Russian minister says OPEC oil deal hurting domestic economy

Maxim Oreshkin’s comments are the first by a senior Russian official giving a negative assessment of the OPEC and Russia deal to curb crude oil production. (Reuters)
Updated 23 November 2017
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Russian minister says OPEC oil deal hurting domestic economy

MOSCOW: Russia’s economic growth in October was negatively affected by a global deal between members of OPEC and Russia to curb crude oil production, Russia’s economy minister said on Thursday.
Maxim Oreshkin’s comments are the first by a senior Russian official giving a negative assessment of the deal, in which Russia joined OPEC and others in cutting output from January by about 1.8 million barrels per day (bpd) to end a supply glut.
The minister was speaking a week before Russia and the Organization of the Petroleum Exporting Countries meet in Vienna to discussing an extension of the pact to curb output, possibly to the end of 2018. It is now due to expire on March 31.
Under the deal, Russia agreed to cut output by 300,000 bpd from its level in October 2016.
“Because of the OPEC deal we have a negative direct impact from oil production, as well as indirect effects related to low investment activity due to production limits,” Oreshkin said.
Russia’s oil-dependent economy grew 1.8 percent year-on-year in the third quarter of 2017, slowing from 2.5 percent in the second quarter, the best annual rate since the third quarter of 2012, data showed this month.
Oreshkin and other officials have said the economy was on track to grow by more than 2 percent after two years of recession. But data on retail sales and other areas have raised questions about the durability of the recovery.
Oreshkin told reporters that annual inflation in Russia had slowed to 2.4-2.5 percent, adding that the ministry retained its full-year inflation forecast of up to 2.8 percent.
Russian Energy Minister Alexander Novak said on Monday Russia would determine its position on a extending the oil pact later in November. OPEC meets in Vienna on Nov. 30.
Top crude exporter Saudi Arabia has been lobbying oil ministers to agree to a nine-month extension at next week’s meeting, people familiar with the matter told Reuters.
Brent crude futures have climbed above $60 a barrel for the first time since mid-2015 thanks to the oil pact, helping Russia’s economy which depends heavily on oil and gas revenues.
But, if oil stays in the $60-$65 range or higher, Russia would be unlikely to support a deal extension for fear the spike would be followed by a damaging fall, said Chris Weafer, a senior partner at Moscow-based Macro-Advisory strategy firm.
“Moscow has had to deal with the economic and social consequences of two recent oil price collapses, in 2008-09 and from 2014,” he said in a note this week.
“The damage from a third collapse would likely greatly outweigh the financial gains to be made from higher oil in the meantime,” he wrote.


SoftBank’s Son says Japan is ‘stupid’ to disallow ride-sharing

Updated 19 July 2018
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SoftBank’s Son says Japan is ‘stupid’ to disallow ride-sharing

  • ‘Ride-sharing is prohibited by law in Japan. I can’t believe there is still such a stupid country’
  • SoftBank and its nearly $100 billion Vision Fund have invested in ride-sharing firms Uber, Didi, Ola and Grab, as well as in other technology companies

TOKYO: SoftBank Group Corp. Chief Executive Masayoshi Son blasted Japan on Thursday for not allowing ride-sharing services, calling it “stupid” and saying the country was lagging overseas rivals in areas such as artificial intelligence (AI).
“Ride-sharing is prohibited by law in Japan. I can’t believe there is still such a stupid country,” Son said at an annual company event aimed at customers and suppliers.
The comments reflect Son’s frustration with Japan where he built SoftBank’s domestic telecoms business, the cash engine that has powered his investments. The group has, however, focused its growing range of technology investments overseas.
Son has also been highly critical of the government previously when SoftBank was still a fledgling telecoms service trying to break up a cozy duopoly in Japan.
“A country that gives up on the future has no future,” Son told attendees at the SoftBank World event, saying Japanese business is lagging behind countries such as the United States and China in employing AI.
Japan outlaws non-professional drivers from transporting paying customers on safety grounds and the country’s taxi industry lobby has vigorously opposed deregulation.
Its strict rules have confined ride-sharing firms to providing limited services, with SoftBank and China’s Didi Chuxing saying on Thursday they will trial a taxi-hailing service — matching users to pre-existing taxi operators — in Osaka beginning autumn of 2019. Uber is also piloting a taxi-hailing service.
When asked for a response to Son’s comments, a spokesman for the Ministry of Land, Infrastructure, and Transport said that an issue with ride-sharing services was that while the driver was in charge of transporting passengers, it was unclear who was in charge of maintenance and operation.
“The ministry believes that offering these services for a fee poses problems from the points of both safety and user protection, and careful consideration is necessary,” he said.
Ride-sharing is not the only service in Japan feeling the impact of government restrictions. Strict new rules on home-sharing came into force last month that have radically reduced the number of lettings on sites such as Airbnb Inc.
The curbs on Japan’s nascent sharing economy come despite a rapid rise in the number of inbound tourists likely to access such sharing services, and at a time when Japan is wanting to show its international face ahead of hosting the Rugby World Cup next year and the Summer Olympics in 2020.
While Son, an ethnic Korean born in Japan, has at times criticized the Japanese government, he can also be politically suave. He has praised US President Donald Trump with warm words and pledged to invest billions of dollars and create thousands of jobs in the United States.
SoftBank and its nearly $100 billion Vision Fund have invested in ride-sharing firms Uber Technologies Inc, Didi, India’s Ola and Southeast Asia’s Grab, as well as in other technology companies.
The event on Thursday saw presentations from executives at portfolio companies including Didi, General Motors’ autonomous vehicle unit Cruise and India digital payments firm Paytm E-Commerce Pvt Ltd.
Artificial intelligence is the common thread linking these companies, Son said, with that technology in the future able drive vehicles, diagnose diseases and power financial services.