Suncor Energy Inc T.SU

More pain for Europe

[Experienced]

Gazprom announced that it has cut off natural deliveries to to the French company Engie for non payment due to a contractual dispute and under Russian law it cannot supply any gas until it gets paid.  This means that the supplies of natural gas are halted until the contract dispute is settled.

Who is Engie?

They are the second largest natural gas transportation company in Europe and the largest gas distribution company in Europe.  They also have a large LNG capacity as well as renewable energy capacity for their production of electricity.

Without doing a deep dive into their financials it is not clear how much they are reliant on Gazprom but I think that we can safely say that the impact of the Gazprom move will have a big impact on natural gas supply in Europe and electricity production in Europe until the dispute is settled.

Either way we are likely to see natural gas prices and electricity prices in Europe rise even further until the dispute is settled and probably afterward if they have to pay Gazprom more for the natural gas adding to the inflationary pressures there..

Will be interesting to see how long it takes before the blackmail by Gazprom pays off or in other words, Engie caves.  My gut says that it might take a while since they are a large company and have market power to perhaps increase their LNG deliveries.  As well the company operates internationally as well which will not be affected by the Gazprom move.  Plus they will be able to make more money from gauging their existing customers in Europe.  

Right now Engie says they have lots of gas in storage and are talking to Algeria about increasing LNG deliveries.  In the meantime, the French Prime Minister has urged businesses to cut their natural gas consumption this winter.


How will this affect oil prices?

Difficult to say but one possibility is as follows...

The value of the Euro relative to the Us dollar could fall especially if the ECB can't raise interest rates due to recession concerns and the US Fed keeps raising US rates.  If this happens there will be downward pressure on the oil price.

Not clear that this will necessarily increase the demand for oil.  Perhaps Migraine has this figured out.

Trying figure out how to put all the pieces together is like doing a thousand piece puzzle on the dining room table.

Let the games begin!!

[MigraineCall]

Yes, one of thousands of moving parts. The increasing strength of the USD/Euro will act to lower WTI and Brent, and gold. On the other hand, the energy crisis and expensive gas and electricity in the EU will promote private generation. People will use gasoline generators, which are getting hard to find. That will burn more product, as well as industry turning to their own generation, fossil fuel

[mrbb]

yes, other than burning wood, furniture and old newspapers, oil is currently the cheapest form of energy. Many still have the notion that $100 oil is too high.  new mini e-digger  2 hrs run time, 8 hrs to recharge using  generator powered by liquid fossil fuel. https://twitter.com/i/status/1565505096317796353  

[MigraineCall]

Nice toy digger. Not only that.  You will need to bring 4 diggers on 4 truck/trailer units to the non serviced jobsite for an 8 hour day, or explain to the client why the 1 day job took 4 days. This is what most ignorant voting people just don't get about this energy transition. It is not as easy as it sounds as presented with beautiful images of birds and forests, butterflies and

[autofocus111]

Pile on the pain. >>>Bloomberg) -- Russia’s Gazprom PJSC said its key gas pipeline to Europe won’t reopen as planned, moving the region a step closer to blackouts, rationing and a severe recession.The pipeline was due to reopen on Saturday after maintenance. But in a last-minute move, the company said a technical issue had been found and the pipe can’t operate again until it’s fixed

[marketsense]

Great and who is going to contradict Gazprom?  The most recent "accident"  among  a string of others involving outsoken oligarchs voicing their disapproval over  Putins war with Ukraine involved an exec from Lukoil who "accidently" fell from a hospital window where he was staying as a patient.  Needless to say he is dead and there will be an "

[NewfNewf]

Nord Stream 2 is ready but germany refuses to use it  due to pressure from the good old USA. As the political class in Europe is in self destruction mode, lets see how Germany with their solar panel/windmill utopia makes out this winter. The political class in Europe is making stupid decisions (maybe on purpose) and unfortunately its the regular middle class person in Europe that will reap

[mrbb]

why give EU prep time for the coming winter, lets start the energy mayhem now.

[mrbb]

gazprom released a photo evidence of the alleged oil leak that shut down Nord Stream 1 pipeline.  I like to applause Putin for his quick action and take measure to ensure environmental and safety protocol that even surpasses ESG compliancy Gazprom announced that it had "completely halted" transport of gas to Nord Stream until a previously undetected oil leakage is rectified.