Germany, Netherlands propose EU-wide plan to curb gas prices

Model of natural gas pipeline and EU flag, July 18, 2022. REUTERS/Dado Ruvic/Illustration

BRUSSELS, Oct 12 (Reuters) - Germany and the Netherlands have proposed a package of 10 measures that the European Union could use to curb gas prices and avoid fuel rationing, including looking into setting a new benchmark price for liquefied natural gas.

The plan, seen by Reuters and shared with other EU countries before the bloc's energy ministers meet on Wednesday, calls for the EU to kickstart joint gas buying, to avoid one country outbidding another and driving prices higher.

The two countries said they were open to the EU creating a new LNG benchmark, and asked the European Commission to develop this, while assessing whether such a price needed to remain voluntary. They said a broad gas price cap on imports was a less preferable option.

Germany and the Netherlands - the former heavily dependent on Russian gas before Moscow invaded Ukraine, and the latter a major gas trading hub - have previously warned that a cap on gas prices could endanger Europe's energy security, if it left countries struggling to attract supplies from price-competitive global gas markets.

"Negotiations with our partners to look for mutually beneficial partnerships are much preferred to a cap," the document said.

The document, first reported by Bloomberg, instead recommended that the EU should launch negotiations with non-Russian suppliers like the United States, Algeria and Norway, to attempt to bring down prices.

A price cap on Russian gas could also be considered, but only if workable for the countries it would affect most, the document said.

Brussels proposed a Russian gas price cap last month, but shelved the idea after resistance from central and eastern countries that feared Moscow would retaliate by cutting off the limited supplies it still sends to Europe.

The two countries struck a cautious tone on measures targeting the price of gas in the electricity sector, after some states have called for an EU-wide rollout of a Spanish and Portuguese scheme that caps the price of gas used for power generation.

"Measures in the electricity sector which might increase the gas demand and targeting the same inframarginal rents should be considered very carefully and also should include burden sharing," Germany and the Netherlands said.

Reporting by Kate Abnett; editing by John Stonestreet

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