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BNSF and CSX launch a new coast-to-coast link to boost freight services
CSX, owned by Berkshire Hathaway, and BNSF, which is also owned by Berkshire Hathaway announced on Friday new coast-tocoast services that will boost freight connectivity across the United States. Shares of CSX dropped about 6% following the announcement but have risen about 5% this year. The new routes will connect Southern California to Charlotte, North Carolina and Jacksonville, Florida. This move follows reports last month that a possible deal could be struck between the two railroad companies to counter a rival merger of Union Pacific and Norfolk Southern. Union Pacific has launched an intermodal domestic service connecting Southern California's Inland Empire to the Chicago area earlier this month. CSX has also been under pressure from activists. Ancora , which calls for a merger, or a change in leadership, and Toms Capital Investment Management Request to meet with the Railroad Operator's Board Better intermodal volumes helped CSX top analyst estimates for Second-quarter profit In July, there are many holidays. Rail operators have long envisioned linking the U.S. Atlantic Coast and Pacific Coast by rail. This is particularly true today, as the industry struggles with increased operational costs and labor shortages. Surface Transportation Board approval is required for any merger due to concerns about pricing power and consolidation in the industry. (Reporting from Nathan Gomes, Bengaluru; additional reporting by Abhinav Paramar; editing by Pooja Deai).
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NSE: Max Healthcare and IndiGo to be included in India's Nifty50 index after rejig
The National Stock Exchange of India (NSE) announced on Friday that it would add Max Healthcare Institute, a hospital chain operator, and InterGlobe Aviation, the parent company of Indigo to its Nifty50 index as from September 30. IndusInd and Hero MotoCorp have been removed from the NSE index, as part of its semi-annual rebalancing. The NSE's semiannual index reshuffle relies on the average market capitalization of stocks over six-month period ending on January 31 or July 31, and changes are implemented in March or September. The Nifty 50 is often changed, causing exchange traded funds to be reshuffled. This could lead to several million dollars of inflows or outflows of the stocks. According to Nuvama, a brokerage firm in July, the addition of Max Healthcare to the index would bring $400 million to Max Healthcare. In the 12 months ending July, Max shares rose by 9.34%, InterGlobe shares by 28.61% and IndusInd's fell by 17.59%. Hero's shares were up 1.82%. InterGlobe's shares reached a new record earlier this week, after Jefferies stated that it expected market share gains for the airline to continue across both domestic and international segments. IndusInd Bank suffered a $230-million loss in the year ending March 31, due to a misaccounting of internal derivatives trades. This led to the resignations in April of the CEO Sumant Kathpalia, and his deputy Arun Khurana. Reporting by Hritam mukherjee in Bengaluru and Urvi dugar; editing by Leroy Leo
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Italian court confirms arrest of Ukrainian over Nord Stream Pipeline
His lawyer confirmed that an Italian appeals court confirmed on Friday the arrest of a Ukrainian suspected by Germany of coordinating the attacks on three Nord Stream pipelines in the Baltic Sea 2022. Serhii, 49, a man whose full name has been given to the court, but who is only identified as Serhii under German privacy laws was arrested near Rimini, an Italian coastal town, on Thursday under a European warrant. The lawyer stated that the appeals court of Bologna (about 120 km north-west from Rimini) would convene on September 3 to discuss his possible extradition back to Germany. However, a decision might not be reached on this day. The lawyer said by phone that the man had told the court that he was an ex-soldier. He was captured in handcuffs while being transferred from Rimini to Bologna, making an eloquent three-finger salute that represented the Ukrainian coat of arms. According to a statement released by the German prosecutor’s office on Friday, he was part of a team that planted devices near the Danish Island of Bornholm located in the Baltic Sea. He is accused of conspiring to cause an explosive, of anti-constitutional acts of sabotage, and of destroying important structures. The arrest occurred as Kyiv engaged in tense diplomatic discussions with the United States about how to end Ukraine's war without granting Russia major concessions or large swathes its own territory. The Italian Carabinieri arrested the man near Rimini, on Italy's Adriatic Coast, while he was on holiday with his family. They were acting on an arrest warrant issued by Europe. German prosecutors claim that he, along with his accomplices, had left Rostock in Germany's northeastern coastline on a sailing boat to carry out this attack. (Reporting and writing by Giulio Pieovaccari; editing by Gavin Jones, Hugh Lawson, and Sara Rossi)
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Moody's further cuts Spirit Airlines's credit rating into junk.
Spirit Airlines, a U.S. airline company, saw its credit rating take another hit on Friday when Moody's Ratings lowered it by two notches. Analysts from the rating agency noted in a report that accompanied the downgrade of Friday Spirit's "higher-than-expected cash burn" when compared with its previous forecast. The analysts predicted that Spirit would burn over $500 million in cash by 2025, due to weak domestic demand for leisure activities, increased domestic capacity and the challenging pricing environment. Fitch Ratings also downgraded its rating by one notch last week, citing a high probability of near-term bankruptcy in their own downgrade. Moody's' and Fitch's rating actions follow Spirit's warning to the public last week, following its quarterly earnings report. The company was warned about the "going concern" risk it faces just months after emerging from bankruptcy. Moody's analysts noted on Friday that Spirit only had $408 million of unrestricted funds at the end the second quarter, and had fully used its $275 million revolving credit facility which matures in march 2028. (Reporting and editing by Mark Porter; Matt Tracy)
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The US export of LNG will fuel the growth of shale gas production
Analysts predict that U.S. LNG exports will increase by 10% per year until 2030, as energy companies double their capacity to produce the gas. This will give a boost to the maturing U.S. Shale industry, which has seen its growth slow down and costs rise. While the U.S. has been the largest producer of oil and gas in the world, many of its most productive drilling sites have already been exploited. Gas remains the bright spot in the industry, despite the fact that oil production will plateau or even fall over the next few months. This is largely due to the booming exports of the United States. According to the U.S. Energy Information Administration's (EIA) forecast, U.S. LNG will reach a record of 11.9 billion cubic foot per day (bcfd), in 2024. By 2030 it is expected to hit 21.5 bcfd. U.S. producers of LNG are building new terminals for super-chilling gas into its liquid form to export. The goal is to meet the booming global demand for fuel as energy consumption increases and many countries are phasing out coal-fired plants. This provides robust growth prospects for gas producing regions in the United States. Morgan Stanley predicts that gas production in Louisiana's Haynesville Shale will increase by 41% and in Texas and New Mexico's Permian basin by 21% between 2024 and 2027. Morgan Stanley's estimates predict that the Marcellus and Utica shale, which cover parts of Pennsylvania and Ohio, as well as West Virginia and West Virginia will grow by 9%. U.S. Gas producers and investment firms have increased their activity in Haynesville to prepare for the surge in LNG exports that will be boosted by President Donald Trump's new approvals. Domenic Dell'Osso told analysts that there are more than 12 billion cubic feet per day (bcfd) of LNG under construction within a 300 mile radius of Expand Energy's (Haynesville's) assets. This will be operational by 2030. Venture Global LNG, a U.S. energy company, has already sanctioned CP2, the third export plant it will build in Louisiana. Cheniere Energy's Texas plant Corpus Christi is building two more liquefaction train. Woodside Energy Group, an Australian company, announced that it would proceed with its Louisiana LNG Project. Analysts predict that more energy companies will take advantage of Trump’s favorable federal permitting policies to build new LNG export plants and pipes over the next year. Factbox on North American LNG Export Projects TRAPPED GAS The EIA predicts that the U.S. will increase its gas production from 103.6 bcfd to 113.5 bcfd by 2030. Most of this fuel is expected to be used to meet the booming LNG export demand. Canada will supply the U.S. with an average of 7.0 bcfd in pipeline gas over the next five-year period. The EIA predicted that even with the rising LNG demand, total U.S. Gas demand, including exports and domestic consumption, would only increase by about 1% annually on average between now and 2030. This will take us from a record-breaking 111.5 bcfd to around 120.3 bcfd. This slowdown in growth is due to a decline in domestic gas consumption, which has fallen from a record of 90.5 bcfd to around 89.6bcfd by 2030. The main reason for this is the increase in renewable energy output. Other energy analysts expect that U.S. power plants will burn more gas than EIA's forecasts in the coming years to meet the fast-growing electricity demand from data centers. Transporting gas to the market will require new pipelines and infrastructure. According to East Daily Analytics analyst Jack Weixel, the capacity of gas pipelines in the Northeast will remain limited, limiting the potential growth to only about 3 bcfd at the end the decade, unless new pipelines are built. Dennis Degner is the CEO of Range Resources. Range Resources is one of the largest U.S. producers of natural gas with operations in Marcellus and Utica. Kinder Morgan, Williams Cos, and Energy Transfer are among the U.S. pipe-line companies that have started spending billions of dollars to build hundreds and miles of new pipelines, especially in the Northeast. This is to increase gas supply for domestic and export demand.
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Turkey opens rail link to Azerbaijan’s Nakhchivan
Turkey broke ground on a rail connection between its Kars province in the northeast and Azerbaijan’s Nakhchivan Exclave. The move was made to take advantage of an American-brokered agreement signed by Azerbaijan, Armenia and Azerbaijan this month. The railroad will be a part of the Southern Caucasus Transit Corridor, for which the U.S. has exclusive development rights. The aim is to increase economic ties and energy exports between Azerbaijan, Armenia and the U.S. The initial peace effort was hindered by the management and development of what is called the Trump Route for International Peace and Prosperity. This route will connect Azerbaijan mainland to the Nakhchivan Enclave, which borders Turkey. It will run through Southern Armenia and connect Azerbaijan with Azerbaijan. Abdulkadir Uraloglu, Minister of Transport in Turkey, announced at a ceremony that the 224-kilometre railway (140 miles) will link Turkey's Dilucu Border Gate with Nakhchivan. The main railway line is located in Kars. The airport will be able to transport 5.5 million passengers per year and 15,000,000 metric tons cargo. Uraloglu stated that this corridor would strengthen the economic cooperation and regional peace between Turkey, Azerbaijan, and Armenia. The project, he added, will also help to open borders and normalise the diplomatic relations of the Southern Caucasus. Last month, Turkey secured 2.4 billion euro ($2.8 billion) green financing from a group including Japan's MUFG Bank and Sweden's EKN export credit agencies and Austria's OeKB, as well as a unit of Islamic Development Bank. Uraloglu stated that when the railway sections in Nakhchivan and Armenia are completed, a trade route from China to Britain would be more efficient. Reporting by Huseyin Haatsever, Editing by Jonathan Spicer and Kirby Donovan.
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Cenovus acquires MEG Energy for C$7.9 Billion in Oil Sands Expansion
Cenovus Energy, a Canadian oil and natural gas producer, announced on Friday that it would buy MEG Energy for C$7.9 Billion ($5.68 Billion), including debt. This will create one of Canada's largest oil sands firms. The combined production of the two companies will be over 720,000 barrels a day. This will include MEG's Christina Lake operations in Alberta and Cenovus' adjacent assets. MEG Energy rejected an hostile takeover bid from Strathcona Resources in June, calling it inadequate and not in its best interests. It then launched a review of the strategic options to find better alternatives. James McFarland said that MEG Energy's board and special committee "concluded the proposed transaction with Cenovus represented the best strategic option" after considering Strathcona’s unsolicited proposal and engaging with several parties. Strathcona Resources didn't immediately respond to an inquiry asking if it was considering a higher bid or any other options as a response to Cenovus’ offer. Calculations show that Cenovus's offer of C$27.25 a share gives MEG a value of approximately C$6.93billion. This represents a premium of 27.9% over MEG's previous close, before Strathcona made an unsolicited offer in May. MEG shareholders receive 25% of the total consideration as Cenovus shares and 75% in cash. The board of MEG has approved the deal. It is expected to close in early 2025, during the fourth quarter.
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The defiance by the Air Canada union of Canadian government orders could inspire workers
The Canadian government intervened four times last year to stop strikes in seven companies, using a obscure Labour Code provision. The same decree was issued on Sunday, but Air Canada flight attendants refused and went on strike for 3 days. Unions and labor experts said that their defiance was a watershed. They claimed it would strengthen unions during negotiations, discourage employers from seeking government assistance in sectors regulated by the federal government, and complicate efforts made by the federal government to end work stops through this provision. "We will look back at this dispute, and this strike as a turning-point," said Chris Roberts. Professor at Carleton University and Director National of the Social and Economic Policy Department, Canadian Labour Congress. In 1984, the Canadian Labour Code was amended to include Section 107, which gives the Minister of Employment the power to stop strikes and lockouts in order to "maintain industrial peace" Since June 2024, it has been invoked five times, in sectors such as railways, ports and postal services. The Canadian Labour Congress (the largest group of workers in Canada) has asked for legislation to remove these powers. Roberts stated that it was "clear now, based on the record of interventions in the last year, that the Minister's superpowers are problematic." Canadian Union of Public Employees, which represents 10,000 flight attendants in Canada, set a precedent when it defied the government's order for the very first time. The union has also filed a lawsuit against Section 107. Hugh Pouliot, CUPE's spokesperson, said via email that "Section 107 creates a fundamentally imbalanced labour relations" and should be repealed. Jennifer Kozelj is the press secretary for Jobs Minister Patty Hajdu. She said that sending the CUPE dispute into arbitration was a difficult decision. Canadians and the economy have already been affected by significant disruption. In an email response, she stated that lost revenue can be the difference between a small company failing and a family facing financial hardship. We cannot predict how every dispute will unfold, but we always believe that the best deals are made at the table. The tide is turning, say the unions. Bea Bruske is the president of the Canadian Labour Congress which represents over 3 million workers in Canada. Michael Lynk is a professor emeritus at Western University, London, Ontario. He said that this was the first time the government used Section 107 and it had a negative outcome. The Teamsters union has challenged Section 107 in court. They were involved in two major negotiation last year with the two largest rail companies of Canada - Canadian National Railways (CNR) and Canadian Pacific. Christopher Monette is the Director of Public Affairs for The Teamsters. He said: "Our ultimate objective is to prevent federal workers from being ordered back to work." INDUSTRIAL NARCOTIC In the year prior, the then Prime Minister Justin Trudeau had ordered that the Canada Industrial Relations Board issue notices of return to work and begin binding arbitration. Seamus O’Regan, the then Labour Minister at the time, had directed CIRB in order to impose binding arbitral proceedings against WestJet and their unionized mechanics. MacKinnon forced workers to return in November by citing Section 107, at the Port of Quebec and Port of Montreal, as well as British Columbia ports. In December he did the same thing with the Canadian Union of Postal Workers. Experts in labor rights and workers' rights have argued that invoking this clause effectively removed their right of strike and leveled the playing field when negotiating with employers. Meanwhile, companies benefitted from government intervention. Lynk, Western University professor, said: "It's a narcotic in industrial relations for employers who use it to extend the clock before turning to the government to order binding arbitration." He added that unlike work stoppages which have been stopped by legislation, the use of this provision does not receive the democratic stamp from the representatives of the people. Air Canada didn't immediately respond to our request for comment. Next year, the carrier will be facing a major negotiation between 14,000 baggage handlers who are currently under contract and aircraft maintenance workers whose contracts expire in March 2026. Dave Chartrand is the Canadian vice-president of the International Association of Machinists and Aerospace Workers (which represents these workers). He said that his members can strike if the negotiations seem unproductive. Chartrand stated in an interview that "if you don't sit at the table with our members and you are not bargaining and you are not trying to get fair contracts for our members, then we will withhold our labor and our manpower." It's a right guaranteed by the constitution.
Asian spot LNG prices fall on abundant supply and weak demand
The Asian spot LNG prices fell slightly this week due to high storage inventories and continued low demand, as well as the lack of progress in peace talks with Ukraine.
Average LNG price for delivery to North-East Asia in October
Go Katayama is an LNG and gas analyst with Kpler. He said, "We expect further downward pressure on Asian LNG prices as storage levels continue to be elevated while the supply situation continues to firm up."
The demand for heating in November is still low, despite the continued summer heat in Japan. China relies less on LNG spot and more on pipeline and domestic gas imports. South Korea has a large stock, which puts further downward pressure.
Katayama said that, "under these conditions," spot prices could need to fall below $10/mmBtu to revive significant buying interest.
Martin Senior, head LNG pricing at Argus, said that the prices were affected due to the lack of immediate progress in peace talks with Ukraine. This could lead to a potential unsanctioning just over 15 million tonnes per annum of LNG export capability.
Senior stated that in China, the National Oil Companies (NOCs), were re-offering their cargoes. Higher stocks are also limiting demand for injections. Meanwhile, strong hydro generation has affected gas generation costs.
He added that the cooler summers in South and Southeast Asia have impacted on demand for spot.
Gas prices in Europe were stable on Friday, around the firmer levels achieved in the previous session. Attention is now focused on upcoming maintenance in Norway, and the need to fill gas storage tanks before winter.
Alex Froley is a senior LNG analyst with ICIS. He said, "The market feels fairly comfortable as European storage is filling up steadily, Chinese consumption remains low, and new projects such as U.S. Plaquemines, and LNG Canada are building up production."
Froley said that if the first half of the winter is comfortable, then the market could start to slide further into the summer of 2026.
Aly Blakeway is the manager of Atlantic LNG for S&P Global Commodity Insights. He said that despite the lacklustre US demand, Europe continues to be the main recipient of US LNG supply.
He added that LNG imports to the continent are still healthy, and that he expects a rise in the purchase of super-chilled fuel before the heating season.
S&P Global Commodity Insights estimated its daily North West Europe LNG Marker price benchmark (NWM) for cargoes to be delivered in October, on an ex ship (DES) basis, at $10.857/mmBtu as of August 21. This represents a discount of $0.525/mmBtu from the September futures prices at the TTF Hub.
Spark Commodities set the price at $10.809/mmBtu while Argus put it at $10.87/mmBtu.
The U.S. Arbitrage to North-East Asia via Cape of Good Hope still encourages U.S. cargos for delivery to Europe. Spark Commodities analyst Max Glen Doepel said that the arbitrage via Panama marginally points to Europe.
He added that the global LNG freight rates increased marginally this week. The Atlantic rates were assessed at 36,500 dollars per day, while Pacific rates were set at 35, 000 dollars. (Reporting and editing by Leroy Leo; Marwa Rashad)
(source: Reuters)