Kyiv is unlikely to renew a gas transit deal that allows Russia’s Gazprom to export natural gas to the EU using pipelines running across Ukraine, Energy Minister German Galushchenko told POLITICO.
The 2019 transit deals runs until the end of 2024 and allows Gazprom to export more than 40 million cubic meters of gas a year via Ukraine, which earns Kyiv about $7 billion.
“I believe, by the winter of 2024, Europe will not need Russian gas at all,” Galushchenko said in a telephone interview. “If now profits from Russian gas pay for Russia’s war of aggression against Ukraine and Gazprom’s private army, the only thing they should pay for in the future shall be reparations.”
He added that the war means “bilateral negotiations are impossible.”
The land route across Ukraine is one of only two pipeline links between Russia and the West. It still accounts for around 5 percent of the bloc’s gas imports, but that’s only a third of the prewar level.
It’s not only Ukraine that’s casting doubt on the future of gas transit.
Gazprom chief Alexei Miller warned last week his company will stop exports if Ukraine doesn’t drop its efforts to seize Russian state assets to enforce a $5 billion award for the energy infrastructure Moscow illegally expropriated when it annexed Crimea in 2014. Gazprom and Ukraine’s Naftogaz are also at loggerheads over a dispute on transit fees.
“If Naftogaz continues such unfair actions, it cannot be ruled out that the Russian Federation will impose sanctions. Then, any relations between Russian companies and Naftogaz will be simply impossible,” Miller said, according to the TASS news agency.
Despite the bombs, missiles and drones wreaking havoc on Ukrainian energy infrastructure, the web of pipelines has kept pumping gas to the EU — where it ends up mainly in Austria, Slovakia, Italy and Hungary.
Russian pipeline gas is not subject to sanctions but the European Commission has plans to end the bloc’s reliance on Moscow’s fossil fuels by 2027.
However, there is growing criticism the EU countries still using Russian gas aren’t moving fast enough to diversify. Austria’s Russian gas imports are back to prewar levels. Hungary gets around 4.5 billion cubic meters a year. In April, its government signed a deal with Gazprom to secure additional volumes.
Kyiv ending the gas deal could cause problems for those countries.
“If Ukrainian transit stops, Gazprom pipeline gas deliveries to EU countries could drop to between 10 and 16 billion cubic meters (45 to 73 percent of current levels),” said a June analysis by Columbia University’s Center on Global Energy Policy. That could leave Europe with a shortfall in 2025 before additional liquefied natural gas capacity from the U.S. and Qatar comes online.
“For Europe as a whole, it’s pretty manageable. But for some countries at the end of the pipeline, Austria, Hungary and so on, the picture is a bit different,” said Georg Zachmann, senior fellow at economic think tank Bruegel. “We’d have to see a reshuffle of physical capacities, physical flows. That might come with additional cost for them.”
It would represent a much more permanent potential break with Moscow.
“Keeping the thing alive means there’s maybe a chance in the future to go back to that. But if the flows are stopped there’s a risk it’s going to be completely dismantled, and the privilege these countries had in the past of getting access to cheap Siberian gas is going to be gone forever,” Zachmann said.
Ukraine’s long-term goal is to boost its own gas production to meet EU demand, Oleksiy Chernyshov, CEO of Naftogaz, told POLITICO in May.
Oil futures settle at their highest in two weeks on Wednesday, finding support after Saudi Arabia’s energy minister reportedly said that the kingdom and its allies will do whatever is necessary to support the oil market.
The comments from Saudi Energy Minister Prince Abdulaziz bin Salman at an OPEC+ seminar was reported by a number of news agencies and follows the Saudi’s announcement Monday that it would extend its voluntary production cut by another month, through August.
Offshore oil drillers were about the worst place to be in 2020 as oil prices were falling and demand for crude seemed to be seeping away. Now, the stocks may be the ones to own as investors realize that oil will be needed to make the world go around for decades.
The heads of prominent U.S. and Indian companies will meet at the White House on Friday with President Joe Biden and Indian Prime Minister Narendra Modi to discuss investment in areas including artificial intelligence.
Those attending include Sam Altman, CEO of OpenAI, as well as Apple AAPL, +0.04%
CEO Tim Cook and Google GOOG, -0.49%
GOOGL, -0.41%
CEO Sundar Pichai. Indian company executives include Mukesh Ambani, chair of Reliance Industries, and Anand Mahindra, chair of Mahindra Group.
“The president and Prime Minister Modi of the Republic of India will meet with senior officials and CEOs of American and Indian companies gathered to discuss innovation, investment, and manufacturing in a variety of technology sectors, including AI, semiconductors, and space,” the White House said.
Friday’s meeting is part of Modi’s high-profile visit to Washington, which included a state dinner at the White House and the announcement of a number of business deals.
Rising demand for crude oil is set to slow to a trickle within five years and peak before the end of the decade, as electric-vehicle uptake surges and developed nations rapidly transition to cleaner sources of energy, according to a prominent energy forecaster.
The International Energy Agency, a group funded by some of the world’s largest oil consumers, expects demand for transport fuels derived from oil such as gasoline will be the first to peak before heading into a steady decline–hastened by a sharp uptick in EVs and a…
The world needs to phase out fossil fuels if it wants to curb devastating global warming, the United Nations climate chief says, but the idea might not even make it onto the agenda of “make-or-break” negotiations.
The phase-out of heat-trapping fossil fuels “is something that is at top of every discussion or most discussions that are taking place”, UN Climate Change Executive Secretary Simon Stiell said.
“It is an issue that has global attention. How that translates into an agenda item and a [climate talks] outcome – we will see.”
Stiell said he could not quite promise ending the use of coal, oil, and natural gas would get a spot on the agenda in climate talks, called COP28, in Dubai, United Arab Emirates, later this year.
That agenda decision is up to the president of the negotiations – Sultan Al Jaber, head of the state-owned Abu Dhabi National Oil Company – Stiell said.
The decision by the host nation UAE to make Al Jaber the head of the climate conference has drawn fierce opposition from lawmakers in Europe and the United States, as well as environmental advocates. UAE officials said they want game-changing results in the climate talks and note Al Jaber also runs a large renewable energy company.
Last year at climate talks, a proposal by India to phase out all fossil fuels, supported by the US and many European nations, never got on the agenda. What gets discussed is decided by the COP president, who last year was the foreign minister of Egypt, a natural gas exporting nation.
When asked if Egypt’s leaders kept the concept off the agenda, Stiell, speaking via Zoom from Bonn, Germany, where preliminary talks started on Monday, said he could not comment except to say “it’s within their purview”.
‘Game-changing results’
An engineer-turned-government-official and diplomat, Stiell walked a fine line between talking about the importance of a fossil fuel phase-out and supporting the UN process that has put countries that export oil and natural gas in charge of negotiations about global warming for two consecutive years.
About 94 percent of the heat-trapping carbon dioxide that human industrial activity put in the air last year was from the burning of coal, oil and natural gas, according to the scientists who monitor emissions at Global Carbon Project.
Al Jaber’s company has the capacity to produce 2 million barrels of oil and 7 billion cubic feet of natural gas a day, and said it plans to increase that drilling to 5 million barrels a day by 2027.
Getting a fossil fuel phase out on the agenda this year depends on the conference president Al Jaber, and on whether there is enough pressure from other nations, Stiell said.
“Where better to have a discussion … then in a region where fossil fuels are at the centre of their economy?” Stiell asked.
A senior UAE official said the Gulf nation wants the UN climate summit it’s hosting from November 30-December 12 to deliver “game-changing results”.
“Our leadership have been very clear to me and our team and our president that they don’t want just another COP that’s incremental,” said Majid al-Suwaidi, who as director-general of the summit plays a key role in the diplomatic negotiations.
“They want a COP that is going to deliver real, big, game-changing results because they see, just like all of us, that we’re not on track to achieve the goals of [the] Paris [Agreement].”
Phasing out ’emissions’
The issue of a coal, oil and natural gas phase-out is central to the fight against climate change, but the real issue is getting something done, not putting it on the COP28 agenda, Stiell said.
In public appearances, Al Jaber has emphasised being “laser-focused on phasing out fossil fuel emissions,” not necessarily the fuels themselves, by promoting carbon capture and removal of the pollutant from the air.
Stiell dismissed the idea that carbon removal can be a short-term solution.
“Right now, in this critical decade of action to achieve those deep reductions, the science tells us it can only be achieved through the reduced use, significantly reduced use, of all fossil fuels,” he said.
Stiell defended the back-to-back years of having climate negotiations run in and by fossil fuel-exporting nations as the wishes of the “parties” or countries involved.
This year will be critical because it is the first global stocktake to see where the world is in its efforts to reduce carbon emissions. To reach the Paris Agreement goal of limiting warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) since pre-industrial times, greenhouse gas pollution needs to be cut in half by 2030.
“We know we are a long way from where we need to be,” Stiell said.
This year’s conference sets up a new round of pledges for even tighter emissions cuts by telling nations the stark truth of how bad the situation is, Stiell said.
But ignorance of the dire threat to the planet is not the problem, he added.
“It’s lack of implementation, I don’t believe it is the lack of knowledge. There’s been report after report after report that all say the same thing, all with increasing urgency,” Stiell said.
Oil futures opened sharply higher Sunday evening, after Saudi Arabia agreed to deliver an additional 1 million–barrel daily production cut next month as the Organization of the Petroleum Exporting Countries and its allies moved to extend existing production targets.
Price action
West Texas Intermediate crude for July delivery CL00, +0.98%
CL.1, +0.98% CLN23, +0.98%
remained up $1.49, or 2.1%, at $73.23 a barrel on the New York Mercantile Exchange, after trading as high as $75.06.
BRNQ23, +0.87%,
the global benchmark, gained $1.59, or 2.1%, to trade at $77.72 a barrel on ICE Futures Europe, after touching $78.73 after the open.
Market drivers
Saudi Arabia on Sunday said it would cut oil output by 1 million barrels a day in July, and that the reduction could be extended if needed. The announcement came as OPEC+ agreed to extend current production levels through the end of 2024 at a contentious meeting in Vienna.
OPEC+ agreed last October to cut production by 2 million barrels a day. Some OPEC+ members in early April announced further cuts totaling 1.6 million barrels a day through year-end, including 500,000 barrels a day in reductions by Saudi Arabia.
Saudi Energy Minister Abdulaziz bin Salman last month warned that short sellers should “watch out” and that they would be “ouching” much as they did in early April, when the surprise cuts caused a sharp, but short-lived, spike in crude prices.
The outcome of the meeting reinforces Saudi Arabia’s “uneasiness with the level of short positions in the market rather than signaling concerns around demand outlook,” said Giacomo Romeo, energy equity analyst at Jefferies, in a Sunday evening note to clients.
“The open-ended part of the measure was likely put in place to discourage future short positioning,” he wrote.
Saudi Arabia will voluntarily cut production by 1 million barrels a day in July, alongside an agreement by the Organization of the Petroleum Exporting Countries and its allies to stick to production targets on Sunday.
Describing the voluntary cut as a “Saudi lollipop,” the country’s energy minister, Prince Abdulaziz bin Salman, said the July reduction could be extended if needed.
OPEC+ — the group made up of OPEC and its Russia-led allies — concluded a contentious meeting in Vienna, with members agreeing to extend previously agreed production cuts through the end of 2024. OPEC+ agreed last October to cut output by 2 million barrels a day and followed that in April with the surprise announcement of 1.6 million barrels a day in additional cuts.
Oil prices have fallen sharply since the October reduction amid worries over the global economic outlook, with Brent crude BRN00, +0.35%,
the global benchmark, down more than 20%. The surprise April cuts initially boosted prices, but gains were soon erased.
“‘Icahn’s favorite Wall Street saying: “If you want a friend, get a dog.” Over his storied career, Icahn has made many enemies. I don’t know that he has any real friends. He could use one here.’”
— Bill Ackman, Pershing Square Capital Management
That was billionaire hedge-fund manager Bill Ackman, founder and chief executive of Pershing Square Capital Management, resurrecting his longstanding feud with billionaire activist investor Carl Icahn in a tweet Wednesday.
Ackman was referencing the fallout from the recent report by short-selling firm Hindenburg Research that accused Icahn’s publicly traded investment vehicle, Icahn Enterprise Partners LP IEP, -13.83%,
of inflating asset values and causing his company to trade at a large premium. The report from May 2 has cost IEP about $10.9 billion in lost market cap, after the stock tumbled another 21% on Thursday.
Ackman said he is neither long or short IEP but merely “watching from a distance.”
But he seemed to agree with Hindenburg’s founder and CEO, Nate Anderson, who questioned margin loans extended to Icahn using his roughly 85% stake in IEP as collateral. Icahn has not disclosed the terms of those loans although he recently told the Financial Times that he used the money to make additional investments outside of his publicly traded vehicle.
“Over the years I have made a great deal of money with money,” he was quoted as having said. “I like to have a war chest, and doing that gave me more of a war chest.”
Ackman said the margin lender or lenders “must be extremely concerned with the situation,” particularly after IEP has disclosed a federal investigation of its business and corporate governance.
For his part, Icahn has called Hindenburg’s analysis “misleading and self-serving” and said it was designed solely to hurt long-term IEP shareholders.
Ackman compared the situation to that of failed investment fund Archegos, “where the swap counterparties were comforted by each having relatively smaller exposures to the situation.”
“The problem is that multiple lenders make for a more chaotic situation. All it takes is for one lender to break ranks and liquidate shares or attempt to hedge, before the house comes falling down. Here, the patsy is the last lender to liquidate.”
Ackman also expressed his surprise that Icahn has not disclosed the margin-loan terms, or even said who provided them. “My understanding of 13D SEC rules is that they require disclosure of sources of financing and even copies of financing agreements, although many investors ignore these requirements.”
Ackman also questioned how IEP’s large dividend yield is feasible, as it’s not supported by operating cash flows.
“The yield is generated by returning capital to outside shareholders, which is in turn funded by the company selling stock to investors,” said Ackman.
Icahn’s problem now is that his system has been outed by the short seller, Ackman wrote.
“Transparency is not the friend of $IEP having caused a more than 50% decline in the shares, which has caused Icahn to post more shares, now more than 65% of his holdings,” he said in the tweet.
The bad blood between Icahn and Ackman goes back to a business dispute the two had over a 2003 deal involving Hallwood Realty. The litigation between them went on for years.
But their animosity for one another hit a crescendo in 2013, when Bill Ackman publicly waged a $1 billion short-selling campaign against Herbalife. Sensing weakness, Icahn took a long position in Herbalife’s stock HLF, -5.21%
and helped deal Ackman significant losses on his bet over time.
The two claimed they had made up in 2014, sharing a stage at a conference broadcast by CNBC.
Ackman had previously had taken a soft shot at Icahn over the Hindenburg report, saying there was a “karmic quality” to it. But now their battle of Wall Street titans appears to be back in full force.
It’s an hour before dawn breaks over the North Sea. Aboard the KV Bergen, the officer of the watch is wide awake.
The 93-meter long Norwegian Navy Coast Guard vessel is on patrol, 50 miles out to sea. The sky is dark, the sea darker. But off the starboard bow, bright lights gleam through the rain and mist. Something huge and incongruous is looming out of the water, lit like a Christmas display.
“Troll A,” says Torgeir Standal, 49, the ship’s second in command, who is taking the watch on this bleak March morning.
It’s a gas platform — a big one.
When it was transported out to this desolate spot nearly 30 years ago, Troll A — stretching 472 meters from its seabed foundations to the tip of its drilling rig — became the tallest structure ever moved by people across the surface of the Earth. Last year, Troll, the gas field it taps into, provided 10 percent of the EU’s total supply of natural gas — heating homes, lighting streets, fueling industry.
“There are many platforms here,” says Standal, standing on the dark bridge of the Bergen, his face illuminated by the glow from the radar and satellite screens on his control panel. “And thousands of miles of pipeline underneath.”
And that’s why the Bergenhas come to this spot today.
In September 2022, an explosion on another undersea gas pipeline nearly 600 miles away shook the world. Despite three ongoing investigations, there is still no official answer to the question of who blew up the Nord Stream pipe. But the fact that it could happen at all triggered a Europe-wide alert.
The Norwegian Navy’s KV Bergen, seen in the background, after departing from the port of Bergen
Against a backdrop of growing confrontation with Moscow over its brutal invasion of Ukraine and its willingness to use energy as a weapon, the vulnerability of the undersea pipes and cables that deliver gas, electricity and data to the Continent — the vital arteries of comfortable, modern European life — has been starkly exposed.
In response, Norway, alongside NATO allies, increased naval patrols in the North Sea — an area vital for Europe’s energy security. The presence of the Bergen, day and night, in these unforgiving waters, is part of the effort to remain vigilant. The task of the men and women on board is to keep watch on behalf of Europe — and to stop the next Nord Stream attack before it happens.
The officers of the watch
But what are they looking for?
In recent weeks the Bergen has tracked the movements of a Russian military frigate through the North Sea — something that it has to do “several times every year,” says Kenneth Dyb, 47, the skippsjef, or commander of the ship.
The Russians have a right to sail through these seas out to the Atlantic, and it is very unlikely Moscow would be so brazen as to openly attack a gas platform or a pipeline. But, says Dyb, as his ship steams west to another gas and oil field, Oseberg, “it’s important to show that we are present. That we are watching.”
Recent reports that Russian naval ships — with their trackers turned off — were present near the site of the Nord Stream blasts in the months running up to the incident have reinforced the importance of having extra eyes on the water itself.
The Oseberg oil and gas field, 130 kilometers north-west of Bergen
Of course, the gas didn’t come for free. Norway has profited hugely from the spike in gas and oil prices that followed Putin’s invasion of Ukraine. The state-owned energy giant Equinor made a record $75 billion profit in 2022. Oslo is sensitive to accusations of war profiteering — and keen to show Europe that it cares about its neighbors’ energy security as much as it cares about their cash.
But the threat to the pipelines could also be more low-key. One of the many theories about the Nord Stream attack is that it was carried out by a small group of divers, operating from an ordinary yacht. In such a scenario, something as seemingly innocent as a ship suddenly going stationary, or following an unaccustomed course through the water, could be suspicious. The Bergen’s crew have the authority to board and inspect vessels that its crew consider a cause for concern.
Russia’s covert presence in these waters has been acknowledged by Norway’s intelligence services in recent weeks. A joint investigation by the public broadcasters in Norway, Sweden, Denmark and Finland uncovered evidence of civilian vessels, such as fishing ships, being used for surveillance activities. This is something that has been “going on forever,” according to Ståle Ulriksen, a researcher at the Royal Norwegian Naval Academy, but it has increased in intensity in recent years.
“We always look for oddities, anything that is unusual, like new ships in the area that have not been here before,” says Magne Storebø, 26, senior petty officer, as he takes the afternoon watch on the bridge later that day.
The sky is leaden and the horizon lost in cloud. Coffee in hand, Storebø casts his eye over the radar and satellite screens as giant windscreen wipers whip North Sea spray from the floor-to-ceiling windows. There are few ships around, all of them familiar to the crew; service vessels plying back and forth from the gas and oil platforms.
The Nord Stream incident and the new security situation has changed the way Storebø thinks about his work, he says.
He is “more aware of the consequences suspicious vessels could have,” he says. “More awake, you could say.”
Senior Petty Officer Magne Storebø keeps watch from the bridge
Soft-spoken and calm beyond his years, Storebø is philosophical about the potential dangers of his work. He has been in the Navy for four years, in which time war has broken out on the European continent and the threat to his home waters has come into sharp focus.
“If you are going to put a rainy cloud over your head and bury yourself down, I don’t think the Navy or the coastguard is the right place to work in,” he says in conversation with two shipmates later that day. “You need to adjust and to look in a positive direction — and to be ready in case things don’t go that way.”
Energy war round two
As Europe emerges from the first winter of its energy war with Russia, its gas supplies have held up better than almost anyone expected.
But as the Continent braces for next winter, the risk of another Nord Stream-style attack to a key pipeline is taken seriously at the highest levels of leadership.
“Things look OK for gas security now,” said one senior European Commission official, speaking on condition of anonymity to discuss sensitive matters of energy security. “But if Norway has a pipeline that blows up, we are in a different situation.”
EU policymakers see four key risks to gas security going into next winter, the senior official added: exceptionally cold weather; a stronger-than-expected Chinese economic recovery hoovering up global gas supply; Russia cutting off the remaining gas it sends to Europe; and last but not least, an “incident” affecting energy infrastructure.
Such an event might not only threaten supply but could potentially spark panic in the gas market, as seen in 2022, driving up prices and hitting European citizens and industries in the wallet. And nowhere is the potential for harm greater than in the North Sea.
Norway is now Europe’s biggest single supplier of gas. After Russian President Vladimir Putin and the energy giant Gazprom shut off supply via Nord Stream and other pipelines, Norway stepped up its own production in the North Sea, delivering well over 100 billion cubic meters to the EU and the U.K. in 2022. European Commission President Ursula von der Leyen visited Troll A herself in March this year — the first visit of a Commission president to Norway since 2011 — to personally thank the country’s president, Jonas Gahr Støre, for supplies that “helped us through the winter.”
“We have a huge responsibility, supplying the rest of Europe with energy,” Defense Minister Bjørn Arild Gram told POLITICO. “To be a stable, reliable producer of energy, of gas, is an important role for us and we take that very seriously. That is why we are also doing so much to protect this infrastructure.”
The vast majority of that gas is transported into northwest Europe via a complex network of seabed pipes — more than 5,000 miles of them in Norway’s jurisdiction alone. The North Sea has an average depth of just 95 meters. That’s not much deeper than the Nord Stream pipes at the location they were attacked.
“It actually doesn’t take a particularly sophisticated capability to attack a pipeline in relatively shallow waters,” says Sidharth Kaushal, research fellow at the Royal United Services Institute think tank in the U.K. A small vessel, “some divers and an [explosive] charge” are all it could take, Kaushal says.
The navy chief
After the Nord Stream incident in September, suspicion instantly fell on Russia. Moscow has a record of operating in the so-called gray zone — committing hostile acts short of warfare, often covertly.
To date, the three investigations looking into the incident have yet to confirm that suspicion. But European governments — and their militaries — are not taking any chances.
In the days immediately following the explosions, NATO navy chiefs started calling each other to try to coordinate efforts to protect energy infrastructure, says Rune Andersen, the chief of Norway’s navy, speaking to POLITICO at Haakonsvern naval base, before the KV Bergen’svoyage.
Everyone had the same thought, he says. “If that happens in the North Sea, we will have a problem.”
Andersen joined the Navy as a young man in 1988, in the last days of the Cold War. Now 54, he is used to the Russian threat overshadowing Norway’s and Europe’s security.
“After decades of attempts to integrate or cooperate with Russia, we now have war in Europe. We see that our neighbor is brutal and willing to use military force,” he says grimly. “I worked in the Navy in the ’90s when it was enduring peace and partnership on the agenda. We are back to a situation where our job feels more meaningful — and necessary.”
Kenneth Dyb, the skippsjef, or commander of the ship
However, he points out, his own forces have so far not seen any Russian movements or operations “that are different to what they were before” the Nord Stream attacks. “The job we are doing is precautionary, rather than tailored to any specific threat,” he adds.
Even so, those early discussions with NATO allies have now formalized into daily coordination via the Allied Maritime Command headquarters in the U.K., to ensure there are always NATO ships on hand that can act as “first responders” to potential incidents. British, German and French ships have joined their Norwegian counterparts in the monitoring and surveillance effort.
It is “by nature challenging” to protect every inch of pipeline, all of the time, Andersen says.
The role of the Bergen and ships like it, he adds, is just “one bit of the puzzle.” Simply by their presence at sea, these ships increase the chances of catching would-be saboteurs in the act, and hopefully deter them from trying in the first place.
The goal, in other words, is to reduce the size of the “gray zone” — or to “increase the resolution” of the navy’s picture of the activity out on the North Sea, as Andersen puts it.
In collaboration with the energy companies and pipeline operators, unmanned underwater vehicles — drones — using cameras and high-resolution sonar have been used, Andersen says, to “map the micro-terrain” around pipelines. These are sensitive enough to spot an explosive charge or other signs of foul play.
Equinor, alongside the pipeline operator Gassco, has carried out a “large inspection survey” of its undersea pipeline infrastructure, a company spokesperson says. The survey revealed “no identified signs of malicious activities” but pipeline inspections are ongoing “continuously.”
Senior Petty Officer Simen Strand speaks to the crew. “We haven’t had much to fear in the past. We are probably less naïve nowadays,” he says.
Perhaps understandably, the heightened level of alert has led to the occasional false alarm. A spate of aerial drone sightings near Norwegian energy infrastructure around the time of the Nord Stream attacks last year included a report of a suspicious craft circling above Haakonsvern naval base itself.
“After a while, we concluded it was a seagull,” says Andersen, with the shadow of a grin.
Europe on alert
The navy chief is nonetheless deadly serious about the potential threat. A Nord Stream-style attack in the North Sea is possible. Anderson will not be drawn on the most vulnerable points in the network, saying only that “easy to access” places and “key hubs” are “two things in the back of mind when we think [about] risk.”
Throughout Europe, the alert has been raised. This month, NATO warned of a “significant risk” that Russia could target undersea pipelines or internet cables as part of its confrontation with the West.
Several countries are increasing patrols and underwater surveillance capabilities. The British Royal Navy accelerated the purchase of two specialist ocean surveillance ships, the first of which will be operational this summer. The EU and NATO have established a new joint task force focusing on critical infrastructure protection, and a “coordination cell” has been established at NATO headquarters in Brussels to improve “engagement with industry and bring key military and civilian stakeholders together” to keep the cables and pipelines secure.
Norway — and Europe — are in this struggle for the long haul, Andersen believes.
Indeed, even as Europe transitions from fossil fuels to green energy, the North Sea will remain a vital powerhouse of offshore wind energy, with plans for a huge expansion over the next 25 years. Earlier this year, the Netherlands’ intelligence services reported a Russian ship seeking to map wind farm infrastructure in the Dutch sector of the North Sea. “We think the Russians wanted to investigate the possibilities for potential future sabotage,” Jan Swillens, head of the Dutch Military Intelligence and Security Service tells POLITICO in an emailed statement. “This incident makes clear that these kinds of Russian operations are performed closer than one might think.”
At the same time in the Baltic, countries are shoring up security around their infrastructure, at sea and on land. Late last year, Estonia carried out an underwater inspection of the two Estlink power cables and the Baltic Connector gas pipeline linking it to Finland, the Estonian navy says. Lithuania, meanwhile, is paying “special attention” to security around its LNG terminal at Klaipėda and the gas cargoes that arrive there, a defense ministry spokesperson says.
Torgeir Standal, left, the KV Bergen’s second in command
It was in Lithuania that Europe had its first major false alarm since the Nord Stream incident, when a gas pipeline on land exploded on a Friday evening in January. Foul play was briefly considered a possibility in the immediate aftermath but was quickly ruled out. The pipe was 40 years old, and had been subject to a technical fault.
The danger posed by Russia to infrastructure throughout Europe should not be underestimated, says Vilmantas Vitkauskas, director of Lithuania’s National Crisis Management Centre and a former NATO intelligence official.
“We know their way of thinking, [the way] they send signals or apply pressure,” Vitkauskas says. “We understand Russia quite well, and we are quite worried by what we see — and how vulnerable our infrastructure is in Europe.”
The watchers on the water
Back aboard the Bergen, life for the sailors carries on as normal. It’s a young crew, with an average age of around 30. Some are conscripts. It’s still compulsory in Norway for 19-year-olds to present themselves for national service, but only around one in four are actually recruited for the mandated 19-month stint.
The days are long. Surveillance, maintenance and exercises in search and rescue are all part of the crew’s regular routine. A helicopter from one of the Oseberg oil and gas platforms soars overhead, and the crew are drafted into an exercise winching people on and off the deck of the Bergenin the dead of night, simulating a rescue operation.
The ship needs to be ready to respond to an incident should the call come in from naval headquarters that help is required, or a suspicious vessel has been identified in their patch of the North Sea. But in their downtime, the sailors head to the gym on the lower deck, or play FIFA on the X-box in the sparse games room. Three hearty meals a day are served in the galley kitchen. There is even a ship’s band, cheekily named “Dyb Purple” after their commander. Dyb “takes it well,” says Senior Petty Officer Storebø.
In the daily whirl of activity, most of the young sailors don’t think of their work in the grand strategic sense of protecting the energy security — the warmth, the light, the industry — of an entire continent.
But the context of the Ukraine war — and the precedent set by the Nord Stream attack — has added a note of solemnity just below the surface of the comradeship and bonhomie.
“We are probably less naïve nowadays,” says 33-year-old Senior Petty Officer Simen Strand, who has a wife and two children, a boy and a girl, back home in Bergen. “We haven’t had much to fear in the past, there hasn’t been a concrete threat.”
Storebø agrees but is characteristically sanguine. “Russia has always been there … I’ve not personally felt any more unease than before.”
The next day, Storebø has the night watch, from midnight to four in the morning, as the Bergen travels back to base for a short stop before heading out to sea again.
It’s dark up on the bridge, with the glow of the control panel screens the only light inside. Twenty miles away, little lights can be seen on the Norwegian coast. A lighthouse flares to the south, at Slåtterøy, not far from Storebø’s home island of Austevoll. Beneath the waves, unseen, gas flows from the Troll field back to the mainland, where it is processed. From there, it continues its journey south to light the dark of European nights.
All is quiet but Storebø can’t afford to lose focus. “Coffee and music help,” he says. “I like the night shifts.”
As the officer of the watch, he has to be ready, should the radar, the satellites, or his own eyes see something out of the ordinary — ready to call the captain and raise the alarm.
That’s the job, he says. “You always have it in the back of your mind.”
China’s demand for oil is growing at a faster-than-expected pace, threatening to tighten crude markets and send oil prices higher as supply struggles to keep up, the International Energy Agency said.
The Paris-based agency’s latest outlook points to a widening divide between booming demand for crude across the developing world and lackluster demand in Europe and North America where economic prospects look bleak.
It also highlights a growing disconnect between oil prices–which have tumbled to their lowest levels in around 16 months in recent weeks–and expectations that strong demand and limited supplies will prompt a sharp deficit that many analysts expect to lift oil prices.
In its closely watched monthly oil market report, the IEA raised its forecast for global oil demand growth this year by 200,000 barrels a day, to 2.2 million barrels a day. It said total demand would stand at 102 million barrels a day, 100,000 barrels a day more than it forecast last month.
China’s share of that increase, already expected to be large, appeared to be growing and “continues to surpass expectations”, the IEA said. The nation’s crude demand hit a record of 16 million barrels a day in March while China will account for 60% of all oil demand growth this year, the IEA said.
U.S. stocks struggled for direction Monday as investors monitored efforts to resolve a U.S. debt-ceiling standoff ahead of a potential default, and weighed economic data that showed a sharp fall in New York state factory activity.
How stocks are trading
The Dow Jones Industrial Average DJIA, -0.04%
was marginally lower by 4 points at 33,297, after briefly turning higher.
The S&P 500 SPX, +0.09%
edged up 4 points, or 0.1%, at 4,128.
The Nasdaq Composite COMP, +0.41%
rose 50 points, or 0.4%, to 12,335.
The S&P 500 fell 0.3% last week, while the Dow dropped 1.1%. The S&P 500’s decline was cushioned by megacap tech-related stocks, which also helped lift the Nasdaq Composite out of a bear market. The Nasdaq gained 0.4% last week.
Despite a generally well-received earnings season and signs that easing inflation may allow the Federal Reserve to halt its monetary-tightening cycle, stocks have been unable to break out of their recent range, as first banking-sector anxiety and lately worries about a technical government-debt default have restrained bulls.
“Over the short-term, the stock market is stuck until we reach a debt-ceiling resolution and until we see more clarity from the regional banking sector, which are the two factors weighing on stocks right now,” said Brad Bernstein, managing director at UBS Wealth Management in Philadelphia, in a note. “Markets are anxious for a debt-ceiling solution and the markets are also hoping that the Fed pauses its rate hikes at the June meeting.”
A second round of debt-ceiling talks between the White House and congressional leaders appears set for Tuesday, according to President Joe Biden.
“I remain optimistic because I’m a congenital optimist,” Biden told reporters Sunday in Rehoboth Beach, Del. “But I really think there’s a desire on their part as well as ours to reach an agreement. I think we’ll be able to do it.”
House Speaker Kevin McCarthy, R-Calif., on Monday, however, said the White House and congressional Republicans remained far apart.
Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, warned against complacency, noting that previous debt-ceiling deadlines have required significant market volatility to encourage politicians to reach agreement.
“[W]e’ve continued to remind investors that since 2011, getting Congress to strike a deal has seemed to occur only after the stock market has thrown a temper tantrum,” said Calvasina in a note to clients.
“In years where the drama in equity markets has otherwise been modest, the hits generally end up in the 5-6% area. In years in which debt ceiling drama has occurred in the context of other major problems in the market (i.e., 2011, 2015-2016, 2018), the hits have ranged from 10% to 19%,” she added.
The New York Fed’s Empire State business-conditions index, a gauge of manufacturing activity in the state, plunged 42.6 points in May to negative 31.8, the regional Fed bank said Monday. Economists had expected a reading of negative 5, according to a survey by The Wall Street Journal. Any reading below zero indicates deteriorating conditions.
The data underlined stagflation worries, said Edward Moya, a senior market analyst at Oanda, in a note.
“It seems that after every economic reading, Wall Street has more reminders on how hard it will probably be to get inflation anywhere close to the Fed’s target. A recession seems like the only way pricing pressures will get closer to 3%,” Moya said.
Atlanta Federal Reserve Bank President Raphael Bostic on Monday said that he would like to see the central bank pause its cycle of rate hikes to gauge the health of the economy.
“I think the appropriate policy is really to just wait and see how much the economy slows from the policy actions that we’ve done,” Bostic said in an interview on CNBC.
3M Co. MMM, +0.02%
said Monday it has fired Michael Vale, group president and chief business and country officer, for cause. The dismissal is due to “inappropriate personal conduct and violation of company policy, unrelated to the company’s operations and financial performance,” the company said in a brief statement. Shares of the diversified industrial company and Dow component were down 0.4%.
Icahn Enterprises LP’s stock was trading down 0.7% Thursday, after short seller Hindenburg Research intensified his bearish bet on Carl Icahn’s investing arm, and said he’s now taking aim at its bonds.
Hindenburg, run by Nate Anderson, said the latest disclosures made Wednesday by IEP raised more questions about Icahn’s personal margin loans, or debt, from the company as well as portfolio losses at IEP. The short seller also said disclosures, intended to counter Hindenburg’s May 2 report, failed to address the issues raised.
The original report raised questions about asset valuations and Icahn’s own borrowing from the company using his units as collateral.
Hindenburg Research, which typically aims to profit from the decline in value of the shares of companies that it writes negative reports about, kicked off such a bet against Icahn Enterprise earlier this month but has now also set its sights on the company’s debt.
“As noted in our earlier report, Icahn had not disclosed “basic metrics around his margin loans like loan to value (LTV), maintenance thresholds, principal amount, or interest rates.” This is still the case,” said Hindenburg.
IEP has not said why Icahn had borrowed against his holdings. The company didn’t respond to a request for comment on Thursday’s report.
On Wednesday, IEP disclosed a federal probe into its corporate governance and other issues. It is unclear if that investigation by the Southern District of New York is related to Hindenburg’s report and allegations, but the news put further pressure on the stock.
The bonds, which have been more active than usual since the first report, took another leg down on Thursday, as the attached charts from market-data company BondCliQ show, as Hindenburg said it has taken a short position in them.
The longest-dated bonds, the 4.375% notes that mature in February of 2029, were trading at around 75 cents on the dollar, as of midmorning.
On Wednesday, IEP IEP, -1.77%
said that pledge had increased to 202 million units, which Hindenburg estimates was valued at $6.5 billion as of Wednesday’s close, based on his calculations.
The battle between the iconic activist investor and the short seller has clobbered IEP’s stock, which has fallen 39% in the month to date at a cost of more than $6 billion of market cap.
IEP posted an unexpected loss on Wednesday of $270 million, or 75 cents per depositary unit, for the first quarter, after income of $323 million, or $1.06 a unit, in the year-earlier period. The FactSet consensus was for income of 19 cents.
Revenue fell to $2.758 billion from $2.968 billion a year ago, ahead of the $2.559 billion FactSet consensus. Analysts on its conference call didn’t pose any question of executives who briefly outlined the quarterly numbers.
The company on Wednesday also issued a rebuttal of the May 2 report from Hindenburg and said it would “take all appropriate steps to protect our unit holders and fight back.”
Icahn acknowledged that the investment segment has underperformed in recent years, which he blamed on its bearish view of the market and large net short position, which it has now scaled back.
IEP offers exposure to Icahn’s personal portfolio of public and private companies, including petroleum refineries, car-parts makers, food-packaging companies and real estate. Its unit holders are mostly individual investors, which means the market-cap loss prompted by the report has hurt those individual investors, said Icahn.
Oil demand is likely to hold up longer than many people expect during the anticipated transition to electric vehicles. And changes in the industry point to oilfield services companies as good long-term growth investments as offshore production ramps up.
Below is a list of oil producers and related companies favored by two analysts who have followed the industry for decades.
Trading in shares of Icahn Enterprises LP was choppy Thursday amid the continued fallout from a short seller’s report that was critical of the investment arm of activist investor Carl Icahn.
The stock IEP was moving between gains and losses, but has lost 36% of its value and $6.5 billion of market cap this week in the wake of the report, which accused Icahn Enterprises of inflating its value. On Wednesday, the company said it is moving the release of first-quarter earnings to before market open on May 10. The earnings were…
Icahn Enterprises LP stock tumbled 25% Tuesday to put it on track for a record one-day decline, after short seller Hindenburg Research issued a negative report against the investment arm of activist investor Carl Icahn.
The stock’s previous one-day record decline was a loss of 19.5% on Nov. 20, 2008. The market cap loss today is about $4.48 billion.