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    Rolling Coverage - DAVOS
    What's Next? A Climate for Action | World Economic Forum - What's Next? A Climate for Action

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  • #2
    OPEC, oil companies clash at Davos over price collapse
    Dmitry Zhdannikov DAVOS, Switzerland Wed Jan 21, 2015 11:31am EST REUTERS

    OPEC defended on Wednesday its decision not to intervene to halt the oil price collapse, shrugging off warnings by top energy firms that the cartel's policy could lead to a huge supply shortage as investments dry up.

    The strain the halving of oil prices since June is putting on producers was laid bare when non-member Oman voiced its first direct, public criticism of the Organization of the Petroleum Exporting Countries' November decision not to cut production but instead to focus on market share.

    Oil prices have collapsed to below $50 a barrel as a result of a large supply glut, due mostly to a sharp rise in U.S. shale production as well as weaker global demand.

    The rapid decline has left several smaller oil producing countries reeling and has forced oil companies to slash budgets.

    Speaking at the World Economic Forum in Davos, Switzerland, the heads of two of the world's largest oil firms warned that the decline in investments in future production could lead to a supply shortage and a dramatic price increase.

    Claudio Descalzi, the head of Italian energy company Eni Spa, said that unless OPEC acts to restore stability in oil prices, these could overshoot to $200 per barrel several years down the line.

    "What we need is stability... OPEC is like the central bank for oil which must give stability to the oil prices to be able to invest in a regular way," Descalzi told Reuters Television.

    He expected prices to stay low for 12-18 months but then start a gradual recovery as U.S. shale oil production began falling.


    But both OPEC and Saudi Arabia, the group's largest producer, stuck to their guns.

    "If we had cut in November we would have to cut again and again as non-OPEC would be increasing production," OPEC Secretary General Abdullah al-Badri said in Davos.

    "Everyone tells us to cut. But I want to ask you, do we produce at higher cost or lower costs? Let's produce the lower cost oil first and then produce the higher cost," Badri said.

    "Prices will rebound. I saw this 3-4 times in my life."

    Al-Badri said the policy was not directed at Russia, Iran or the United States.

    State-run oil company Saudi Aramco Chief Executive Khalid al-Falih also appeared unfazed, saying that although it could take some time, the oil market will eventually balance itself.

    The chief executive of French oil major Total Patrick Pouyanne echoed Descalzi's warnings.

    "There is a natural decline of five percent a year from existing fields around the world. That means by 2030 more than half of the existing global oil production will disappear. There is an enormous amount of money that needs to be invested to get another 50 million barrels per day of new production," Pouyanne said in Davos.

    Total is set to cut capital spending by 10 percent this year from 2014's $26 billion, reducing investments in the North Sea and U.S. shale production, he added.

    Total joins a raft of international oil companies, including BP and ConocoPhillips, that have slashed 2015 budgets due to lower prices.
    OPEC, oil companies clash at Davos over price collapse | Reuters

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    • #3

      Bloomberg: Russians party on in Davos as vodka flows and Ukraine burns
      BLOOMBERG Matthew Campbell and Olga Tanas Jan 21, 2015 1:46 PM ET

      Party Hasn't Stopped for Russians at Davos Even With Ukraine Sanctions

      VTB Bank isn’t letting a bad year get in the way of a good party.

      Executives at the state-controlled Russian bank, which has cut hundreds of employees following U.S. and European Union sanctions, are betting a little jazz and vodka with the world’s elite will dull the pain. VTB threw a soiree Tuesday at the World Economic Forum in Davos, Switzerland, where guests were treated to what an invitation sent to delegates called a “modern Russian atmosphere” at the ski town’s InterContinental Hotel.

      Partygoers were greeted by women in conical, gold-flecked outfits with strips of neon-LED lights wrapped around them, served caviar, and serenaded by Grammy-winning guitarist Al Di Meola, Russian crooner Leonid Agutin and Serbian star Emir Kusturica and his No Smoking Orchestra.

      “As a strategic partner of the World Economic Forum in Davos, we have organized a reception dedicated to its opening ceremony,” the VTB press office said in a statement.

      Russian billionaires and business leaders aren’t planning to lower their profile in Davos this year despite economic sanctions placed on the country following President Vladimir Putin’s annexation of the Crimea region of Ukraine in March. Their country’s isolated status has been amplified by the escalating battles between Ukrainian and Russian troops since an effort to restart peace talks collapsed last week.

      Targeted Companies

      “The situation is getting worse, because we now have information about more than 2,000 additional Russian troops crossing our border, together with 200 tanks and armed personnel carriers,” Ukraine President Petro Poroshenko said in an interview today on Bloomberg TV. “The situation can get worse in days.”

      Russia’s delegation this year will consist of 73 business leaders, down from 82 in 2014. Among them are executives from companies that have been targeted by the U.S. and EU, including VTB chairman and chief executive officer Andrey Kostin and OAO Sberbank CEO Herman Gref, who will host a reception tonight and a breakfast on Friday titled “2015: How to attract investment in a geopolitically unstable region?”

      The atmosphere in Davos so far has been positive, Kostin said at the party.

      “It’s only the first night, but we have friends here. Ukrainian friends, European friends, American friends,” he said. “Some business relationships are restricted” because of the Ukraine crisis. “But that doesn’t affect personal relationships.”
      ‘Tough Sledding’

      State-owned Vnesheconombank, another Russian entity to be targeted by U.S. sanctions, is sending a pair of executives. Alexander Dyukov, CEO of sanctioned oil producer Gazprom Neft, also will be in attendance.

      The Russian contingent could put attendees from countries that have rebuked the nation over what they say is its fomenting unrest in Ukraine in a sticky position.

      “It’s definitely going to make things awkward,” Ian Bremmer, the chief executive officer of political consultancy Eurasia Group, said in an e-mail last week. “It’s going to be tough sledding for the Russians this year.”

      The Russian delegation will feature at least eight billionaires, including Vagit Alekperov, CEO of OAO Lukoil, Russia’s largest privately owned energy firm. The company was sanctioned by the U.S. in September.
      Deripaska Party

      Aluminum tycoon Oleg Deripaska, the country’s 15th-richest person, also will attend. Deripaska, who has a $7.7 billion fortune, according to the Bloomberg Billionaires Index, usually hosts a Davos party.

      Russians have been fixtures on the forum’s panel discussions for more than a decade, and have hosted some of its most lavish parties. In 2011, Russian investment bank Troika Dialog, now part of Sberbank, put on what it called a “spectacular ice show” performed by Russian figure-skating stars. One of the forum’s first major parties last year was a Russia-themed cocktail party that previewed the Winter Olympics in Sochi. Sberbank had branded an entire hotel with its logo.

      President Putin and Prime Minister Dmitry Medvedev aren’t scheduled to be in Davos this week. Putin used the event in 2009 to highlight Russia’s economic stability during the worst days of the global financial crisis. Medvedev has been attending ever since. The Kremlin this year is represented by a group that includes First Deputy Prime Minister Igor Shuvalov and Alexei Ulyukaev, the minister for economic development.
      ‘Putin’s Machinery’

      “A large part of the Russians that go there are basically a part of Putin’s sweetheart machinery,” said Rep. Mario Diaz-Balart, a Florida Republican who’s at the event. The Russian presence in Davos “is just part of the reality.” He said he’ll steer clear of events put on by sanctioned companies.

      In keeping with its longstanding policy of neutrality, Switzerland hasn’t joined in measures to punish Russian companies or individuals.

      The World Economic Forum, based in Geneva, says it invites representatives from all parts of the world as part of its mandate to encourage international dialog. One of last year’s notable guests was Iranian president Hassan Rouhani, who was flanked throughout the event’s Congress Centre with a phalanx of advisers and bodyguards.

      “They still are here as a force,” said World Economic Forum founder Klaus Schwab in an interview with Bloomberg Television’s Erik Schatzker. “We hope that dialogs can take place to understand better what the Russians really feel and on the other hand to show the Russians how the rest of the world feels about the present situation.”
      Schwab Speech

      Schwab, who said in a speech at the VTB party that he doesn’t usually visit private events, said he attended to show “our Russian friends that they are welcome in Davos” and that “after all, Russia is a very important European country.”

      VTB and Sberbank are “strategic partners” of the WEF, a group of international businesses that prominently participate in its calendar of events at a cost of 600,000 Swiss francs ($687,500) per year. Other such partners include Goldman Sachs Group Inc. and Microsoft Corp.

      The presence of some Russians “makes it complicated for a lot of global companies, as they won’t want to be having visible meetings. They won’t feel comfortable,” said Laura Tyson, an economist at the University of California, Berkeley, and a former Clinton administration official. “As a Russian, I’d feel that maybe I wouldn’t go.”

      Russian delegates said they don’t want their country’s business elite to lie low.
      ‘Final Stage’

      “Davos is kind of the epitome of a country’s strategy to attract investment,” said Anataloy Karachinsky, the CEO of Moscow-based software producer IBS Group. “If a country has such a strategy and its leaders want to attract investment, then Davos is a final stage, when the biggest efforts are made. There is no other such place in the world.”

      Less than five years ago, Russia’s surging economy had U.S. and European companies clamoring to expand there. Some European companies are now reeling from the sanctions. French carmaker Renault SA, whose CEO Carlos Ghosn will be in Davos, operates one of Russia’s largest car plants. The company’s earnings have been hurt by the sanctions and the fall of the ruble. The shares rose 3.5 percent last year.

      Other companies that do business in Russia include Germany’s Siemens AG, which is providing trains for the high-speed railway between Moscow and St. Petersburg, and London-based BP Plc, which owns 20 percent of Rosneft, the Kremlin-controlled oil producer. Both companies’ CEOs will attend the conference.

      Kirill Dmitriev, the CEO of Russia’s main sovereign-wealth fund, plans to be fully involved with the week’s events.

      “We have often heard that representatives of Western, primarily European, business oppose sanctions,” he said in an e-mail. “We anticipate that these views will gain further momentum during the Forum.”

      Relationship Building

      Dmitriev’s Russian Direct Investment Fund will take part in a dinner for sovereign-wealth funds. The executive plans to give a speech and use the event to build relationships with “funds from Asia, the Middle East, and Latin America.”

      Governments from those regions have mostly continued to do business as usual with Russia.

      Eugene Kaspersky, founder and chief executive officer of Kaspersky Lab, a Moscow-based cyber-security company, said geopolitics won’t affect his ability to do business in Davos.

      “We work in a concrete sector, we are global company, and our principal position is to be out of politics,” he said in an e-mail. “We are fighting against cyber-evil, which comes in many forms from many sources. I don’t think that crisis in Ukraine will somehow affect our presence at summit in Davos.”

      Eurasia Group’s Bremmer said almost all Russian businesses will be met with caution from delegates from the U.S. and EU.

      “Pretty much every client we have is skittish about doing business in Russia,” he said. “It’s very far from business as usual.”
      Party Hasn't Stopped for Russians at Davos Even With Ukraine Sanctions - Bloomberg

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      Hannia - Hania - Mighthelp