HomeMediaLatest NewsNot only Russia: why the European Commission wants to introduce a price ceiling for all gas

Not only Russia: why the European Commission wants to introduce a price ceiling for all gas

19 October 2022

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Forbes on the proposals of the European Commission dated October 18 on regulating wholesale gas prices, coordinating gas purchases and the EU energy solidarity.

The European Commission (EC) is proposing a new package of emergency measures to address high gas prices in the European Union and ensure uninterrupted supplies in the winter, the EC said in a statement. “This will be done through joint gas purchases, price capping mechanisms on the TTF gas exchange, new measures for the transparent use of infrastructure and solidarity among member states, as well as continuous efforts to reduce gas demand,” the statement said.

The issue of trade secrets also arises here, Alexey Belogoryev says. According to him, most contracts for gas supplies are not public and pricing is different there. “It is unprofitable not only for suppliers, but also for importers to disclose this data precisely because the differentiation is very high,” the expert says. — Companies may be required to disclose information about the price and other terms of the contract to some authorized body. But with a heterogeneous market, it will be very difficult to determine a universal price.”

The new rules clarify the notion of “just satisfaction”. "Solidarity Compensation" will be based on the average market price of gas in the 30 days prior to the request for assistance. At the same time, the EU Member States must respond to the request within 12 hours and provide agreed solidarity measures within three days.

“There are logistical problems here: the gas transportation system of Europe is not so developed as to transfer large volumes of gas in reverse mode, such opportunities are far from being everywhere,” the expert says. — The distribution of supply and demand for gas and its reserves across Europe is extremely uneven. I think there will be great difficulties with manifestations of solidarity, during peak periods of demand, national egoism will manifest itself.”

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