Russian Reliance on Chinese Loans May Blunt Sanctions’ Impact
By ANDREW E. KRAMERJULY 17, 2014
MOSCOW — With the latest round of sanctions against Russia, the United States Treasury Department said it had “increased the cost of economic isolation for key Russian firms,” like the state oil company Rosneft and the banking arm of the natural gas giant Gazprom.
The isolation, though, does not extend to the companies’ growing reliance on Chinese lending, a trend in the Russian natural resources industry that will blunt the effect of sanctions aimed at the finances of Russian oil companies.
Energy companies form the backbone of the Russian economy. If oil and gas are taken together, they export more energy than Saudi Arabia, and that money props up the military of President Vladimir V. Putin. Rosneft is the world’s largest publicly traded oil company, pumping about 4.1 million barrels daily.
Given the gigantic outlays for drilling wells and building pipelines in the Siberian wilderness, such companies rely deeply on cheap sources of capital. The Chinese have been willing to oblige.
“We absolutely don’t expect any impact on the operations or finances of Rosneft or Novatek,” another Russian energy company hit with sanctions on Wednesday, said Pavel Kushnir, an oil and gas analyst at Deutsche Bank in Russia.
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http://www.nytimes.com/2014/07/18/business/russian-reliance-on-chinese-loans-may-blunt-impact-of-sanctions.html?_r=0
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