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G-7 Leaders Aim to Squeeze Putin’s Gas Revenue

Business Maverick

Business Maverick

G-7 Leaders Aim to Squeeze Putin’s Gas Revenue

Workers are seen clearing the rubbles of the Amstor mall, the day after it was hit by a Russian missile strike according to Ukrainian authorities in Kremenchuk, on June 28, 2022. Photographer: Genya Savilov/AFP/Getty Images
By Bloomberg
28 Jun 2022 0

Group of Seven nations moved forward with a plan to limit President Vladimir Putin’s energy revenue by curbing oil and gas prices, a day after a Russian missile strike on a shopping center in central Ukraine killed at least 20 people. 

The missile attack, in the city of Kremenchuk some 300 kilometers (186 miles) southeast of Kyiv, was sparked by a fire from a strike on an arms and ammunition depot nearby, Russia’s Defense Ministry said — a claim swiftly refuted by Ukrainian authorities. More than 40 people were still unaccounted for. G-7 leaders branded the attack a war crime.

Ukrainian President Volodymyr Zelenskiy told G-7 leaders he wants the war to be over by the end of the year, according to officials familiar with the remarks. Heads of state and government are en route to Madrid for a NATO summit, which plans to boost the size of its high-readiness force to 300,000 to bolster defenses against Russian aggression.

(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)

Key Developments

On the Ground

Russian forces are pressing ahead with their goal of occupying all of the Donetsk and Luhansk regions, Ukrainian military spokesman Oleksandr Motuzyanyk said during a video briefing. Kyiv-led forces are withdrawing from Sievierodonetsk, as the Russian military moved in on neighboring Lysychansk from the south, closing in on the last major redoubt in the Luhansk region that Kyiv still controls. While Lysychansk remained the main hot spot of military action, Russian troops shelled Ukrainian positions and civilian areas elsewhere along the front line, including with air-to-land missiles. Kharkiv, Ukraine’s second-largest city, was also being shelled, its mayor said.

(All times CET)

At Least 20 Killed in Missile Strike at Shopping Center (4:17 p.m.)

The number of people killed in the shopping center strike in Kremenchuk has climbed to at least 20, while more than 40 are missing, Kyrylo Tymoshenko, the deputy head of the presidential office, said on Telegram. Another 59 were injured.

Interior Minister Denys Monastyrsky said in televised remarks that identifying remains was complicated by heavy burn wounds, adding that many appeared to have ignored an air-raid alarm and remained in the building. Zelenskiy said in a video address that about 1,000 were at the site, and called the Russian state the “largest terrorist organization in the world.”

Close to 3,000 civilians have been killed in Russian attacks since the invasion began Feb. 24, the State Emergency Service of Ukraine said on Telegram.

European Gas Demand Rose to Highest in a Decade in 2021, BP Says (2:09 p.m.)

Europe’s natural gas demand soared to the highest in a decade last year and the war in Ukraine will only tighten the market further, BP Plc said in its annual Statistical Review.

Energy use roared back in 2021 as nations emerged from months of pandemic restrictions. But the rebound coincided with capped gas flows from Russia and a squeeze on liquefied natural gas. The European market ended the year with volatility at an all-time high, and the wild price swings have continued in 2022 with the invasion of Ukraine stoking fears over supply.

European Gas Demand Rose to Highest in a Decade in 2021, BP Says

Leaders Want Urgent Evaluation of Energy Price Caps (1:45 p.m.)

G-7 leaders agreed that they want ministers to discuss urgently and evaluate how the prices of Russian oil and gas can be curbed to limit revenues flowing to the government in Moscow.

“We reaffirm our commitment to phase out our dependency on Russian energy,” the leaders said in a statement after the three-day summit meeting in the Bavarian Alps. “In addition, we will explore further measures to prevent Russia from profiting from its war of aggression.”

G-7 Nations to Attend G-20 in November, Scholz Says (1:30 p.m.)

Asked whether Germany and other G-7 nations will attend a G-20 summit in November, which Putin may also take part in, German Chancellor Olaf Scholz said there was “broad agreement” among leaders in Bavaria that they “don’t want to drive the G-20 apart.”

Read more: Ukraine, Russia Presidents Accept Indonesia’s G-20 Invite

“As things stand, the decision of the countries gathered here was that they will attend,” Scholz said at a news conference. Both Putin and Zelenskiy have accepted invitations to the meeting in Bali from G-20 presidency Indonesia, though it’s not clear if they will attend in person. Putin has declined to meet with Zelenskiy, who has said it’s the only way to end the war.

Johnson Appears to Rule Out Defense Spending Boost Despite Calls (1:30 p.m.)

Prime Minister Boris Johnson appeared to rule out boosting the UK’s defense budget after his defense secretary, Ben Wallace, called for a 20% increase in spending over five years  — and General Patrick Sanders, the UK army chief, said Britain and its North Atlantic Treaty Organization allies must be “unequivocally prepared to fight” if Russia attacks any of their territory.

Speaking as he was set to depart Germany after the G-7 meeting, Johnson told reporters the UK has “more than met our pledge” to spend 2% of national income on defense and last year was the third biggest spender on defense in the world. “I don’t think it will come to that,” Johnson said, when asked if Britain will be forced to fight Russia directly.

Russia Says Mall Strike Wasn’t Intentional (12:20 p.m.)

The Russian Defense Ministry said it carried out a “precision-guided attack” on hangars storing arms and ammunition that Ukraine had received from the US and European countries. It said that the explosion sparked a fire in the nearby shopping mall, which it described as “non functioning.” The ministry didn’t provide evidence to back up its claims, and Ukraine was swift to refute them.

Speaking on national television, Ukraine’s interior minister said there is no military facility within a five-kilometer radius of the shopping mall. He also said that more than 100 missiles were fired at Ukraine in the past three days.

Australian Premier Warns China to Learn from Putin’s Mistakes (3:48 a.m.)

In an interview with the Australian Financial Review, conducted en route to Spain for the NATO summit, Albanese said the Ukraine invasion had brought democratic nations together, “whether they be members of NATO, or non-members such as Australia.”

When asked what message the Chinese government should take from Russia’s invasion, particularly for its ambitions toward Taiwan, Albanese said the war “had shown attempts to impose change by force on a sovereign country meet resistance.”

Read more: Australian PM Warns China to Learn from Putin’s Mistakes

NATO to Label China ‘Systemic Challenge’ (2:26 a.m.)

NATO is set to label China a “systemic challenge” when it outlines its new policy guidelines this week, while also highlighting Beijing’s deepening partnership with Russia, according to people familiar with the matter.

The so-called Strategic Concept document will outline the alliance’s priorities for the coming decade and is due to be signed off by NATO leaders at a summit in Madrid this week. The previous version, published in 2010, made no mention of China and referred to Russia as a partner, wording that is set to be scrapped.

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