Good intentions. Where Europe is heading with opposition to Russian gas

MOSCOW, September 9 — PRIME, Andrey Karabyants. The need to introduce in the EU a “ceiling” of prices for gas supplied to the community countries through pipelines from Russia, said the head of the EC. The bloc’s energy ministers will review the initiative, as well as other measures proposed to deal with the energy crisis, at an extraordinary meeting on September 9. In response, the President of the Russian Federation warned that Western “partners” could completely lose energy resources from Russia if they tried to deprive her of the corresponding income. What this could lead to, understood “Prime”.

GOOD INTENTIONS WITHOUT RUSSIAN GAS

The President of the European Commission (EC) Ursula von der Leyen and her supporters in the all-European structures in Brussels insist on the introduction of a cap on prices for natural Russian gas supplied to Europe via pipelines. According to the head of the EC, this will reduce Moscow’s income from the export of energy resources, which are used, among other things, to finance a special military operation (SVO) in Ukraine. In addition, the EC hopes that the introduction of a price ceiling will help overcome the energy crisis in Europe. Due to the reduction in supplies from Russia this winter, the European market may experience a shortage of “blue fuel”, despite record high prices. In addition, the high cost of gas has led to a rapid increase in electricity tariffs for households and industrial enterprises.

In turn, the finance ministers of the G7 (G7) countries expressed their support for the plan to limit prices for Russian gas.
Western media reports that the price ceiling for Russian gas offered by the EC is 50 euros per MWh (about $520 per thousand cubic meters). This is four and a half times lower than the price at which gas was traded on the Title Transfer Facility (TTF) hub index in the Netherlands on September 7.
In addition, the EC proposes to introduce rationing of fuel supplies to the population and industrial enterprises, as well as to create a single company that will purchase gas in Russia for all consumers in the EU.

However, the introduction of a price ceiling for Russian natural gas in the EU is a belated measure. Russia has significantly reduced energy exports to Europe. Now it enters the European market through only two routes: in transit through Ukraine and through the Turkish Stream gas pipeline. Exports via the Yamal-Europe and Nord Stream gas pipelines have been completely halted.

Germany, which now receives small volumes of Russian gas through Ukraine, has suffered the most from the reduction in supplies. Until 2022, Germany was the largest consumer of Russian gas. According to the German Ministry of Economy, in 2021, supplies reached 50.7 billion cubic meters, providing 55% of the country’s natural gas needs.

“The share of Russian pipeline gas that we buy has fallen to 9% of total imports … last year it was 41%,” von der Leyen admitted in an interview with European media.

Since the beginning of the year, Gazprom has reduced the export of this fuel to the EU by 48% in annual terms, and to Europe, including the UK, by 49%, the company said in its Telegram channel.

At an extraordinary meeting of EU energy ministers scheduled for September 9, the head of the EC will also propose other measures to overcome the energy crisis: a mandatory reduction in electricity consumption during peak hours in all EU countries and the withdrawal of excess profits from companies that use other sources instead of gas to generate electricity types of fuel.

PUTIN’S WARNING

Vladimir Putin, speaking at the Eastern Economic Forum (EEF), warned European partners in advance that their attempts to limit Russia’s income from energy exports are doomed to failure.

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

The Russian President emphasized that in the event of attempts to set a price ceiling for any Russian energy carriers, their supplies to Europe would be completely cut off.

“We will not supply gas, oil, coal, fuel oil. We will not supply anything,” Putin stated unequivocally.

DIVISION IN THE RANKS OF EUROPEANS

In connection with the intention of the EC to introduce a price threshold for Russian gas, a split has emerged among EU members.

“This is not a constructive proposal, in my opinion. It’s more like another way to impose sanctions on Russia than a way to solve the energy crisis in Europe,” Czech Industry Minister Josef Sikela told the STK news agency.

In the Czech Republic, which receives oil and gas from Russia via pipelines, mass protests have already taken place against rising tariffs for electricity and hot water.

In addition to the Czech Republic, Hungary opposes the introduction of a price ceiling. The government of this country has signed a number of agreements to increase the supply of Russian gas. According to the consulting agency Energy Prices, the population of this country pays the least for gas in Europe. According to the agency, the British pay the most for electricity in Europe, followed by the Italians, but their bills are 30% less. The most expensive gas costs the population in the Netherlands, in the “honorable” second place is Germany.

On the evening of September 7, the official proposals of the EC were published, from which it follows that the proposed emergency measures in the energy sector, including the introduction of a “ceiling” on Russian gas prices, are temporary.