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Gazprom shares at lowest since 2017

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Shares in Russian energy giant Gazprom have fallen to their lowest level since the autumn of 2017.

According to transaction data from the Moscow Stock Exchange, Gazprom shares fell 3.97 per cent to 117.9 rubles. The company’s shares last traded below this level on 6 September 2017.

In total, since the beginning of the year, Gazprom’s quotations on the Moscow Stock Exchange have fallen by more than 25 per cent.

In May, Gazprom’s Board of Directors recommended to the Annual General Meeting not to declare or pay dividends based on the company’s 2023 results.

Optimistic expectations about the signing of the contract for the Power of Siberia-2 pipeline project, which will increase natural gas supplies to China, at the St Petersburg International Economic Forum (SPIEF) last week also failed to materialise.

The company’s natural gas production is also at the lowest level in its history

On the other hand, Gazprom continues to cut production. In its annual report published on Monday, the company reported that natural gas production at the end of 2023 was 359 billion cubic metres.

The report said that 13 per cent (53.9 bcm) of production was lost compared to 2022 and 30 per cent (156 bcm) compared to 2021.

Last year’s result was the company’s worst in the 34 years since it was transformed from the USSR’s Ministry of Natural Gas Industry into Gazprom.

By cutting off gas to most of its European customers, Gazprom lost a market it had been associated with for more than half a century.

Last year it sold only 69 bcm of gas to countries outside the Commonwealth of Independent States (CIS), the lowest volume since 1985.

Deliveries to Europe fell to 28 bcm, a level last seen in the second half of the 1970s.

Gazprom ended the year with a net loss under International Financial Reporting Standards (IFRS) for the first time since the late 1990s, and the size of the loss, 629 billion roubles, was a record in the company’s history.

Moscow continues to negotiate with Beijing over the construction of the Siberian Power-2 pipeline, which is expected to increase China’s gas purchases fivefold.

But Beijing has been slow to act, expecting Russia to offer new discounts on gas, which is already 46 per cent cheaper for Chinese buyers than for European countries and Turkey.

According to Financial Times (FT) sources familiar with the talks, Chinese President Xi Jinping has asked his counterpart Vladimir Putin to cut the price of gas to the local level. He also agreed to buy only a small part of the 50 bcm of Siberia’s Power-2 capacity.

According to the newspaper, negotiations on the project have stalled and Russian investment banks have excluded the Chinese contract from Gazprom’s future valuations in their special reports.

RUSSIA

What does Russia’s update of its nuclear doctrine mean?

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Russia has updated its nuclear deterrence policy, defining threats to the security of Belarus as a potential justification for the use of nuclear weapons. While experts argue that these changes are largely declaratory, they also suggest that the timing of this update may be linked to U.S. missile support for Ukraine.

Russian President Vladimir Putin approved the amendments to the doctrinal document entitled Fundamentals of the State Policy of the Russian Federation in the Field of Nuclear Deterrence. The announcement was made during a meeting on 25 September 2024, where Putin revealed the changes to Russia’s nuclear doctrine.

In June 2024, Deputy Foreign Minister Sergei Ryabkov hinted at the need for an update, citing lessons learned from military operations. The new text, in line with Putin’s directives, introduces significant changes to the conditions under which nuclear weapons can be used:

Nuclear retaliation is now justified in cases where critical threats arise to the security of not only Russia but also Belarus.

The updated doctrine expands the scope of threats to include cruise missiles, unmanned aerial vehicles (UAVs), hypersonic weapons, and other aerospace attack systems. Previously, the scope was limited to ballistic missile attacks.

The doctrine highlights the importance of continuous updates to adapt to evolving security conditions.

When asked whether the publication of this doctrine was connected to the U.S. decision to send ATACMS missiles to Ukraine, Kremlin spokesperson Dmitry Peskov dismissed the idea of coincidence, stating that the document was published “on time.”

Peskov emphasized a critical new provision: If a non-nuclear state attacks Russia with the backing of a nuclear-armed state, it will be treated as a joint nuclear attack. This underscores Russia’s heightened sensitivity to Western support for Ukraine, especially in light of escalating tensions with NATO.

Several experts have weighed in on the implications of the updated nuclear doctrine:

Alexander Yermakov, a specialist at the Russian International Affairs Council (RIAC), noted that the changes largely clarify existing provisions. For instance, the scope of retaliation has expanded to include drones and cruise missiles, whereas previous documents only referred to ballistic missile attacks.

According to Yermakov, the timing of the doctrine could be a strategic response to recent U.S. military aid to Ukraine: “These changes were announced earlier. However, in light of recent developments, they were published to remind of the risks of possible escalation.”

Dmitry Stefanovic, an expert from the Centre for International Security at the Institute of World Economy and International Relations, highlighted that the new doctrine reflects global nuclear trends.

Stefanovic noted that some countries have increased their arsenals, new nuclear-weapon states have emerged, and the importance of the nuclear factor has increased in recent years.

The expert added that the doctrine contains elements that strengthen nuclear cooperation with Belarus.

“The updated document further clarifies the issue of the ‘nuclear threshold’ – the necessary conditions for the use of nuclear weapons. This is no cause for relief, either for Russia or its rivals. If the risk of direct confrontation with the US and NATO remains, a scenario of rapid nuclear escalation is always possible,” Stefanovic said.

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U.S. rehearses nuclear strike on Russian border

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NATO’s Joint Air Forces Command has announced that the United States’ B-52H Stratofortress strategic bombers recently conducted a training bombing mission at the Cudgel range near Kaliningrad Oblast.

The exercise was coordinated with Italian and German fighter jets, demonstrating NATO’s operational cooperation. It involved dropping laser-guided bombs from an altitude of six kilometers as part of the Vanguard Merlin exercise, a tactical program organized by U.S. rotational units in Europe.

The deployment of B-52 bombers to Europe is described by NATO as a routine measure aimed at “protecting allies and deterring potential threats.”

In early November, the U.S. Air Force stationed four B-52 aircraft at Mildenhall Air Base in the UK. Since their arrival, the bombers have flown over Finland, Sweden, the North Sea, and Lithuania, expanding NATO’s aerial presence in the region.

On 15 November, The Wall Street Journal (WSJ) reported, citing sources within President Joe Biden’s administration, that the United States plans to increase its deployed nuclear warheads in response to growing threats from Russia, China, and North Korea.

The report revealed that the White House had previously drafted a classified directive to prepare for potential simultaneous conflicts with Moscow, Beijing, and Pyongyang. While the strategy emphasizes the development of non-nuclear deterrence, it also considers enhancing nuclear capabilities.

These proposals are currently under evaluation by the Pentagon, with final decisions expected from the incoming administration of President-elect Donald Trump.

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Russia will not give Israel guarantees on Hezbollah

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In an interview with RIA Novosti, Alexander Lavrentiev, the Russian President’s special envoy to Syria, stated that Moscow could not provide Israel with guarantees to prevent “arms smuggling” from Syria to Lebanon.

Earlier reports from the Israeli press indicated that Israel would like to see Russia as a mediator in the Middle East peace settlement. Lavrentiev confirmed that Israel had requested guarantees from Russia to prevent Shiite groups from moving military equipment through Syria to Lebanon. However, he clarified that this demand could not be met.

“This would require the establishment of new checkpoints along the border, a task that does not fall within the competence of the Russian military in Syria,” Lavrentiev explained.

When asked about Israel’s expectation of a security guarantee, Lavrentiev responded, “First of all, we cannot give such a guarantee.”

Reports have previously indicated that Israel has been in contact with Moscow regarding the regional settlement process. It was even suggested that Strategic Planning Minister Ron Dermer, one of Prime Minister Benjamin Netanyahu’s closest advisors, was planning a confidential visit to Moscow.

Meanwhile, Itamar Eichner, a columnist for Yedioth Ahronoth, noted in his column yesterday that Israel understands Russia’s influence over Hezbollah, Syria, and Iran. “This is why Tel Aviv seeks guarantees from Moscow to prevent arms smuggling and to stop the Lebanese terrorist organization from recovering from the war,” Eichner wrote.

Commenting on Israel’s desire to secure the Syrian-Lebanese border, Lavrentiev highlighted a recent attack near Khmeimim Air Base in Syria. Although this incident took place about a month ago and did not directly impact Russian troops, Lavrentiev felt compelled to address it.

“Israel carried out an airstrike near Khmeimim. They did not target the air base directly, as they know this would have serious consequences for Israel. Reports suggest that the strike targeted warehouses and buildings in the vicinity,” Lavrentiev stated.

He also mentioned that the Russian Defense Ministry had “sent a representative to Israel” for further discussions.

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