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Novatek signs UN Global Compact

Global markets had a turbulent time in September. But in Russia the rise continued, with the market noting a new ten-year high. The reason, of course, is the ever-increasing price of energy; Russia’s main export is energy so it obviously benefits from higher prices.

The price of oil rose to over USD 80 for the first time in quite a while, but even more important and more discussed was the price of gas peaking at over USD 900 per mcm. European stocks are very low, and demand is strong even though winter has not yet begun. The situation looks very bright for the gas companies (but not so much for European electricity consumers). The fund has invested in two gas companies – Gazprom and Novatek, both of which were strong in September. Gazprom rose 21 percent and Novatek 13 percent. Carnegie Rysslandsfond as a whole rose by 5.5 percent, all in SEK terms.

Novatek signed the UN Global Compact in September, and this is something we have advocated for a long time. On a less upbeat note, the company’s US CFO Mark Gyetvay was accused of not declaring his offshore assets and failing to pay taxes. However, Gyetvay has no direct ownership in Novatek.

Gazprom has now completed the construction of North Stream 2, but is awaiting EU approval before the pipeline can be put into operation. Gazprom’s board has also decided to expand the company’s investment programme for this year to RUB 1.7 trillion. The favourable situation in the gas market makes investments necessary and possible, and the company will still have enough cash left over for a substantial dividend. At the same time, Lukoil and Gazpromneft are making major investments in a new oil project in Meretoyakha. Total production potential is 9.1 million tonnes of oil and 500 bcm of natural gas. The investment is estimated at about RUB 200 billion. Russian oil and gas companies continue to invest in new production.

Russia has quietly held elections to its parliament, the Duma, and Putin’s United Russia party retains control. There are, of course, many accusations that the election was not correct, but protests have been impossible due to restrictions by the authorities.

In light of China’s electricity crisis, InterRAO has doubled its electricity supplies to China. InterRAO also supplies electricity to Finland. Both the main networks to Finland and to China are now running at 100 percent.

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