Politico: EU plans to cut energy prices under threat

The European Union's plans to reduce energy prices are under threat due to a lack of funds in the community amid the rejection of inexpensive Russian gas.

The European Union, which is putting pressure on the new European Commissioner for Energy Dan Jorgensen to lower energy prices, is having difficulty finding funds for this purpose due to the rejection of fuel from Russia, Caliber.Az reports, citing Politico.

Russian liquefied natural gas (LNG) remains ‘financially attractive to several EU member states that are reluctant to give it up,’ the publication notes.

“Cutting [gas] supplies from Russia while saying you are going to cut prices makes no logical sense,” said Tom Marzec-Manser, head of gas market analysis at consulting firm ICIS.

According to him, replacing Russian gas with fuel from other countries will prove more costly for the EU.

The newspaper emphasises that high electricity bills “undermine Europe's competitiveness and cause discontent” in the community.

Notably, following Russia's all-out assault on Ukraine in early 2022, Europe's heavy reliance on the aggressor’s gas became an immediate problem as Moscow cut off flows via the Nord Stream and Yamal-Europe pipelines — two key energy connections to the EU.

Europe swiftly rebalanced. Coastal countries built out capacity to bring in liquefied natural gas (LNG) from places like the United States, while new contracts were drawn up. By 2023, Russian pipeline gas made up only 8 per cent of the EU’s energy imports, down from over 40 per cent in 2021.

Currently, the EU countries relying on the Ukraine pipeline are essentially getting Russian gas as cheaply as they can without depending on middlemen who resell for higher prices.

 The Ukraine pipeline may also continue to pump gas. While Kyiv has refused to negotiate a renewal directly with Moscow, talks are underway with fossil fuel-rich Azerbaijan to take over the contracts.  

However, questions remain as to whether Azerbaijan can produce sufficient gas to replace all former Russian exports — or whether it would merely serve as a middleman, rebranding “Russian gas” as “Azeri gas” before sending it on through the Ukraine pipeline.

By Khagan Isayev