Not a step back from both sides and whoever endures – The Russian president is betting on the heavy winter and the pressure of punctuality, Europe is “investing” in the absence of customers and filling the gap
Europe and Russia are engaged in a dangerous game of ping pong – for the economy and industry, but also for the balance in the world – using the energy crisis and prices in natural gas, electricity and oilwhich affect the entire chain of commercial and economic activity.
The President of the Commission, Ursula von der Leyenofficially announced that Europe will proceed to impose a ceiling on the wholesale market of energy products, in order, on the one hand, to keep prices as low as possible and, on the other hand, to deliver a key economic blow to Moscow.
The reaction of the Kremlin and Vladimir Putin was immediate, formalizing in the clearest way, Moscow’s decision to cut off the supply of natural gas and oil to any countries that adopt the wholesale price ceiling proposal.
Both sides seem determined to stick to their positions until one or the other “breaks”. THE Putin he believes that the pressure of punctuality, especially in view of the coming winter, will be unbearable for Europeans and will cause social upheavals.
Europe, on the other hand, believes that Moscow will find it very difficult to cover the gap in its export balance, which will cause another “leakage” in Russia’s state coffers.
The Commission’s proposal for energy
The European Commission will propose a cap on Russian gas prices, along with measures that would include a mandatory reduction in EU electricity use during peak hours, as well as a cap on the revenue of non-gas power producers, it said today Commission President Ursula von der Leyen.
“We will propose a maximum price for Russian gas … We need to cut off the Russian revenues that Putin is using to finance this horrible war in Ukraine,” von der Leyen told reporters.
Earlier today, the Russian president, Vladimir Putin, stated that the Russia will stop pumping natural gas and oil if a ceiling is imposed on the prices of Russian energy sources.
Five meters
In her statements to the press in Brussels, the president of the Commission briefly developed the European Commission’s plan for dealing with high energy prices, which will be presented to the energy ministers of the EU countries next Friday.
Among other things, the Commission will propose to the member states a mandatory target for the reduction of electricity consumption in peak hours, in view of the Council of Ministers of Energy on 9 September.
“We are facing an extraordinary situation because Russia is an unreliable supplier and is manipulating our energy markets. With unity and solidarity we will prevail!” said the President of the Commission, noting that the storage of natural gas, as a whole in the EU, has reached 82%.
“Through diversification we have increased LNG or pipeline natural gas deliveries from the US, Norway, Algeria, Azerbaijan and other countries. For example, Norway now delivers more gas to the EU than Russia. And we are making huge investments in domestic renewable energy through RePowerEU,” he added.
Continuing, Ursula von der Leyen emphasized that the manipulation of natural gas markets has a secondary effect on the electricity market.
“We are facing astronomical electricity prices for households and businesses and huge market volatility,” he said, setting out a series of “immediate measures” proposed by the Commission to protect vulnerable consumers and businesses:
Firstly, the Commission proposes a “smart electricity saving”, i.e. “a mandatory target to reduce the use of electricity during peak hours”. “We will work closely with member states to achieve this,” noted Ursula von der Leyen.
Secondlythe Commission proposes upper limit on the revenues of companies that produce electricity at low cost. Low-carbon energy sources generate windfall revenues that do not reflect their production costs. “We will propose re-channeling these windfalls to support vulnerable people and companies to adapt,” the Commission President stressed.
Thirdlythe same must be true for the fossil fuel company windfalls. Oil and gas companies also make huge profits. The Commission will therefore propose a solidarity contribution for fossil fuel companies. Member States should invest this revenue to support vulnerable households and invest in clean domestic energy sources.
FourthThe committee proposes the facilitation of liquidity by the member states for energy companies. Energy utilities must be supported to cope with market volatility. They are currently being asked to provide unexpectedly large amounts of capital, which threatens their ability to trade and the stability of future markets. In addition, the Commission will extend the legal framework allowing for the rapid granting of state guarantees.
Fifththe Commission proposes cap on the price of Russian natural gas. “The goal here is very clear. We need to cut the Russian revenues that Putin is using to finance this horrible war against Ukraine,” Ursula von der Leyen stressed.
In conclusion, the President of the Commission pointed out that at the beginning of the war, Russian gas imports by pipeline from Russia were 40% of all imported gas and today it has decreased to 9%. “These are difficult times. But I am convinced that Europeans have the economic strength, the political will and the unity to maintain the upper hand,” he added.
Putin: The pipelines will be closed
The president Vladimir Putin stated today that Russia will start supplying gas to Germany again through the Nord Stream 1 pipeline once the damage to its turbine is repaired and rejected Western claims that Moscow is using natural gas as a weapon.
Speaking as part of the speech he delivered at Eastern Economic Forum held in Vladivostoka city in Russia’s Far East, the Russian president said Germany and Western sanctions were to blame for the Nord Stream 1 pipeline not being operational, and that Ukraine and Poland had unilaterally decided to shut down other pipelines carrying natural gas to Europe.
Europe is facing a looming energy crisis and soaring energy bills after Gazprom completely suspended gas supplies through Nord Stream 1 after what it claimed was an oil leak in its turbine during maintenance work.
“Nord Steam 1 is effectively closed now”, Putin said, calling on Germany to return a turbine for the pipeline’s Portovaya compressor station, which would allow Russia to start sending gas again.
“There’s an oil spill there — it’s a potentially explosive situation, a fire hazard. The turbine can’t work. Give us a turbine and we’ll open Nord Stream 1 tomorrow. But they’re not giving us anything.”Putin said.
Russia will stop pumping natural gas and oil if a ceiling is imposed on the prices of Russian energy sources, he noted.
https://www.youtube.com/watch?v=n2b_0gfV_4E
The Russian president criticized Europe’s calls for a ceiling on the price of Russian natural gas, calling it “stupid” and said Russia would withdraw from its supply contracts if the West imposed a price ceiling on Russian exports.
Moscow will have no problem selling its vast energy resources around the world despite Western sanctions, the Russian president said, arguing that imposing a cap would lead to price increases and that global demand for Russian energy is high.
He also noted that Russia has agreed on all the basic parameters for the sale of natural gas to China through Mongolia.
In fact, regarding the country’s economy, Putin said the country’s budget will show a surplus this year as the Russian economy is on a path of slight contraction for this year.
The budget surplus will reach $24.5 billion in 2022; while GDP will decrease by “about 2% or even a little more,” Putin concluded.
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