EU leaders plan to boost energy security and scale back demand for the Russian ruble

  • The heads of state and government of the EU meet at the summit in Brussels
  • Plan to jointly purchase gas to increase non-Russian supply
  • EU-US deal expected on LNG supply
  • Leaders cancel demand for ruble gas payments

BRUSSELS (Reuters) – European Union leaders will agree to jointly buy gas to reduce reliance on Russian fuels at a two-day summit starting on Thursday, with some saying they would Moscow’s demand to buy oil and gas rubles.

The invasion of Ukraine by Russia, Europe’s biggest gas supplier, has pushed already high energy prices to record highs, prompting the EU to pledge to reduce dependence on Russian fossil fuels by increasing imports from other countries and sourcing renewable energy fast expands.

Moscow said on Wednesday “unfriendly” countries, including EU member states, must start paying in rubles for Russian oil and gas, a demand some EU leaders say conflicts with supply deals.

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“Everywhere there are fixed contracts in which the currency in which the deliveries are to be paid for is part of these contracts,” said Federal Chancellor Olaf Scholz. “Most of the time it says euros or dollars, that’s the basis on which we work.”

“No one will pay in rubles,” said Slovenian Prime Minister Janez Jansa.

In a draft of their summit conclusions, seen by Reuters, leaders will agree to “collaborate on joint purchasing of gas, LNG and hydrogen” before next winter and coordinate actions to fill gas storage facilities — steps based on the Building a supply buffer aimed at non-Russian gas.

The European Commission has said it is ready to negotiate to pool demand and scout for gas, on a similar model to how the bloc bought COVID-19 vaccines.

Leaders will discuss that plan on Friday, when the EU is also expected to reach an agreement with US President Joe Biden, who will attend the summit, on additional supplies of liquefied natural gas (LNG) to the US for the next two winters will announce.

Russia supplies 40% of the EU’s total gas needs – most of it via pipelines – plus 27% of oil imports and 46% of coal imports.

US exporters have shipped record amounts of LNG to Europe for three consecutive months as prices are more than 10 times higher than a year ago, with European and Asian buyers competing for a tight supply.

But countries remain divided on whether to directly sanction Russian oil and gas, a move already taken by the United States. An EU embargo would require the unanimous approval of all 27 member states.

Latvia and Poland are among countries trying to halt the hundreds of millions of euros a day Europe is paying Russia for fossil fuels.

“Energy sanctions are a way to prevent money from pouring into (Russian President Vladimir) Putin’s war chest,” said Latvian Prime Minister Arturs Karins. “The most logical place to move forward is oil and coal.”

Germany, which receives 18% of Russia’s gas exports, and Hungary are among opponents citing the economic damage an oil embargo would cause.

Rising energy prices have also jumped onto the EU summit agenda, with Spain, Belgium, Italy, Greece and Portugal proposing price caps and measures to decouple electricity and gas prices to rein in consumer bills.

Spanish Prime Minister Pedro Sanchez said he was hoping for a “balanced agreement” on Spain’s proposals, which affect Europe as a whole.

Other countries warn that capping wholesale prices would create problems and undermine efforts in the green energy transition. Some diplomats have said EU-wide decisions on this are likely to be delayed until a report from energy regulators on potential EU electricity market reforms, due this month.

EU countries are largely responsible for their own energy policies. Governments have already poured billions into national tax cuts and subsidies to stem rising energy bills.

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Reporting by Kate Abnett; additional reporting by Sabine Suiebold, Bart Meijer, Marine Strauss, Bart Meijer; Editing by John Chalmers, Kirsten Donovan

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