Connect with us

Business

The gas ‘poker game’ between Russia and Europe

Published

on

The EU relies heavily on Russian gas, raising concerns that Moscow could use its export to blackmail the 27-nation bloc
Share this:

The drop in Russian gas flows to the European Union has had no major effect on supplies, but it raises pressure on the region to wean itself from Moscow’s energy.

Here is a look at the issue:

– Heavy dependence –

The EU relies heavily on Russian gas, raising concerns that Moscow could use its export to blackmail the 27-nation bloc.

Last year, the EU received around 155 billion cubic metres of Russian gas, accounting for 45 percent of its imports of the fossil fuel.

While the EU is discussing an embargo on Russian oil, a gas ban is less likely for now as some countries such as Germany, the EU’s economic engine, are heavily reliant on the energy source.

“Of course, the Europeans have been quite bad in this poker game — they showed too openly how scared they were to lose the Russian gas that now, Russia is gaining the upper hand,” said Ipek Ozkardeskaya, analyst at Swissquote Bank.

Ukraine has pleaded with the EU to ban Russian gas, pointing out that it gives Moscow the financial means to press on with its war against its neighbour.

In the first two months following the February 24 invasion, Russia has raked in 63 billion euros ($65.5 billion) in gas exports, including 44 billion euros from the EU, according to the Centre for Research on Energy and Clean Air.

– Low gas flows –

Russian gas flows via Ukraine fell this week.

Ukraine’s pipeline operator GTSOU said it halted gas transport at the Sokhranivka transit point from Wednesday as Russian occupying forces now in control were interfering with operations.

Ukraine urged Russian energy firm Gazprom to increase supplies via another site, Sudzha, but the company said it was impossible to reroute all the supplies through there.

“Roughly one third of Russia’s total Ukrainian transit flows through the Sokhranivka entry point, while the rest (two thirds) passes through the Sudzha station,” said Ole Hvalbye, commodities analyst at SEB bank.

The loss amounts to two percent of Europe’s Russian gas consumption, according to Hvalbye.

“This does not scream crisis, but it is a wake-up call for what is to come,” he said.

Gazprom also announced on Thursday that it would stop sending natural gas via the Polish section of the Yamal-Europe gas pipeline after Moscow imposed retaliatory sanctions against Western energy companies.

The pipeline can carry up to 33 billion cubic meters of gas from fields in Russia’s Yamal peninsula and western Siberia through Belarus and Poland to Germany.

But a market source said the impact is limited as the pipeline had already been carrying low volumes for months.

The move will make “no difference” as long as long-term contracts for Russian gas via other pipelines are fulfilled.

– Russian and Ukrainian intentions –

Some analysts suggest that Ukraine has deliberately disrupted Russian gas flows to Europe in frustration over the EU’s reluctance to impose an embargo on Russia’s energy exports.

Carsten Fritsch, analyst at Commerzbank, said it was “possible” that Ukraine, which relies heavily on Russian oil, is pressuring Hungary to drop its opposition to an EU crude embargo.

While the EU has balked at a gas ban, there are fears that Russia could turn off the taps in retaliation at Western sanctions over the war.

Kaushal Ramesh, senior analyst at the research firm Rystad Energy, said “supplies could be stopped unilaterally by Gazprom”.

“The chances of this happening are slim, but not zero,” Ramesh said.

EU buyers are “not caught completely off guard” as storage levels are currently sufficient to last through “most of 2022, even if Russian flows were to stop instantly”.

But, he added, “the outlook for winter 2022 supply is now a lot more pessimistic”.

– The alternatives –

The EU has set a goal of cutting Russian gas imports by two thirds this year.

Germany says it can make up for the recent drop in Russian deliveries by getting gas from Norway and the Netherlands to stock up before winter.

Europeans are also counting on liquefied natural gas (LNG), which can be shipped by boat from other countries such as Qatar and the United States.

Denmark is looking into possibly raising its own natural gas production in its North Sea fields, while Romania is eyeing legislation to encourage gas extraction in the Black Sea.

Experts say the situation is another argument in favour of speeding up the transition away from fossil fuels.

“The rollout of clean energy solutions alone can lead to a reduction of 101 bcm (101 billion cubic metres of gas), which is equivalent to two thirds of Russian imports, already by 2025,” according to the E3G climate think tank.

The European Biogas Association is also ready to step in, saying it could nearly double its production to 35 billion cubic meters by 2030, equivalent to 20 percent of Russian gas imports.

Share this:

Business

Boeing delivers first 787 in a year

Published

on

By

Share this:

Boeing delivered a 787 Dreamliner to American Airlines on Wednesday, the first of that aircraft to be sent to a customer in over a year due to defects discovered in the plane.

US air safety regulators on Monday cleared the aviation giant to resume deliveries of the top-selling widebody after Boeing made changes to its production process.

“We have resumed 787 deliveries, following our thorough engineering analysis, verification and rework activities to ensure all airplanes conform to Boeing’s exacting specifications and regulatory requirements,” a company spokesperson confirmed to AFP.

It was the first delivered to a customer since June 2021. 

But for American the wait was longer.

“Today is an exciting day! We’re thrilled to welcome our first BoeingAirplanes 787-8 delivery since April 2021,” the company said on Twitter.

The 787’s travails date to late summer 2020, when the company uncovered manufacturing flaws with some jets, and subsequently identified additional issues, including with the horizontal stabilizer.

The difficulties curtailed deliveries between November 2020 and March 2021. Boeing suspended deliveries later in spring 2021 after more problems surfaced.

However, the company said none of the issues posed “an immediate safety of flight concern for the in-service 787 fleet.”

The news will be welcomed by US airlines and travelers who have suffered from massive delays and canceled flights in recent weeks, partly due to the shortage of aircraft.

American said it currently has 47 of the planes in its fleet, and has ordered another 42.

Inability to deliver the Dreamliner has dragged down Boeing’s profits, which plunged 67 percent in the second quarter. And the manufacturing changes have led to billions in additional costs for the company.

The firm has delivered just over 1,000 of the planes since it was first introduced in 2004.

Share this:
Continue Reading

Business

Brazil farmers bet on environmentally friendly cotton

Published

on

By

A combine harvests cotton in a field at Pamplona farm in Cristalina, Brazil on July 14, 2022
Share this:

The road through Cristalina, Brazil is in the middle of the tropics, but the fields on either side look like they are covered in snow — little white puffs of cotton stretching to the horizon.

The alabaster plants interspersed with the corn and soybean fields outside the central-western town are part of a silent revolution in Brazil: facing negative attention over the agribusiness industry’s environmental impact, farmers are increasingly turning to cotton and adopting sustainable techniques to produce it.

After increasing exports 15-fold in the past two decades, Brazil is now the world’s second-biggest cotton supplier, after the United States — and the biggest producer of sustainable cotton.

No less than 84 percent of the cotton grown in the South American agricultural giant is certified by the Better Cotton Initiative (BCI), an international non-profit group to promote sustainable cotton farming.

“Consumers have changed. People don’t want to buy products any more than don’t respect nature and its cycles,” says entomologist Cristina Schetino of the University of Brasilia, who specializes in cotton farming.

The industry is trying to improve the international image of Brazilian farming, tarnished by a history of slave labor, heavy pesticide use and the destruction of the Amazon rainforest for agriculture, a trend that has accelerated under far-right President Jair Bolsonaro — an agribusiness ally.

In 2005, the Brazilian Cotton Producers’ Association (Abrapa) launched a sustainability training program for farmers and introduced protocols on efficiently using water and pesticides and phasing out toxic products in favor of biological fertilizers.

A new tracing program launched with Brazilian clothing brands meanwhile lets consumers check how cotton goods were produced.

Last season, cotton farmers in Brazil replaced 34 percent of chemical pesticides with biological ones, Abrapa says.

They have also started using drones to apply pesticides more efficiently.

Switching to sustainable techniques is “a re-education process,” says Abrapa’s executive director, Marcio Portocarreiro.

“At first, farmers tend to think manly about the impact on their bottom line. But when they get past that phase… they realize that farming sustainably gives them a guaranteed market,” he told AFP.

– Added value –

Located outside Cristalina, around 130 kilometers (80 miles) south of Brasilia, the capital, Fazenda Pamplona is one of Brazil’s biggest proponents of sustainable cotton.

The 27,000-hectare (67,000-acre) operation, run by agribusiness giant SLC Agricola, is like a small city in the middle of the countryside, with a banquet hall, a children’s park, sports fields and housing for employees.

The farm aims to retain workers by creating a home where they will want to stay, says production coordinator Diego Goldschmidt.

He stands in front of two enormous bales of cotton, labeled with QR codes that detail their harvest.

“These are already sold,” he beams.

The farm produced more than 600,000 tonnes last year, 99 percent of it for export.

Sustainable cotton sells for prices up to 10 percent higher than conventional cotton.

“Besides being the right thing to do for society and the environment, it provides added value,” says Goldschmidt.

– Aiming high –

But cotton remains one of the most pesticide-intensive crops, using more than double that of soy per hectare.

The problem is the prevalence of pests such as boll weevils and the absence of organic products to stop them, says Schetino.

“There’s still a lot of dependence on chemical products, which have a negative environmental impact,” says the entomologist, who is researching alternatives.

Brazil cultivates around 1.6 million hectares of cotton a year. It is a key supplier for the global garment industry, exporting to the likes of China, Vietnam, Pakistan and Turkey.

Abrapa has set itself the ambitious goal of surpassing the US to become the world’s biggest cotton supplier in 2030.

“Brazil may not have a good image on sustainable farming yet,” says Goldschmidt.

“But we will soon. There’s a lot of potential.”

Share this:
Continue Reading

Business

Low Rhine deepens Germany’s energy crisis

Published

on

By

The prospect of severe, longer-term limits to traffic spells a new headache for the industries lined up on the banks of the Rhine
Share this:

A hot, dry July made worse by climate change has raised the risk that the German economy could run aground as sinking Rhine waters make shipping along the river harder.

The prospect of severe, longer-term limits to traffic spells a new headache for the industries lined up on the river’s banks and threatens to further strain Germany’s efforts to wean itself off Russian energy imports as coal counts among key cargo moved on the waterway.

Roberto Spranzi, boss of DTG, a shipping cooperative, says the volumes that his fleet can carry are already limited by the unusually low water levels.

“At the moment we have a capacity where, we have to use three or four vessels where we would normally need one,” Spranzi tells AFP. 

Pointing at the worrying ebb at the entrance to the inland port of Duisburg in western Germany, Spranzi notes that “currently it’s at 1.70 metres (5.6 feet) In theory, the normal water level is over two metres”.

Further up the river in Kaub, a noted bottleneck for shipping where the Rhine runs narrow and shallow, the reference level is forecast to go below 40 centimetres by the end of the week and squeeze traffic further.

“We supply factories on the Rhine with their raw materials. When that’s not possible any more — or less often — that’s a threat to German industry, too,” Spranzi says.

– Coal power – 

Around four percent of freight in Germany is carried via its waterways, including the Rhine, which winds its way from Switzerland, along the border with France, through Germany’s industrial heartland and the Netherlands to the sea.

As Berlin turns to mothballed coal power capacity to plug the gap after Russia curtailed its energy deliveries, the Rhine has taken on added significance as a key artery for coal transport.

But the sinking water level has already led energy providers to warn they may have to limit output.

Uniper has said the low level of the Rhine may lead to the “irregular operation” of two of its coal plants into September.

EnBW, which runs sites in the southwestern region of Baden-Wurttermberg, has warned that deliveries of the fuel could be restricted.

The dwindling waters have seen “transport costs per tonne rise”, EnBW said in a statement, adding that it had preemptively built stocks of coal earlier in the year.

Alternative routes were available — either by road or rail — but capacity was “tight”, EnBW said.

The Rhine freight restrictions have added to the supply chain disruption seen by industry and increased the risk of scarcity. 

Across southern Germany, a shortage of fuel at the pump has been traced back to the dry weather, among other factors.

“Low water levels on the Rhine mean that in this area very important transportation of oil products, such as petrol, diesel or heating oil can’t operate as normal,” says Alexander von Gersdorff, spokesman for the German energy and fuel industry lobby.

– ‘Much earlier’ – 

A 2018 drought, which saw the Rhine’s reference depth at Kaub fall as low as 25 centimetres in October, shaved 0.2 percent off German GDP that year, according to Deutsche Bank Research.

“The low levels have come much earlier this time,” Deutsche Bank Research economist Marc Schattenberg tells AFP.

“If the problems we are now observing last longer (than in 2018), the loss of economic value becomes all the more serious.” 

Industrial heavyweights stationed along the Rhine rely on the waterway to ferry goods to and from their sites.

Duisburg-based conglomerate ThyssenKrupp said in a statement it had “taken measures” to assure its supplies of raw materials.

The chemical giant BASF, whose Ludwigshafen base sits south of the Kaub choke-point, said its production had not yet been limited by the low water levels, but warned that it could not rule out “reductions for specific units in the coming weeks”.

Share this:
Continue Reading

Featured