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16 Oct, 2022 12:26

Gazprom outlines consequences of price cap on Russian gas

Such a decision would violate contracts and inevitably lead to a halt in supplies, CEO warns
Gazprom outlines consequences of price cap on Russian gas

Plans to set a price cap on Russian gas sales, which are currently being considered by Western leaders, would cause supplies to be halted, according to Gazprom CEO Alexey Miller.

“We rely on the contracts that have been signed. A unilateral decision of the kind is, of course, a violation of essential terms of the agreements which would lead to a termination of supplies,” Miller said on Sunday in an interview with Russia 1 TV.

Numerous sanctions have been introduced by the US, EU, and allies on Moscow over its military operation in Ukraine. EU customers have so far reduced their purchases of Russian energy, and the G7 and EU are currently trying to introduce a price cap on Russia’s oil and gas.

Miller’s comments echoed a similar warning from President Vladimir Putin, who said last month that Moscow would cut off energy supplies if price caps are imposed.

Earlier this month, EU leaders reached an agreement to impose yet another package of sanctions on Russia, including banning maritime transportation for Russian oil to third-party countries unless the oil is sold below or at a certain price. The measures would take effect after December 5, 2022 for crude and February 5, 2023 for refined petroleum products.

Earlier this week, US Treasury Secretary Janet Yellen said that a price cap on Russian oil exports of around $60-per-barrel would likely reduce Moscow’s energy revenues while allowing profitable production, thus keeping Russian crude on the global market. Yellen stressed that the measure is still being discussed by the US and its Western allies.

On Friday, Russian Deputy Prime Minister Aleksander Novak said the US should set a price cap on its own liquified natural gas (LNG) going to Europe, as American fuel is being delivered to Europe at prices four times higher than the price for domestic consumption.

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