Wed. Oct 5th, 2022

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

July 15, 2022

European’s Energy Crisis is becoming a reality now. Now, private businesses are making statements and taking actions. But the crisis is getting worse day by day, as governments and/or politicians are still making pronouncements rather than taking actions.

The most ominous or drastic action so far is Unpier, Germans’ “energy giant” has started using gas it was storing for the winter to supply its customers. Of course, it is necessary for Uniper to survive now, but the action is similar to taking the milk bottle away from the baby. It is NOT sustainable. Even after the German Government provide the necessary financial commitments to keep Uniper afloat for the time being, where is the natural gas? That is the core issue!

It is good news that “Ineos, one of Europe’s largest gas users, struck a deal last month to buy 1.4 million tons of liquefied natural gas a year from US exporter Sempra over two decades.” But wait “The LNG will come from either Sempra’s proposed 13.5 million tpa Port Arthur LNG Phase 1 project in Texas, US, or the 6.75 million tpa Cameron LNG Phase 2 project in Louisiana, US. The LNg will be supplied over a 20-year period on a free-on-board basis. The agreement is preliminary and non-binding, dependent on Sempra securing the necessary permits and financing for the proposed projects. For sure, there will be no US LNG to Ineos for this winter or next winter!

Is it time for EU leaders listen to some unsolicited, but wise ideas? For example:

  1. Urban: “The moment of truth must come in Brussels, when leaders admit they have made a miscalculation, that the sanctions policy was based on wrong assumptions and it must be changed.”
  2. Germany has vowed to put Russia out of business, stolen billions from Russia and private Russians, stolen plants and companies from Gazprom, shut down the new Russian pipeline, and done their best to crush the Russian economy – and now they are complaining that the Russians aren’t delivering gas as fast as they want. Am I the only man smart enough to see something wrong with this picture? The Germans are lucky that the Russians don’t tell them to burn their furniture for heat.

Europe to Ration Gas If Nord Stream Stays Shut, Ineos Says

Diana Li and Alix Steel Fri, July 15, 2022, 10:19 AM

(Bloomberg) — Europe will need to ration natural gas to meet winter heating demand if the Nord Stream pipeline doesn’t restart after planned maintenance, according to Ineos Group.

“It looks pretty dire for this winter now, as to whether we’ll get to the targets we need for storage,” Brian Gilvary, executive chairman of the UK chemicals company’s Ineos Energy business, said in a Bloomberg Television interview. “If Nord Stream 1 doesn’t come back, it is inevitable. We will definitely see rationing in Europe.”

Ineos, one of Europe’s largest gas users, struck a deal last month to buy 1.4 million tons of liquefied natural gas a year from US exporter Sempra over two decades.

Energy Giant Uniper Faces Harder Bailout Talks Than Lufthansa

Priscila Azevedo Rocha, Josefine Fokuhl and Arne Delfs Fri, July 15, 2022,

(Bloomberg) — Bailing out German energy giant Uniper SE is shaping up to be even more painful than the weeks-long, tangled and nearly-failed rescue of carrier Deutsche Lufthansa AG.

Every corner of the negotiation is difficult, with a deal unlikely before the end of next week, according to people familiar with the talks, who asked not to be named citing confidentiality. To make matters worse, a labor union is opposing a plan by majority Finnish owners, and the company is running out of cash just as the rising cost of capital make state-backed loans trickier to get.

Germany is under pressure to find a solution soon. Uniper has started using gas it was storing for the winter to supply its customers after Russia cut deliveries to Europe, forcing the company to pay up for fuel in the spot market. The inventory drawdowns, which started on Monday, are also providing much needed cash for the Dusseldorf-based company already faced with a liquidity crunch.

But labor union Verdi has been opposed to the plan, arguing that it would essentially amount to a break up of the company, threatening jobs, said Board Member Christoph Schmitz. While the union backs a German stake, acquiring a company that has operations in Russia and nuclear power plants in Sweden can be tricky for the administration of Chancellor Olaf Scholz.

Rescuing the energy giant could also prove more expensive. If Russian shipments are halted beyond that, Uniper could face even more difficulties. Still, the company is key for security of supply and Habeck has already said he won’t let it fail.

Uniper Board Member Sees Insolvency ‘Within Days’ as Russian Gas Squeeze Worsens

Fri, July 15, 2022, 3:38 AM By Geoffrey Smith

Investing.com — German energy giant Uniper (ETR:UN01) could be insolvent within a matter of days, a board member claimed on Friday.

Some Readers’ Comment

So company’s own country not supporting it and blame goes to Russia? Sanctions are used as weapon and now they backfired so it is unfair? Wow.

Gurmit

west would use finance, trade, sports and other sanctions as a weapon against Russia, but God forbid Russia would use energy as a weapon to fight back? hilarious little clowns those politicians, aren’t them?

Lexa

Russia’s gas shutoff is forcing Europe’s biggest buyer of its supplies to draw down winter emergency reserves

Phil Rosen Fri, July 15, 2022, 10:23 AM

According to a Financial Times report, the Düsseldorf-based company, which is Europe’s biggest buyer of Russian gas, said that beginning earlier this week it’s been taking gas from storage units amid dwindling supplies.

“This development makes it harder to reach the storage levels necessary for the winter and reduces the reserves available in the event of a gas deficit situation,” Germany’s Federal Network agency said, per the FT.

Germany has vowed to put Russia out of business, stolen billions from Russia and private Russians, stolen plants and companies from Gazprom, shut down the new Russian pipeline, and done their best to crush the Russian economy – and now they are complaining that the Russians aren’t delivering gas as fast as they want. Am I the only man smart enough to see something wrong with this picture? The Germans are lucky that the Russians don’t tell them to burn their furniture for heat.

Rodger Olsen Comment

Europe ‘shot itself in the lungs’ with sanctions on Russia, Orban says

Thu, July 14, 2022, 11:52 PM

BUDAPEST (Reuters) – The European Union has “shot itself in the lungs” with ill-considered economic sanctions on Russia, which, unless rolled back, risk destroying the European economy, Hungarian Prime Minister Viktor Orban said on Friday.

Initially, I thought we had only shot ourselves in the foot, but now it is clear that the European economy has shot itself in the lungs, and it is gasping for air,” Orban, a long-time sanctions critic, told public radio in an interview.

Orban said Ukraine needed help, but European leaders should reconsider their strategy, as sanctions have caused widespread damage to the European economy without weakening Russia or bringing the months-long war closer to any resolution.

“The moment of truth must come in Brussels, when leaders admit they have made a miscalculation, that the sanctions policy was based on wrong assumptions and it must be changed.”

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