EU plans minimum gas storage amid energy prices hike

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The European Union proposed Wednesday legislation requiring natural gas storage be filled with a minimum of 80% before next winter as a crisis of inflating energy prices hit the continent due to the Ukraine crisis.

The measure is one of the options the bloc has put on the table as inflation and projected lower economic growth as the 27 nations headed toward heavily sanctioning Moscow despite their dependence on Russia's resources.

Russia provides around a third of the EU's natural gas imports, and those have been left off the bloc's sanctions for now, though the United States has been pressuring its allies to impose a ban on Russian fossil fuel exports.

The legislative proposals drawn up by the commission include calling for the 80% minimum gas storage level to be reached by late this year, November, to be exact. It is also possible that Brussels will raise the level to 90% in the upcoming years.

President Vladimir Putin said Wednesday Russia would only accept payments in rubles for gas deliveries to "unfriendly countries" in a nod to all EU members over the sanctions on his country.

"I have decided to implement a set of measures to transfer payment for our gas supplies to unfriendly countries into Russian rubles," Putin said. He also ordered the measure be implemented within a week.

"Global and European energy markets are going through turbulent times, particularly since the Russian invasion of Ukraine. Europe needs to take swift action to ensure our energy supply for next winter, and to alleviate the pressure of high energy bills on our citizens and businesses," EU energy commissioner Kadri Simson said in a statement.

The legislative proposals also suggested implementing an EU-wide task force to head the bloc's gas purchases and a certification system for storage to prevent "outside influence" from non-EU suppliers, such as Russia's Gazprom, the firm behind Nord Stream 2, the pipeline providing Europe with natural gas despite the diplomatic issues between Brussels and Moscow.  

European Commission chief Ursula von der Leyen tweeted that the package raised to the table was "key to make prices go down," though observers noted that high energy costs were a global phenomenon. 

A real EU approach to buying and storing gas is key to make prices go down.

I discussed with energy CEOs and @ert_eu how to diversify supply and reduce demand for gas.⁰
We will set a group of industry experts to help reduce our dependency. pic.twitter.com/ae2XY5rNVG

— Ursula von der Leyen (@vonderleyen) March 23, 2022

"The bottom line here is that there is no silver bullet," an EU official told journalists, explaining that compensating for sky-high energy prices at either the retail or wholesale stages was very risky.

"They could distort trade in the internal market and henceforth they could also lead to risks to security of supply," the official said. 

The EU is seeking to head in that direction due to Russia launching a special military operation for several reasons, including NATO's eastward expansion. Other reasons were the Ukrainian shelling of Donbass and the killing of the people of the Donetsk People's Republic and Lugansk People's Republic, in addition to Moscow wanting to "denazify" and demilitarize Ukraine.

In response, the US and its allies have rolled out comprehensive sanctions, including restrictions on the Russian central bank, export control measures, SWIFT cutoff for select banks, and closure of airspace to all Russian flights. Many of their companies have suspended their Russian operations.

The EU fears its situation follows the US model, where the status-quo and the sanctions on Russia exhausted citizens' purchasing power, causing fuel prices to soar in the country with US oil prices reaching their all-time high following a ban on Russian fuel exports.