The European Union will refrain from immediate gas-price caps amid political divisions and concerns over security of supply, Bloomberg reported.
The European Commission plans Tuesday to propose measures to avoid extreme price spikes in energy derivatives and to use the EU’s joint purchasing power as a leverage in negotiations with global gas suppliers, according to a draft document. The bloc’s executive arm, also wants to launch a new liquefied natural gas index to better reflect the region’s energy reality after a cut in supplies of pipeline gas from Russia.
To create a more direct mechanism to avert gas-price volatility, the package would require trading venues to establish a new temporary intra-day volatility management mechanism in electricity and gas derivatives by Jan. 31, 2023. In a bid to avoid unintended disruptions on markets for less liquid contracts, the tool should focus on front-month energy derivatives, the document showed.
The commission’s plan will be discussed by EU leaders at a summit on Oct. 20-21 in Brussels. They may endorse a plan to “explore a temporary dynamic price corridor on natural gas” that would be implemented before a new LNG index is in place and are likely to support joint gas purchases, according to a draft political statement by the heads of government. In the next step, energy ministers will debate the specifics at a gathering in Luxembourg on Oct. 25.
