The eyes of the EU are forcing fossil fuel companies to help consumers survive the energy crisis

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BRUSSELS, Sep 12 (Reuters) – Fossil fuel companies may have to share their excess profits to help European households and industries cope with scorching energy bills, a European Union draft plan showed on Monday how the cost of “war.” energy “of the West with Russia has taken a growing toll.

Energy prices and inflation spiked as Moscow cut gas supplies in response to Western sanctions imposed on its shares in Ukraine, prompting France to tell consumers they should share some of the pain while Britain is among countries facing the threat of recession.

The draft proposal from the European Commission, which is due to be presented this week, would see the 27 EU countries introduce a “solidarity contribution” for the fossil fuel industry. Read more

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Oil, gas, coal and refining companies are expected to provide a financial contribution based on the taxable profit realized in fiscal year 2022, according to the draft, which may still change and will therefore need to be approved by EU governments.

“Such profits do not correspond to any regular profits that these entities would have or could have expected to make under normal circumstances,” says the EU draft plan, seen by Reuters.

BP (BP.L) and Shell (SHEL.L) did not make immediate comments. TotalEnergies (TTEF.PA) did not immediately respond to a request for comment.

The proposals should also include a life raft for power companies facing a liquidity crisis. But countries are divided over the details and whether to impose a ceiling on the price they pay for gas, diplomats said. Russia said it would cut all supplies if a limit was introduced on its gas. Read more

Meanwhile, companies and governments across Europe have been busy tackling the crisis.

‘IRRESPONSIBLE’

In France, Finance Minister Bruno Le Maire said consumers will be protected by new energy price caps when current ones run out this winter, although there would be some increases as it would be “completely irresponsible to put the burden on. … exclusively on the balance sheet “.

In neighboring Spain, Iberdrola (IBE.MC) said it will guarantee gas and electricity for five months to customers deemed vulnerable by the Red Cross, after which all outstanding bills will have to be paid. Read more

Italy’s main business lobby group, Confindustria, said it was in talks with the government about how a potential gas rationing would take place. Read more

With the EU looking to diversify its energy supply, Finland Gasgrid said it aimed to start importing liquefied natural gas (LNG) via a planned floating terminal in January.

Separately, the EU securities supervisor said it was “actively considering” potential measures to alleviate tensions in energy markets where some participants are having difficulty finding sufficient liquidity to cover positions. Read more

In Britain, where inflation hit a 40-year high of more than 10%, the economy grew 0.2% in July compared to June, less than the expected 0.4%. The sharp rise in energy costs penalized the demand for electricity and a jump in the cost of materials hit the construction sector.

A “small rebound in real GDP in July suggests that the economy has little momentum and is likely already in recession,” said Paul Dales of Capital Economics.

‘TOO LITTLE GAS’

As the European Commission elaborates the new set of EU measures, Norway has warned against gas price caps.

“A maximum price would not solve the fundamental problem, which is that there is too little gas in Europe,” Norwegian Prime Minister Jonas Gahr Stoere said after a phone call with European Commission President Ursula von der Leyen.

Norway, which is a close ally of the EU, has become the bloc’s largest gas supplier after Russia cut exports in the wake of the war in Ukraine, gaining record revenue from its oil industry as prices rise. .

EU ministers have already withdrawn from a price cap aimed only at Russian gas, which accounted for around 40% of the gas in the bloc before the invasion of Ukraine. That share plummeted to 9% as Moscow cut supplies, blaming technical problems caused by the sanctions.

‘UNPREDICTABLE’

Meanwhile, Russia said it was difficult to predict the consequences for gas transit in Europe of a new arbitration process initiated by Ukrainian energy company Naftogaz. Read more

Naftogaz said on Friday that Gazprom did not pay her for the transportation of gas through Ukraine on time or in full.

“There could be a lot of unpredictable things from both our Western colleagues and Ukrainian gas industry leaders,” Kremlin spokesman Dmitry Peskov said. Read more

Natural gas flows from Russia to Europe along key routes remained stable on Monday, while the Nord Stream 1 pipeline remained closed. Read more

Oil prices rose as Iranian nuclear talks seemed to run into obstacles and an embargo on Russian oil shipments loomed, with scarce supply struggling to meet still robust demand. Read more

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Reporting by the Reuters offices; Written by Ingrid Melander; Editing by Alexander Smith, Kirsten Donovan

Our Standards: Thomson Reuters Trust Principles.

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