Ukraine’s president hinted at progress in the Kherson-region counteroffensive after at least the third meeting in the past eight days with top military commanders. “Ukrainian flags are returning to the places where they should be,” Volodymyr Zelensky said.

Europe is bracing for another spike in energy costs and potential rationing after Russia’s Gazprom PJSC didn’t reopen the key Nord Stream 1 gas pipeline as planned on Saturday, citing a newly discovered fault. The EU said Gazprom was acting on “fallacious pretences.”

Germany’s government announced a $65-billion cost of living support package. Sweden and Finland took action to help stabilise power markets while tens of thousands of Czechs protested on Saturday, demanding help with rising energy bills as petitions circulated calling for a direct contract with Russia for cheap gas supplies.

Key developments

• Europe looks set for energy rationing after Russian gas cut
• Germany takes aim at cost of living crisis in $65bn plan
• Thousands protest in Prague over energy crisis 
• Sweden sets up $23bn emergency backstop for utilities
• Sullivan retires as US ambassador to Russia, embassy says

On the ground

Russian shelling of the port town of Ochakiv in the southern Mykolaiv region destroyed an elevator with several thousand tons of grain, deputy mayor Oleksiy Vaskov said. The shelling also destroyed several houses, he said. Russia continues to focus on establishing control over the Donetsk region, holding the captured areas of Kherson, Kharkiv, Zaporizhzhia and Mykolaiv, Ukraine’s defence ministry said. It said Russian troops launched more than 10 missiles and more than 24 air strikes on military and civilian targets in Ukraine in the past day. Russia’s defence ministry said on Sunday it had destroyed a Ukrainian command unit in the Kharkiv region.

Zelensky hints at advance after meeting commanders

Volodymyr Zelensky met his top military commanders on Sunday for at least the third time in eight days to discuss the situation on the frontline, saying afterwards that, “Ukrainian flags are returning to the places where they should be by right.”

The comment appeared to refer to an image that circulated widely on social media on Sunday of Ukrainian troops raising their national flag on what was said to be a hospital in Vysokopillya, west of the Dnipro River in Kherson oblast.

Ukrainian forces are trying to advance in the Kherson region, which Russia occupied shortly after the start of its invasion. There were unconfirmed reports on Sunday that Kyiv’s troops had recaptured Vysokopillya.

Finland, Sweden take steps to stabilise power markets

Sweden’s government will provide Nordic and Baltic utilities as much as $23.2-billion in credit guarantees as it seeks to prevent Russia’s energy curbs from setting off a financial crisis, it said on Sunday.

Separately, Finland will set up a €10-billion emergency backstop to help utilities weighed by surging collateral demands as they trade on volatile power markets.

The moves are just the latest knock-on effects from Russia’s war in Ukraine and its choking off of gas supplies to Europe.

Kyiv to boost electricity exports to Romania, Slovakia

ENTSO-E, the European grid operators network, agreed to allow Ukraine to increase electricity exports to the EU by a fifth during daytime hours, the state-run Ukrenergo said on its website on Sunday.

Ukraine will ship 300MW from 7am to 11pm from Monday to Friday and from 9am to 11pm at weekends, Ukrenergo said. The country’s electricity exports are to remain at 250MW in overnight hours.

The increase will start on Monday with Ukraine shipping 125MW to Romania and 175MW to Slovakia. From Tuesday exports will be 150MW to each destination, Ukrenergo said.

US ambassador to Moscow steps down

John Sullivan, the US ambassador to Russia, ended his tenure after almost three years and had departed the country, the US embassy in Moscow said on its website.

The nomination of a new ambassador by President Joe Biden will be subject to approval by the US Senate. It comes as tensions between Moscow and Washington are running high after Russia invaded Ukraine.

Ukraine says Black Sea grain shipments reach 2 million tons

Grain shipments from three Ukrainian Black Sea ports continue under a safe-transit deal reached in July with the help of the UN and Turkey, which runs a joint coordination centre for the cargoes in Istanbul.

Another dozen ships loaded with grain left Ukrainian ports on Sunday morning, Turkey’s defence ministry said on Twitter. Oleksandr Kubrakov, Ukraine’s infrastructure minister, put the flotilla at 13 ships carrying a total of 282,500 tons to eight countries.

So far the Black Sea initiative has moved 2 million tons, Kubrakov said. Shipments from Ukraine have helped alleviate global shortages and driven a sharp drop in grain prices.

Zelensky speaks to EU’s Von der Leyen

Ukraine’s president spoke by phone Sunday with European Commission President Ursula von der Leyen, he said on Twitter.

Among the topics was the next tranche of European aid to Ukraine, which is expected to be offered this week, and potential further sanctions on Russia.

Scholz blames Putin for Germany’s gas squeeze

Germany’s leader put the responsibility for the European gas squeeze on Russian President Vladimir Putin as the government in Berlin announced a new support package to help citizens cope with spiralling energy costs.

“Putin’s Russia has broken its contracts,” said Chancellor Olaf Scholz. “This is part of the new reality… Russia is no longer a reliable supplier.”

Scholz nonetheless assured Germans that the nation would have enough gas to get through the winter, even though Russian supplies from the Nord Stream 1 pipeline have been suspended indefinitely. Germany’s energy regulator said on Sunday that storage levels are already at 85%.

Ukraine expects €5bn in EU aid this week, says PM

Ukraine expects to get €5–billion in European Union assistance this week, Prime Minister Denys Shmyhal said after meeting with German President Frank-Walter Steinmeier in Berlin. Schmyhal also said Germany would provide €200-million to support some of the millions of people displaced within Ukraine.

“We are grateful to Germany and all countries of the European Union for financial assistance,” Shmyhal said in an emailed statement. The funds will be used to “ensure our economy’s resilience, army support and going through heating season,” he said.

Ukraine also hoped to get more heavy weaponry from Germany, and expected to receive a “super modern” German-made air defence system IRIS-T this autumn, he said.

Germany inks deal for €65bn cost of living aid

Germany’s coalition government agreed on a relief plan worth about €65-billion to help millions of households struggling with soaring prices as Russia once again cut off gas supplies via the Nord Stream 1 pipeline.

“The rapid and appropriate relief for citizens and the economy is necessary due to the sharply increasing burden of high energy prices,” the government said.

Energy rationing looks all but inevitable in Europe

Energy rationing in Europe this winter is looking all but inevitable after Russia’s Gazprom made a last-minute decision not to turn the crucial Nord Stream pipeline back on after maintenance.

The European Union has already created a voluntary 15% demand reduction target for gas, with the option of making it obligatory if needed. The bloc’s energy ministers plan an emergency meeting on Friday to decide on the next steps.

Read more: “Europe Looks Set for Energy Rationing After Russian Gas Cut”

Russia looks to sow ‘political chaos’ across Europe, says Zelensky

The eleventh-hour move by Russia’s Gazprom to keep the Nord Stream 1 gas pipeline closed is part of “a decisive energy attack on all Europe,” Ukraine’s president said.

In his nightly video address on Saturday, Volodymyr Zelensky said Russia “wants to weaken and intimidate the entire Europe, every state.” President Vladimir Putin’s government “is trying to attack with poverty and political chaos where it cannot yet attack with missiles,” Zelensky said.

His comments came hours after tens of thousands of Czechs took to the streets in protests tied to high energy costs and a cost of living squeeze.

IAEA’s Grossi plans report on Ukraine nuclear situation

The head of the UN’s atomic agency said he plans to publish a report within days on “the situation with physical, nuclear security and guarantees” across Ukraine.

A team from the International Atomic Energy Agency led by director general Rafael Mariano Grossi visited the Zaporizhzhia plant on Thursday. Grossi called the ability to establish a permanent presence of IAEA monitors at the plant “a game changer”.

Separately, the mayor of Enerhodar, the town nearest the atomic plant, said Russian troops were impeding the delivery of humanitarian aid for citizens including medication, baby formula and material to repair windows shattered by shelling.

Russia failing to properly equip and pay its troops, says UK

Russian forces in Ukraine are likely to be suffering from morale and discipline issues as the invasion grinds toward its seven-month mark, the UK defence ministry said.

“One of the main grievances from deployed Russian soldiers probably continues to be problems with their pay,” the UK said, offering no direct evidence for a claim that “sizeable combat bonuses” aren’t being paid.

“The Russian military has consistently failed to provide basic entitlements to troops deployed in Ukraine, including appropriate uniform, arms and rations, as well as pay. This has almost certainly contributed to the continued fragile morale of much of the force,” the ministry said in a tweet. DM