Report: Germany skeptical over price cap on Russian gas

MOSCOW, Sep 7 (PRIME) -- E.U. efforts to set a price cap on Russian gas imports are running into a German roadblock, newswire Politico reported on Wednesday.

The plan being pushed by European Commission President Ursula von der Leyen and explored by her officials is to limit the cash Russia gets to fund its operation in Ukraine and to rein in soaring gas prices wreaking political and economic havoc across the Continent.

But the idea is running into resistance from Europe's most powerful economy and historically the largest E.U. importer of Russian gas.

"We remain skeptical when it comes to issues surrounding a gas price cap, but we are generally ready for talks in the European framework," said a spokesperson for Germany's economy ministry.

One E.U. diplomat criticized Germany as "the problem" because it was "taking them such a long time to decide on issues like the price cap.”

Von der Leyen last week called for putting a price cap on Russian gas imports. E.U. officials have since been preparing options for introducing such a measure, to be discussed by country representatives on Wednesday ahead of an emergency meeting of energy ministers on Friday.

On Monday, France became the latest country to throw its weight behind Brussels' plan. Poland also wants a price cap on gas, and for such a measure to be broadened to all gas imports to Europe, said a Polish diplomat.

The German government of Chancellor Olaf Scholz, however, is reluctant.

Ahead of Wednesday's meeting, officials in Berlin have been arguing that the E.U. should focus on less incendiary steps to combat high energy prices, namely introducing a windfall tax on excess energy profits — something agreed by Berlin's three-party ruling coalition on Sunday.

That's leading to pessimism about the ability to act without Germany fully on board. The result of Wednesday's meeting will "unfortunately be negative," said another E.U. diplomat.

In a last-minute effort to push Berlin's position ahead of Wednesday's meeting, Jorg Kukies, Scholz's top E.U. adviser, traveled to Brussels on Tuesday to discuss the issue with senior Commission officials including Bjorn Seibert, von der Leyen's cabinet chief.

A main concern in Berlin is that limiting the price for Russian pipeline gas would probably trigger retaliation by Moscow in the form of a complete gas cut-off for the E.U. — a scenario that Berlin fears would particularly hit Central European countries like the Czech Republic or Slovakia and Romania, which receive Russian gas via a pipeline through Ukraine or the southern TurkStream pipeline.

Some in Brussels are backing that view: "It risks cutting off flows to the smaller and dependent Slovakia and Czech Republic," another E.U. diplomat said.

German Economy Minister Robert Habeck said Monday that Germany itself was already largely cut off from Russian gas supplies, as it only receives very small quantities via Ukraine following Gazprom's decision to shut the undersea Nord Stream pipeline for repairs. Habeck added he does not believe that Russia will resume larger deliveries of gas to Germany.

German officials argue that Berlin's hesitancy to impose a price cap on Russian gas is not so much linked to its own interests but rather to the regional supply situation.

A cut in Russian supplies would also force Germany to share its gas with other countries under E.U. rules, leaving less for itself.

However, countries like the Czech Republic, Slovakia and Hungary have a higher proportion of the gas they'll need this winter in storage than Germany, according to the E.U.'s gas storage inventory. Hungary, Russia's closest ally in the E.U., has also struck recent deals with Moscow to boost gas deliveries.

Even without a complete shutoff, Russian deliveries to the E.U. are down sharply from historical levels; they used to account for 40% of the bloc's imports. Russian gas now accounts for less than 10% of imports, and as of Tuesday flows were 78% lower than in the same period last year, according to the Bruegel think tank.

That lessens the risk of Kremlin retaliation, the Commission's energy department said in its study of the impact of a price cap: "If they do not supply much, why not risk it?"

But talk of a price cap on Russian gas doesn’t make much sense at this point, said Nathalie Tocci, director of Italy's Istituto Affari Internazionali think tank.

“It's feasible in the sense that you could do it,” she said. “The point is that you will be capping the price of a quantity that is basically zero.”

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