(Bloomberg) -- European Union energy ministers backed an initial package of measures to tame the gas crisis, and the bloc pledged to come forward with more next week as the crisis only intensifies.
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Ministers signed off on a deal to curb power demand and grab profits from energy companies to redistribute to struggling consumers. But amid clamor for more action and criticism the commission has been too slow to act, Energy Commissioner Kadri Simson promised to do more.
The gnarly issue of a cap on wholesale gas prices is set to come back on the table again -- even as it’s not clear consensus can be achieved. The commission insists that any price cap has to be accompanied by stricter demand cuts, and not all member states are ready for that. Proposals for an alternative gas benchmark and common gas purchases are also likely to get another hearing.
Overshadowing the meeting in Brussels was the sabotage earlier this week of the Nord Stream pipelines, which has thrown the focus onto security and prompted a rush to bolster defenses. As the bloc plans a stress test of its energy infrastructure, Norway’s allies offered help protecting oil and gas assets.
Habeck signals Russia to blame for Nord Stream destruction; Putin blames “Anglo-Saxons”
Ministers agree initial package of measures
Italy sends navy to protect pipelines
Norway’s armed forces bolster security, and gets help from allies
Gas flows via Ukraine stable; prices fall 7%
Satellites capture first images of pipeline leaks
Draghi warns against distorting market
France mulls shielding businesses from costs
Read this: How Would You Manage Europe’s Energy Crisis?
Norway Gets Help From Allies (5:50 p.m.)
Norway has accepted offers of help from Germany, France and the UK as it increases its presence around oil and gas installations in the North Sea, Prime Minister Jonas Gahr Store told reporters. It has redirected two of its coast guard vessels and a maritime surveillance aircraft to patrol the area, he said.
ConocoPhillips Spots Drones; Ups Security (3:50 p.m.)
ConocoPhillips Skandinavia AS said it has raised the security level and emergency preparedness around its offshore and onshore facilities, and has spotted drones in the area.
The company is cooperating with authorities, it said.
TotalEnergies SE said late Thursday it had spotted an aerial drone close to an oil field in the Danish North Sea, following similar reports from Norway.
EU Sees Stress Test on Infrastructure (3 p.m.)
Energy Commissioner Kadri Simson said she’d work with her home affairs counterpart to propose a stress test on European energy infrastructure as a response to the Nord Stream blasts.
“I will work with my colleague Commissioner Ylva Johansson to propose to the member states a stress test of the physical protection of critical energy infrastructure,” she said. “
“Given the possible serious possible impact of an incident on the internal market and across borders, an EU-wide approach is needed and we will work with member states to define the test scope and timing to reinforce the resilience of the EU energy system to threats.”
Ministers Demand More Action (2:45 p.m.)
Czech Energy Minister Jozef Sikela, whose country holds the rotating presidency, called on the commission to press ahead at pace with more measures to stem the crisis.
Sikela has heard “serious concerns” from member states about the lack of urgency.
“We have to act now,” he told reporters.
Common gas purchases, work on a parallel benchmark gas index, and measures to cut the link between gas and power prices should be considered.
Habeck Points Finger at Russia (2:20 p.m.)
German Economy Minister Robert Habeck indicated that Russia is to blame for the Nord Stream explosions, in the clearest statement yet from a European leader.
“There’s an investigation ongoing and we should wait for the result but that Russia is saying it wasn’t us is like saying I’m not the thief,” he said. “I don’t know who has done the explosions but saying it wasn’t us is not an answer I would trust.”
The Kremlin has denied responsibility.
Habeck Underlines the Challenge (2:15 p.m.)
Habeck underlined the challenge facing ministers as they contemplate measures such as gas price caps: “We need to find a way to reduce prices without risking supply.”
For now, there’s no agreement on any kind of gas price cap. But several member states are still pushing.
“I’m optimistic we’ll find better solution than what is currently on the table,” he told reporters.
‘Progress’ on Oil Price Cap (1:15 p.m.)
There’s been progress in discussions on the oil price cap, according to Poland’s ambassador to the EU, Andrzej Sados.
A new draft on the broader sanctions package will be circulated in coming days for discussion on Monday, he told reporters in Brussels.
Poland is one of the key backers of the plan in the bloc.
How Big Is the Nord Stream Leak? (1 p.m.)
Whichever way you look at it, the amount of natural gas bubbling up in the Baltic Sea from Russia’s ruptured Nord Stream pipelines is massive.
The underwater pipes, damaged by what European and US leaders say was sabotage, contained 778 million cubic meters of gas, based on data compiled by the Danish Energy Agency. That would be enough to meet three days’ supply for Germany, Europe’s biggest user of the fuel. It’s also the same as two-and-a-half days of production from Norway, currently the continent’s top gas supplier.
What Happened to the Caps? (11:45 p.m.)
As the EU moves forward with its first package of measures, it’s becoming increasingly clear that some of its most radical ideas are running into stark divisions within the bloc, as well as market realities.
Some key member states have all but dropped an idea of putting a price cap on gas from Russia. That was meant to cut Moscow’s revenues as well as helping European prices. The idea was also floated of a wider cap that would also cover gas from Algeria and Norway.
The problem is any such measure would endanger supply, at a time when the bloc is desperate for alternative sources of gas. And capping LNG is probably not an option in a vastly competitive global market.
Another idea is a cap on the wholesale gas price, as backed by 15 nations. That’s looking hard to execute as it would require an overhaul of the market.
That leaves the option of capping the price of gas just for power production in order to sever the link between gas and power and alleviate the burden on bills. It’s the narrowest, most modest version of a price cap, though it still comes at a big fiscal cost.
EU Ministers Back Package (11:06 a.m.)
Ministers reached an agreement on an initial energy intervention package, setting a goal to reduce power consumption and agreeing to tap windfall profits of companies and redirect them to customers and businesses.
It includes a binding target for each member state to lower its electricity use by 5% during peak hours during the heating season. It also allows governments to slap levies on fossil-fuel companies and power producers with cheaper inputs, a move the bloc estimates could raise 140 billion euros ($138 billion).
Habeck Says Allies Should Avoid ‘Exploitation’ (10 a.m.)
German Economy Minister Robert Habeck suggested that countries stepping into supply gas to the EU, which include Norway and the US, shouldn’t exploit the skyrocketing prices at Europe’s expense.
“I call on the EU to work for a different negotiation position with those states which are supplying gas,” he told reporters. “Because in this situation, we are in a partnership, and partnership cannot mean exploitation.”
Italy Sends Navy to Protect Pipelines (9:20 a.m.)
Italy is reinforcing protection of strategic trans-Mediterranean pipelines, the Navy said.
Two ships of the Italian Navy, equipped with remote-controlled submarines, are in charge of monitoring key areas in the Mediterranean Sea, specifically around the infrastructures transporting energy from Maghreb countries to Italy, according to a statement.
EU Focuses on Three Steps for Now (9:15 a.m.)
Ministers are likely to sign off on a package based around three main measures -- the easiest ones on which to achieve consensus. A gas cap is not part of the package as it’s proved too controversial, at least for now. The main measures to be approved today are:
A mandatory power demand reduction target at peak hours
A profit-grab on power producers with cheaper input costs -- for example those using nuclear, renewables
A levy on excess profits of fossil-fuel producers. The funds would be redistributed to help struggling consumers
German Finance Chief Says Putin’s ‘Energy War’ Will Fail (9:10 a.m.)
German Finance Minister Christian Lindner said the government is protecting Europe’s biggest economy from the fallout of the energy crisis with an “all-in strategy” and warned Russian President Vladimir Putin that his “energy war” will fail.
Putin’s “goal is clear,” Lindner said in a speech to the lower house of parliament in Berlin ahead of a vote approving the government’s temporary cut in sales tax on gas purchases to 7% from 19%. “Our prosperity should be shaken, our economic structure hit so that in the end our social cohesion erodes, also with the aim of bringing the solidarity that this country has for Ukraine to an end,” Lindner added. “We’re sending out a clear signal that he will fail.”
Sweden Taking Steps to Secure Infrastructure (9:20 a.m.)
Swedish Energy Minister Khashayar Farmanbar said authorities are taking steps to secure energy infrastructure after the Nord Stream blasts, which he said were probably perpetrated by a state actor.
Norway Can’t Avert Sabotage (9 a.m.)
Norway’s security service lacks tools to prevent sabotage against the country’s energy facilities while such risks have increased, public broadcaster NRK reported, citing the agency’s Deputy Chief Hedvig Moe.
Frustration at Slow Pace (8:30 a.m.)
Some member states expressed frustration that more hasn’t been done to reach an agreement sooner to bring down gas prices.
The European Commission set out earlier this week the risks of implementing a gas price cap on its own without additional measures.
Not Safe Enough Yet to Assess Pipeline Damage (8:25 a.m.)
US Defense Secretary Lloyd Austin said he spoke with his Danish counterpart, who said it will still be several days before it’s safe enough to assess the damaged pipelines.
“There is a lot of speculation but quite frankly, until a complete investigation is done, no one will be able to determine for certain what happened,” Austin told reporters in Hawaii.
EU to Focus on Three Steps (8:20 a.m.)
Ministers will focus on three measures that were the easiest to secure consensus around: a reduction of electricity demand, a cap on profits from energy producers with cheap input costs, and a tax on excess profits from fossil fuel companies. A cap on gas prices is not on the table.
Czech Energy Minister Jozef Sikela said more needs to be done, and now.
“This is just the first part in the puzzle. We must not stop here,” Sikela said. “We are in an energy war with Russia. The winter is coming and we have to act now.”
Europe’s Biggest Reactor Reaches Full Capacity (8 a.m.)
Europe’s newest nuclear reactor now has the biggest output too, bringing some relief to the region’s strained electricity market.
Finland’s Olkiluoto-3, which sits on a peninsula by the Baltic Sea, reached full power for the first time last night, its operator Teollisuuden Voima Oyj said.
Germany Warns of Gas Shortage Threat This Winter (7:30 a.m.)
German Economy Minister Robert Habeck said the government’s move to put a lid on gas prices won’t hinder efforts to cut consumption, but he reiterated an appeal for all consumers to use less fuel to avert a shortage this winter.
“We’re still in this emergency situation and if we don’t save, if households don’t reduce usage, then the threat remains that we’ll have too little gas this winter,” Habeck said in an interview with Deutschlandfunk radio.
The EU must also come up with a “unanimous response” to help bring down prices for gas imported into Europe, he added, accusing some countries, even allies, of “making out like bandits.”
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