>> e.u. energy ministers meet and failed to strike a deal to cap the price of natural gas, increasing as russia has invaded ukraine. we look at the deep divisions and if they can be overcome. this is "inside story". ♪ hello. welcome to the program. i am adrian finighan. ministers held their for

the emergency meeting to try to solve the price for natural gas, but failed. member states promised a ceiling in october, but are divided on what it should be. they want to punish russia and protect consumers from prizes that increases the ukraine war began. the split is between those wanting tough measures and those fearing that a cap is too low and could affect suppliers. energy ministers want to avoid the increasing gas prices like in august and will try to reach a compromise at another round of talks this week. >> we will be only one open issue for discussion on monday. uh, and this is the price level triggering uh the mechanism. uh, we have to make sure the

situation from this august will not be repeated. i think we are almost there, but now we need to get together and show it is not an empty word, but a core value of the eu, which we all subscribe to. >> some members are worried about the impact of sanctions and a price cap on their own people. hungary says its national interests come first. >> here, the debate is dominated by sanctions, and that is a big problem, a very big problem. even though sanctions have clearly been shown to fail, sanctions are a failed policy and sanctions have thus far led european decision-making and european reactions to the war. i would like to re-order a that we consider the sanctions policy as a misguided policy.

the important thing for us is our national interest are not harmed in energy supply not jeopardize. anchor: there is agreement on some points. one person says they have agreed to keep what is known as over-the-counter contracts out of the cap, contracts directly negotiated between countries and suppliers outside official gas exchanges. exemption would allow for more sources of supply and they have also agreed to review the measure at the end of february to see how effective it has been. the deal would include ways to swiftly removed it encase it has negative knock on effects. ♪ so, let's bring in our guests forward the discussion. we are joined by the ceo of my resources and energy policy advisory. from moscow, the ceo of macro advisory strategic consultancy

focused on asia. and from warsaw, the editor in chief of the pluto magazine. welcome -- political magazine. welcome. what is the price cap designed to do, her pressure or protect you consumers, or both on and will it work? >> it is designed to do both, but i'm not sure it's effective on either. in order to make sure prices don't go too high, some prices was so high that people really feared for how they could supply the population adequately, and it is supposed to put a cap on what pressure can earn, but you have to understand that when you look at gas, before the ukraine war, about 40% of all gas coming to europe came from russia.

in germany, it was 55%. since then, it has really gone down to 17% and people are putting on offshore re-gas ification terminals to get more lng, but europe is not only slowly and steadily weaning itself on its total dependence on russian gas. anchor: if, as you say, the dependence on russian gas has fallen, why are certain you member states, why do they feel it is so important to introduce this price cap? why are they trying to push it through? >> because some countries still depend on russian gas, austria, slovakia, and those bordering states. they still really need, and the

western balkans, they still need russian gas, so they want to avoid too much money goes to russia and into the war efforts, but it is a matter, you know, this is a matter for the next 12 to 18 months. looking forward, it is a matter of where where the gas for europe come from, but it will be a lot more expensive. lng gas is more expensive than russian pipeline gas which comes from the western siberian gas fields on infrastructure that is basically paid off as though you are having new infrastructure, more expensive gas, so prices will go up in europe no matter what. anchor: how would russia react if a cap on the price of russian gas was implemented? would it hurt russia? can it get around the cap? >> well, first of all, i have to

say there is much less commentary, much less debate about the gas price cap than there has been about the oil price cap. we have seen a very fierce political action to the proposed price cap. even now we are expecting president putin will sign legislation making it illegal for any russian producer to sell oil under the terms of the price cap. there has not been or hardly be in the country about the gas price cap. one of the reasons is because the price level as we indicated at that level, the benchmark price, the price of gas has only ever been above that great -- rate for a few days in august. the current prices have to level , 130, oh that's the reason why

there is less excitement about this in russia, because the levels are set high, and another reason is because russia does have options when it comes to transferring oil. we see a great effort now to secure tankers and shift oil to asia. you can't do that with gas because of the pipeline routes, so the position in moscow because they are simply waiting to see what is agreed and what will be the impact, and only then will we get a reaction from moscow, but itself, it will not have much damage. anchor: let me clarify what you were saying. the current price of gas is well below where this cap is but it will be implemented. so it won't make much difference. >> no, it is not. the current price is 130, and the price cap is 275, oh it is a

long way off. i am assuming the reason that europe wants to agree to this because are looking forward to next year, when europe will not have much of an energy problem this winter because enough gas has been secured, as the previous speaker said, with big imports of lng, or reserves are high, and it should not be a problem this winter, but it is already looking like a more dangerous situation for europe coming into next winter. it may not be able to get the same lng supplies next summer as a cut this summer because china did not buy as much lng as a contracted for and allow that energy to go to europe. if the chinese economy recovers as it appears to be come a china would take the lng and europe would not get it, so the position therefore is we could be looking at a much higher gas price and greater volatility in the gas market this time next year, and i think the mechanism therefore that rather than

anything else. anchor: what is poland's position? it is pushing hard for this cap, isn't it? >> yes, poland is pushing hard for the cap come up at one of the countries that has been for a long time pushing for european energy independence or interdependence, by proposing and pushing for the energy packages that would build up european energy market as a whole and not disconnect and divide the market of nationstates that has been abused by countries like russia for their own benefit and weakening the european blog. currently, the gas price cap is being pushed down as much as possible for countries like poland and ukraine as well. should there be a big disagreement on that price, i don't think so, of course, there is something happening behind closed doors that we don't happening yet, but it is coming to be, but importantly, we have

to remember it is part of a broader effort called, power e.u., a commission effort to make europe as a block more independent from weaponizing gas prices, gas deliveries, energy deliveries to europe by specifically russia, but any other actors in the future, and it is a long-term strategy so just like my previous speaker said, it is about building up a resilience for the next year and the future year in terms of acting together as a block and not disunited as nationstates. anchor: does poland have any sympathy for landlocked countries like hungary and austria, who of course don't have ports to take lng and don't want a cap on russian gas? >> that is the whole point of building interconnectivity. poland has been at the forefront of proposing enter connectors in

building it. since 2008, 2009 with the gas crisis when russia was turning off delivery of gas to europe, specifically central europe. poland and other countries in eastern europe and germany and many other countries have been starting to build with european support so-called enter connectors to make the gas market truly european and not landlocked to nationstates, so austria, czechoslovakia, hungary, slovakia, they are being offered and they are having these enter connectors built to make the energy market and the gas market specifically fully accessible to all europeans and to be more resilient begin such blockades by road -- rogue actors. anchor: let's continue this idea of the interconnected world, the eu energy independence, co-interdependence, is that wishful thinking, do you think? >> well, there will never be

independence, but europe started to build those connectors before 2008 and started when they with u.s. money rehabilitated the gas pipelines, they were built in holland with the north sea and british gas, so this has been a trend that is important because we get gas from algeria, from the mediterranean, then we get all the lng in spain, mediterranean, holland, england, and now in germany, so yes, this interconnectivity is important so the problem with gas is oil, you find oil and oil will find the market. as our previous speaker said, you know there has been a big

movement by russians to ship oil to places that do not adhere to the oil price cap. that is not possible with lng so these enter connectors are key in europe as been working on this since 1998 for various places and it needs students, that. anchor: what impact our sanctions against russia having on ordinary people? you talk about the fact that people are far more worked up about the price cap and oil than gas. is this making an impact on daily life in russia? >> [indiscernible] the debate about price and dealing with sanctions, very much a government level, ordinary people going about

their daily lives, people are aware and are affected by say the travel bans and the fact that russians can no longer cross the border into other countries like poland, etc. price increases this year because of trade disruptions. there is general concern about the economic impacts next year. people are more aware that russia is now entering the phase where the accumulation of sanctions is going to start having a bigger impact on the economy, jobs, and therefore their lives, so therefore there is general concern about the accumulation and the impact of sanctions. people are not talking about the oil price cap or gas price cap or any of the specific issues that are happening at the government level. as i said, the government discussion is the oil price, not the gas cap. again, look at the two things. one, a big disruption on gas

volumes. nord stream 1 was suspended in has now been taken out of action. so volumes coming into europe through the pipelines are much less than usual. that is a much bigger factor in terms of economic factors, in terms of the volumes that have been reduced. the price is as i say, we have seen a big jump in price this year, but russia has been used to a low price, much less than $100 for every year up to this year, so i really don't think therefore even if there is a gas price cap put in place that anything above 100, i don't think the russians will react to it in the same way they reacted to the oil price cap. [indiscernible] anchor: let's talk about the inability of the eu to find a deal or unity on this. at the beginning of the program, we talked about the

czechoslovakian energy minister who said his fellow ministers could face a reputation risk if they're going to stop future price spikes. if 90% of the deal is done and what is the problem, what is preventing it from getting over the line time and time again? >> well, we can only assume as we have no credible report that would testify what is happening behind the closed door, but there are always countries in the eu that use cards to negotiate their individual interests on potentially even disconnected from energy policy, and countries like that, for instance, hungary, have often been using the need to agree on certain policy agenda as a token and negotiating something completely different, along with the other countries, regarding rule of law or regarding some

other funding they are seeking. so, i would not be surprised if again, a country like this or the one that i mentioned or another, may be finding it hard to agree at first because it is seeking a side deal. there is a parallel negotiation going on with respect to the individual interests of a given country, but that is. speculative. however, that is usually the logic of these decisions as they are reached and we see the deals done and we see that in the support of hungary for the support package for ukraine only this week, which has been opposed by hungary previously, and hungary agreed to that indirect exchange for making some conditions. anchor: does any of this make a difference at all for consumers

like you and i when we pay our gas or literacy bills? this is all academic, at the moment, but could a price cap drive prices higher? will we still be paying more for gas and electricity regardless? >> we will still be paying more for gas electricity in the if we have a cap gas price, and as pointed out, very rarely w was t the gas price cap, but when you look at redirecting trade flows, it is always an expensive undertaking, whether oil or gas, and especially gas, and lng is a lot more expensive. so as we are weaning ourselves off a russian gas and use more lng and gas from other sources, which will be more expensive,

obviously we will have to come to deal with that, and it then depends on how our utilities by the gas when they buy it, how they buy it, and when we look at it now, europe was extremely lucky that china had the zero covid policy and the economy didn't really boom, so a lot of cargo was redirected to europe where they could get better prices but once china picks up and then there is this east asian, you know, play switches china, korea, japan, which are the largest consumers of lng, once that consumption picks up, europe will need to pay a lot to entices cargo to come here, and what we have been stored though is u.s. lng, but that is still in the permitting process and we are still about three years to

five years off from that hitting the market so you know, gas and oil are not light switches. these are, these, these come at this infrastructure takes time to create and it takes time to redirect the trade flows, so yes, in short, it will get more expensive for the european consumer. anchor: do you agree with what she was saying, about the european consumer, but where russia will sell its gas if it cannot sell it to europe? >> um, yes. obviously there is a different discussion on the gas cap from the oil cap, because zero cap is specific to russia, but the gas cap proposal will affect all gas purchase by europe, and it is right to focus on lng. the headlines will certainly focus on piped gas from russia, therefore targeting pressure comes to get the headlines, but the much more serious issue is what will be the price cap on

lng and will there be a price cap on lng, because that is a more portable, movable product. if europe caps the price and demands that from asia and elsewhere, those tankers will turn around and go elsewhere, so europe will have to be extreme the careful on what will be the price cap mechanism in the review mechanism for lng, rather than for piped gas, because we know the future as we have heard is to try and acquire more and more lng because it can be sourced from different places and reduce piped gas, but ticket from russia, so the question of price cap on lng is much more critical than the price cap on the cows come in from russia, because if we get a strong recovery in the asian markets, they will pay more for the gas, and europe could end up with gas shortages in addition to higher prices, if they get this pricing

mechanism wrong. anchor: is there much appetite in the eu to cap the price of lng? >> well, i don't know about the particular issue here, whether there is much appetite in europe , but there is appetite in your progrowth energy packet reform. in the re-power program, introduces gas cash and introducing cap --s and essentially introducing a common european market and integration in terms of more greener alternative energies, more effective energy sources, and lowering the consumption levels, so we need to look at it from a holistic perspective what the eu commission and countries want to achieve here. and there is general agreement in the direction it is going.

there is of course, there is some concerns that my co-speakers have already mentioned, and they are supported by european national central bank, that also is worried about not making the right call on the price cap in terms of the level of the price cap that may create shortages, and this concern is counter weighted by introducing a price cap, which is expected from central european countries like poland to have a direct and immediate effect on the income levels of russia through which russia funds the war effort in ukraine. anchor: ok. i am afraid we will have to leave it. we are out of time. thank you to you all. as always, thank you for watching. don't forget, you can see the program any time by going to the website. for further discussion, join us on her facebook page.

and, as always, you can join the conversation on twitter. ♪ for me, adrian finnigan, and the whole team, bye for now. ♪

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man: at the beginning of, um, of 2020, i had an exhibition at the university museum of contemporary art in mexi city, and it was an introspective exhibition called "customatism," and that exhibition had been prepared for years. i mean, had 30 years of work, if not more, probably, like, 40 years of work, and it was supposed to come to the museum of contemporary art in san diego, but then, all of a sudden, we had this pandemic. woman on tv: china has identified the cause of a mysterious new virus. man on tv: we now have a name for the disease-- covid-19. man 2 on tv: you must stay at home. president trump: we're asking