EU countries failed to agree on limiting Russian gas prices

European Union (EU) energy ministers in Brussels during an emergency meeting of the EU Energy Council on September 9 failed to agree on a cap on Russian gas prices, Reuters reported, citing two unnamed diplomats.

“There was a big debate about capping gas prices. And the European Commission (EC) should come up with a proposal that will help reduce prices for all [импортируемый в ЕС] gas, but at the same time will not jeopardize gas supplies to Europe,” one of the interlocutors explained to Reuters.

Bloomberg sources explained that the EU countries are in no hurry to limit prices only for Russian gas due to fears that the Russian Federation in response may completely stop its supplies. The fact that Russia will not sell energy resources to the EU on unfavorable terms for itself was said by Russian President Vladimir Putin on September 7 at the WEF-2022 in Vladivostok, calling the idea of ​​an administrative way to limit gas prices from Russia “nonsense and nonsense.” “Will any decisions of a political nature be made that contradict the contracts? Yes, we simply will not fulfill them! And we won’t supply anything at all if it contradicts our interests,” Putin warned.

Also on September 7, the President of the Russian Federation announced that Russia and China agreed the main parameters of gas supplies, including the price, through the Power of Siberia-2 pipeline currently being designed with a capacity of 50 billion cubic meters. m per year.

On the same day, the head of the EC, Ursula von der Leyen, said that the European Commission considers the possibility of limiting gas prices not only from the Russian Federation, but also from other countries, including pipeline and liquefied natural gas (LNG). The French newspaper Politico wrote that the draft document developed by the European Commission proposes to limit Russian gas prices to 50 euros per MWh (about $528 per 1,000 cubic meters). The head of the EC did not name these figures.

The cost of gas in the EU began to grow in the fall of 2021, when TTF quotes for the first time overcame the bar of $2,000 per 1,000 cubic meters. Volatility in the gas market increased with the start of a special military operation (SVO) in Ukraine and the introduction of new sanctions against the Russian Federation, which created risks to cut fuel supplies. In early March, spot gas prices in Europe approached $3,900 per 1,000 cubic meters. m, but then stabilized around $2000.

According to the ICE exchange, on September 9, futures for gas supplies in October traded at a price slightly above $2,000 per 1,000 cubic meters. m.

Even before the start of the emergency meeting in Brussels, it became clear that the opinions of EU energy ministers on limiting prices for Russian gas were divided. Austrian climate minister Leonore Gewessler said that Vienna cannot now support the European Commission’s proposal. “We were able to reduce our dependence on Russian gas from 80% to less than 50%. But we’re still addicted [от поставок из РФ]”, – she said (hereinafter, quotes from TASS).

Vice-Chancellor, Minister for Economic Affairs and Climate Protection of Germany Robert Habek said that only countries that “still receive gas from Russia” should introduce a price ceiling. Belgian energy minister Tienne van der Straeten and Polish climate and environment minister Anna Moskva said that to overcome the energy crisis in Europe, a price ceiling should be set on all imported gas. “We need to put a ceiling on all gas to be able to control our bills and get energy prices down,” Van der Straeten said.

From April 1 Moscow translated payment for gas supplies to unfriendly countries, including EU states, from dollars and euros to rubles. Those companies that did not agree to the new payment scheme were forced to buy gas from other countries or buy Russian gas from those who agreed to convert the payment into the Russian national currency. “Gazprom» stopped deliveries to Poland and Bulgaria, some companies from Germany, the Netherlands, Finland, etc.

In May, the “GTS Operator of Ukraine” stopped the transit of Russian gas to Europe through one of the two gas measuring stations (GIS) – “Sokhranovka” on the border with the LPR, which led to a reduction in supplies through the Ukrainian GTS by half (on average “Gazprom“now pumps 41-42 million cubic meters. m per day). In June, supplies began to decline through the Nord Stream 1 gas pipeline with a capacity of 55 billion cubic meters. m per year (167 million cubic meters were pumped per day) due to problems with equipment Siemensand in early September they were completely stopped.

Now Russia exports gas to the EU in two directions – through the Sudzha point of the GTS of Ukraine and through the Balkan branch of the Turkish Stream. According to Gazprom, over the eight months of 2022, gas exports from Russia to non-CIS countries decreased by 37%, to 82.2 billion cubic meters. m.

On September 9, Turkish President Recep Tayyip Erdogan said that he had discussed gas prices with the Russian President and “hopes for a discount” when buying it, Bloomberg reported.

The prospect of introducing a cap on Russian gas prices is vague, and the initiative itself is untimely in the face of energy shortages at the very beginning of the heating season in the EU, says senior analyst Alfa Bank Nikita Blokhin. According to his estimates, gas reserves in Germany’s underground storage facilities, which are more than 85% full, will last “for one and a half to two months.” “With the preservation of LNG imports, despite competition from the Asia-Pacific market, Europe will not be able to survive a moderately cold winter without Russian gas supplies,” Blokhin said.

The decision of the EU to limit prices for Russian gas, according to Sergey Glandin, a partner at the NSP law firm, should be taken within the framework of the Common Foreign Policy and Security (Chapter 2, Section V of the EU Treaty). Such a decision will have to be approved by the EU Council with the consent of all EU countries. To block, according to the lawyer, an objection from any EU state will be enough, for example, Hungary. But in the case of consensus, such a decision, he said, can be approved relatively quickly – within weeks.

According to Blokhin, the EU countries will probably return to a substantive discussion of this initiative only after the end of the heating season. Stock market expertBCS World of Investments” Yevgeny Mironyuk adds that the EU may speed up the introduction of a price ceiling for Russian gas if pipeline deliveries continue to drop critically.