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The energy ministers of the European Union will discuss price caps on natural gas as one of the measures to fight excessive energy prices across the bloc, Reuters has reported.
The discussion will take place on September 9 and will involve suggestions such as a price cap on natural gas imports, caps on the gas used for electricity generation, and the temporary exclusion of gas-fired power plants from the bloc’s electricity price-setting system, the report noted.
The President of the European Commission Ursula von der Leyen last Friday called for a price cap to be imposed on Russian gas imports to thwart, as she said, the Russian President’s attempt to manipulate the EU energy market.
Now, however, it seems a price cap for all imports of natural gas is on the table, including from long-term friends such as Norway.
The energy ministers will also look into the paper energy markets at their September 9 meeting, the document seen by Reuters revealed. This market has been drawing growing attention from legislators and regulators because of the excessive volatility that has prompted bailouts for energy utilities worth billions in some European countries.
"The margin requirements for futures contracts have increased commensurately with increased daily price fluctuations. This makes it almost impossible for an increasing number of companies to keep their hedging positions open, triggering their withdrawal from the futures markets," the document said.
Natural gas prices on the spot market in Europe have ballooned by 400 percent over the past 12 months. While most of the spike has been blamed on reduced Russian gas flows, some are beginning to point to the financialization of the energy markets in Europe: the result of deliberate efforts by European institutions aimed, ironically, at reducing the bloc’s dependence on Russian gas, whose supply was in the past contracted on a long-term basis.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.