Press review: OPEC+ cap deal rolls on and China’s got Russia’s back in Venezuelan oil

Izvestia: Baghdad gearing up for final stage of anti-terror operation

The Iraqi army is bracing to kick off the final stage of its mopping-up operation against the Islamic State (terror group, outlawed in Russia) in the coming days, Baghdad government spokesman Saad al-Hadith told Izvestia on Friday.

"Having wrapped up the liberation of the country’s communities, the Iraqi army will now launch a mopping-up operation in the deserted areas located within the governorates of Al Anbar and Nineveh. Earlier, the control over them was partly restored and now this effort will continue to fully protect the Iraqi-Syrian border and adjacent areas," he said. The terrorists have no more manpower to put up serious resistance and expand their presence, the spokesman said.

Earlier, the Iraqi army liberated the 20,000-strong city of Rawa in the Al Anbar governorate, the last stronghold controlled by the IS group. The militants still control several thousand square kilometers near the border with Syria. The three-year history of the pseudo state, which was created in June 2014, will soon come to an end, the paper says.

Oleg Glazunov, an expert at the Association of Military Political Scientists, told Izvestia there is no doubt that the Iraqi forces will succeed, but the operation will be a tough nut to crack. "No one is going to let IS get a single square centimeter. However, it’s one thing to have battles in a town, where the enemy’s location is clear, but it’s a totally different ballgame to pursue them in a desert," the expert said.

The issue remains open on how to combat terrorist organizations that are mobile and don’t have territories, the paper writes. The IS group, which will lose territories in Iraq and Syria, has drawn many supporters over the past years, both in the Middle East and in Europe, Southeast Asia, Africa and other regions. This may be a serious headache for many governments around the globe. Therefore, military efforts are expected to take a backseat, while special services will come to the fore and play a major role in the anti-terror fight.

Izvestia: China to back Russia in Venezuelan oil pursuits

Russia’s oil giant Rosneft sees no risks of continuing cooperation with Venezuela despite the ongoing crisis there, the company’s spokesman Mikhail Leontyev told Izvestia. Serious concerns that Venezuela’s strategic sector, which has been mired in a deep crisis, won’t be able to stay afloat, emerged after the appointment of Major General Manuel Quevedo as Minister of Petroleum and chairman of the state-owned company, PDVSA. Experts note that China may seriously back Caracas in the current situation.

Rosneft has shares in four oil projects in Venezuela and also owns 40% of shares in the gas joint venture with PDVSA, PetroMonagas. Many experts feel that the company can come up against serious risks when expanding its presence in the Latin American country.

"Venezuela’s financial situation is shaky, but it is not in default. Rosneft assured that all the risks have been taken into account. But in reality, it is impossible to insure against everything. There is certain solace that China has invested more money than Russia. Possibly, they will provide support as Beijing is interested in safeguarding its investments," said senior analyst at Sberbank CIB Valery Nesterov. "By the way, the United States’ sanctions seriously harm PDVSA, they have to sell their oil through intermediaries."

According to preliminary assessments, China has invested a total of $62 bln in Venezuela’s economy, mainly in its oil sector. Therefore, Beijing, which desperately needs energy resources for its economy, will prefer to support its suppliers through new loans rather than lose its investments, the paper says.

Vedomosti: OPEC+ extends oil cap deal to end of 2018

On Thursday, parties to the OPEC+ deal, which cut oil production by 1.8 mln tonnes this year, decided to extend the agreement until the end of 2018, Russian Energy Minister Alexander Novak said. Six observer countries will have to cut oil output if needed, he said. Libya and Nigeria, which had been exempt from this due to their political crises, have been also asked to cap output.

The deal is crucial, since it swayed investors’ sentiments, Denis Borisov, Director of the Moscow-based Oil and Gas Center at EY, told Vedomosti. The central banks are expected to normalize their policies and liquidity may flow to safer assets, letting air out of the bubble to deflate.

The OPEC+ deal helped Russia to replenish its reserve fund, which could have continued to dwindle, Vladimir Tikhomirov, chief economist at BCS Financial Group, said. Other partners to the agreement also refilled their state coffers, economist at Vygon Consulting Sergey Ezhov noted. The deal’s extension signals that the participants see more gains than losses. According to his assessment, the short-term effect from the deal will be up to 800 bln rubles ($13.7 bln) per year.

Now the problem will be how to withdraw from the deal in the future along with any slump in prices that may follow, analyst at Sberbank CIB Valery Nesterov warned. Russia has become a hostage as it will be difficult to replenish reserves with oil prices at $40-45 per barrel, he explained. Next year is important for both Moscow and Riyadh. Russia will hold its presidential election and Saudi Arabia will have an IPO for its oil major Saudi Aramco, and oil prices in 2018 should not be low, Nesterov explained.

Russian companies will have different repercussions after the OPEC+ deal extension. Rosneft may delay plans for developing two deposits, which may produce up to 230,000 barrels per day, and this may affect the company’s loan debt, manager at GL Asset Management Sergey Vakhrameyev said. Meanwhile, Gazprom Neft is in a more advantageous situation. The company was not hit by sanctions and may delay the launch of several projects, and refinance loans on milder terms, he said.

RBC: Russia, Egypt to ink deal on using military airfields

Moscow and Cairo plan to sign an agreement on jointly using military airfields, RBC writes. The document will help Russia solve both military and humanitarian missions in the region, and not just in Syria, experts told the paper.

The accord with Egypt will give Russia access to its military infrastructure, which is crucial for aviation to be immediately redeployed, military expert Vladimir Yevseyev, who is Deputy Director of the CIS Countries Institute, said. This is necessary if Russia decides, for example, to take part in an operation in Libya, he explained.

Thanks to this deal, Moscow will streamline holding military joint drills with Egypt and will get the opportunity to station aircraft on a permanent basis, Viktor Murakhovsky, editor-in-chief of the Arsenal Otechestva (Arsenal of the Fatherland) magazine, said. The agreement will also ease the training of Egyptian pilots learning to operate Russian aircraft, he added. Moscow and Cairo may also start joint anti-terror operations on the Sinai Peninsula, Murakhovsky said.

Russia currently uses the military infrastructure of several former Soviet states, beyond that horizon is only in Syria.

The expansion of military cooperation between Russia and Egypt comes amid the diminishing cooperation of the Arab Republic with Washington, the paper writes. Over the past years, Russia has made several attempts to regain influence in North Africa, which it lost after the collapse of the Soviet Union. Egyptian President Abdel Fattah el-Sisi is lending a helping hand to Russia’s efforts. He is also demonstrating a milder stance on Syria than his allies in the region - Saudi Arabia and other countries, which insist on Syrian President Bashar Assad’s departure.

RBC: Russia unlikely to profit on 2018 FIFA World Cup

On Friday, the Kremlin will host the final draw for the 2018 FIFA World Cup and the countdown will begin for the major sporting event. RBC writes that by the end of 2017, Russia will have already spent 634 bln rubles ($10.8 bln) and another 44 bln rubles ($752 mln) will be shelled out in 2018. The overall cost for hosting the World Cup in Russia is estimated at $13.2 bln. This will be the highest price tag for a mundial, and this fits the latest trend - each event was more expensive than the previous ones. However, the Russian record won’t stay on top for long. Qatar is planning to earmark a staggering $200 bln for the 2022 World Cup.

Russia’s economy will get only a short-term boost from the World Cup, but in the long run, Russia will shell out more than it will rake in, Raiffeisen Bank analyst Stanislav Murashov said. "In general, most likely, this is an unprofitable project for us," the expert said.

The World Cup will add 0.2 percentage points to the country’s GDP growth in the second and third quarters of 2018, Scientific Director at the Gaidar Institute for Economic Policy, Sergey Drobyshevsky, told the paper.

Some economists doubt that foreign tourists will flock to the host country: while fans usually come for the event, tourists, who are not interested in the high-profile football championship, on the contrary, may postpone their trip to avoid extra stress as hotels and airports will be overcrowded and prices will soar.

Sanctions may also significantly affect the arrival of fans in Russia, Alfa Bank’s Chief Economist Natalya Orlova warned.

Amid the preparations for the World Cup, investments in Russia’s culture, sport, leisure activities and entertainment in January-September 2017 surged 29.6% to 121 bln rubles ($2 bln), year-on-year. However, the stadiums built for the event are unlikely to recoup the investment. "One may expect a bang for the buck, but still this will have just a slight effect, the World Cup is more about image than economics," Drobyshevsky said.

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