Research & Insights 53

US and UK ban imports of Russian aluminium, copper and nickel

The United States and United Kingdom have each imposed a ban on imports of Russian aluminium, copper and nickel. As a result, the London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME) will no longer be able to accept these Russian-produced metals. According to Citigroup, Russia produces 6% of the world’s aluminium, 4% of its copper and 11% of its high-purity nickel metal. Metals are Russia’s leading export item after energy, with a value of US$ 15 billion in 2023. Titanium and platinum-group metals have been excluded from the ban, as Russia remains an indispensable global supplier of these two hard-to-find metals. China, India and Turkey are expected to consume all the Russian metal that the US, UK and other Western countries are blocking because of sanctions.

Russia increases its LNG production and deliveries to Europe

Russia’s liquefied natural gas (LNG) exports rose by over 4% in the first quarter of 2024. It has increased its LNG production to replace sanctioned pipeline gas exports to Europe, explains the Russian newspaper Kommersant. According to Kpler data, LNG exports in the first quarter of 2024 rose by 4.3% to 8.7 million metric tons. Exports to the European Union rose by 4%, while those to Asia fell by 7%. Most of Russia’s LNG production comes from the Yamal LNG project, managed by Novatek, and the Sakhalin Energy project, managed by Gazprom. The European Union has become the biggest buyer of Russian LNG, accounting for half of the total volume of Russian LNG exports since the beginning of the year. According to February data, China was the second largest buyer, absorbing 21% of Russian deliveries.

Moscow IPOs to be boosted by pension funds

In a draft ordinance, Russia’s Central Bank said it would allow non-government pension funds (NPFs) to buy shares in an initial public offering (IPO) if their aggregate value on the stock market is at least 3 billion rubles (US$ 32 million), up from 50 billion rubles (US$ 535 million) at present. IPOs could double this year to over 80 billion rubles (US$ 862 million), according to estimates by Aigenis, reported on Bloomberg. This figure is well below the US$ 3 billion reached in 2021 before the outbreak of conflict in Ukraine, but it is in line with the government’s desire to develop capital markets and support the economy. The Central Bank wants to encourage long-term savings to invest in the equity market in a context where foreign funds have disappeared. For small Russian companies, it is becoming attractive to raise capital by selling shares at a time when the key interest rate is 16%.

European courts rule in favour of two Russian billionaires

The two wealthy Russian bankers, Mikhail Fridman and Petr Aven, had their inclusion on the EU sanctions list annulled by the European Court of Justice (ECJ) last week. The highest judicial body in the EU has now ruled in their favour, stating that the European Council had not sufficiently demonstrated the relevance of the sanctions imposed on them. Both men are major shareholders in the Alfa Group conglomerate, which includes Russia’s leading private bank, Alfa Bank, and  largest food retailer, X5 Retail Group. They remain subject to an EU-wide travel ban and asset freeze, pending the outcome of a separate legal action. The judgment highlighted apparent flaws in the EU’s research and intelligence-gathering process when drawing up restrictions against more than 1,700 individuals and 400 entities since 2014 accused of supporting or enabling the invasion of Ukraine.

Research & Insights #52

Russian manufacturing industry grows fastest in almost 18 years

In March, Russian manufacturing activity grew at its fastest pace in almost 18 years, according to a business survey. The S&P Global Purchasing Managers’ Index (PMI) for Russian manufacturing rose from 54.7 in February to 55.7 in March, its highest level since August 2006. The 50 threshold separates expansion from contraction in the manufacturing sector. Moscow is helping to boost manufacturing, injecting funds into the defence sector to increase military production. The defence industry was behind stronger-than-expected growth in industrial output in February. “Driven by stronger demand, Russian goods producers recorded renewed business confidence regarding production prospects for the year ahead in March”, S&P Global said. Companies announced their plans to invest in new product lines and machinery.

Russia blocks renewal of North Korea sanctions monitors

Russia has vetoed the annual renewal of a group of experts charged with monitoring the application of United Nations sanctions against North Korea imposed since 2006 for its nuclear weapons and ballistic missile programs. This decision comes at a time when the United States is accusing North Korea of transferring weapons to Russia for use in Ukraine, a charge denied by both Moscow and Pyongyang. Recently, the FT revealed that Russia was supplying oil to North Korea, in defiance of UN sanctions. North Korean vessels were allegedly involved in illicit ship-to-ship oil transfers designed to circumvent the import ceiling, which limits North Korea to 500,000 barrels per year for oil and oil products. According to the British think-tank Royal United Services Institute, deliveries from the largest port in the Russian Far East (Vostochny) could amount to 125,000 barrels of petroleum products in just a few weeks.

Western pressure impacts Turkey’s trade boom with Russia

Turkey’s exports to Russia fell by 33.7% year-on-year in the first quarter, according to preliminary data from the Turkish Ministry of Trade. Washington and Brussels are exerting increasing pressure on Ankara to ensure that Turkish financial institutions and businesses do not facilitate or support trade with Russia, notably through secondary sanctions. According to Kutlu Karavelioglu, president of the Machinery Exporters Association, machinery exporters, the main beneficiaries of Turkey’s increased deliveries to Russia in 2023, could see their sales fall by a billion US dollars this year. A Russian presidential spokesman told reporters that Russia and Turkey were working to eliminate bank transfer problems resulting from anti-Russian sanctions. Six months ago, the Turkish president recalled that annual trade turnover with Russia was US$ 62 billion, and that the aim was to reach US$ 100 billion in the near future.

The Bank of Russia advocates crypto-currencies for international payments

The Bank of Russia wants to speed up the adoption of the draft law on international crypto-currency payments. The Governor of the Bank of Russia advocates that such payments be made under an experimental legal regime. At a national level, the Bank of Russia’s financial messaging system (SPFS) has become the main channel for exchanging financial information. Today, it is used to route some 98% of financial transactions in Russia. “Sanctions risks remain high when accounts in US dollars, euros, as well as SWIFT, are used in the chain of payments,” Elvira Nabiullina noted. The yuan’s share of the foreign exchange market structure reached a record high in March, rising from 46.6% in February to 53%. The share of “toxic” currencies (US dollars and euros) fell from 52.8% in February to 46.4% in March 2024.

Research & Insights #51

Russia is in a position to repay all its foreign debt in cash

Russia’s foreign debt decreased to US$ 326.6 billion in December 2023, from US$ 383.6 billion a year earlier. Russia’s low level of foreign debt means that the state and companies are not dependent on international capital and are not exposed to the risk of sanctions on their bond issues. The country’s international reserves stood at around US$ 600 billion at the end of the first quarter of 2024, although around half of these reserves are frozen. Around US$ 150 billion is in monetary gold and the rest is in yuan, which means that even excluding frozen funds, Russia can cover its external debt with cash, while all Western countries are massively indebted. Thanks to high oil prices, Russia’s current account surplus rose from US$ 4.5 billion in January to US$ 5.2 billion in February. Russia is probably one of the least vulnerable countries in terms of macro fundamentals.

Russian diamond sanctions benefit Dubai at Antwerp’s expense

Sanctions against Russian diamonds have come into force and traders are fleeing Antwerp for Dubai to avoid what they see as “impossible” rules. Until recently, over 80% of all rough diamonds mined in the world were traded in the Belgian city. But since 01 March , traders are required to inspect all stones over one carat to ensure that they do not come from Russia, the world’s leading exporter of rough diamonds accounting for 30% of global production by volume. According to merchants, it is “impossible to determine the origin of a stone” simply from its physical composition. To avoid operating under EU rules, some traders are planning to set up operations in Dubai or India. “The current trajectory threatens the existence of Antwerp’s diamond industry, a heritage of six centuries”, believe the diamond traders. Alrosa, the world’s largest state-owned diamond mining company, which accounts for over 90% of total Russian diamond production, is under EU sanctions.

Most Russians have never lived as well as they do now

According to Russian media outlet The Bell, considered a “foreign agent” by the Kremlin, “most Russians have never lived as well as they do today”. The Russian economy is growing due to increased public spending, in particular to support the war effort, leading to wage increases outstripping inflation. The average income of the richest 10% of Russian society has risen by 27% since the start of the war, while that of the poorest 10% has risen by 67%. According to Levada, the proportion of Russians who feel that the distribution of material wealth in Russia is becoming more unfair fell from 45% in 2021 to 25% in November 2023. According to the head of the central bank, investment activity has reached record levels and the business climate indicator achieved its highest level in 12 years. Unemployment reached a record 2.7% in January.

World’s largest oilfield services group continues to operate in Russia

The world’s largest oil services company, SLB, formerly Schlumberger, continues to operate in Russia, unlike its two main rivals, Baker Hughes and Halliburton. Active in the country since the 1990s, SLB generated around 5% of its sales of US$ 33.1 billion in Russia in 2023. It employs some 9,000 people, but stopped making new investments and deploying technology in March 2022 following the sanctions. SLB’s CEO told the Financial Times that SLB had put controls in place “to prevent and prohibit any shipment and support of technology” to Russia since July 2022. These measures reduce the country’s ability to exploit some of its offshore oil fields in the long term. According to US regulatory filings, the company retained net assets in the country with a book value of US$ 600 million at the end of 2023.

Research & Insights #50

US has urged Ukraine to halt strikes on Russian oil refineries

The US has urged Ukraine to halt its attacks on Russian energy infrastructure, according to the Financial Times. Washington fears that drone strikes could drive up world oil prices and provoke retaliation from Moscow. Since January, Ukraine has stepped up drone attacks on Russian crude processing facilities. Their aim is to paralyse fuel supplies, an important source of income for the Russian state. The extent of the losses caused by this year’s strikes is unclear. However, they have prompted Moscow to ban gasoline exports for a period of six months from 01 March. At least nine major refineries have been successfully attacked this year, putting an estimated 10-15% of the country’s total refining capacity offline. Despite Western sanctions, Russia remains one of the world’s leading energy exporters. US President Joe Biden, who is beginning his re-election campaign, takes a dim view of the recent 15% rise in oil prices to US$ 85 a barrel.

Vladimir Putin re-elected President of the Russian Federation

Vladimir Putin was officially re-elected on 17 March for a fifth term as President of Russia, with 87.28% of the vote and an overall turnout of 77.49%. Of the three parliamentary opposition candidates allowed to stand, Communist Party (PCFR) candidate Kharitonov came second with 4.31% of the vote, followed by New People’s Party candidate Davankov with 3.85% and Liberal Democratic Party (PLDR) candidate Slutsky with 3.2%. These results appear to be in line with the latest poll conducted by VCIOM (Levada) on 15 February. It gave Putin 70%, Kharitonov 3.4%, Slutsky 2.3% and, above all, indicated that 20.5% of voters who had decided to cast their ballot had not yet decided for whom, giving a turnout rate of 87%. If the Western media attribute these results to ballot-box stuffing and other rigging, they are probably underestimating the “flag effect” produced by the war in Ukraine.

Russia’s central bank keeps rates at 16%

Last week, Russia’s central bank maintained its key interest rate at 16% for the second time in a row. According to the institution, domestic demand continues to outstrip the capacity to expand production of goods and services. As a result, inflationary pressures remain high, and tight monetary conditions must be maintained in an attempt to bring inflation back to the bank’s 4% target. Governor Elvira Nabiullina said a rate cut was more likely in the second half of the year. Inflation was 7.4% in 2023, compared with 11.9% in 2022. “The personnel shortage remains a serious limitation for further production growth,” said Ms. Nabiullina. The central bank forecasts GDP growth of 1-2% in 2024, while the International Monetary Fund anticipates an increase of 2.6%. The next meeting of the Board of Directors of the Bank of Russia is scheduled for 26 April.

VK’s revenues are up, but its debt is soaring

VKontakte, the “Russian Facebook”, is growing in a context where the online market has been severely shaken by Kremlin measures and Western sanctions. In 2023, VK’s annual revenues rose by 36% to 132.8 billion rubles (US$ 1.5 billion), according to its IFRS accounts. This increase is mainly due to the integration of advertising into the content that VK produces itself, reports Kommersant. At the same time, however, its debt increased even faster, by 41.8%, to 139 billion rubles in the same year. VK is seeking to consolidate its position as Russia’s new Internet champion by investing heavily and taking advantage of Yandex’s setbacks. Analysts note an increase in the debt/equity ratio, which “significantly reduces the level of financial autonomy”. In 2023, Adjusted EBITDA amounted to 0.5 billion rubles. VK confirmed that the company was “in an active investment phase”, but added that the holding planned to complete it in 2024.

Research & Insights #49

BRICS countries plan to create a payment system based on blockchain

The BRICS group is to work on creating an independent payment system based on digital technologies and blockchain, Kremlin aide Yury Ushakov said recently. The aim is to expand the role of BRICS in the international monetary and financial system, by increasing settlement in national currencies and strengthening correspondent banking networks to secure international transactions. “The idea is not to create a financial and monetary alliance, but to create payment and settlement systems that do not depend upon whims of the West,” explained Deputy Foreign Minister Sergei Ryabkov. Russia took over the group’s presidency on January 1, 2024 and will host the BRICS summit in October 2024 in Kazan, Tatarstan, in Russia’s Volga region.

Moscow’s reaction to the confiscation of its assets could lead to systemic risks

Russian sovereign assets frozen in the EU could yield up to €20 billion by 2027, some of which will probably be transferred to Kyiv on a regular basis, a senior EU official told Reuters. However, some of these funds may have to be provisioned in Europe in anticipation of massive claims against the clearing house, Euroclear. According to the EU source, Russia’s central bank is likely to get its hands on Euroclear’s 33 billion euros of money located in Moscow. In addition, it could take legal action to seize Euroclear’s money in the securities depositories in Hong Kong and Dubai, and in a worst-case scenario, the European depositary could run out of capital and have its licence withdrawn, which could lead to a global financial crisis, given that Euroclear’s total assets amount to over 37 trillion euros.

Data suggests that less than 10% of Western companies have left Russia

According to calculations by the Kyiv School of Economics, only 373 of the 3,756 foreign companies working in Russia before the outbreak of war have completely withdrawn from the country. This is partly due to the fact that leaving companies have to sell their assets at half their market value, much to the delight of businessmen loyal to the Kremlin. Of the companies that remain in Russia, some are private, but others are publicly traded and could, in theory, come under pressure from their shareholders to divest from Russia. In fact, according to a study by the company Caliber, very few American and European consumers know which global brands have left Russia and which have stayed. According to Dirk van der Put, director of Chicago-based Mondelez, which produces Milka chocolate, “from a moral point of view, investors don’t care” whether companies operate in Russia.

The US warns Austrian bank Raiffeisen about its relations with Russia

The US has threatened Austria’s leading bank with sanctions for its activities in Russia. The US Treasury warned Raiffeisen Bank International (RBI) that it risked “being excluded from the US financial system” if it helped finance the Russian military. Raiffeisenbank, the Russian subsidiary of RBI, is the largest Western bank in the country. It ranks tenth among Russian credit institutions in terms of asset size. Despite RBI’s willingness to sell its Russian operations after coming under pressure from international regulators, the company continues to operate in the Russian market, providing payment facilities to hundreds of companies in the country. In 2023, RBI made a profit of 2.4 billion euros, including 1.3 billion euros in Russia, where it employs 9,942 people in 490 retail branches.

Research & Insights #48

Switzerland considers using Russian assets for Ukrainian reparations

Despite its tradition of neutrality, the Swiss Parliament has voted in favour of a series of motions enabling the government to elaborate an international legal basis for using Russia’s frozen assets to pay reparations to Ukraine. More than US$ 8 billion in Russian central bank reserves and assets are held in Switzerland. Since the start of the conflict in Ukraine, Switzerland has refused to send arms to Kyiv or to allow countries holding Swiss-made weapons to re-export them to Ukraine, yet it has aligned itself with the European Union’s economic sanctions against Russia. Switzerland has long been a preferred destination for wealthy Russians and their assets. According to the Swiss Bankers Association (SBA), banks hold between 150 and 200 billion Swiss francs (US$ 213 billion) of Russian clients’ money in offshore accounts.

Russia to expand trade with China via its Eastern railroads

Moscow wants to spend billions modernising its vast eastern railroads to facilitate trade with China. According to the Kommersant newspaper, the aim is to increase the annual transport capacity of Russia’s two longest railroads, the Trans-Siberian Railway and the Baikal-Amur Mainline, from 150.5 million tonnes of goods in 2023 to 210 million tonnes by 2030. These 13,500 km of railroad represent a vital axis for Russia’s foreign trade, linking its western regions to the Pacific Ocean and China. In 2024, Russia plans to spend 366 billion rubles (US$ 4 billion) to improve the infrastructure of the Eastern Section (“Eastern Polygon”) of the Trans-Siberian rail line. Trade between Russia and China reached a record US$ 240 billion in 2023. China supplies Russia with everything from clothing to machinery and cars, while Russia sells raw materials such as coal and aluminum.

Russia’s oil and gas revenues surged in February

Russia’s oil and gas proceeds rose by over 80% in February compared with the previous year, reaching 945.6 billion rubles (US$ 10.4 billion), according to the Ministry of Finance. This increase is due to the rise in crude oil prices and the country’s ability to resist Western sanctions. According to Bloomberg calculations based on this data, profits from oil and oil products, which account for 84% of total hydrocarbon revenues, have more than doubled. “The expected volume of additional oil and gas revenues for the federal budget is projected at 125.2 billion rubles (US$ 1.38 billion) in March 2024,” the Ministry of Finance said in a statement. Russia’s shadow fleet has enabled the country to create a parallel shipping structure capable of withstanding the shifting tactics and direction of Western sanctions, with hundreds of opaquely owned tankers plying complex routes.

Moscow Exchange’s net profit for 2023 soars

In 2023, the Moscow Exchange’s net profit rose by 67.5% to 60.8 billion rubles (US$ 655 million), compared with 36.3 billion rubles (US$ 391 million) the previous year, according to the company. Commission income rose to 52.2 billion rubles ($562 million) due to high customer activity, as well as the launch of new products and services, the exchange said, accounting for 50% of the exchange’s operating revenue structure. It’s worth noting that on 4 March, 2024, the MOEX Russia index exceeded the February 2022 pre-war value of 3,300 points for the first time. Whereas before the war in Ukraine, around 80% of floating Russian shares were held by Western investors, the market, characterised by low valuations and high dividends, is now growing organically, with dozens of IPOs for domestic and friendly investors.

Research & Insights #47

Russia’s Central Bank holds rates unchanged

On 16 February, 2024, the Bank of Russia decided to maintain its key rate at 16%. “Current inflationary pressures have eased compared to the autumn months, but remain elevated,” the institution stated. According to its forecasts, annual inflation should fall to 4.0-4.5% in 2024 and then stabilise at a level close to 4%, compared with 7.4% at present. Governor Elvira Nabiullina pointed out that the public’s growing propensity to save, against a backdrop of high returns on cash deposits, combined with a slowdown in consumer activity and lower demand for imports, was beginning to create conditions for more balanced growth. The Bank of Russia has improved its economic growth forecast for 2024 from 0.5-1.5% to 1.0-2.0%. The International Monetary Fund expects the Russian economy to grow by 2.6% this year.

EU says no need to extend Ukrainian gas transit deal

The European Commission wants to put an end to the transit of Russian natural gas through Ukraine. According to Kadri Simson, European Commissioner for Energy, there is no need to extend the contract between Moscow and Kyiv, which expires at the end of this year. Countries receiving gas from Ukraine (Austria, Italy and Slovakia) will be able to be supplied from other sources, said Ms. Simson. Russian gas flows to Europe currently stand at around 12 billion m3 per year, or 10-15% of pre-war levels. Ukraine and Russia do not appear ready to renew the transit agreement at present. The last operational pipeline will then be the TurkStream pipeline system, one of whose two 15.75 billion m3 per year sections is destined for the European market.

Polymetal about to sell Russian assets due to sanctions

Polymetal is set to sell its Russian mining and metallurgical activities to Mangazeya Plus. Subject to shareholder approval, the transaction is valued at US$ 3.69 billion, the company said. After the outbreak of war in Ukraine, Polymetal transferred its domicile from Jersey, then considered an unfriendly jurisdiction by the Russian authorities, to Kazakhstan in order to unblock international payments from Russia. Analysts at Tinkoff Investments said the deal valued the assets at an EV/EBITDA multiple of 2.5 times, implying a “significant discount” to current Russian peer multiples and the group’s historical average multiple of around 8 times. Following the sale, Polymetal’s annual production will be around 500,000 ounces of gold equivalent per year, compared with 1.7 million in 2023.

Gazprom suffers collapse in sales to Europe

Gazprom’s EBITDA is expected to have fallen in 2023  by almost 40% to around 2.2 trillion roubles (US$ 24.3 billion), compared with 3.6 trillion rubles in 2022. These poor financial results reflect one of the fundamental events caused by the war in Ukraine: the restructuring of European gas markets. The Gazprom business, which includes oil and power generation, used to benefit greatly from gas exports to Europe. In 2022, these exports had almost halved to 101 billion cubic meters compared to the previous year. Prices have collapsed from the peaks reached in the early days of the war. Gazprom’s oil business, Gazprom Neft, has become the company’s main source of revenue, contributing 36% of revenues and 92% of net income in the first half of 2023. Sergey Vakulenko, former head of strategy at Gazprom Neft, described the group’s situation as “not great, not terrible”, insisting that “the company is not yet on the verge of collapse”.

Research & Insights #46

Yuan-denominated corporate and household accounts exceed those in US dollars

According to the Russian Central Bank, by the end of 2023, corporate and household funds on CNY-denominated accounts with Russian banks totaled the equivalent of US$ 68.7 billion, compared with US$ 64.7 billion on USD-denominated accounts. Corporate loans in yuan increased 3.6-fold to reach the equivalent of US$ 46.1 billion. This is due to the conversion of loans previously issued in “unfriendly” currencies. Exporters have also shown increased interest in yuan-denominated loans due to high interest rates on ruble-denominated loans. Moreover, during the same year, the Moscow Exchange trading volume in Chinese yuan surpassed that of the US dollar, the Kommersant daily reported. In January 2024, the yuan’s share of foreign exchange transactions exceeded 50% for the first time.

Russia extends authorisation to supply German company SEFE with LNG


The Russian government has extended until 2040 the authorisation granted to Yamal LNG plant to supply liquefied natural gas (LNG) to the German state-owned gas importer SEFE. Yamal LNG exports by cargos to the Old Continent, unaffected by sanctions, reached a new record of 1.98 million tonnes in January, up 14% on the record level of 1.74 reached in May 2022. This extension underlines the dependence of European countries on Russian LNG supplies. It also reflects the strategic considerations of the Russian government, wanting to maintain its access to the European market. Novatek’s Arctic LNG 2 project is currently under pressure following US sanctions. This project is crucial for Russia, which is aiming to increase its share of the global LNG market to 20% by 2030, compared with around 8% today.

Euroclear disapproves of new proposal to use frozen Russian assets


Euroclear CEO Lieve Mostrey has criticised the G7’s latest plan to use frozen Russian assets as collateral to raise funds to finance the war in Ukraine. Mostrey sees this idea as an indirect form of asset seizure, and highlights the complexity of using another entity’s assets as collateral. While the United States is pressing for Russian assets to simply be seized and given to Ukraine, Europe is stalling. The latter is concerned about the damage this could do to the European banking system and confidence in the euro. Two-thirds of the Russian central bank’s US$ 300 billion is in Europe, most of it invested in assets held by Euroclear. Brussels has passed a law allowing European governments to tax the profits generated by these investments, estimated at US$ 4 billion a year.

Rosneft profits rise 47% thanks to increased gas production


Russia’s biggest oil producer, state-controlled Rosneft, has posted strong financial results for 2023, despite sanctions aimed at restricting Moscow’s ability to sell its crude oil. Net profit jumped by 47.2% to 1.3 trillion rubles (US$ 14.07 billion), while adjusted free cash flow rose 44.3% to 1,427 billion rubles. Rosneft CEO Igor Sechin attributed the rise in profits to strict cost control and work to improve production efficiency. The oil and gas giant also focused on reducing its debt, which fell by 700 billion rubles, according to Mr. Sechin. Rosneft’s results were also boosted by increased production. While oil production is limited by “external constraints” (OPEC+), Rosneft has no such restrictions on natural gas production  which rose by 24.6% last year to 92.7 billion cubic meters of gas, according to official figures.

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Research & Insights #45

Central bank gold rush continues into 2023

According to the World Gold Council, annual gold demand (excluding OTC) reached 4,448 tonnes in 2023, down just 5% on a particularly strong 2022. Global gold ETFs saw their third consecutive annual outflow, losing 244 tonnes. Taking into account demand from OTC markets and other less transparent sources, total demand is estimated to have reached a new annual record of 4,899 tonnes. Since the G7 countries froze part of the Bank of Russia’s foreign exchange reserves in 2022, purchases of the yellow metal by central banks around the world have increased at a steady pace. They bought 1,037 tonnes in 2023, 45 tonnes less than the 2022 record. Mine production remained relatively stable in 2023, up 1%, while recycling increased by 9%, leading to a 3% rise in total supply. Despite the Fed’s rate hike cycle, gold ended 2023 up 15% at US$ 2,078.4 an ounce.

Sweden closes NordStream investigation

The Swedish Public Prosecutor’s Office has announced that it is closing its investigation into the sabotage of the Nord Stream gas pipelines. It considers that the case does not fall within its competence and will not be pursued. The destruction of the NordStream gas pipelines in the Baltic Sea represents the greatest act of war against the European Union since its creation, with far-reaching consequences for its energy security and the prosperity of Europeans. On February 8, 2023, American investigative journalist Seymour Hersh published an article in which he claimed that US Navy divers had placed explosive devices under the Nord Stream 1 and 2 gas pipelines whilst participating in the BALTOPS exercise in June 2022. According to Hersch, the Norwegians activated the bombs three months later.

Russian banks post record profits despite Western sanctions

According to the Central Bank of Russia, Russian banks ended 2023 with record profits of 3.3 trillion rubles (US$ 33.3 billion), up 50% on 2021, the last year of normal operations. These positive results, which reflect the resilience of the economy despite Western sanctions, are due to the boom in state-subsidised mortgages, as well as increased financing for the purchase of assets sold by Western companies leaving the country. Mortgage lending rose by 34.5% year-on-year, thanks to a generous government stimulus package designed to boost consumer demand. Subsidised mortgages accounted for more than half of new home loans. These mortgages are used by the state to indirectly support the banking sector, the construction industry and thus, indirectly, the economy.

Journalist Tucker Carlson interviewed Vladimir Putin

On February 8, President Vladimir Putin was interviewed by American TV host Tucker Carlson (transcripts). This is the first interview given to an American journalist since the outbreak of war in Ukraine nearly two years ago. Carlson said that it would enable Americans to understand Russia’s view of the war. “We are not here because we love Vladimir Putin….We are not encouraging you to agree with what Putin may say in this interview, but we are urging you to watch it. You should know as much as you can,” he said. Much of the two-hour conversation was devoted to the Ukrainian conflict, and Russia’s relations with the USA, NATO and the West in general. In the first 24 hours, the interview was viewed over 150 million times on the X platform alone.

Research & Insights #44

US$ 1 trillion spending on gas production worldwide this decade

According to the NGO Global Witness, the fossil fuel industry is expected to spend over a trillion US dollars worldwide over the next decade to secure natural gas supplies. US$ 223 billion is expected to be spent on developing and operating new gas extraction sites to supply Europe. The continent needs to replace Russian pipeline gas, which was its main source of supply until 2022. Oil giants Shell, TotalEnergies, ExxonMobil, Equinor and Eni are forecasted to be among the top spenders, and are likely to invest a total of US$ 144 billion in the continent’s gas supply over this period. Annual spending by the top 20 companies producing for Europe is set to rise by 75%, from US$ 60 billion in 2024 to US$ 105 billion in 2033. The analysis includes both fossil gas and gas condensate, a by-product of gas extraction used to manufacture kerosene, diesel and other fossil fuels. 

EU agrees to US$ 54 billion in new aid package for Ukraine

European Union leaders have agreed to provide a further US$ 54 billion in aid to Ukraine. This decision comes after weeks of resistance from Hungary, and against a backdrop of uncertainty about US aid. This aid from the European Union’s common budget will cover the period up to 2027, and Kyiv is due to receive the first tranche of US$ 4.8 billion (€4.5 billion) in March. To put this figure into perspective, the IMF estimates Ukraine’s financing gap at over US$ 40 billion for 2024, and the World Bank estimates Ukraine’s long-term reconstruction needs at US$ 411 billion. The aid package consists of around two-thirds in loans and one-third in grants, and is designed to stabilise the Ukrainian economy, finance reconstruction and prepare the country for future membership of the European Union.

Russia continues to import Western semiconductors

Russia imported more than US$ 1 billion of advanced US and European chips in 2023. According to classified Russian customs data obtained by Bloomberg, more than half of the semiconductors and integrated circuits imported in the first nine months of last year were manufactured by US and European companies. The vast majority of these sanctioned technologies enter Russia via re-exports from third countries, including China, Turkey and the United Arab Emirates, US media report. In total, customs data show that Russia imported US$ 1.7 billion worth of chips in the first nine months of 2023. The Kyiv School of Economics recently revealed that Russia imported US$ 8.77 billion of battlefield goods between January and October last year, down just 10% on the pre-sanction period.

Yandex owner to exit Russia in US$ 5.2 billion deal

Yandex NV has agreed to sell its Russian-based businesses, which account for over 95% of group sales, in a cash and stock deal worth Rbs 475 billion (US$ 5.2 billion). This agreement allows the “Russian Google” to remain under Russian control. The Kremlin has been negotiating for a year and a half to separate the national strategic asset from its Dutch parent company, Yandex NV. The deal calculates Yandex’s market capitalisation at US$ 10.2 billion. The sale price reflects “a mandatory discount of at least 50% to ‘fair value’, Yandex NV said. Almost 88% of Yandex’s ownership structure is currently free-float, with many Western funds among its shareholders. Yandex NV said in a statement that the deal would consist of a cash equivalent of at least 230 billion roubles and up to around 176 million Yandex NV Class A shares.