A long-term contract for the transit of Russian gas is crucial for Ukraine, which needs money to maintain its pipeline network, the country’s gas transmission system (GTS) operator says.
“We need a long-term contract that will cover our operational needs,” head of GTS Ukraine Sergei Makogon said on Tuesday.
Makogon stressed that servicing the country’s gas transmission system is expensive, being an enormous infrastructure with thousands of workers. Therefore, it will be difficult for Ukraine to maintain it “without significant long-term commitments,” he stressed.
Kiev strongly opposes the launch of Russia’s newly constructed Nord Stream 2 pipeline, fearing Moscow could scrap the transit contract with Ukraine and switch entirely or in part to the new system.
“Nord Stream 2 and Turkish Stream 2. What should Europe do? Investigate the abuse of dominance. Show solidarity. Answer resolutely. Protect transit through Ukraine. Do not give exceptions to EU rules,” read the presentation to Makogan’s speech at the conference.
Russia, however, repeatedly stated that it will respect commitments under the gas transit deal with Kiev. At the end of 2019, Russia and Ukraine signed a raft of agreements on the continuation of gas transit through Ukraine’s territory, including a five-year transit contract, according to which Russia’s state energy major Gazprom guaranteed the pumping of 65 billion cubic meters of gas during the first year and 40 billion cubic meters of gas annually over the next four years.
The head of Gazprom, Alexey Miller, recently said that the company is ready to continue gas transit through Ukraine after 2024, depending on economic feasibility and the technical condition of Ukraine’s gas transportation network. At the same time, he pointed out that the volumes of transit will have to be adjusted to the new volumes of purchases of Russian gas by EU states with consideration of Nord Stream 2 contracts.
The new Russian pipeline is awaiting EU certification to launch deliveries. The process could take up to four months due to bureaucratic procedures in Brussels as well as opposition to the project from Washington and some Eastern European states.
The Brent crude oil price for November exceeded $80 per barrel for the first time in three years, trading data shows. The rally comes as energy demand runs ahead of supply amid post-pandemic recovery of the global economy.
As of 5am GMT, the price of December Brent futures grew by 0.85% to $79.36 per barrel, while November futures jumped by 0.83%, to $80.19, reaching $80.35 earlier on Tuesday. US benchmark West Texas Intermediate (WTI) November futures were also up, gaining 0.85% to $76.09 a barrel.
The rise in oil prices comes amid signs of an improving outlook for global energy demand. At the same time, global refineries are failing to keep up, as supply is growing at a slower pace despite the efforts of OPEC. The group and its allies, including Russia, have been easing supply curbs initially introduced at the height of the Covid-19 pandemic. Markets are also awaiting a new OPEC forecast on global oil outlook later on Tuesday, which will detail the group’s views on market fundamentals.
Market experts say prices could continue to grow, with fuel demand projected to reach pre-pandemic levels by early next year.
“Oil demand could rise by 500,000 barrels a day as high gas prices are forcing consumers to switch to other feedstocks,” Vivek Dhar, a commodities analyst at Commonwealth Bank of Australia, told Bloomberg. The expert says this will increase the supply deficit in the markets, especially given the fact that OPEC and allies’ production increase of 400,000 barrels a day each month will add only about 2% to the world’s supply by the end of the year.
The presidents of the Federal Reserve banks of Boston and Dallas are stepping down, after recent reports of potentially unethical investments in 2020 drew criticism and prompted the Fed to launch an ethics review.
Robert Kaplan of Dallas followed Eric Rosengren of Boston in announcing an early retirement on Monday. Both executives are 64, a year short of the mandatory retirement age at the Fed.
Rosengren said he would retire on Thursday, rather than in July 2022, citing health reasons – an upcoming kidney transplant to help him deal with a chronic condition, specifically. Kaplan will also retire effective October 8, because “the recent focus on my financial disclosure risks becoming a distraction” to the “vital” work of deliberating future monetary policy at “a critical point in our economic recovery,” he said.
The early retirements come following last week’s disclosures that Kaplan traded stocks of Amazon, Facebook and Johnson & Johnson – among others – in 2020, even while the Fed’s measures to deal with the economic fallout of the coronavirus pandemic boosted their profits and shares. Rosengren, meanwhile, invested in real estate trusts that dealt with mortgage-backed bonds the Fed was buying up to influence borrowing rates.
Fed chair Jerome Powell said the trades were technically legal under existing rules, but vowed to tighten ethics regulations in order to ensure the credibility of the Federal Reserve, the quasi-private institution that functions as the de facto central bank of the US.
The Fed has 12 regional banks and their presidents serve on the Federal Open Market Committee, with a rotating vote every three years. Rosengren was scheduled to be a voting member of the FOMC in 2022.
Today, something very rare happened: 2 Federal Reserve leaders “retired” early.
This happened largely b/c @michaelsderby of the WSJ put a big spotlight on the personal trades the Dallas and Boston Fed presidents did in 2020. Other stories soon followed.
Journalists hastened to claim credit for the highly unusual departure of two regional bank chairs, with a Washington Post economics correspondent citing the work of her colleague at the Wall Street Journal as key to this turn of events.
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Iran and Venezuela have struck a deal to swap heavy Venezuelan crude for Iranian condensate, Reuters has reported, citing unnamed sources familiar with the deal.
According to these sources, the swaps are set to begin this week and last for six months, although they could be extended. The imports of Iranian superlight crude will help Venezuela revive its falling oil exports amid US sanctions that, among other problems, have cut off the country’s access to the light oil that is used to blend with its superheavy to make it exportable.
For Iran, the deal will bring in heavy crude it could sell in Asia, the Reuters sources also said. The diluted Venezuela crude will also likely go to Asian buyers.
Reuters also reported that, according to the US Treasury Department, the deal could constitute a breach of sanctions, to which both Venezuela and Iran are subjects.
“Transactions with NIOC by non-US persons are generally subject to secondary sanctions,” the Treasury Department said in response to a Reuters request for comments on the deal. It added that it “retains authority to impose sanctions on any person that is determined to operate in the oil sector of the Venezuelan economy.”
Despite the sanction noose, Venezuela has been ramping up its oil exports, generating vital revenue. According to a recent Reuters report, the country, which is home to the world’s largest oil reserves, exported more than 700,000 bpd of crude in July—the highest daily export rate since February.
Most of the oil went to China and Malaysia, although the latter is usually only a stop along Venezuelan oil’s trip to China. The same report noted that three of the five crude oil blending facilities in the Orinoco Belt were operational, and another crude upgrader was preparing to restart operations after a year’s pause.
Iran, meanwhile, recently revealed plans to attract some $145 billion in oil and gas investments from both local and foreign sources.
“We plan to invest $145 billion in the development of the upstream and downstream oil industry over the next four to eight years, hence I welcome the presence of domestic and foreign investors in the industry,” Javad Owji, Iran’s new oil minister, said during a meeting with executives from China’s oil giant Sinopec.
Facebook said this week it is “pausing” its Instagram Kids project in order to “work with parents, experts and policymakers to demonstrate the value and need for this product.”
The announcement came amid growing opposition for the project and criticism that Facebook has knowingly ignored its own research showing that Instagram is toxic to the mental health of younger people.
Boom Bust’s Ben Swann explains the latest developments.
