BAKU, Azerbaijan, October 19. The European Commission has not yet reached consensus on whether to cap the price of gas for end users, with some countries pushing back on the idea due to the significant negative impact it could have on the supply-demand balance, said analyst at Rystad Energy Nikoline Bromander, Trend reports October 19 via the company.
She pointed out that several countries, including Germany, remain fundamentally opposed to a gas price cap on fears it could exacerbate the energy crisis by failing to address the EU’s fundamental supply issues.
“For major gas suppliers such as Norway, which is presently maximizing production to meet Europe’s needs, a price cap could encourage producers to switch back to injecting gas for enhanced oil recovery instead. Firstly, the EC is considering measures to expand the list of assets that companies can use as collateral, boosting their ability to hedge transactions. Secondly, they are considering creating a joint platform for gas purchases, a joint procurement which is key to ensuring that the EU can leverage their market power and avoid competing for a limited pool of volumes. Third, they are planning a new benchmark, with the intention of providing an alternative to the TTF that they feel may better reflect LNG prices,” noted Bromander.
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