Russia offered to pump more gas to Europe. But analysts doubt that’s ever going to happen
LONDON — Winter isn’t even upon us yet and Europe is already experiencing a gas market crisis with bumper demand and limited supply, prompting a squeeze on prices in the region.
So when Russian President Vladimir Putin stepped in on Wednesday, offering to increase Russia’s gas supplies to Europe, regional gas prices (up a staggering 500% so far this year) fell and markets breathed a sigh of relief.
Market analysts quickly suspected that the offer to increase supplies to Europe was likely intended to put pressure on Germany to certify the Nord Stream 2 gas pipeline (which will take Russian gas supplies to Germany via the Baltic Sea) for use, as Russia is waiting on Germany’s energy regulator to authorize the $11 billion pipeline, a process that could take several months.
Experts warned that Russia’s offer demonstrated that Europe is increasingly vulnerable to Moscow’s ability to turn on — and off, more importantly — gas supplies as and when it wants.
While Russia’s apparent largesse might have offered gas markets some respite, analysts have since noted that Russia might not even be able to deliver on promises to supply more.
“Comments from Mr. Putin appear to have provided some comfort to the market. However, whether these additional gas supplies depend on a quick approval of Nord Stream 2 or not may not be the main issue,” Adeline Van Houtte, Europe analyst at the Economist Intelligence Unit, said in a note Thursday.
“Currently, the Russian domestic gas market remains tight, with its inventories running low, output already near its peak and winter looming in Russia as well, limiting gas export capacity,” she said.
“There is also little sign that Gazprom — the Russian gas export pipeline monopoly, which supplies 35% of European gas needs — is attempting to pump more gas to Europe’s spot buyers via existing routes, and overall given its small room for manoeuver, it is unlikely that Gazprom could deliver more than around 190bcm (billion cubic meters) to Europe this year,” she said, warning it meant “European prices are unlikely to cool substantially in 2021.”
Mike Fulwood, senior research fellow at the Oxford Institute for Energy Studies, expressed doubts that Russia is able to supply more gas to Europe too, noting that production is already at record levels.
“Russia’s been faced with the same demand pressures” as elsewhere, he noted.
“It was [a] very cold winter in Russia last winter, and Russian production is actually at record levels,” he told CNBC’s “Squawk Box Europe.” “It’s well up on last year of course when demand was down, but it’s also up on 2019 levels, and they’ve been having to refill their own storage as well, which was depleted badly because of the cold weather.”
“So it’s extremely doubtful whether they could supply more gas, whatever the route,” he added.
Russia’s reliability as an energy supplier to Europe has been high on the agenda for policymakers, both in the region and the United States, for several years now.
The last couple of U.S. presidential administrations have been vocal in their disapproval of the construction of the Nord Stream 2 project, warning that it will reduce Europe’s energy security and increase its dependence on Russia. For its part, the U.S. would like to increase its own exports of liquefied natural gas to Europe.
‘They have the capacity’
The International Energy Agency’s Executive Director Fatih Birol seemed convinced that Russia could raise gas supplies to Europe, telling the Financial Times on Thursday that the IEA’s analysis suggested Russia could raise exports by roughly 15% of peak winter supply to the continent.
Calling on Russia to prove itself to be a “reliable supplier,” Birol said the gas exporter could live up to its word if it wants to.
“If Russia does what it indicated yesterday [Wednesday] and increases the volumes to Europe, this would have a calming effect on the market,” he said. “I don’t say they will do it, but if they wish so, they have the capacity to do it.”
It sounds like Tesla jumped the gun when announcing that Nissan drivers now have access to the Supercharger network in North America.
They will have to wait a bit.
Yesterday, we reported that Tesla added Nissan to the list of automakers with EVs capable of using the Supercharger network in North America.
However, Tesla has since removed Nissan from its list of automakers with access and switched the Japanese automaker back to the “coming soon” list.
Nissan confirmed to Electrek that access is not currently available, but it will be available by the end of the year.
It sounds like a miscommunication on Tesla’s side. We hear that it should be coming soon.
Elon Musk fired Tesla’s entire charging team – seemingly to make an example of its then-head of charging, Rebecca Tinucci, who reportedly disagreed with Musk about making further layoffs following another layoff wave.
Instead of just firing her, Musk decided to fire the entire team and then sent an email to other Tesla managers using the charging team situation as a warning.
Tesla has since had to rehire several former members of its charging team to rebuild the department.
This is believed to have slowed down the opening of the Supercharger network to other automakers in North America. We were told that communications with Tesla’s charging team were difficult to non-existent for those automakers for weeks earlier this year.
As we have previously reported, the situation has definitely slowed down Tesla’s own deployment of Supercharger stations.
Nonetheless, the Supercharger network recently hit the milestone of 60,000 chargers worldwide.
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Europe’s “green dream” Northvolt has filed for bankruptcy protection in the US after a rescue package failed to go through, leaving the battery maker with just one week’s worth of cash in the account. Cofounder and CEO Peter Carlsson, who spearheaded a costly expansion, has also quit.
The Swedish-owned battery maker filed for Chapter 11 in the Southern District of Texas, reports Bloomberg, with $5.8 billion debt. CEO Peter Carlsson, Telsa’s former chief products officer, stepped down from his role as CEO after the filing, but will remain onboard as advisor and director.
According to a statement, Northvolt said that its main factory will maintain business as usual during the reorganization, as the company now has a buffer from creditors, giving it time to restructure the balance sheet. However, the company said that this will not impact its business in Germany, and through the court process, Northvolt now has access to about $145 million in cash collateral. An additional $100 million in debtor-in-possession financing will be added to the pot via one of its customers, the report said.
In recent weeks, Northvolt has been in intense negotiations in the hope of securing a $300 million rescue package to give the company a bit more time to seek longer-term funding. But when that deal fell through, the battery maker was forced to seek protection from creditors via the Chapter 11 filing.
The company still has a $7 billion project in place in Quebec – a new campus that is set to include a cell production plant, battery recycling, and cathode active-material production facilities – and the bankruptcy won’t affect those plans, the company said on its website. “Northvolt Germany and Northvolt North America, subsidiaries of Northvolt AB with projects in Germany and Canada, are financed separately and will continue to operate as usual outside of the Chapter 11 process as key parts of Northvolt’s strategic positioning.”
The plant is expected to have capacity to produce 30 GWh of battery cell every year, with an expansion set to double that output, making it enough to power 1 million EVs. The Canadian government is putting $1.334 billion CND toward the project, with Quebec chipping in another $1.37 billion CND.
Northvolt has hit hard times in recent months, once thought of as Europe’s best shot to homegrown EVs and the makers of “the world’s greenest battery.” Enthusiasm mounted as the company opened the doors to its first plant in Sweden, in the small town of Skelleftea near the Arctic Circle, in 2021. Billions of dollars have been invested into the company, and Volvo, VW, and BMW rushed to place future orders.
All of this enthusiasm has been fueled by a vision to cut dependency on China by creating greener EV batteries using 100 percent recycled nickel, manganese, and cobalt. Plans were put in place to build factories in Gothenburg, in southern Sweden, and Poland, Germany, and Canada, all backed by huge government subsidies. Back in January, the company raised an additional $5 billion, firmly locking in its position as one of Europe’s best-funded startups and recipient of the largest-ever green loan in the EU.
But then things started going south, with Northvolt’s production problems and massive delays forcing BMW to cancel its €2 billion battery cell order with the company. This past May, Northvolt also announced that it pushing back its plans for an IPO until next year. The interim report that followed revealed the dire state of its finances and how far its production had fallen short of goals, with Carlsson admitting he had been “too aggressive” with the company’s expansion plan.
Since Northvolt has put in place a series of changes to reset the company’s course, including bringing onboard a new CFO, leaving the former CFO to focus solely on expansion plans. Plus the company started making cuts, including closing down its research center, Cuberg, in San Francisco and deprioritizing secondary businesses. At the end of September, Northvolt announced that it would cut 1,600 staff from three Swedish sites and about 20 percent of its international workforce.
Last month, Volvo started proceedings to take over their joint venture with Northvolt, while Volkswagen Group’s representative to Northvolt’s board stepped down this month. Sweden, for its part, is ruling out taking a stake to save its homegrown enterprise, Bloomberg reports. Carlsson had said last month that the company needs more than $900 million to permanently shore up its finances.
Photo credit: Northvolt
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Leading yard operation 3PL YMX Logistics has announced plans to deploy fully twenty (20) of Orange EV’s fully electric Class 8 terminal trucks at a number of distribution and manufacturing sites across North America.
As the shipping and logistics industries increasingly move to embrace electrification, yard operations have proven to be an almost ideal use case for EVs, enabling companies like Orange EV, which specialize in yard hostlers or terminal tractors, to drive real, impactful change. To that end, companies like YMX are partnering with Orange EV.
“This relationship between YMX and Orange EV is a significant step forward in transforming yard operations across North America,” said Matt Yearling, CEO of YMX Logistics. “Besides the initial benefits of reduction in emissions and carbon footprint, our customers are also seeing improvements in the overall operational efficiency and seeking to expand. Our team members have also been sharing positive feedback about their new equipment and highlighting the positive impact on their health and day-to-day activities.”
This Orange looks good in blue
One of the most interesting aspects of this story – beyond the Orange EV HUSK-e XP’s almost unbelievable 180,000 lb. GCWR spec. – is that this isn’t a story about California’s ports, which mandate EVs. Instead, YMX is truly deploying these trucks throughout the country, with at least four currently in Chicago (and more on the way).
“Our collaboration with YMX Logistics represents a powerful stride in delivering sustainable yard solutions at scale for enterprise customers,” explains Wayne Mathisen, CEO of Orange EV. “With rising demand for electric yard trucks, our joint efforts ensure that more companies can access the environmental, financial, and operational benefits of electrification … this is a win for the planet, the workforce, and the bottom line of these organizations.”
We interviewed Orange EV founder Kurt Neutgens on The Heavy Equipment Podcast a few months back, but if you’re not familiar with these purpose-built trucks, it’s worth a listen.
HEP-isode 26
SOURCE | IMAGES: YMX Logistics.
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