May 20, 2022

Hardwood Paroxysm

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Gas and tension with the Nordic countries. Now everyone is running for themselves – Corriere.it

At the height of the tension at the summit, on a Friday afternoon in Brussels, capitalism’s first major crisis erupted: the tulip bubble of 1637, when market fever in Amsterdam led to decades well above the intrinsic value of lamps. It ended, of course, with a devastating internal explosion. Something similar is happening today with gas pricewhich – which war in ukraine It has even grown tenfold compared to last year.

So it’s another Dutch call for non-interference market mechanisms. Mario Draghi He extracted some history: “Today’s gas market operates like the tulip market in the seventeenth century,” the prime minister told his colleague Mark Rutte from The Hague. Implication: It makes no sense to hide behind liberal fundamentalism, while war is being born in Europe energy shock Which could lead to the closure of entire industrial sectors. Italy continued with Spain, Greece and Portugal – and the opening of France and the President of the Commission Ursula von der Leyen – in Suggestion of roofs at methane prices Buyable in Europe via pipeline. The Netherlands, which is home to the gas contract exchange (property transfer facility), has continued to call the “market”. Supported by Sweden and Germany. Rutte has attempted to respond to Draghi’s implicit accusation that The Hague is putting all interests of its financial position before all interests even in the midst of a dramatic crisis. “I am not defending the merchants – said the Dutch prime minister -. I am defending the market,” defined today by the Iskander missiles raining down on Ukraine.

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However, the most significant dichotomy today is Berlin. Olaf Schultz is afraid Any action on gas or even Russian coal alone would lead to a supply cut and a recession in Germany. In office for three months, at the head of a divided government and under enormous pressure from the industrialists, the Social Democratic chancellor would not want to change anything about the import of energy from Russia. not now. Within a few days, the executive mobilized in Berlin by blocking three of the six or seven gas-to-gas regasification vessels offered on the global market for liquefied gas that would arrive from the United States or Qatar. But at the European summit, Schultz got into a spat with Draghi, proposing to respond to the current emergency by accelerating renewable energy that would give its first effects in three or four years. The Italian prime minister responded: “We maintain European targets on emissions, but we are in a difficult situation: it is not the time for new leaks ahead.” In the end, the summit essentially produced the idea of ​​trying to reach an agreement in May. But a European stalemate will have immediate consequences. Because for ventilators two years ago, at the beginning of Covid, a competition has now begun between the main European countries to find gas supplies to replace those of the Russians. Each works only for his own good, despite the intention expressed by the Brussels Summit to develop joint procurement. Mostly the race to Africa, in which Italy has a comparative advantage for two reasons: it has already moved about ten days ago and it is Eni who owns the fields in Algeria under concession. Egypt, Congo, Angola or Mozambique that could replace – within two years – with methane or LNG – most of the 29 billion cubic meters of Russian supplies that are expected to fail. Meanwhile, Spain will share most of the 15 billion cubic meters of LNG that the US administration has promised with the Benelux countries. Germany and Great Britain began a round of African capital (in addition to Qatar) to search for new offers.

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Italy is trying to charter two gas-to-gas regasification vessels using a hump Which costs about 35 million a year, with contracts of at least ten years. If all goes according to plan, the first ship is supposed to start next winter and only the second in 2023, with a supply of another ten billion cubic meters. About a dozen more should come from Algeria, and two or three from local production, while the development of renewables will also help. Already in two years, Italy could replace almost all supplies of Russian gas, if all went smoothly. But even then he won’t be able to avoid cutting consumption next winter: a bit of austerity is around the corner.