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Russia’s Putin says Europe only has itself to blame for surging gas prices

The European Union can only blame its own policies for record gas prices as some of its members resell cheap Russian gas at much higher prices within the bloc, Russian President Vladimir Putin said on Friday.

Putin also called on the EU to approve a new Russian gas route, the Nord Stream 2 pipeline, to ease the price crunch.

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Europe’s benchmark gas price climbed to a new record on Tuesday, up almost 800 percent since the start of the year. The price eased on Friday, but it was still up more than 400 percent.

Nord Stream 2 is opposed by the United States and particularly several east European states, which say the pipeline will make the EU even more reliant on Russian gas, which already supplies 35 percent of the bloc’s gas needs.

The pipeline from Russia to Germany, which was built in September, is still awaiting regulatory approval from Berlin and Brussels.

“The additional gas supplies on the European gas market would surely reduce the price on an exchange, on the spot (market),” Putin was quoted as saying by news agency RIA at a joint meeting of the State Council and a council on science and education.

Adding to the squeeze, the Yamal-Europe pipeline that usually sends Russian gas to Western Europe was flowing in reverse for a fourth day on Friday, pumping fuel from Germany to Poland, data from German network operator Gascade showed.

Russian gas giant Gazprom has not booked gas transit capacity for exports via the Yamal-Europe pipeline for Dec. 25, auction results showed.

Gazprom usually books capacity via the route on a short-term basis, after Poland and Russia chose not to extend their long-term transit deal last year.

Putin said Poland had “sidelined” Russia from managing the Yamal-Europe pipeline, which has been working in reverse mode by sending gas eastward. The pipeline runs from Russia to Belarus and further to Poland and Germany.

“This does not increase the Russian gas volumes on the European market, so the price is rising,” Putin said according to Interfax news agency, about the reverse flows.

Putin said on Thursday that Germany was reselling Russian gas to Poland and Ukraine rather than relieving an overheated market.

In Ukraine, another transit route for Russian gas to Europe, the head of state gas transmission operator said Gazprom had reduced daily gas transit across Ukrainian territory to 87.7 million cubic meters (mcm) from 109 mcm.

“The reduction in gas supplies to the European Union at a time when prices reached $2,000 suggests that these are not economic decisions but purely political ones, aimed at increasing pressure on the EU to launch Nord Stream 2 on terms of the Russian Federation,” Sergiy Makogon wrote on Facebook.

The benchmark European gas price soared above 2,200 euros ($2,495) per 1,000 cubic meters on Tuesday.

Makogon said Europe had set a record for extracting gas from storage because of supply shortages.

Russia has repeatedly dismissed charges it has played politics over gas and says it is meeting all the amounts it is contracted to supply. Companies with supply deals have also said their contracts have been met.

Missing out

Russian Deputy Prime Minister Alexander Novak also said Europe was missing out on additional Russian supplies because of delays to Nord Stream 2.

“To my mind, European consumers are very interested in the project to start working, while the companies, which participate in it, they could have submitted additional requests as part of long-term relations on gas supplies via this new gas pipeline,” Novak told Russian state TV channel Rossiya-24.

He also said European leaders had made mistakes in reducing the use of long-term supply deals in favor of the spot market, where prices are more volatile.

“The countries, which receive gas via the long-term deals, they receive it much cheaper,” Novak said.

Europe’s red-hot gas market could find some relief from redirected cargoes of liquefied natural gas (LNG) from Asia as European prices make this diversion attractive.

Gazprom, which has a monopoly on Russia gas exports by pipeline, has not booked gas transit capacity for exports via the Yamal-Europe pipeline for Dec. 24, auction results showed on Friday.

Gascade’s data on the Yamal-Europe pipelines showed flows at the Mallnow metering point on the German-Polish border going east from Germany into Poland at an hourly volume of around 1,218,000 kilowatt hours (kWh/h) on Friday and were expected to stay at these levels during the day.

Data from Slovak pipeline operator Eustream showed capacity nominations for Friday’s Russian gas flows from Ukraine to Slovakia via the Velke Kapusany border point were at 739,843 MWh, down from Thursday’s 785,160 MWh.

That drop was being balanced by higher nominations for flows from the Czech Republic to Slovakia, meaning nominations for flows from Slovakia to the Austrian hub Baumgarten were roughly stable compared with the previous day.

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Ryanair cabin crew in Spain announce 12 new days of strikes in July

Spain-based cabin crew at Ryanair plan to strike for 12 days this month to demand better working conditions, the USO and SICTPLA unions said on Saturday, raising the prospect of travel chaos as the summer tourist season gets under way.

The announcement came on the final day of the crews’ current strike, which began on Thursday and forced Ryanair to cancel 10 flights in Spain on Saturday.

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Cabin crew will strike on July 12-15, July 18-21 and July 25-28 across the 10 Spanish airports where Ryanair operates, the unions said in a statement.

“The unions and crew of Ryanair … demand a change of attitude from the airline,” they said in a statement, calling for Ryanair to resume negotiations on working conditions.

The unions also urged the government “not to allow Ryanair to violate labor legislation and constitutional rights such as the right to strike.”

Airline workers across Europe have been staging walkouts as the sector adapts to a resumption of travel after pandemic lockdowns.

Spain-based cabin crew at easyJet are striking for nine days this month for higher pay. The airline cancelled five flights from Spain on Saturday.

Workers at Paris’ Charles de Gaulle airport went on strike on Friday and into Saturday, forcing the cancellation of about 10 percent of flights.

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Tesla braces for delayed delivery due to China plant shutdown

Tesla Inc. is expected to announce quarterly production and delivery figures this weekend that will likely be among the worst of the year – and break its multi-quarter streak of record-setting results – due largely to an extended shutdown of its factory in Shanghai.

The electric vehicle maker may have delivered more than 261,000 vehicles globally during the three months ended in June, according to nine analysts surveyed by Bloomberg, ending a two-year stretch of consecutive quarterly gains.

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Tesla handed over more than 310,000 vehicles in the first three months of the year, more than any previous quarter.

“We cut our second-quarter deliveries estimate by 65,000 to 245,000 units, reflecting a prolonged Covid 19-related shutdown and logistical challenges in the Shanghai factory,” wrote Emmanuel Rosner of Deutsche Bank in a research note to clients. “Recall that during the first-quarter call, CEO Elon Musk had provided directional guidance of sequentially flat deliveries for the quarter but the situation in China worsened subsequently,” only improving in early June.

Shares of Tesla rose 1.2 percent to close trading Friday at $681.79, but the stock is down about 35 percent so far this year.

Deliveries are one of the most closely watched metrics at Tesla. They underpin the Austin, Texas-based company’s financial results and are widely seen as a broad barometer of consumer demand for EVs amid a wider shift away from the internal combustion engine.

Many large automakers will announce US sales results Friday but Tesla, which reports global totals, hasn’t specified a release date.

Dan Levy, an analyst with Credit Suisse, reduced his delivery estimate for the period to 242,000 units. “In aggregate, we believe the Shanghai shutdown accounted for about 90,000 units of lost production in the second quarter,” Levy wrote in a note to clients.

Tesla makes the Model S, X, 3 and Y vehicles at its plant in Fremont, California. It also produces Models 3 and Y at a factory near Shanghai. The company has begun delivering the first Model Ys from its new plant near Berlin and held a “Cyber Rodeo” event for 15,000 people in April to celebrate a new factory in Austin.

‘Money Furnaces’

However, both Berlin and Austin have been slow to ramp up production, with Musk warning in a late May interview that both plants are “gigantic money furnaces.”

Analysts and investors are also worried that the price hikes automakers are imposing to combat soaring raw material costs will weigh on demand. Tesla had boosted its sticker prices by as much as $6,000 a car earlier this month, according to Electrek.

A stronger-than-expected delivery number could provide a boost to Tesla’s stock, which is down more than 35 percent this year amid wider market concerns about rising energy costs, inflation and a potential recession.

Musk shares many of those concerns and is in the process of laying off 10 percent of Tesla’s salaried work force while pushing others to return to the office.

Earlier this week, Tesla laid off roughly 200 people on its Autopilot team, mostly hourly employees who worked as data annotation specialists.

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Regulator urges Germans to prepare for possible gas shortage

Fearing Russia might cut off natural gas supplies, the head of Germany’s regulatory agency for energy called on residents Saturday to save energy and to prepare for winter, when use increases.
Federal Network Agency President Klaus Mueller urged house and apartment owners to have their gas boilers and radiators checked and adjusted to maximize their efficiency.
“Maintenance can reduce gas consumption by 10 percent to 15 percent,” he told Funke Mediengruppe, a German newspaper and magazine publisher.
Mueller said residents and property owners need to use the 12 weeks before cold weather sets in to get ready. He said families should start talking now about “whether every room needs to be set at its usual temperature in the winter – or whether some rooms can be a little colder.”
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The appeal came after Russia reduced gas flows to Germany, Italy, Austria, the Czech Republic and Slovakia earlier this month, as European Union countries scramble to refill storage facilities with the fuel used to generate electricity, power industry and heat homes in the winter.
Russian state-owned energy company Gazprom blamed a technical problem for the reduction in natural gas flowing through Nord Stream 1, a pipeline which runs under the Baltic Sea from Russia to Germany.
The company said equipment getting refurbished in Canada was stuck there because of Western sanctions over Russia’s invasion of Ukraine.
German leaders have rejected that explanation and called the reductions a political move in reaction to the European Union’s sanctions against Russia after it invaded Ukraine.
Vice Chancellor Robert Habeck, who is also Germany’s economy and climate minister and responsible for energy, has warned a “blockade” of the pipeline is possible starting July 11, when regular maintenance work is due to start. In previous summers, the work has entailed shutting Nord Stream 1 for about 10 days, he said.
The question is whether the upcoming regular maintenance of the Nord Stream 1 gas pipeline will turn into “a longer-lasting political maintenance,” the energy regulator’s Mueller said.
If the gas flow from Russia is “to be lowered for a longer period of time, we will have to talk more seriously about savings,” he said.
According to Mueller, in the event of a gas supply stoppage, private households would be specially protected, as would hospitals or nursing homes.
“I can promise that we will do everything we can to avoid private households being without gas,” he said, adding: “We learned from the coronavirus crisis that we shouldn’t make promises if we’re not entirely sure we can keep them.”
He said his agency “does not see a scenario in which there is no more gas coming to Germany at all.”
Also on Saturday, German chemical and consumer goods company Henkel said it was considering encouraging its employees to work from home in the winter as a response to a possible supply shortage.
“We could then greatly reduce the temperature in the offices, while our employees could heat their homes to the normal extent,” Henkel CEO Carsten Knobel told daily newspaper Rheinische Post.
Earlier this month, Habeck activated the second phase of Germany’s three-stage emergency plan for natural gas supplies, warning that Europe’s biggest economy faced a “crisis” and storage targets for the winter were at risk.
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