EU plans Russian gas price cap as Putin warns West of winter freeze

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  • EU proposes to cap the price of Russian gas
  • Putin threatens to cut off all energy sources
  • A rising bill to support businesses, households

BRUSSELS/VLADIVOSTOK Russia, Sept 7 (Reuters) – The European Union proposed a Russian gas price cap on Wednesday after President Vladimir Putin threatened to cut off all energy supplies if he took such a step, increasing the risk of rationing in some of the world’s wealthiest countries this winter.

The escalating stalemate could push gas prices further up in Europe, adding to the already exorbitant bills EU governments are paying to keep their energy suppliers from collapsing and keep customers from running out. money from freezing in the cold months to come.

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

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As tensions mounted, Putin said contracts could be torn up if prices capped and warned the West it risked being frozen like a wolf’s tail in a famous Russian fairy tale. Read more

The EU, however, plans to move forward with a price cap on Russian gas and also a cap on the price paid for electricity from generators that do not run on gas. Read more

EU energy ministers are due to hold an emergency meeting on Friday.

“We will propose a price cap on Russian gas… We need to reduce the revenue from Russia that Putin is using to fund this atrocious war in Ukraine,” European Commission President Ursula von der Leyen told reporters.

The Netherlands, which has always opposed a cap on gas prices, would support one that targets Russian gas, a source with knowledge of the matter told Reuters on Wednesday.

However, a Czech minister said earlier that it should be removed from Friday’s meeting agenda. The Czechs are helping to shape the discussions as holders of the rotating EU presidency.

NO SUPPLIES

Putin had anticipated the move and said Russia would retaliate.

“We won’t provide anything if it contradicts our interests,” Putin told an economic forum in Vladivostok.

“We won’t supply gas, oil, coal, fuel oil – we won’t supply anything,” Putin said. He also questioned a United Nations-brokered deal to export grain from Ukraine.

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

Eurelectric, a body representing the European electricity industry, has also criticized plans for an EU cap of 200 euros per megawatt hour on the price of electricity from generators that do not run on gas.

“The root cause of the problem is a shortage of gas supply and our reliance on imported fossil fuels. Governments should seek to tackle this problem rather than resorting to distortive and ad hoc interventions in the electricity market “, said Kristian Ruby, Secretary General of Eurelectric.

However, European utilities stocks rallied on the news, with analysts viewing the cap level as a better-than-expected outcome for the industry.

The energy crisis facing Europe has deepened after Russia’s Gazprom (GAZP.MM) completely suspended gas supplies through the Nord Stream 1 pipeline to Germany after it said it discovered a leak. engine oil during maintenance work last week.

The Russian president said Germany and Western sanctions affecting parts supply were to blame for the pipeline not being operational.

The impact of soaring prices is forcing companies to cut production and governments to spend billions on support to protect consumers from the impact.

Britain’s new Prime Minister Liz Truss is set to unveil her plans on Thursday, with the bill for a price freeze expected to rise to £100bn. Read more

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Reporting by Reuters Writing by Keith Weir, Editing by William Maclean and Carmel Crimmins

Our standards: The Thomson Reuters Trust Principles.

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