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Russo-Ukrainian war: Strategic and economic theatres

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  • Originally posted by TopHatter View Post
    Hey, wasn't Germany supposed to be shivering in the dark by now? Whatever happened to that?
    Germany basically stopped re-exporting gas to other countries (cut by 75%), which conveniently amounted to what we were importing from Russia - that's what Nordstream was for after all. Combined with a slight increase of gas imports from the Netherlands, i.e. North Sea gas fields.

    P.S. : Also, gas prices for private households have doubled - leading to reduced consumption.
    Last edited by kato; 15 Feb 23,, 00:00.

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    • Originally posted by Monash View Post

      Well if the cost's associated Putin's 'special military operation' do force him to deregulate the domestic gas market I can certainly see millions of poor Russians 'shivering in the dark' in the not to distant future.
      I doubt in respect to Moscow and St. Pete!
      When we blindly adopt a religion, a political system, a literary dogma, we become automatons. We cease to grow. - Anais Nin

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      • Originally posted by kato View Post
        Germany basically stopped re-exporting gas to other countries (cut by 75%), which conveniently amounted to what we were importing from Russia - that's what Nordstream was for after all. Combined with a slight increase of gas imports from the Netherlands, i.e. North Sea gas fields.

        P.S. : Also, gas prices for private households have doubled - leading to reduced consumption.
        In other words, Germany didn't just roll over and die in the face of Vladimir Putin's "genius" plans...they actually did something about the problem.

        What a concept....
        “He was the most prodigious personification of all human inferiorities. He was an utterly incapable, unadapted, irresponsible, psychopathic personality, full of empty, infantile fantasies, but cursed with the keen intuition of a rat or a guttersnipe. He represented the shadow, the inferior part of everybody’s personality, in an overwhelming degree, and this was another reason why they fell for him.”

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        • Originally posted by kato View Post
          Germany basically stopped re-exporting gas to other countries (cut by 75%), which conveniently amounted to what we were importing from Russia - that's what Nordstream was for after all. Combined with a slight increase of gas imports from the Netherlands, i.e. North Sea gas fields.

          P.S. : Also, gas prices for private households have doubled - leading to reduced consumption.
          How about the new gas port terminals for importing gas from LNG carriers? I heard something in passing about them but don't recall.
          “Loyalty to country ALWAYS. Loyalty to government, when it deserves it.”
          Mark Twain

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          • Originally posted by Albany Rifles View Post

            How about the new gas port terminals for importing gas from LNG carriers? I heard something in passing about them but don't recall.
            Gas imports to Germany by immediate source (i.e. across which border they come), since January 1st 2022 until today on weekly data points, official from the Federal Infrastructure Authority:


            Click image for larger version  Name:	imports.jpg Views:	0 Size:	81.0 KB ID:	1597117
            For major direct sources Light Blue is Norway and Dark Grey is Netherlands, i.e. the two countries running gas production in the North Sea.

            The light grey line going down in June is Russia, i.e. specifically the Nordstream pipelines.
            The dark blue line that goes down at the same time and is a bit hidden behind the rest is the Czech Republic, i.e. the GAZELLE pipeline for land imports from Russia (those across Ukraine).

            The barely relevant pink line picking up a bit since December 2022 is LNG at the newly established gas port terminals in Germany. For scale, the planned capacity of the five LNG terminals once they're all in operation at the end of the year would be about 600 GWh/day broadly, i.e. three times what it's at now.

            The currently much more relevant green line is LNG regasified in Zeebrugge in Belgium, basically one of the biggest freight ports in Europe. Just yesterday an agreement was formalized between Germany and Belgium to double capacity for that import route.
            Last edited by kato; 15 Feb 23,, 19:32.

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            • Thanks Kato
              “Loyalty to country ALWAYS. Loyalty to government, when it deserves it.”
              Mark Twain

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              • Originally posted by TopHatter View Post
                [while Wintershall Dea, in which BASF holds just under 73% percent, said last month it was pulling outof Russia.
                That sentence there btw shouldn't be underestimated.

                BASF, with this decision, is swallowing a loss equivalent to all worldwide military aid to Ukraine so far combined.

                It also means BASF will seek to aggressively explore new sources and intrude into markets of competitors. Mostly on other continents, among the mentioned countries for a possible re-investment mentioned have been Algeria and Argentina.

                BASF is the largest single user of gas in Germany, with about 5% of the national consumption going to them. Their main factory complex 20 km from me alone uses more natural gas than the entire country of Switzerland.

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                • Originally posted by kato View Post
                  That sentence there btw shouldn't be underestimated.

                  BASF, with this decision, is swallowing a loss equivalent to all worldwide military aid to Ukraine so far combined.
                  Do they get to carry over the loss in the coming years, and write it off their taxes?

                  "Every man has his weakness. Mine was always just cigarettes."

                  Comment


                  • They booked it all to last year, 1.9 billion EUR in Q2/22 and Q3/22, 5.4 billion EUR in Q4/22. For scale, BASF has a total annual sales revenue of around 87 billion EUR (93 billion USD) and without socalled "special external influences" had been expecting a net profit of about 6.8 billion before taxes for 2022.

                    As i understand it they did hold onto their Russian business unit until November/December, and then decided to cut their losses and effectively just hand over 2.5 billion in assets located in Russia after the government there enforced retroactive price reductions on gas from production in the country sold to Gazprom. Shell, Enel and other competitors took the same decision earlier, mostly on smaller amounts.

                    The loss for Q4/22 would have been writing off that plus Nordstream, the losses before mostly from lack of gas export due to sanctions.

                    The original plan they had at BASF last year was to completely separate their Russian business unit from the company in order to not include those losses in their financial results, as well as publicly trading, i.e. selling off their majority stock in DEA-Wintershall (Nordstream operator). That plan, which failed, was probably laid out specifically so that the parent company could present a small net profit of a few billion for 2022.
                    Last edited by kato; 16 Feb 23,, 15:49.

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                    • European natural gas prices have hit an 18-month low.

                      https://www.ft.com/content/3bb53193-...6-c2781dff1ea0
                      "Every man has his weakness. Mine was always just cigarettes."

                      Comment


                      • That's great news, it will have a impact on European inflation rates. It's also another kick in the balls for Putin and Russia's war time economy, doubly so because the bulk of Russia's natural gas infrastructure was orientated towards Europe and with that market collapsing it will be years before an equivalent volume of gas can be delivered to other markets.
                        Last edited by Monash; 20 Feb 23,, 01:21.
                        If you are emotionally invested in 'believing' something is true you have lost the ability to tell if it is true.

                        Comment


                        • Maersk nears complete Russia exit after selling logistics sites

                          COPENHAGEN (Reuters) -Shipping and logistics group A.P. Moller-Maersk has agreed to sell its two logistics sites in Russia to IG Finance Development Limited, it said on Monday, nearly marking the end of its business activities in the country.

                          The group said the sale of its inland depot facility in Novorossiisk, with a capacity of 1,500 containers (TEU), and a chilled and frozen warehouse in St. Petersburg had obtained regulatory approvals in the European Union and Russia.

                          "We are pleased to have found a new owner of our two logistics sites in Russia and thereby execute on our decision to divest all our assets in the country," Chief Commercial Officer Karsten Kildahl said in a statement.

                          IG Finance Development, a company registered in Cyprus, has made an agreement with Arosa, a large food importer in Russia, to operate the sites, Maersk said.

                          Maersk still needs to sell four tug boats under its Svitzer brand, a process that is ongoing, a spokesperson told Reuters. After that, Maersk will not have any business in Russia.

                          In August last year, Maersk sold a 30.75% stake in Russian port operator Global Ports Investments to Russia's largest container operator Delo Group.
                          _________
                          “He was the most prodigious personification of all human inferiorities. He was an utterly incapable, unadapted, irresponsible, psychopathic personality, full of empty, infantile fantasies, but cursed with the keen intuition of a rat or a guttersnipe. He represented the shadow, the inferior part of everybody’s personality, in an overwhelming degree, and this was another reason why they fell for him.”

                          Comment


                          • How the Russian economy self-immolated in the year since Putin invaded Ukraine

                            A year after Putin’s invasion of Ukraine, some cynics lament that the unprecedented economic pressure campaign against Russia has not yet ended the Putin regime. What they’re missing is the transformation that has happened right before our eyes: Russia has become an economic afterthought and a deflated world power.

                            Coupled with Putin’s own misfires, economic pressure has eroded Russia’s economic might as brave Ukrainian fighters, HIMARS, Leopard tanks, and PATRIOT missiles held off Russian troops on the battlefield. This past year, the Russian economic machine has been impaired as our original research compendium shows. Here are Russia’s most notable economic defeats:

                            Russia’s permanent loss of 1,000+ global multinational businesses coupled with escalating economic sanctions
                            The 1,000+ global companies who voluntarily chose to exit Russia in an unprecedented, historic mass exodus in the weeks after February 2022, as we’ve faithfully chronicled and updated to this day, have largely held true to their pledges and have either fully divested or are in the process of fully separating from Russia with no plans to return.

                            These voluntary business exits of companies with in-country revenues equivalent to 35% of Russia’s GDP that employ 12% of the country’s workforce were coupled with the imposition of enduring international government sanctions unparalleled in their scale and scope, including export controls on sensitive technologies, restrictions on Russian elites and asset seizures, financial sanctions, immobilizing Russia’s central bank assets, and removing key Russian banks from SWIFT, with even more sanctions planned.

                            Plummeting energy revenues thanks to the G7 oil price cap and Putin’s punctured natural gas gambit
                            The Russian economy has long been dominated by oil and gas, which accounts for over 50% of the government’s revenue, over 50% of export earnings, and nearly 20% of GDP every year.

                            In the initial months following the invasion, Putin’s energy earnings soared. Now, according to Deutsche Bank economists, Putin has lost $500 million a day of oil and gas export earnings relative to last year’s highs, rapidly spiraling downward.

                            The precipitous decline was accelerated by Putin’s own missteps. Putin coldly withheld natural gas shipments from Europe–which previously received 86% of Russian gas sales–in the hopes freezing Europeans would get angry and replace their elected leaders. However, a warmer-than-usual winter and increased global LNG supply mean Putin has now permanently forfeited Russia’s relevance as a key supplier to Europe, with reliance on Russian energy down to 7%–and soon to zero. With limited pipeline infrastructure to pivot to Asia, Putin now makes barely 20% of his previous gas earnings.

                            However, Russia’s energy collapse is also triggered by savvy international diplomacy. The G7 oil price cap has achieved the once unimaginable balance of keeping Russian oil flowing into global markets while simultaneously cutting into Putin’s profits. Russian oil exports have held amazingly consistent at pre-war levels of ~7 million barrels a day, ensuring global oil market stability, but the value of Russian oil exports has gone from $600 million a day down to $200 million a day as the Urals benchmark crashed to ~$45 a barrel, barely above Russia’s breakeven price of ~$42 per barrel.

                            Even countries on the sidelines of the price cap scheme, such as India and China, ride the coattails of the G7 buyers cartel to secure Russian supply at deep discounts of up to 30%.

                            Talent and capital flight
                            Since last February, millions of Russians have fled the country. The initial exodus of some 500,000 skilled workers in March was compounded by the exodus of at least 700,000 Russians, mostly working-age men fleeing the possibility of conscription, after Putin’s September partial mobilization order. Kazakhstan and Georgia alone each registered at least 200,000 newly fleeing Russians desperate not to fight in Ukraine.

                            Moreover, the fleeing Russians are desperate to stuff their pockets with cash as they escape Putin’s rule. Remittances to neighboring countries have soared more than tenfold and they rapidly attracted ex-Russian businesses. For example, in Uzbekistan, the Tashkent IT Park has seen year-over-year growth of 223% in revenue and 440% growth in total technology exports.

                            Meanwhile, offshore havens for wealthy Russians such as the UAE are booming, with one estimate claiming 30% of Russia’s high-net-worth individuals have fled.

                            Russia will only become increasingly irrelevant as supply chains continue to adapt
                            Russia has historically been a top commodities supplier to the world economy, with a leading market share across the energy, agriculture, and metals complex. Putin is fast making Russia irrelevant to the world economy as it is always much easier for consumers to replace unreliable commodity suppliers than it is for suppliers to find new markets.

                            Supply chains are already adapting by developing alternative sourcing that is not subject to Putin’s whims. We have shown how in several crucial metals and energy markets, the combined output of new supply developments to be opened in the next two years can fully and permanently replace Russian output within global supply chains.

                            Even Russia’s remaining trade partners apparently prefer short-term, opportunistic spot-market purchases of Russian commodities to capitalize on depressed prices rather than investing in long-term contracts or developing new Russian supply.

                            It appears Russia is well on its way toward its long-held worst fear: becoming a weak economic dependent of China–its source of cheap raw materials.

                            The Russian economy is being propped up by the Kremlin
                            The Kremlin has had to prop up the economy with escalating measures, and Kremlin control is increasingly creeping into every corner of the economy with less and less space left for private sector innovation.

                            These measures have proven costly. Government expenditures rose 30% year-over-year. Russia’s 2022 federal budget has a deficit of 2.3%–unexpectedly exceeding all estimates despite initially high energy profits, drawdowns and transfers of 2.4 trillion rubles from Russia’s dwindling sovereign wealth fund in December, and asset fire sales of 55 billion yuan this month.

                            Even these measures of last resort have been insufficient. Putin has been forced to raid the coffers of Russian companies in what he calls “revenue mobilization” as energy profits decline, extracting a hefty 1.25 trillion ruble windfall tax from Gazprom’s corporate treasury with more raids scheduled–and forcing a massive 3.1 trillion ruble issuance of local debt down the throats of Russian citizens in the autumn.

                            More can be done
                            Although 2023 will exacerbate each of these trends and further batter the Russian economy, there is even more that can be done to grease the skids.

                            A crackdown on sanctions evasion and smugglers, perhaps through secondary sanctions in the case of Turkey and other chronic offenders, will ensure that bad actors do not feed Putin’s war machine.

                            Sanctions provisions across technology, financial institutions, and commodity exports can be escalated. Pressure on companies remaining in Russia to fully and immediately exit the country must be maintained. Some $300 billion in frozen foreign exchange reserves could be seized and committed to the reconstruction of Ukraine

                            Tightening these screws will help improve the chances that before this time next year, Russia will realize it does not need Putin, just as the world has already realized it does not need Russia.

                            Only then will the Russian economy and people stand a chance of returning to prosperity.
                            ___________
                            “He was the most prodigious personification of all human inferiorities. He was an utterly incapable, unadapted, irresponsible, psychopathic personality, full of empty, infantile fantasies, but cursed with the keen intuition of a rat or a guttersnipe. He represented the shadow, the inferior part of everybody’s personality, in an overwhelming degree, and this was another reason why they fell for him.”

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                            • Interesting article from the Economist on the Wests artillery ammunition shortages. Been meaning to link it here for a while.

                              https://www.economist.com/briefing/2...l-of-democracy
                              If you are emotionally invested in 'believing' something is true you have lost the ability to tell if it is true.

                              Comment


                              • Originally posted by Monash View Post
                                Interesting article from the Economist on the Wests artillery ammunition shortages. Been meaning to link it here for a while.

                                https://www.economist.com/briefing/2...l-of-democracy
                                Paywall unfortunately
                                “Loyalty to country ALWAYS. Loyalty to government, when it deserves it.”
                                Mark Twain

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