US Threatens Russia Over Petrodollar-Busting Deal

04/04/2014
by Tyler Durden

On the heels of Russia’s potential “holy grail” gas deal with China, the news of a Russia-Iran oil “barter” deal, it appears the US is starting to get very concerned about its almighty Petrodollar

  • *U.S. HAS WARNED RUSSIA, IRAN AGAINST POSSIBLE OIL BARTER DEAL
  • *U.S. SAYS ANY SUCH DEAL WOULD TRIGGER SANCTIONS
  • *U.S. HAS CONVEYED CONCERNS TO IRANIAN GOVT THROUGH ALL CHANNELS

We suspect these sanctions would have more teeth than some travel bans, but, as we noted previously, it is just as likely to be another epic geopolitical debacle resulting from what was originally intended to be a demonstration of strength and instead is rapidly turning out into a terminal confirmation of weakness.

As we explained earlier in the week,

Russia seems perfectly happy to telegraph that it is just as willing to use barter (and “heaven forbid” gold) and shortly other “regional” currencies, as it is to use the US Dollar, hardly the intended outcome of the western blocakde, which appears to have just backfired and further impacted the untouchable status of the Petrodollar.

If Washington can’t stop this deal, it could serve as a signal to other countries that the United States won’t risk major diplomatic disputes at the expense of the sanctions regime,”

And here is Voice of Russia, “Russia prepares to attack the Petrodollar:

The US dollar’s position as the base currency for global energy trading gives the US a number of unfair advantages. It seems that Moscow is ready to take those advantages away.

The existence of “petrodollars” is one of the pillars of America’s economic might because it creates a significant external demand for American currency, allowing the US to accumulate enormous debts without defaulting. If a Japanese buyer want to buy a barrel of Saudi oil, he has to pay in dollars even if no American oil company ever touches the said barrel. Dollar has held a dominant position in global trading for such a long time that even Gazprom’s natural gas contracts for Europe are priced and paid for in US dollars. Until recently, a significant part of EU-China trade had been priced in dollars.

Lately, China has led the BRICS efforts to dislodge the dollar from its position as the main global currency, but the “sanctions war” between Washington and Moscow gave an impetus to the long-awaited scheme to launch the petroruble and switch all Russian energy exports away from the US currency .

The main supporters of this plan are Sergey Glaziev, the economic aide of the Russian President and Igor Sechin, the CEO of Rosneft, the biggest Russian oil company and a close ally of Vladimir Putin. Both have been very vocal in their quest to replace the dollar with the Russian ruble. Now, several top Russian officials are pushing the plan forward.

First, it was the Minister of Economy, Alexei Ulyukaev who told Russia 24 news channel that the Russian energy companies must should ditch the dollar. “ They must be braver in signing contracts in rubles and the currencies of partner-countries, ” he said.

Then, on March 2, Andrei Kostin, the CEO of state-owned VTB bank, told the press that Gazprom, Rosneft and Rosoboronexport, state company specialized in weapon exports, can start trading in rubles. “ I’ve spoken to Gazprom, to Rosneft and Rosoboronexport management and they don’t mind switching their exports to rubles. They only need a mechanism to do that ”, Kostin told the attendees of the annual Russian Bank Association meeting.

Judging by the statement made at the same meeting by Valentina Matviyenko, the speaker of Russia’s upper house of parliament, it is safe to assume that no resources will be spared to create such a mechanism. “ Some ‘hot headed’ decision-makers have already forgotten that the global economic crisis of 2008 – which is still taking its toll on the world – started with a collapse of certain credit institutions in the US, Great Britain and other countries. This is why we believe that any hostile financial actions are a double-edged sword and even the slightest error will send the boomerang back to the aborigines,” she said.

It seems that Moscow has decided who will be in charge of the “boomerang”. Igor Sechin, the CEO of Rosneft, has been nominated to chair the board of directors of Saint-Petersburg Commodity Exchange, a specialized commodity exchange. In October 2013, speaking at the World Energy Congress in Korea, Sechin called for a “global mechanism to trade natural gas” and went on suggesting that “ it was advisable to create an international exchange for the participating countries, where transactions could be registered with the use of regional currencies “. Now, one of the most influential leaders of the global energy trading community has the perfect instrument to make this plan a reality. A Russian commodity exchange where reference prices for Russian oil and natural gas will be set in rubles instead of dollars will be a strong blow to the petrodollar.

Rosneft has recently signed a series of big contracts for oil exports to China and is close to signing a “jumbo deal” with Indian companies. In both deals, there are no US dollars involved. Reuters reports, that Russia is close to entering a goods-for-oil swap transaction with Iran that will give Rosneft around 500,000 barrels of Iranian oil per day to sell in the global market. The White House and the russophobes in the Senate are livid and are trying to block the transaction because it opens up some very serious and nasty scenarios for the petrodollar. If Sechin decides to sell this Iranian oil for rubles, through a Russian exchange, such move will boost the chances of the “petroruble” and will hurt the petrodollar.

It can be said that the US sanctions have opened a Pandora’s box of troubles for the American currency. The Russian retaliation will surely be unpleasant for Washington, but what happens if other oil producers and consumers decide to follow the example set by Russia? During the last month, China opened two centers to process yuan-denominated trade flows, one in London and one in Frankfurt. Are the Chinese preparing a similar move against the greenback? We’ll soon find out.

Finally, those curious what may happen next, only not to Iran but to Russia, are encouraged to read “From Petrodollar To Petrogold: The US Is Now Trying To Cut Off Iran’s Access To Gold.”

Source

RUSSIA: A New Financial System INDEPENDENT From Wall Street

Thursday, April 3, 2014
The 4th Media News

Putin Flushes the US Dollar: Russia’s Gold Ruble Payments System Delinked from Dollar?

A New Financial System independent from Wall Street and City of London begins to take shape concretely in Russia?

Russia “forced” by the sanctions to create a currency system which is independent from the US dollar.

Russia announces that it will sell (and buy) products and commodities – including oil – in rubles rather than in dollars. The move is towards the development of bilateral.

Putin has been preparing this move — the creation of a payment system in rubles completely independent and protected from the Dollar and the “killer speculations” (e.g. short-selling) of the big Western financial institutions — for a long time.

After sanctioning several Russian banks to punish Russia for Crimea, the Washington politicians were told by the financial power-to-be to step back because obviously, the Wall Street vampires understand that putting Russian banks outside the reach of their blood sucking teeth is never a good idea.

For Wall Street and the city’s financial services, countries like Russia should always have an open financial door through which their real economy can be periodically looted.

So Washington announced that it was a mistake to enforce sanctions on all Russian banks; only one, the Rossiya bank shall be hit by sanctions, just for propaganda reasons and to make an example out of it.

It is what Putin needed. Since at least 2007, he was trying to launch an independent Ruble System, a financial system that would be based on Russia’s real economy and resources and guaranteed by its gold reserves.

No tolerance for looting and financial speculation: A peaceful move, but at the same time a declaration of independence that Wall Street will consider as a “declaration of war”.

According to the Judo strategy, the sanction attack created the ideal situation for a “defensive” move that would redirect the brute force of the adversary against him.

And now it’s happening. Bank Rossiya will be the first Russian bank to use exclusively the Russian ruble.

The move has not been done in secret. On the contrary. A huge golden ruble symbol will be set up in front of bank Rossiya headquarters in Perevedensky Pereulok in Moscow “to symbolize the ruble’s stability and its backing by the country’s gold reserves,” the official agency Itar-Tass explains quoting the bank officials.

In fact, the officials  are very clear on their intention to punish the western speculators that have been looting their country for a long time:

“Russia, at its present stage of development, should not be dependent on foreign currencies; its internal resources will make its own economy invulnerable to political wheeler dealers.”

This is only the first step, declared Andrei Kostin, the president of VTB, another bank previously sanctioned:

“We have been moving towards wider use of the Russian rouble as the currency of settlement for a long time. The ruble became fully convertible quite a long time ago.

Unfortunately, we have seen predominantly negative consequences of this step so far revealed in the outflow of capital from this country. The influx of foreign investments into Russia has been speculative and considerably destabilizing to our stock markets.”

According to Itar-Tass, Kostin was very precise and concrete:

“Russia should sell domestic products – from weapons to gas and oil – abroad for roubles and buy foreign goods also for rubles….Only then are we going to use the advantages of the rouble being a foreign currency in full measure.”

Putin himself lobbied for the new siystem in meetings with members of the Upper House of the Duma, the parliament, on March 28, overcoming the last doubts and indecisions:“

“Why do we not do this? This definitely should be done, we need to protect our interests, and we will do it. These systems work, and work very successfully in such countries as Japan and China. They originally started as exclusively national [systems] confined to their own market and territory and their own population, but have gradually become more and more popular…”

Alea Iacta Est!

By Umberto Pascali, Information Clearing House

Source

LEASE SALE DISPLAYS POWER OF THE GULF

A message from Executive Director Lori LeBlanc

The oil and gas industry demonstrated its confidence in the power of American energy during the federal government’s Central Gulf of Mexico lease sale held March 19 in New Orleans. In fact, a total of 50 companies submitted 380 bids, and the Department of Interior garnered $850 million in high bids for about 1.7 million acres off the coast of Louisiana, Mississippi and Alabama. This signals a continued strong business interest in offshore energy production.

It’s this confidence in the valuable resources of America’s Gulf that continues to drive our national and state economy, fund the U.S. government, employ hundreds of thousands of men and women across our country, and keep the lights on from Portland, Oregon, to Portland, Maine. Here in Louisiana, we proudly serve as the gateway to the Gulf, the front door to the boundless energy potential miles off of our coast and thousands of feet under the water’s surface. We proudly do a job that other states refuse to do; a job that literally fuels America.

GEST is pleased to help promote this rebirth of the Gulf as America’s energy workhorse, as well as the thousands of men and women who go to work each day to provide power to our people.

Hats off to all of you!

Read More: Here

Williams Partners: Gulfstar One spar nears completion (VIDEO)

Williams Partners L.P. reported key construction milestones and progress on a tieback expansion as its proprietary Gulfstar FPS™ (Floating Production System) nears completion in the eastern deepwater Gulf of Mexico. The Gulfstar One project is the first spar-based floating production system with major components built entirely in the United States.

“Williams Partners’ made-in-America Gulfstar One is 21,500 tons of proof that American engineering and construction are alive and well. The hull of the floating production system was towed out and positioned in the deepwater Gulf of Mexico before the topside platform was installed in March 2014.” the company said in a press release.

After mooring the floating spar to the ocean floor in February, crews in March lifted and installed Gulfstar’s three-level topside structure. The floating production system is moored 135 miles southeast of New Orleans in about 4,000 feet of water. It will serve as a hub that aggregates production and then combines production handling services with oil and gas export pipeline services, which feed Williams’ downstream oil and gas gathering and processing services.

Once operational, the Gulfstar’s base design will produce up to 60,000 barrels of oil per day and 135 million standard cubic feet of gas per day with additional tieback capacity. With hook-up and commissioning activities currently underway, Gulfstar is on schedule to start serving anchor customers in the third quarter of 2014 and Gunflint in 2016.

In addition to previously announced anchor commitments, Gulfstar in January executed agreements with Gunflint field owners Noble Energy, Inc., Ecopetrol America Inc., Marathon Oil Company and Samson Offshore, LLC. The Gunflint tieback is designed and engineered with modifications expected to be completed after the base Gulfstar project is completed.

“Landing this Gunflint tieback before first oil is received from the anchor tenants demonstrates the promise of the Gulfstar model for producers, both economically and technically,” said Rory Miller, senior vice president of Williams’ Atlantic-Gulf operating area. “As a midstream company, Williams is focused on infrastructure solutions of this nature that connect the best supplies with highest-value markets. Gulfstar is one of approximately $4.5 billion in large-scale projects we expect to bring into service in 2014 and 2015.”

Major components of the Gulfstar were built entirely in the United States, creating approximately 1,000 domestic jobs and allowing quick parts replacement and reduced platform downtime. Gulf Marine Fabricators built the hull in Aransas Pass, Texas and Gulf Island Fabrication, Inc. constructed the topsides in Houma, La.

“Gulfstar provides a complete ‘floating production system to market clearing point’ solution for producers in the Gulf for their oil, gas and liquids production, designed specifically to maximize their net present value and minimize risk,” said Mark Cizek, Gulfstar Project Director. “The ‘design one, build many’ construction concept allows for standardized design options and enhanced safety and reliability of each unit. The repeatable concept also increases speed to market.”

Williams Partners developed the Gulfstar One project and it has a 51 percent ownership interest. Marubeni Corporation has a 49 percent interest in the Gulfstar One project.

Source

Williams Partners Reports Execution Progress on Gulfstar One

Worldwide Field Development News Mar 15 – Mar 21, 2014

This week the SubseaIQ team added 5 new projects and updated 15 projects. You can see all the updates made over any time period via the Project Update History search. The latest offshore field development news and activities are listed below for your convenience.

Europe – North Sea
OMV Increases Presence in West of Shetlands
Mar 21, 2014 – OMV is increasing its interest in the UK North Sea through an agreement to acquire 4 Hess-operated licenses in the West of Shetlands area. For a consideration of $50 million, OMV will gain operatorship of license P1028 and P1189 (the Cambo discovery), P1830 (the Blackrock prospect) and P1831. Future discoveries in the acreage could necessitate an additional payment to Hess of $35 million. With the acquisition of the Cambo field, OMV gains almost 60 MMboe of recoverable resources. Blackrock, scheduled for drilling in 2015, is located between Cambo and the Chevron-operated Rosebank development. The agreement is subject to UK regulatory approval.
Project Details: Cambo
Australia
ConocoPhillips Continues Browse Basin Drilling Program with Poseidon North-1
Mar 21, 2014 – The Transocean Legend (mid-water semisub), under contract to ConocoPhillips, spud the Poseidon North-1 well in permit WA-315-P March 19. Poseidon North is located on the crest of a large tilted fault block with primary targets in the Plover and Montara formations. Poseidon North-1 is a continuation of the current 6-well Browse Basin Phase 2 drilling program with 4 of the 6 wells having already been completed. If successful, the well could greatly add to the resource base of the Greater Poseidon. ConocoPhillips and its partner, Karoon Gas Australia, hold 60% and 40% interest in the permit respectively.
Project Details: Poseidon
Downhole Issues Force AWE to Sidetrack Pateke-4H
Mar 19, 2014 – AWE Limited, operator of New Zealand permit area PMP 38158, reported the mechanical drill string difficulties it experienced last week while drilling Pateke-4H were unable to be resolved. AWE has since abandoned the lower part of the hole and is preparing to sidetrack the well at 11,072 feet. From there, the well will be drilled horizontally through the F10 reservoir to a measured depth of 17,588 feet. The F10 sand was encountered on prognosis in the main well bore and oil shows along with logging data suggest the presence of an oil bearing reservoir. Any commercial significance of the oil shows cannot be determined until the horizontal leg has been completed. If the formation is found to be capable of supporting commercial production rates, the well will be completed and tied-back to the Tui FPSO with first oil in 1Q 2015.
Project Details: Tui Area Development Project
Asia – SouthEast
Shell Strikes Oil While Appraising Limbayong Gas Discovery
Mar 19, 2014 – A consortium consisting of Shell (35%), ConocoPhillips (35%) and Petronas (30%) made an oil discovery in Block J offshore Sabah, Malaysia. The discovery was made while drilling an appraisal of the 2002 Limbayong gas discovery. Limbayong-2 encountered 446 feet of oil-bearing sands. Results from the well have encouraged the partners to plan additional appraisal wells to determine the commerciality of the field. The well was drilled by the Ensco 8504 (UDW semisub). Limbayong is located in over 3,000 feet of water near the Shell-operated Gumusut development.
Project Details: Limbayong
Mediterranean
FA-1 Spuds off Morocco Targeting Eagle Prospect
Mar 20, 2014 – Fastnet Oil & Gas, a junior partner in the Foum Assaka license, announced the FA-1 well designed to target the Eagle prospect offshore Morocco was spud March 16. License operator Kosmos Energy has allowed up to three months to reach the target depth of 13,123 feet. FA-1 is targeting an estimated 360 MMboe of Pmean resources in its Lower Cretaceous objective. Kosmos contracted the Maersk Discoverer (UDW semisub) to drill the well in almost 2,000 feet of water.
Project Details: FA-1 (Eagle)
Cairn Announces Heavy Oil at JM-1 Offshore Morocco
Mar 19, 2014 – Well JM-1 in the Juby Maritime III license offshore Morocco has been drilled to total depth by the Cajun Express (UDW semisub) and is being plugged and abandoned without testing. Cairn Energy drilled the well to explore the possibility of oil in the Upper and Middle Jurassic intervals of the Cap Juby prospect. A gross heavy oil column of 360 feet was confirmed in the Upper Jurassic section but determination of oil gravity and reservoir quality will need require further evaluation. Cores taken from the well will be compared to cores obtained from other wells drilled on the Cap Juby structure to assess the extent of moveable hydrocarbons. Sidewall cores and logging data covering the Middle Jurassic objective are being evaluated but preliminary results indicate limited primary porosity. Participants in the Juby Maritime III license consist of Cairn (37.5%), Genel Energy (37.5%) and ONHYM (25%).
Project Details: Cap Juby
Africa – West
Nigerian DPR Approves Aje Field Development Plan
Mar 21, 2014 – Panoro Energy announced the approval of the Aje Field Development Plan (FDP) by the Nigerian Department of Petroleum Resources (DPR). Aje contains productive sands in three levels consisting of a Turonian gas condensate reservoir, a Cenomanian oil reservoir and an Albian gas condensate reservoir. As submitted, the FDP focuses mainly on the development of the oil-bearing Cenomanian interval and will involve the tieback of two subsea wells to a leased FPSO. Aje-4 will be recompleted for use and a new well will be drilled to the Aje-2 subsurface location. In a 1997 flow test, Aje-2 delivered 3,700 bopd in spite of severely impaired productivity due to drilling operations. The joint venture is expected to make a final investment decision shortly. Aje is located in 3,000 feet of water in OML 113 offshore Nigeria. Interest holders include YFP (25%), Chevron (33.75%), Vitol (24.05%), Panoro (12.19%) and Jacka Resources (5%).
Project Details: Aje
Ophir: Padouck Deep-1 Proves Working Hycrocarbon System in North Gabon Basin
Mar 21, 2014 – Ophir Energy’s exploratory well at its Padouck Deep prospect offshore Gabon has been drilled to a depth of 10,816 feet by the Titanium Explorer (UDW drillship). No evidence of hydrocarbons was observed in the primary objectives but minor shows in shallower intervals have provided proof of a working hydrocarbon system in the North Gabon Basin. Once the well is plugged and abandoned, the rig will mobilize to the Gnondo Block to test the Affanga Deep prospect which has the potential to hold mean recoverable resources of 170 million barrels. If successful, the well will substantially de-risk several surrounding prospects that could lead to a future hub development.
Project Details: Padouck Deep
Aibel Starts Module Fab for TEN Cluster FPSO
Mar 20, 2014 – In February 2014, Aibel Thailand received a procurement and construction contract from MODEC for the fabrication of 7 topsides modules for a new-build FPSO slated for use at Tullow’s TEN Cluster development offshore Ghana. Aibel recently held a steel cutting ceremony at the Deeline fabrication shop in Thailand. The ceremony began with a traditional worship followed by blessings administered to steel, machinery, visitors and staff by Buddhist monks. Once complete, the 9,400-ton package of modules will be shipped to Singapore to be integrated with the FPSO’s hull. Completion of the last module is scheduled for April 2015.
Project Details: TEN Cluster
Africa – Other
Way Too Early Results Indicate Hydrocarbon Discovery at Sunbird-1
Mar 20, 2014 – Total depth was reached at the BG Group-operated Sunbird-1 wildcat offshore Kenya. The well was drilled by the Deepsea Metro 1 (UDW drillship) to a depth of 9,350 feet and a hydrocarbon column was identified in the main objective, a Miocene-aged Pinnacle Reef. Extensive losses in the highly permeable upper section of the structure have hampered efforts to determine the vertical extent of the column using wireline logs. Although samples were recovered from the well, additional analysis will be needed to determine the exact nature of the hydrocarbons as well as any commercial significance of the discovery. BG serves as operator of the L10A license with 50% interest. Its partners consist of PTTEP (31.25%) and Pancontinental Oil and Gas (18.75%).
Project Details: Sunbird
S. America – Brazil
Petrobras Begins Parque das Baleias Production with P-58 FPSO
Mar 21, 2014 – Petrobras started production at its Parque das Baleias development in the Campos Basin this week. Currently, only one well is on stream but in the coming months, 14 production wells and 9 injection wells will be connected to the P-58 FPSO that was recently installed in 4,593 feet of water. The P-58 has a designed daily production capacity of 180,000 barrels and 21.2 MMscf of oil and gas. Produced oil is offloaded to shuttle tankers for transport and produced gas flows through a subsea pipeline to the onshore Cacimbas Gas Treatment Unit in Linhares, Espirito Santo.
Project Details: Espadarte
Asia – Far East
CNOOC Makes Deepwater Gas Discovery in South China Sea
Mar 21, 2014 – CNOOC recently announced a gas discovery at its deepwater Qiongdongnan Basin acreage in the South China Sea. Lingshui 17-2 was drilled in roughly 4,700 feet of water to test part of a structure known as the Lingshui Sag. The well reached a total depth of 11,515 feet and encountered 180 total feet of gas-bearing reservoir.
Project Details: Lingshui 17-2
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