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EU Scraps Price Cap On Russian Natural Gas

The European Commission is walking away from the idea of proposing a price cap on Russian gas as part of measures to tackle the energy crisis, the Guardian reported on Tuesday, citing a leaked draft document of proposals it had seen.  

The draft document, expected to be unveiled on Wednesday, contains no reference to any price cap on gas, be it Russian or not, according to the leak viewed by the Guardian.  

Last week, the European Commission said it would propose a mandatory target for the EU to cut power consumption at peak hours, a revenue cap on electricity producers and fossil fuel companies, and a price cap on Russian gas as immediate measures to save the European gas and electricity markets and help vulnerable consumers.

"We will propose a cap on Russian gas. The objective here is very clear. We must cut Russia's revenues which Putin uses to finance this atrocious war against Ukraine," European Commission President Ursula von der Leyen said last Wednesday.  

However, EU member states remain deeply divided over a price cap on Russian gas, with at least ten out of 27 governments reportedly opposing such as move over concerns that Putin might retaliate with a complete halt of gas supply to the whole of Europe. Germany, Europe's biggest economy and the most affected EU member by the now-shut Nord Stream pipeline, isn't supportive of the plan, either. 

Related: China's Annual Oil Demand Could Drop For The First Time In 20 Years

Another group of EU countries, which include France and Poland, pushed for a price cap on all imported gas. However, the European Commission is wary of this idea because a cap would hurt Europe's ability to draw in large volumes of LNG if prices elsewhere are higher. 

The gas price cap is thus unlikely to make it in Wednesday's proposal from the Commission, although the draft is still subject to changes, according to the Guardian. 


But the EU executive arm is said to be pressing forward with a cap on revenues for nuclear and renewable power producers and a levy on the extra profits of the fossil fuel companies, including the refining sector, sources with knowledge of the discussions told Bloomberg on Tuesday. 

By Tsvetana Paraskova for Oilprice.com

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  • Lori Moran on September 13 2022 said:
    Maybe the European ally countries producing liquid natural gas should flood the market with first rights going to the European countries being affected by Russia driving the prices down.
  • Mamdouh Salameh on September 13 2022 said:
    This was inevitable since a proposed capping of the price of Russian gas supplies will only result in crippling energy bills and the virtual collapse of some European economies without harming Russia. Instead, Russia will continue to rake in cash as evidenced by the rise of gas export revenues of Russia’s gas giant Gazprom’s to an estimated $100 bn this year.

    Let us hope that the EU will see sense and lift sanctions against Russia altogether if it wants to avoid freezing in winter and witnessing the virtual collapse of its economy.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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