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Russia Opposes U.S. OneWeb Satellite Service, Cites Security Concerns

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  • Russia Opposes U.S. OneWeb Satellite Service, Cites Security Concerns

Russia’s state security agency is opposing a high-level deal for the U.S. OneWeb satellite startup to bring Internet access to remote parts of the country because it says the project could be used to gather intelligence and damage national security.

OneWeb, which plans to use a constellation of hundreds of satellites to provide a worldwide Internet network, struck a deal with Russian space agency Roscosmos in 2015 to send them into orbit and it clinched a joint venture with a subsidiary of the agency to service Russia.

But now, after objections from Moscow, Oneweb is relinquishing its majority stake in the venture, according to two industry sources and a Russian state procurement document.

Speaking at a conference in Moscow, Federal Security Service official Vladimir Sadovnikov said the FSB was against the project servicing Russia for security reasons since it could potentially hand a foreign Internet service provider a monopoly over rural and remote areas.

“Some of Russia’s regions would become totally dependent on a foreign satellite service,” Sadovnikov said, adding that Moscow had not received any conclusive evidence that OneWeb’s satellites would not be used for intelligence gathering.

“The only way to address the threats of foreign satellite networks like OneWeb, especially in the Arctic region and Far North, is to restrict their usage in Russia,” Sadovnikov said.

He added that Russia favored setting up a similar network partnering with India, China and countries which he described as non-aggressive.

Moscow’s ties with the West are at a post-Cold War low following Russia’s 2014 annexation of Crimea and rows over sanctions, Syria, alleged election meddling and a poisoning attack on a former spy in Britain.

Sadovnikov conceded that there were satellite projects similar to OneWeb in scale such as Iridium which were already in use, but they were not used widely and are therefore not seen as a threat.

OneWeb did not respond to a request for comment.

Roscosmos and Oleg Ivanov, Russia’s deputy minister for digital development and communications, declined to comment.

LOST CONTROL
Almost 45 percent of the world population does not have access to the Internet, according to Internet World Stats. OneWeb aims to make it available to everyone, including on aircraft and other high-speed transport. The project is meant to be fully online by 2027.

Russia is important to the success of the project as it has many remote and far-flung areas where high-speed broadband is not available.

OneWeb was founded by former Google manager Greg Wyler and closed an $1.7 billion investment deal with Airbus Group, Bharti, Coca-Cola, Hughes, Virgin Group, Qualcomm and SoftBank.

It plans to create a network of 900 satellites, most of which will be sent into orbit by 21 Soyuz launch vehicles from the Baikonur Cosmodrome in Kazakhstan and the Guiana Space Center.

The contract for the launch was signed by OneWeb, Arianspace and Roscosmos in 2015. It will cost OneWeb $1 billion to have the satellites sent into orbit, Igor Komarov, Roscosmos’ former CEO, said after signing the deal.

The first launch was scheduled for late 2017, but the company has pushed the date back several times. The launch is now scheduled for between December 2018 and February 2019, according to Wyler.

In 2017, OneWeb strengthened its partnership with Roscosmos by creating a joint venture with satellite operator Gonets, a subsidiary of Roscosmos, to develop the project in Russia. OneWeb currently holds a 60 percent stake and Gonets has the rest.

However, Gonets now intends to increase its stake to 51 percent and is looking for a contractor to estimate the cost of the deal, a document submitted by Gonets in the Russian state procurement system showed.

Gonets is a state company and is therefore required to publish details of all procurement orders in line with Russia’s anti-corruption legislation.

Two industry sources – one at the FSB, and the other an official at the Ministry for Digital Development and Communication – confirmed to Reuters that Gonets would become a controlling stakeholder in the joint venture with OneWeb.

This is a key condition for OneWeb operating in Russia, although there are other conditions as well, the source at the FSB said without detailing what those other conditions were.

“OneWeb is an important project for Roscosmos and Russia’s space industry, but national security issues come first. There are many doubts regarding that project, especially because of the sanctions against us,” said the source at the FSB.

OneWeb submitted a request to receive a frequency band in Russia, but was refused by authorities, according to Russian media reports confirmed by a communications official. A source at the Ministry for Digital Development and Communications said OneWeb would be given permission after legal issues regarding the joint venture were completed.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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