The European Union should cap the price of gas transported by pipeline from Russia to mitigate the effects of market manipulation by Russian President Vladimir Putin. President of the European Commission (EC) Ursula von der Leyen announced this today during her trip to Germany. Former Russian President Dmitry Medvedev responded to her words by announcing that Moscow would stop supplying gas to the Union in that case. At the same time, the head of the EU executive called for energy savings, she should present a concrete plan in mid-September. Finance ministers and central bank governors of countries from the G7 group of developed countries agreed today to introduce a price ceiling for Russian oil and oil products.
Leyenová wants a stop on the prices of Russian gas, which she says will stop supplying it
In the spring, EU states tasked the commission with preparing an analysis of possible price caps due to the unprecedented rise in energy prices related to the Russian invasion of Ukraine.
“I am firmly convinced that it is time to cap the price of gas from Russian gas pipelines to Europe,” said the German politician after today’s meeting with the leadership of the German Christian Democrats (CDU). According to her, in addition to savings, investments in renewable sources are other ways to deal with the rise in gas and electricity prices.
The price of gas for the European market for delivery in October was hovering around 213 euros (5,215 CZK) per megawatt hour (MWh) shortly after midday at the Title Transfer Facility (TTF) virtual trading hub in the Netherlands, showing a decrease of around 13 percent. A year ago it was about 29 euros and two years ago it was about 15 euros/MWh. It started to increase more noticeably last fall, reaching a maximum near 345 euros/MWh shortly after the February invasion of Ukraine by Russian troops, but fell back below 200 euros per MWh the same day. Prices in TTF are decisive for the European market.
Since July, the Russian company Gazprom has reduced the volume of supplies through the Nord Stream gas pipeline to a fifth of its capacity. On Wednesday, it was completely interrupted due to maintenance, but the current records of the capacity reservation for the transportation of the raw material indicate that on Saturday morning the deliveries will resume as planned. However, according to Russian ex-president and current deputy chairman of the Russian Security Council Medvedev, the possible introduction of price ceilings will change this situation.
“There will simply be no Russian gas in Europe,” Medvedev wrote on the Telegram social network, according to Reuters.
The possibility of introducing maximum prices for Russian gas will be discussed in a week by the energy ministers of the EU countries, whose extraordinary meeting was called by the Czech Presidency of the Council of the EU. In response to the rapid rise in prices, more and more countries are talking about capping in recent days. Von der Leyen should present a more detailed procedure on September 14, when she delivers her annual State of the EU message.
The President of the EC emphasized today that the Union has already taken some important steps in the interests of its energy security and efforts to reduce prices. For example, it managed to fill the gas reservoirs by 80 percent already two months before the original goal, she added.
The G7 finance ministers agreed to cap the prices of Russian oil and oil products
Finance ministers and central bank governors from the G7 group of developed countries agreed today to introduce a price ceiling for Russian oil and oil products. The pricing mechanism has yet to be decided, foreign press agencies inform.
On Thursday, the Deputy Prime Minister of the Russian government, Alexander Novak, called the introduction of a price ceiling “absolute absurdity” that destabilizes the entire industry. According to him, Russia will not supply oil or oil products to countries that support the establishment of a price ceiling.
The measure will enter into force on December 5 for crude oil and on February 5 of next year for refined petroleum products. These are the same dates when, as part of the EU’s sixth sanctions package against Russia, a partial embargo on the import of Russian oil and oil products into the EU will begin to apply.
Already in June, the G7 states announced that they would consider capping Russian oil prices as another method of putting pressure on Russia for its aggression against Ukraine. At the same time, Russia is one of the world’s largest oil exporters. US Treasury Secretary Janet Yellen said the measure would also help lower global energy prices.
This year, Russia could increase revenues from the sale of oil up to 337.5 billion dollars (about 8.3 trillion CZK), which is 38 percent more than last year. This follows from a document of the Russian Ministry of Economy, which is available to Reuters.
Novak also stated that Russian companies are ready for the European Union’s December embargo on the import of Russian oil and that they can maintain production at the current level. According to the Deputy Prime Minister’s forecast, mining may amount to 520 to 525 million tons by the end of the year. Last year, Russia extracted 524 million tons of oil.
Last year, 6.8 million tons of crude oil were imported into the Czech Republic, a year-on-year increase of 10.8 percent. Half of it was imported from Russia, according to statistics from the Ministry of Industry and Trade. The second largest importer was Kazakhstan.
The President of the European Commission (EC), Ursula von der Leyen, said today that the European Union should also cap the price of gas transported by pipeline from Russia to mitigate the effects of market manipulation by Russian President Vladimir Putin. Former Russian President Dmitry Medvedev responded to her words by announcing that Moscow would stop supplying gas to the Union in that case.