A year ago when the Olympic torch arrived in Sochi, many observers were warning that interest in the Russian Black Sea resort would fizzle out once the 2014 winter games were over. But that was before western sanctions and falling oil prices began weighing on the Russian economy and sending the rouble into a nosedive.
Russians no longer able to afford foreign ski holidays and chalets are now flocking to the slopes of Sochi and investing their depreciating rubles in mountain side homes built for the Olympics. For the first time Sochi has been included in the annual ranking of the world’s top twenty ski resorts by price growth for prime residences, compiled by Knight Frank, the global real estate consultancy. Read more
In a dreadful week for the rouble, Alexander Lukashenka, the president of Belarus, has gone out of his way to make matters worse, threatening to suspend the use of the Russian currency in bilateral trading deals.
“If they are buying our products in Russia they can pay in dollars,” Lukashenka told a government meeting in Minsk on Thursday. If Belarus has to deal in the world’s worst performing currency “then it has to be at the exchange rate on the very day, on the very hour. ” Read more
As European leaders threatened yet tougher sanctions to punish Russia for its aggressive policies in Ukraine on Monday, Vladimir Putin was thousands of miles away in oil rich east Siberia making friendly with a visiting Chinese official.
“On the whole we are very careful about allowing our foreign partners in, but of course for our Chinese friends there are no limits,” Russia’s president said.
China is emerging as the winner in the Ukraine crisis even as Russia’s relations with the US and the European Union go from bad to worse. It has secured a huge gas deal with Gazprom and is making strides towards greater involvement in the Russian oil and gas production. Read more
France was one of the most reluctant European Union countries to agree to impose sanctions on Russia for grabbing Crimea off Ukraine. So it’s perhaps not altogether surprising to see a French investor hobnobbing with Vladimir Putin on the Black Sea peninsular this week and offering to build a tourist attraction in the region.
France’s Puy du Fou International has agreed to build a historical theme amusement park in Crimea that will celebrate the history of Russia and the Black Sea peninsular, the government of Crimea said on Friday. Read more
First western sanctions stopped billionaire Gennady Timchenko from flying around in his luxury jet, now they’re hurting budget Russian air travelers as well. Aeroflot grounded Dobrolet, its fledgling low coster airline, after companies in the European Union suspended co-operation agreements.
Owing to “unprecedented pressure” the low cost carrier had no option but to suspend flights and ticket sales, Aeroflot said. However, analysts said that Russia’s national airline, having already spent about $20m of the $100m budget allocated for Dobrolet, was unlikely to allow the sanctions to force it to give up on the low coster altogether.
“The company has the option of signing new leasing and technical servicing agreements with Asian counter parties, including Chinese ones, according to experts, wrote Sberbank Investment Research in a note on Monday, adding that “this will probably take months and incur additional costs.” Read more
Gazprom has been struggling to adapt to the tectonic changes in global gas markets and has finally decided a fresh face is needed at its foreign trade division. After 12 years in service, Alexander Medvedev has lost his job as head of Gazprom Export and been replaced by one of his former deputies.
Elena Burmistrova, formerly deputy director general for petroleum products, LNG and new gas markets at Gazprom Export has been appointed deputy director of Gazprom Export, replacing Medvedev, Gazprom said on Wednesday. Read more
Rosneft has raised the stakes in its campaign to strip Gazprom of its monopoly over Russian gas exports. In a sharply worded statement on Tuesday, Russia’s state oil company threatened to take Gazprom to court unless it opened up a planned pipeline to China to rival gas producers.
Gazprom has been gearing up to build the Power of Siberia pipeline since signing a $400bn gas export contract with China in May. Linking vast Gazprom controlled gas fields in east Siberia with the Russian Pacific, the 4,000km pipeline will feed gas to domestic consumers and to the Chinese border. Read more
As international budget airlines begin to make headway in the Russian market, Aeroflot has launched its own version of easyJet. Passengers crammed aboard the maiden flight from Moscow to – guess where? – Crimea on Tuesday were waved off by Dmitry Medvedev, Russia’s prime minister. Read more
Tough times ahead for Russian smokers and for the international tobacco groups that feed their obnoxious habit: a ban on smoking in government buildings introduced last year was expanded to include all public places at the weekend, as the Kremlin stepped up the war on Russia’s estimated 40m cigarette addicts. Read more
As Russia steps up control of the internet, electronic payment processors are feeling the heat. Qiwi and PayPal cited security concerns when they halted co-operation with RosUznik, a Russian charity that supports political prisoners, this week. RosUznik suspects political motives.
Founded in late 2011 as a wave of anti-government protests erupted in Moscow, RosUznik collects charitable donations to help fund legal aid for opposition activists undergoing trial or in detention. Read more
Alexander Lukashenko is living up to his reputation as Europe’s last remaining dictator. The president of Belarus has decided to bring back serfdom on farms in a bid to stop urban migration.
Lukashenko has announced plans to introduce legislation prohibiting farm labourers from quitting their jobs and moving to the cities. “Yesterday, a decree was put on my table concerning – we are speaking bluntly – serfdom,” the Belarus leader told a meeting on Tuesday to discuss improvements to livestock farming, gazeta.ru reported. Read more
As western governments impose sanctions on Russia, international majors with interests in the country have stayed out of the fray, saying it’s business as usual. France’s Total, for one, was not going to let the Ukraine crisis halt plans to finalize a deal with Russian Lukoil this week that paves the way for exploration of tight oil reserves in western Siberia.
Total has entered a joint venture with Lukoil to explore the tight oil potential of the Bazhenov formation in western Siberia, the French company said on Friday. Lukoil will have a controlling 51 per cent interest of the project, with Total holding the remaining 49 per cent. After conducting seismic surveys this year, the partners expect to begin drilling in 2015. Read more
As Gazprom bullies Ukraine to settle its $3.5bn gas arrears, Russian domestic gas consumers are also running up multi-billion dollar debts. Ukraine is broke and Russian buyers, hit by the economic downturn, will struggle to pay up. Just as well then that Gazprom has finally clinched a $400bn gas contract with China which opens up a new potential market in the east from 2018.
Gazprom’s customers owed Rbs115.8bn ($3.35bn) for gas at the end of 2013, almost 40 per cent more than on December 31st 2012, Kirill Seleznev, director general of Mezhregiongaz, Gazprom’s gas distribution subsidiary, told reporters in Moscow this week. Read more
Click to enlarge
Russia’s super rich have been losing money as the Ukraine crisis escalates but that doesn’t necessarily mean they’ll stop splurging on Russian art. International auction houses are nervously awaiting the results of the next Russia Art Week sales that open in London in less than two weeks’ time. Read more
The International Monetary Fund has slashed its growth forecast for Russia for the second time in less than a month as international sanctions threaten to tip the already weak economy into recession.
Russia’s economy is on track to grow by just 0.2 per cent this year, rather than the 1.3 per cent it forecast earlier this month, the IMF said on Wednesday, warning that further downgrades were likely unless the Ukrainian crisis abated. Read more
With the Ukraine crisis casting a shadow over Russia’s gas trade with Europe, Gazprom has moved to shore up relations with Turkey, its second biggest foreign gas customer after Germany. In talks in Ankara on Monday, Russia’s state gas monopoly agreed to boost capacity in the Blue Stream pipeline that transports gas across the Black Sea to northern Turkey.
On a working visit to Ankara on Monday, Alexander Medvedev, deputy head of Gazprom, met Taner Yildiz, Turkey’s energy minister, for talks aimed at boosting gas co-operation between the two countries. The two men agreed that capacity in Blue Stream should be upgraded to to 19bn cubic meters a year from 16bn cubic meters a year to enhance Turkish energy security. Read more
Russia brushed off the threat of western energy sanctions on Friday and pledged to press ahead with plans to build a new gas export pipeline that would strengthen its hold on European gas markets.
Russia is continuing work on the 2,500km South Stream pipeline that will carry gas across the Black Sea to southern and central Europe, Alexander Novak, Russian energy minister told a press conference in Moscow on Friday. Read more
Russia is rethinking investor friendly dividend reforms as the Ukrainian crisis weighs on its faltering economy. Rules introduced last year that would oblige state companies to put more of their profits in shareholders’ pockets may be shelved, according to a report out on Wednesday.
Russia has been pushing state companies to pay more generous dividends in an effort to improve the country’s investment image and boost interest in upcoming privatisations. Rules introduced in late 2012 setting a minimum 25 per cent pay out were a step in the right direction but, as often happens with Russian regulations, there was room for interpretation. Read more
Russian lawmakers are debating measures to restrict the distribution of foreign films shown at domestic cinemas in a move that reflects growing anti-western sentiment. The threat of a new Cold War is giving Hollywood the shivers.
Robert Schlegel, a member of the pro-Kremlin United Russia party, has tabled a parliamentary bill that would place a 50 per cent cap on the share of foreign-made films distributed at Russian cinemas. Deputies are expected to debate the proposals in the next couple of weeks. Read more
Russia’s Sukhoi Civil Aviation has reached a preliminary agreement to supply up to 100 Superjet-100’s to China in what would be by far the biggest sale yet of its flagship regional passenger jet. Apart from swelling Sukhoi’s order books, a Chinese deal could help Russia circumvent possible western sanctions.
Sukhoi Civil Aviation signed a memorandum of understanding (MOU) to sell up to one hundred Superjet-100s to O’Bay Aircraft, a privately held airline based in Henan province in north China. As part of the deal, the two sides are considering a joint assembly venture to make SSJ-100’s in Zhengzhou, the capital of Henan province. Read more