EU prepares for further cuts in Russian gas as prices spike

BRUSSELS • European Union leaders yesterday warned that "cheap energy is gone" and agreed to boost preparations for further cuts in Russian gas, accusing Moscow of "weaponising" energy via a supply squeeze.

A day after celebrations over setting Kyiv on the road to membership of the bloc, yesterday's summit in Brussels was a sober reflection on the economic impact of Russia's invasion of Ukraine.

"Inflation is a major concern for all of us," European Council chief Charles Michel said at a news conference as the two-day summit ended. "Russia's war of aggression is pushing up the price of food, energy and commodities," he said, adding that leaders had agreed to closely coordinate their economic policy responses.

Few concrete steps were agreed on at the summit, but the leaders tasked the European Commission with finding more ways to secure "supply at affordable prices" because of "the weaponisation of gas by Russia".

European Commission chief Ursula von der Leyen said the search for alternative supplies was in progress, with United States LNG deliveries up 75 per cent this year from last year, and Norway pipeline gas deliveries up 15 per cent.

The EU executive will present a plan on preparedness for more gas cuts from Russia to leaders next month, she said. "Hope for the best, prepare for the worst. That is what we are doing right now."

Leaders of the 27 EU nations placed the blame for a huge spike in prices and sagging global growth on the war that began four months ago.

Latvian Prime Minister Krisjanis Karins, calling for governments to "support those portions of society that suffer the most", said: "The notion of cheap energy is gone and the notion of Russian energy is essentially gone, and we are all in the process of securing alternate sources."

Following unprecedented Western sanctions imposed over the invasion, a dozen European countries have so far been thumped by cuts in gas flows from Russia.

"It is only a matter of time before the Russians close down all gas shipments," one EU official said ahead of yesterday's talks.

The EU relied on Russia for as much as 40 per cent of its gas needs before the war - 55 per cent for Germany - leaving a big gap to fill in a tight global gas market.

Inflation in the 19 countries sharing the euro currency has shot to all-time highs above 8 per cent, and the EU's executive expects growth to dip to 2.7 per cent this year.

Eurogroup chief Paschal Donohoe warned that the bloc must "acknowledge the risk we could face if inflation becomes embedded in our economies".

REUTERS