The European Union restores the profits of energy companies instead of capping the price of Russian gas

BRUSSELS (Reuters) – European Union energy ministers on Friday tasked Brussels with drafting proposals within a few days to reduce the revenues of non-gaseous energy producers and help energy companies stay afloat.

But as they sought to protect citizens from rising energy prices that have driven inflation across the continent to record levels, ministers have backed away from more divisive proposals to curb Russian gas prices.

At an emergency meeting in Brussels, ministers instead asked the European Commission to propose broader ceilings for gas prices, even as the European Commission itself quickly poured cold water on the viability of such an idea.

EU countries have also endorsed the Executive’s proposal to provide emergency funds to energy companies facing increased safeguards requirements, and tasked the Commission with designing such measures.

“Everyone is in a hurry to find a solution” amid ministers’ concern about the impact of higher energy prices on homes and businesses, Swedish Energy Minister Khachiar Fermanbar said.

The EU windfall plan, yet to be clarified, would see governments cut excess revenue from wind and nuclear and coal-fired power plants that can currently sell their power at record prices determined by the cost of gas, and use the money to rein them in. Consumer bills.

The summary of the meeting stated that fossil fuel companies would have to pay a “solidarity contribution”.

“Taking some of that extra profit and recycling it back home makes sense,” Irish Environment Minister Eamon Ryan said on Friday of the commission’s recommendations.

It is due to unveil the proposals on Tuesday. Czech Industry Minister Josef Sekila said energy ministers may hold another emergency meeting later this month to negotiate and approve final plans.

There is no ceiling for Russian gas prices now

Russian President Vladimir Putin said this week that Moscow would cut off all supplies to Europe if a price cap on Russian gas was applied. Some countries still receiving Russian gas said they were not willing to risk losing that supply.

“If price restrictions are imposed exclusively on Russian gas, it is clear that this will lead to an immediate cut off of Russian gas supplies,” said Hungarian Foreign Minister Peter Szyjjarto.

Italy’s Environmental Transition Minister Roberto Singolani said 15 EU countries have spoken in favor of capping prices for all gas imports. But countries, including the Netherlands, have expressed doubts.

“I wouldn’t say there is broad support for a broad (gas) cap,” Dutch Minister of State for Extractive Industries Hans Villbreev told reporters.

The European Commission has warned that capping LNG prices in Europe could risk diverting it to other regions instead, depriving Europe of much-needed fuel.

“We have to be careful not to jeopardize our security of the supply situation,” said EU Energy Commissioner Kadri Simsun.

The EU executive did not include a general cap on gas prices in the list of measures he proposed to countries ahead of Friday’s meeting.

Refinitiv data showed that shipments of Russian gas pipelines through the three main routes to Europe have fallen by nearly 90% in the past 12 months. Moscow has blamed the supply cuts on technical problems caused by Western sanctions over its invasion of Ukraine.

VNG [RIC:RIC:VNG.UL]On Friday, one of Germany’s largest importers of Russian natural gas became the latest European energy company to seek government support due to supply cuts in Moscow. Read more

With EU countries backing the idea of ​​EU-wide “emergency liquidity tools” to help companies facing increased collateral requirements, European Central Bank President Christine Lagarde said on Friday that governments, not central banks, should help energy companies under pressure from market volatility. . Read more

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(Reporting by Kate Abnett). Additional reporting by Jan Luptaka, Sabine Siebold, Bart Meijer and Maren Strauss. Writing by Ingrid Melander and Kate Abnett; Editing by Edmund Blair, Elaine Hardcastle and Thomas Janowski

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