Fake Evidence Forces US Company to Drop $1.37 Bln Lawsuit Against Gazprom / Sputnik International

Russian oil and gas giant Gazprom successfully defended a $1.37 billion claim lodged by a US oil company.

Moncrief Oil International dropped a $1.37 billion lawsuit against Russian oil and gas giant Gazprom after a key piece of evidence, produced by the US company, turned out to be fake, Bloomberg reports.

The case was dismissed with prejudice against Moncrief on Monday, ending years long litigation, according to Baker Botts, a Houston-based law firm representing the Russian company.

Moncrief Oil International sued Gazprom for backing out of a joint venture to develop a natural gas field in Siberia, also accusing the Russian company of using stolen trade secrets. However, the Texas-based company managed to produce only one document supporting its claim.

Known as Trial Exhbit 1, the document allegedly dated to 2004. But a simple Google search by Baker Botts attorneys revealed that an image used in the document was created almost a decade later, in 2012.

Complete story at - Fake Evidence Forces US Company to Drop $1.37 Bln Lawsuit Against Gazprom / Sputnik International

​Gazprom gets highest investment grade from China’s biggest ratings agency — RT Business

China’s Dagong rating agency has given Russia’s Gazprom the highest AAA credit rating with a long-term stable outlook. It says US and EU sanctions won’t have a substantial effect on the creditworthiness of the world’s largest gas producer.

"Obtaining such a credit rating by Dagong will further expand the base of investors from the Asia-Pacific region in debt instruments of Gazprom, including pension funds, insurance companies, investment funds and banks, as well as increasing the loyalty of Asian investors in the company," Gazprom said in a statement.

The rating shows Gazprom’s strong wealth creation capability, and “the very low degree of deviation between its available repayment sources and wealth creation capability,” reported Dagong.

The agency says the sanctions imposed by the US and the EU against Russia will have little effect on Gazprom’s creditworthiness. The credibility of Gazprom in local and foreign currency is very high, it goes on to say.

A high credit rating from Dagong allows Gazprom to place shares in Hong Kong, the agency’s president Guan Jianzhong said on Monday.

"The rating reflects a very high potential for the company," he said, adding that the outlook for Gazprom’s long-term credit rating will remain ‘stable’ over the next 1-2 years.

The agency kept the sovereign credit rating of Russia at A level with a stable outlook, which means a high level of credibility.

Complete story at - ​Gazprom gets highest investment grade from China’s biggest ratings agency — RT Business

Russia to Shift Ukraine Gas Transit to Turkey as EU Cries Foul - Bloomberg

Russia plans to shift all its natural gas flows crossing Ukraine to a route via Turkey, a surprise move that the European Union’s energy chief said would hurt its reputation as a supplier.

The decision makes no economic sense, Maros Sefcovic, the European Commission’s vice president for energy union, told reporters today after talks with Russian government officials and the head of gas exporter, OAO Gazprom (GAZP), in Moscow.

Gazprom, the world’s biggest natural gas supplier, plans to send 63 billion cubic meters through a proposed link under the Black Sea to Turkey, fully replacing shipments via Ukraine, Chief Executive Officer Alexey Miller said during the discussions. About 40 percent of Russia’s gas exports to Europe and Turkey travel through Ukraine’s Soviet-era network.

Russia, which supplies about 30 percent of Europe’s gas, dropped a planned link through Bulgaria bypassing Ukraine amid EU opposition last year. Russia’s relations with the EU have reached a post-Cold War low over President Vladimir Putin’s support for separatists in Ukraine.

Sefcovic said he was “very surprised” by Miller’s comment, adding that relying on a Turkish route, without Ukraine, won’t fit with the EU’s gas system.

Gazprom plans to deliver the fuel to Turkey’s border with Greece and “it’s up to the EU to decide what to do” with it further, according to Sefcovic.

Complete story at - Russia to Shift Ukraine Gas Transit to Turkey as EU Cries Foul - Bloomberg

The Vineyard of the Saker: Russia Leaves the European Commissioner for Energy Union out in the Cold

by Aleksei Kettunen

GAZPROM–EU: 6–0

Yesterday on Wednesday the EU negotiated with Gazprom in Moscow. The EU negotiators had three aims:

• Pressure Russia into extending the special winter pricing on gas supplies to Ukrainian due to end in March,
• Force Russia to further unilateral concessions by forcing all European energy purchases to happen through a new “European Energy Union”,
• Pressure Russia to resurrect the canceled South Stream gas pipeline project and build it in accordance with the restrictive rules of the Third Energy Package.

The Russian response was a cold shower.

Firstly, Gazprom said there is no need for a special summer agreement on Ukrainian gas purchases, as a valid contract already exists.

In practice, this means that all the concessions Kiev has received for the winter season are temporary and there is no space for negotiations. If the EU wants to ensure their gas transits through Ukraine then it must put pressure on Kiev to comply with existing agreements. If Kiev needs gas it cannot afford to pay – thus endangering transit deliveries to EU countries – it is not Russia's problem. The same applies to Kiev's gas debts; the EU will have to pay both the Ukrainian gas debts and any future gas purchases.

Secondly, Gazprom announced that the South Stream gas pipeline project is dead and will not be realized. The project collapsed under US and EU pressure. The greatest obstacle turned out to be EU's Third Energy Package. It heavily restricts how Gazprom could use their own pipeline; Gasprom could only use 50% of South Stream's capacity and would be forced to offer the remaining 50% of the transportation capacity to third parties. Although all of the agreements between Gasprom and the various transit and consumer countries were made before the Third Energy Package entered into force, the European Commission now demands that it is applied retroactively.

Russia's solution is as follows: Gazprom will build the pipeline to Turkey and extend it the Turkish-Greek border. The pipeline will end in a gas distribution hub near the EU border. If the EU wants to buy gas, it will have to build a pipeline to Turkey at its own expense. It will also need to expand the gas transport capacity between its South European member countries – and do so under the constraints imposed by its own Third Energy Package.

The final punch to EU arrogance was Gazprom's declaration that after the completion of the gas hub and the Turkish pipeline Gazprom will end all gas transit through Ukraine. Russian gas will only be available through Turkey! The Ukrainian pipeline network will be used exclusively supply gas to Ukraine. Gazprom based its decision on Ukraine's instability and the high transit risks.

Complete story at - The Vineyard of the Saker: Russia Leaves the European Commissioner for Energy Union out in the Cold

Head of Gazprom: The Role of Ukraine as a Gas Transporter Will Go Down to Zero - Fort Russ

"Nord Stream" and a Turkey pipeline will make the transit of gas through Ukraine meaningless, announced the head of Gazprom Alexey Miller in an interview to the TV program "Vesti on Saturday with Sergey Brilev": "Yes, in fact, the role of Ukraine as a transit country is reduced to zero," - said Miller.

"The decision to stop the "South Stream" is a beginning of the end of our business model, when we focused on the delivery to a final consumer in the European market."

At the same time, he noted that Russia will supply Ukraine with all its gas needs for domestic consumption. "In fact, we will provide the amount that Ukraine needs for its domestic consumption. Deliveries to Europe will be made by alternative routes,"- said Miller.

At the same time, he stressed that the cancellation of "South Stream" is not associated with the requirements of the Eurocommission's third energy package. "The decision to shut down "South Stream" was adopted in the framework of the visit of our President to Turkey, but on this very day the pipelaying ship went out in the Black Sea in order to carry out work on laying the pipeline. But how can we proceed with this work, when Bulgaria did not even give permission to build in the territorial waters, in the special economic zone, and have not issued a construction permit to build on land... This issue has nothing to do with the third energy package," - explained Miller.

Complete story at - Head of Gazprom: The Role of Ukraine as a Gas Transporter Will Go Down to Zero - Fort Russ

The 4th Media » Banned from US Banks, Gazprom Turns To Even Bigger Banks In China

Russian state owned oil company Gazprom is turning to China for foreign sources of capital now that the U.S. and European financial markets are closed to them.

Gazprom said in a press release posted on its website today that it was in talks with the behemoth Industrial and Commercial Bank of China for funding. The statement did not say whether funding would be provided, however.

This has been quite the week for China-Russia relations. Li Keqiang was in Russia earlier this week to discuss deeper economic integration. Energy remains front and center. But integration is occurring beyond oil and gas deals. For instance, the Bank of Russia announced a deal with the Moscow Exchange to trade currencies and create forex derivatives contracts between the two markets.

Russia is aching to settle business in Chinese yuan, partly in a snub to the Western powers, and partly out of necessity because of Western sanctions.

Last week, BNP Paribas said it was no longer offering letters of credit to sanctioned Russian banks dealing with commodities traders. BNP Paribas has run afoul of European Union sanction law in the past, and was fined heavily for it.

Both the U.S. and European Union banned its banks from providing Russian companies with financing beyond 90 days.

Like all modern companies, reliable credit lines are imperative to running a business. Russian banks can only handle so much.

Complete story at - The 4th Media » Banned from US Banks, Gazprom Turns To Even Bigger Banks In China

Gazprom Plays Hardball as EU Support for Ukraine Falters - Russia Insider

Gazprom refused to soften its position in the latest round of trilateral talks between the EU, Gazprom and Ukraine to resolve the gas dispute.

Instead Gazprom just stuck to the offer it made back in June.

The offer remains $385 per 1,000 cubic meters for 6 months. This is the same price it offered to go down to in June when Ukraine rejected it. Technically the offer is a discount of $100 per 1,000 cubic meters. The contractual price remains $485 per 1,000 cubic meters. At the end of the 6 month period the $100 per 1,000 cubic meters discount ends and the price reverts to the full contractual price of $485 per 1,000 cubic meters.

What has changed since June is that the EU now seems to be backing Gazprom’s offer.

Under the deal proposed Ukraine in return for the discount must pay down its debt to Gazprom by at least $2 billion by no later than October and by $3.1 billion by the end of the year. This in addition to its prepayments at the discounted price of $385 per 1,000 cubic meters for gas actually received.

Complete story at - Gazprom Plays Hardball as EU Support for Ukraine Falters - Russia Insider

Yesterday's Gas Deal: Another Nail in Ukraine's Coffin - Russia Insider

The facts on yesterday's deal:

Existing Debt

Ukraine will pay $2 billion straight away on the existing debt it owes Russia. It will then pay a further $1.1 billion in instalments before the end of year. This is lower than Russia's earlier demands that Ukraine pay $5 billion off in debt, it is unclear how Russia has positioned itself regard this $1.9 billion.

Natural Gas Supplies

Russia has agreed to sell Ukraine gas at a price of 385 dollars per 1000cm once the initial 2 billion debt tranche is paid off. The price is considered to be a 100 dollar discount to the actual price which will restart again after 6 months. Meaning, 485 dollars per 1000cm of gas from March 2015.

Government approval

Both parties must now have the deal approved by their respective governments.

Analysis:

Paying back the debt will put significant strain on the currency as the dollars will have to be bought from the market. It is most likely that the dollars will come from the IMF loan. But given that most of the loan will now be used simply to pay for the gas, the loan size is hugely inadequate. If the IMF are serious about supporting Ukraine they will have to significantly increase the loan size as has already been reported.

Complete story at - Yesterday's Gas Deal: Another Nail in Ukraine's Coffin - Russia Insider

Russian Retaliation Begins: Gazprom "Limiting EU Gas", Cuts Poland Supplies By 24% In Past Two Days | Zero Hedge

Update: Bloomberg notes that Russian gas deliveries to Europe are suddenly in accelerating flux.

Ukraine today received request from Poland to ship 11mcm/d of Russian gas, Ihor Prokopiv, CEO of Ukraine’s pipeline operator Uktransgaz, says in Kiev. Gazprom sent note it’s ready to supply just 7mcm, Prokopiv says

Poland halted reverse gas flow to Ukraine of 4mcm/d by 3pm Warsaw, later than initially planned, Prokopiv

And yet:

GAZPROM SAYS GAS FLOWS TO POLAND REMAINING AT 23MCM/D

So all is well on the surface. Just don't look underneath.

Over the weekend, we commented that in response to Europe's latest, and most serious, sanction round which would finally impact Russian energy giants Rosenft, Gazprom Neft (but not Gazprom) and Transneft, "suddenly the stakes for Russia, and thus Europe, just got all too real, as Putin will now have no choice but to really ramp up the retaliatory escalation, which following the food ban can only mean one thing: a staggered reduction in gas flow to Europe."

And while Europe appears to have blown its load prematurely, with the sanctions leaked before Europe actually has the consensus to implement them (it is now a daily threat by Europe which is screaming that it will impose the sanctions any minute yet not actually doing so), Russia has no such moral quandaries and three days following our forecast, here comes Gazprom confirming once again that it is perfectly happy to play the "mutual defection" strategy in the ongoing and ever escalating game theory between Europe and Russia for one simple reason: it has all the leverage.

From Bloomberg:

RUSSIA LIMITING EU GAS TO RESTRICT REVERSE SUPPLY TO UKRAINE

In other words, this is only the beginning as Ukraine has clearly made the case that it will plug its gas reserve gap using "reverese flow" of Russian gas in transit to Europe. More importantly, this follows news earlier today from Poland’s PGNiG which said Gazprom lowered supply by 20%-24% in past 2 days.

So is this the beginning of the quite literal, ahead of the winter, European cold war? It looks like it, although for now it is all covered up in diplomacy with Bloomberg reporting that the Russian exporter "set volumes of daily natgas deliveries to Poland at level of end of last week due to preparations for heating season in Russia, Gazprom official says by phone, asking not to be identified in line with corporate policy." That, and conveniently Gazprom decided to "carry out some maintenance work at its pipeline system in Russia." Some maintenance work which suddenly saw Poland, which is 80% reliant on Russian gas, receive up to a quarter less Russian gas...

Complete story at - Russian Retaliation Begins: Gazprom "Limiting EU Gas", Cuts Poland Supplies By 24% In Past Two Days | Zero Hedge

‘EU is completely politically and economically irrational dealing with Russia’ — RT Op-Edge

Energy policy in Europe is a complete and utter ludicrous mess, while its politicians are ultimately incontinent and incompetent when it comes to economic and energy policies, global financial markets expert Patrick Young told RT.

RT:Austria's unequivocally backedSouth Stream. Why would they do that when other European countries are calling for the project to be frozen?

Patrick Young: The situation we have at the moment is an argument between frankly the economically irrational and those who are energy rational. Austria is one of the leading countries in that group. The Austrian government knows that ultimately one third of their gas comes from Russia. In some areas of Austria almost 100 percent of their gas comes from Russia. The similar situation is that large parts of Western Europe exist in a very old nirvana kind of state, where they don’t appreciate how much energy they need or indeed where it comes from. Many of them think that it comes from renewables, yet spending tens of billions only gives them roughly one percent renewable energy. The truth of the matter is that ultimately about a third of Europe's energy need comes from Russia at the moment. In the situation where the world has become more unstable in the last fortnight, thanks to ISIS and so on in the Middle East, we have a situation where ultimately Europe needs Russian gas, and the sooner we have European pragmatism, the better it is going to be. That is what Austria understands.

RT: Is Europe mixing up its politics and economics with regards to South Stream?

PY: I think you can say that actually Europe mixes up its politics and its economics. After all, why would we have a Lalaland project like the euro that was actually economic rationalism? The whole position within the European Union is one of trying to create the great power empire without understanding the necessary economics that come behind it. Therefore, energy policy in Europe is a complete and utter ludicrous mess. Even in countries such as Germany they are proclaiming some sort of weird eco-mantra on one side, and actually burning more coal. Ultimately Europe needs this gas; European Union is being completely politically and economically irrational in terms of how they are dealing with the whole Russian incident at the moment.

RT: On the other hand, Gazprom holds a huge share in the European gas market... isn't that cause to worry?

PY: Europe has got an opportunity if it wants to diversify and they can do it very easily, I mean it can frack its way to freedom. But again, you have got an incredibly spineless energy policy going on in many countries. Look at the way Chancellor Merkel as a knee-jerk reaction closed all of her nuclear power plants simply because she was worried about the risk of a tsunami, which are not particularly common hitting the Baltic Sea. Therefore you have a problem, Europe can solve it itself if Europe wants to diversify away from Russian energy, it can find sources within its own shores by using the fracking power. But a thing that I find particularly worrying is that the offer at the moment is a pivot to endless numbers of ships coming from the US to supply Europe with gas from where they have fracked it in the US. That makes no sense whatsoever. It’s not a particularly effective way to transit the gas itself, it is going to be incredibly costly to bring together, and Europe is going to be jumping out of bed with one partner, Russia, into the bed with the another partner, the US, who ultimately has proven to be very fickle as recent spying scandals have shown.

It’s absolutely fascinating, isn’t it? We have an arguable alcoholic, who couldn’t manage to control a tram load of secret agents in Luxembourg, could well be the European Commission President by the end of this week. We have got a situation where Mrs. Merkel, a research scientist, ignores all of the science in order to go populist. It’s really very worrying all together. At this moment Europe is being run by a group of politicians who are ultimately incontinent and incompetent when it comes to both economic and energy policies, and given the fact that that is going to be the security and the future of the EU, it’s a tragedy. Europe needs a better political deal, Europe needs both energy and security and economic growth. At the moment the political pigmies are delivering neither.

Complete story at - ‘EU is completely politically and economically irrational dealing with Russia’ — RT Op-Edge

Russia Reveals "Plan B": Gazprom Says Gas Transit Via Ukraine May Be Stopped Completely | Zero Hedge

A few days ago, when we wrote our "explainer" on the need for Russia to have an alternative pathway for its gas, one which bypasses Ukraine entirely and as the current "South Stream" framework is set up, crosses the Black Sea and enters Bulgaria before passing Serbia and Hungary on the way to the Central European energy hub located in Baumgarten, Austria, we said that "one short month after Putin concluded the Holy Grail deal with Beijing, he not only managed to formalize his conquest of Europe's energy needs with yet another pipeline, one which completely bypasses Ukraine (for numerous reasons but mostly one: call it a Plan B), but scored a massive political victory by creating a fissure in the heart of the Eurozone, after Austria openly defied its European peers and sided with Putin."



Today we find just what said Plan B is.

As Itar-Tass reports, citing Gazprom CEO Alexei Miller, "Russia’s gas giant Gazprom does not rule out gas transit via Ukraine may be stopped completely."

"What happened once is a tendency, nothing happens incidentally. In 2009, gas supplies were stopped completely — so, we know precedents,” Miller told a briefing on Friday.

Clearly, this is bad news for Ukraine: Gazprom not interested in participation in Ukraine’s gas transportation system (GTS), “train has departed”, CEO said.

“The train has already departed. It seems it departed yesterday,” Miller said. “It belongs to no one. The GTS has no owner,” he said. “The GTS of Ukraine does not belong to Naftogaz but to the Ukrainian government. Before discussing things with someone regarding modernization and cooperation, it should appear on the balance sheet of this or that economic entity.”

“Property and legal issues should be resolved first,” Miller said.

Complete story at - Russia Reveals "Plan B": Gazprom Says Gas Transit Via Ukraine May Be Stopped Completely | Zero Hedge

Russia Is Doing It – Russia Is Actually Abandoning The Dollar | InvestmentWatch

The Russians are actually making a move against the petrodollar. It appears that they are quite serious about their de-dollarization strategy. The largest natural gas producer on the planet, Gazprom, has signed agreements with some of their biggest customers to switch payments for natural gas from U.S. dollars to euros. And Gazprom would have never done this without the full approval of the Russian government, because the Russian government holds a majority stake in Gazprom. There hasn’t been a word about this from the big mainstream news networks in the United States, but this is huge. When you are talking about Gazprom, you are talking about a company that is absolutely massive. It is one of the largest companies in the entire world and it makes up 8 percent of Russian GDP all by itself. It holds 18 percent of the natural gas reserves of the entire planet, and it is also a very large oil producer. So for Gazprom to make a move like this is extremely significant.

When Barack Obama decided to slap some meaningless economic sanctions on Russia a while back, he probably figured that the world would forget about them after a few news cycles.

But the Russians do not forget, and they certainly do not forgive.

At this point the Russians are turning their back on the United States, and that includes the U.S. dollar.

What you are about to read is absolutely stunning, and yet you have not heard about it from any major U.S. news source. But what Gazprom is now doing has the potential to really shake up the global financial landscape. The following is an excerpt from a news report by the ITAR-TASS news agency…

Gazprom Neft had signed additional agreements with consumers on a possible switch from dollars to euros for payments under contracts, the oil company’s head Alexander Dyukov told a press conference.

“Additional agreements of Gazprom Neft on the possibility to switch contracts from dollars to euros are signed. With Belarus, payments in roubles are agreed on,” he said.

Dyukov said nine of ten consumers had agreed to switch to euros.

Complete story at - Russia Is Doing It – Russia Is Actually Abandoning The Dollar | InvestmentWatch

90% Of Gazprom Clients Have "De-Dollarized", Will Transact In Euro & Renminbi | Zero Hedge

Following Obama and Putin's "caught on tape" meeting Vine'd by the French President, we can't help but wonder if the Russian leaders comments were something akin to "this is not over yet." With "De-Dollarization" efforts already broadly under discussion, ITAR-TASS reports that Gazprom had signed additional agreements for clients to switch from dollars to euros and renminbi, "nine of ten consumer had agreed to switch."

Via ITAR-TASS,

Gazprom Neft had signed additional agreements with consumers on a possible switch from dollars to euros for payments under contracts, the oil company's head Alexander Dyukov told a press conference.

"Additional agreements of Gazprom Neft on the possibility to switch contracts from dollars to euros are signed. With Belarus, payments in roubles are agreed on," he said.

Dyukov said nine of ten consumers had agreed to switch to euros.

ITAR-TASS reported earlier that Gazprom Neft considered the possibility to make payments in roubles under contracts. Some contracting parties agree to switch from dollars to euros and Yuans.

"The so-called Plan B is already partially worked out. The switch of dollar contracts to euros and Yuans is agreed on with some of our contracting parties. Under consideration is the possibility to switch contracts to roubles," Dyukov said at the St. Petersburg International Economic Forum.

As we concluded previously,

And as we have explained repeatedly in the past, the further the west antagonizes Russia, and the more economic sanctions it lobs at it, the more Russia will be forced away from a USD-denominated trading system and into one which faces China and India.

Complete story at - 90% Of Gazprom Clients Have "De-Dollarized", Will Transact In Euro & Renminbi | Zero Hedge

Moody’s downgrades Ukraine to ‘default imminent’ — RT Business

Moody's Investors Service has downgraded Ukraine's government bond rating one notch from Caa2 to Caa3, citing the current political crisis and deepening economic instability as reasons for its negative outlook.

The Caa rating is a credit risk grading pertaining to investments that are both very poor quality and entail a high credit risk. The current downgrade drops Ukraine from Moody's "extremely speculative" rating to "default imminent with little prospect for recovery."

Moody’s said the downgrade was driven by three factors, which “exacerbate Ukraine's more longstanding economic and fiscal fragility.”

The first factor is Ukraine’s political crisis, citing the recent regime change in Kiev and subsequent events in Crimea. The agency went on to cite Ukraine’s stressed external liquidity position, which faces continued decline in foreign currency reserves, the withdrawal of Russian financial support and a spike in gas import prices. Moody’s further noted that this assessment accounts for the near-term liquidity relief recently hammered out with the IMF. Finally, due to a “sizable fiscal deficit,” the agency expects a significant contraction of GDP and a sharp currency depreciation as the debt to GDP (Gross Domestic Product) ratio hits between 55-60 percent by year’s end.

On Thursday, Gazprom CEO Aleksey Miller announced Ukraine would begin paying $485 per thousand cubic meters of natural gas starting from April. The price rise followed a cancelation of the Black Sea hosting deal. On Wednesday President Vladimir Putin signed a federal law ending Russia’s commitment to the Kharkov Agreement, as the Black Sea port of Sevastopol is now under jurisdiction of the Russian Federation. This follows another steep hike on April 1, when the price Ukraine paid for gas went up 44 percent to $385, after Kiev failed to meet its debt repayments.

Last December, Russia offered Ukraine’s Yanukovich-led government a $15 billion loan and a 33 percent discount on natural gas: a lifeline to help its faltering economy. Moscow went through with the purchase of a $3 billion Eurobond from Kiev, though Russia later froze both the gas deal and the credit- line, due to events on the ground.

   

Complete story at - Moody’s downgrades Ukraine to ‘default imminent’ — RT Business