(Bloomberg) — Gazprom PJSC cut natural gas supplies via its most important link to the European Union to about 20% of the pipeline’s capacity, in a move that could test western unity five months into the war.
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EU member states agreed on Tuesday to cut their demand for gas by 15% over the next eight months. However, some countries may be reluctant to make sacrifices for Germany, which failed to diversify energy sources while lecturing southern nations on putting their fiscal houses in order, according to a senior EU diplomat who asked not to be identified to discuss a confidential issue.
RT lost an appeal to overturn an EU ban following the invasion of Ukraine, as a court ruled the bloc “cannot be criticized” for temporarily shutting down the Kremlin-backed broadcaster.
(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)
Key Developments
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Ukraine’s Fight to Rebuild in Face of Unrelenting War
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Russian Gas Cuts Risk Reviving Old EU Divisions This Winter
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Wheat Futures Keep Rising From Recent Lows With Ukraine in Focus
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UniCredit’s Russia Business Emerges as Surprise Top Performer
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Poland Will Spend 1% of GDP to Aid Ukraine Refugees, Study Shows
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U.S. Senators Call for Sanctions on Russian Oil Sales to China
On the Ground
Ukraine continued its offensive in the south, striking the main bridge that connects the city of Kherson to Russian-occupied territory across the Dnipro River. The region’s Russian-installed authorities said the link was shut after the attack. Ukraine retook two villages in the area, its southern command said. Elsewhere, Russia shelled Dnipropetrovsk region overnight and hit Ukraine’s second-largest city of Kharkiv with missiles, according to local authorities. Ukraine’s military said fighting was ongoing in the Bakhmut district of the Donetsk region.
(All times CET)
Russian Further Reduces Gas Flows to Europe (12:55 p.m.)
Gas supplies via the Nord Stream pipeline fell to 20% of capacity on Wednesday, according to German grids.
The move had been previously announced by Gazprom, which said that flows would be cut from 40% of capacity due to the need to service a turbine.
The cuts have already led to reduced deliveries to buyers, with Italy’s Eni SpA saying shipments from Russia will be about 21% less on Wednesday than in recent days.
Poland to Spend 1% of GDP to Aid Ukraine Refugees, Study Finds (12:30 p.m.)
Spending by private citizens and authorities in Poland to support Ukrainian refugees will exceed 25 billion zloty ($5.3 billion) this year, or almost 1% of the country’s economic output, a state-affiliated think tank estimated.
Poles spent as much as 10 billion zloty on aid in the first three months since the war began, survey results released by Polish Economic Institute showed.
More than 2 million Ukrainians have settled in Poland since Russian invaded, leading to a massive outpouring of support from private citizens.
RT Loses Appeal Against EU Ban on Russian Propaganda (11:40 a.m.)
The EU General Court, the bloc’s second-highest court, said a temporary ban on some Russian state-funded media outlets was justified because they supported the war against Ukraine.
The EU banned RT in March, accusing it of spreading “propaganda” and being “essential and instrumental in bringing forward and supporting the aggression against Ukraine.”
Kremlin spokesman Dmitry Peskov denounced the verdict as “an attack on media freedom.” He said Russia will retaliate against “western media” in Russia, without specifying which outlets.
Ukraine’s Exports at 30% of Pre-War Levels, Kubrakov Says (11:30 a.m.)
Ukraine’s exports have returned to 30% of their pre-war levels and will keep rising despite a Russian blockade cutting off access to seaborne shipments, Infrastructure Minister Oleksandr Kubrakov said in an interview.
Efforts to revive idle rail links, add capacity at existing border posts and open new crossings have helped exports recover as hopes for a short conflict were dashed, according to the minister.
“Everybody realizes the war will be longer and nobody can predict how long it will be,” said Kubrakov.
Macron Pushes Back Against Russian Influence in Africa (11:00 a.m.)
French President Emmanuel Macron is ready to step up support to African countries facing food and security concerns in a bid to stem Russia’s growing sway in the region.
Macron is visiting Cameroon, Benin and Guinea Bissau this week while Russian Foreign Minister Sergei Lavrov tours other countries in the continent as Moscow seeks to strengthen its relations in Africa following its invasion of Ukraine.
Macron in Cameroon’s capital Yaounde blamed Russia for disrupting the global food supply and triggering shortages in Africa. He promoted his so-called FARM initiative with which France and allies pledge to help developing countries boost their own agricultural capacity.
UniCredit Gets Boost From Russian Unit’s Performance (10:40 a.m.)
Profit at UniCredit SpA’s Russian unit got a boost from the ruble’s appreciation, Chief Executive Officer Andrea Orcel said in an interview, as the Italian lender has held off exiting that market following the invasion of Ukraine. It is still reviewing options on Russia, including a possible sale, he said.
UniCredit reduced its total Russia exposure by an additional 2.7 billion euros ($2.7 billion) since March, while profit at its local subsidiary rose to 346 million euros on higher revenues and a release of provisioning due to the shrinking loan portfolio, the bank reported.
UniCredit, Raiffeisen Bank International AG and Societe Generale SA were the top European lenders in Russia before the war. SocGen sold its Rosbank unit to the investment firm of Russia’s richest man, Vladimir Potanin, while Raiffeisen has said it may sell its local subsidiary.
Chernihiv Highlights Challenges of Rebuilding Ukraine’s Economy (9:50 a.m.)
A push to rebuild Chernihiv, a city of 280,000 that was battered by a Russian siege early in the war, highlights the challenges Ukraine’s reconstruction efforts face even after Kremlin troops pulled back in mid-April.
Much of the city’s infrastructure, housing stock and businesses remains in ruins after Russian shelling. The highway to Kyiv, 80 miles away, relies on a makeshift floating bridge to cross the Desna, a major tributary to the Dnipro river that divides Ukraine’s east from west.
Yuriy Sinitsa, a local business owner, says his pet accessories company was at 50% of prewar output in June, up from 10% in April. Yet the city’s proximity to the Russian and Belarusian borders leave it exposed to further attacks. “The bombing could restart any day,” Sinitsa said.
Ukraine’s Naftogaz to Offer New Deal for Bondholders (9:45 a.m.)
Ukrainian state-run energy company NJSC Naftogaz Ukrainy will “urgently” present a new plan to delay debt payments after missing a final deadline on a foreign bond.
“Naftogaz is working with all interested parties to get bondholders’ approval,” the company said Wednesday in an emailed statement.
A grace period for Naftogaz to redeem $335 million of international bonds expired on Tuesday as the government blocked the payment. Bondholders rejected a restructuring proposal put forward earlier this month. Ukraine is seeking a two-year pause on its own foreign bond payments.
Turkey Says Grain Shipments Could Start Within a Week (8:00 a.m.)
Grain shipments could resume within a week and reach 25 million tons by the end of the year, although the exact timing of when grain exports begin hasn’t been set, Turkish President Recep Tayyip Erdogan’s spokesman, Ibrahim Kalin, said in an interview Tuesday.
Kalin dismissed concerns that a Russian missile strike on Odesa’s port after the deal was reached would undermine the agreement. Turkey is due to open a joint operations center with Ukraine, Russia and the United Nations on Wednesday to coordinate trade under the agreement.
As many as 100 vessels carrying grain and agricultural products were trapped in Ukrainian ports when war broke out.
Microsoft, Michelin Take Hits From Russia Pullbacks (6:30 a.m.)
Microsoft Corp. said its decision to scale back in Russia after the start of the war led to charges of $126 million. French tiremaker Michelin, which suspended operations in the country after the invasion, took a 202 million euro hit from its exit.
Over 1,000 companies have voluntarily curtailed or suspended operations in Russia beyond what is legally required since the invasion, according to economists at Yale University. McDonald’s Corp. announced a $1.2 billion charge this week after it sold its Russian business.
U.S. Senators Call for Sanctions on Russian Oil Sales to China (12:30 a.m.)
Republican senators, including Marco Rubio and Rick Scott, introduced a bill to sanction China’s purchases of oil and other energy supplies from Russia in an effort to cut off funding for the Kremlin’s war against Ukraine.
The bill would impose penalties on any entity insuring or registering tankers that ship oil or liquefied natural gas to China from Russia, according to Rubio’s office.
China’s imports of Russian crude have surged this year as the world’s biggest energy consumer picked up discounted barrels that European buyers had shunned.
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