November 27, 2022

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Energy, EU: “It is better to negotiate with suppliers than to set a price cap.” Germany and the Netherlands push the ceiling and push for a joint procurement agreement

Milan – At the end of the informal summit of energy ministers in Prague, some positive statements emerged on a common front to address increases in electricity and gas prices. But concrete steps are still postponed for the next few days, while a proposal signed by Germany and the Netherlands is on the table that insists on joint purchase but closes the ceiling on the price of gas, if not for the Russian importer via pipelines. right on me Popular Purchases It turns out that among energy ministers “there is general agreement on the need to move towards common gas purchases by 2023,” said at the end of the meeting Czech Energy Minister Josef Sekila, as President of the Council of the European Union. However, there are no details, particularly as to whether making mass purchases of gas is mandatory or not. Sekila noted that “today’s meeting helped bridge the gap between member states as we move towards a common solution” to lower prices.

The presidency itself said that the European Commission would “present its proposals” against expensive energy “next week. They will be discussed in the official Energy Council on October 25, and another extraordinary meeting of energy ministers can be called to reach a common agreement.” authorized Qadri Simpson Details that official offers will arrive on October 18 with rules for creating a new standard because the Dutch TTF no longer represents the market. As for the Ceiling priceSimpson sounds about Germany’s idea: “We think negotiating the price with suppliers” is a “better” option but if that is not possible, the Commission is looking at a “mechanism to reduce it” anyway. “We will see over the weekend how to proceed with the cap on gas production for electricity production and if the proposal at this point has a large majority in favor of this measure,” he said afterwards, referring to the possibility of capping. Only on the fuel component intended for production.

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Proposal from Germany and Holland

proposal for Germany and the Netherlandsa few days away from made by Italy With three other countries on the basis of introducing a “dynamic” price ceiling on all imported gas. However, in the document presented by Berlin and The Hague, the price ceiling hypothesis remains only in the background and is clearly restricted.

Instead, the informal document (the so-called “paperless”) insists on other aspects. “Public procurement of gas for storagemore coordinated energy diplomacy for gas with trusted partners, further reduction in demand, and a more representative index, but on a voluntary basis, in TTFThese are some of the suggestions at the heart of the file. “The need for a set of actions rather than the implementation of an action,” is the title of the non-paper. In the document, the two countries did not mention the maximum price for importing LNG, but they assert that “it can be considered as a ceiling for Russian gas through the pipeline.” They also suggest being very careful about the gas price cap for LNG production.Electricity.

The Russian president also returned to the gas issue Russian President Vladimir Putin According to Moscow, it is ready to resume gas supplies to Europe by connecting the Nord Stream 2 gas pipeline to Germany under the Baltic Sea, but it never started operating. “The ball – he added – is in the field of Europe.” Putin then put forward the hypothesis of the price ceiling being discussed in the G7: “With their risky decisions, some Western politicians are in fact destroying the global market economy, threatening the well-being of billions of people,” he said. Gazprom’s tone is even more serious: “There is no guarantee that Europe will be able to withstand the winter with its current gas stocks,” CEO Alexei Miller said.

Steps on Ttf

In the introduction to the document, Germany and the Netherlands explain that “a more European approach” is needed to the energy crisis and “it is necessary to reduce gas prices together and achieve independence from Russian energy as soon as possible by ensuring supplies and avoiding rationing.” These proposals also constitute a first response to the proposals of the European Commission wishing to work on gas for electricity production and on TTF. “From the discussion of recent months – the document emphasizes – it is clear that there is no one simple solution. We need a coordinated effort and a set of actions, not just one,” says Albildan.

Among the actions that the non-paper indicates, two also relate to the Amsterdam stock index, where there is only a partial opening. Germany and the Netherlands are actually proposing to develop a “more representative index” but on a “voluntary basis” and at the same time say they are “open to discussing additional measures such as circuit breakers (so-called automatic switches) to deal with high volatility” it is understood that the exchanges where trading is carried out Dutch TTF futures already have circuit breakers.”

Among the proposals is also to increase interdependence between EU countries during potential interventions in the electricity market, Germany and the Netherlands caution: “measures that can increase gas demand and aim for the same sub-marginal revenue should be considered very carefully and also include burden-sharing”.

Along with the two there are alsoAustria, which favors joint negotiation at the European level with reliable suppliers, the United States, Norway and Qatar, rather than setting a price ceiling. To clarify the position of the Minister of Energy, Leonor Gosler, upon arrival at the informal council in Prague. “The first logical step might be to talk to those countries that can support us in terms of supply and prices,” Geweisler explained. The minister emphasized that Austria has been demanding joint gas purchases for some time, and urged swift action to reach an agreement in this regard, “because joint negotiation can mean lower costs.” The position also matches the position of NorwayWhich “does not recommend capping the price of gas. We think the solution is to build in a commercial framework. Our proposal is to pursue that,” said Norwegian Energy Minister Terje Asland in Prague.

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All countries ask UNHCR for a ‘common approach’

A document signed by all European countries and addressed to the Commission also arrives in Prague: “We ask the Commission to take a common approach on a series of measures to address rising gas prices. In recent weeks, we have had open and constructive discussions to address the issue of rising gas prices. We started from different ideas and documents. We met in a spirit of compromise and a shared belief that we need common ground to pave the way for a strong common European response to the crisis.”