Bloomberg | EU Weighs Gas [EMBARGO] Price Caps and Benchmarks to COMBAT ["shrinking"] Russian Squeeze, 5 Sep Macron Monday hot cake

The European Union is weighing new gas benchmarks and price caps as Moscow's tightening supply squeeze forces the 27-nation bloc to assess drastic measures to curb spiking energy costs.
[...]
As part of preparations for the gathering, the European Commission is also assessing options to subject the Dutch Title Transfer Facility -- the virtual gas marketplace whose main index is used for long-term contracts in Europe -- to financial supervision to avoid speculation, according to internal EU documents seen by Bloomberg News on Monday.

build back better merit order

"The price premium [op margin, net profit] between the TTF and Europe's LNG delivered ex-ship < wipes tears > indices has widened significantly bringing up questions about its representativeness as an index for linking the contracts in the whole EU-27," the commission said in the document.

--OR--

As a last resort in case of supply disruption in Europe, the EU could also explore temporarily pegging the TTF to the JKM Asian benchmark as a dynamic cap. Yet that would require the use of other hubs or mechanisms to allocate gas inside Europe, the commission said in the document on benchmarks for The Wholesale Gas Market.

buh-bye OPEC. buh-bye Brent. buh-bye WTI

"In this situation, JKM would become The World Price for international gas for some time," the commission said. "The Wholesale mMarket would be therefore determined by LNG supply/demand, and not by the EU's internal bottlenecks. < wipes tears > LNG would still be attracted by the fact transport costs ["a few euros"] are lower to the EU."

< wipes tears >

In the document, the commission stressed that while Russia has already sharply reduced shipments to the EU, this option should only be considered if the bloc is ready to accept a full disruption.

"The price cap should be designed in a way that Russia finds itself worse off under a gas delivery stop than complying with the price cap," the commission said in the document. "Given that in the previous decade (2010/2020), prices of Russian gas have settled between 5 euros and 35 euros/MWh, any cap above that level would ensure that Russia would be above its marginal production costs."

EC | EU-U.S. LNG TRADE a/o Jan 2022
"Europe is currently importing around 90% of the gas it needs [...] Since the meeting of US and EU Commission Presidents in 2018, U.S. LNG exports into Europe increased by 2240%.[...]The fact is that U.S. LNG, if priced competitively, can play an important role in EU gas supply, enhancing diversification and EU energy security."

The EU imported 155 billion cubic meters of natural gas in 2021 from Russia, including liquefied natural gas (LNG).

In 2021, we imported 22bcm of #LNG from the US. This year, from January to August, we have received more than 40bcm. This means that the additional 15bcm of LNG agreed by @vonderleyen and @potus has already been delivered. #REPowerEU

— Kadri Simson (@KadriSimson) September 7, 2022

soooo how to cap US-LNG imports without capping US-LNG prices by Q4?

Southeast Asia is a key region for the global energy system & its #cleantransition. I had a good discussion on deepening EU-ASEAN cooperation with Secretary-General Dato Lim Jock Hoi today & I hope we can restart the #energy dialogue with @ASEAN still this year. pic.twitter.com/WMVXjF32kB

— Kadri Simson (@KadriSimson) September 5, 2022

at USD 40 or EUR 40? Srsly?
S&P | Global gas-to-oil fuel switching to jump 80% as European, Asian gas prices soar, 7 Sep
"The daily physical assessment reached $71.01/MMBtu on Aug. 25, the highest level since March 7, when the benchmark hit a record-high $84.76/MMBtu."

Politico.eu.com | Cap the cost of all gas imports to EU, Belgian PM says, 8 Sep scope adjustment

The European Union should impose a radical plan to cut the cost of energy by capping the price paid for gas imported from anywhere else in the world, Belgian Prime Minister Alexander De Croo said in an interview

The Plan objective—which is not absolute elimination of EU fuel consumption and waste (Q)—has not changed. The feasible domain of EU enforcement has. Establishing an explicit boundary of rationality around the EU27 is nice, given that lingering errors in EU problem recognition d/b/a sanctions against Russian gas restrain holy free trade NORMS and indiscriminately penalize ROW.

cap only on gas imported from Russia...the [sic] mounting economic crises, fueled by Russian President Vladimir Putin's invasion of Ukraine ...cutting gas supplied to the bloc in retaliation for sanctions imposed on Moscow by Brussels

Eurocentricity will not go quietly into the night, figuratively speaking.

Under De Croo's proposal, the cap on all [EU27] gas imports would need to be implemented in a "dynamic way" [EUR-denominated value band; See EC draft] to ensure that there was still a reason [other than "sustainable" value-add/margin/profit transactions?] for traders to sell gas [produced by "third-countries" anywhere] to Europe rather than, for example, in Asian markets.

Asian [LNG] prices are currently about half of those in Europe ["ex-post": "a few euro" freight by wght + P&I + customs FTE admin], De Croo said. If Europe sets The Price Cap 5 percent higher than [JKM] Asia [index], he explained, "all traders in the world will still continue to sell in Europe, because you they still get a price that is more attractive greater than Asia buyers can afford."

epiphany however fleeting

Earlier on Thursday, Belgium's Energy Minister Tinne Van der Straeten went even further and said Belgium would not support the Commission's plan to impose a price cap specifically on Russian gas imports.

"A cap on Russian gas only is a purely political objective," the Green politician told reporters. "I don't see the added value in that. We will not agree to this."

EC | draft electricity market emergency interventions
NB. disposition of revenue earned by renewable energy generators to maintenance of fossil fuel P&E