% cost of capital. The implied net present value equates to more than 100% of the original investment. Cue champagne.Push that cost of capital to 12% and limit the life span to 20 years — as investors shy away and screws tighten on emissions — and the implied value, while still positive, drops to only about half of the capex. In theory, renewable-energy projects could offer better overall economics than that second case; while they sport lower rates of return, they also offer growth and a lower risk profile. Plug in a 12% rate of return but with a 6% cost of capital and 30-year horizon, and the net value is more than two-thirds of your outlay.(4)Math is fun, of course, but pulling that kind of thing off inside a giant incumbent is the innovator’s dilemma on steroids. Hence, BP is also overhauling its corporate structure, combining the old upstream and downstream operations into one unit and, in a McKinsey-esque flourish, creating cross-division “integrators” for functions such as strategy. This would have been a major event even without the energy transition stuff. It remains to be seen how the matrix works in practice. One obvious question is what would happen if the sustainability integrator wanted to veto a project proposed by the production and operations division (imagine the reply-all email chains, for starters).In addressing all this in September, BP will need hard targets linked to incentives. Top wish-list items would be transparent assumptions for carbon pricing in guidance and, beyond that, straightforward breakeven oil prices incorporating transition-related inputs and dividends. Similarly, near-term capex guidance for non-fossil fuel investments are needed.Beyond this, BP’s roughly 20% stake in Russian oil major Rosneft Oil Co. PJSC should be considered for disposal. While Looney defended Rosneft’s sustainability credentials on Wednesday, convincing investors the Russian major is all-in on a green future seems a rather tall order. Sure, BP’s equity share of Rosneft accounts for 30% of its own production. But then volume isn’t the point, and $15 billion would help address a priority: reducing leverage.It is good that BP has put a vision out there, even if details are yet to come. As it fleshes out the strategy, there will be an ongoing need to keep it focused, understandable — and unconventional.Too often, the industry conversation on transition centers on this or that technology, such as carbon capture, aimed at shoring up the existing business rather than reconsidering it at a more fundamental level. As Harry Benham, an oil-industry veteran turned chairman of transition-advocacy group Sandbag, put it to me on Wednesday, a century-old industry built on extraction and thermal systems is now locked in a battle with an adversary that operates in a completely different way: “manufactured electrical energy.” And that’s it.(1) I've borrowed the math here from a recent report by UBS titled "How fossil capex restrictions could lead to convergence of the energy and utility sectors."To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.