Industry
Russian gas will have to be paid in roubles (photo: Gazprom)
EU. On Wednesday 23 March 2022, the European Commission presented a series of ideas to collectively ensure security of supply and reasonable prices for gas in the European Union in the face of the war in Ukraine.
The threats of Russian responses to the multiple sanctions taken by the West, and in particular the freezing of assets ($300 billion of Russian reserves held abroad), make these recommendations even more important. All the more so since Vladimir Putin, on Wednesday 23 March 2022 during a government meeting, warned that he would henceforth demand that "hostile countries" pay for their Russian gas supplies in roubles. "It is clear that delivering our goods to the EU, to the United States, and receiving dollars, euros, other currencies, no longer makes any sense for us," the Russian president asserted.
The government and the Russian Central Bank have been given one week to put this system in place. This declaration comes at a time when Washington has declared an embargo on Russian gas and oil and the European Union is also considering following this position.
The threats of Russian responses to the multiple sanctions taken by the West, and in particular the freezing of assets ($300 billion of Russian reserves held abroad), make these recommendations even more important. All the more so since Vladimir Putin, on Wednesday 23 March 2022 during a government meeting, warned that he would henceforth demand that "hostile countries" pay for their Russian gas supplies in roubles. "It is clear that delivering our goods to the EU, to the United States, and receiving dollars, euros, other currencies, no longer makes any sense for us," the Russian president asserted.
The government and the Russian Central Bank have been given one week to put this system in place. This declaration comes at a time when Washington has declared an embargo on Russian gas and oil and the European Union is also considering following this position.
Minimum stockpiling required
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To tackle the root causes of the emerging problem threatening the gas market for the coming winter season, the European Commission is proposing to legislate on the obligation for Member States to have a minimum level of storage of 80% of their gas reserve capacities, as of 1 November 2022, to guarantee energy supply. This will be increased to 90% in subsequent years with interim targets set between February and October.
It will be up to storage operators to communicate filling levels to national authorities and up to Member States to monitor these levels on a monthly basis and report to the Commission.
To support this effort, the Commission advocates the adoption of a "100% discount on capacity-based transport tariffs at entry and exit points of storage facilities".
It will be up to storage operators to communicate filling levels to national authorities and up to Member States to monitor these levels on a monthly basis and report to the Commission.
To support this effort, the Commission advocates the adoption of a "100% discount on capacity-based transport tariffs at entry and exit points of storage facilities".
Task force for joint gas purchases
The EU is also exploring options for market intervention at European and national levels. It also wants to build on partnerships with third countries to buy gas and hydrogen collectively, as Member States have done to buy vaccines with Covid-19.
The European Commission says it is "ready to create a task force on joint gas procurement at EU level". It would allow for "improved resilience" and demand pooling that would "strengthen the EU's international profile with suppliers to ensure cheap imports for the coming winter", the European Commission said.
In its press release, it said that "the task force would be supported by Member States' representatives in a steering committee. A joint negotiating team led by the Commission would conduct talks with gas suppliers and also prepare the ground for future partnerships with major energy suppliers, which will not be limited to LNG and gas.
The European Commission says it is "ready to create a task force on joint gas procurement at EU level". It would allow for "improved resilience" and demand pooling that would "strengthen the EU's international profile with suppliers to ensure cheap imports for the coming winter", the European Commission said.
In its press release, it said that "the task force would be supported by Member States' representatives in a steering committee. A joint negotiating team led by the Commission would conduct talks with gas suppliers and also prepare the ground for future partnerships with major energy suppliers, which will not be limited to LNG and gas.
