An escalating dispute at major gas facilities in Australia could drive up European prices, analysts say
Liquefied natural gas (LNG) storage units at Grain LNG importation terminal, operated by National Grid Plc, on the Isle of Grain on August 22, 2022 in Rochester, England.
Dan Kitwood | Getty Images News | Getty Images
The looming threat of strikes at Australian natural gas facilities will keep global gas markets on tenterhooks, energy analysts told CNBC, with traders fearing that a prolonged halt to production could squeeze global supplies and send European prices higher.
U.S. energy giant Chevron and unions representing workers at the Gorgon and Wheatstone projects in Western Australia are in daily talks this week to try to come to an agreement over pay and job security. The Fair Work Commission, Australia’s independent workplace relations tribunal, is mediating talks between both sides.
If a deal cannot be agreed, the strikes are scheduled to begin from 6 a.m. local time Thursday. The long-running dispute escalated even further on Tuesday as a union alliance announced plans to strike for two weeks from Sept. 14.
“In response to Chevron’s [duplicitous] claim that our EBA negotiations are ‘intractable’, the Offshore Alliance is escalating Protected Industrial Action to [demonstrate] that our bargaining negotiations are far from ‘intractable,'” the Offshore Alliance said in a Facebook post.
“Offshore Alliance members are yet to exercise their lawful workplace rights to take Protected Industrial Action and our bargaining claims will look more and more reasonable as Chevron’s Gorgon and Wheatstone LNG exports dry up.”
In response, a Chevron Australia spokesperson told CNBC, “We’re looking to narrow points of difference with Gorgon and Wheatstone downstream employees and their representatives through further bargaining mediated by the Fair Work Commission.”
There is so little flexibility in the market that the slightest provocation will cause large changes to the prices.
Jacob Mandel
Senior research associate for global energy markets at Aurora Energy Research
Fears of strike in Australia, one of the world’s biggest exporters of liquified natural gas (LNG), have recently pushed up European gas prices — and analysts expect near-term volatility to persist.
Jacob Mandel, senior research associate for global energy markets at U.K.-based consultancy Aurora Energy Research, said the global natural gas market was currently “very tight” and “very little supply flexibility” means that strike action in Australia could send European gas prices higher.
“Prices have moved quite significantly on basically little bits of news on what’s happened to these two facilities because there is so little flexibility in the market that the slightest provocation will cause large changes to the prices,” Mandel told CNBC via videoconference.
He said that European gas prices could climb to above 40 euros ($42.9) per megawatt hour if the strikes go ahead as planned. The front-month gas price at the Dutch Title Transfer Facility (TTF) hub, a European benchmark for natural gas trading, traded at 33.5 euros on Tuesday.
The TTF contract rose sharply to around 43 euros last month. TTF prices have since pared gains, however, and remain well below last summer’s extraordinary spike to more than 300 euros.
“I think it is extremely unlikely prices will go anywhere near where they were last September, where they hit these massive record peaks,” Mandel said. “Prices reached those peaks under extraordinary circumstances, which in theory could have been replicated. However, in Europe, we’ve taken many steps that could keep prices from reaching such a high.”
“It doesn’t mean that prices could increase above this 40 per megawatt hour level and if something else happens — a sudden winter storm, or something like this — certainly this can push [prices] higher,” he added.
Kaushal Ramesh, head of gas and LNG analytics at research firm Rystad Energy, said looming industrial action at Chevron’s Gorgon and Wheatstone facilities suggested near-term volatility could continue until a resolution is reached.
“We still don’t think there will be a material impact on production,” Ramesh said, citing the resolution of other similar disputes. He noted that it may become difficult for Chevron to prolong the strikes if they do go ahead.
“Whatever monetary impact there may be to Chevron from giving in to the workers’ demands is likely a fraction of lost revenue if production were to be substantially impacted,” Ramesh told CNBC via email.
“Thus, these are political developments, and things can get irrational, but so far, Asian buyers have not been too concerned. This winter, Japan and Korea will have an additional 6 GW of nuclear power available compared to the previous year.”
Another ‘big question mark’ for Europe
Wild price swings in energy markets in recent weeks come as the euro zone continues to wean itself off Russian fossil fuel exports following the Kremlin’s full-scale invasion of Ukraine.
Last month, the EU hit its target of filling gas storage facilities to 90% of capacity roughly two-and-a-half months ahead of schedule, bolstering hopes the bloc has secured enough fuel supplies to keep homes warm during winter. Nonetheless, the region’s gas market remains sensitive.
“Europe’s gas markets remain nervous, as seen in the jump in prices in August at the threat of an LNG worker strike in faraway Australia,” said Henning Gloystein, a director for energy, climate, and natural resources at political consultancy Eurasia Group.
“Real disruptions” are possible this winter, Gloystein said, including Norwegian winter storm outages or a cut of the remaining Russia gas to Europe. He warned that a stoppage of pipeline transit via Ukraine or a suspension of Russian LNG shipments were two notable risks for Europe.
One “big question mark” adding a risk premium to costs in Europe, Mandel said, is the future for the transit of Russian gas through Ukrainian territory, which is scheduled to expire at the end of next year.
Oleksiy Chernyshov, the chief executive of Ukraine’s largest oil and gas company Naftogaz, told CNBC in mid-August that the Russian gas transit agreement “is actually quite a complex issue.”
“I just wanted to make very clear Ukraine is servicing this transit actually in favor of European Union countries that are consuming Russian gas,” Chernyshov said. “We clearly understand that some of the countries cannot immediately get rid and stop consumption because they need it for the preparation for the winter.”
A spokesperson for the European Commission, the EU’s executive arm, told CNBC that the gas transit agreement is “still a long way from now” and they cannot speculate on what the situation would like in 18 months’ time. “It is also not for us to speculate nor comment on the two parties’ interest for a renewal of such contract,” they added.
The spokesperson said under the EU’s REPowerEU plan, the bloc’s objective is to “completely phase out Russian fossil fuel imports as soon as possible.” They noted that Russian gas now represents less than 10% of the EU’s pipeline imports, compared to roughly 50% before the energy crisis spurred by Russia’s full-scale invasion of Ukraine.
Tesla has started accepting Cybertruck trade-ins, something that wasn’t the case more than a year after deliveries of the electric pickup truck started.
We are starting to see why Tesla didn’t accept its own vehicle as a trade-in: the depreciation is insane.
The Cybertruck has been a commercial flop.
When Tesla started production and deliveries in late 2023, the vehicle was significantly more expensive and had less performance than initially announced.
At one point, Tesla boasted having over 1 million reservations for the electric pickup truck, but only about 40,000 people ended up converting their reservations into orders.
Now, Cybertruck inventory is sitting unsold for months and Tesla is having to offer heavy discounts to move them.
We previously reported that Tesla refused to accept the Cybertruck, its own vehicle, as a trade-in more than a year after starting deliveries.
Tesla didn’t share an explanation at the time, but we assumed that the automaker knew the Cybertruck was depreciating at an incredible rate and didn’t want to be stuck with more trucks than it was already dealing with.
Now, Tesla has started taking Cybertruck trade-ins, at least for the Foundation Series, and it is now providing estimates to Cybertruck owners (via Cybertruck Owners Club):
Tesla sold a brand-new 2024 Cybertruck AWD Foundation Series for $100,000. Now, with only 6,000 miles on the odometer, Tesla is offering $65,400 for it – 34.6% depreciation in just a year.
Pickup trucks generally lose about 20% of their value after a year and 34% after about 3-4 years.
It’s also wroth nothing that Tesla’s online “trade-in estimates” are often higher than the final offer as noted in the footnote o fhte screenshot above.
Electrek’s Take
This is already extremely high depreciation, but Tesla is actually trying to save face with estimates like this one.
As Tesla wouldn’t even accept Cybertruck trade-ins, used car dealers also slowed down their purchases as they also didn’t want to be caught with the trucks sitting on their lots for too long.
On Car Guru, the Cybertruck’s depreciation is actually closer to 45% after a year and that’s more representative of the offers owners should expect from dealers.
That’s entirely Tesla’s fault. The company created no scarcity with the Foundation Series. They built as many as people wanted. In fact, they built too many and ended having to “buff out” the Foundation Series badges on some units to sell them as regular Cybertrucks and as of last month, Tesla still had some Cybertruck Foundations Series in inventory – meaning they have been sitting around for up to 6 months.
Now, Tesla is stuck with thousands of Cybertrucks, early owners are already getting rid of their vehicles at an impressive rate, and the automaker had to slow production to a crawl.
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Australian logistics company Linfox is making big moves to electrify its heavy-duty semi fleet with the addition of thirty new Volvo FH and FM Electric semi trucks as the Swedish brand works to begin production at its Brisbane facility.
Volvo Trucks is expecting to begin full scale production of its FH and FM Electric semi trucks at the Brisbane factory in early 2026, just in time to fill the Linfox order – which happens to be the company’s largest in Australia. So far.
“We are very proud to continue our close partnership with Linfox. The order for 30 Volvo electric trucks is proof of their trust in our company and in zero-emissions transport as a viable solution here and now,” said Roger Alm, President Volvo Trucks. “Our commitment to start building electric trucks in Australia demonstrates our confidence in this technology, and means we can offer an industry-leading range of purpose-built electric trucks all around the world.”
With the production kickoff of electric trucks in Australia, it means Volvo Trucks is building its big HDEVs and prime movers in five countries on three continents. Which, as the company’s electric fleet approaches the 100 millionth mile logged mark, probably means they’re pulling well ahead of some of the other guys.
“Linfox is excited to partner with Volvo in driving the future and leading sustainable logistics in Australia,” explains Peter Fox AM (Member of the Order of Australia), Executive Chairman of Linfox. “Further electrifying our fleet sets the standard for us and our customers and the entire industry.”
Linfox’ latest order includes 29 Volvo FH Electric and one FM Electric semi. The company currently has four electric Volvo trucks in its fleet of 195 semis, with plans to continue to electrify as ICE-powered assets reach retirement.
Electrek’s Take
Now counting miles in operation in the tens of millions and rolling out its third generation of electric semi trucks, Volvo (and, by extension, Mack and Renault) continue to build a huge lead in the commercial trucking space. The competition, meanwhile, seems content to post pictures of its first factory while trucks that have been on order for years still haven’t reached customers.
I can’t see how they (Tesla) catch up from here.
SOURCE | IMAGES: Volvo Trucks.
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Oakland International Airport (OAK) in Alameda, California is helping stressed-out air passengers breathe a little bit easier with the introduction of five new battery-electric K9MD shuttle buses to its ground equipment fleet.
Global EV leaders BYD aren’t coming to America – the Chinese brand is already here. The company has been building EVs in its $250 million, 106,000 square foot production facility in Lancaster, California since 2014, delivering hundreds of battery-electric buses to fleets across the world. With this order of five new K9MD buses, OAK becomes the latest airport to turn to BYD Ride to help electrify its ground operations.
“We applaud Oakland Airport and their commitment to electrifying its fleet,” said Jason Yan, Vice President of Sales, West Region and National Account at Ride. “[BYD] Ride is thrilled to partner with OAK to offer sustainable transportation solutions that benefit both the environment and the community.”
The K9MD buses seat up to 42 passengers and have a 208 mile operating range from a 352 kWh lithium iron phosphate battery. That battery is backed by a 12-year warranty to help keep fiscally conservative fleet buyers at ease, while the smooth, quiet, and electric drive keeps the fleet’s operators happy, too.
Oakland International Airport is operated by the Port of Oakland, and is scheduled to electrify its entire ground operations fleet by 2030.
Electrek’s Take
The people live and work near airports are exposed to more emissions than most – and that includes kids, the elderly … even their pets. Electrifying the assets that operate in those spaces pays huge and immediate dividends in terms of the public health of some of the most vulnerable populations.
It’s as good a place as any to start. Let’s go.
SOURCE | IMAGES: BYD.
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