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9 Sep, 2022 06:10

EU to debate Russian gas price cap – Reuters

The bloc is looking to bring down energy costs as Europe prepares for winter
EU to debate Russian gas price cap – Reuters

EU member states will discuss urgent bloc-wide measures on Friday to rein in skyrocketing energy prices, including imposing a price cap on Russian gas, Reuters reported this week.

According to a draft document seen by the news outlet, EU ministers are expected to meet on September 9 to consider options including a price cap on imported gas, as well as on gas used to produce electricity, or to temporarily remove gas power plants from the current EU system of setting electricity prices.

The ministers will reportedly also consider offering urgent “pan-European credit line support” for energy market participants facing very high margin calls.

“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 says.

It also provides for the possibility of discussions on caps on the margin limits that energy exchanges can ask for, and a temporary suspension of European power derivatives markets.

Former Russian president Dmitry Medvedev warned last week that in the event of a price cap on Russian gas, EU nations will be cut off from the country’s supplies. “It will be like with oil. There will be no Russian gas in Europe,” Medvedev wrote on his Telegram channel.

The indefinite suspension of Russian gas flows via the Nord Stream 1 pipeline to the EU ahead of the approaching winter season has pushed the European energy prices even higher. Last week, Russian energy supplier Gazprom said it would not resume natural gas deliveries to Germany via the key route, due to a malfunctioning turbine.

Nord Stream 1 had been operating at reduced capacity since June due to the shutdown of several gas turbines. Gazprom has cited faulty or delayed equipment due to Western sanctions as the main reason for the reduction of deliveries.

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