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EU plans joint gas purchases but at odds over Russia oil embargo amid energy crunch
Home > Top Stories > EU plans joint gas purchases but at odds over Russia oil embargo amid energy crunch
Global Banking & Finance Review®
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By Philip Blenkinsop and Ingrid Melander
BRUSSELS (Reuters) -European Union leaders on Friday backed plans to buy gas jointly and won a pledge from the United States to supply them with more LNG, both steps aimed at helping the bloc face an energy crunch heightened by Russia’s invasion of Ukraine.
“We’re coming together to reduce Europe’s dependence on Russia’s energy,” U.S. President Joe Biden told reporters in Brussels as he announced the liquefied natural gas (LNG) deal. “We should not subsidise Putin’s brutal attack on Ukraine.”
But, as the second day of an EU summit got underway, it was clear the bloc’s leaders were still at odds over whether to ban Russian oil and gas imports, and over proposals by Spain and others to cap energy prices for consumers.
As regards the LNG deal, analysts say there is no spare gas available in the world, meaning it is unclear where this additional supplies could come from.
The invasion by Europe’s top gas supplier has pushed already-high energy prices to records and prompted the EU to pledge to cut Russian gas use by two-thirds this year by hiking imports from other countries and boosting renewable energy.
“The energy bill is insanely high … and that bill has to go down and we can do that as European countries if we work together”, Belgium’s Prime Minister Alexander De Croo told reporters.
“That means, buying gas together … and putting in place a sort of handbrake to have a price cap when prices are too high.”
Slovenian Prime Minister Janez Jansa said all countries supported joint gas purchases to tame prices.
“There is a solution,” he said on arrival for the summit. “It is common European purchases, common logistics, common building of gas storage capacity.”
The European Commission said on Wednesday it was ready to lead negotiations pooling demand and seeking gas ahead of next winter, following a similar model through which the bloc bought COVID-19 vaccines on behalf of member states.
Russia supplies 40% of the EU’s gas needs and more than a quarter of its oil imports.
EMBARGO?
That dependency on energy from Russia means the question of whether to impose an embargo, as the United States has done, is much tougher – and divisive – in Europe, and no decision was expected on Friday.
Those most dependent on this supply are reluctant to take a step that would have a major economic impact.
Poland’s Prime Minister Mateusz Morawiecki said Germany, Hungary and Austria were among the most reticent about imposing a ban on oil and gas imports from Russia.
A group that includes Germany and Netherlands are expected to push back on proposals to cap prices, diplomats said.
The United States will work to supply 15 billion cubic metres (bcm) of liquefied natural gas (LNG) to EU markets this year as part of the new deal announced on Friday, the transatlantic partners said.
EU Commission chief Ursula von der Leyen said this was “a big step” towards reducing the bloc’s energy dependency on Russia.
However, since U.S. plants are already producing LNG at full capacity, analysts said most of the additional gas going to Europe would have to come from exports that would have gone to other parts of the world.
The longer-term objective would be to ensure, until at least 2030, about 50 bcm per year of additional U.S. LNG, von der Leyen and Biden said.
(Reporting by John Irish, Sabine Siebold, Jan Strupczewski, John Chalmers, Benoit Van Overstraeten; Writing by Ingrid Melander; Editing by John Chalmers)
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