The European Commission is preparing to set a price ceiling for Russian gas: what it will be

Limiting the cost of fuel threatens to quarrel the members of the European Union

On September 9, the European Commission will propose to the EU countries to set a limit on the cost of Russian gas. According to the head of the EC, Ursula von der Leyen, the price limit for “blue fuel” will reduce the Kremlin’s revenues going to finance the special operation in Ukraine. As it turned out. countries of the continent do not have a solidarity position on this issue. Moreover, the gas ceiling threatens to quarrel with the EU members, who understand the energy security of the continent in different ways. Moscow, on the other hand, is watching these discussions from the outside, while not forgetting to warn former partners about a complete halt in the supply of raw materials if the measures proposed by Brussels cause damage to the Russian federal budget.

The EU countries have different views on the subject of setting the marginal cost of Russian energy resources. Hungary, Slovakia and Belgium do not support the proposed “ceiling” in principle, Germany is skeptical about such an initiative, and Poland and Italy, according to the American newspaper Politico, are in favor of setting a price ceiling for all gas imported into the European Union – not only of Russian origin.

Hungary’s position on Russian gas is understandable – Budapest, regardless of any sanctions, has already agreed with Gazprom on the purchase of fuel for the next heating season. Russia’s fuel relations with Slovakia are a little worse: this year Bratislava had to reduce purchases in our country and reorient itself to Norwegian raw materials, but the Slovaks, apparently, do not mind returning to the previous agreements with Moscow. Most German companies have been receiving “blue fuel” from Russia for half a century, so it will be difficult for them to change import schemes. Belgium receives practically no direct Russian gas, but the leaders of this country have made it clear that they are better off without “price ceilings”.

As for the position of Warsaw, the Poles have long shown an extremely aggressive attitude towards Moscow and have not directly purchased “blue fuel” from Gazprom for several years – Poland prefers to spend twice as much money on the purchase of Russian raw materials from European resellers. It is therefore logical that they want in principle to cap the price of any imported gas.

With Italy, the situation is more complicated: previously, almost all the “blue fuel” consumed by the inhabitants of the Apennine Peninsula, until recently, was supplied from Russia. This year the situation has changed: according to the president of the Italian analytical company Nomisma Energia, David Tabarelli, his country has already been able to replace 17 of the 29 billion cubic meters of Russian gas imports, however, “in the event of a cessation of supplies from the Russian Federation, as early as January, Rome will have to face rationing supply of electricity”. Even the most irreconcilable Russian opponents are trying to argue with marginal gas prices – the Czech Republic, currently presiding over the EU, intends to completely remove the issue of limiting gas prices from our country from consideration by the European Commission.

At the same time, the EU countries are gradually implementing plans to reduce the dependence of their energy balance on hydrocarbon supplies from our country. According to Gazprom, in 2022 the countries of the continent reduced the export of Russian “blue fuel” gas to their market (including the UK) by 49%. And according to Ursula von der Leyen, EU members have reduced purchases of Russian gas from 40% of consumption in 2021 to 9% at the moment. At the same time, EU economic commissioner Paolo Gentiloni warns that the coming winter could be “one of the worst in history,” which puts Eurozone powers at risk of falling into recession as a result of strong gas prices.

“The EU is buying up all possible volumes of energy resources from the market in order to reduce dependence on Russian gas,” says Vitaly Gromadin, asset manager at BCS Mir Investments. “Because of these transactions, from time to time, gas prices soar to the sky level, which is felt by the population of Europe.”

Well, how does Russia look at all these European maneuvers around the gas ceiling? “As President Putin said, the introduction of price restrictions on Russian energy carriers has no prospects: in this case, the West is threatened with a complete halt in supplies from our country,” said Igor Yushkov, an expert at the National Energy Security Fund. – The terms of the contracts concluded earlier will be fully implemented, but the cost of fuel fixed in the agreements, if they change, then without prejudice to the domestic budget. And Russia will always manage to turn off gas to the Europeans, who for some reason will begin to present their own, and not at all market price conditions.