Filenews 9 September 2022
The European Commission's proposal to impose a price cap on Russian gas did not find a listening ear among EU energy ministers, who at today's meeting decided they would not support the proposal, according to two European diplomats.
In fact, European energy ministers are pushing the European Commission to find other ways to rein in the price of imported gas.
This is because they fear that imposing a cap only on the price of imported Russian gas will push the Russian president, Vladimir Putin, to "respond" by completely turning off the taps to the EU, depriving the bloc of even the small quantities that are currently arriving in Europe.
However, it is unclear how the bloc will be able to convince suppliers to agree to lower the selling prices of gas.
Some energy ministers in the member countries are calling for a price cap on all gas imported into the European Union, and the idea of joint gas markets is being promoted.
"There is a wide-ranging debate on limiting the price of gas and the Commission should present a proposal that will help reduce prices for all gas, but at the same time will not jeopardise Europe's gas supply," one of the diplomats said, speaking to Reuters about what was happening behind the closed doors of the meeting of European energy ministers.
On the other hand, EU energy ministers support a cap on the profits of energy companies, as well as the proposal to provide liquidity to trading companies to cope with the hurdle of increased margin calls in transactions.
Gas prices, which are about eight times higher than the current average levels, continue to show strong volatility this week as well, as traders assess energy supply concerns amid eu efforts to mitigate the impact of the energy crisis on households and businesses.
EU energy ministers failed today to reach an agreement on a cap on Russian gas and authorised the European Commission to consider other possible emergency measures, such as a total cap on all imported gas.
Ministers also asked Brussels for a draft proposal to cap the revenues of companies that produce electricity from sources other than gas. These proposals should be delivered by mid-September.
"We should continue our work on all fronts," Energy Commissioner Kadri Simpson said while speaking at the press conference after the conclusion of the ministerial meeting.
"We will present next week groundbreaking proposals for an unprecedented situation," he added.
When asked about the gas cap, he said that "nothing is off the table."
"But we are also looking at other ways to reduce prices, it is very important to reduce the Russian supply of alternative supplies from reliable partners, it is important to diversify, to conclude agreements with reliable partners," he said.
At the same time, he noted that the EU has prepared for the possibility of Moscow completely cutting off gas supplies to Europe.
Some countries have reacted to the proposal to impose a cap on Russian gas due to concerns about retaliation from Moscow, diplomatic sources said earlier today. Russia has warned that such a measure will lead to a complete freeze on gas flows to Europe. Against the backdrop of these concerns, ministers concluded that "further work is needed" to launch such a measure.
Measures to enhance liquidity
Ministers asked the Commissions to also come up with emergency measures to provide liquidity in an effort to address the shocks in the European market. Earlier today, European Central Bank President Christine Lagarde made it clear that the central bank is not in a position to provide liquidity to energy companies.
"In this current, very unstable environment, it is important to put in place fiscal measures to provide liquidity to healthy energy market companies, especially utilities," Lagarde said while speaking at a press conference in Prague today.
"As far as the ECB and the national central banks of the Eurosystem are concerned, of course we are ready to provide liquidity to banks, not to energy companies," he added.
Source: Capital.gr
