Oilprice
EU Rejects Russia’s Ruble-For-Gas Scheme, Warns Of Supply Shock
Tom Kool
https://sputniknews.com/20220502/paying-for-gas-via-russia-proposed-mechanism-is-violation-of-sanctions-eu-official-says-1095209324.html
Also
Proposed Mechanism is Violation of Sanctions, EU Official Says
https://sputniknews.com/20220502/paying-for-gas-via-russia-proposed-mechanism-is-violation-of-sanctions-eu-official-says-1095209324.html
Related
The long run this might be the biggest news.
- Russia’s war in Ukraine has put global energy security in the spotlight.
- Long-term net-zero plans from Europe and the United States remain in tact, but elsewhere, energy security remains the top priority.
- China and India have been ramping up the use of coal, faced with volatile and record-high natural gas prices.
The War In Ukraine Has Stalled Global Efforts To Cut Emissions
Tsvetana Paraskova
https://www.blogger.com/blog/post/edit/2761684730989137546/3084400132195192625#
U.S. Fuel Exports Are Draining Domestic Diesel And Gasoline Supplies
Michael Kern
https://oilprice.com/Latest-Energy-News/World-News/US-Fuel-Exports-Are-Draining-Domestic-Diesel-And-Gasoline-Supplies.html
13 comments:
We'll have net zero when civilization is ended.
I suspect this rush in Europe to slit its own throat is pushed by the Green lobby. They will see this as a once in a lifetime opportunity to slash fossil fuel use within their own spheres of influence and get the purity fix they desire.
It's self flagellation by a ruling elite that is hooked on value signalling and who believes they have the proles under control.
The whole of the West seems to be turning into a Norman vs Saxons rerun.
Plot twist: self flagellation begins with the proles receiving the whip.
Petroleum exports (surging, by the way) are one of the main reasons for high prices and low stocks. This was started by Trump, who wanted to "make money for the U.S." However, the policy stupidly continues under Biden. The US is currently a net exporter by a record amount, and it continues to grow.
Somebody has to makeup the difference if they’re going to cutoff Russia….
So Gazprombank isn't sanctioned, so it could still receive payments in euros, but can Russia do anything with these euros since everything else is sanctioned and disconnected from swift?
If that is the case, well, that's mighty cute of the Europeans to now cry fowl that Russians wants a modification to the payment process.
One sticking point that annoys me, all this talk of "converting" euros to rubles. Obviously you can't convert a euro into rubles. I don't really see much benefit in this "pay gazprom with euros, they'll then get the rubles and then deliver gas." So Gazprom still ends up with a pile of Euros, or they give them to the Russia central bank, which then has a pile of euros.
Where the exact advantage here for Russia?
'iSo Gazprom still ends up with a pile of Euros, or they give them to the Russia central bank, which then has a pile of euros.
Gazprom sells the euros they receive on the Moscow Exchange.
So Gazprombank isn't sanctioned, so it could still receive payments in euros, but can Russia do anything with these euros since everything else is sanctioned and disconnected from swift?
There are alternative payments systems already in place.
It still seems like nothing other than shifting money from one pocket to another in the same pair of pants. Before, Gazprom would get euros for its gas, most of these deposits were located in European Banks, if I understand correctly. Nothing would have stopped them from taking their Euros and selling them on the Moscow exchange (or any other exchange for that matter, or doing whatever else they wanted), correct? But now, the euros get deposited in a Russian bank, which will then sell them. Unless a specific bank were specified, I find it hard to see how this could be a breach of contract in any way. In effect, Europe is still paying for gas in Euros. Europe gives Euros, Russia gives gas, contract settled.
Before, Gazprom would get euros for its gas, most of these deposits were located in European Banks, if I understand correctly. Nothing would have stopped them from taking their Euros and selling them on the Moscow exchange (or any other exchange for that matter, or doing whatever else they wanted), correct?
Sanctions would prevent doing this. There is no material difference — Europe is still paying in euros but not into a European bank or other bank that is sanctioned but into a Russian back that is not. In this way, Russia actually gets paid for what it sells rather than the funds being frozen by sanctions in a sancetioned bank and essentially confiscated.
This cleverly avoids sanctions owing to the Russian regulation which the Europeans are claiming involves breach of contact. This is their bitch. They want to sanctions to stick but they also need the resources that Russia has.
This is going to be extended to other resources than gas. Putin just signed the papers today and the Council of Ministers has a time frame to decide the details. But it is on. In the end Russia could conceivably require payments in gold bullion, the way international trade used to be settled. Now the option is between setting in rubles and gold.
"But now, the euros get deposited in a Russian bank, which will then sell them."
Gazprombank won't sell them, because to do that would create currency risk within the bank and push the rouble sky high.
Gazprombank gets the TARGET2 deposit. The National Clearing Centre at the Moscow Exchange ends up holding the Euro deposit in Gazprombank, which then backs any Euro margin settlement accounts on the Moscow Exchange.
Gazprom itself gets the Roubles from whoever bought the Euro settlement on the Moscow Exchange - probably the Bank of Russia to keep the exchange rate down.
What you end up with is a 'eurodollar' system, but in Euros within Russia and the 'friendly' nations it trades with.
Very clear, Neil. I was not aware of the details. Thanks.
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