US President Joe Biden and European Council President Charles Michel shake hands, during a European Union leaders summit, amid the Russian invasion of Ukraine, in Brussels, Belgium, on 24 March 2022. REUTERS/Evelyn Hockstein

BRUSSELS, March 25 (Reuters) – European leaders failed on Friday to agree on a short-term solution to the energy market crisis aggravated by Russia’s invasion of Ukraine, but offered a compromise for Spain where soaring fuel prices led to 12 days of trucker blockades.

An intense debate over whether to cap energy prices, pitting some southern countries against Germany and the Netherlands, pushed back the second day of a European summit into the evening, Spanish Prime Minister Pedro Sanchez exiting the meeting room at some point.

In the end, they settled on a compromise and left a number of issues unresolved.

The war in Ukraine has pushed energy prices to record highs and prompted the European Union to seek to cut Russian gas consumption by two-thirds this year, finding gas elsewhere and boosting renewables.

While states around the Mediterranean have pushed for a wholesale gas price cap to protect poorer households, opponents have said it would involve state cash subsidies for fossil fuel generation.

Leaders instructed the European Commission to urgently assess what near-term options, from price caps to tax breaks, could help reduce gas and electricity prices.

Italian Prime Minister Mario Draghi told a press conference after the summit that the EU executive would discuss options with major oil and electricity companies.

“We hope to have proposals by May,” he said.

Spain and Portugal have obtained permission to implement temporary measures to reduce their electricity prices.

European Commission President Ursula von der Leyen said this ‘special treatment’ was possible because the Iberian Peninsula was largely detached from the rest of the EU’s power grid, although the EU executive will also assess the plans. short-term offers offered by other EU members.

Earlier on Friday, US President Joe Biden – who joined on the first day of the summit – pledged to help Europe with more LNG deliveries as it grapples with the need to reduce its dependence on gas. regard to Russia for its energy needs.

Russia supplies 40% of the gas the EU needs for heating and electricity production and more than a quarter of its oil imports.

Belgian Prime Minister Alexander De Croo, who has backed push by southern European countries for market intervention, said EU governments were facing increasing public pressure.

“Today it’s about people’s day-to-day problems and it’s about people’s electricity and gas bills,” he said. “We are at war and in a war you must take extraordinary measures.”

DEPENDENT ON RUSSIA

The 27 Member States have agreed on a plan for joint gas purchases to control prices.

The European Commission has said it is ready to conduct negotiations on demand-pooling and gas research before next winter, following a similar pattern whereby the bloc bought COVID-19 vaccines from the name of member states. Read more

“We’ve seen some countries turn to other countries to negotiate their own contracts. It’s not the best way, and I’ve told my colleagues that, because we’re pushing prices up,” the president said. French Emmanuel Macron.

However, the EU has remained divided on whether to ban Russian oil and gas imports on top of the series of sanctions it has imposed on Moscow since the invasion a month ago.

Moscow calls its actions in Ukraine a “special military operation” to demilitarize and “denazify” Ukraine. kyiv and the West say Putin launched an unprovoked war.

Europe’s energy dependence on Russia means the issue of an embargo, as imposed by the United States, is economically risky, and no decision was made on Friday.

Germany, Hungary and Austria were among the most reluctant to impose a ban on Russian oil and gas.

Nor did a common position emerge on Russia’s demand this week that “unfriendly” countries must use rubles to pay for their oil and gas. Read more

Draghi said the leaders had agreed that any Russian gas export request would represent a breach of contract.

The Kremlin’s request poses a dilemma for countries dependent on Russian energy because accepting it would strengthen the ruble and funnel hard currency to Moscow – but a refusal could mean their energy supplies dry up.

Additional reporting by Philip Blenkinsop, John Irish, Jan Strupczewski, Sabine Siebold in Brussels, Belen Carreno in Madrid, Bart Meijer in Amsterdam and Benoit Van Overstraeten in Paris Writing by Ingrid Melander and John Chalmers Editing by Matthew Lewis

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