Russia’s Gazprom says gas flows to Europe will remain shut after G7 agree price cap to stifle Putin’s war machine

Russia’s Gazprom says gas flows to Europe will remain shut after G7 agree price cap to stifle Putin’s war machine
Russia’s Gazprom says gas flows to Europe will remain shut after G7 agree price cap to stifle Putin’s war machine

Russia’s Gazprom said natural gas supplies to Europe through the Nord Stream 1 gas pipeline would remain closed.

It comes after G7 finance ministers agreed to impose a price cap on Russian oil exports in a bid to limit funding for President Vladimir Putin’s war in Ukraine.

Gazprom said it was not restoring supply to Europe because the main gas turbine at the Portovaya compressor station near St Petersburg could not operate safely until a leak was found. fixed. He did not say when supplies would be restarted.

The G7 decision was taken during a virtual meeting of the group, made up of seven of the world’s richest countries – the UK, US, Canada, Italy, France, Germany and Japan – Friday afternoon.

Confirming the news, Chancellor Nadhim Zahawi said: “We will reduce Putin’s ability to fund his war from oil exports by banning services, such as insurance and the provision of finance, to ships carrying Russian oil. above an agreed price ceiling”.

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The ceiling price has not yet been decided.

A statement from G7 finance ministers said it would be set by the whole coalition before being implemented in each country.

Despite selling less oil since invading Ukraine in February, Russia earned £600m more from oil sales in June than in the previous month due to the surge war-induced prices.

In addition to limiting Russia’s revenues, it is hoped that the price cap may also bring down rising energy prices around the world.

Speaking after the announcement, Mr Zahawi said the move would “protect our citizens from oil price shocks next year”.

He added: “This is a significant step forward.

“It will mean that Putin cannot take advantage of excessively high oil prices and of course protect us all from oil price shocks next year and beyond.”

Image:
Chancellor Nadhim Zahawi

“Putin’s strategy will not work”

The G7 decision comes after Mr Zahawi met Treasury Secretary Janet Yellen in Washington on Wednesday for talks on how to tackle the cost of living crisis.

Sky News understands the meeting was important in bringing the two countries into sync on the price cap.

Mr Zahawi said G7 ministers would discuss strategies to implement the cap in December and then put it in place in February.

Energy bills will skyrocket for millions of UK households before that, after Ofgem has raised its October price cap by 80% – plunging many into financial difficulties.

A heroic wish list that remains very short in detail

Paul Kelso

Trade correspondent

@pkelso

G7 and EU countries have already pledged to cut or curb imports of Russian oil and gas.

The ‘price cap’ announced by G7 finance ministers today is an attempt to further stifle Moscow’s fossil fuel revenues, by targeting service companies that provide the logistical and administrative architecture of the oil trade .

The G7 says service providers will be barred from “allowing shipping” of crude oil and petroleum products if they are traded above a cap yet to be determined.

The release is not specific about services, but we can assume that shipping, transport, insurance, finance and trading companies, many of which are based in the EU, US, UK and Switzerland are in the crosshairs of finance ministers.

The aim, according to Chancellor Nadhim Zahawi, is to reduce Moscow’s oil revenues while protecting low- and middle-income countries that still depend on Russian imports, and to insulate British consumers from future price shocks.

It’s a heroic wishlist but still theoretical and very short on details. This statement only signals an “intention to finalize and implement” a plan and it is unclear how it would be implemented.

What is clear is that existing measures to reduce reliance on fossil fuels are not hitting Kremlin revenues as hard as hoped.

Even though Russian oil export volumes have fallen, rising world prices triggered by the war mean that revenues are rising. Research from the Center for Energy and Clean Air suggests revenue rose in July as exports fell 6%.

And while Western customers are turning their backs, India and China are taking over, with Beijing now depending on Moscow for nearly 25% of oil imports.

Today’s G7 decision is an acknowledgment that so far Russia’s strategic weaponization of fossil fuels has been a strategic win-win.

As European consumers are hit with higher bills, perhaps weakening support for Ukraine, Moscow is still cashing in.

Read more:
Zahawi plots multi-billion pound tax cuts for companies weathering energy crisis
Who is proposing what to deal with soaring energy bills?

Mr Zahawi acknowledged that people needed help sooner than when the Russian oil cap comes into effect.

He said he was “very concerned about the scarring effect on business” and that the government was “working out options” for the next prime minister, who will be appointed on Monday, to “get up and running to be able to offer help additional in January and until next year.”

Mr Zahawi added: “Putin must know that this strategy will not work. He thinks using energy as a tool for revenge will work… It won’t work.

“And in fact today’s G7 reminds him again why we’re going to coordinate and we’re going to collectively manage these energy price shocks and continue to help Ukraine get their country back.”

. Russian Gazprom claims the flows gas to Europe will remain closed after agreed dun ceiling des price for suffocate machine war Putin news politics

. Russias Gazprom gas flows Europe remain shut agree price cap stifle Putins war machine

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