World Inside

LNG traders absorb huge losses after supply outages

Publish: 10:19 AM, 11 Aug, 2022


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Major energy traders are taking hundreds of millions of dollars in losses as they scramble to plug a liquefied natural gas (LNG) supply gap after several outages hampered efforts to fill European storage ahead of the winter heating season.

Unplanned disruptions at LNG plants in the United States, Nigeria and Australia have wrong-footed traders, including BP and Shell, forcing them to pay inflated costs for alternative supplies.

In a market already struggling to meet global demand for natural gas after Russia sharply reduced pipeline supplies into Europe, the lost LNG cargoes which can be transported by ship, have pushed global prices sharply higher in recent months.

BP took a more than $500 million hit to replace LNG cargoes lost after a sudden shutdown of the Freeport LNG plant in Texas in June, industry sources told Reuters.

Freeport, the second-biggest U.S. LNG export plant, supplies BP with 4 million tonnes per year from a total portfolio of 18 million tonnes, BP Chief Financial Officer Murray Auchincloss told Reuters.

"Freeport does create an impact in the quarter and we've provided for that for the year," Auchincloss said. The company had deducted the expected costs from its second-quarter profit, but Auchincloss did not specify costs.

A BP spokesperson declined to comment on the loss figure.

France's TotalEnergies also said it would replace eight cargoes of LNG it was scheduled to receive from Freeport by buying in the spot market in the third quarter of the year. It was unclear how much the replacement cargoes would cost TotalEnergies.

Freeport produces 15 million tonnes of LNG per year.

Traders typically sign long-term offtake agreements with LNG producers and agree on separate deals to supply consumers with cargoes from their global portfolios. It's rare to use plant outages to justify not supplying consumers through what is known as force majeure.

Shell, the world's largest LNG trader with a 20% market share, cut its LNG production volumes in the second quarter by 4%, mainly due to supply losses from the Sakhalin-2 plant in Russia, where it exited operations after Moscow's invasion of Ukraine in February.

The company continues to receive LNG cargoes under existing long-term deals with Sakhalin-2, a company spokesperson said.

But the future of the contracts is shrouded in uncertainty after Russia gave foreign investors in the project one month to claim their stakes in a new entity that will replace the existing one. Shell Chief Executive Ben van Beurden said it was "highly unlikely" Shell would join the new entity. 

The supply loss impacted Shell's second-quarter profit by around $200 million in the quarter, according to estimates by industry sources. Shell declined to comment on the figure.

On top of that, Shell and its partners lost LNG production at the giant Prelude floating LNG off the western coast of Australia after shutting it down amid a pay dispute.

Nigeria's huge LNG export terminal on Bonny Island has also seen output declines in recent months as a result of a shortfall in natural gas supplies due to rampant theft and sabotage to oil and gas pipelines. 

The money lost is dwarfed by enormous profits both BP and Shell recorded this year on the back of soaring refining margins and high oil and gas prices.

But lower availability of LNG has pushed benchmark prices to record highs as Europe sought to ramp up imports rapidly to replace lost Russian pipeline natural gas.

At current prices, an average cargo of LNG would cost around $100 million in the spot market.

European LNG imports from January to July surpassed a record 100 billion cubic metres (bcm), or 75 million tonnes (Mt), almost reaching the level observed through the entire 2021, according to Nnenna Amobi, senior LNG analyst at Refinitiv.

Around 35% of total European imports were received from the United States in July, versus 43% in June, mainly due to the loss of Freeport cargoes.

The global LNG market reached 380 million tonnes in 2021, according to Shell.

- Reuters



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World Inside

Russia-Middle East-Japan interested trading in Indian Rupee

Publish: 09:23 AM, 27 Sep, 2022


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Due to the fear of Western sanctions and the volatility of the US dollar, some non-Western countries including Russia, Iran, United Arab Emirates, Saudi Arabia, Japan have expressed interest in paying in Indian rupees. India has also opened the door to international trade in rupee through policy reforms to boost bilateral trade.

Prabir Kumar Bhattacharjee, secretary general of India's industry group 'Tea Association of India', told Russian Media Sputnik that importers from countries like Russia and Iran, which are subject to Western sanctions, want to pay the price in rupees for Indian products. In fact, they want to advance trade in this way to avoid economic blockade.

Prabir Bhattacharjee also said that major tea importing countries like UAE, Saudi Arabia, Japan, Sri Lanka and China are also looking to use the opportunity to pay in rupees. Because, in the case of the US dollar, there is a kind of worldwide duty for this.

According to Indian government statistics, India is the world's number one producer and fourth exporter of tea. According to 2021 estimates, about 17.3 percent of India's total tea exports went to Russia, 13.4 percent to Iran and about 8.8 percent to the United Arab Emirates. Imports are expected to increase further this year.

Economic experts say finding an alternative to the US dollar is the need of the hour. According to Ashwani Mahajan, co-convener of Indian economic advocacy group Swadeshi Jagran Manch, India now needs to find alternatives to the dollar to boost foreign trade. He also expressed hope that foreign transactions in rupees will expand in the coming months and years.

Ashwani Mahajan blames sanctions on Iran and Russia for India's retreat from the US dollar. Experts say, India should have encouraged trade in local currency a lot earlier to expand trade.


Indian Rupee  


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World Inside

School shooting in Russia: 17 including 11 children dead, 24 wounded

Publish: 08:46 AM, 27 Sep, 2022


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A gunman opened fire in a school in central Russia on Monday, killing 17 people and wounding 24 others before shooting himself dead, authorities said.

The shooting took place in School No. 88 in Izhevsk, a city 960 kilometers (600 miles) east of Moscow in the Udmurtia region.

Russia’s Investigative Committee identified the gunman as 34-year-old Artyom Kazantsev, a graduate of the same school, and said he was wearing a black t-shirt bearing “Nazi symbols.” No details about his motives have been released.

The government of Udmurtia said 17 people, including 11 children, were killed in the shooting. According to Russia's Investigative Committee, 24 other people, including 22 children, were wounded in the attack.

The governor of Udmurtia, Alexander Brechalov, said the gunman, who he said was registered as a patient at a psychiatric facility, killed himself after the attack.

Kremlin spokesman Dmitry Peskov described the shooting as “a terrorist act” and said Russian President Vladimir Putin has given all the necessary orders to the relevant authorities.

“President Putin deeply mourns deaths of people and children in the school, where a terrorist act took place,” Peskov told reporters Monday.

The school educates children between grades one and 11. It has been evacuated and the area around it has been cordoned off, the governor said.

Russia's National Guard said Kazantsev used two non-lethal handguns adapted to fire real bullets. The guns were not registered with the authorities.

A criminal probe into the incident has been launched on charges of multiple murder and illegal possession of firearms.

Izhevsk, a city of 640,000, is located west of the Ural Mountains in central Russia.

- AP/UNB


Russia   School Shooting  


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World Inside

Death toll from sunken Lebanon migrant boat rises to 94

Publish: 11:25 AM, 25 Sep, 2022


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The death toll from a migrant boat that sank off the Syrian coast after sailing from Lebanon earlier this week has risen to 94, after more bodies were recovered from Syria's Baniyas coast on the Mediterranean, Syrian state TV said on Saturday.

It is the deadliest such voyage yet from Lebanon, where mounting economic desperation has led many to board often rickety and overcrowded boats in the hope of reaching Europe.

Syrian authorities began finding bodies off the coast of the northern port city of Tartus on Thursday afternoon. The Syrian transport ministry quoted survivors as saying the boat had left from Lebanon's northern Minyeh region on Tuesday with between 120 and 150 people on board, bound for Europe.

- Reuters


Lebanon   Migrant boat sink  


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World Inside

Shelling hits southern Ukraine, Russia in UN spotlight over escalation

Publish: 09:19 AM, 25 Sep, 2022


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Shelling hit southern Ukraine late on Saturday while Russia sought to defend its seven-month old war at the United Nations even as it moves to escalate the conflict.

Kyiv and Western nations say referendums in territories Russia has seized by force are a sham designed to justify a ramping up of hostilities with newly drafted troops, after battlefield losses in Ukraine in recent weeks.

Russian Foreign Minister Sergei Lavrov addressed the UN General Assembly and the world's press on Saturday, casting opposition to Russia's assault on its neighbor as limited to Washington and countries under its sway. Nearly three-quarters of countries in the assembly voted to reprimand Russia and demand it withdraw its troops shortly after the February 24 invasion.

Kyiv and Moscow traded blame for shelling in Ukraine's Zaporizhzhia region on Saturday.

Regional governor Oleksandr Starukh said on Telegram that Russian forces launched "a massive missile strike" on the region from about 10 planes, wounding at least three people.

Russia's RIA state news agency, citing unnamed sources, said Ukrainian forces shelled a granary and fertiliser warehouses in the region.

Reuters was unable to verify either sides' claims.

Lavrov, in a news conference following his speech to the assembly in New York, said the Ukrainian regions where votes are underway would be under Moscow's "full protection" if they are annexed by Russia, including with nuclear weapons. 

The Group of Seven industrialised economies have said they will not recognize the results of the votes.

Ukraine requested an urgent UN Security Council meeting over the referendums, accusing Russia of violating the UN Charter by attempting to change Ukraine's borders, foreign affairs ministry spokesperson Oleg Nikolenko said on Twitter.

Putin on Wednesday ordered the country's first mobilisation since world war two, an announcement that saw some Russian men headed swiftly to the borders, with traffic at frontier crossings with Finland and Georgia surging and prices for air tickets from Moscow rocketing.

More than 2,000 people have been detained across Russia for protesting the draft, including 798 people detained in 33 towns on Saturday alone, according to independent monitoring group OVD-Info.

Frustration has even spread to pro-Kremlin media, with one editor at the state-run RT news channel complaining that problems like call-up papers being sent to the wrong men were "infuriating people."

When asked on Saturday why so many Russians were leaving the country, Lavrov pointed to the right of freedom of movement.

- Reuters


Ukraine-Russia war   UN  


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World Inside

Switzerland to destroy 10 mn doses of Moderna Covid jab

Publish: 09:07 AM, 25 Sep, 2022


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Switzerland will need to destroy 10.3 million doses of Moderna's vaccine against Covid-19, after they expired this week, the health ministry said Saturday.

The ministry said it had no choice but to eliminate the jabs after the doses expired last Wednesday, according to Keystone-ATS.

It told the news agency that 2.5 million of the doses were being stored at a Swiss army logistics base and 7.8 million were in an external storage depot in Belgium.

The ministry confirmed an initial report on Swiss news site Beobachter, which estimated that the doses set for destruction were worth around 280 million Swiss francs ($285 million).

The health ministry, which did not immediately respond to a request for comment from AFP, pointed to its early procurement strategy in the race to develop vaccines to counter the global Covid-19 pandemic.

It ordered doses from various manufacturers to avoid becoming reliant on vaccines that might eventually prove ineffective and to guard against any delivery problems.

The fact that vaccines based on mRNA technology, from Moderna and Pfizer-BioNTech, turned out to be effective, left Switzerland with a large surplus of doses.

In June, the Swissinfo news site estimated that Switzerland had an excess of some 38 million doses of various Covid vaccines, that would expire before the year-end.

The ministry said that some 3.5 million doses of the new, adapted Moderna vaccine would be available when Switzerland kicks off its next booster campaign next month.

Switzerland, which has counted 13,556 deaths from Covid since the start of the pandemic, has fully vaccinated nearly 70 percent of its population of 8.7 million.

– BSS/AFP


Covid-19   Coronavirus   Covid vaccine   Moderna   Switzerland  


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