Die Welt (Germany): an abnormal ratio of profit from the export of gold and gas has weakened Russia — with one exception

On the same day, when the world’s largest gas concern “Gazprom” has published its latest quarterly report, the Central Bank and Customs service of Russia have taken care of this sensation. And I must say that for Gazprom, the main supplier of gas to Europe and the largest taxpayer in Russia, these figures were stunning.

For the first time in its history, Russia has made more money thanks to the export of gold, not gas. Numbers refer to the elapsed second quarter and transported by gas pipes, the monopoly on the export of which belongs to Gazprom.

And these figures say that only April and may, Russia sold abroad 65,4 tons of gold worth $ 3.6 billion (about 3.1 billion euros). During this same time, the profit from gas exports amounted to 2.4 billion dollars (about 2.1 billion euros). Final data yet, but the calculations of the Central Bank of Russia show that export of gas for the entire quarter brought only $ 3.5 billion (3.0 billion euros) — that is, less than the exports of gold in just two months.

Official statistics reflect the chaos in the global hydrocarbon markets caused by outbreak of coronavirus. And they show an extraordinary increase in the value of gold and prices: after all, the yellow metal in the night Monday set a new record at the level of the 1921 dollars per ounce. In other words, cautious investors see it as a major life-saving anchor in troubled times. But that’s not all.

Because in a dramatic situation, which hit Gazprom, the fault is not only coronaries. A gas giant, the largest owner is the state, even in the first quarter reported a huge drop in profits.

For the first time in the autumn of 2015, the Gazprom even suffered losses in the amount of 116,2 billion rubles (1.4 billion euros), while during the same period last year, there was a net profit of $ 536 billion (6.4 billion euros). Turnover fell 24.1% to 1.74 trillion rubles (20.3 billion Euro), while exports to Europe — Gazprom’s main market — and all have fallen by 45%.

The ruble is losing value

While Gazprom had no luck with a serious fall of the ruble in March, especially as 70% of the debts of the concern has in dollars and euros. However, the depreciation of the ruble is only part of the problem.

The other part is that delivery to Europe and China (more recently the second most important market for Gazprom) in the power market and climatic causes decreased by 17%, while prices decreased on average by 36%. In the second quarter of falling sales and prices has increased even more. Analysts at investment company BCS Global Market Research predicts that the situation with the profit of Gazprom on the European market in the second and third quarter will be “terrible”.

But the oligarch Suleiman Kerimov, the turmoil in the commodities markets is very profitable. He is the main shareholder of the company “Polyus Gold”, Russia’s largest gold producer. As the 54-year-old native of Dagestan in the second quarter increased, presumably at $ 8.8 billion and reached to 18.8 billion.

Thus Karimov has risen in the list of Forbes since the 13th from 7-th place, for the first time in 12 years, hitting the top ten. In recent years, he often drew attention to his person various scandals.

For example, in November 2017, he’s barely getting off the ladder of a private jet in nice, was arrested by the French police on suspicion of tax evasion. Three days later he was released on bail of 5 million euros. In Russia, the arrest Kerimov, who owned in France with numerous real estate has caused a wave of indignation, as the French ignored his immunity as member of Parliament.

Another scandal occurred in 2008, when Kerimov driving a Ferrari (but on the passenger seat this time was sitting pretty Russian TV presenter) crashed into a tree in nice. Kerimov, a married father of three children, he got severe burns and went into operation in Brussels. He later donated one Belgian relief Fund burn patients a million dollars.

In 2017, Russian President Vladimir Putin awarded him the order “For merits before Fatherland” 2 nd degree.

The Russian Central Bank has allowed the export of gold

Breakneck revenue growth during coronaries Karimov owes to the fact that his family owns 78.6% of shares of “Polyus Gold”. This concern, whose shares jumped with the price of the yellow metal itself, plays in the top League of global commodity markets and has an advantage over all others: its production costs are almost minimal.

The rapid growth of profit “the pole-Gold” is made possible in part thanks to the Russian Central Bank. April 1, its management announced the transition to a new course. Before CB was one of the major buyers in the gold market. Now the regulator has refused purchases and allowed direct sales of the yellow metal abroad manufacturers.

Lack of demand can not speak. Many States are very interested in Russian gold. The main buyer, which accounted for 80% of sales, were the United Kingdom (which in many other areas defiantly refuses to cooperate with the Russians). In London are the main trading platforms and the storage of physical gold.

About this demand for gas, Gazprom can only dream of, especially that along with the crash of the demand concern will soon risk to face other problems, rooted in the United States.

The Americans are out to interfere with the completion of the pipeline “Nord stream — 2”, which connects Russia and Germany. They argue that Europe may fall into an excessive dependence on Russia (omitting, however, the fact that they intend to increase supply of liquefied gas to the Old world).

U.S. Secretary of state Mike Pompeo said on 15 July that the Russian pipeline is subject to the terms of U.S. law, enacted in 2017, which provides, inter alia, sanctions against companies doing business together with Russia and such countries as Iran and North Korea.

The United States seeks to prevent the completion of the second Nord stream

Pompeo statement was only one of many steps by the United States in this direction. They had earlier tried to prevent the completion of construction of the gas pipeline “Nord stream — 2”, threatening its members with sanctions. The restrictions, which came into force at the end of 2019, was directed against the company that owns ships, pipelayers involved in the project.

Thus, the construction of the pipeline was suspended, but soon should be continued with participation of Russian specialized vessel. President Putin had optimistic to say that the project will be completed in early 2021, with a delay of several months. However, he enjoys the support of German politicians opposing the US intervention in the Affairs of Germany.

Gazprom itself is struggling to maintain its leading position in the European market. In this regard, the group at the end of last and beginning of this year have engaged in dumping. Representatives of Gazprom, despite the negative results in the first quarter and a disastrous second believe that the market has already bottomed and rebounded from it, so towards the end of the year, the situation is equalized.

Thus, it remains in force forecast that the results of the 2020 gas exports to Europe will amount 166-167 billion cubic meters. Last year in the West (including Turkey) have been sold 199 billion “cubes”.

Despite the hype about gold, Russia’s biggest source of income is export of gas and oil, despite falling by a third in the first five months of the year. Russian experts believe that the export of gold, even now experiencing a real boom can compensate for losses from reduced sales of oil and gas in the best case by 10%.