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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