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oil

  • 9
    DEC14
    RUB: can’t resist the oil

    Yesterday, RUB weakened 1.7% against USD, closing at 53.80 amid fairly low trading activity: total turnover in the MICEX was just USD 3.6bn. A triple-whammy of disappointing economic data, alongside fresh slippage in the oil price, was the main focus for markets yesterday. The latest trade data for China featured slower export growth and a 6.7% decline in imports. In Japan, real GDP growth for 3Q14 was revised down to a 1.9% annualised decline. Hence, EM FX index slipped ...

  • 3
    DEC14
    Oils – potential tax on financial results

    ... a new draft law to the Duma to replace MET with tax on financial results (TFR) by the end of the year, Vedomosti reports. The tax could be 60% of revenues decreased by operating costs. The authorities are considering a number of fields, including Lukoil, Gazprom Neft, Salym Petroleum and Surgutneftegaz, to serve as pilots to analyse the new rules over the course of three years. The Ministry of Finance has yet to examine the document. Given the lack of details, it is difficult to calculate the exact ...

  • 3
    DEC14
    RUB: underperforming crude oil

    ....50-11.00% do not look high at all. In addition, there was Brent’s near 2.2% decline, which also produced some pressure in NOK (-1.3%). Finally, the Ministry for the Economy announced revised economic forecasts for next year based on an assumption of oil at USD 80/bbl. Consequently, the Ministry sees the average USDRUB rate at 49.00 next year. We estimate RUB’s fair value at 42-43 against USD at these crude oil levels. Nevertheless, given that spot Urals is below USD 70/bbl, the message was negatively ...

  • 1
    DEC14
    Russian/CIS bonds: poisoned by weak oil

    On Friday, Russian/CIS bonds corrected down following the drop in crude and weakening FX. In high grade, long oil and gas names were under pressure: Rosneft’s issues fell near 1.0pp in price, SIBNEF 23 (YTM 7.30%) sagged 0.7pp in price, and the belly and the long end of the LUKOIL curve slipped 0.5-0.9pp in price, having widened in yield 13bp. Mid-term GAZPRU ...

  • 28
    NOV14
    RUB: oil lubricates slipway of decline

    ... against USD to close at 48.60. As we suggested, downward pressure on crude meant visible negative sentiment for RUB and other commodity-based currencies. In particular, NOK declined 1.20% as Brent fell 6.1% to USD 71.7/bbl. OPEC refrained from cutting oil production, leaving its output target at 30mmb/d. More disappointing was the absence of a commitment to adhere to the 30mmb/d ceiling (7 months out of 10 this year have been above 30mmb/d). Overall, we believe that the meeting puts the risks for Brent ...

  • 28
    NOV14
    OPEC refuses to cut – issues challenge to US tight oil

    OPEC maintained its 30mmb/d target and refused to cut production. GCC oil ministers stated that oversupply was not OPEC's problem; the market will ‘fix it’ and new high-cost non-OPEC production must now play a role in balancing the market. This effectively suggests OPEC is happy for prices to fall as low as needed to ...

  • 18
    NOV14
    Oils – suggestion to introduce excess profit tax for projects with export duty reliefs

    ... profit tax (EPT) for projects with export duty reliefs. At the same time, the potential introduction of the proposed tax changes might be delayed, the paper says. Our initial calculation, based on the 2014 numbers, suggests that in the case of EPT (with oil operating income being subject to the tax), the tax rate for some average brownfields might not be lower than the current MET rate. Therefore, introducing EPT would not be beneficial for the Russian oil industry, we think. As such, we would see any ...

  • 10
    NOV14
    Oil and Gas - No rush

    This morning, we have published Russian oil and gas: No rush. The front page is given below. Russian O&G has been outperforming the wider Russian market, in line with its usual historical role as a defensive low-beta sector and now also supported by harsh RUB devaluation. Nevertheless, the ...

  • 7
    NOV14
    Oil and gas companies – terms of a number of licenses softened

    The Federal Agency on Subsoil Usage has changed the terms of 165 licences owned by Rosneft, Gazprom, Novatek, Surgutneftegas, Bashneft and Tatneft, Vedomosti reports. The changes might relate to their periods. Among potential reasons for the changes are the negative macro environment,...

  • 24
    OCT14
    Oils – wholesale gasoline prices decrease – price dynamics in line with our expectations

    ... gasoline has declined 2.7% and 5.2%, respectively, for the last week. We forecast retail gasoline prices to remain broadly flat YoY in USD terms in 2014 in Russia, so the price dynamics are currently in line with our expectations. The key risk here for oil companies is potential government intervention on the market with the intention of putting more control on the retail business in Russia. That would impact the profitability of the retail business, in our view. To recap, wholesale gasoline prices ...

  • 23
    OCT14
    RUB: can’t resist oil

    ... yesterday Ksenia Yudaeva, First Deputy Chairman of the CBR, said that the regulator was going to resist the speculative and panic pressure on the FX market, which might pose a threat to financial stability. However, the main caveat is that increased crude oil volatility makes it hard to distinguish between fundamental adjustments and speculator activities. Hence, we think the CBR is to continue with its current FX intervention policy in the near term.

  • 10
    OCT14
    BoP in 3Q14 - Internal rebalancing at full speed, but oil drop requires more

    ... the current account surplus, running at USD 11.4bn vs. a deficit of USD 0.7bn last year. This was chiefly by virtue of: the gain in the trade balance remaining in the double-digit area (11.2% YoY), although it slowed, as shrinking exports of crude oil and gas were more than recouped by choking merchandise imports (-8.7% YoY); an all-time high annual plunge in investment income deficit (USD 5.8bn) was the largest contributor among the invisible parts of the CA in light of stabilising/dampening ...

  • 16
    SEP14
    RUB: sinking with oil prices

    Yesterday, RUB refreshed historical lows, weakening to 38.30 vs. USD and 43.50 vs. BASKET (i.e. 1.5% lower on the day) on the back of the fall in crude oil prices. Crude traded at around USD 97.2/bbl by the middle of the day, so many oil-linked currencies experienced the sell-off; IDR and NOK also weakened 0.6-0.9%. Of course, the current account balance is to be cut significantly if oil prices hold ...

  • 11
    SEP14
    Oil and Gas – access of independent gas producers to the Power of Siberia pipeline proposed – neutral

    The Ministry of Energy has proposed several ways to provide independent gas producers with access to the Power of Siberia pipeline, Vedomosti reports. The document provided to the government discusses several options: the situation is left unchanged (no access of independent producers to the pipeline); Gazprom might buy gas from independents at the export netback price or at cost plus model; a consortium of independent gas producers might be created to finance the construction of the pipeline. ...

  • 8
    SEP14
    Oil companies – increase in wholesale gasoline prices – neutral

    ... by the repair works at several refineries in Russia and Belarus. We forecast retail gasoline prices to remain broadly flat YoY in USD terms in 2014 in Russia, so the price dynamics are currently in line with our expectations. The key risk here for oil companies is potential governmental intervention on the market with the intention of putting more control on the retail business in Russia. That would impact the profitability of the retail business, in our view.

  • 4
    SEP14
    Oils – excess profit tax rate might stand at 60%, Minenergo suggests

    Kommersant reports today that Russia’s Ministry of Energy has suggested two approaches to the excess profit tax for the sector (the mechanism that will be tested on selected greenfields). These are: i) an excess profit tax (EPT) with oil operating income (which is to have the potential to be reduced by capex) being subject to the tax, or ii) a tax on financial results (TFR), with oil revenues decreased by an ‘uplift’ (current opex, DD&A, prior year losses and a capex rebate for ...

  • 4
    SEP14
    Oils - more discussions on tax manoeuvre

    Vedomosti writes that as part of the long discussed tax manoeuvre oil companies are to retain their tax holidays for MET in the same in the absolute amount. Some sort of a tax rebate fixed in rouble terms is to be applied to provide for this. We note that the government is yet to announce the final tax rates or clear ...

  • 21
    AUG14
    Oil & Gas – Ministry of Finance publishes draft tax manoeuvre

    The Ministry of Finance has published draft law on tax manoeuvre, according to Vedomosti. Kommersant, however, reports slightly different numbers. The discussion about the new tax regime for the oil industry continues, and it is still not clear what the final version will be given that even newspapers are mentioning different numbers. The direction is similar to what we expected (a decrease in export duties and excise coupled with an increase ...

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