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Serious Blow to the US Petro-Dollar

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  • Serious Blow to the US Petro-Dollar

    Russia’s Gazprom Neft to Sell Oil for Rubles, Yuan

    MOSCOW, August 27 (RIA Novosti) - The Russian oil company Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfers, the Russian business daily Kommersant reported Wednesday.

    The Russian government and several of the country’s largest exporters have widely discussed the possibility of accepting payments in rubles for oil exports.

    Last week, Russia began to ship oil from the Novoportovskoye field to Europe by sea. Two oil tankers are expected to arrive in Europe in September. According to Kommersant, the payment for these shipments will be received in rubles.

    Gazprom Neft will not only accept payments in rubles; subsequent transfers via the ESPO may be paid for in yuan, the newspaper reported.

    According to the newspaper, the change in currency was made because of the Western sanctions against Russia.
    More here

    Comment: I see this as ground breaking news which with time will have a serious effect on the US Dollar as a reserve currency.
    Above post is my opinion unless it's a quote.

  • #2
    A petrodollar is the money that oil exporting nations receive from selling their oil, which is then deposited into Western Banks.
    Siefert, pray tell, once the trade is complete, in what currency will the funds be parked? Still in the dollar - maybe?

    Additionally, the petrodollar will live until Saudi Arabia does what Gazprom supposedly just did. Lest you have forgotten, the Saudis are American allies, so it is not absolutely final yet.
    Siefert, hold on to the gold, if you have any. LOL

    PS> For now the Russians are the only ones reporting this ????
    Other reads of interest:

    Ukraine crisis accelerates Russia-China energy cooperation
    By Germain Moyon 5 hours ago 9/7/2014

    Russia aims to boost its economic ties with China, particularly in the energy sector, in the face of Western sanctions over Ukraine but this could prove a high-risk strategy.

    On Monday, far from the fighting in Ukraine and the threat of fresh Western sanctions, President Vladimir Putin launched what is hailed as "the biggest construction project in the world" in Eastern Siberia.

    The 4,000-kilometre (2,500-mile) "Power of Siberia" pipeline will connect Yakutia's gas fields with the Sea of Japan (East Sea) and also with the Chinese border.

    From 2018, the Power of Siberia will for the first time allow Moscow to supply China with natural gas through a pipeline under a contract worth $400 billion over 30 years.

    Ending 10 years of difficult negotiations with Beijing, the signing of the contract in May was a major success for Putin, whose annexation of Ukraine's Crimea peninsula and support for other Ukrainian separatist movements have led to the worst East-West standoff since the Cold War.

    At loggerheads with the West, Moscow is seeking to refocus its gas and oil exports from Europe -- its main energy market -- towards Asia, and is diligently building an energy alliance with Beijing.

    The shift suits China, which needs additional energy supplies to cover its growing domestic consumption.

    Europe, shaken by the recent gas dispute between Moscow and Kiev, has also redoubled its resolve to reduce dependence on Russian fossil fuels

    - Record oil to Asia -

    Russian gas giant Gazprom's Chinese contract will "provide a launch pad for the company's full-scale diversification into the Asia-Pacific region at a time when it is facing sales pressure in Europe", the Russian branch of Moody's Investors Service noted this week in a report.

    But Moody's also warned of "challenges" to the eastward turn, "as China's ability to put pressure on prices and the sheer scale of the required investments could weigh on the future profitability of Russia's oil and gas sector".

    The value of the Russia-China gas contract is being kept confidential, but according to some leaks it was below Gazprom's expectations, while the required investments amount to tens of billions of dollars.

    Russia has been more successful in carving out a niche in Asia's oil market -- thanks to a mega contract that the Russian state oil company, Rosneft, signed in 2013 with Beijing.

    In mid-August the Wall Street Journal estimated that a record 30 percent of Russian oil exports had gone to Asia since the beginning of the year.

    Russia's Energy Minister Alexander Novak said this week that its oil exports to Asia could eventually double, adding that Moscow was in talks with Asian companies willing to invest in liquefied natural gas (LNG) projects in Russia's Far East.

    - On Beijing's terms -

    The China National Petroleum Corporation (CNPC) is expanding its Russia presence -- it holds 20 percent in an LNG project planned for the Arctic Yamal peninsula by Russia's Novatek Group and France's Total -- and is working with Rosneft on oil deposits in East Siberia.

    This week Putin offered China a stake in the huge Vankor oil field -- considered one of the most valuable in east Siberia.

    "If concluded, this deal would represent a major change," the Eurasia Group consulting firm said in a report on Wednesday.

    "Rosneft's decision to offer China a stake in the mega Vankor oil field in East Siberia signals that Moscow's bargaining position has been further weakened by (Western) sanctions and that it needs the capital infusion."

    The United States sanctions hit Rosneft hard -- forcing the company led by Putin's close ally Igor Sechin to request a bailout from the state to pay off a debt that exceeds $30 billion -- while Brussels restricted Russia's access to some technology aimed at the energy industry.

    Russia's oil production -- with hydrocarbons the main source of state revenues -- is running out of steam at the moment and projects needed to revive it require huge investment.

    As a result Moscow has little choice but to boost cooperation with China.

    But "what Kremlin presents as a strategic partnership is simply a means for China to diversify its supplies", forcing Russia to accept Beijing's terms, Russia's Vedomosti business daily wrote this week. Ukraine crisis accelerates Russia-China energy cooperation - Yahoo Finance

    Last edited by Hannia; 7th September 2014, 17:56.

    æ, !

    Hannia - Hania - Mighthelp


    • #3
      You're comment surprises me which is correct except that the US / Saudi friendship is not so strong as you assume. This allows me to segue into the issue of Saudi Arabia and its oil supplies to China and the other prospective reserve currency, the Yuan. The article from Financial Sense suggests that not only the Ruble but the Chinese Yuan is doing exactly that, i.e. displacing the dollar.

      How the Chinese currency is replacing the U.S. Dollar in global oil markets

      History is being written in the East. As the U.S. stays distracted with stone age warriors in Central Asia and the Middle East, the last platform of the American economic foundation, the U.S. Dollar's currency reserve status, is being underminded by their trade partners in Asia. Both Australia and Japan are set to start direct-trading in Chinese currency and they are not the only ones. There are almost 20 countries whom have currency swaps in place with China all in order to side-step the U.S. Dollar in global trade. At the China Money Report, we have written extensively on the "Rise of the Renminbi". What is new and largely unreported and what we will cover in this article is the "Rise of the Petroyuan," as China is now converting its oil imports into Chinese Yuan as opposed to U.S. Dollars. This will be a new challenge and possibly the fatal blow to the U.S. Dollar as the dominant global reserve currency.
      Regarding the US and the Saudis just look at Obama's face in the Guardian Article

      Barack Obama arrives in Saudi Arabia for brief visit with upset Arab ally

      The US President's flying visit – no more than an evening in the Saudi king's palace – is his first since the ousting of Hosni Mubarak in Egypt, which drove an initial wedge between Washington and Riyadh.

      Ever since, relations have tangibly soured on every front, with the US outreach to Iran and ambivalence on Syria particularly irking Saudi leaders who believe arch foe Tehran has been empowered at their expense. So bothered has Riyadh become by what it sees as naive appeasement of Iran, that it now seems ready to project itself regionally without US cover.

      "The US has underwritten the regional security order for the past 70 years and it sees now as a good time to disengage?," one senior figure put to the Guardian recently. "We will have to do it all ourselves."


      While openly threatening to "turn elsewhere" for allies, it is not yet ready to sever strategic ties.
      In your question "In what currency will the funds be parked? Still in the dollar - maybe?"

      Possibly you supplied the answer yourself, i.e. gold. Don't forget both China and Russia are increasing their gold reserves as fast as they can get their hands on it.

      PS: My gold stays buried at the end of the garden. LOL
      Above post is my opinion unless it's a quote.


      • #4

        What the Russians reported today was already reported in March 2014:
        Putin Flushes the US Dollar: Russia’s Gold Ruble Payments System Delinked from Dollar? | Global Research

        PPPS: Ciao

        æ, !

        Hannia - Hania - Mighthelp


        • #5
          Siefert, how about bitcoin?

          Please don't answer. You'll just be asking for trouble. I am on a tear today.

          æ, !

          Hannia - Hania - Mighthelp


          • #6
            Originally posted by Hannia View Post

            What the Russians reported today was already reported in March 2014:
            Putin Flushes the US Dollar: Russia’s Gold Ruble Payments System Delinked from Dollar? | Global Research

            PPPS: Ciao
            I was aware that this was in the pipeline for some time it's just that today is ratcheting up more and more (also I am new to the forum).
            What the article you quote does not bring out quite so well is that the result of the sanctions on the US reserve currency in the long-term will be much more disadvantageous than the short-term effect it will have on Russia. Then again, the US administration has been notoriously unable to see well into future.
            It only remains to be seen what Western Europe will be thinking and possibly doing in future to protect themselves from brainless American hegemony.
            IMO All eyes on Germany!!
            Above post is my opinion unless it's a quote.


            • #7
              brainless American hegemony.
              What does that mean or do you know? How is one stupid and financially dominant at the same time?
              Obama has been made impotent, because he's black, not because he can't read the future. Rich American WASPS hate the thought of a black president succeeding. They want to guarantee that Americans do not vote for a black guy again. I agree that for right now, Washington (Republicans and Democrats) can't see the forest for the trees.
              I am currently not betting on any country part of EU. There is a tea party lurking behind every bush there, which puts me into heavy duty pause.
              Last edited by Hannia; 7th September 2014, 22:10.

              æ, !

              Hannia - Hania - Mighthelp


              • #8
                Today's the Day !!

                Will the EU follow US demands and sanction Russia's big three energy companies, Rosneft, Gazprom Neft & Transneft?
                In other words will the EU commit Harikari? Looks like for the time being the answer might be yes.

                Europe Goes "All In": Will Sanction Rosneft, Gazprom Neft And Transneft
                Above post is my opinion unless it's a quote.


                • #9
                  Nothing to worry about. China is the biggest holder of USD as reserve. China and US can't work without each other.

                  See whats been posted in the past day.

                  Contact forum moderators here.