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19 Dec, 2022 17:26

Kremlin responds to EU gas price ‘cap’

The measure disrupts the market process of setting prices, Putin’s spokesman has said
Kremlin responds to EU gas price ‘cap’

Any attempts to set a gas price cap are “unacceptable,” Kremlin spokesman Dmitry Peskov told journalists on Monday, adding that Russia would provide an appropriate response to such a move. His words came as the EU energy ministers agreed on a gas price ceiling mechanism, according to Reuters.

“This is a violation of the market price discovery process, an infringement upon the market process itself,” Peskov told journalists, adding that “any references to the ceiling cannot be accepted.”

Russia would “need time to carefully evaluate all pros and cons while working on its [response] measures,” he noted, adding that a response to the oil cap had been “somewhat delayed” for similar reasons.

The oil price ceiling was introduced by the EU, G7 countries, and Australia earlier this month. Russia has so far not officially unveiled any measures in response. However, Peskov previously said that a relevant presidential decree was being finalized. 

According to the Russian newspaper Vedomosti, Moscow would ban oil sales under contracts that specify a price ceiling. Exports would also be prohibited to nations that require the cap as a condition in their supply deals, or if their reference prices are fixed at the cap level of $60 per barrel.

Earlier on Monday, the EU energy ministers reportedly agreed on a mechanism to try to bring down the high gas prices that have hit the bloc’s economies amid its attempts to rid itself of Russian imports. According to Reuters, the cap would be triggered if prices surpass €180 per megawatt hour for three days on the Dutch Title Transfer Facility (TTF) front-month contract. 

The cap would freeze trading on the front-month to front-year TTF contracts at a price exceeding a certain reference level by no more than €35 per megawatt hour. The reference level would be set on the basis of existing liquefied natural gas (LNG) price assessments, Reuters added.