US Business

European Union ministers met Monday to respond to Russia cutting gas supplies to Poland and Bulgaria — and discuss plans for a possible oil embargo to punish Moscow for invading Ukraine.

The energy ministers from the 27 member states were coordinating efforts to counter what Brussels has branded the Kremlin’s bid to “blackmail” the West with threatened energy shortages.

The EU is also working on a phased ban on Russian oil imports, hoping to cut off funding for its war effort and assert energy independence from Moscow.

“We will support full sanctions on all Russian fossil fuels. We already have coal — now it’s time for oil,” said Anna Moskwa, Poland’s environment minister.

But Poland is among the more hawkish member states. Others, such as Germany, are wary of the economic hurt a wider ban on Russian energy would bring.

So no decision on an oil embargo was expected Monday. Diplomats and European Commission experts are still working towards a proposal for an eventual sixth sanctions package.

Instead, the ministers discussed technical ways to wean their economies off Russian energy supplies. 

They also looked at how to support countries that have provoked the Kremlin’s wrath, such as Bulgaria and Poland, whose gas deliveries were halted last week.

France’s ecological transition minister Barbara Pompili, whose country holds the EU presidency, said she had called the emergency meeting to “ensure our solidarity with our colleagues from Bulgaria and Poland.”

Russia’s President Vladimir Putin has demanded “unfriendly countries” — which includes all EU states — pay for their gas in rubles, which Warsaw and Sofia refused.

Doing so would involve western clients depositing in euros or dollars in a bank run by Russian state energy giant Gazprom, to be converted into rubles and moved to a second Gazprombank account. 

The European Commission says that could breach EU sanctions on Russia. But Germany and Austria have been cautious about rejecting the Kremlin’s payment terms.

“We appeal to countries not to support Putin’s decree, not to support the initiative to pay in rubles,” Moskwa said.  

– Face saver? –

Germany’s minister for economic affairs and climate Robert Habeck said Berlin would follow EU policy even if it imposed costs on its economy.   

But he also suggested the dual Gazprombank accounts plan could be “a face-saving solution for Putin”. 

France’s Pompili said: “We will continue to pay in euros the contracts which were stipulated in euros, or in dollars those which were stipulated in dollars.”

The European commissioner for energy, Kadri Simson, said Russia’s decision to cut off the two EU members showed that Moscow was not a “reliable supplier”.

She denied Russian reports that some EU countries have agreed to make ruble payments.

On Sunday, sources told AFP the EU will propose, perhaps as early as this week, a phased-out ban on imports of Russian oil — but not gas — in a fresh round of sanctions against Russia.

Several diplomats said the ban on oil was made possible after a U-turn by reluctant Germany.

The commission will propose a tapered ban over six to eight months, to give countries time to diversify their supply, the sources said.

The ban requires unanimous backing and could yet be derailed, with Hungary expected to mount strong opposition as it is dependent on Russian oil and close to the Kremlin.

Other countries are worried that a ban on oil would increase prices at the pump when consumer prices are already sharply on the rise because of the war.

“We must be very attentive to market reactions,” one official told AFP on condition of anonymity. “There are solutions and we will get there in the end, but we must act with great care.”

The sixth package of anti-Russian measures will also target the country’s largest bank, Sberbank, which will be excluded from the international SWIFT messaging system, the diplomats said. 

Spirt Airlines reiterated Monday its support for a merger with Frontier Airlines, saying it concluded a competing offer from JetBlue Airways involved excessive regulatory risk.

Spirit said the Department of Justice’s challenge of JetBlue’s alliance with American Airlines raised the odds that a takeover of Spirit by JetBlue might get blocked.

“After a thorough review and extensive dialogue with JetBlue, the board determined that the JetBlue proposal involves an unacceptable level of closing risk that would be assumed by Sprit shareholders,” said Mac Gardner, chairman of Spirit.

“We believe that our pending merger with Frontier will start an exciting new chapter for Spirit and will deliver many benefits to Spirit shareholders, team members and guests.”

In early February, budget carriers Spirit and Frontier announced they were combining to create a competitive low-cost carrier that aims to test the dominance of larger rivals.

But in April, JetBlue challenged the deal, bidding to buy Spirit for $3.6 billion and offering a similar argument about challenging larger US carriers.

JetBlue announced Monday an “enhanced” offer for Spirit that included a $200 million reverse break-up fee in case the JetBlue-Spirit deal was blocked on antitrust grounds. 

But Spirit, which had pushed for assurances JetBlue would drop the American Airlines venture if needed, said in a letter the carrier’s concessions were insufficient and “imposes on our stockholders a degree of risk no responsible board would accept.”

Shares of Spirit fell 8.9 percent to $21.52 in pre-market trading, while JetBlue gained 0.6 percent to $11.08. Frontier Group fell 1.9 percent to $10.41.

The EU accused Apple on Monday of blocking rivals from its popular “tap-as-you-go” iPhone payment system, opening a fresh battlefront between the US tech giant and Brussels.

“The preliminary conclusion that we reached today relates to mobile payments in shops, by excluding others from the game,” said Margrethe Vestager, the EU’s antitrust chief.

“Apple has unfairly shielded its Apple Pay wallets from competition. If proven this behaviour would amount to abuse of a dominant position, which is illegal under our rules,” Vestager told reporters.

The European Commission, the bloc’s competition watchdog, specifically charged the iPhone maker with preventing competitors trying to enter the contact-less market “from accessing the necessary hardware and software … to the benefit of its own solution, Apple Pay”.

The accusation is the latest salvo against US tech giants by EU regulators, who have also taken aim at Apple’s music streaming and e-book businesses.

The company is also a main target of the Digital Markets Act, a landmark EU law that will prohibit Apple and other US tech giants from privileging their own services in its products and platforms.

The EU’s outline of the case came after the commission launched an investigation in 2020 that was fuelled by complaints from European banks that resist paying a fee to Apple in order to reach their customers via apps.

The battle comes as tech giants eye personal finance as a new moneymaker, with Google, Amazon and Facebook owner Meta also seeking ways to replace credit cards or the need of carrying a wallet.

Launched in 2014, Apple Pay allows iPhone or Apple Watch users to make payments at retailers by touching their devices to the same terminals currently used for credit and debit cards.

– ‘Many options’ –

The technology at the heart of concerns in the Apple Pay case is “near-field communication”, or NFC, which permits devices to communicate within a very short range of each other, usually less than 10 centimetres (four inches).

On iPhones, the use of NFC is blocked for payments except by Apple Pay and any company wanting to use the technology must pass through Apple for a fee.

Vestager said that by restricting the access to the NFC to themselves, “this market is really not developed because it’s not possible for other app developers to get access to the NFC.”

Apple said that its first priority was security and that the Apple Pay system offered a level playing field between all actors using its products.

“Apple Pay is only one of many options available to European consumers for making payments, and has ensured equal access to NFC while setting industry-leading standards for privacy and security,” the company said.

“We will continue to engage with the commission to ensure European consumers have access to the payment option of their choice in a safe and secure environment,” it added.

There is no deadline for the EU’s continued investigation. If found guilty, Apple would have to remedy its practices or face fines that could reach as high as 10 percent of annual sales.

Finnish-led consortium Fennovoima said on Monday it has terminated a contract with Russian group Rosatom to build Finland’s third nuclear power plant, citing risks linked to the Ukraine war.

“The contract has been cancelled due to delays and the inability to deliver, and we have seen that the war has increased these risks,” Fennovoima chairman of the board Esa Harmala told reporters at a press conference.

Rosatom said it was surprised by the announcement.

“The reasons for such a decision are completely incomprehensible,” the group said in a statement, adding that the project had been “progressing” and Fennovoima’s management had not discussed the termination of the contract with shareholders.

Rosatom said it might take the matter to court.

“We reserve the right to defend our interests in accordance with the current contracts and current law”, the firm stated.

The proposed 1,200-megawatt Russian-designed reactor was to be built in Pyhajoki, about 100 kilometres (60 miles) from the port of Oulu in northern Finland.

The Hanhikivi 1 project, in which Rosatom owns a 34-percent stake with the remainder held by a Finnish consortium, had been delayed several times and the construction permit had not yet been granted.

Construction was to have begun in 2023 and electricity production in 2029.

Fennovoima, which had already poured 600-700 million euros into the project, said issues with the delivery had accumulated “years before” and the contract was not terminated solely because of the war.

It was not immediately known whether the Finnish consortium would completely scrap its plans to build a new reactor, or seek out a new partner to replace Rosatom.

“It is too early to speculate on the future of the project”, Harmala told reporters.

“This decision does not have a direct impact on the shareholder agreement between the owners of Fennovoima.”

However, Fennovoima chief executive Joachim Specht added it was “too early” to comment on whether Rosatom would stay on as an owner in Fennovoima.

– ‘Significant complexities’ –

The project, which employed 450 people, had been one of the major industrial projects involving a Russian company in the European Union, though there had been many uncertainties about its future.

Two days before Russia’s invasion of Ukraine, the Finnish government had said it was re-evaluating the security risks for the 7.5-billion-euro deal.

Russian nuclear power groups are currently not subjected to European sanctions over the Ukraine war.

Nevertheless, Fennovoima had said in early April it expected the existing sanctions to have an effect on the project.

Harmala stressed on Monday that “we were not pressured in any way”.

Fennovoima said the decision to cancel the contract was “not made lightly”.

“In a such a large project there are significant complexities and decisions are made only after thorough considerations”, it said in a statement.

Finland currently has five nuclear reactors at two plants, both located on the shores of the Baltic Sea, providing about 30 percent of the country’s electricity.

The fifth reactor, Olkiluoto 3 built by the French-German consortium Areva-Siemens, went online in March and will provide 15 percent of Finland’s electricity when it begins producing at full capacity in September.

Stock markets and oil prices fell in holiday-thinned trade Monday as traders digested weak Chinese economic data and a looming US interest rate hike.

Equities kicked off the month of May on the wrong foot after Wall Street finished a tough April by closing sharply down on Friday following disappointing results from tech giant Amazon.

Paris and Frankfurt were down in midday trading while London was closed for a bank holiday.

Tokyo, Seoul, Mumbai, Manila and Wellington all fell. Hong Kong and mainland Chinese markets were closed along with several other Asian markets.

Sydney also retreated, though Qantas shares rose after the airline said it would launch the world’s longest non-stop commercial flight between Sydney and London by the end of 2025.

Data at the weekend showed Chinese manufacturing activity shrank last month at its fastest pace since the start of the pandemic as the government applies Covid-19 lockdowns in the country’s biggest cities.

The government’s refusal to shift from its zero-Covid policy and strict containment measures is fanning fears about the world’s number two economy and key driver of global growth.

“There is a bit of mixed sentiment among traders today,” Naeem Aslam, analyst at AvaTrade, told AFP.

“On one hand you have bargain hunters coming to market but then on the other hand traders are concerned about the weakness on the Chinese economic data,” he said.

– Rate hike looms large –

Investors are also looking ahead at the US Federal Reserve’s two-day policy meeting, which starts Tuesday and is expected to see the central bank hike borrowing costs by half a point — the most since 2000.

Some analysts are predicting the Fed could even announce a three-quarter-point increase at some point as it battles more than 40-year-high inflation.

With some commentators warning rates could go as high as three percent, there are also worries the Fed could be too heavy handed and tip the US economy into recession.

Fed boss Jerome Powell “could cement the view that 50 (basis points) is the new 25, but more worrying for stock pickers, there are lots of QE to unwind”, said SPI Asset Management’s Stephen Innes, referring to the quantitative easing bond-buying programme used by the Fed to keep rates low.

“So, the question is, how much of the impact of the balance sheet runoff” has been priced in.

The struggles in China, the world’s biggest crude importer, led to a drop in prices of the commodity on demand concerns, offsetting worries about tighter supply as the EU eyes a ban on Russian oil over its invasion of Ukraine.

Brent North Sea crude, the international benchmark, was down 2.7 percent at $104.30 per barrel.

The European Commission is currently preparing a sanctions text that could be put to the 27 member states as early as Wednesday, sources said, adding that the ban would be introduced over six to eight months to give countries time to diversify their supply.

– Key figures at around 1040 GMT –

Frankfurt – DAX: DOWN 0.6 percent at 14.014.37 points

Paris – CAC 40: DOWN 1.3 percent at 6.448,41 

EURO STOXX 50: DOWN 1.5 percent at 3.746,88

London – FTSE 100: Closed for a holiday

Tokyo – Nikkei 225: DOWN 0.1 percent at 26,818.53 (close)

Hong Kong – Hang Seng Index: Closed for a holiday

Shanghai – Composite: Closed for a holiday

New York – Dow: DOWN 2.8 percent at 32,977.21 (close)

Euro/dollar: DOWN at $1.0528 from $1.0550 on Friday

Pound/dollar: DOWN at $1.2570 from $1.2578

Euro/pound: DOWN at 83.77 pence from 83.86 pence

Dollar/yen: UNCHANGED at 129.89 yen

West Texas Intermediate: DOWN 3.2 percent at $101.39 per barrel

Brent North Sea crude: DOWN 2.7 percent at $104.30 per barrel

A strike by owners of fuel tankers over the weekend renewed Sri Lanka’s long queues for diesel and petrol on Monday as pumps ran dry, compounding the island nation’s economic and energy crisis.

Sri Lanka is in the grip of a pandemic-spurred economic freefall, the worst since independence from Britain in 1948, which has led to shortages of food and other essentials. 

The lack of fuel has been an especially large sticking point for the government, as petrol prices have increased by 90 percent while diesel — commonly used for public transport — has gone up by 138 percent.

Fuel woes eased slightly last week as supplies arrived under a $500 million credit line from India.

But the salve proved temporary as fuel tanker operators have been on strike since late Saturday, demanding an increase to their prices to ferry the petrol across the country.

Energy minister Kanchana Wijesekera said Monday he needed at least three more days to restore the supplies of petrol and diesel. 

“I appeal to the motorists to bear with us for three more days,” he told reporters in Colombo, adding that the government was trying to hire other mobile container owners not affiliated with the protest.

According to Wijesekera, the union representing tanker operators was demanding a 115 percent increase in fees, outstripping an offer of 95 percent more from state-owned Ceylon Petroleum Corp (CPC).

“We are willing to increase, but not by as much as the tanker operators are demanding,” he said.

“If we give in, the CPC will go bankrupt.”

But the operators say running costs are up due to diesel prices being raised 138 percent, while insurance, spare parts and wages have spiked due to the sharp depreciation of Sri Lanka’s currency.

The rupee has dropped by more than 40 percent against the dollar since March.

Tens of thousands have protested for weeks across the country, with demonstrators also camped daily outside the residence of President Gotabaya Rajapaksa calling for his resignation over alleged corruption and mismanagement of the economy.

Sri Lanka has sought about $3 billion from the International Monetary Fund to overcome the balance-of-payments crisis and boost depleted reserves.

The government has also announced a sovereign default on its huge foreign debt.

Qantas has revealed plans for the world’s longest-duration commercial flight by the end of 2025, ferrying passengers between Sydney and London on Airbus A350s in just over 19 hours.

Only a handful of airlines fly non-stop over such vast distances, which present a host of challenges including the capability of planes, commercial viability, and even the health of crew and passengers.

Here are some of the longest-duration flights in the world today:

Singapore to New York: 18 hrs 40 min

Singapore Airlines Flight SQ24 to New York’s John F. Kennedy International airport is currently the longest commercial journey in the world, taking passengers more than 15,000 kilometres (9,300 miles) from the city-state to the eastern United States on Airbus A350-900s.

It also operates the second-longest journey — Flight SQ22, also on A350-900s, to Newark in the US state of New Jersey is scheduled at 18 hours and 25 minutes.

Qantas will use the A350-1000 variant for its planned Sydney-London flights.

Darwin to London – 17 hrs 55 min

The longest current Qantas route — QF9 — connects Darwin in northern Australia with London daily, with passengers covering almost 14,000 km on Boeing 787 Dreamliners.

The flights were originally operated between London and the western city of Perth, but were moved to Darwin because of Covid-linked travel restrictions in Australia.

Qantas has said it will resume the Perth-London route this year.

Los Angeles to Singapore – More than 17 hrs

Singapore Airlines Flight SQ35 takes passengers more than 14,000 km over the Pacific Ocean from Los Angeles on the US West Coast to the Asian city-state in 17 hours and 10 minutes.

The carrier’s San Francisco-Singapore flight is scheduled at 16 hours and 40 minutes.

New York-Hong Kong in 16-17 hrs?

Cathay Pacific said in March that it was planning to alter its New York-Hong Kong route over the Atlantic instead of the Pacific Ocean, making it a longer journey than Singapore Airlines Flight SQ24 to JFK.

The flight path will cover “just under 9,000 nautical miles” (10,357 miles) — or 16,668 kilometres — in 16 to 17 hours, the airline told AFP in a statement.

It declined to be drawn why its flight path gave a wide berth to Russia’s airspace, which it has previously flown through, according to Bloomberg.

Many airlines have cancelled routes to Russian cities or are avoiding Russian airspace over Moscow’s invasion of Ukraine.

Cathay Pacific said the decision was taken because “strong seasonal tailwinds” made the new route more favourable.

Qantas announced on Monday it will launch the world’s longest non-stop commercial flight, with passengers set to spend 19 hours in the air travelling from Sydney to London by the end of 2025.

After five years of planning, the airline said it was ordering 12 Airbus A350-1000 aircraft to operate the “Project Sunrise” flights to cities including London and New York.

Non-stop flights will start from Sydney by the end of 2025, it said, with long-haul trips later planned to include Melbourne.

“New types of aircraft make new things possible,” said Qantas chairman Alan Joyce, according to a statement.

“The A350 and Project Sunrise will make any city just one flight away from Australia,” he said.

“It’s the final frontier and the final fix for the tyranny of distance.”

Qantas operated research flights for the long-haul route in 2019, including a trial London-Sydney trek of 17,800 kilometres (11,030 miles), which took 19 hours and 19 minutes.

A trial New York-Sydney flight in the same year covered 16,200 kilometres (10,200 miles) and took a little over 19 hours.

Singapore Airlines currently operates the world’s longest non-stop commercial flight from Singapore to New York, covering 16,700 kilometres (10,400 miles) in a little under 19 hours.

Qantas already operates a 14,498-kilometre Perth-London trip that takes 17 hours.

– ‘Maximum comfort’ –

“As you’d expect, the cabin is being specially designed for maximum comfort for long-haul flying,” Joyce said.

Qantas said the new A350 aircraft would be configured for 238 passengers with first-class suites offering a separate bed, recliner chair and wardrobe.

It promised spacier economy sections and a “wellbeing zone” designed for “movement, stretching and hydration”.

Airbus listed the price of the A350-1000 at US$366.5 million (348 million euros) on its 2018 catalogue, the last one it published.

Qantas said it was also ordering 40 A321 XLR and A220 aircraft from Airbus.

In addition, it bought options for another 94 of these planes until the end of 2034.

The A220 models were listed at between US$81 million and US$91.5 million in 2018. The A321 was unveiled after Airbus stopped publishing catalogue prices.

Qantas said the total cost of the deal was a matter of commercial confidence, though it indicated it had obtained a significant discount on the standard price of the aircraft.

“The A320s and A220s will become the backbone of our domestic fleet for the next 20 years, helping to keep this country moving,” Joyce said.

The newer aircraft would reduce emissions by at least 15 percent if running on fossil fuels, and more if using sustainable aviation fuel, he said.

“We have come through the other side of the pandemic a structurally different company,” the airline boss said.

“Our domestic market share is higher and the demand for direct international flights is even stronger than it was before Covid.”

The A350-1000 planes will be powered by Rolls-Royce Trent XWB-97 turbofan engines, designed to be 25 percent more fuel efficient than the previous generation of aircraft, Qantas said.

Japanese energy conglomerate ENEOS Holdings said Monday it will withdraw from a gas project in coup-hit Myanmar, days after its Thai and Malaysian partners announced they would pull out.

ENEOS is the latest energy giant to retreat from the Southeast Asian country, whose military has waged a widespread crackdown on dissent since it ousted and detained civilian leader Aung San Suu Kyi last year.

The company is involved in the Yetagun project off southern Myanmar along with the Japanese government and Mitsubishi Corporation.

Together they hold a 19.3 percent stake in the gas field, which has been operational for two decades.

ENEOS said it had “decided to withdraw after discussions taking into consideration the country’s current situation, including the social issues, and project economics based on the technical evaluation of Yetagun gas fields”.

“This withdrawal will be effective after approval from the Myanmar government,” it added in a statement.

An official at Japan’s natural resources and energy agency told AFP that the government “takes the same position” as ENEOS, noting the Yetagun project has experienced a reduction in output over the past decade.

Malaysia’s Petronas and Thailand’s oil and gas conglomerate PTTEP also announced their withdrawal on Friday. Petronas subsidiary Carigali holds a roughly 41 percent stake in the Yetagun project, while PTTEP owns 19.3 percent.

More than 1,800 civilians have died in Myanmar during the military crackdown and more than 13,000 have been arrested, according to a local monitoring group.

With the economy tanking and pressure mounting from rights groups, companies from France’s TotalEnergies to British American Tobacco and Norway’s Telenor have upped sticks.

Tokyo is a major provider of economic assistance to Myanmar, and the government has long-standing relations with the country’s military.

After the coup, Japan announced it would halt all new aid, though it stopped short of imposing individual sanctions on military and police commanders.