china and russia in oil trade, not denominated in dollars!

[David Farber <dave () farber net>]

Begin forwarded message:

From: paul foldes <pfoldes () eidmgt com>
Date: October 29, 2008 7:02:45 AM EDT
To: dave () farber net
Subject: for IP if so inclined, china and russia in oil trade, not  
denominated in dollars!

following article from today's NYT is prognosticating with trouble for  
US down the line. China and Russia agreeing to use yuan and rubles for  
oil trade instead of the dollar; and Russia diverting future  
production availability from (west?) to the east; following pattern  
followed by Saudis in past year by signing contracts with China.

How ironic that President Bush and Dick Cheney - remember these are  
'oil men' - have managed to cause historic changes in oil supply/buyer  
relationships - to the detriment of US 'national security' by  
diminishing US's power in the Middle East through their ill advised  
adventure in Iraq.

NYT 10 / 29 under fair use exception, for educational, non commercial  
purposes

October 29, 2008


Russia Seeks to Trade Oil for Loans From China

By ANDREW E. KRAMER

MOSCOW — As credit streams from troubled Western banks dry up in the  
financial crisis, Russian oil companies are negotiating multibillion- 
dollar loans from a more reliable source: the cash-rich Chinese  
government.

Under a proposed loans-for-oil deal, reported by Reuters on Monday,  
Russian oil companies would borrow $20 billion to $30 billion from  
Beijing. In return, they would export about two billion barrels of oil  
to China <http://topics.nytimes.com/top/news/international/countriesandterritories/china/index.html?inline=nyt-geo 
> over the next 20 years.

The Chinese prime minister, Wen Jiabao <http://topics.nytimes.com/top/reference/timestopics/people/w/wen_jiabao/index.html?inline=nyt-per 
>, was in Moscow on Tuesday for talks with Prime Minister Vladimir V.  
Putin <http://topics.nytimes.com/top/reference/timestopics/people/p/vladimir_v_putin/index.html?inline=nyt-per 
>, but there was no indication that the deal had been signed. The  
agreement would commit Russian companies to redirect some of their  
energy exports to the East at a time when Russian and Chinese leaders  
have been saying they would like to see greater integration of their  
economies, and Russia <http://topics.nytimes.com/top/news/international/countriesandterritories/russiaandtheformersovietunion/index.html?inline=nyt-geo 
>’s relations with the West are at a low point.

It would also offer a prime example of the way the financial crisis is  
realigning global commerce, directing it away from reliance on Wall  
Street lending and toward China and Japan, with their enormous cash  
reserves.

It was unclear how close Russia and China were to an agreement. A  
planned pipeline to China, a spur of a trans-Siberian pipeline that is  
under construction, would be capable of carrying about 300,000 barrels  
of oil a day.

On Tuesday, the countries agreed only to build the spur, from the  
Russian town of Skovorodino to the Chinese border, at a cost of about  
$800 million. How much oil will flow through the pipeline, and at what  
cost per barrel, have been matters of contention for some time and  
have yet to be resolved.

There is little doubt that the crushing cash needs of the Russian oil  
companies helped narrow the differences. Much of the companies’  
revenue during the recent spike in oil prices went to taxes. As a  
result, the state oil company Rosneft <http://topics.nytimes.com/top/reference/timestopics/organizations/r/rosneft/index.html?inline=nyt-org 
> owes about $21 billion to Western banks and has already been  
confronted with demands from creditors for early repayment.

China, after years of piling up trade surpluses with the United  
States, is awash in cash, with currency reserves of $1.9 trillion, the  
largest in the world.

The Russian government, which also has a healthy cash reserve, has  
pledged $9 billion in loans to its country’s oil companies, but that  
does not begin to cover their cash needs, which include the enormous  
sums needed to expand into the more expensive and remote fields in  
Siberia.

<< Mr. Wen and Mr. Putin also discussed relying on rubles and yuan in  
bilateral trade, rather than on dollars. Mr. Putin is an advocate of  
reducing the dollar <http://topics.nytimes.com/top/reference/timestopics/subjects/c/currency/dollar/index.html?inline=nyt-classifier 
>
role in international commerce. “At the moment the world, which is  
based on the dollar, is suffering serious problems,” he said. >>


--
Paul Foldes
Email: pfoldes () eidmgt com
Phone: (703) 370 0009
Cell:  (703) 585 5112





-------------------------------------------
Archives: https://www.listbox.com/member/archive/247/=now
RSS Feed: https://www.listbox.com/member/archive/rss/247/
Powered by Listbox: http://www.listbox.com