Putin may nationalize US assets

Investment Analysis Clubs Macro Economic Trends and Risks
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https://www.nytimes.com/2022/03/10/world/europe/russia-econo…

**Facing economic calamity, Putin talks of nationalizing Western businesses.**

**With the ruble collapsing, the economy contracting and people abandoning the country, Russia’s leader talks of a Western plot to destroy the country.**

**By Anton Troianovski, The New York Times, Published March 10, 2022**

**Besieged by an onslaught of sanctions that have largely undone 30 years of economic integration with the West in the space of two weeks, President Vladimir V. Putin on Thursday opened the door to nationalizing the assets of Western companies pulling out of Russia and exhorted senior officials to “act decisively” to preserve jobs.**

**Russia is in danger of defaulting on its sovereign debt and facing a sharp contraction in its economy... With the ruble having lost nearly half its value in the last month, prices of basic goods have risen sharply, causing panic buying at supermarkets. The central bank, which has kept the Moscow stock exchange closed since the war began, has introduced new capital controls, preventing companies from withdrawing more than $5,000 in cash for the next six months....**

**Mr. Putin told officials in the televised meeting that the assets of such companies should be put under “external management” and then transferred “to those who want to work.” Dmitri A. Medvedev, the vice chairman of Mr. Putin’s security council, said the Kremlin could respond to Western companies leaving the Russian market with the seizure of their assets “and their possible nationalization.”...** [end quote]

I sold my treasured XOM stock (with its 8.5% dividend yield) the week before Russia invaded Ukraine in the expectation that Russia would eventually nationalize Exxon’s multibillion-dollar investment in the Sakhalin oil field. So far, XOM’s price hasn’t dropped since the price of oil has been rising. But I wouldn’t be the least bit surprised if Russia nationalizes foreign assets in the near future.

https://www.google.com/search?client=firefox-b-1-d&q=xom…

Wendy

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Besieged by an onslaught of sanctions that have largely undone 30 years of economic integration with the West in the space of two weeks, President Vladimir V. Putin on Thursday opened the door to nationalizing the assets of Western companies pulling out of Russia and exhorted senior officials to “act decisively” to preserve jobs.

There are all sorts of levels of business expertise. His senior officials did not get to where they are running an efficient operation.

Anecdotal, in my area there is bar/restaurant group. One of the investors is a hedge fund manager. The group moved their location about three years ago to a great spot on the river. The prior ownership of the spot lost it over time. There was work to be done on the location. The hedge fund guy put in $10 million. Probably a day or a week or a month’s work to the funds guy.

That restaurant is a good sized but not $10 million’s worth. It will always be a loser. They do not care.

My cousin out of Waterford Ireland has had 14 of the largest pubs in the US. He is selling them to retire now. Three of his pubs were in casino food courts dating back to a time when the casinos were packed 24/7. His rents were the best deals in the casinos.

He was offered a fourth casino location on a new wing in the casino. The concept restaurant/pub would have cost $3 million like his other concepts. He was to be down a corridor around the corner while the Mexican $2 million concept was front and center for the project. My cousin wanted front and center. He was told no, he rejected the deal because recouping $3 million would have been hard.

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But I wouldn’t be the least bit surprised if Russia nationalizes foreign assets in the near future.

This begs the question as to whether there are more US tangible assets in Russia than there are tangible Russian assets in the US (or otherwise confiscatable by the US).

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Here comes an updated version of the US War Powers act that allowed the US to take over and sell German businesses in the US in both World Wars.

No big deal. A minor update. Just change the perps.

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Here comes an updated version of the US War Powers act that allowed the US to take over and sell German businesses in the US in both World Wars.

Remember Henry Fonda doing TV commercials for GAF? GAF was the US operation of IG Farben, nationalized in 1941, and sold to the public in 1965.

1971 GAF View Master Commercial with Henry Fonda & Jodie Foster

https://www.youtube.com/watch?v=DAxJzwawc7g

Steve…has a View Master back when the earth was young

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The U.S. is not at war with Russia at this time. And the government is trying very hard not to go to war with Russia.

On the other hand, what will happen if Russia uses chemical weapons?
Wendy

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The U.S. is not at war with Russia at this time. And the government is trying very hard not to go to war with Russia.

On the other hand, what will happen if Russia uses chemical weapons?

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USA is in a MAJOR economic war with Russia involving trade, sanctions, weapons, missiles, ammunition, and money. USA should seize Russian assets and sell them as soon as Russia does it to USA assets in Russia. Putin calls this economic war a declaration of war.

Where is the USA/NATO redline on war crimes? I expect that before long Putin will be so desperate that he will use chemical weapons, and then we will see pictures of dead young boys and girls with blond hair lying on the ground from chemical weapons.

Killing women and children and bombing hospitals should be a REDLINE. Using chemical weapons is a definite REDLNE in my opinion.

Jaak

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Wendy

Do you think nationalizing $4 billion of XOM assets would have a huge impact on XOM? That’s just over 1% of its assets. And, presumably, there would be some tax offsets. Current oil prices far more than offset that threat. Maybe not a good call??

The US Congress with its threat of a “windfall” tax is a far greater threat. Hopefully, sound heads will prevail.

The Saudi-Russia price war a few years back followed by the collapse in demand from the pandemic caused the worldwide O&G industry to cut back on capex. Meanwhile existing fields continued to decline at circa 4-5% annually, and - on a 100 million B/D base - caused supply shortages that cut into any excess capacity and weren’t being replaced by new production. So, while the Ukraine invasion has further impacted supply from Russia, underlying demand growth coming out of the pandemic is the real underlying factor in a supply-demand crunch driving up oil prices. That’s going to take time to correct. The politics are already causing us to get in bed with former enemies like Iran and Venezuela. And maybe reconsider supply from Canada.

Plus now make friends with the very O&G companies that the current administration has been attacking? Threating them?

While all of this is going on, the existing fields continue to decline around at a rate of around 4-5 million B/D. That’s going to soak up any excess production capacity pretty quickly.

Pogo is right, once again.

People need to get a helluva more realistic about energy supply-demand. Electricity from wind and solar isn’t going to bail us out - for a very long time if ever.

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GAF. Yes, I worked for the company that eventually bought the GAF surfactants business including the Igepal brand name. Ig as in IG Farben.

Also Bayer Aspirin and Merck (still separate from Merck AG in Germany).

The subject is covered pretty well in the book Aspirin Wars. See the review on the Book–Non-fiction discussion board.

https://discussion.fool.com/aspirin-wars-money-medicine-and-100-…

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texirish
Pogo is right, once again.

People need to get a helluva more realistic about energy supply-demand. Electricity from wind and solar isn’t going to bail us out - for a very long time if ever.

Well said. Too bad too few have the thinking skills to ever understand your statement. (Not just here on the board, but nationwide.)

And thanks for the back up data. Interesting.

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Electricity from wind and solar isn’t going to bail us out - for a very long time if ever.

I agree with ‘a very long time’ but not with ‘if ever.’

Let’s take cars. It is estimated that by 2030 50% of new cars will be EVs. Let’s assume that by 2040 all new cars are EVs. It would take until 2050 to make all cars on the road (1.4 billion) electric. For instant gratification America, 28 years is an eternity.

I don’t see aviation using battery power, maybe hydrogen. There will be some point where weaning the remainder of fossil fuel users off petrol will just not make economic sense.

As with everything else, renewable adoption will follow an “S” curve and somewhere at around 85% adoption additional growth will be quite slow.

I believe one of the great benefits will be local production which makes the grid a lot less fragile, it will become more of an equalizer than a distributor. Give it 50 years in the industrialized world, 100 elsewhere.

The Captain
Greta and the Greens will be apoplectic

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People need to get a helluva more realistic about energy supply-demand. Electricity from wind and solar isn’t going to bail us out - for a very long time if ever.

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February 15, 2022 – The Clean Power Quarterly 2021 Q4 Market Report, released today by the American Clean Power Association (ACP), shows the U.S. surpassed more than 200 gigawatts (200,209 MW-ac) of total operating utility-scale clean power capacity in 2021.

Texas is now building wind and solar at break neck speed.

The top five states for new installation additions in 2021 include:

Texas (7,352 MW)
California (2,697 MW)
Oklahoma (1,543 MW)
Florida (1,382 MW)
New Mexico (1,374 MW)

The EIA is predicting that coal is going to make a comeback, but it expects that comeback to be short-lived:

We expect US renewable generation across all sectors to increase 7% in 2021 and 10% in 2022. As a result, we forecast coal will be the second-most prevalent electricity source in 2021, and renewables will be the second-most prevalent source in 2022. We expect nuclear electric power to decline 2% in 2021 and 3% in 2022 as operators retire several generators.

https://cleanpower.org/news/u-s-surpasses-200-gigawatts-of-t…

The EIA is predicting that coal is going to make a comeback in 2022, but it expects that comeback to be short-lived:

“We expect US renewable generation across all sectors to increase 7% in 2021 and 10% in 2022. As a result, we forecast coal will be the second-most prevalent electricity source in 2021, and renewables will be the second-most prevalent source in 2022. We expect nuclear electric power to decline 2% in 2021 and 3% in 2022 as operators retire several generators.”

https://electrek.co/2021/12/24/clean-energy-was-the-no-2-sou…

By 2030, renewables will collectively surpass natural gas to be the predominant source of electricity generation in the US, according to the US Energy Information Administration’s (EIA) Annual Energy Outlook 2021. But that’s not enough.

The EIA also projects that the share of renewables in the US electricity generation mix will double from 21% in 2020 to 42% in 2050. This is due to regulatory and market factors. Wind and solar will make up the bulk of that growth, as per the EIA chart below:

https://electrek.co/2021/02/08/renewables-us-electricity-203…

Jaak

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If you add in the fact that the American public is use to low fuel prices and renewables are getting cheaper it is almost a certainty that the current stituation will speed up the change away from a petroleum based economy.

I filled my SUV hybrid’s gas tank for $35 yesterday/424 mi. The person at the next pump filled his monster SUV for $160. For the difference in price my wife and I drove into Boston , saw a VanGogh exhibit, had a great lunch, headed home and still had a half a tank of gas. Oh, and we stopped on the way home for some ice teas and cookies.

We were held hostage once by the Saudis over oil do really think we are going to let the Russians do the same thing?

OTFoolish

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texirish: So, while the Ukraine invasion has further impacted supply from Russia, underlying demand growth coming out of the pandemic is the real underlying factor in a supply-demand crunch driving up oil prices. That’s going to take time to correct. The politics are already causing us to get in bed with former enemies like Iran and Venezuela. And maybe reconsider supply from Canada.

…

People need to get a helluva more realistic about energy supply-demand. Electricity from wind and solar isn’t going to bail us out - for a very long time if ever.

Wow tex, where you been hiding? A strong wind of desperately needed reality for a lot of people with their heads in strange places. Funny what high gas prices does to politicians in desperate situations isn’t it?

Anymouse <likes high gas prices, reminds people there is a reason to think before getting in the car to drive miles to save pennies on the chicken legs on special>

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Per XOM’s CEO (Darren Woods), their Russian assets on valued at “$4B and represent 1-2% of XOM’s earnings and operating capital.”
Source: Bloomberg, Mar 2, 2022

Intuition leads me to believe oil price increase will more than offset XOM’s loss from walking away from their Russian assets.

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Intuition leads me to believe oil price increase will more than offset XOM’s loss from walking away from their Russian assets.

We have moved from Crisis with Ukraine Russia to chronic. There is no reason to believe the price will stay up at least not based on a crisis. Russia is still shipping fossil fuels until the wealthy western powers can replace the Russian supplies.

The west is beginning to do more business with other suppliers.

Chinese lock downs over Covid are exploding. Expect factory lines and the use of transportation to fall significantly in China. Really the numbers are just not in yet.

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I sold my treasured XOM stock (with its 8.5% dividend yield) the week before Russia invaded Ukraine in the expectation that Russia would eventually nationalize Exxon’s multibillion-dollar investment in the Sakhalin oil field. So far, XOM’s price hasn’t dropped since the price of oil has been rising. But I wouldn’t be the least bit surprised if Russia nationalizes foreign assets in the near future.

Not me! I’m holdin’ on and collecting the dividend!

These things come and go. A year from now nobody will remember this brouhaha.

Desert (CVX, XOM, T, BNS, BKH, ED, ATGFF, NI, NWN, TRP, ENB, WRE, WGL, XEL, DUK, SO & KO) Dave