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Demand for Russian Ruble Rockets as Kazakhstani Bargain Hunters Head to Russia

(More articles about the economy of the Eastern Europe countries are posted on

The collapse of the ruble is causing economic doom and gloom in Russia. But in border regions of neighboring Kazakhstan demand for the ailing currency is rocketing as people rush across the frontier to snap up bargains. 

“In northern Kazakhstan, people are buying up rubles en masse and going shopping across the border,” reports KTK TV.

Bringing goods across the long border is relatively straightforward as Russia and Kazakhstan are fellow members of the Customs Union. So people are hurrying across from cities in northern Kazakhstan to buy anything from property and cars to clothes and food in Siberia.

The price of an apartment in some Siberian cities, once far higher than in the depressed towns of northern Kazakhstan, is now on a par, KTK said.

“I’ll sell my apartment, and for the same price I’ll buy in Omsk, because of the fall of the ruble,” said an inhabitant of the city of Petropavl, which lies just 70 kilometers from the Russian frontier. “It’s an investment.”

In Kazakhstan’s capital, status-conscious bargain hunters are using the cheap ruble to buy expensive cars, an Astana-based dealer told Kazinform news agency. “We brought five cars over from Yekaterinburg [in Russia] yesterday, now we’re going to sell them on. Our rivals are doing the same, as are ordinary people wanting to acquire an expensive vehicle. You can find good options almost half as cheap as in Kazakhstan. Some people are going over and driving new cars right out of the showroom.”

The ruble has fallen almost 40 percent against the dollar and 60 percent against the euro since the beginning of this year. That may be good news for Kazakhstanis near the Russian border, but more generally it is bad news for Kazakhstan, economists say.

The falling ruble was one of the main reasons behind Kazakhstan’s devaluation of the tenge in February, which created economic havoc and public anger. The ruble’s further precipitous plunge, combined with falling oil prices, is now creating expectations of another destabilizing devaluation, which many economists in Kazakhstan believe inevitable, although the National Bank keeps vehemently ruling it out.






Source: Eurasianet via The Moscow Times

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Russian State Duma supports the idea of introduction common currency for Eurasian Union

The Russian State Duma supports the idea of Prime Minister Dmitry Medvedev about the introduction of common currency in the Eurasian Economic Union that is to be created in 2015.

The Head of Government announced this idea at a business forum in St. Petersburg held on June 15 2012.

“This is a logical proposal,” the Head of the Parliamentary Committee for the CIS Affairs Leonid Slutsky said.

He believes that the introduction of the common currency will make the Eurasian Union a real supra-national organization for ordinary people and not only an “initiative that exists in the papers”. He went on saying that they need a common currency, language, borders, common law and one parliament.

L.Slutsky added that it is necessary to take into account global experience, including the European Union.

He said, however, that the Eurasian Union will not copy the European Union, although the best elements can be borrowed. L.Slutsky believes that the question of a common currency should be solved after 2015, after the borders of the Eurasian Economic Union are outlined.

“Only then it will be clear whether it will be created a new supranational currency like the euro or whether it is appropriate to use the Russian rouble in a common economic area”, Leonod Slutski concluded.

The Eurasian Economic Union should be created by January 2015 between Russia, Belarus and Kazakhstan.





Translated by:

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Life-Changing Career Advice From LinkedIn’s Billionaire Founder Reid Hoffman

In December 2002, Reid Hoffman launched a professional networking site that would become a $20 billion-plus company, called LinkedIn.

Hoffman reveals the career wisdom that helped lead him to that success in a book called “The Start-Up of You.” Those ideas have been visualized in the following slideshow, which he’s allowed us to republish on Business Insider.


Source: BusinessInsider

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Nursultan Nazarbayev named 2014 Person of the Year in Russia

Kazakh President Nursultan Nazarbayev has been named as the 2014 Person of the Year by the Russian Biographical Institute and Institute for Economic Strategies.

As the reasons for the decision, the institutes cite President Nazarbayev’s role in the establishment of the Eurasian Economic Union (EEU).

Russian President Vladimir Putin, Belarusian President Alexander Lukashenko and Armenian President Serzh Sargsyan also claimed the award.

It is worth mentioning that Chinese leader Xi Jinping was also crowned the 2014 Person of the Year for the strengthening of economic and political ties with Russia. This is the first time the award goes to a leader of a country that is not a part of the Commonwealth of Independence States (CIS).

The award Person of the Year was founded by the Russian Biographical Institute back in 1993. It acknowledges the most outstanding citizens of the Russian Federation and representatives of other countries.










Source: Kazinform via Turkish Weekly

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Update on Kashagan: Pipelines, Environment and Budget

Image courtesy of Ak Zhaik

Public hearings on Environmental Impact Assessment (EIA) of the “Construction project of facilities for Kashagan field experimental program. Flowlines. Modifications” were held in Atyrau, Ak Zhaik reports.

Public hearings were opened by the Deputy Governor of Atyrau Oblast Gumar DUiSEMBAEV, but a bit later the meeting was joined by the Governor of Atyrau Oblast Baktykozha Izmukhambetov. In his welcoming speech NCOC managing director Stephan de Mayo, in particular, said about the transition of the consortium to a new management model (see “North Caspian project to have one joint company”).

Sulfide stress cracking

Kashagan project management director Giancarlo Ruiu. Image courtesy of Ak Zhaik

The report about technical part of pipelines replacement project was made by the Kashagan project management director Giancarlo Ruiu. At the beginning he briefly mentioned about preliminary results of root cause investigation of damaged pipelines running from D island to Bolashak plant. According to him, pipelines were damaged due to “sulfide stress cracking”.

New pipelines will be made of steel with plating by corrosion-resistant alloy of an abbreviation KSS. The length of each of two 28-inch pipelines will be 96 km. According to Mr. Ruiu, the materials of both previous pipelines, as well as new pipelines conform to operational requirements of sour oil and gas. But the selection of new material is caused by tight schedule of work that are due to start in spring of 2015 and finish in the second half of 2016.(more detailed information is below).

New Pipes Into Old Trenches

Mr. Ruiu informed that onshore and offshore pipelines will be dismantled and fully replaced. Pipes will be laid in old trenches. Offshore section of old pipelines will stay in place said Mr. Ruiu – “for the time being!” And new pipes will be laid parallel to conserved old ones at the distance of 120 meters. For both pipelines-onshore and offshore the double coating will be provided: anticorrosive and ballast ones.

The length of onshore pipeline section is 65 km and exactly there, according to Giancarlo Ruiu, is the most problematic part of the pipeline since the depth in that area is 0-1 meter which makes it difficult for vessels to drift with the purpose of welding works.



The director of NCOC department of environmental protection, loss prevention, safety and sustainable development Igor Lukashov. Image courtesy of Ak Zhaik

The director of NCOC department of environmental protection, loss prevention, safety and sustainable development Igor Lukashov presented the EIA during pipeline replacement. From his presentation it followed that since onshore pipes are laid in the existing corridor, the impact on environment will be minimized.

The biggest impact is expected during the construction activities in the sea – increase of water turbidity, change of its physical parameters with corresponding consequences for habitat. As for waste: according to Mr. Lukashov, formation of “red” level waste (the most harmful) is not expected.
As for avifauna and sea mammals, the environmental risk for them is estimated by the company as “average” and “low”.

According to Mr. Lukashov, some damage to ecology will be caused only during construction of pipelines, and during operation they “are rather passive element of the environment, and we are not expecting any impact from them”. Sounds unconvincingly, taking into account the fact that current public hearings were initiated by the need to replace the previous pipelines that “started to leak” during operation.


Later at the Q&A session NCOC ecologists echoed Mr. Lukashov, who drew public attention to the ability of Caspian Sea biota to rapid self-restoration.

- At times during winter ices travel in such a way that they scrape off everything live, but in spring everything is restored, – stated NCOC ecologist Goulsym Moutysheva.

Probably, based on this assumption, NCOC during the initial laying of pipeline in 2005 assessed the damage that could be caused to bioresources of the Caspian Sea only in $250 thousand. According to Erbolat Kadimov, the regional agricultural department deputy, after lengthy negotiations with the company this figure was increased up to $5 million. He expects from the company that this time the estimated amount of damage will be, at least, two times higher, considering that activities are conducted for the second time, as well as other factors.

Moutysheva said that calculation of possible ecological damage from replacement of pipelines is currently being conducted.

The chief specialist of Atyrau territorial inspection of forestry and fauna Bostan Suleimenov expressed his concern about the seals that could suffer during replacement of pipelines. Moutysheva said that according to forecasts in the nearest years warm winters are not expected in the Caspi when seals can swim up to coastal sites. And in cold winters these animals are based in deep-water part of the sea where no activities are planned.

Some more billions of dollars

During Q&A session the representatives of the public didn’t share Mr. Ruiu’s optimism concerning new materials for the pipeline. The teacher of Atyrau institute of oil and gas, Candidate of technical sciences Rafael Mendybaev:

- In the public hearing documents there is no chemical and technological grounding for the selection of new pipe material, there is no reference to grade of pipe, the manufacturer, or corrosion resistance test data. Where is the guarantee that the new pipe “won’t leak”?

Giancarlo Ruiu again didn’t give any specific paramenters. But informed that new pipes contain nickel:

- This material conforms to all international standards and technical parameters of those fluids that will pass through them (sour oil and gas). If we choose unalloyed steel, then it would require time for testing. And this material can be used straight away, it passed the test and is used in oil industry.

Stephane de Mahieu added to his answer:

- Cracking took place on the pipe body. During additional examination we noticed that welded seams also had cracks. Another reason was that on some sections the metal had increased hardness.
Final examination results of the reasons of pipeline failure will be provided at the beginning of 2015. We made our conclusions, and during tender for pipe production we dealt with other companies –and not the initial suppliers.

He also informed that according to the arrangement the Kazakhstan party won’t incur expenses for replacement of pipelines. S. de Mayo didn’t tell the exact budget of this expensive campaign:

- I will not voice any figures until all tender procedures are over and general contractor identified in order to avoid any speculation. I can only say that it will be about several billion dollars. From the Kazakhstan party the bodies that will supervise the activities are PSA LLP (operating 16,8% Kazakhstan shares in the North Caspian project) and Energy Ministry of Kazakhstan.


Source: Ak Zhaik

Image courtesy of Ak Zhaik, photos by Kanat Eleuov


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CIS banks to face difficulties due to low oil revenues in Russia – Fitch

The CIS banks will face difficulties due to weaker demand and lower oil revenues in Russia, Fitch Ratings report entitled “2015 Outlook: CIS and Georgian Banks” said Dec. 12.

“The 2015 outlooks for banking systems in the Commonwealth of Independent States (CIS) are dominated by geopolitics and oil,” Fitch Ratings said. “Sanctions and the lower oil price will affect the Russian economy and its banks, while Ukrainian lenders are experiencing considerable stress as a result of the country’s crisis.”

Fitch expects the Russian economy to contract by 1.5% in 2015, and there is significant downside risk to this forecast in the case of tightened sanctions, accelerated capital flight or a further fall in oil prices.

“The weak economy, already large depreciation of the ruble, closed wholesale funding markets, rising inflation and high interest rates will put significant pressure on banks’ credit profiles and ratings next year, and the sector outlook is negative,” the report says.

In Fitch’s view, increased impaired loans, more moderate profitability and continued corporate loan growth will add pressure to Russian banks’ capital ratios, some of which are already tight due to a combination of legacy NPLs, recent expansion and ruble depreciation. However, Fitch expects Central Bank swap and repo facilities to support FX liquidity and enable banks to meet sizeable external debt maturities in 2015, the agency said.

Ukraine’s banking system is experiencing considerable stress as a result of the country’s crisis. Fitch expects operating conditions to remain very difficult in 2015 and beyond, reflected in the negative sector outlook. Banks’ credit profiles have deteriorated sharply as a result of increased loan impairment and sharp hryvnia depreciation, which have impacted both capital ratios and funding stability, the report says.

Economic growth should remain solid in Kazakhstan in 2015, supporting the stable outlook on the banking sector, notwithstanding drags from Russia, the lower oil price and tenge devaluation.

However, bank performance will remain subdued due to limited new business and further provisioning on legacy NPLs. Loan book clean-ups are unlikely due to the limited size of the Problem Loans Fund, and banks will probably move loans to captive SPVs to meet the end-2015 NPL target, the report says.

The outlooks for banks in Azerbaijan, Belarus and Uzbekistan are stable, given already low ratings. However, challenges will increase as a result of lower oil prices (Azerbaijan) and the weak Russian economy (Belarus, Uzbekistan). The sector outlook is moderately positive in Georgia as the economy continues to grow strongly, benefiting lenders whose financial metrics remain robust, the report says.


Source: Trend

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