Russia is utilizing gasoline as ‘weapon of conflict,’ says French ecology minister, as Gazprom suspends supply

Russia is utilizing vitality provides as a “weapon of conflict”, France mentioned on Tuesday after Russia’s Gazprom minimize deliveries to a significant buyer within the nation whereas additionally planning to close its foremost gasoline pipeline to Germany for 3 days this week.

Western nations worry that Moscow is intentionally driving up gasoline costs to attempt to weaken their opposition to its invasion of Ukraine, a tactic Ukrainian President Volodymyr Zelenskyy on Monday dubbed “financial terrorism”. 

“Very clearly Russia is utilizing gasoline as a weapon of conflict and we should put together for the worst case state of affairs of a whole interruption of provides,” France’s Vitality Transition Minister Agnes Pannier-Runacher mentioned.

She was talking to France Inter radio after French utility Engie mentioned it will obtain much less gasoline from Gazprom from Tuesday due to an unspecified contractual dispute.

By Tuesday night, the Russian gasoline big introduced that it’ll droop its gasoline deliveries to Engie from Thursday as a result of French firm’s failure to pay for all deliveries made in July.

“Gazprom Export has notified Engie of a full suspension of gasoline deliveries from 1 September, 2022 till the receipt in filled with the monetary sums due for the deliveries,” the Russian group mentioned in an announcement printed Tuesday night on its Telegram account.

Moscow has insisted that European international locations ought to pay for Russian gasoline in roubles — a solution to preserve its forex afloat amid extreme Western sanctions as a result of its aggression towards Ukraine.

Nord Stream 1, the primary conduit for Russian gasoline into Europe, has turn out to be a flash level within the dispute. Europe faces an additional squeeze on provides this week as Gazprom shuts off the pipeline for upkeep from Wednesday until the early hours of Saturday.

Russia has been pumping gasoline by way of Nord Stream 1 at solely 20% of capability and there are fears that this week’s outage might be prolonged.

Kremlin spokesman Dmitry Peskov mentioned on Tuesday that technological issues attributable to Western sanctions on Russia are the one factor standing in the way in which of supplying gasoline by way of Nord Stream 1.

European governments are attempting to coordinate a response to hovering vitality prices for companies and households and to fill storage amenities forward of peak demand within the winter.

‘Costs are insane’

EU vitality ministers will maintain an emergency assembly on 9 September to debate the disaster.

Germany, Europe’s largest economic system, is open to discussing a price-cap scheme on gasoline provides at a European stage, a supply in Italy instructed Reuters, citing a textual content message Germany’s economic system minister despatched to his colleagues throughout the bloc.

The supply mentioned Robert Habeck despatched a message to EU vitality ministers flagging that Berlin was open to debate the value cap at subsequent week’s assembly.

Italian Prime Minister Mario Draghi has been pushing for a worth cap and has additionally known as for steps to decouple the price of electrical energy from the gasoline worth. Such a transfer would permit European households to get the advantages from electrical energy produced from cheaper sources reminiscent of renewables.

The chief government of German vitality agency Wintershall Dea mentioned on Tuesday that present worth ranges meant demand for gasoline would fall in the long run.

“The costs we’re having at the moment are insane. That’s nothing even a gasoline producer is on the lookout for as a result of ultimately, we’re going to massively destroy demand for our product,” Mario Mehren instructed reporters on the sidelines of a convention in Norway.

Benchmark Dutch wholesale gasoline costs rose on Tuesday afternoon after an preliminary retreat. The front-month gasoline contract was up 1.5% at €271/MWh, off all-time highs hit final week however nonetheless buying and selling at ranges greater than 5 occasions these seen a yr in the past.