EU tells countries gas price caps would come with risks

BRUSSELS, Sept 28 (Reuters) – The European Commission has warned EU countries that a wide cap on gas prices could be complex to launch and pose energy security risks, as countries call on Brussels to intervene to control high fuel prices.

The Commission shared a document with countries on Wednesday, analyzing various options the EU could consider to reduce high gas prices, after 15 of the bloc’s 27 member states this week urged the EU to propose a cap on gas prices. gas price.

The document, seen by Reuters, says a wholesale price cap for swap transactions – covering both liquefied natural gas and pipeline supplies – could disrupt fuel flows between EU countries .

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Indeed, price signals would no longer help direct flows to regions where demand is high or supply is scarce, the Commission said. He suggested that such a price cap could only work if a new entity was launched to allocate and ship scarce interstate fuel supplies.

The EU would also need “significant financial resources” to ensure countries can continue to source gas from competitive global markets where other buyers may be willing to pay prices above the EU’s cap. EU, the Commission said. He did not specify where these resources might come from.

A broad cap on wholesale gas prices would pose a greater “risk of triggering supply disruptions” from foreign suppliers than a cap on pipeline deliveries alone, he added.

The Commission has analyzed other options to deal with the energy crisis, including lower caps on gas prices.

The EU could cap the price of Russian gas imports or cap the price of gas used to generate electricity to rein in high electricity prices, the document says.

The Commission recommended the EU negotiate with “reliable” suppliers to reduce prices and said joint purchasing of gas could also help countries share additional supplies fairly.

EU countries disagree on whether a wide gas price cap would ease supply shortages and soaring energy prices caused by Russia’s sharp cut in supplies towards Europe.

France, Italy, Poland and 12 other countries urged Brussels on Tuesday to propose a cap on wholesale gas prices to help curb soaring inflation. Germany, the Netherlands and Denmark are among the opponents.

Discussions on possible gas price caps will continue at a Friday meeting of EU energy ministers, who must also approve a package of measures proposed by Brussels last week, including taxes on windfall profits of energy companies.

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Reporting by Kate Abnett; Editing by Charlotte Van Campenhout and David Evans

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