EU plans to cap Russian gas price as Putin threatens to cut off supply

EU plans to cap Russian gas price as Putin threatens to cut off supply

The European Union on Wednesday proposed capping Russian gas prices, hours after President Vladimir Putin threatened to cut off all supplies if such a move were taken, raising the risk of rationing in some of the world’s richest countries. world this winter.

The escalation of the standoff threatens to push gas prices in Europe even higher, adding to the already exorbitant bills EU governments are paying to prevent their energy providers from going bankrupt and cash-strapped customers. freeze in the cold months ahead.

Europe has accused Russia of militarizing energy supplies in retaliation for Western sanctions imposed on Moscow over its invasion of Ukraine. Russia blames these sanctions for gas supply problems, which it blames on pipeline failures.

EU energy ministers are scheduled to meet urgently on Friday to discuss how to deal with the energy crisis.

“We will propose a cap on Russian gas prices. … We must cut Russia’s revenues that Putin uses to finance this atrocious war in Ukraine,” European Commission President Ursula von der Leyen told reporters.

The Commission will also propose other measures, such as a mandatory cut in electricity use at peak times and a cap on revenue from energy generated from other sources.

In an earlier speech at an economic forum in Vladivostok, Putin anticipated the move, warning that supply contracts could be broken and warning the West that it would freeze like the wolf’s tail in a famous Russian tale.

“Will there be political decisions that contradict the contracts? Yes, we simply will not honor them. We will not supply anything at all if it contradicts our interests,” Putin said.

“We will not supply gas, oil, coal, heating oil, we will not supply anything,” Putin said.

Europe typically imports about 40% of its gas and 30% of its oil from Russia.

The wealthy Group of Seven (G7) democracies announced plans last week to impose a price cap on Russian oil exports, in a move that could also restrict Russia’s ability to source tankers and insurance from outside countries. to the G7.

CRACK IN THE RANKS OF THE EU?

However, there were signs of division among EU members over the price capping plan. A Czech minister said it should be removed from the agenda of Friday’s meeting. The Czechs are helping guide the discussions as holders of the rotating EU presidency.

“In my opinion, it is not a constructive proposal. It is more a way of sanctioning Russia than a real solution to the energy crisis in Europe,” Industry Minister Jozef Sikela was quoted as saying by Czech news agency CTK.

The energy crisis facing Europe has worsened after the Russian company Gazprom completely suspended gas supplies through the Nord Stream 1 pipeline to Germany after it said it had found an oil leak in an engine during work. maintenance last week.

Putin rejected Western claims that Moscow was using the gas as a weapon to crush opposition to its invasion of Ukraine.

The Russian president said that Germany and Western sanctions were to blame for the pipeline not being operational and that Ukraine and Poland decided on their own to cut off other gas routes to Europe.

He asked Germany to return a turbine for the pipeline’s Portovaya compression station that would allow Russia to resume gas pumping.

The impact of rising prices is forcing companies to cut production and governments to spend billions in aid to cushion the impact on consumers.

About half of aluminum and zinc production in the European Union has been forced to halt activity due to the electricity crisis, an industry association said on Wednesday, calling on the bloc to cut costs to avoid permanent closure. of metal-producing plants.

The European electricity industry body urged governments to grant emergency loans to energy companies facing a liquidity problem due to increased collateral needs as electricity prices rise.

In Germany, where the government is spending €65 billion to protect consumers and businesses from price gouging, a survey showed that more than 90% of medium-sized businesses consider rising energy prices and raw materials is a major or existential threat.

Melissa Galbraith
Melissa Galbraith is the World News reporter for Globe Live Media. She covers all the major events happening around the World. From Europe to Americas, from Asia to Antarctica, Melissa covers it all. Never miss another Major World Event by bookmarking her author page right here.