• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

The Nail In The Petrodollar Coffin: Gazprom Begins Accepting Payment For Oil In Ruble, Yuan

Tyler Durden's picture




 

Several months ago, when Russia announced the much anticipated "Holy Grail" energy deal with China, some were disappointed that despite this symbolic agreement meant to break the petrodollar's stranglehold on the rest of the world, neither Russia nor China announced payment terms to be in anything but dollars. In doing so they admitted that while both nations are eager to move away from a US Dollar reserve currency, neither is yet able to provide an alternative.

This changed in late June when first Gazprom's CFO announced the gas giant was ready to settle China contracts in Yuan or Rubles, and at the same time the People's Bank of China announced that its Assistant Governor Jin Qi and Russian central bank Deputy Chairman Dmitry Skobelkin held a meeting in which they discussed cooperating on project and trade financing using local currencies. The meeting discussed cooperation in bank card, insurance and financial supervision sectors.

And yet, while both sides declared their operational readiness and eagerness to bypass the dollar entirely, such plans remained purely in the arena of monetary foreplay and the long awaited first shot across the Petrodollar bow was absent.

Until now.

According to Russia's RIA Novosti, citing business daily Kommersant, Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfers. Meaning Russia will export energy to either Europe or China, and receive payment in either Rubles or Yuan, in effect making the two currencies equivalent as far as the Eurasian axis is conerned, but most importantly, transact completely away from the US dollar thus, finally putin'(sic) in action the move for a Petrodollar-free world.

More on this long awaited first nail in the petrodollar coffin from RIA:

The Russian government and several of the country’s largest exporters have widely discussed the possibility of accepting payments in rubles for oil exports. Last week, Russia began to ship oil from the Novoportovskoye field to Europe by sea. Two oil tankers are expected to arrive in Europe in September.

 

According to Kommersant, the payment for these shipments will be received in rubles.

 

Gazprom Neft will not only accept payments in rubles; subsequent transfers via the ESPO may be paid for in yuan, the newspaper reported.

 

According to the newspaper, the change in currency was made because of the Western sanctions against Russia.

 

As a protective measure, Russia decided to avoid making its payments in US dollars, which can be tracked and controlled by the United States government, Kommersant reported.

"Protective measure" meaning that it was the US which managed to Plaxico itself by pushing Russia to transact away from the US Dollar, in the process showing the world it can be done, and slamming the first nail in the petrodollar's coffin.

This is not surprising to anyone who has been following our forecast of the next steps in the transition from the Petrodollar to the Gas-O-Yuan. Recall from April:

The New New Normal flow of funds:

  1. Gazprom delivering gas to China.
  2. China Gazprom paying in Yuan (convertible into Rubles)
  3. Gazprom funding itself increasingly in Yuan.
  4. Russia buying Chinese goods and services in Yuan (convertible into Rubles)

And all of this with the US banker cartel completely disintermediated courtesy of the glaring absence of the USD in any of the above listed steps, or as some may call it: from the Petrodollar to the Gas-o-yuan (something 40 central banks have already figured out... just not the Fed).

Still confused? Then read "90% Of Gazprom Clients Have "De-Dollarized", Will Transact In Euro & Renminbi" for just how Gazprom set the stage for the day it finally would push the button to skip the dollar entirely. Which it just did.

In conclusion we will merely say what we have said previously, and it touches on what will be the most remarkable aspect of Obama's legacy, because while the hypocrite "progressive" president who even his own people have accused of being a "brown-faced Clinton" after selling out to Wall Street and totally  wrecking US foreign policy abroad, is already the worst president in a century of US history according to public polls, the fitting epitaph will come when the president's policies put an end to dollar hegemony and end the reserve currency status of the dollar once and for all, thereby starting the rapid, and uncontrolled, collapse of the US empire. To wit:

In retrospect it will be very fitting that the crowning legacy of Obama's disastrous reign, both domestically and certainly internationally, will be to force the world's key ascendent superpowers (we certainly don't envision broke, insolvent Europe among them) to drop the Petrodollar and end the reserve status of the US currency.

As of this moment, both Russia and China have shown not on that it can be done, but it is done. Expect everyone to jump onboard the new superpower axis bandwagon soon enough.

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Wed, 08/27/2014 - 13:58 | 5150033 RacerX
RacerX's picture

and so it begins. The real reason for the war.

Wed, 08/27/2014 - 14:00 | 5150046 nope-1004
nope-1004's picture

Yes, war must occur now.  On the other side of it will be a new financial system that otherwise would not be publicly accepted.

 

Wed, 08/27/2014 - 14:01 | 5150055 BlackChicken
BlackChicken's picture

Holy shit, it's on.

Wed, 08/27/2014 - 14:04 | 5150076 Divided States ...
Divided States of America's picture

The end game is near for the USD...in order to keep investors invested in the USD is for them to keep buying US stocks...and the Fed is making sure that they do so by propping up the US stock markets with new highs every fuckin day.....lets see how long they can do this.

Wed, 08/27/2014 - 14:05 | 5150090 Pladizow
Pladizow's picture

Once the trade is complete, in what currency will the funds be parked?

Still the dollar - perhaps?

Wed, 08/27/2014 - 14:09 | 5150125 ZerOhead
ZerOhead's picture

It won't be Bitcoin...

Wed, 08/27/2014 - 14:13 | 5150153 SMG
SMG's picture

Petrodollar will live until Saudi Arabia does what Gazprom just did.  So not final yet.

Wed, 08/27/2014 - 14:15 | 5150174 Slave
Slave's picture

And what is the (R)etard solution to all of this...? Kill 'em all?

Wed, 08/27/2014 - 14:18 | 5150198 JoeSexPack
JoeSexPack's picture

Before the FED's owners take their loss they'll accuse Russia of cheating, flip the poker table & start a fight.

 

Trying to steal all chips & run out the back while the others knock each other out.

 

Bet on it.

Wed, 08/27/2014 - 14:20 | 5150206 strannick
strannick's picture

Oil in Rubles, and gold in Yuan,

Germany saying the US should just move along. Yep, its on.

Wed, 08/27/2014 - 14:24 | 5150229 Alea Iactaest
Alea Iactaest's picture

Der Speigal has clearly been moving away from the US embrace (death grip?) for awhile now. The stage is set. US will be a pariah, with the world cheering on every move to give the Exceptional what they consider we rightly have coming.

Wed, 08/27/2014 - 14:28 | 5150269 SafelyGraze
SafelyGraze's picture

"it doesn't really make any difference (to the US) whether oil is traded in dollars or rubles or yuan"

- ambrose

http://en.wikipedia.org/wiki/Ambrose_Evans-Pritchard

 

Wed, 08/27/2014 - 14:29 | 5150278 Latina Lover
Latina Lover's picture

I wonder how you say "Fuck You America" in Russian and Chinese?

Wed, 08/27/2014 - 14:34 | 5150320 SoberOne
SoberOne's picture

And gold "Yuans" at the news...

Wed, 08/27/2014 - 14:35 | 5150338 Pinto Currency
Pinto Currency's picture

 

 

Let's see how long the adolescent president and congress can avoid doing their homework which is currency reform and debt market restructuring.

Wed, 08/27/2014 - 14:40 | 5150383 ilion
ilion's picture

I kinda start to like the Russians.

Wed, 08/27/2014 - 14:46 | 5150438 y3maxx
y3maxx's picture

...Looks like the Fat Lady has started to sing.

Wed, 08/27/2014 - 14:55 | 5150502 Quus Ant
Quus Ant's picture

Maybe war.  Or will the US overthrow Russia with yet another color revolution?

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

http://www.voltairenet.org/article185074.html

 

September is going to be a wild month. 

Wed, 08/27/2014 - 15:15 | 5150633 Save_America1st
Save_America1st's picture

Those who act first, act best.  There's already going to be a lot of followers to this....those nearly 100 other countries who have joined the BRICS aliance.

The one who acts last is fucked.  And I'm pretty sure America has been set up to be the only douche bag at the dance without a girl. 

Wed, 08/27/2014 - 16:38 | 5151110 Liberal
Liberal's picture

As a staunch liberal, I have no idea what this deal means.

Is this going to affect my EBT card?

Wed, 08/27/2014 - 21:50 | 5152234 asdasmos
asdasmos's picture

They are increasing the cost to renounce US citizenship to $2,350 after record renunciations.

isaacbrocksociety.ca/2014/08/27/state-department-to-hike-renunciation-fees-to-us2350-says-no-public-benefit-in-respecting-human-right-to-change-nationality/

The amount of people renouncing are undercounted. Waiting times around the world do not add up as they can process many per day. In Toronto, Canada, the amount they can process in a year is just about the same as the official number of renunciants and relinquishments for the wolrd per year.

Thu, 08/28/2014 - 01:22 | 5152677 HardlyZero
HardlyZero's picture

Nail is so old school.

They should say 'nailgun' in coffin.

For the banks.

 

Hey do DSK and Corzine date each other these days...no one else will ?

Thu, 08/28/2014 - 02:50 | 5152768 Drunk In Church
Drunk In Church's picture

The petro dollar is doing just fine and dandy.  If anything, the currency will gain quite significantly.  There's no future in gold.  The Yankee dolla is king. 

Wed, 08/27/2014 - 15:03 | 5150549 MeMadMax
MeMadMax's picture

I don't think Ochooma gives a shit... 

 

And why would he?

Wed, 08/27/2014 - 15:14 | 5150624 dontgoforit
dontgoforit's picture

It doesn't make a bit of difference.  None.

Wed, 08/27/2014 - 15:40 | 5150761 TheReplacement
TheReplacement's picture

You all are so cute and innocent still.  As if this is an accident of bad policy or some other unintential consequence.  Ha.

Thu, 08/28/2014 - 11:49 | 5153997 Meat Hammer
Meat Hammer's picture

Bingo! "They" are ready to crash the US dollar now that the plebs have made them retarded rich by jumping into the stock market with both feet and buying into the housing bubble...again.  They already own everything, so fuck it.  They'll jump out in time and we'll be left holding our dicks.

Putin and Obama are just actors in a play.

Same as it ever was.

Wed, 08/27/2014 - 16:41 | 5151124 logicalman
logicalman's picture

She's at least clearing her throat!

 

Wed, 08/27/2014 - 21:38 | 5152186 Tarshatha
Tarshatha's picture

There goes my fucking pension.

Thu, 08/28/2014 - 01:31 | 5152689 Ward no. 6
Ward no. 6's picture

russia is fascinating

not just what is happening now, but even their history (although some of it so sad )

I like their language for starts...

luv their writers... Dostoyevsky being one of my favorites...

even einstein once said ""Dostoevsky gives me more than any scientist, more than Gauss." 

Kefir originates from russia

interesting life in yakutia russia

http://askyakutia.com/

 

Wed, 08/27/2014 - 14:48 | 5150454 JRobby
JRobby's picture

That's math. And math is hard.

Wed, 08/27/2014 - 14:36 | 5150329 Pinto Currency
Pinto Currency's picture

-

Wed, 08/27/2014 - 16:33 | 5151089 NoDecaf
NoDecaf's picture

@ Latina Lover - In Russian it's "Idi na hoi" which translates into "go to the dick" which is their way of saying "fuck you"

Wed, 08/27/2014 - 21:50 | 5152231 Eeyores Enigma
Eeyores Enigma's picture

Lets be clear.

EVERY country will accept ANY currency for ANY of their resources.

BUT it will be PRICED in dollars so those with the goods will look at that and adjust accordingly. As soon as some currency or basket of currencies hold value compared to the dollar THEN and only then will it be used for international trade.

Hey...we didn't make the rules we just play by them...oh...wait a minute...we DID make the rules...never mind.

 

 

Thu, 08/28/2014 - 04:16 | 5152825 conscious being
conscious being's picture

Lets be clear.

You don't understand the petro$.

Wed, 08/27/2014 - 22:19 | 5152341 Moustache Rides
Moustache Rides's picture

No ticky, no laundry

Thu, 08/28/2014 - 01:25 | 5152669 HardlyZero
HardlyZero's picture

Fiat wars....and it's gone.

https://www.youtube.com/watch?v=_nVk25ZvTkU

 

Oiling up your car with trap greese will make the roadway smell like frys.

No tickee, no Oilee.

Wed, 08/27/2014 - 22:22 | 5152345 Bro of the Sorr...
Bro of the Sorrowful Figure's picture

???????

Wed, 08/27/2014 - 19:48 | 5151801 SaracenSam
SaracenSam's picture

If that were true, they wouldn't have destroyed Iraq and Libya and killed their leaders.

Wed, 08/27/2014 - 16:34 | 5151091 Freddie
Freddie's picture

The USA is a Soros and Tel Aviv run country now.

Thu, 08/28/2014 - 07:14 | 5152967 Volaille de Bresse
Volaille de Bresse's picture

"The USA is a Soros and Tel Aviv run country now"

They're an easy scapegoat. I'm sure it's been ruiend by good old WASP's. The two poisons of Murica are ignorance and arrogance, not kippas.

You've displayed plenty of both during the 80's and the 90's now the bill is on the table and you gotta pay it.

Wed, 08/27/2014 - 19:32 | 5151738 Bangin7GramRocks
Bangin7GramRocks's picture

The U.S. still has how many soldiers stationed in Germany? I think this isn't what it appears. Rightly or wrongly, when the shit starts to unravel, they will all come running back to the dollar.

Wed, 08/27/2014 - 15:16 | 5150643 mt paul
mt paul's picture

dead mike wonders 

if the cigars he steals

will be priced in yuan or rubles

Wed, 08/27/2014 - 20:20 | 5151935 El Oregonian
El Oregonian's picture

Well, there's 4 players left with only 3 chairs remaining and the music has just stopped. One will lose, the USA is the furthest away from a chair....

Unfortunately, unless we have a Mexican Stand-off, then firepower will rule the day....

Wed, 08/27/2014 - 14:47 | 5150443 JRobby
JRobby's picture

"Before the FED's owners take their loss"

They will vaporize half of the globe. Hopefully more will begin to see the psychopaths that have BEEN running things for who they are soon.

Wed, 08/27/2014 - 16:03 | 5150922 AL_SWEARENGEN
AL_SWEARENGEN's picture

" finally putin'(sic) in action the move for a Petrodollar-free world."  Tyler, it's verbiage like that that keeps me coming back for more.

Wed, 08/27/2014 - 16:34 | 5151088 Time for Titus
Wed, 08/27/2014 - 18:21 | 5151497 American Dreams
American Dreams's picture

Oh dear God!!! Not the Banks!

Know your enemy

AD

Wed, 08/27/2014 - 20:19 | 5151930 BFUSA
BFUSA's picture

Drudge Report: Russians hacked American Banks

Jack Ryan: Shadow Recruit

 

http://youtu.be/K9KAnx4EvaE

Wed, 08/27/2014 - 14:30 | 5150284 JRobby
JRobby's picture

That would be full-retard no?

Do NOT follow this link or you will be banned from the site!