Why solutions for bringing down gas prices remain elusive

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EU energy ministers meeting in Prague yesterday failed to coalesce around a gas price cap and are still waiting for the European Commission proposals, due next week. We’ll bring you the latest on the debate ahead of the leaders’ summit on October 20-21.

We’ll also hear from Poland, where the government is on high alert after a suspicious leak was detected at a Russian oil pipeline — sabotage not being excluded.

Bosnia and Herzegovina meanwhile got a conditional thumbs up from the commission yesterday on being granted EU candidate status, pending a slew of outstanding reforms. The bloc’s leaders are expected to decide whether to take this step at a summit in December.

In Luxembourg, EU justice ministers are gathering today to discuss the prosecution of war crimes in Ukraine, as well as a proposal made by France to expand the powers of the recently-created European Public Prosecutor’s Office, to pursue people evading the EU’s sanctions regime against Russia.

And for today’s profile, we look at the Greens’ new co-leader in the European parliament, Germany’s Anglophile Terry Reintke.

To cap or not to cap

Nature abhors a vacuum, and so do EU governments. Energy ministers (or their state secretaries) from 27 countries spent another day exchanging hot air in a meeting room in Prague, pending concrete proposals from the European Commission on how to bring down energy prices, writes Andy Bounds in Brussels.

Energy commissioner Kadri Simson did at least confirm that the document will come on October 18. She said it would include four elements, notably a common purchasing platform to buy gas at lower prices than the market rate.

This has risen hugely since Russia’s war in Ukraine and its decision to almost completely turn off the taps to Europe.

“This will allow the EU to use our collective purchasing power to limit prices and avoid that member states are outbidding each other on the market and driving up prices when doing so,” Simson told reporters after the meeting.

Commission officials are still deciding whether participation will be mandatory, as the FT revealed yesterday. They fear that otherwise it will be difficult to get companies to sign up. They could use Article 122 of the European treaty, which gives the EU sweeping powers to address supply shortages, since the gas would be used to fill storage facilities this spring and summer ahead of next winter.

In a related move, the commission could change a voluntary commitment by member states to reduce gas use by 15 per cent into a compulsory one.

“Any measures we take to lower prices must not send the wrong signals that would drive up consumption across the EU,” Simson warned.

The third idea is to enforce solidarity of supply, ensuring that countries with enough gas transfer to those running short. This again might or might not be mandatory.

Finally, officials will try to create an alternative benchmark to the Amsterdam-set Title Transfer Facility (TTF) for gas prices, which has been highly volatile. “It is no longer representative of the energy market and artificially increases prices,” Simson says.

These ideas all appear in a joint paper from the Netherlands and Germany that was circulated just ahead of the meeting. The two countries are fighting against the idea from several others of imposing a price cap on gas imports, which would float below the market price but high enough to attract suppliers.

Jozef Síkela, the Czech economy minister who chaired the talks, said: “I firmly believe that today’s meeting has helped to bridge the gap between member states and that we are moving towards a common solution.”

But a diplomat from a country backing price caps disagreed. “All the countries just restated their position. Without a commission proposal to discuss you cannot make progress.

“There were some bilaterals outside the meeting which might bring some compromise. The price cap idea is very much alive.”

The commission proposal will be discussed by leaders at a European summit next week, and then again by energy ministers on October 25. A final decision could come at an emergency energy council in November, diplomats said, by which time winter will have well and truly arrived.

Chart du jour: British gilt

The Bank of England battled a renewed sell-off in UK government bonds yesterday after it pledged to end its emergency gilt-buying programme. Markets were already unsettled by the fiscal plans of prime minister Liz Truss.

Jittery Poland

It’s a sign of the times in Poland that news early yesterday of an oil pipeline leak immediately made the headlines, write Raphael Minder and Barbara Erling in Warsaw.

In the midst of a Russian-engineered energy crisis and as Sweden continues its investigation into suspicious explosions on the Nord Stream gas pipelines, tensions are running high in Poland and other countries that border Ukraine and also have energy infrastructure linking them to Russia.

Initially, Polish state secretary for energy Mateusz Berger said there were no grounds to suspect sabotage for the leak on the Polish section of the Druzhba pipeline system that carries crude oil from Russia to Germany and other parts of central Europe.

But in an evening interview with Polish public radio, Prime Minister Mateusz Morawiecki kept open a possible Russian involvement in the oil leak, saying that the investigation would determine whether “it is a coincidence or it is really an act of sabotage”. Morawiecki added: “Many signs may point right away at the Kremlin, but we want to be responsible and then confirm the guesses.”

The incident, which took place near the town of Płock, in central Poland, is likely to be seen as vindication for the Polish government’s decision to raise last week by one notch an alert warning system that is used to determine the level of overseas terrorism threats against energy infrastructure.

It could also accelerate Poland’s drive to end all imports of Russian oil before year-end and rely instead on oil brought by tankers to its port terminal in Gdańsk. Whatever happened to the pipeline near Płock, “oil deliveries are moving to the sea,” said Polish fuel market analyst Jakub Bogucki.

Friend in mid-level places

Relationships between the UK and EU have warmed up rapidly since Liz Truss took office as prime minister last month. Now London has another influential friend in the European parliament, writes Andy Bounds.

Terry Reintke was elected co-president of the Green group this week. The German organised a singing of Auld Lang Syne, a Scottish hymn to friendship, when MEPs voted for the UK’s withdrawal agreement in January 2020.

Her office contains a shrine to the departed member of the EU, including fan mail from Brits who want the country to rejoin.

“My parents were half-British,” she joked, given their love for TV, films and visits to the island. She grew up in North Rhine-Westphalia, where British troops were billeted during the cold war.

“It is completely incomprehensible that the UK and EU are not working as closely as possible. There are not so many stable democracies you can rely on.”

Reintke, 35, hopes talks to resolve differences over trading arrangements with Northern Ireland, which restarted last week, will produce results. But she warned any solution must be “sustainable” given London’s history of failing to implement deals it has agreed.

Her other priorities include helping the heavy industry in her native Ruhr valley to decarbonise using hydrogen and other technologies.

She is also an advocate of the rule of law and worries about the commission potentially approving money for Poland and Hungary, despite what she argues are continuing breaches of human rights.

Reintke will marshall support for parliament to vote against signing off the EU accounts in that event. And in extremis, the Greens, who are the fourth biggest party, will call for a motion of censure, a rare event that could bring down the commission. However, mustering a parliamentary majority will probably prove impossible.

What to watch today

1. Nato defence ministers meet in Brussels

2. Justice ministers meet in Luxembourg

Notable, Quotable

We mustn’t let Putin win with his strategy of endangering our economic prosperity

• Die Inflation: German vice-chancellor Robert Habeck told the FT that inflation in his country would average 8 per cent over the whole of this year and 7 per cent next year — far above the ECB’s 2 per cent target. He predicted German inflation would fall to 2.4 per cent in 2024.

• Belarus front: Belarus is being dragged by Moscow into opening a new front in the war in Ukraine, which could force Kyiv to divert resources and attention away from its counteroffensives in the east and south of the country.

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