European gas prices soared, share prices fell and the euro tumbled on Monday after Russia stopped pumping gas to Europe via a key supply route, sending a new tsunami across the country. economy of the European Union that has not yet recovered from the Covid-19 pandemic.
EU governments are racing with multi-billion dollar packages to prevent energy companies from being overwhelmed by a liquidity crisis and to protect households from rising bills after Russian state-owned Gazprom said it would stop pumping gas through the Nord Stream 1 pipeline due to a failure.
Europe has accused Russia of weaponizing energy supplies in retaliation for Western sanctions imposed on Moscow for its invasion of Ukraine. Russia says the West has launched an economic war and sanctions have hampered pipeline operations.
A number of European power utilities have already collapsed and some large generators could be at risk, hit by price ceilings that limit pass-throughs to consumers or caught in hedge bets with gas prices now 400% higher than a year ago. back.
“This has the ingredients for a kind of Lehman Brothers of the energy industry,” Finnish Minister of Economic Affairs Mika Lintila said on Sunday, referring to the US bank that collapsed in 2008 and announced the global financial collapse.
Finland intends to offer EUR 10 billion (US$ 10 billion; R$ 51.1 billion) and Sweden 250 billion SEK (US$ 23 billion; R$ 119.3 billion) in liquidity guarantees for its investment companies. energy. Germany, more dependent on Russian gas than most EU states, has offered a multibillion-euro bailout to energy utility Uniper.
“The government program is a last resort financing option for companies that would otherwise be threatened with insolvency,” said Finnish Prime Minister Sanna Marin.
The benchmark gas price climbed 35% on Monday to 284 euros (R$1,477) per MWh (megawatt-hour), after Russia said on Friday that a leak in Nord Stream 1 equipment meant the pipeline would be closed in addition to last week’s three-day maintenance shutdown.
EMERGENCY PLANS
Russia also sends gas to Europe via pipelines through Ukraine, another important route. But those supplies were also reduced during the crisis, leaving the EU scrambling to find alternative supplies to replenish gas storage facilities for the winter.
Several EU states have unleashed emergency plans that could lead to energy rationing and fuel recession fears, with inflation rising and interest rates soaring.
Some energy-intensive industries in Europe, such as fertilizer manufacturers and aluminum producers, have already reduced production. Other industries, already facing chip shortages and logistical blockages, face skyrocketing fuel bills.
Energy ministers from EU countries are due to meet on Sept. 9 to discuss options to contain rising energy prices, including gas price ceilings and emergency credit lines for energy market participants, a document showed. seen by Reuters.
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