Kommersant: Russia embarks on largest ever reduction in oil output
The new OPEC+ deal to reduce production announced on April 10 will compel Russia’s oil industry to scale down the production of liquid hydrocarbon by 8.4% in 2020, Kommersant writes. This is the lowest level since 1994, when production in Russia fell by about 10% over three years after the collapse of the Soviet Union. In absolute terms, a decrease in oil production will be about 46.6 mln tonnes, a larger drop in the history of modern Russia was recorded only in 1992 (63 mln tonnes).
According to Kommersant’s sources in the government, "it was essential to stop the falling prices at all costs." To do so, an agreement with Riyadh was required, and some concessions had to be made. Other sources said that geopolitical issues had been taken into account while hammering out a deal with the United States and Saudi Arabia, which required a trade-off.
The vast majority of the paper’s interlocutors in the industry highlighted the need to cut production under the current extraordinary situation. They also agreed that a controlled decline is more preferable than a chaotic shutdown of wells, which would result in substantially lower prices. According to Vygon Consulting’s Marina Mosoyan, if Urals plummeted as low as $10 per barrel, the decline in production of the existing well stock could reach 20% (about 85 mln tonnes per year). At a Urals price of $20 per barrel, production may decline by 5%, mainly due to hard-to-recover oil.
At the same time, production cuts, at least in the foreseeable future, will not result in an increase in oil prices. According to most forecasts, the average oil prices are unlikely to substantially surpass $30 per barrel. The last time such low prices were observed had been in 2003-2004 ($29-38 per barrel of Brent respectively).
That said, companies are likely to switch to Plan B, which has been in their arsenal since the 2008 crisis, the paper quotes Managing Director of Advance Capital Karen Dashyan as saying. "To begin with, all major investment in geological exploration will be put on hold. Major projects involving the construction of pipelines and infrastructure for new fields are likely to be frozen. Upgrading refineries and large-scale logistics projects will be frozen as well with a high degree of probability," he stressed.
Nezavisimaya Gazeta: Summit of world powers proposed amid emergency
Russian President Vladimir Putin’s idea to hold a summit of five permanent members of the UN Security Council was put forward at a time when contradictions between these powers manifested themselves and continued to deepen, Senior Research Fellow at the Russian Academy of Sciences’ Institute of Far Eastern Studies Vasily Kashin wrote in his article in Nezavisimaya Gazeta.
Moreover, the initiative was put forward against the backdrop of the start of the new global economic and humanitarian crisis, he noted. "The economic imbalances, which have been piling up for years, the coronavirus pandemic and the US-Russian-Saudi oil price war came together triggering the collapse, which, according to many forecasts, could exceed the scale of the 2008-2009 crisis. What’s more, the threat of new pandemics can become a permanent factor affecting national policies and consumption patterns and provoking a wave of de-globalization and a painful restructuring of a number of large economies," the expert pointed out.
According to Kashin, 2020 will be an important milestone drawing a line under the old world established in the late 1980s after the Cold War. "A new world will be born in epidemics, economic crises and wars. Cooperation between great powers is required to control the scale of these disasters," he added.
Referring to Russia-US relations, he stressed that arms control issues would top the agenda during the summit, adding that the survival of the arms control systems was in question.
"The Americans overestimate Russia’s interest in the agreement. Russia has been preparing for the potential collapse of the arms control system for a long time, investing in improving its nuclear triad and its control systems," he stressed.
The expert also highlighted the need for countries to have realistic expectations from the upcoming summit. "Given the pre-crisis start of 2020, much more can happen in the world by the time of the summit, which is expected to be held on the sidelines of the UN General Assembly session in September," Kashin concluded.
Izvestia: Iran offers US assistance in combating coronavirus
Tehran has offered Washington assistance in the fight against COVID-19, since protection from the infection is the task of the entire global community, which is above political disagreements, Iranian Ambassador to Russia Kazem Jalali told Izvestia.
"In fact, the fight against the spread of the coronavirus and curbing the disease is for the protection of the entire human community. Given the fact that the virus knows no boundaries, all countries need to pool efforts to counter it. The Islamic Republic, even in relation to the United States, which is apparently hostile to us and imposed cruel, illegal and inhuman sanctions against us, expressed its willingness to provide its people with assistance in the fight against coronavirus," the ambassador stressed.
He also noted that Iran was ready to start supplying test systems to other countries, specifically, Palestine, Yemen and Syria. "In Iran, we have used all the capabilities of our research centers, in particular, science-based companies to produce the means to counter the coronavirus and have achieved some success," he explained.
When asked to comment on Tehran’s stance on the US-Israeli Middle East plan known as "the deal of the century," the envoy described it as "a stillborn plan." "It has no chances of being a success, since it takes into account the interests of one side only and does not take into account the interests of the Palestinian people. <…> The Americans put forward their pro-Israeli plan without assessing the real situation, and this is a big mistake," he stressed.
Referring to the construction of the Bushehr nuclear power plant, the ambassador noted that the implementation of the project continued in accordance with the agreement. "The moratorium on US sanctions regarding Iran’s peaceful activities has been extended. However, if the sanctions are imposed, the continuation of the construction will fully depend on [Russia’s State Nuclear Energy Corporation] Rosatom," he said.
Nezavisimaya Gazeta: COVID-19 deals blow to China’s global ambitions
The coronavirus pandemic threatens to trigger a series of economic crises in those countries, which have received assistance from China as part of the One Belt One Road initiative, Nezavisimaya Gazeta writes citing data provided by the US International Institute for Strategic Studies. Trotted out by Chinese President Xi Jinping, it has become a key element of an ambitious plan to turn China into a global leader.
Meanwhile, the countries involved in the project are the most vulnerable to the coronavirus-related economic challenges. Many of them have a high level of external debt. In order to maintain a balance in their finances and keep their currencies stable, they need to ensure a constant influx of export earnings, foreign direct investment and foreign loans. Now they also have to increase borrowing to support their healthcare systems.
China will have to respond to the debt crises. According to the report’s authors, borrowers could seek debt restructuring on a multilateral basis, putting China in the same position as Western creditors, which means the conditions, on which the money was given, should be transparent. This option is not acceptable for Beijing. However, if the issue at hand is bilateral agreements, China’s approach is likely to be more flexible. If some debts are forgiven, Beijing will act as a benevolent partner of poor countries, strengthening its influence in the third world. However, given the current circumstances, that approach could deal a blow to the Chinese Communist Party’s prestige domestically.
Andrei Karneev, who heads the School of Asian Studies at the Higher School of Economics, stressed to the paper that a huge amount of money and political resources had been poured into the initiative. "This being so, it would be logical to refrain from drastic steps. The most important thing to do is to rescue the project itself. On the other hand, it is not necessary to request payment. After all, there were examples when some sort of transport infrastructure, ports and mineral deposits were offered to China," he said.
Izvestia: Moscow imposes tougher restrictions amid worsening coronavirus situation
Starting Wednesday, people will only be able to travel around Moscow and the Moscow Region only after acquiring a digital pass, Izvestia writes. The reason for the tougher measures is a substantial increase in the number of people who have contracted the novel coronavirus. According to experts, that was, to a certain extent, the result of some people’s carelessness who continued to actively visit public places. Therefore, the newly-imposed restrictive measures are vital.
In general, the authorities’ actions are aimed at preventing morbidity, prominent Russian attorney Anatoly Kucherena told the paper.
"The task of the police now is to explain to people how formidable the danger is. If a person believes that he or she was fined unreasonably, the decisions on the fine can be appealed. The most important thing is to refrain from actions aimed at resisting the police. It is essential to explain to police officers that there were good reasons for going outside," he explained.
Meanwhile, health professions are certain that tough restrictive measures in Moscow and the Moscow Region are absolutely necessary.
The growth of the number of coronavirus cases cannot be avoided in the near future, said experts interviewed by Izvestia. The situation could deteriorate within the next two weeks because of the irresponsible behavior by some people, stressed Chief Physician of the Lider Meditsiny medical center Yevgeny Timakov.
"The two next weeks will show the true effectiveness of the quarantine measures. It will be clear whether it is worth toughening them further. The increase in the number of cases, which we see now is far from the limit yet," Ivan Konovalov, associate professor of the Department of Infectious Diseases, warned.
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