Ukraine’s President Volodymyr Zelensky accused Russia of economic terrorism on Monday as the cost of Europe’s energy crisis spiralled with Germany on the hook for at least 19 billion euros to bail out its biggest importer of Russian gas.
A surge in gas prices as top exporter Russia cuts supplies has squeezed German utility company Uniper, prompting it to seek an extra 4 billion euros ($4 billion) in credit lines from Berlin, on top of a 15 billion euro bailout deal agreed last month.
How to respond to the crippling impact of soaring energy costs on business and households is top of the political agenda across the continent as autumn approaches.
The Czech Republic, which holds the rotating European Union presidency, called an emergency meeting of energy ministers for Sept. 9 when it will propose a cap on the price of gas used for electricity production.
“What is going on is really a pan-European problem, it has an impact on all countries, on some less and on some more. And that is why we are convinced the best solution is a Europe-wide solution," Czech Industry Minister Jozef Sikela told a news conference.
German benchmark power prices for 2023 breached 1,000 euros per megawatt hour for the first time on Monday as supply concerns kept prices of gas and related fuels such as electricity and coal sky-high.
“Russia is using economic terror," Zelenskiy told an energy industry conference in the Norwegian city of Stavanger.
“It is exerting pressure with price crisis, with poverty, to weaken Europe," Zelenskiy told the audience via a translator.
His comments come as Russia’s Gazprom plans maintenance this week that will halt gas flows along the Nord Stream 1 pipeline that links Russia and Germany via the Baltic Sea.
The outage has fuelled fears that Russia is curbing supply to put pressure on Western nations opposed to its invasion of Ukraine, a charge Moscow denies.
“NO LEHMAN BROTHERS RERUN"
Countries such as Germany and Italy, heavily reliant on Russian gas imports for their energy, have been building up storage levels ahead of the cold winter months when demand peaks.
German Economy Minister Robert Habeck said that German gas storage facilities were more than 80% full and he expects prices to retreat. Italy has hit a similar level, giving a cushion against further supply shocks.
Germany would get through the winter better than some people thought a short time ago, Chancellor Olaf Scholz said on Monday.
Habeck also stressed that Germany will not allow a Lehman Brothers-style domino-effect to happen on its gas market.
“I promise on behalf of the German government that we will always ensure liquidity for all energy companies, that we don’t have a Lehman Brothers effect on the market," said Habeck, referring to the U.S. investment bank’s collapse, which helped trigger the 2008 financial crisis.
There was a less upbeat prediction from the head of gas major Shell who warned the gas shortages could persist.
“It may well be that we will have a number of winters where we have to somehow find solutions," Shell CEO Ben van Beurden told a news conference at the industry meeting in Stavanger.
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