Germany Is Skeptical About A Natural Gas Price Cap

Germany is not convinced that a price cap on Russian gas imports would be a smart move, Politico has reported, citing a spokesman for the German economy ministry.

"We remain skeptical when it comes to issues surrounding a gas price cap, but we are generally ready for talks in the European framework," he said.

The idea to cap Russian gas prices was floated earlier this month by European Commission President Ursula von der Leyen.

"I firmly believe that it is now time for a price cap on Russian pipeline gas to Europe," Von der Leyen said last week at a meeting of conservative German legislators. 

"A gas price cap can be proposed at European level, and there also is a legal foundation at European level to skim profits temporarily as an emergency measure at a time of crisis," she also said.

The idea has been taken up by other European officials as well and will be discussed at a meeting of EU energy ministers on Friday. There is also a variation of the price cap idea: Poland has called for a price cap on all imported gas, including LNG.

Politico reports that, according to German government officials, Berlin has misgivings about a gas price cap not because it fears for its own gas supply but because of concern about supply to Central Europe: Russia may respond to price caps with a halt of gas flows via Ukraine, flows that go to Central European countries, threatening the regional gas supply situation.

Norway, meanwhile, has signaled it was willing to discuss lower prices for the gas it sells to Europe, along with long-term contract commitments.

“I fully understand that Europe now has a profound debate about how energy markets work, how they can secure more affordable prices for citizens, families, industries, how this shortfall of gas after [Russian president Vladimir] Putin’s aggression can be handled,” said the country’s Prime Minister, Jonas Gahr Større, this week, as quoted by the FT.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

• The Global Gas Crisis Is Spilling Into The United States
• Russia Is Now Producing LNG Near The Shuttered Nord Stream Pipeline
• “Lehman Event” Looms For Europe As Energy Companies Face $1.5T In Margin Calls