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The European Union (EU) is going down in flames as its fuel taps from Russia run dry.

Issues related to the war in Ukraine have resulted in no more gas flowing through the Nord Stream 1 (NS1) pipeline and soon-to-be tripled gas prices across Europe.

To avoid what will inevitably become a widespread catastrophe for the European economy, EU officials are reportedly discussing fuel rationing as the next step in their standoff against Russian President Vladimir Putin, who quite frankly appears to be winning on every front.

Should the NS1 pipeline never get turned back on due to issues with a key engine turbine component that is still stuck in Canada due to sanctions, Western Europe faces a total loss of energy in the coming months.

Up until now, the public was simply hearing about these problems on the news. Now, however, the consequences of failed political leadership are turning into sky-high gas prices and now the potential for forced rationing.

A recent poll found that more than 60 percent of German citizens fear there will not be enough gas to go around this winter, especially since some people will be stocking up and hoarding what they can before prices triple come 2023.

Germans are starting “to sweat” as they realize there will be no gas available for heat this winter

Draft EU measures propose limiting the heating of public and commercial buildings to 19 degrees Celsius, or around 66 degrees Fahrenheit, which is cold enough to require the use of extra layers of clothing indoors.

Private households are also being encouraged to lower their thermostats by one degree, a proposal that was also made back in February right after Russia invaded Ukraine.

…click on the above link to read the rest of the article…

Gazprom Reportedly Declares Force Majeure, Will Halt Gas Flows To Germany Indefinitely

July 18, 2022

Gazprom Reportedly Declares Force Majeure, Will Halt Gas Flows To Germany Indefinitely

Already days before the July 22 European “Doomsday” when the scheduled Russian 10-day maintenance of the crucial Nord Stream pipeline to Germany is slated to end – but which was thrown into deep doubt given Gazprom recently said it can no longer guarantee its “good functioning” due to crucial turbines being previously held up in Canada related to sanctions – the Russian energy giant has declared Force Majeure to one major European customer.

Simply put, Gazprom declared extraordinary and extreme circumstances to void itself from all contractual obligations to this customer, thus the gas will stop flowing indefinitely, as Reuters reports in a breaking development Monday, “Russian gas export monopoly Gazprom has declared force majeure on gas supplies to Europe to at least one major customer starting June 14, according to the letter seen by Reuters.”

The letter invoked “extraordinary” circumstances outside the company’s control, Reuters continues, citing a source saying the customer in question is Germany via the Nord Stream 1 pipeline.

As we’ve been detailing, German authorities have of late taken unprecedented steps in anticipation of an enduring Russian gas halt, essentially dimming the lights across the country – which has included everything from limiting hot water, to shutting down swimming pools, to quite literally dimming city street lights as it entered “alarm” stage over dwindling supply.

It seems this letter declaring its legal release from supply obligations going back to June 14 is in preparation for definitive action on July 22, namely that the pipeline’s operations are likely to remain suspended.

…click on the above link to read the rest of the article…

IEA: Europe Will Have To Cut Gas Usage By Nearly One-Third

June 30, 2022

IEA: Europe Will Have To Cut Gas Usage By Nearly One-Third

In the first quarter of next year, the countries of the European Union will have to cut their usage of natural gas by up to 30% in preparation for a complete stoppage of Russian gas flows, according to the International Energy Agency (IEA).

IEA Director Fatih Birol on Tuesday said that “a complete cut-off of Russian gas supplies to Europe could result in storage fill levels being well below average ahead of the winter, leaving the EU in a very vulnerable position.”

“In the current context, I wouldn’t exclude a complete cut-off of gas exports to Europe from Russia,” he stated.

Citing technical issues related to the Nord Stream pipeline, Russia earlier in June cut flows of gas to Germany by 60%.

Plans to boost natural gas storage filling in Europe would not withstand a full Russian cut-off if it were to happen between now and the fourth quarter of this year.

By the first of November, the European Union should have its gas storage filled to 90%; however, a complete Russian cut-off would reduce that significantly, leading to another surge in natural gas prices, which have already tripled year-on-year, according to Bloomberg, citing figures from the ICE Endex.

European natural gas prices remained steady from Monday to Tuesday, in part due to a resumption of the flow of Russian gas through the TurkStream pipeline, which was undergoing maintenance. The pipeline has a 31.5-billion-cubic-meter capacity, Bloomberg reports.

On Tuesday, Dutch front-month gas futures dropped 0.2% at the close.

Also steadying natural gas prices in Europe on Tuesday were new estimations for demand, which could see a drop due to sunnier weather that can better support solar energy.

…click on the above link to read the rest of the article…

Germany Fears Russia Could Shut Nord Stream 1 Within Weeks

June 25, 2022

Germany Fears Russia Could Shut Nord Stream 1 Within Weeks

The European Union has this week accused Russia of planning “rogue moves” regarding lowering natural gas flows to Europe, or in other words continuing to ‘weaponize’ its energy, to which the Kremlin has consistently responded with variations of ‘our gas, our rules’.

This after Moscow has reduced Nord Stream 1 gas flows by 40% last week while citing technical issues, leading to a four- to sixfold rise in market prices, based on German energy officials. However, Berlin isn’t buying that needed maintenance on the key pipeline is all that’s happening here, instead seeing in it an underhanded Russian ploy to ramp up the pressure on Europe, giving way to fears that the saga could end in Russia halting its pipeline altogether.

“Gas is now a scarce commodity in Germany,” economy minister Robert Habeck said at a Thursday press conference while warning that his country is now approaching crisis supply levels which could see authorities turn to gas rationing.

Habeck confirmed that the last days have seen a “significant deterioration of the gas supply situation” – following Gazprom’s Nord Stream 1 also having to now undergo what the Russian energy company has scheduled as “annual maintenance” for a period of ten days, from July 11 to July 21.

Habeck was asked in an interview this week with German broadcaster ZDF about the negative scenario possibility of Russia artificially extending the repair and maintenance period: “I’d be lying if I said I’m ruling it out. In fact, Putin has gradually reduced the amount of gas more and more,” he responded.

According to the German language publication, the economy minister bluntly spelled out that Putin is trying to use energy to drive a wedge among European allies:

…click on the above link to read the rest of the article…

IEA: Current Energy Crisis Is “Much Bigger” Than 1970s Oil Crunch

June 1, 2022

IEA: Current Energy Crisis Is “Much Bigger” Than 1970s Oil Crunch

IEA Chief Birol: The world faces a “much bigger” energy crisis than the one of the 1970s.
Back in the 1970s, the crisis was just about oil.
Birol: The world, especially Europe, could face a summer of shortages of gasoline, fuel, and jet fuel.

The world faces a “much bigger” energy crisis than the one of the 1970s, the Executive Director of the International Energy Agency (IEA), Fatih Birol, told German daily Der Spiegel in an interview published on Tuesday.

“Back then it was just about oil,” Birol told the news outlet. “Now we have an oil crisis, a gas crisis and an electricity crisis simultaneously,” said the head of the international agency created after the 1970s shock of the Arab oil embargo.

The energy crisis started in the autumn of last year, but the Russian invasion of Ukraine made it much worse as the markets fear disruption to energy supply out of Russia, while Western governments are imposing increasingly restrictive sanctions on Moscow over the war in Ukraine.

The EU agreed late on Monday to ban most of the imports of Russian oil, leaving pipeline supply exempted from the embargo, for now. This will further tighten already tight crude and product markets.

The world, especially Europe, could face a summer of shortages of gasoline, fuel, and jet fuel, the IEA’s Birol told Der Spiegel.

Fuel demand is set to rise as the main holiday season in Europe and the United States begins, Birol added.

Upended crude oil flows add to reduced global refinery capacity resulting in low inventories of products, including in the United States.

Refinery capacity for supply, globally and in the U.S, that is now a few million barrels per day lower than it was before the pandemic.

Putin: Oil Sanctions Will Be Europe’s “Economic Suicide” On Orders From “American Overlords”

May 18, 2022

Putin: Oil Sanctions Will Be Europe’s “Economic Suicide” On Orders From “American Overlords”

Russian President Vladimir Putin announced that EU countries are committing “economic suicide” by refusing Russian energy resources amid a push to impose an oil embargo, but which has been thus far blocked by Russian energy-dependent Hungary and a handful of others.

As quoted in RIA Novosti, Putin described that the oil sector is busy undergoing a “tectonic shift” which will only be made worse by “ill-thought-out” sanctions by the West. The address was given virtually to an energy conference of the country’s industry heads.

“Changes in the oil market are tectonic in nature and doing business as usual, according to the old model, seems unlikely,” he said. “In the new conditions, it is important not only to extract oil, but also to build the entire vertical chain leading to the final consumer.”

*Putin signs a pipeline in 2011. AFP via Getty*

He called out the current EU-US trajectory of seeking to inflict maximum punishment on Moscow as a strategy ensuring higher energy prices and higher inflation. That’s when he observed:

“Of course, such an economic suicide is a domestic affair of the European countries,” based on the AFP translation.

At the same time, Putin additionally pointed out, Europe’s “chaotic actions” would eventually serve to boost oil and gas revenues for Moscow, also as Russia diverts energy supplies to “friendly” countries. He urged Russian industry authorities to be more proactive in leveraging the situation for the nation’s benefit.

Putin described a scenario of Europe feeling the brunt of the crisis worst, according to state media:

…click on the above link to read the rest of the article…

Cutting Off Russian Gas Would Be “Catastrophic”, German Industry President Warns

May 17, 2022

Cutting Off Russian Gas Would Be “Catastrophic”, German Industry President Warns

As we detailed yesterday, almost two months after Europe rushed to declare it would impose unprecedented sanctions on Russia in response to Putin’s invasion of Ukraine with no regard for how such sanctions would boomerang and cripple its own economies, the old continent which was and still remains hostage to Russian energy exports, is finally grasping the underlying math which was all too clear to Vladimir Putin long ago.

The European Union’s executive arm said yesterday that the currency bloc’s economy would expand about 0.2% this year, with inflation topping 9%, as governments struggled to replace the imports.

This severe stagflationary scenario is highlighted by Siegfried Russwurm, president of the Germany’s biggest industry association BDI, warning that the cessation of Russian gas deliveries would have a dire effect on the German economy.

“The consequences of cutting off Russian gas supplies would be catastrophic,” he told tabloid Bild am Sonntag in an interview published at the weekend.

Russwurm added that cutting off Russian gas would deprive businesses of fuel in Germany, forcing businesses to close production lines.

“In this situation many companies will be completely cut off gas supplies. In many cases, affected businesses will be forced to stop production, some businesses may never be able to start again,” he warned.

Europe’s “sudden realization” of just how destructive pushing through with full-blown sanctions will be, somewhat similar to that of Elon Musk who “learned” about the millions in Twitter spam accounts only after bidding $44 billion – is why over the weekend, Bloomberg reported that the European Union is set to fully water down its so-called sanctions and to offer gas importers a solution to avoid a breach of sanctions when buying fuel from Russia while satisfying President Vladimir Putin’s demands over payment in rubles.

…click on the above link to read the rest of the article…

The Real Reason Behind the EU’s Drive to Embargo Russian Oil

May 14, 2022

The Real Reason Behind the EU’s Drive to Embargo Russian Oil

This week the European Union is expected to announce a complete import ban on Russian oil. Hungary, in its first real act of defiance, is threatening to veto this; Germany, after some hemming and hawing, has finally decided it can survive such a ban.

Assuming Hungary’s objections are eventually overcome, at first blush this looks like yet another energy “own goal” by the people obsessed with soccer. The U.S. has already issued this ban.

Because European industry is heavily dependent on Russian oil and gas, the conventional wisdom is that the EU Commission is just petulant and incompetent.

Are they petulant? Yes. Incompetent? Possibly? But only if you think in conventional terms of doing the right thing for their people. What is clear to any serious observer of EU politics is that they are not interested in what their people have to say or want.

Theirs is an agenda which will brook no opposition, even if it means destroying its own economy to bring a rival to its knees.

That said, I sincerely doubt there will be a “buyers embargo” on natural gas because there is no viable substitute for it.

Hungary is using the need for unanimous consent within the European Council to block any ‘gas ban’ in any new economic sanctions package. There are at least three other countries which are happy Hungary is willing to suffer Brussels’ wrath.

But banning Russian oil, on the other hand, is different.

So, it is interesting that Hungary would do this, given they import no oil from Russia. {Ed. this is wrong, Hungary imports 65% of its oil through the Druzhba pipeline} This veto was predicted by me the morning after the Hungarians overwhelmingly rejected George Soros’s anti-Viktor Orban coalition and handed it an ignominious defeat.

…click on the above link to read the rest of the article…

Europe May Face LNG Crisis This Winter

May 11, 2022

Europe May Face LNG Crisis This Winter

Rush to wean off Russian gas has made European consumers highly vulnerable to LNG price shocks.
Global LNG demand outstrips supply in 2022.
New LNG projects are unlikely to provide relief until 2024.

A liquified natural gas (LNG) crisis is brewing for European countries dealing with energy insecurity in the wake of Russia’s invasion of Ukraine, as demand will outstrip supply by the end of this year, Rystad Energy research shows. Although soaring demand has spurred the greatest rush of new LNG projects worldwide in more than a decade, construction timelines mean material relief is unlikely only after 2024. Global LNG demand is expected to hit 436 million tonnes in 2022, outpacing the available supply of just 410 million tonnes. A perfect winter storm may be forming for Europe as the continent seeks to limit Russian gas flows. The supply imbalance and high prices will set the scene for the most bullish environment for LNG projects in more than a decade, although supply from these projects will only arrive and provide relief from after 2024

The European Union’s REPowerEU plan has set an ambitious target to reduce dependence on Russian gas by 66% within this year – an aim that will clash with the EU’s goal of replenishing gas storage to 80% of capacity by 1 November. By shunning Russian gas, Europe has destabilized the entire global LNG market that began the year with a precarious balance after a tumultuous 2021. The decision to sharply reduce reliance on Russian gas and LNG from current levels of between 30-40% will transform the global LNG market, resulting in a steep increase in energy-security based European LNG demand that current and under-development projects will not be able to supply.

…click on the above link to read the rest of the article…

An Economic ‘Atomic Bomb’: Hungary Threatens EU’s Latest Sanctions Against Russia, Including Oil Embargo

May 7, 2022

An Economic ‘Atomic Bomb’: Hungary Threatens EU’s Latest Sanctions Against Russia, Including Oil Embargo

The European Union’s ban on Russian oil is in jeopardy Friday after Hungary’s Prime Minister Viktor Orban rejected proposals as too costly and too swift for the country to implement, marking a potentially lethal blow to the bloc’s plans to wean itself off Russian energy as diplomatic wrangling drags on over its toughest sanctions against Moscow yet.

Vladimir Putin Visits Hungary — Hungarian Prime Minister Viktor Orban said current energy sanctions proposals against Russia are not … [+]

GETTY IMAGES

KEY FACTS

Orban, an ally to Putin who was reelected for a fourth term as prime minister in April, told Hungarian state radio on Friday that Hungary could not support proposed EU sanctions against Russia in their current form, according to multiple news reports.

Plans to ban Russian oil are far too costly and would amount to an “atomic bomb” being dropped on the Hungarian economy, he said.

Hungary would need at least five years and massive investment on infrastructure in order to manage without Russian oil, Orban said.

He said he is willing to negotiate a sanctions proposal that meets Hungary’s interests and is waiting on a new proposal from the European Commission.

While Orban’s objections are not surprising—Hungary is heavily dependent on Russian oil and has consistently shot down proposed energy sanctions against Moscow since it invaded Ukraine in February—they are a major obstacle for finalizing the bloc’s latest round of sanctions, which require unanimity from all 27 member states.

KEY BACKGROUND

Current plans would see most of the EU phase out Russian oil imports within six months, alongside disconnecting some of Russia’s largest banks from the SWIFT international finance system and banning Russian broadcasters from the region. When outlining the sanctions package on Wednesday, European Commission President Ursula Von der Leyen said ending the bloc’s “dependency on Russian oil…

…click on the above link to read the rest of the article…

EU To Impose Full Embargo On Russian Oil Next Week, Will Send Price Above $185 According To JPMorgan

April 19, 2022

EU To Impose Full Embargo On Russian Oil Next Week, Will Send Price Above $185 According To JPMorgan

Despite the clear intentions of western government to cripple Russian energy production, loadings of Russian oil have so far been surprisingly resilient, so much so that Russia’s current account balance is at all time highs.

According to JPMorgan, shipments in the seven days to April 16 hit 7.3 mbd, only 330 kbd below the 7.58 mbd averaged in
February before the start of the war. Remarkably, JPM calculates that Russian crude exports are averaging 360 kbd above pre-invasion volumes, while exports of oil products like fuel oil, naphtha, and VGO have declined by 700 kbd (full report available to pro subscribers in the usual place).

As previously observed, the decline in product exports combined with a 200 kbd drop in Russian domestic oil demand has resulted in Russian refineries cutting runs. The volume of refining cuts in April has risen to 1.3 mbd, almost 0.6 mbd above usual April maintenance. By late March, a sharp reduction in domestic refining throughput triggered production shut-ins.

With that in mind, JPM now estimates that Russian production shut-ins will amount to 1.5 mbd in April, vs its initial forecast of 2 mbd (the forecast of a 1 mbd loss of Russian exports for the rest of the year remains unchanged for now).

Underlying JPM’s projection is the assumption that European buyers will cut their purchases of Russian oil by about 2.0-2.5 mbd by the end of the year and that Russia will be able to re-route only about 1 mbd out of that.

The three ways JPM gets to its 2.0-2.5 mbd estimate are:

Russian crude spot contracts account for about 1.8 mbd of total exports, while about 0.3 mbd of products are sold on spot terms, giving us a likely disruption of 2.1 mbd,

…click on the above link to read the rest of the article…

Europe To Cap Potash Imports As Planting Season Begins

April 6, 2022

Europe To Cap Potash Imports As Planting Season Begins

The EU is expected to deliver another shock to its agricultural sector by capping Russian imports of potash, a crucial ingredient for growing food, according to Bloomberg, citing a Dow Jones report.

The European Commission is expected to imminently unveil broad new sanctions on Russia. Much of the fertilizer is purchased from Belarus; the landlocked country in Eastern Europe could also be slapped with new sanctions for its involvement in Russia’s invasion of Ukraine.

Potash is a key ingredient for agricultural fertilizers. Europe produces only a negligible amount of the fertilizer, and to potentially cap imports from Russia and or Belarus (top producers) seems idiotic for Europe as the spring planting season is only beginning.

Even if Europe were to rework its supply chains to import potash elsewhere, only a few other countries would export it. The impact of capping imports will send prices even higher and create fertilizer shortages for crops. This can dramatically affect crop harvests at the end of the growing season.

A handful of North American fertilizer stocks jumped on the report, including CF Industries +3% and Intrepid Potash 2%.

About 90% of potash is used as fertilizer in Europe; the rest is used to produce table salt, help slow the aging of wine, preserve canned food, and give chocolate its aroma.

Global spot prices for potash show prices continue to accelerate to the upside. This may discourage farmers from purchasing or even spread less of it during the planting season.

Even before the invasion of Ukraine, all fertilizer production in the West was declining (read: here) due to high natural gas prices. The shortage of fertilizers, not just potash, but also nitrogen and phosphates, on global markets, is inevitable. What Europe is doing to potentially cap potash imports from Russia and Belarus is idiotic and can spark a food crisis.

…click on the above link to read the rest of the article…

EU Pushes To Break “Energy Taboo” With Proposed Ban On Russian Coal Imports

April 5, 2022

EU Pushes To Break “Energy Taboo” With Proposed Ban On Russian Coal Imports

Update (0825ET): As EU ambassadors meet on Tuesday to discuss another proposal on Russian sanctions, German Foreign Minister Annalena Baerbock insisted that the EU would “completely end” its fossil fuel dependence on Russia, starting with coal.

Of course, as we noted below, Germany is among the most dependent EU economies on Russian energy. Weaning its economy off Russian energy without triggering a major domestic crisis and “total collapse.”

US equity futures tumbled on the news as investors braced for more international fallout from increasing tensions between Europe and the Russians, which could lead to even higher energy prices.

* * *

Not to be outdone by tiny Lithuania (which claims to have officially weaned itself off Russian gas imports by building an LNG terminal), the European Commission has devised a controversial proposal to ban imports of Russian coal, along with a host of other measures comprising a new sanctions package to be introduced on Tuesday, according to reports from WSJ, Reuters and a host of other media outlets.

Along with banning imports of Russian coal, the package also calls for an import ban on rubber, chemicals and other products from Russia worth up to €9 billion a year.

If passed, the proposal would mark the first energy sanctions on Russia since the start of the conflict in Ukraine. Although it wouldn’t touch oil and gas, such a ban would break the so-called “energy taboo”, according to Bloomberg’s Javier Blas.

While thermal coal isn’t nearly as critical as oil and gas, it’s still a “big deal,” Blas pointed out.

Coal-fired power plants are still being used across the EU, though most member states expect to completely phase them out by 2030. Russia has the second-largest coal reserves in the world. In 2020, it mined 328 million metric tons, making it the sixth-largest producer globally…

…click on the above link to read the rest of the article…

All the World is a Stage: How the Global Drama is Being Played Out

March 14, 2022

All the World is a Stage: How the Global Drama is Being Played Out

The “Commedia dell’Arte” was a form of popular theatre, often played without a script. The masked actors would improvise according to the characteristics of their “persona”, their mask.

There are many ways of predicting the future, and my remote ancestors, the Etruscan Haruspices, would do it by examining the liver of a freshly killed goat. I may have inherited from them my interest in the future, although I don’t usually go around killing goats.

A gentler way of studying the future consists in considering the world as a stage. You know what the characters are, what they want, the way they usually behave. Then, when you put them on stage, they may act and create a drama even without following a script. It was the way the ancient Commedia dell’Arte worked. No script, actors would just play their part, according to their “persona.” a term that in Latin means “mask” and that in our times came to be related to “personality,”

It may also work for states. They have a certain persona, a way to behave that may be predictable. About two months ago, I proposed an interpretation of the current drama patterned on an older drama: the European tragedy of World War 2. The actors, the states, were different, but their masks were very similar, and I sketched out what their behavior could have been.

You see how things are going: the world powers are acting on stage as their masks impose them to do. In particular, the EU is playing the role that was of Italy in 1940. The lack of natural resources forces the EU to depend on foreign sources, in particular on importing natural gas from Russia — which plays the role that was of Britain in the 1930s: that of fossil fuel exporter…

…click on the above link to read the rest of the article…

When normality is exposed as a Ponzi

March 5, 2022

When normality is exposed as a Ponzi

Putin’s hubris, yes-men for generals, lack of fighting conviction among the men, poor logistics and strong Ukrainian leadership and determination have combined to turn the Russian invasion of Ukraine into a military quagmire.

Meanwhile, the West has upped the stakes in a financial war. The underlying assumption is that the Russian economy is weak and those of the Western allies are stronger. A few key metrics shows this is incorrect. The underlying resilience of the Russian economy and its financial system is not generally understood, and instead EU sanctions could end up undermining the whole euro system and the euro itself.

This article looks at how errors on the battlefield are likely to bring the financial and economic war between the West and Russia out into the open. By suspending access to them, the West has made the mistake of proving to Russia (and all other national central banks) the ultimate uselessness of currency reserves and the benefits of gold. As well as leading to the likely collapse of the entire euro system, this article explains how this financial war could end up with a de facto gold standard for the rouble and call an end for the entire fiat currency Ponzi scheme.

The destruction of the global fiat Ponzi scheme is a step closer

Being increasingly debased, western currencies serve to conceal deteriorating economic conditions, particularly in the US, EU, UK, and Japan. In China, less so perhaps. But China faces an old-fashioned property crisis which is sure to lead to further currency expansion and therefore, debasement of the renminbi. In this article about the state of the financial war between the US, UK and EU on one side, collectively the West, and Russia on the other, we focus on how the invasion of Ukraine is evolving into open financial warfare.
…click on the above link to read the rest of the article…

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