BRUSSELS/VLADIVOSTOK Russia, Sept 7 – The European Union proposed a price cap for Russian gas on Wednesday after President Vladimir Putin threatened to cut off all energy supplies if it did so, raising the risk of rationing in some countries. richest countries in the world this winter.
The escalating stalemate could further push sky-high European gas prices, adding to the already eye-watering bills EU governments are paying to stop their energy providers from collapsing and prevent cash-strapped customers from being frozen out in the cold months ahead.
Europe has accused Russia of weaponizing energy supplies in retaliation for Western sanctions imposed on Moscow over its invasion of Ukraine. Russia blames the sanctions for causing gas supply problems, which it attributes to pipeline faults.
As tensions rose, Putin said contracts could be torn up in the event of price caps and warned the West it risked being frozen like the wolf’s tail in the famous Russian fairy tale.
The EU will propose a ceiling on the price of Russian gas
Putin threatens to cut off all energy supplies. Draft law to support businesses, households.
However, the EU plans to impose a price cap on Russian gas as well as a cap on the price paid for electricity from non-gas-powered generators.
On Friday, EU energy ministers are to meet in an extraordinary manner.
“We will propose a price cap for Russian gas… We must reduce the Russian revenues that Putin is using to finance this brutal war in Ukraine,” European Commission President Ursula von der Leyen told reporters.
The Netherlands, which has consistently opposed a gas price cap, would support one targeting Russian gas, a source familiar with the matter told Reuters on Wednesday.
But the Czech minister said earlier that it should be withdrawn from the agenda of Friday’s meeting. Czechs help lead the discussions as holders of the rotating EU presidency.
NO DELIVERIES
Putin anticipated the move and said Russia would strike.
“We will not supply anything at all if it is against our interests,” Putin said at an economic forum in Vladivostok.
“We will not supply gas, oil, coal, heating oil – we will not supply anything,” Putin said. He also questioned the UN-brokered agreement on grain exports from Ukraine.
Europe typically imports about 40% of its gas and 30% of its oil from Russia.
Eurelectric, the body representing Europe’s electricity industry, also criticized EU plans to cap the price of electricity from non-gas-fired generators at €200 per megawatt hour.
“The root cause of the problem is the lack of gas supplies and our dependence on imported fossil fuels. Governments should try to address this problem rather than resorting to disruptive, ad-hoc interventions in the electricity market,” said Kristian Ruby, Eurelectric’s general secretary.
But shares in European energy companies rallied on the news, with analysts seeing the cap level as better than expected for the industry.
The energy crisis facing Europe has intensified after Russia’s Gazprom ( GAZP.MM ) completely suspended gas supplies via the Nord Stream 1 pipeline to Germany after it said last week it had discovered an engine oil leak during maintenance.
The Russian president said that Germany and Western sanctions affecting the supply of parts are to blame for the malfunctioning of the pipeline.
The impact of price spikes is forcing companies to cut production and governments to spend billions in support to cushion consumers.
New British Prime Minister Liz Truss is expected to unveil her plans on Thursday, with the bill from the price freeze forecast to rise to £100bn.