Sunday, February 12, 2023

US military shoots down third flying object in three days after Great Lakes airspace closure

Issued on: 12/02/2023 -



The US and Canada have raised the surveillance over their airspaces after a number of unindentified flying objects were spotted. Secretary of Defense Lloyd Austin, right, meets with Canada's Minister of National Defense Anita Anand, far left, at the Pentagon in Washington, Friday, Feb. 10, 2023. © J. Scott Applewhite, AP

Text by:NEWS WIRES

The U.S. military shot down a flying object over Lake Huron near the Canadian border, U.S. officials said on Sunday, as North American security forces have been on high alert for airborne threats.

Two U.S. officials, speaking on condition of anonymity, told Reuters that the military had shot down the object but declined to say whether it resembled the large white Chinese balloon that was shot down earlier this month.

U.S. Representative Elissa Slotkin, who represents a district in Michigan, near where the incident took place, said pilots from the U.S. Air Force and National Guard shot down the object. "Great work by all who carried out this mission," she wrote on Twitter.

Meanwhile, Canadian investigators are hunting for the wreckage of an unidentified flying object that was shot down by a U.S. jet over Yukon territory on Saturday.

"Recovery teams are on the ground, looking to find and analyze the object," Prime Minister Justin Trudeau told reporters on Sunday.

"The security of citizens is our top priority and that's why I made the decision to have that unidentified object shot down," he said, adding that it had posed a danger to civilian aircraft.

North America has been on high alert for aerial intrusions following the appearance of a white, eye-catching Chinese airship over American skies earlier this month.

The 200-foot-tall (60-meter-high) balloon - which Americans have accused Beijing of using to spy on the United States - caused an international incident, leading Secretary of State Antony Blinken to call off a planned trip to China only hours before he was set to depart.

Surveillance fears appear to have U.S. officials on high alert.
Twice in 24 hours, U.S. officials closed airspace - only to reopen it swiftly.

On Sunday, the Federal Aviation Administration briefly closed space above Lake Michigan. On Saturday, the U.S. military scrambled fighter jets in Montana to investigate a radar anomaly there.

Canada also closed airspace on Sunday near Tobermory, Ontario, which is on Lake Huron near the U.S. border, according to Nav Canada, a private non-profit that operates Canada's air traffic control system.

China denies the first balloon was being used for surveillance and says it was a civilian research craft. It condemned the United States for shooting it down off the coast of South Carolina last Saturday.

At least three other flying objects have been destroyed over North America since then, as military and intelligence officials focus on airborne threats.

U.S. Senate Majority Leader Chuck Schumer told U.S. broadcaster ABC that U.S. officials think two of the latest objects were smaller balloons than the original one, which was brought down off the coast of South Carolina on Feb. 4.

A second was shot down over sea ice near Deadhorse, Alaska, on Friday. The third was destroyed over the Yukon on Saturday.

The White House said only that the recently downed objects "did not closely resemble" the Chinese balloon, echoing Schumer's description of them as "much smaller."

"We will not definitively characterize them until we can recover the debris, which we are working on," a spokesperson said.

Schumer said he was confident U.S. investigators scouring the ocean off South Carolina to recover debris and electronic gadgetry from the original balloon would get to the bottom of what it was being used for.

Debris in remote locale

Canadian counterparts trying to piece together what was shot down over the Yukon may have their own challenges. The territory is a sparsely populated region in Canada's far northwest, which borders Alaska. It can be brutally cold in the winter, but temperatures are unusually mild for this time of year, which could ease the recovery effort.

Speaking to Fox News, House of Representatives Foreign Affairs Committee Chairman Michael McCaul said the balloon shot down over the South Carolina coast had been on a mission to get imagery of sensitive American nuclear sites.

"They want to get imagery, get intelligence on our military capability, particularly nuclear," McCaul said. "And they're building quite a nuclear stockpile themselves."

Republican lawmaker Mike Turner, who serves on the U.S. House Armed Services Committee, suggested the White House might be overcompensating for what he described as its previously lax monitoring of American airspace.

"They do appear somewhat trigger-happy," Turner told CNN on Sunday. "I would prefer them to be trigger-happy than to be permissive."

Republicans have criticized the Biden administration over its handling of the incursion by the suspected Chinese spy balloon, saying it should have been shot down much earlier.

(REUTERS)

US military shoots down fourth flying object over North America

A US fighter jet shot down the object over the shores of Michigan on Sunday

The object, which was not deemed a military threat, has been described by defence officials as unmanned and octagonal in shape. It was downed by a missile fired from an F-16 fighter jet at 14:42 local time (19:42 GMT).

By Gareth Evans
BBC
in Washington

The US has shot down another unidentified flying object in the fourth military operation of its kind this month.

President Joe Biden ordered it to be downed near Lake Huron, close to the Canadian border, on Sunday afternoon.

The object could have interfered with commercial air traffic as it was traveling at 20,000ft (6,100m), a Pentagon statement said.

It was first detected above military sites in Montana on Saturday, it added.

The incident raised further questions about the spate of high-altitude objects that have been shot down over North America this month.

A suspected Chinese spy balloon was downed off the coast of South Carolina on 4 February after hovering for days over the continental US. Officials said it originated in China and had been used to monitor sensitive sites.

China denied the object was used for spying and said it was a weather monitoring device that had been blown astray. The incident - and the angry exchanges in its aftermath - ratcheted up tensions between Washington and Beijing.

On Sunday, a defence official said the US had communicated with Beijing about the first object after receiving no response for several days. It was not immediately clear what was discussed.

Since that first incident, American fighter jets have shot down three further high-altitude objects in as many days.

President Biden ordered an object to be shot down over Alaska on Friday, and on Saturday a similar object was shot down over the Yukon in north-western Canada.

Officials have not publicly identified the origin or purpose of these objects. Both the US and Canada are still working to recover the remnants, but the search in Alaska has been hampered by Arctic conditions.

"These objects did not closely resemble, and were much smaller than, the [4 February] balloon and we will not definitively characterise them until we can recover the debris," a White House National Security spokesperson said.



Unidentified flying objects - timeline


4 February: US military shoots down suspected surveillance balloon off the coast of South Carolina. It had drifted for days over the US, and officials said it came from China and had been monitoring sensitive sites


10 February: US downs another object off northern Alaska which officials said lacked any system of propulsion or control


11 February: An American fighter jet shoots down a "high-altitude airborne object" over Canada's Yukon territory, about 100 miles (160 km) from the US border. It was described as cylindrical and smaller than the first balloon


12 February: US jets shoot down a fourth high-altitude object near Lake Huron "out of an abundance of caution"






Later on Sunday, the US Air Force general overseeing North American airspace said he had not ruled any explanation out - including extraterrestrial life.


"I'll let the intel community and the counterintelligence community figure that out. I haven't ruled out anything," Gen Glen VanHerck told reporters after being asked about the possibility of aliens.

One senior official told ABC News that the three most recent objects to be shot down were likely weather balloons and not surveillance devices.

But this was contradicted by the top Democrat in Congress, who earlier told the broadcaster that intelligence officials believed the objects were in fact surveillance balloons.

"They believe they were [balloons], yes," Senate Majority Leader Chuck Schumer said, adding that they were "much smaller" than the first one shot down off the South Carolina coast.

"The bottom line is, until a few months ago, we didn't know of these balloons," he said.

Democrat Debbie Dingell, one of several Michigan members of Congress who applauded the military for downing the object over the state on Sunday, joined growing calls for the White House and defence officials to provide more information.

"We need the facts about where they are originating from, what their purpose is, and why their frequency is increasing," she said.

Democratic Senator Jon Tester, who represents Montana, told the BBC's US partner CBS: "What's gone on the last two weeks or so... has been nothing short of craziness. And the military needs to have a plan to not only determine what's out there, but determine the dangers."

Republicans have repeatedly criticised the Biden administration for its handling of the first suspected spy balloon, saying it should have been shot down far sooner.

Meanwhile, Defence Secretary Ben Wallace said the UK would conduct a security review following the recent incidents in the US and Canada. "This development is another sign of how the global threat picture is changing for the worse," he said.


Objects shot down over Alaska, Yukon were balloons, US Senate leader says

Schumer says devices downed from 40,000 feet in air were smaller than Chinese balloon downed off South Carolina earlier this month, officials trying to analyze debris for data

FBI special agents assigned to the evidence response team process material recovered from the high altitude balloon recovered off the coast of South Carolina, February 9, 2023, at the FBI laboratory in Quantico, Virginia. (FBI via AP)
FBI special agents assigned to the evidence response team process material recovered from the high altitude balloon recovered off the coast of South Carolina, February 9, 2023, at the FBI laboratory in Quantico, Virginia. (FBI via AP)

WASHINGTON (AP) — The United States believes the unidentified objects shot down by American fighter jets over Canada and Alaska were balloons, though smaller than the Chinese balloon downed over the Atlantic Ocean last weekend, Senate Majority Leader Chuck Schumer said Sunday.

Schumer told ABC’s “This Week” that he was briefed on Saturday night by US President Joe Biden’s national security adviser, Jake Sullivan, after the incident hours earlier over the Yukon. On Friday, an object roughly the size of a small car was downed over remote Alaska, according to the White House.

Asked whether those two recent objects were balloons, Schumer said, “They believe they were, yes, but much smaller than the first one.”

The government has said the first balloon was about the size of three school buses. It was shot down February 4 off the South Carolina coast after it had traversed the United States.

The Biden administration said it was used for surveillance. China claims it was on a meteorological research mission.

Schumer said teams were recovering debris from the objects and would work to determine where they came from.

Senate Majority Leader Chuck Schumer of New York speaks during a bill signing ceremony for the Respect for Marriage Act, December 13, 2022, on the South Lawn of the White House in Washington. (AP Photo/Andrew Harnik)

The ones downed on Friday and Saturday were smaller and flying at a lower altitude of about 40,000 feet, within the airspace occupied by commercial flights, compared with about 60,000 feet for the first one.

“The bottom line is until a few months ago we didn’t know about these balloons,” Schumer said. “It is wild that we didn’t know…. Now they are learning a lot more. And the military and the intelligence are focused like a laser on first gathering and accumulating the information, then coming up with a comprehensive analysis.”

Schumer: "It is wild" U.S. didn't know about China's balloon program earlier


Senate Majority Leader Chuck Schumer (D-N.Y.) acknowledged it was "wild" the U.S. didn't know about the Chinese government's use of balloons "until a few months ago," during an interview on ABC's "This Week" Sunday.

Catch up quick: Last week the U.S. shot down a suspected Chinese surveillance balloon that had traversed the U.S. and is believed to have been capable of collecting communications.

  • Pentagon officials have said that similar balloons crossed into U.S. airspace briefly at least three times during the Trump administration.
  • The State Department spokesperson said earlier this week that China has flown similar surveillance balloons over more than 40 countries across five continents in the past.
  • The U.S. on Friday shot down a "high-altitude" object that violated its airspace above territorial waters near Alaska and on Saturday Canadian Prime Minister Justin Trudeau announced that an unidentified object had been shot down in its airspace.
  • Little is known about the origins of the latter two objects and it is not clear whether they were in any way connected to the first.

State of play: The U.S. military and intelligence are "focused like a laser" on gathering more information about the balloons, Schumer said.

  • Asked by host George Stephanopoulos whether the surveillance balloon program would need to be shut down, Schumer agreed that the Chinese government would likely need to "get rid of it."
  • “I think the Chinese were humiliated. I think the Chinese were caught lying, and it's a real step back for them," Schumer said.
  • Schumer added that he believed Sen. Jon Tester (D-Mont.) was looking into why it took so long for the U.S. military and intelligence to know about the balloons and said he supported Congress looking into the matter.

The big picture: Tester told CBS' "Face the Nation" Sunday that while the military likely had "some" awareness of the use of balloons, Congress needs to have a debate about whether that awareness was at a sufficient level.

  • Going forward, the U.S. needs to have a specific plan for how to deal with such objects, "so we know exactly what's going to happen when these balloons come in and their threat is assessed," Tester said.
  • Rep. Michael McCaul (R-Texas), the chair of the Foreign Affairs Committee, told the same program Sunday that the flight of the suspected surveillance balloon was clearly intentional, calling it an "act of belligerence."
  • "It was done with provocation to gather intelligence data and collect intelligence on our three major nuclear sites in this country. Why? Because they're looking at what is our capability in the event of a possible future conflict in Taiwan. They're really assessing what we have in this country," McCaul said.
  • https://plawiuk.blogspot.com/2023/02/norad-trudeau-ordered-u.html
Syria's President May Allow More Border Crossings For Quake Aid: WHO

World Health Organization chief Tedros Adhanom Ghebreyesus met with the Syrian president in Damascus on Sunday afternoon to discuss the response to the devastating earthquake
Updated: February 13, 2023 5:23 

President Assad indicated he was open to additional cross-border access points, WHO said.

Damascus, Syria:

The WHO chief said Sunday that Syria's President Bashar al-Assad had voiced openness to more border crossings for aid to be brought to quake victims in the country's rebel-held northwest.

World Health Organization chief Tedros Adhanom Ghebreyesus met with the Syrian president in Damascus on Sunday afternoon to discuss the response to the devastating earthquake which has killed more than 33,000 people across Syria and Turkey.

Concerns have been running particularly high for how aid might reach all those in need in Syria, which has been devastated by more than a decade of civil war.

"The compounding crises of conflict, Covid, cholera, economic decline and now the earthquake have taken an unbearable toll," Tedros said after visiting Aleppo and witnessing the devastation first hand.

He said he was "waiting to move across lines to the northwest, where we've been told the impact is even worse".

The situation is particularly dire in the rebel-held area in the northwest, which cannot receive aid convoys from government-held parts of the country without Damascus's authorisation.

The single border crossing open to shuttle aid from Turkey also saw its operations disrupted by the quake.

Some pre-positioned aid has been delivered, and convoys began rolling through the border crossing again on Thursday, but there have been mounting calls to open more crossings to speed up the aid delivery.

"This afternoon I met with His Excellency President Assad, who indicated he was open to considering additional cross-border access points for this emergency," Tedros told a virtual press conference from the Syrian capital.



















'Massive access' needed

Humanitarian aid in rebel-held areas usually arrives through Turkey via a cross-border mechanism created in 2014 by a UN Security Council resolution.

But it has long been contested by Damascus and its ally Moscow, who see it as a violation of Syrian sovereignty.

Under pressure from Russia and China, the number of crossing points has been reduced over time from four to one.

Equally vital for Syria's quake-hit northwest is speeding up aid from within the country.

Tedros hailed the "recent blanket approval by the government of Syria for the UN for cross-line conveys" to bring aid into the rebel-held northwest.

But while Damascus had given the all-clear for cross-line aid convoys to go ahead from government-held areas, Tedros said the WHO was still waiting for the green light from the rebel-held areas before going in.

"We're on standby" he said.


Richard Brennan, WHO's director for the Eastern Mediterranean region, told reporters that there had been "no cross-line deliveries since the earthquake struck".

"We did have one scheduled in the next couple of days. We are still negotiating for that to go ahead."

Before the quake, the UN typically had permission to bring in one aid convoy per month, he said, adding that even before the disaster, they had been trying to increase that to three or four.

"Now of course there's a greater sense of urgency," he said, suggesting that far more convoys were needed.

"What we need is massive access," agreed WHO's emergencies chief Michael Ryan.

"We need cross-lines access, we need cross-border access, and that needs to increase."
Israel authorises nine ILLEGAL West Bank outposts, despite US opposition

Issued on: 13/02/2023 - 















File photo: An Israeli flag is painted on the surrounding wall of the West Bank Jewish settlement of Migdalim near the Palestinian town of Nablus, Monday, Oct. 25, 2021. © Ariel Schalit, AP

Text by:NEWS WIRES

Israel granted retroactive authorisation on Sunday to nine Jewish settler outposts in the occupied West Bank and announced mass-construction of new homes within established settlements, moves likely to draw US admonition.

The first to publish the decisions by Prime Minister Benjamin Netanyahu's security cabinet were two pro-settler politicians whose inclusion in the coalition he built after a Nov. 1 election had already signalled a hard-right tack.

Most world powers consider the settlements illegal for taking up land where the Palestinians seek statehood. Israel disputes this. Since capturing the West Bank in a 1967 war, it has established 132 settlements, according to the Peace Now watchdog group.

In recent years, settler zealots have erected scores of outposts without government permission. Some have been razed by police, others authorised retroactively. The nine granted approval on Sunday are the first for this Netanyahu government.

A statement from Netanyahu's office also said a planning committee would convene in the coming days to approve new settlement homes. Far-right Finance Minister Bezalel Smotrich said these would number 10,000.

Palestinian President Mahmoud Abbas's administration, whose US-sponsored statehood talks with Israel broke down in 2014, said Sunday's announcement should be "condemned and rejected".

"It is a challenge to US and Arab efforts and a provocation to the Palestinian people and it will lead to more tension and escalation,” said Abbas spokesperson Nabil Abu Rudeineh.

There was no immediate comment from the US Embassy. But the ambassador, Thomas Nides, had made clear last month that the US administration would oppose such moves.

"We want to keep a vision of a two-state solution alive. He (Netanyahu) understands that we understand that massive settlement growth will not accomplish that goal," Nides said.


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"We have been very clear about the ideas of legalising outposts, massive settlement expansion - it will not keep the vision of the two-state solution alive, in which case we will oppose it and we will be very clear about our opposition," he told Israel's Kan television in a Jan. 11 interview.

Statements by Smotrich, fellow ultranationalist Itamar Ben-Gvir and Netanyahu's office deemed the settlement push in part as a response to recent Palestinian attacks. But they had agreed on such plans before their coalition was sworn in on Dec 29.

While welcoming the Netanyahu government's announcement, West Bank settler leader Yossi Dagan urged "a total removal of curbs on construction, to enable construction in full swing".

The other Palestinian territory, Gaza, is under Hamas Islamists who reject peacemaking with Israel.

(REUTERS)
On climate, most corporations more talk than action

Marlowe HOOD
Sun, February 12, 2023 


The world's biggest and richest companies are failing to deliver on their climate pledges, according to an in-depth analysis released Monday that calls on governments to crack down on corporate greenwashing.

Under growing pressure from shareholders, governments and consumers, companies are racing to roll out strategies to reduce the carbon emissions of their operations, along with their products and services.

Twenty-four multinationals examined have all endorsed the Paris treaty target of capping global warming at 1.5 degrees Celsius, and aligned themselves with UN-backed campaigns to ensure that business plays its part in decarbonising the global economy.

Staying under that critical temperature threshold will require slashing global greenhouse gas emissions 45 percent by 2030, and reaching "net zero" -- with any residual emissions balanced by removals -- by mid-century, the UN's IPCC science advisory panel has said.

But the 2030 pledges of the 22 companies that made them would only slice 15 percent off their collective emissions, the report found.

And net zero targets adopted by all 24 multinationals -- if met -- would barely remove a third of their current emissions.

"The overwhelming majority of these corporations are simply not delivering the goods they promised," the 2023 Corporate Climate Responsibility Monitor concluded.

Climate think tanks Carbon Market Watch and NewClimate Institute did a deep-dive into sectors ranging from the auto, shipping and aviation industries, to retail fashion, high tech and food, to steel and cement. No oil or gas companies were included.



- Vague 'net zero' pledges -

With combined earnings of more than $3 trillion, the two dozen companies under the microscope account for some four percent of all global emissions -- two billion tonnes of CO2 or its equivalent each year.

Analysts assessed the integrity of each corporation's climate plan, looking at the accuracy of self-reported emissions, targets set for reducing them, progress to date, and how heavily pledges depend on questionable compensation schemes known as carbon offsets.

"At a time when corporations need to come clear about their climate impact and shrink their carbon footprint, many are exploiting vague and misleading 'net zero' pledges to greenwash their brands while continuing with business as usual," said Carbon Market Watch executive director Sabine Frank.

Earning the best overall marks was shipping giant Maersk, whose plan for erasing its carbon footprint by 2040 was deemed to have "reasonable integrity".

The climate plans of eight corporate giants -- including Apple, Google, Microsoft and steel-conglomerate ArcelorMittal -- were judged to have "moderate integrity".

Swedish fast-fashion retail giant H&M, also in this tranche, has very ambitious emissions reduction targets, but parts of its green strategy could undermine them, the report found.

"The company’s plans to switch to biomass and renewable electricity credits (RECs) in the supply chain could severely undermine those targets," NewClimate Institutes's Silke Mooldijk told AFP.

Biomass is associated with deforestation and CO2 emissions, and the purchase of RECs "allows companies to report emission reductions that are not real," according to a recent study in Nature Climate Change.

- Junk carbon credits -


When asked to comment, H&M "welcomed" the new report and outlined steps it is taking to achieve its "100 percent renewable electricity goal for our and our supplier’s operations", but sidestepped the question of biomass and RECs.

The climate claims of another 11 companies were found to have "low integrity," and four -- American Airlines, Samsung Electronics, retail food giant Carrefour, and JBS, the largest meat processing company in the world -- were all tagged with "very low integrity".

Carrefour objected to the ranking, saying the company had set emissions reduction goals across its entire value chain, and was the only large French food retailer ready to cut off suppliers lacking their own climate strategies.

JBS said the report had not taken into account written clarifications provided to the authors, but did not say what they were.

American Airlines and Samsung did respond when contacted by email.

"Regulations are needed requiring companies to reduce their emissions, and regulating what they can -- and cannot -- say to consumers," Carbon Market Watch policy lead Gilles Dufrasne told AFP.

"The short term action that's needed is to ban carbon neutrality claims," he added. "If the company wants to buy junk carbon credits that don't represent anything, they're free to do so, but they're not free to make false and misleading statements."





CHART: Copper exploration budgets jump, but major discoveries elusive

Frik Els | February 9, 2023 | 

A shining star. Escondida, Chile. (Image by BHP).

According to a report by S&P Global Market Intelligence, copper exploration’s total budgets increased 21% to just shy of $2.8 billion in 2022, the highest level since 2014.


The increase was driven by a strong recovery for the price of copper since hitting multi-year lows at the outset of the global pandemic.

The copper price has doubled from March 2020 when the bellwether metal briefly fell below $2/lbs ($4,400 a tonne) and prices are set to stay elevated given the rosy demand outlook through the end of the decade.

Last year saw two large copper mines start up operations – Anglo American’s 60%-owned Quellaveco in Peru and Cukaru Peki (Timok) in Serbia, which is wholly-owned by China’s Zijin Mining. Teck Resources’ Quebrada Blanca in Chile will follow this year, while two other major projects, Udokan’s eponymous mine in Russia and Rio Tinto’s Oyu Tolgoi underground expansion, are currently under construction.

S&P Global sees a market surplus over the next three years (–285kt this year) but after this bulge in additional tonnes coming online, the pipeline narrows substantially, with a nearly 400kt undersupply in 2026.

S&P Global points out that fatter exploration budgets over the past several years – most of which being spent in Latin America – have not led to a meaningful increase in the number of recent major discoveries:

“While copper reserves and resources have increased by 50 million tonnes compared with our analysis last year, most of the increase came from assets discovered in the 1990s,” say the authors.


Source: S&P Global Market Intelligence





SANCTIONS? WHAT F__KING SANCTIONS

Oil Shippers Rake In Billions From Russian Oil Trade

  • Oil shipping firms and Asian refiners are raking in billions of U.S. dollars from transporting and refining Russian crude.

  • Most of the shipping companies transporting Russian crude – without breaching the sanctions and price cap – are based in the United Arab Emirates, Greece, India, and China.

  • While shipping firms and refiners are making “crazy good” money off trade in Russian crude, the Russian budget revenues are sinking with the low prices of Urals.

While Russia looks to contain the loss of oil revenues as the price of its flagship crude plummeted after Western sanctions took effect, oil shipping firms and Asian refiners are raking in billions of U.S. dollars from transporting and refining Russian crude.     

To attract customers in China and India ahead of and after the EU embargo and the G7 price cap, Russian exporters have been offering $15-$20 per barrel discounts, and they are also paying $15-$20 per barrel to shipping companies to transport the crude to Asia, traders in Russian crude have told Reuters

“Crazy Good” Tanker Business for Russian Crude 

The business of transporting Russian crude to Asia has become “crazy good,” a trader dealing with Russian oil told Reuters. Shipping firms are charging much higher rates to ship crude from Russia to refining hubs in Asia than they did a year ago. The profit for an oil shipping firm from a single voyage of a mid-sized tanker with 700,000 barrels of crude on board could be as high as $10 million, according to an invoice Reuters has seen. 

Refiners in China and India are also believed to be big beneficiaries of the pivot of Russian trade to Asia as they get cheap crude to process into fuels. 

Most of the shipping companies transporting Russian crude – without breaching the sanctions and price cap – are based in the United Arab Emirates (UAE), Greece, India, and China, and some of them are partially owned by Russian firms, according to numerous anonymous banking and trading sources who spoke to Reuters. 

“Judging by the customs statistics, some of the benefit was captured by refiners in India and China, but the main beneficiaries must be oil shippers, intermediaries and the Russian oil companies,” Sergey Vakulenko, non-resident fellow at the Carnegie Endowment for International Peace, told Reuters. 

Vakulenko, a former executive at Gazprom Neft, quit the Russian oil producer and left Russia days after the invasion of Ukraine.

Russian Budget Hit  

While shipping firms and refiners are making “crazy good” money off trade in Russian crude, the Russian budget revenues are sinking with the low prices of Urals. Vladimir Putin seeks to amend the tax legislation to curb the fallout on the state finances, stretched thin to pour more money into the invasion of Ukraine. 

The discounts at which Russian oil is being offered has led to the price of Urals to drop to around $30 per barrel below the international benchmark, Brent Crude

As a result, the revenues for the Russian budget – with oil being the biggest revenue stream – are plunging.  

Some of the shipping firms transporting Russian crude are either Russian or partly Russian-owned, or with unclear ownership, which makes the estimates of Russian losses more difficult—there could be indirect income for Russia from the shipment of crude. 

The direct impact, however, is known, and it has become worse since the embargo and price cap on Russian crude oil came into effect on December 5. 

The average price of Urals in January, at $49.48 per barrel, was 1.7 times lower than in January 2022, when it averaged $85.64 per barrel, the Russian Finance Ministry said last week. 

The plunge in the price of Urals reduces Russia’s budget revenues from oil export taxes. 

Russia’s budget revenues from oil and gas plunged in January by 46% compared to the same month last year. Budget revenues from energy sales – including taxes and customs revenues – plummeted last month to the lowest level since August 2020. 

Due to the low price of Urals in January, Russia’s budget was $24.7 billion (1.76 trillion rubles) into deficit in January, compared to a surplus for January 2022, as state revenues from oil and gas plunged by 46.4% due to the low price of Urals and lower natural gas exports, the Russian Finance Ministry said in preliminary estimates this week. 

Russia is considering taxing its oil firms based on the price of Brent – instead of Urals – to limit the fallout on the budget revenues due to the widening discount of Urals to Brent, Russian daily Kommersant reported last week, quoting sources.

In the budget estimate for January this week, the Finance Ministry confirmed parts of this report, saying that “considering the fact that the relevance of the price of Urals in calculating export prices has diminished, various other approaches are currently being studied to switch to alternative price indicators for tax purposes.” 

The EU oil ban and price cap are costing Russia an estimated $172 million (160 million euros) per day due to the fall in shipment volumes and prices for Russian oil, Finland-based Centre for Research on Energy and Clean Air (CREA) said in a report last month. The revenue losses were expected to rise to $300 million (280 million euros) per day with the EU sanctions on imports of petroleum products as of February 5, according to CREA.   

By Tsvetana Paraskova for Oilprice.com

U.S. Shale Giants Want In On The Global LNG Game

  • U.S. gas producers are getting increasingly interested in LNG exports.

  • Producers such as Devon Energy and Chesapeake are looking to get exposure to international LNG markets.

  • Market observers expect demand from Asia to start climbing, now that prices are off their peak from last summer.

Over the course of just a few years, the United States became one of the top three exporters of liquefied natural gas. Last year, it was the biggest supplier of LNG to Europe. This was made possible by a handful of companies that invested billions in liquefaction plants along the Gulf Coast, with another handful coming in the next couple of years. But competition is intensifying.

Energy Intelligence reported this month that U.S. gas producers are getting increasingly interested in LNG exports. The report cited the chief executive of Devon Energy as saying the company was looking into diversifying with LNG exports to get some exposure to international markets.

"We're not going to be big LNG players like Cheniere or Freeport or anything like that," Rick Muncrief said at the NAPE conference in Houston last week. "I mean, from our perspective, it's how can we get some exposure in international markets and help our allies around the world. We do the same thing with oil."

The decision makes perfect sense. Demand for liquefied natural gas globally is on the rise, and strongly, after Europe joined the LNG party. Even though the EU's emission-cutting plans discourage European buyers from securing long-term LNG import deals, which U.S. producers find to be a problem, U.S. LNG will continue to flow to Europe.

At the same time, market observers expect demand from Asia to start climbing, too, now that prices are off their peak from last summer. Indeed, Bangladesh recently bought an LNG cargo after months of abstaining from such imports because of prices. It also plans to buy several more if prices remain where they are. And if more U.S. gas producers enter the LNG space, chances are that prices will get a ceiling once their facilities start operating.

Earlier this year, BloombergNEF predicted that U.S. LNG export capacity would soar to 169 million tons by 2027. That would make the United States the world's biggest LNG exporter, far ahead of Qatar, which plans to expand its capacity to 110 million tons by 2026.

"The US is in the lead because of its flexible contract terms and the competitive landscape of project developers," said BloombergNEF global LNG specialist Michael Yip. "Its aggressive but transparent pricing and reliability as an LNG supplier has made it easy for these new projects to secure contracts."

That's just the big guns in LNG exports. Add to that the smaller gas producers that are diversifying into LNG exports, and the potential future dominance of the U.S. on international LNG markets becomes even more pronounced. As long as the gas flows as it does now.

Earlier this year, two gas CEOs warned there might be a slowdown in drilling activity because of prices. At such prices, profitability is hard to come by, Adam Rozencwajg, the natural resources investor from Goehring & Rozencwajg, told Oilprice. And that may put a lid on the supply of gas.

"Companies with remaining core Tier 1 acreage can make a return at today's gas price—those are few and far between," Rozencwajg said. "More importantly, companies have come to realize just how difficult it is to maintain high-quality drilling inventory. In light of that, they are reluctant to increase activity and pull forward the inevitable moment they'll be short of high-quality drilling prospects."

What this means is that sooner or later, prices will go up. This will make LNG exports even more lucrative. And shareholders who mind increased drilling might change their minds.

"Most of our investors get it and they think it's a good idea," Chesapeake's Nick Dell'Osso, one of those CEOs who warned about lower drilling activity this year said at NAPE.

"At the end of the day, the way I describe it to our investors, is this is not arbitrage capture. This is diversification of market. The US gas is being sold in international markets. We should have exposure to that. That's diversification of your product sales points and ultimately like any other portfolio diversification."

Indeed, diversification has proven to be the optimal strategy both for producers and for consumers, as any European Union official is sure to tell you if you ask them.

By Irina Slav for Oilprice.com