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After 10 months of uninterrupted power supply, South African power cutbacks return
Officials announced on Friday that South African households and businesses will be experiencing scheduled power outages for the first 10 months because of breakdowns and planned maintenance at Eskom's coal fired power stations. Kgosientsho RAMOKGOPA, the Energy Minister told reporters Eskom's reserves had been depleted and that as a result "Stage 3 power cuts" would be implemented. This could require up to 3,000 Megawatts to be removed from the national grid. Outages will begin at 5 pm (1500 GMT) Friday. He said that the breakdowns occurred when several units were off-line for maintenance. Ramokgopa called the return of power outages in Africa's largest industrialised economy a "temporary reversal" and said that the country is still on track to ending the electricity outages. Since more than a century, power cuts have slowed down South Africa's economy. However, since March of last year there has been no power cut after Eskom's generator fleet suddenly improved its performance. Eskom announced last month that they expect to make their first profit in 8 years. This is due to improved power supplies and the debt relief package provided by the government. South Africa's energy regulator, however, could have dealt a blow to its efforts at a turnaround. On Thursday, it awarded the company a tariff increase average of 12.7% for the fiscal year starting in April. This is about a third less than what they had requested. Eskom's request for tens or even hundreds of millions of rands to cover coal contracts, an increased carbon tax, and increasing municipal debt is effectively denied by the regulator.
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Businesses sell in Russia
Many Western companies sold their Russian assets to comply with the sanctions imposed over the conflict in Ukraine, and to respond to the Kremlin's threats that it could seize foreign assets. The following companies have sold their business in Russia. They are grouped by sector. Continental sold its Russian tire plant to holding company S8 Capital by May 2023. Renault sold Avtovaz's majority stake to the Russian government in 2022. The price was reportedly only one rouble, but there was a six-year buyback option. Volkswagen sold its Kaluga production facility and local subsidiaries to Volkswagen in May 2023. Banks & Insurance The government decree, published on January 31, showed that President Vladimir Putin had authorized the Armenian investment fund Balchug Capital to purchase Goldman Sachs Russian unit. This could pave the way for U.S. Bank to withdraw fully from Russia. ING announced on January 28 that it had agreed to the sale of its Russian business to Global Development JSC, without disclosing any financial details. The deal is expected to have a negative impact on the company's post-tax results of approximately 0.7 billion euro ($730.7m). HSBC said that it had transferred its Russian unit, owned by Expobank, to the bank for an undisclosed amount in May. In May 2022, Societe Generale will sell its Rosbank division to Interros Capital. The loss is 3.1 billion euros. Uniqa Insurance announced on October 4 that it has completed the sale of Raiffeisen Life, and is now out of Russia. ENERGY Shell sold its Russian retail business and lubricants to Lukoil by 2022. FOOD & BEVERAGES, CONSUMER GOUVERNMENTS Carlsberg announced on December 3 that it had agreed with long-time employees of Baltika Breweries in Russia to sell their shares. Heineken said that it sold its Russian operations to Arnest Group in August 2023 for a symbolic amount of one euro. Belgian brewer AB InBev has agreed to sell its share in the joint venture AB InBev Efes by April 2022. This will result in a $1.1billion impairment. Danone sold its Essential Dairy and plant-based business to Vamin R LLC, resulting in a loss of 1.2 billion euro. Unilever announced on 10 October that it had sold its Russian unit to Arnest Group. Arnest Group is a Russian manufacturer of cosmetics, household products and perfume. FORESTRY AND PACKAGING International Paper sold its 50 percent stake in a joint venture to Russian shareholders in 2023. Mondi, a British company, sold three packaging converting businesses to Gotek Group in September 2023 for 1.6 billion roubles (16.41 million dollars). It also agreed to sell the largest plant it has in Russia to Sezar Invest at 80 billion roubles. Finnish packaging company Huhtamaki sold its Russian operations last year for 151 millions euros. Forestry firm Stora Enso also sold three corrugated packing plants to local management. RESTAURANTS & RETAIL AmRest sold its KFC business to Smart Service in Russia for 100 million Euros in May 2023. Gazprombank Group purchased 14 MEGA shopping centers in Russia in September 2023 from a division of IKEA operator Ingka Group for an undisclosed amount. Ingka announced that it sold its final asset in Russia on Nov. 8, 2024. Hugo Boss announced on August 5 that it had sold its Russian business for an undisclosed amount to Stockmann, a wholesale partner. Moscow has approved the sale of Inditex's Russian operations to an UAE-based buyer by April 2023. LPP sold its Russian businesses in June 2022, to a Chinese group and the former CEO of Russian firm Re Trading. The stores were sold for $135.5m plus 1.2billion zlotys (about $297.6m) in inventory. LPP reported a loss of 600 million zlotys on the sale in March 2024. McDonald's closed its Russian business in 2022 and took a $1.28 billion charge. TOBACCO British American Tobacco announced in September 2023 that it would sell the Russian and Belarusian operations to a consortium headed by its Russian management. The amount of this sale was not disclosed. Imperial Brands sold its Russian business in April 2022 to Russian investors. OTHER EMBRACER In March, the Swedish gaming company announced that it had ceased its operations in Russia after selling selected assets of its Saber Interactive subsidiary to a third party for $247 millions. FRAPORT On Dec. 5, the German airport operator announced that it was nearing completion of its sale of a 25% stake in St. Petersburg's airport Pulkovo, to Middle East investor Orbit Aviation LLC. POLYMETAL INTERNATIONAL In March 2024, the precious metals company announced that it had sold its Russian operations to a Siberian miner for $3.69 billion. This included the net debt of $2.21 billion. Vimpelcom was sold to the senior management of Vimpelcom in October 2023, completing the telecoms operator's exit from Russia. XEROX HOLDINGS In October 2023, Xerox Holdings, a printer maker, announced that it had sold the Russian operations of its company to local management. The amount was not disclosed. YANDEX NV Yandex is a Dutch company that runs an internet search engine. In July, a Russian investor consortium bought the majority of its business in a deal valued at around $5 billion. ($1 = 0.9148 euros) ($1 = 97.5000 roubles) ($1 = 4.0323 zlotys)
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TASS reports that Russia has begun to inspect its fleet of tankers after a major oil spill.
A government official told the TASS state news agency that the Russian government had launched an inspection program to examine the condition of the tanker fleet in the country after a major oil spill involving a tanker. The authorities in southern Russia's Krasnodar Region have declared an emergency in the region after a large oil spill was caused by two old tankers that got into trouble in December during a storm. The Volgoneft tanker 212 split in two in the Kerch Strait between the Black Sea Sea of Azov. Meanwhile, the Volgoneft Tanker 239 ran aground in the Kerch Strait about 80 metres away from the shore, near the port of Taman. The older ships, which were more than 50 years old, carried a total of 9,200 metric tonnes (62,000 barrels), and the spillage was one of largest environmental disasters that hit the region for many years. (Reporting and Writing by Anastasia Teterevleva, Editing by Andrew Osborn).
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CORRECTED - Asian spot LNG prices are down due to low demand during Lunar New Year.
The Asian spot price of liquefied gas (LNG), which is a product of liquefied gas, fell this week due to low demand in Asia during the Lunar New Year holidays. This encouraged cargo diverts towards Europe, where gas prices have reached a 15-month peak amid concerns about storage refilling. The average LNG price in March for delivery to North-east Asia Industry sources estimate that the price per million British Thermal Units (mmBtu) was $13.80, down from $14/mmBtu a week ago. The demand in Asia has been lower than normal, especially in China. This has caused rates to fall. Toby Copson is chairman of Davenport Energy Partners. Copson said that "Overall sentiment is muted, so cargoes continue to be rerouted towards Europe in order to gain premiums." In South-East Asian markets, high prices also discourage price sensitive buyers. "Asian LNG Buyers are firmly off the market for spot U.S. Gas Cargoes. This is true not only for deliveries next month but also in future months," Natasha Fielding said, Head of European Gas, LNG, and Biomass Pricing at Argus. The market continues to be concerned about the colder temperatures in Europe and the increased storage withdrawals. The higher prices in Europe prompted a surge of LNG tankers in early January to divert from Asia to Europe, with at least 6 making mid-Atlantic route changes. This week we saw the LNG Juno change course from Japan to Greece, said Alex Froley senior LNG analyst at ICIS. Malaysia's Petronas has confirmed that its operations at Miri and Bintulu remain unaffected despite severe flooding. This eases market concerns about LNG supply disruptions. Florence Schmit is the European energy strategist for Rabobank. She said: "All eyes are on the final straw which could speed up the pace of European storage withdraws and leave sites depleted so after the winter, that the only option will be fierce competition with LNG." Schmit said that the current sentiment is bullish and the fact that governments in Europe are talking about subventioning storage injections over the summer will only amplify this trend. S&P Global Commodity Insights estimated its daily North West Europe (NWM) LNG Marker price benchmark on a basis of ex-ship (DES), for cargoes to be delivered in March at $15.31/mmBtu, a $0.47/mmBtu reduction from the gas price for March at the Dutch TTF Hub. Spark Commodities set the price for the February delivery period at $15.39/mmBtu. Qasim Afghanistan, Spark Commodities analyst, says that the U.S. arbitrage for north-east Asia via Cape of Good Hope has narrowed slightly, but it still signals strongly that U.S. cargoes will be delivered to Europe and not Asia. As a result of increased vessel availability, global LNG freight rates have fallen to record lows. On Friday, Atlantic rates dropped to the lowest ever recorded levels, at $3,500/day. Afghan also said that Pacific rates dropped to $11,500/day.
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Spanish port traffic surges due to Red Sea crisis
In 2024, the volume of goods passing through Spanish ports increased by 6% after many companies chose to send their goods south of Africa in order to avoid attacks by Houthi militias on ships in the Red Sea. The state port agency reported on Friday that Las Palmas, Canary Islands, and Barcelona both saw a 13% and 10% increase in volume of goods, liquid bulks, and dry bulks respectively. The agency said that Spanish ports had adapted to the situation, which has led to some peak times of extra activity. It added that it expects higher port traffic as long as the Red Sea remains unstable. Yemen's Houthis launched more than 100 attacks against ships in November 2023. They sank two vessels and seized another, claiming to be in solidarity with Palestinians living in Gaza. Following a Gaza ceasefire agreement, the Houthis announced last week that they would stop attacking vessels owned or operated by U.S. and British companies. They will instead limit their attacks to commercial ships with ties to Israel. Transport companies, however, have stated that the risks are still too high for them to re-use the Red Sea route. Emily Stausboll is a senior shipping expert at Xeneta. She said that carriers will want to know if there are any long-term plans for safe passage in the Red Sea before they return. This would help them avoid further disruptions if conditions worsen and they have to once again divert around Cape of Good Hope. According to the agency, container traffic through Spain's port increased by 11% in 2018. Spanish ports also saw an increase in vessel bunkering in preparation for longer routes. The ports will see a drop of 4.5% in 2023 for container traffic. Two executives from the fashion industry in Spain claim that some Spanish retailers have increased their air shipping to Europe to meet the demand. This is due to the two-week delay required to ship goods via Southern Africa to Europe. Corina Pons is the reporter. (Editing by Charlie Devereux, Mark Potter and Mark Potter.)
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Suez Canal Authority: Red Sea stability is returning
Osama Rabi, the chairman of the Suez Canal Authority, told AP Moller Maersk that there were signs that stability was returning to the Red Sea and urged them to consider this when planning their sea routes. Rabie's comments were made at a meeting between the CEO of a Danish container shipping company and other senior executives. However, the statement did not specify when this meeting was held. Rabie said, "We will take into consideration the positive indicators in the Red Sea Region when planning our maritime schedules for the next period." A number of major shipping companies around the world have suspended Red Sea voyages, and rerouted their vessels to southern Africa in order to avoid possible attacks by Yemen's Houthis. In December, Egyptian President Abdel Fatah al-Sisi stated that the disruption would cost Egypt $7 billion in revenue from the Suez Canal by 2024. Maersk announced last week that it will continue to divert ships away from the Gulf of Aden, Red Sea and the southern tip of Africa in spite of the Houthis' announcements they would reduce their attacks on vessels. Since November 2023, the Houthis of Iran have launched more than 100 attacks against ships. They have sunk or seized two vessels and killed four seafarers. Reporting by Yusri Mohammed. Jana Choukeir wrote the article. Mark Potter (Editing)
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Malaysia's Petronas plans to increase oil and gas production over the next three years
Petroliam Nasional Berhad, the Malaysian state-owned company that produces energy In its Activity Outlook Report, the company said that it will focus on boosting the country's oil production and gas output over the next three-year period. Petroliam Nasional (Petronas) said that it plans to increase and maintain the oil and gas production of the country at 2 million barrels equivalent per day, from 1.7 mmboe, in 2024. Petronas' report, published on Tuesday, stated that the company will achieve its target through a number of projects, including the Kasawari Gas Development off the coast of Sarawak, Borneo and the redevelopment and exploitation of the Gumusut Kakap, Bekok Tabu, and Seligi Oil and Gas Fields. The report predicts that in the next two-year period, 15 exploration wells will be drilled annually, with a focus on shallow water wells and deeper water wells. Petronas' outlook for upstream projects is unchanged for the next three-year period, with 69 new development wells expected in 2025 as opposed to 56 in 2020. Petronas expects to drill more than 400 wells and to execute 39 upstream projects over the next three-year period, including construction of three offshore platforms for central processing, three onshore installations, as well as fabrication and installation of approximately 900 km (559 miles) worth of pipelines.
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Japan considers Alaska LNG Pipeline pledge to win Trump’s favour
Three officials with knowledge of the situation say that Japan may offer support for a $44billion gas pipeline in Alaska to appease U.S. president Donald Trump and avoid potential trade friction. Sources said that officials in Tokyo believe Trump will bring up the project, which is a key part of the U.S. security and prosperity, at his first meeting with Japanese Prime Minister Shigeru ishiba in Washington, as early as next week. The overall cost of gas is causing Japan to doubt the viability the 800-mile pipeline that would link fields in Alaska to a southern port where the gas could be liquefied before being shipped to Asian consumers. Officials said that Japan is willing to look into a possible deal, if requested. One person said that Tokyo could include this commitment along with other concessions such as increasing defense spending and manufacturing investments in the U.S. to reduce the $56 Billion bilateral trade deficit, and stave off tariffs. The White House didn't immediately respond to an inquiry about the meeting. The Japanese foreign ministry stated that it was too early to talk about the issue. No details of Japan's potential interest in the Alaska Project have been reported previously. They spoke under the condition of anonymity as they were not authorized to speak to the media. One of the executive orders Trump issued when he assumed office on January 20 promised to unlock Alaska's potential resource, including "the sale and transportation Alaskan LNG to other areas of the United States or allied nations in the Pacific region". Trump has presented the project as a win-win for Alaska and U.S. ally nations in Asia who are looking for a reliable source of energy. Japan has plenty of access to LNG and its companies have traded more than half the country's domestic consumption last year. The Alaska pipeline can still help Japan diversify its supply away from more risky sources such as Russia and the Middle East, which account for around one-tenth (10) of its gas imports. Ishiba stated in the parliament on Friday, that although Japan must reduce its reliance on fossil-fuels, there are "things that we should ask from the U.S. regarding stable energy supply". Ishiba did not mention Alaska or give any specifics. Officials warned that Ishiba would not be able make any firm commitments regarding LNG, such as investing in the Alaska Project, when he met Trump. A fourth official stated that any deal must offer flexibility and reasonable pricing, as well as allowing Japanese buyers the option to resell LNG purchased. Trump has threatened to impose tariffs on a variety of foreign goods, but has revealed little since his return to office about his policy towards economic and security relations with Japan. The topic has dominated the political discourse in Japan. A key U.S. ally and major foreign investor, Japan was shaken by Trump's tariffs on imports of steel and his demand that Tokyo pay more for hosting American troops during his first term. The media in Tokyo is focusing on whether Ishiba can recreate the bond between Trump and former Japanese Prime Minister Shinzo Abe during Trump's first term. Abe was the first foreign president to meet Trump following his election victory in 2016. The pair became close friends and played golf together. Ishiba’s administration sought advice from U.S. policy experts and lawmakers with connections to Japan and Trump, as it did not have such intimate knowledge of Trump’s inner circle. These include former U.S. Ambassador to Tokyo Bill Hagerty, who is a Tennessee Senator, and Kenneth Weinstein from the Hudson Institute. Weinstein said he encouraged Japan to strengthen energy partnerships with the U.S., and that the Alaska Project deserved serious consideration. Hagerty’s office didn't respond to any questions. Ado Machida is a Tokyo-based entrepreneur who was on Trump's team of transition after his election win in 2016. He said that an offer from Japan to purchase more LNG and to support the Alaska LNG Pipeline would "probably be the easiest" way for Trump to accept. Machida said that Trump would want to know the Japanese government's response to his proposal. He added that he spoke to Japanese officials about it. One of the officials stated that state banks, such as the Japan Bank for International Cooperation, could finance the Alaska project for trading firms like Mitsubishi Corp and Mitsui & Co. Japan relies on these companies to secure its oil, gas, and coal reserves abroad. Mitsubishi has reached an agreement in 2022 with Alaska Gasline Development Corporation, the state-owned company that oversees the LNG proposal to evaluate the feasibility of ammonia production. Mitsubishi hasn't committed to the project past an assessment. Mitsubishi and Mitsui refused to comment on possible investments and discussions regarding the Alaska LNG Project. JBIC stated that it would provide support on a case by case basis, taking factors such as the involvement of Japanese companies into consideration. A spokesperson for AGDC stated in a press release that it had spoken with Japanese leaders of the energy industry about the project. However, they did not provide any specifics. Despite opposition from environmentalists, the project was first approved under Trump's previous term. In 2020, it received final legal approval and in 2022 Federal Energy Regulatory Commission authorization. AGDC announced this month that it has entered into an agreement to advance the pipeline with Glenfarne.
Financial Times - Jan 31
These are the most popular stories from the Financial Times. These stories have not been verified and we cannot vouch their accuracy.
Headlines
-The European Union is debating the return of Russian gas in Ukraine as part of peace deal
Shell boss says he will take the Jackdaw Gasfield case to Britain's highest Court
Norwegian government falls over EU energy dispute
British regulators proposes to ease Royal Mail obligations
View the full article
European officials are debating if Russian pipeline gas sales should be restarted to the European Union as part of an eventual settlement to end the conflict against Ukraine.
Shell boss Wael sawan has said that he will fight to the British Supreme Court for permission to develop Jackdaw's North Sea gasfield, after a court had revoked the project.
A dispute over European Union policies on energy has led to the fall of Norway's government coalition, just as U.S. president Donald Trump's threat to impose tariffs or take over Greenland was set to reignite the debate about Oslo joining the EU.
The British postal regulator proposed to ease the Royal Mail's duties, allowing it to make fewer delivery as the group prepares itself for a new ownership under Czech billionaire Daniel Kretinsky.
(source: Reuters)