Ruble Falls After News of Russia’s Agreement with OPEC

February 16, 2016
The oil production platform at the Sakhalin-I field in Russia, partly owned by ONGC Videsh Ltd., Rosneft Oil Co., Exxon Mobil Corp. and Japan's Sakhalin Oil and Gas Development Co., is shown. File Photo. Source: ONGC Videsh Ltd. via Bloomberg, 2011.

LIVE UPDATES: Within minutes of the news that Russian Energy Minister Aleksandr Novak had met with OPEC members in Doha and agreed to freeze oil extraction at the level of January 11, the ruble, which had been rallying, fell in value,

Welcome to our column, Russia Update, where we will be closely following day-to-day developments in Russia, including the Russian government’s foreign and domestic policies.

The previous issue is here.

Recent Translations:
The Non-Hybrid War
Kashin Explains His ‘Letter to Leaders’ on ‘Fontanka Office’
TV Rain Interviews Volunteer Fighter Back from Donbass
‘I Was on Active Duty’: Interview with Captured GRU Officer Aleksandrov


Opposition Obtains Permission for Nemtsov Memorial March – But Not Past The Place of His Assassination

Russian opposition leaders have obtained permission from the Moscow Mayor’s office to hold a march to mark the date of the assassination of Boris Nemtsov on February 27 last year, Meduza reported.

Translation: the march in memory of Boris Nemtsov will take place in the center of Moscow on February 27.

But a compromise had to be made to get the permit that means the marchers cannot go to the site where Nemtsov was killed on Bolshoi Moskvoretsky Bridge by the Kremlin.

They had requested to go from Slavyanskaya Square across Bolshoi Moskvoretsky Bridge to the foot of Maly Moskvoretsky Bridge in the center of Moscow. Instead, they will now have to go on the Boulevard Ring Road along Strastnoy and Sretensky Boulevards and wind up on Sakharov Avenue. This is place where many opposition marches have been allowed — as if the fact of the name of Russia’s most famous modern dissident, Dr. Andrei Sakharov, will compensate for not being visible in the center of town by the seat of government. 

Kasyanov, former finance minister and chair of the opposition Parnas party was undeterred from continuing his campaign in parliamentary elections despite several recent attacks on him orchestrated by Chechen leader Ramzan Kadyrov.

Translation: Despite the active resistance of the authorities, I will continue to visit the regions according to a previously planned schedule.

He said authorities had so far ignored his petitions to open criminal cases regarding the threats and physical attacks he has suffered recently.

In an interview with Reuters, published today, Kasyanov said:

“I am afraid for my life and for those of my colleagues,” Kasyanov, 58, told Reuters in an interview at the Moscow headquarters of his People’s Freedom or PARNAS party. “Anyone normal would fear for their life.”

— Catherine A. Fitzpatrick 

Former Russian Vice Premier Kokh Arrested in Absentia on ‘Smuggling’ Charges; Germany Refuses to Interrogate
Moscow City Court announced today that Alfred Kokh, former vice premier under the Yeltsin Administration and an architect of Russia’s privatization, was arrested in absentia on charges related to taking art works out of the country, Interfax reported.
Kokh was placed on Russia’s “international wanted list,” but this does not mean other countries will cooperate with Russia’s requests, as we have seen with the case of Mikhail Khodorkovsky and others.
Germany announced that it was refusing to interrogate Kokh at the FSB’s request, Interfax reported. Kokh, who is of German origin, obtained residence in Germany.
Kokh’s lawyer, Alkhas Abgadzhayev, said the FSB had made the request to Germany last year.
The case on charges of “contraband of national treasures” was opened against Kokh, who has been an outspoken critic of Russia on his Facebook page and in various Russian publications, on February 11, 2014, after he was stopped at customs en route to Germany on November 22, 2013. Kokh said the art work by an unknown artist was valued at 197,400 rubles ($2,528).
Earlier Kommersant reported of a criminal case opened in April 2014 that a painting valued at 18,000 rubles ($230) — evidently the same work — which did not have the proper paperwork for export was seized by customs agents. Later an expert at the Tretyakov Gallery analyzws the painter’s signature and said the work was by Soviet-era painter Isaak Brodsky (1883-1939), a painter of Lenin and other Soviet leaders, said to be among the founders of socialist realism.

Kokh, who said he had not had the work appraised, commented that another expert at the Grabar Center denied that it was Brodsky’s signature. 

— Catherine A. Fitzpatrick 

Ruble Falls After News of Russia’s Agreement with OPEC

The ruble, which had been rallying, fell in value today within minutes of the news that Russian Energy Minister Aleksandr Novak had met with OPEC members in Doha and agreed to freeze oil extraction at the level of January 11, reported.

Going into the meeting with Saudi Oil Minister Ali Al-Naimi as well as with representatives of Venezuela and Qatar, the ruble was at 76 per dollar; it then fell in value to 77.45 where it has remained. The ruble was trading at 85 to the euro, but fell to 86.66 where it continues to hover. The price of Brent crude, to which the value of the ruble has been tied, is at $33.55 currently, falling from $35.54 before the meeting this morning.

Earlier today Stanislav Kleshchev, a BTB24 bank analyst, had said that the price of Brent had gone up so sharply in the last three days that if no agreement had been reached, speculators would think of fixing the profits and then the price would fall.
Yegor Susin, an expert at Gazprombank’s Center of Economic Forecasting, said that if Saudi Arabia kept to the agreement, the price of oil would go up, as long as the US didn’t increase production and export. He predicted $40-$50 a barrel.
Bloomberg reported that there were risks for Russia in the agreement:

Prior to Tuesday’s agreement, Novak had said he could consider reductions if other producers joined in.

Yet Igor Sechin, chief executive officer of the country’s largest oil company Rosneft OJSC and a close Putin ally, has resisted, saying last week in London that coordination would be difficult because no major producer seems willing to pare output.

“The history of relations with OPEC suggests that Russian companies are not keen to cut production,” James Henderson, an oil and gas industry analyst at the Oxford Institute for Energy Studies, said by phone. “There are certain practical difficulties, and the companies would rather somebody else did that, and they could benefit once the price goes up.”


In Siberia, Russia’s main oil province, winter temperatures can go below minus 40 degrees Celsius (minus 40 Fahrenheit). That’s a challenge for anyone thinking of turning off the taps.

The oil and gas that flows from wells always contains water, so once pumping stops, pipes may freeze, Mikhail Pshenitsyn, who has worked for more than 10 years in the Russian oil industry, said by e-mail. The problem goes away in summer, but there’s still the risk of a long-term reduction in output because a halted reservoir can become polluted with salts and residues, he said.

Lukoil announced they were putting a calculation of $30 for oil into their annual budget, Vedomosti reported.
German Gref, president of Sberbank, said 50% of Russia’s Reserve Fund would have to be spent even if oil were $40 per barrel and some expenditures were cut, TASS reported.

Currently the fund is at 3.737 trillion rubles ($48 billion), down from 5.865 trillion rubles (about $74 billion) a year ago — when the ruble was at a higher value.

— Catherine A. Fitzpatrick