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EU gas price will cost 33bn.

 

Energy traders would have to stump up an additional $33bn in margin payments if a plan by Brussels to cap the price of a key European gas benchmark goes ahead, a leading exchanges operator has warned. Producers and traders that rely on the Dutch TTF futures market face an 80 per cent rise in the payments they make as insurance to secure their deals, Intercontinental Exchange has told the European Commission, according to a memo seen by the Financial Times. Such a large increase in margin requirements could «destabilise the market», ICE, the Atlanta-based group that runs the TFF market, said. Margin requirements on swaps and futures used by energy producers have already doubled this year, according to the European Central Bank, forcing many firms to draw on bank credit lines and conduct more trades privately, where margin requirements are lower.

ICE’s warning comes as EU authorities race to finalise a planned ceiling on the region’s gas prices, which soared over the summer as Russia’s invasion of Ukraine and high temperatures hit supplies, curbed economic output in the bloc and forced energy suppliers to seek billions of euros in emergency funds. The Commission on Tuesday proposed to limit the price of the upcoming contract on the TTF market. Brussels proposed capping the gas price if it hits €275 per megawatt hour for two consecutive weeks and if the difference between it and a benchmark for European liquefied natural gas costs is €58 per MWh or more for 10 days within those weeks. The AFM, the Dutch regulator that oversees the TTF futures market, has warned that a cap could temporarily halt trading and force more deals to be negotiated away from the exchange.

Comments

  1. John24 November 2022 at 11:15

    I wonder how much of a calculated move was the invasion of Ukraine? It seems to me that Putin was expecting it to be over within 1-2 months and everything that has happened afterwards was just a "let's decide as we go along" kind of thing. People are suffering everywhere, even in Russia, because of this stupid and pointless conflict.

    ReplyDelete
    Replies
    1. William M.24 November 2022 at 15:08

      It’s going to be a hard winter for a lot of us. The conflict doesn’t seem to be ending any time soon so we better brace for at least one difficult winter if not more.

      Delete

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