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Source: Union Pacific and Norfolk Southern are exploring a merger across the continent.
A person familiar with this matter has confirmed that Union Pacific, which is the largest U.S. railroad operator in terms of freight, is looking at acquiring Norfolk Southern, to create a coast-to-coast network worth $200 billion. The person stated that the talks are still in their early stages. There is no guarantee that they will continue or any deal will pass what would have to be an extensive, detailed regulatory examination. Both companies declined to make any comments. A deal that unites two of the largest freight rail operators from North America will likely be subject to intense scrutiny by regulators. The steel, grain and chemical industries will likely lobby against further consolidation in an industry which has already consolidated from more than 100 Class I railroads back in the 1950s down to six today. Union Pacific shares dropped 2.7% on Friday afternoon, while Norfolk Southern shares rose 1.52%. Combining the two would create a single-line freight rail network that would stretch from coast to coast and change the divide between the western and eastern regional operators. Norfolk is recovering after a turbulent couple of years, which included the firing its former CEO amid ethics investigation, a battle in the boardroom with activist Ancora and a derailment of a train that cost about $1.4 billion to the company. CONCENTRATION The merger of Union Pacific and Norfolk Southern will create the United States' first single-line modern freight railroad from West to East. Union Pacific CEO Jim Vena stated earlier this year that a transcontinental merge would benefit customers by eliminating the need for carriers to interchange in Chicago, a bottleneck for many years, and reducing delays. Critics warn, however, that a consolidation of this kind could lead to a reduction in competition. This is causing regulators concern. Shippers could face increased costs and fewer service options if there are fewer major players on the market. Brandon R. Oglenski, Barclays analyst, said: "We suspect that certain shipper groups may be vocal about the perceived loss of competition that a merger could bring. Semafor was the first to report that discussions between two operators were taking place. This led to speculations about competitors considering concentration. Mike Steenhoek is the executive director of Soy Transportation Coalition. He said, "History shows that mergers and purchases within the railroad sector will inspire and encourage additional M&A." Canadian National, CP's main rival, then made an offer to purchase Kansas City Southern. Canadian Pacific acquired Kansas City Southern, creating the first railroad linking Canada, Mexico, and the U.S. in 2023. Union Pacific will lead the industry in 2024 with $24.3 billion, followed by BNSF, CSX (privately owned, owned by Berkshire Hathaway), Canadian National, Norfolk, and Canadian Pacific Kansas City. Steenhoek stated that the energy and momentum towards the remaining U.S. based Class I Railroads - BNSF & CSX – pursuing a merge would be significant. Oglenski stated that a regulatory decision can take between 16 and 22 months. Merging carriers are required to notify Surface Transportation Board 3 to 6 months prior to filing an application. This is followed by a year of evidentiary review, and then a 90-day final ruling. He said that a potential Union Pacific purchase of Norfolk Southern would have material synergies. Emily Nasseff Mitsch is an equity analyst with CFRA. Reporting by Sabrina Valle in New York and Lisa Bartlein; editing by David Gregorio
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EU sanctions on Russian energy, financial and banking sectors target the BTC offered by Azeri
The differentials between Brent and Urals crudes dated Friday remained unchanged, but premiums for Azeri BTC slid further in the afternoon trading window due to weak demand, traders reported. The European Union agreed on Friday to an 18th set of sanctions against Russia. These include measures that aim to deal further blows with the Russian oil industry and energy sector. EU diplomats have confirmed that the EU will set a price cap for Russian crude oil at 15% less than its average market value. This means that at the moment, the price of a barrel of Russian crude is about $47.60. That's well below the $60 limit the Group of Seven Major Economies has been trying to impose from December 2022. Shipping sources confirmed on Friday that Greek tanker operators are likely to continue shipping Russian oil approved for export despite the new wave of sanctions by the European Union, which will tighten further restrictions. PLATTS WINDOW Traders said that SOCAR had offered to load two loads of Azeri BTC of 650,000 barrels at plus $1.55 each on August 10-14. This was about $1.00 below the recent estimate. There were no bids or offers made on Urals or CPC Blend at the Platts Window on Friday. The details of the 18th package approved by the European Union on Friday against Russia for its war in Ukraine are listed below. This package is aimed at further damaging Russia's energy and oil industry. Reporting by Mark Porter; Editing and Cynthia Osterman
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Sources: Greek fleet will continue to ship approved Russian oil, despite new EU sanctions
Shipping sources confirmed on Friday that Greek tanker operators are likely to continue shipping Russian oil approved for export despite the new wave of sanctions by the European Union, which will tighten further restrictions. A large amount of Russian oil is exported now by a "shadow fleet" (unregulated tankers) but shipping data shows that Greek owned ships, which are part of the largest tanker fleet in the world, also carry some of the Russian crude which does not fall within sanctions or exceeds the price cap. The EU agreed on Friday to a 18th package against Russia for its war in Ukraine. This included measures that would further damage its vital energy sector. The EU's main measure is a cap on the price of Russian crude. This will prevent the EU from buying Russian crude for less than 85% the average market value. The cap is currently around $47.60 per barrel, which is far below the $60 cap proposed by the Group of Seven Western Powers. Sources who declined to identify themselves due to the sensitive nature of the issue said that Greek shipping companies will continue to ship the maximum amount possible. They account for dozens oil shipments to Russia each month, and 20% of all trade. Sources at Greek shipping companies involved in the trade said that while it would be more difficult to complete such transactions, they are still "doable". "As long traders continue to buy oil at this price, things will not change much. We'll respect new cap." The Greek Shipping Ministry officials did not respond immediately to a comment request. As of yet, the U.S. has shown no interest in aligning itself with EU's price cap. The EU's move will be limited by the fact that most oil is purchased in dollars and only U.S.-based banks are able to restrict dollar clearing. It will complicate the sanctions-compliant trade in Russian oil carried out by European companies. Leigh Hansson is a partner in Reed Smith's sanctions department. She said that the EU price cap will be a similar requirement to previous ones. We expect a 90-day wind down period for the transportation of Russian crude oil and services related to it for contracts signed by 18 July." (Reporting and editing by Jonathan Saul, Renee Maltezou)
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Sources say that Autostrade CFO Peluso will return to Telecom Italia to serve as finance chief
Two sources said on Friday that Piergiorgio Peluso will be taking over as Chief financial officer at Telecom Italia. Peluso served as TIM CFO from 2007 to 2019. People said that he will return to the former phone monopoly in the next month. TIM and Autostrade per l'Italia spokespeople declined to comment. Sources previously said that TIM was looking for a replacement to the current CFO Adrian Calaza as he will be leaving the company at the end of this year. Calaza, a Brazilian national of Argentinean descent and former CFO at TIM's Brazilian division, will take on the role of Group Finance Chief in 2022. He was responsible for the landmark deal last year to sell TIM's fixed line network to a U.S. investment group led by KKR. The goal of this deal was to reduce TIM's debts by 16.32 billion dollars. Peluso is expected to announce his return to TIM on 5 August, when TIM's Board meets to review the first-half results. One source said that he will take on the CFO position at a future date. Poste Italiane, a financial conglomerate, replaced France's Vivendi, the company's biggest shareholder, in May. Poste Italiane now holds a stake of 24.8%. $1 = 0.8580 euro (Reporting and editing by Alvise Armallini and Elaine Hardcastle).
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Greek-managed ships divert Russian oil to Africa in order to avoid Red Sea Attacks
Three oil traders and LSEG data indicate that several Greek-managed oil tankers are increasingly avoiding using the Red Sea to transport Russian oil to Asia, choosing instead the longer route through Africa due to the escalating threat of Houthi attacks. Rerouting comes after a deadly drone attack and speedboat attack on a Greek-operated, Liberian flagged bulk carrier, off Yemen earlier this month, in which four seafarers were killed. In July, the Houthi group, which is backed by Iran and has a fleet of speedboats under its control in Yemen, sank a second vessel. This ended a short period of calm. Since the Houthi began their attacks in November 2023, traffic on the Red Sea has plummeted. The group says the attacks are in solidarity with Palestinians during the Gaza conflict. Russian oil shipments have continued to flow through the area despite the fact that most Western shipowners abandoned it last year. This is due to the close relationship between Moscow and Iran, who back the Houthis. Recently, Greek shipping companies became active on the Russian Urals oil market. The price of the grade has dropped below the Western price limit of $60 per barrel. This allows them to provide insurance and transport services while still complying with the sanctions under the Group of Seven's price cap. LSEG data indicates that vessels like the Minerva Elpida (carrying a total of 300,000 metric tonnes of Russian Urals crude) and Minerva Vera (carrying a total of 200,000 metric tons of Russian Urals oil), departed late June and early in July, and are now en-route to India via Cape of Good Hope. The Greek ship managers did not respond to emails asking for their comments. Was not able determine who made the decision to alter the route. The tankers in question are part of a fleet whose sister vessels have been docked in Israeli ports since October 20, 2023. According to Norwegian marine insurer Gard, this could make them targets for Houthi force. P&I insurance is a standard feature of ship protection. It covers claims from third parties, including those involving environmental damage or injury. Ships are covered by separate hull and machine policies against physical damage. War risk insurance is necessary when entering high-risk zones such as the Red Sea. Kyklades Maritime manages the Nissos Ios a midsized Suezmax under Marshall Islands flag that can carry up to 1 million barrels. Gard provides protection and indemnity insurance. Minerva Elpida is a Greek flagged Aframax tanker capable of carrying up to 0.7 million barrels. The Minerva Vera is a Malta-flagged Suezmax. Both are managed by Minerva Marine, and insured by NorthStandard. Gard declined to comment about Red Sea security and said that it had not provided war risk insurance for the Nissos Ios. It is not known which companies insured the war risks of these three vessels. Northstandard stated that neither P&I nor war risk underwriters would provide shipowners with routing recommendations. Instead, "the decision to travel via the Cape would have been made jointly by both owners and charterers". Typically, it takes two times as long to travel via the Cape of southern Africa to Europe than to travel through the Red Sea. Since the Houthi attack, war risk premiums on Red Sea cruises have increased by more than two-thirds. This has resulted in an increase of hundreds of thousands of extra dollars for each seven-day voyage. (Reporting in MOSCOW by Jonathan Saul and Louise Heavens in LONDON)
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Russia convicts many for anti-Israel riots in Dagestan Airport two years ago
The Investigative Committee of Russia announced on Friday that 135 Russians were sentenced to long prison terms in connection with an anti-Israel mass protest held in October 2023 in the predominantly Muslim Dagestan Region. In the North Caucasus, hundreds of anti-Israel demonstrators stormed the airport of Makhachkala where a plane just arrived from Tel Aviv. The unrest was caused by Israel's conflict with the Palestinian militant group Hamas. Investigators have said that they have collected evidence against 142 individuals and finished investigations into the involvement of 139. Investigators have put the three others on Russia's most wanted list. They are believed to be those who organised the riots through posts on Telegram. The prison sentences for the 135 convicts ranged from 6 1/2 to 15 years. They were convicted of mass riots, among other crimes. Investigators have not named the individuals or revealed their plea bargain. The video footage from the time shows the protesters, mainly young men, waving Palestinian banners, destroying glass doors, and running through airport shouting, "Allahu akbar" (God Is Greater). Before the security forces were able to contain the unrest, more than 20 people had been injured. The plane was not damaged. Vladimir Putin has blamed Ukraine and the West for the unrest without providing any evidence. Kyiv denies any involvement and the United States condemns the violence.
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Incorrect speed record card caused 2024 Nepal plane crash, panel says
The report of a government-appointed panel on Friday said that a passenger plane crash in Nepal in 2013 which killed 18 people, was caused by incorrect information in the flight documents about the aircraft's speed at takeoff. In July of last year, a CRJ-200LR owned by Nepalese Saurya Airlines crashed shortly after take-off from Kathmandu, killing all 17 passengers as well as the co-pilot. Only the captain was left. The report to the government stated that the crash was due to a "deep-stall during takeoff due abnormally rapid pitch rates commanded at lower than optimal rotation speed". Expert in aviation Nagendra Prasad Gimire said the aircraft took off prematurely before it reached the required speed. The report stated that errors in a "speed card" - which provides airspeed data for specific aircraft during takeoffs, climbs and landings - went unnoticed. It also said the airline failed to deal with previous cases where the aircraft's pitch rate (the rate at the aircraft's nose rotates upwards or downwards) was high during takeoff. The report said that the operator had shown gross negligence and noncompliance throughout the entire process of handling cargo and luggage. All operators should review their speed cards, and ensure that they comply with all requirements for cargo and bag handling. The panel asked the Civil Aviation Authority of Nepal to review its procedures for approving non-scheduled flight. Babu Ram Paudel, a CAAN spokesperson, declined to comment on the report. He said he hadn't seen it. Bivechan Khanal, Saurya Airlines' operation manager, said that the airline will "do everything necessary" to implement all recommendations. The crash brought to light the low air safety standards of Nepal, a landlocked country that is heavily dependent on air travel. In 2013, the European Union banned all air carriers from Europe that were certified in Nepal, citing safety issues. (Reporting and editing by Timothy Heritage, Gopal Sharma)
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RPT-Asian spot LNG prices decline on muted demand, high inventories
The Asian spot LNG prices fell this week as a result of weaker demand, strong inventories, and buyers in South Asia finding current prices too expensive. Average LNG price for September deliveries into North-east Asia Industry sources estimate that the price per million British Thermal Units (mmBtu) was $12.30, down from $12.90/mmBtu a week ago. Prices have been on a slow decline this week because of the abundance of supply and increased inventories. Toby Copson is the chairman of Davenport Energy Partners. He added that "Demand is still relatively weak at a macro level, with hubs in the U.S. and Europe reflecting this." Martin Senior, head LNG pricing at Argus, says that coal has been able to meet the majority of cooling demand due to a heatwave across Japan and South Korea. He said that some production outages occurred, such as at Australia's Gorgon third LNG train, U.S. Elba Island Terminal and United Arab Emirates Das Island, which were undergoing maintenance. Senior said that the outages had not forced Asia to compete with other countries for cargoes from the Atlantic basin. Current prices were also too high for some price-sensitive buyers in South Asia and China. Gas prices in Europe rose slightly last week due to unplanned maintenance by Norway, but fell on Friday when the supply from Norway increased. The European Union agreed on Friday to an 18th package against Russia for its war in Ukraine. This included measures that would further damage the Russian oil industry. This package includes a ban on transactions with Russia, including those relating to the Nord Stream pipelines that run under the Baltic Sea and its financial sector. The new EU sanctions package does not alter the outlook for the European gas market. "The 2027 Russian phase-out is still in place, which is the reason why TTF market reactions were rather muted," Florence Schmit said, energy strategist at Rabobank. She said that the threat by U.S. president Donald Trump to impose 100% tariffs on countries purchasing Russian energy within 50 days did not shake the market. Schmit said that "the tariff rate and the 50-day break signalled this could be more noise than real...Russia sanctions are still an upside risk, although it is limited for now." S&P Global Commodity Insights estimated its daily North West Europe LNG Marker price benchmark (NWM) for cargoes to be delivered in September ex-ship on July 17 at $11.397/mmBtu, a $0.450/mmBtu reduction from the September futures prices at the TTF Hub. Spark Commodities rated the August price as $11.269/mmBtu. Arbitrage by the U.S. to North-East Asia via Cape of Good Hope is still pointing to Europe. Qasim Afghanistan, an analyst at Spark Commodities, says that the arbitrage via Panama also points to Europe and not Asia. Afghan said that on Friday, the LNG market in Atlantic increased to $33,750/day while Pacific rates were relatively stable at $38,250/day. (Reporting and editing by Nina Chestney; Marwa Rashad)
Italy power expenses stay sky high despite clean energy push: Maguire
Electricity prices in Italy are the greatest amongst significant European economies, due to an enduring reliance on fossil fuels for power generation despite growth in renewable energy output.
Italy's wholesale electrical energy costs have balanced around 100 euros per megawatt hour (MWh) up until now in 2024, according to energy think tank Ash.
That compares to 69 euros in Germany and 50 euros in Spain, and means that Italy's homes and services pay far bigger energy costs than most of their peers across Europe.
FOSSIL REPAIR
High reliance on nonrenewable fuel sources for electricity generation is the main chauffeur behind Italy's high power expenses. In 2023, 55%. of Italy's electrical power came from fossil fuels, Coal data shows.
That compared to 45% in Germany, 39% in the UK,. 25% in Spain and 41% for Europe as a whole.
So far in 2024, Italy's power companies have handled to raise. clean power generation to a brand-new record, and have cut the share. of nonrenewable fuel sources in electrical power generation listed below 50% for the. very first time, to 47%.
However, that fossil generation share still surpasses that of. competing economies, with Europe as a whole tape-recording a 37% average. fossil share this year and Germany a 40% share.
HIGH AND RISING
Italy's nonrenewable fuel source generation share is expected to increase. over the rest of the year as clean power generation. declines.
The lift in Italy's tidy power output so far in 2024 has. been mainly sustained by a 45% rise in output from hydro dams and. a 18% rise in solar generation.
In addition to a 2% rise in wind output, the greater hydro and. solar production helped lift total clean electricity generation. by 20% from January through August from the very same months in 2023.
In total, Italy's tidy electrical power generation struck a record. 88 terawatt hours (TWh) throughout the January to August duration,. compared to 73.4 TWh during the same months in 2023.
Nevertheless, both hydro and solar generation peak throughout summer season. in Italy, and then trend steadily lower over the rest of. the year as snow melt levels drop off and reduced daytime cuts. into solar output.
That suggests that overall tidy power generation will also. decrease, and will likely spur a revival in fossil fuel-fired. output as we head into winter season and the country's main heating. season.
GAS RATE PRESSURE
Italy's power firms primarily count on natural gas for power. generation, with around 45% of electrical energy generation coming. from gas-fired plants in 2023.
On the other hand, Germany's power producers just depend on. gas to produce around 15% of electrical power in 2015,. while the average for Europe as a whole was 24%.
What's more, more than 95% of Italy's gas originates from imports. due to progressively decreasing domestic gas production.
Such a high dependence on imported gas implies that Italy's. power companies have actually been at the mercy of international gas markets. for the lion's share of their power generation fuels.
In addition, Italy's federal government has opted to change gas. materials from Russia - which was sanctioned by European Union. member states following its intrusion of Ukraine in 2022 - with. purchases from other suppliers.
This switch-out of gas from Russia - which was previously. Italy's single largest gas supplier - with gas from other. providers has actually strained gas market streams throughout Europe, and. raised total gas rates.
In addition, Italy has plugged a growing share of its gas. supply space with imports of melted gas (LNG), which is. considerably more pricey than gas supplied through pipeline.
HANDED DOWN EXPENSES
Much of the higher expenses of gas imports have actually been passed on. to Italy's customers in the type of the greater wholesale. electrical power expenses.
Italy's government has attempted to soften the blow of greater. energy rates by reducing sales taxes and supplying aids. for the build-out of renewable resource generation capacity.
But with utilities on the hook for aggressive boosts in. renewable energy capacity as part of a new energy security. decree passed last year, households have borne the brunt of the. effect from the greater cost of energy imports.
And with power providers set to deal with steep capital costs as. they construct new clean energy production possessions, energies are. not in any position to cut costs for families whenever quickly.
That means that Italy's energy customers look set to keep. paying among the greatest rates in Europe for their power and. electrical power for the foreseeable future.
<< The opinions revealed here are those of the author, a. writer .>
(source: Reuters)