The price of European natural gas futures increased on Wednesday as the EU abandoned its plan to control the cost of gas imports from Russia in response to opposition from its 27 member states.
After EU Commission President Ursula von der Leyen acknowledged that it would be impossible to put into action the measure she proposed last week, benchmark Dutch TTF prices were up 7.6 per cent at 213.65 per megawatt-hour by 09:30 ET (13:30 GMT).
In an address to the EU parliament, Von der Leyen stated that the Brussels-based executive of the union would instead establish a new task force with member states to engage with important suppliers like Norway over decreasing pricing.
Norway’s significance as a supplier has increased this year as a result of Russia restricting supplies in an effort to put pressure on Europe to stop supporting Ukraine. The Nord Stream 1 pipeline to Germany was abruptly shut down last month by the Russian gas monopoly Gazprom (MCX:GAZP), citing technical issues.
The price cap proposal, which many believed would have asymmetric impacts that would damage some member states significantly more than others without delivering sufficient compensation, had failed to garner consensus at a meeting of EU Energy Ministers last week. Many claimed that the action also ran the risk of upsetting potential rival suppliers like Algeria and Libya. The prime minister of Norway, Jonas Gahr Store, had also voiced his opposition to a price cap, claiming that it wouldn’t address the EU’s concerns with a lack of gas.
Von der Leyen’s address, however, gave the impression that the bloc will probably continue with a windfall tax on oil and gas producers as well as with a mechanism to sever the link between gas and electricity pricing.