EU panic over gas crisis as VDL leads charge to ‘reduce dependency’ on Putin

Brussels infighting threatens to erupt as energy crisis

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It comes as European Commission President Ursula von der Leyen vowed on Tuesday to establish a joint gas reserve for EU nations, in a bid to stem the ongoing energy crisis in Europe. At a dinner discussion in Slovenia last night, the Spanish Prime Minister outlined a joint statement that had been signed by his country, along with France, the Czech Republic, Greece and Romania.

In it, they called for an investigation into the current state of affairs in the EU gas market to “understand why current gas contracts have been insufficient”.

The five states also proposed an EU-wide approach to purchasing gas, as well as reforms to the EU’s wholesale electricity market.

They also called for limiting speculation with CO2 credits under the EU’s emissions trading system to ensure “a more predictable carbon price” with “less volatility”.

It comes as Ms von der Leyen announced that EU leaders will discuss the notion of establishing an EU strategic gas reserve later this October.

Speaking to reporters in Estonia, she also suggested that EU electricity prices could be decoupled from gas prices under new measures.

Global natural gas prices have been rising sharply since April as economies begin to unlock from the coronavirus pandemic, with the cost of the commodity 280 percent higher in Europe this year.

Meanwhile, gas-producing Russia has been accused of not increased exports to meet demand.

Ms von der Leyen told reporters that the EU was “heavily dependent” on gas imports, with 90 percent being imported into the economic union.

“Globally the economies are picking up so demand is rising, but the supply is not rising accordingly,” she said.

“We are very grateful that Norway is stepping up its production, but this does not seem to be the case in Russia.”

Though she stressed that the EU would have to invest in renewable energies as part of efforts to reduce dependence on gas, “in the short term, we will discuss […] a strategic reserve”.

In 2019, almost three-quarters of the EU’s imports of natural gas came from Russia – accounting for 41 percent of the bloc’s supplies.

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According to Eurostat, the EU received most of its natural and liquified natural gas in 2019 from Russia.

However, the Financial Times is reporting today (Wednesday) that gas markets swung sharply after Russian president Vladimir Putin said he was willing to stabilise soaring global energy prices.

Mr Putin said that Gazprom – the state-owned energy company – was already exceeding its contractual obligations to Europe by “more than 8 percent”.

Russia is also awaiting approval for the Nord Stream 2 pipeline, which would send gas to Germany while circumventing Ukraine.

One French minister has already railed against the current EU pooled energy market, calling it “obsolete” and “aberrant” in televised remarks.

According to French newspaper Le Parisien, minister for the economy Bruno Le Maire said “the French are paying the bill in a way that they cannot understand and that is totally inefficient from an economic point of view.”

He continued: “In France, we get our electricity from nuclear power plants and hydraulic power.

“We therefore have carbon-free energy and a very low cost, but the market […] means that electricity prices in France are aligned with gas prices.”

“We have to completely review [its] operation,” Mr Le Maire stated.

The UK is also suffering from soaring global gas prices, with many small energy firms going bust in recent weeks.

Business Secretary Kwasi Kwarteng has largely opted to allow the UK energy market to deal with the crisis without government intervention, while protecting customers with the energy price cap.

In a statement to the House of Commons on Sept. 20, Business Secretary Kwasi Kwarteng said: “We have sufficient capacity and more than sufficient capacity to meet demand, and we do not expect supply emergencies to occur this winter.

There was “absolutely no question” of “the lights going out, or people being unable to heat their homes.

“There’ll be no three-day working weeks, or a throw-back to the 1970s. Such thinking is alarmist, unhelpful and completely misguided.”

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