EU eyes levy on fossil gasoline companies to assist customers survive power disaster By Reuters

By Kate Abnett and Ingrid Melander

BRUSSELS (Reuters) -Fossil gasoline companies could must share their extra earnings to assist European households and industries address red-hot power payments, a draft European Union plan confirmed on Monday as the price of the West’s “power struggle” with Russia took a rising toll.

Power costs and inflation have surged as Moscow slashed fuel provides in response to Western sanctions imposed over its actions in Ukraine, prompting France to inform customers they must share a number of the ache whereas Britain is amongst international locations going through the specter of recession.

The draft European Fee proposal, which is predicted to be unveiled this week, would see the 27 EU international locations introduce a ‘solidarity contribution’ for the fossil gasoline business.

Oil, fuel, coal and refining corporations must make a monetary contribution primarily based on taxable surplus earnings made within the 2022 fiscal 12 months, in keeping with the draft, which might nonetheless change and can then should be authorized by EU governments.

“These earnings don’t correspond to any common revenue that these entities would or might have anticipated to acquire in regular circumstances,” the draft EU plan, seen by Reuters, mentioned.

BP (NYSE:) and Shell (LON:) had no rapid remark. TotalEnergies didn’t instantly reply to a request for remark.

The proposals are additionally anticipated to incorporate a life-raft for energy companies going through a liquidity crunch. However international locations are cut up over the small print and whether or not to impose a cap on the worth they pay for fuel, diplomats mentioned. Russia has mentioned it might lower all provides if a cap on its fuel was launched.

In the meantime, throughout Europe corporations and governments scrambled for methods to deal with the disaster.

‘IRRESPONSIBLE’

In France, Finance Minister Bruno Le Maire mentioned customers can be protected by new caps on power costs when present ones run out this winter though there can be some will increase as it might be “fully irresponsible to place the burden … solely on the state price range”.

In neighbouring Spain, Iberdrola (OTC:) mentioned it might assure fuel and energy provide for 5 months to prospects deemed weak by the Pink Cross, after which all excellent payments should be paid.

Italy’s important enterprise foyer group Confindustria mentioned it was in talks with the federal government about how any potential fuel rationing would happen.

With the EU looking for to diversify its power provide Finland’s Gasgrid mentioned it aimed to start importing liquefied (LNG) by way of a deliberate floating terminal in January.

Individually, the EU’s securities watchdog mentioned it was “actively contemplating” potential measures to ease strains in power markets the place some individuals face difficulties to find sufficient money to cowl positions.

In Britain, the place inflation has hit a 40-year excessive of greater than 10%, the economic system expanded by 0.2% in July in comparison with June, lower than the 0.4% anticipated. The sharp climb in power prices harm demand for electrical energy and a leap in the price of supplies hit the development sector.

A “disappointingly small rebound in actual GDP in July means that the economic system has little momentum and might be already in recession,” mentioned Paul Dales at Capital Economics.

‘TOO LITTLE GAS’

Because the European Fee drafts the brand new collection of EU measures, Norway warned towards fuel worth caps.

“A most worth wouldn’t resolve the elemental downside, which is that there’s too little fuel in Europe,” Norwegian Prime Minister Jonas Gahr Stoere mentioned after a name with European Fee President Ursula von der Leyen.

Norway, which is a detailed ally of the EU, has change into the bloc’s largest provider of fuel after Russia in the reduction of exports within the wake of the Ukraine struggle, giving it document revenue from its petroleum business as costs soared.

EU ministers have already backed away from a worth cap concentrating on solely Russian fuel, which accounted for round 40% of the bloc’s fuel earlier than its invasion of Ukraine. That share has plummeted to 9%, as Moscow lower provides, blaming technical points brought on by sanctions.

‘UNPREDICTABLE’

In the meantime, Russia mentioned it was laborious to foretell the implications for fuel transit to Europe of a brand new arbitration course of initiated by Ukraine power agency Naftogaz.

Naftogaz mentioned on Friday Gazprom (MCX:) had not paid it for fuel transportation by means of Ukraine on time or in full.

“There could possibly be lots of unpredictable issues from each our Western colleagues and the leaders of Ukraine’s fuel business,” Kremlin spokesman Dmitry Peskov mentioned.

Pure fuel flows from Russia to Europe alongside key routes have been regular on Monday, whereas the Nord Stream 1 pipeline remained shut.

Oil costs rose as Iranian nuclear talks appeared to hit obstacles and an embargo on Russian oil shipments loomed, with tight provide struggling to fulfill nonetheless sturdy demand.