The EU will propose a ceiling on the price of Russian natural gas Putin threatens to cut off all energy supplies The bill for supporting businesses, households is increasing
BRUSSELS/VLADIVOSTOK Russia, Sept 7 (Reuters) – The European Union proposed a price cap on Russian natural gas on Wednesday after President Vladimir Putin threatened to cut off all energy supplies if it took such a step, raising the risk of a glut in some of the richest countries in the world this winter. The escalation of the standoff could push up European gas prices further, adding to the already exorbitant bills EU governments are paying to stop their energy suppliers from collapsing and prevent cash-strapped customers from being frozen out in the cold months ahead. . Europe has accused Russia of rigging energy supplies in retaliation for Western sanctions imposed on Moscow over its invasion of Ukraine. Russia blames these sanctions for causing gas supply problems, which it attributes to pipeline faults. Sign up now for FREE unlimited access to Reuters.comSign up As tensions rose, Putin said contracts could be scrapped in the event of price caps and warned the West it risked being frozen like the wolf’s tail in a famous Russian fairy tale. read more However, the EU plans to push ahead with a price cap on Russian gas and also a cap on the price paid for electricity from non-gas-fired generators. read more EU energy ministers are due to hold an emergency meeting on Friday. “We will propose a price cap for Russian natural gas… We need to cut Russia’s revenues that Putin is using to finance this horrible war in Ukraine,” European Commission President Ursula von der Leyen told reporters. The Netherlands, which has steadfastly opposed a cap on the price of natural gas, would support what Russian gas is targeting, a source with knowledge of the matter told Reuters on Wednesday. However, a Czech minister said earlier that it should be removed from the agenda of Friday’s meeting. The Czechs help steer the discussions as holders of the EU’s rotating presidency.
NO SUPPLIES
Putin had predicted the move and said Russia would respond. “We will provide absolutely nothing if it conflicts with our interests,” Putin told an economic forum in Vladivostok. “We will not supply natural gas, oil, coal, heating oil – we will not supply anything,” Putin said. He also challenged a United Nations-brokered deal to export grain from Ukraine. Europe typically imports about 40% of its natural gas and 30% of its oil from Russia. Eurelectric, a body representing the European electricity industry, also criticized plans for an EU cap of €200 per megawatt hour on the price of electricity from non-gas-fired generators. “The root cause of the problem is the lack of natural gas supply and our addiction to imported fossil fuels. Governments should seek to address this instead of resorting to distorting, ad-hoc interventions in the electricity market,” said Kristian Ruby, Secretary General of Eurelectric. However, European utility shares rallied on the news with analysts viewing the cap level as a better-than-expected result for the sector. The energy crisis facing Europe became more acute after Russia’s Gazprom ( GAZP.MM ) completely suspended gas supplies through the Nord Stream 1 pipeline to Germany after it said it found an engine oil leak during maintenance work last week. The Russian president said German and Western sanctions affecting the supply of parts were to blame for the pipeline not operating. The impact of the price spike is forcing companies to cut production and governments to spend billions on support to cushion consumers from the impact. Britain’s new prime minister Liz Truss is expected to unveil her plans on Thursday, with the bill from the forecast price freeze rising to £100bn. read more Sign up now for FREE unlimited access to Reuters.comSign up Reporting by Reuters Writing by Keith Weir Editing by William Maclean and Carmel Crimmins Our Standards: The Thomson Reuters Trust Principles.
