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Press review: Russia-China unity bucks US economic colonialism and will oil prices crash

Top stories in the Russian press on Tuesday

Izvestia: Russia-China energy partnership thwarts US economic aggression

The total volume of liquid hydrocarbons that have fallen under unilateral restrictions by the United States has reached a record level totaling about a third of the world’s reserves, said Rosneft CEO Igor Sechin. Washington uses energy as a political weapon on a wide scale. Amid the tensions, Russian-Chinese relations have been strengthening, Izvestia wrote. The partnership is fundamentally vital for ensuring sustainable world development, experts told the newspaper. The Russian-Chinese energy business forum is an important platform for developing joint projects, which was held this year at SPIEF, the St. Petersburg International Economic Forum.

This year, over 100 Russian and Chinese companies, including delegates from the oil and gas sector, and the power industry among others, attended the forum. Chinese banks and IT structures showed interest in joint energy projects. In all, a total of 33 agreements were signed at two sites between companies from Russia and China. The Arctic with potential reserves of 20 bln tonnes of oil was also at the center of the negotiations.

Director General of the National Energy Institute Sergey Pravosudov told Izvestia that American pressure on China is blatant, and the US could use the power of their fleet, far superior to China’s, to block off the sea routes of hydrocarbon deliveries to the US. In this situation, energy from Russia would become a vital necessity for China.

"The Eastern Siberia-Pacific Ocean oil pipeline and the Power of Siberia gas pipeline are becoming the main arteries for reliable and safe supplies to Chinese consumers of oil and gas," the expert believes.

Economist Alexander Isaev highlighted that over the past 5-6 years, Rosneft has almost quadrupled its oil supplies to China. He noted that Chinese demand for hydrocarbons is rapidly surging, and additional opportunities are being created to strengthen cooperation between the two countries in this area.


Nezavisimaya Gazeta: Officials predict oil price collapse without OPEC+ agreement

Oil prices may fall below $40 to $30 per barrel due to overproduction, Russian Energy Minister Alexander Novak said following a meeting of the Russian-Saudi Intergovernmental Commission on Trade, Economic and Scientific and Technical Cooperation. According to Nezavisimaya Gazeta, oil prices could fall to $30 per barrel if OPEC+ countries do not agree on extending the deal to limit production. The decision to prolong the agreement for the second half of the year may be made in the near future.

On June 5, oil prices fell below $60 per barrel for the first time since January 2019. A similar decline - when Brent crude was at roughly $30 at the beginning of 2016 -forced OPEC, the largest association of oil exporters led by Saudi Arabia, and one of the world's top oil producers, Russia, to become the informal leader of a dozen non-OPEC countries. Together, they concluded a deal on oil production cuts, now known as OPEC+.

"Statements about quotas and fulfilling obligations help keep oil prices at an acceptable level. From this point of view, the OPEC+ agreement is necessary for all the main participants," Leading analyst at the National Energy Security Foundation Igor Yushkov told the newspaper, adding that the decision on new production quotas would be announced in advance, but the meeting itself would take place after the G20 summit.

At the same time, the expert believes that OPEC+ is evolving. "Firstly, the parties are trying to find an output volume, at which oil prices will not significantly decrease or grow, since price hikes would lead to an increase in shale oil production in the United States. Therefore, the new goal of OPEC+ is to curb US oil production. Secondly, the parties to the agreement are in no hurry to disclose the production volumes, because they are closely observing how events will unfold in Iran and Venezuela. It is likely that exports from these countries will be reset and the rest of the countries will not have to significantly reduce oil production. Thus, perhaps, so far neither Russia, nor Saudi Arabia have exact figures on oil output reduction for the next period of the OPEC+ deal," the expert told Nezavisimaya Gazeta.


Nezavisimaya Gazeta: Ukraine offers Moldova 'help' in repelling ‘Russia’s military threat’

The new Moldovan government elected by the new parliament cannot enter the building occupied by the old government, which is being guarded by police. Meanwhile, according to Nezavisimaya Gazeta, Moscow is being blamed for the crisis, for having allegedly insisted on the federalization of Moldova. Chairman of the Social Democratic Party Viktor Shelin told the newspaper, "Russia was let down: a pro-European government was upheld in the country and Moscow was accused of pressuring Chisinau."

When Chisinau talks about federalization, Tiraspol reiterates that they are not going to unite with Moldova on any basis. President of Transnistria Vadim Krasnoselsky told the newspaper that the unrecognized republic chose a different path - "to recognition".

Meanwhile, Ukraine picked up the topic of federalization. According to the Foreign Ministry of Ukraine, it is important for the country and regional security to prevent outside intervention aimed at implementing the 'Russian scenario' of federalization. The ministry also noted its interest in a "stable, democratic and European" Moldova and offered assistance in resolving the situation.

Thus, the Security Service of Ukraine decided to step up its counter intelligence moves, according to its press service. In order to prevent any aggravation of the situation in Chisinau, associated with foreign interference in domestic affairs, the counter-intelligence regime has been beefed up on Ukrainian soil at entry points to Moldova, the newspaper wrote.


Kommersant: Rosneft pushing Transneft to pay compensation for Druzhba pipeline fiasco

Rosneft is urging the government to force Transneft to compensate for consumer losses due to the recent oil contamination in the Druzhba pipeline, several sources told Kommersant. Rosneft received claims from Belneftekhim for $155 mln and another $450,000 from Poland’s Orlen and wants to get guarantees of proper payments from Transneft. According to Kommersant, Belarus might not actually have such high claims, however, in any case the government would be ready to discuss compensation only after a complete resolution of the crisis.

Rosneft CEO Igor Sechin also said that the company itself had suffered, having reduced production in May by 0.5 mln tonnes due to Transneft’s "unilateral refusal" to accept raw materials into the system, Kommersant sources said. The delay in the settlement of claims by Transneft will lead, in Sechin’s opinion, to losses for oil companies owing to lower oil premiums on future contracts due to buyers hedging their risks, loss of sales markets, and lost budget revenues from export supplies.

Rosneft reminded Kommersant that Transneft has promised to compensate for the losses from the oil contamination fiasco. "We trust the company as a bona fide counterparty, and we have no reason to doubt them," Rosneft Press Secretary Mikhail Leontyev said.

Meanwhile, Transneft told Kommersant that the company has not yet received reasonable claims for damages. "There is a general understanding that we are talking about weeks and months, not days or years. And of course, attempts to profit off of compensation are unacceptable," advisor to President of Transneft Igor Demin, told Kommersant.

At the same time, Deputy Prime Minister Dmitry Kozak’s spokesman Ilya Dzhus told Kommersant that "no decisions were taken to compensate consumers at the government level." He recalled that the question was postponed until the full restoration of the Druzhba pipeline’s operation.


Vedomosti: Russians support giving passports to residents of Donbass republics

The Levada Center pollster rolled out the results of a survey, according to which 70% of Russians support President Vladimir Putin’s proposal to issue Russian passports to the residents of self-proclaimed Lugansk and Donetsk republics in a simplified manner, while only 22% of respondents were against, Vedomosti wrote.

Meanwhile, 36% of the respondents consider the main problem of handing out the new passports to be additional burden for the Russian budget, 26% see a deterioration in relations with Ukraine, and 22% believe that the relations would improve. The majority of the respondents (77%) believe that the proposal was made to help people, while 59% believe that Russia wants to expand its influence in Eastern Ukraine.

According to Director of Levada Center Lev Gudkov, there no denying that Russians approve of the simplified issuance of passports to the residents of Donbass, but more and more people do not want to face the consequences for Crimea. Passports are perceived as a humanitarian action, but at the same time, Russians are aware that they will have to face the music for this move. These ideas exist on different planes: it is impossible to influence politics, the authorities will decide how to act, but the moral side is understood and approved.

"We will have the rudiments of imperial consciousness for a long time, almost equal shares of respondents believe that Russians and Ukrainians are one people. The independence of the former Soviet republics is not taken seriously, especially Ukraine," political analyst Boris Makarenko told Vedomosti. "Russians believe that Donbass is close to them both geographically and culturally, and a stably negative attitude has been formed towards the Ukrainian leadership and its political class," he noted. "Although there is much less enthusiasm in terms of the situation with Ukraine - the refrigerator becomes more important than the TV, and people are tired of suffering plummeting incomes," Makarenko explained.


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