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BRUSSELS/VLADIVOSTOK RUSSIA (Reuters) – The European Union proposed a cap on the price of Russian gas on Wednesday after President Vladimir Putin threatened to cut off all energy supplies if such a step was taken, raising the risks of rationing in some regions. The richest countries in the world this winter.
An escalating standoff could send European gas prices even higher, adding to the eye-draining bills being paid by EU governments to prevent their energy suppliers from collapsing and cash-strapped customers from freezing in the cold months ahead.
Europe accuses Russia of arming energy supplies in response to Western sanctions imposed on Moscow over its invasion of Ukraine. Russia blames those sanctions for causing gas supply problems, which it attributes to pipeline failures.
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With tensions rising, Putin said contracts could be torn apart if prices rise and warned the West not to risk freezing like a wolf’s tail in a popular Russian fairy tale. Read more
However, the EU plans to move forward with capping the price of Russian gas and also capping the price paid for electricity from non-gas generators. Read more
EU energy ministers are due to hold an emergency meeting on Friday.
“We will propose a cap on the price of Russian gas… We must reduce Russia’s revenue that Putin is using to finance this brutal war in Ukraine,” European Commission President Ursula von der Leyen told reporters.
A source familiar with the matter told Reuters on Wednesday that the Netherlands, which has consistently opposed a cap on gas prices, would support a cap targeting Russian gas.
But a Czech minister said earlier that it should be removed from the agenda of Friday’s meeting. The Czechs help guide the discussions as the rotating EU Presidency.
no supplies
Putin anticipated this move and said Russia would respond.
“We will not offer anything at all if it is against our interests,” Putin said at an economic forum in Vladivostok.
“We will not save gas, oil, coal and heating oil … We will not save anything,” Putin said. He also questioned a UN-brokered deal to export grain from Ukraine.
Europe usually imports about 40% of its gas and 30% of its oil from Russia.
Euroelectric, a body representing the European electricity industry, has also criticized EU plans to put a cap of €200 per megawatt-hour on the price of electricity from non-gas-fired generators.
said Christian Ruby, general secretary of Euroelectric.
However, European utilities stocks rose after the news as analysts viewed the cap level as a better-than-expected result for the industry.
The energy crisis facing Europe has become more acute after Russia’s Gazprom (GAZP.MM) All suspended gas is supplied via Nord Stream 1 pipeline to Germany after it said it found an engine oil leak during maintenance work last week.
The Russian president said German and Western sanctions that affected the supply of spare parts were to blame for the pipeline’s failure to operate.
The impact of higher prices is forcing companies to cut production and governments to spend billions on subsidies to protect consumers from the impact.
New British Prime Minister Liz Truss is expected to reveal her plans on Thursday, with the price-freezing bill expected to rise to £100 billion. Read more
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(Reporting by Reuters) By Keith Weir; Editing by William MacLean and Carmel Crimmens
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