[IP] Re: china and russia in oil trade, not denominated in dollars!

[David Farber <dave@farber.net>]

Begin forwarded message:

From: "David Chessler" <chessler@usa.net>
Date: October 29, 2008 10:54:14 AM EDT
To: "Johnmac" <Johnmacsgroup@yahoogroups.com>
Subject: [johnmacsgroup] Fwd: [IP] china and russia in oil trade, not  
denominated in dollars!
Reply-To: johnmacsgroup@yahoogroups.com



------ Original Message ------
Received: Wed, 29 Oct 2008 07:44:45 AM EDT
From: David Farber <dave@farber.net>
To: "ip" <ip@v2.listbox.com>
Subject: [IP] china and russia in oil trade, not denominated in dollars!



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

http://www.nytimes.com/2008/10/29/world/europe/29russia.html




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





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