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(Adds Belgian Minister Cheniere, market reaction)
By Elizabeth Piper and Gabriela Baczynska
LONDON/BRUSSELS, Sept 8 (Reuters) – Britain will limit consumer power expenditures for two years and funnel billions to force firms, its new leader, Liz Truss, said on Thursday in a bid to deal with a crisis of strength between Europe and Russia. in a worsening economic war.
European governments are spending billions of euros to help consumers and businesses cope with rising energy expenditures as the price of gas, which is already high after the COVID pandemic, has become stratospheric following russia’s invasion of Ukraine.
“This is the time to be bold, we are facing a global power crisis and there are no loose options,” Truss told parliament, initiating a change of course in the primaries after ruling out “helping” his crusade to become prime minister.
The Truss package, financed through government loans, could cost Britain around £150 billion, rattling money markets, where the pound is soaring around the lows reached in 1985.
Russia’s invasion of Ukraine has revealed Europe’s dependence on its fuel. Russia’s supplies plummeted last year and Brussels accused Moscow of militarizing power to undermine Europe’s power for Ukraine. Russia has denied this and accuses Western sanctions of causing problems in fuel sources.
European Union energy ministers will meet on Friday to discuss the Bloc of 27’s reaction to the crisis, following an initial combined reaction to a plan to cap Russian fuel costs that is likely to galvanize Moscow.
Belgium, for its part, said value limits applied to fuel imports from Russia would be meaningless.
“Not much Russian fuel comes into Europe, so I don’t see the additional price of that,” Energy Minister Tinne Van der Straeten told Reuters.
“A cap on Russian fuel will not reduce prices,” he said, adding that it would be “purely political. “
Friday’s EU ministerial assembly is expected to approve the policies, but it is expected to explain what characteristics have the most powerful support.
The Baltic states are in favor of capping Russian fuel prices, as are countries that count on Moscow for fuel, adding Portugal, diplomats said.
WOLF TAIL CONGELɠ?
Russian President Vladimir Putin has threatened to cut off all of Europe’s energy materials if he introduces a value cap and warns the West that it will freeze like a wolf’s tail in a famous Russian fairy tale.
But EnergyScan analysts said Putin’s risk did not appear to have affected fuel costs in Europe “even though around 80 million cubic meters (mcm) per day of Russian fuel still transits into Europe, Ukraine and Turkstream. “
Dutch wholesale fuel costs fell on Thursday due to weak demand and expectations that Europe could end the winter despite halting Russian flows through a main pipeline.
On the electric power front, Germany’s base electricity contract fell by 2. 9% from the previous close of €510/MWh, just below last week’s all-time high. The contract was up 560% from a year earlier.
With Russian deliveries uncertain, Europe is also looking for fuel resources and delivery routes, and several countries are pushing for more liquefied herbal fuel (LNG) import terminals.
On Thursday, the Netherlands said the first shipment to bring LNG docked at a new terminal in the Dutch port of Eemshaven, as a leading market in Europe for LNG, attracting large volumes from around the world.
Cheniere Energy Inc. LNG. A, the largest U. S. LNG exporter. The U. S. Food and Drug Administration, which shipped 70 percent of its production to Europe this year, said current market costs recommend that volumes will continue to go to Europe over the winter.
Meanwhile, EU countries also continued to prepare individual plans before the winter.
Germany plans to subsidize a pivotal point of electricity use for families and reserve less expensive electricity for small and medium-sized enterprises, according to measures set out in an Economy Ministry document known through Reuters on Thursday.
SUBSIDIES IN THE UK
In Britain, Truss said average household energy expenditure would remain at around £2,500 a year for two years, avoiding a significant increase in expected value next month that threatens the finances of millions of families and businesses.
New strategies will also be introduced, with a moratorium on abandoned hydraulic fracturing and new oil and fuel exploration licenses issued for the North Sea, he said.
Separately, the Treasury and the Bank of England will publish a £40 billion program to boost corporations in the face of liquidity shortages due to exorbitant fuel prices. There were no specific main points about how the regime would work.
Other countries are also looking for their electric power suppliers, with Denmark saying on Thursday it would supply one hundred billion Danish kroner ($13. 4 billion) in pledges to power companies.
Meanwhile, a Russian strategy paper, noted through Reuters, showed that Putin’s risk of cutting off energy materials altogether may become a double-edged sword for Russia.
“A relief in demand from foreign consumers will lead to an imbalance in the system, when low costs in the domestic market will be offset by export gains,” the document says.
(Reuters reporting; written through Ingrid Melander; edited through Carmel Crimmins)