Energy Market Scan May 16 2022

Just like the EU and the western world tightened sanctions against Russia, Russia in turn is also taking several steps against several EU firms and countries. Russia has sanctioned 31 western firms including the Gazprom Germania unit which is now under German management.

Posted on May 16, 2022

Geopolitics and War 

Russia sanctions 31 companies including the Gazprom Germania unit 

Just like the EU and the western world tightened sanctions against Russia, Russia in turn is also taking several steps against several EU firms and countries. 

Russia has sanctioned 31 western firms including the Gazprom Germania unit which is now under German management. 

Russia has also cut electricity to Finland. Putin has warned his Finnish counterpart Sauli Niinisto that ditching neutrality and joining NATO would be a mistake that could damage relations between their countries. This came as a reaction to Sweden's and Finland's official request to join the NATO. 

This has pushed the EU to scramble and draft a plan for buying Russian gas without breaking sanctions. EU is also trying to come to terms with Putin's rubles-for-gas demand. 

Hashtags: #Russia #Finland #Gazprom #Germany #naturalgas

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INDIA BANS WHEAT EXPORTS ADDING TO GLOBAL FOOD INSECURITY CONCERNS

India, which was intending to "feed the world" in 2022-23, and is one of the top 10 providers, has done an about face and banned wheat exports.

This call was expected, considering the loss of wheat crops due to the heat wave, as mentioned in last week's edition.

This will inevitably deepen the concern around global food supply, leading to a rise in wheat prices and further dent the food security of several importing countries. 

Indian government officials, however speaking just hours after the country banned wheat exports, gave a different reason, they said there was no dramatic fall in wheat output this year but unregulated exports had led to a rise in local prices.

Hashtags: #wheat 

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The US $40 Billion aid package to Ukraine runs into hurdles

The $40 Billion US aid package to Ukraine has run into hurdles in the Senate. This bill had been previously passed smoothly by the House. 

One of the senators, Rand Paul, has blocked the bill, expressing concerns that the aid is excessive and will lead to an increase in US borrowing and the risk of denting the US economy which is already struggling due to inflation and recession. 

Former US President, Donald Trump, has also criticised the bill. 

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Canadian Alberta court quashes a Liberal environmental legislation

Canada, as is with other countries, is struggling to balance short term oil and gas needs versus the long term aspiration to go green and reduce pollution. Then there is also the tussle for power between the state/federal versus regional governments. 

Bill C-69, passed by the Trudeau government in 2019, gave Ottawa the power to consider the effect of resource projects on environmental and social issues — including climate change. 

At the time, the oil and gas sector — worth billions to the economies of Alberta and Canada — said the legislation would hamstring industry. The legislation, along with the companion Bill C-48 — which formalized a tanker ban off the northwestern British Columbia coast — spawned protests across the West, including a protest convoy that drove from Red Deer, Alta., to Ottawa. 

Dubbed the “no more pipelines law” by Kenney’s United Conservatives, the Alberta government went to court in September 2019, seeking to have the legislation — officially the Impact Assessment Act — declared unconstitutional in what’s known as a reference case. On Tuesday, the court did so, declaring the legislation “a classic example of legislative creep” as the federal government used the cover of environmentalism to expand its powers. While it noted that climate change constitutes an “existential threat,” the bill was itself a threat to Canadian federalism and the division of powers. 

There has been rising protest amidst rising oil and gas prices, to surpass environmental concerns, and explore and produce more oil and gas. According to an expert, there is 170 billion barrels of oil stuck in the ground in Alberta. 

This bill could now be challenged in the supreme court, and hence has some more distance to go.

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