Week Ahead (10 October)

W/C Monday, 10 October – EU Commission expected to unveil proposal for an EU-wide cap on gas prices

The European Commission is expected to unveil its long-awaited proposal for an EU-wide cap on gas prices this week. On Wednesday, President von der Leyen stated in a letter to EU leaders that the Commission has started working on a temporary measure to cap the price of gas across the bloc. Von der Leyen’s letter is confirmation that the Commission has abandoned its scepticism of a price cap, amid growing pressure from EU capitals, as the winter heating season in Europe began on 1 October.

Meanwhile, EU leaders held an informal meeting in Prague last Friday in order to discuss different models, as disagreements over the specificities of a price cap persist among member states. Disagreements remain over whether to introduce a fixed price cap, by imposing a lower price on natural gas imports, or to subsidise purchases of natural gas imported into the bloc. The Commission’s expected proposals could give leaders the opportunity to break the current impasse in the next European Council summit, scheduled for October 20-21.

W/C Monday, 10 October – UK government expected to secure 20-year natural gas deal with Norway

This week, the UK government is expected to secure a contract with Norway to further increase imports of natural gas, with a total length of up to 20 years, as high-level negotiations over specificities are still ongoing. In May, Norway became the UK’s primary gas supplier, exceeding UK supplies for the first time, as the country is becoming increasingly relied on imports due to a sharp fall in its own oil and gas production last year, coupled with increased consumption during the pandemic.

Prime Minister Truss has publicly stated her government’s plans to secure long-term energy contracts with other countries, and there are growing indications that a similar deal with Qatar, the second largest source of imported gas in the UK in Q2 2022, could also be underway. Furthermore, the UK is currently in discussion with the U.S to seal long-term contracts for additional LNG imports.

The country is currently struggling with soaring energy prices and faces the prospects of a looming gas supply crisis, after the national energy regulator Ofgem warned of a ’significant risk’ of gas shortages this winter, last week. Besides increasing imports from reliable partners, Prime Minister Truss has taken additional steps to bolster the UK’s energy security, such as lifting a ban on fracking for shale gas in England and launching a new oil and gas exploration licensing round.

Wednesday, 12 October – Digital Markets Act (DMA) to be published in the EU Official Journal

On Wednesday, the Digital Markets Act (DMA) will be published in the EU Official Journal. The DMA, together with the Digital Services Act (DSA), is part of the landmark Digital Services Package, adopted by the European Parliament in July with an overwhelming majority in the plenary session. 20 days after publication, the provisions enter into force and will be applicable six months later – in March 2023. By then, digital platforms will have two months to designate their services as coming under the scope of the rules, and the Commission has 45 working days to verify the designations. By late June or early July 2023, designated gatekeeping platforms have six months to get their services into compliance, until around March 2024, when enforcement of the obligations begins.

The European Commission can then fine said digital platforms up to 10% of their global turnover from the preceding year if they are found to be in breach of the DMA. While EU competition law allows the Commission to intervene when companies abuse their dominant market positions, the DMA would allow the Commission to impose prescriptive rules on companies simply due to their market strength. It is likely that the ability of gatekeepers to ‘self-preference’ and ban competitors from accessing their marketplaces, such as app stores, will be curtailed.

Thursday, 13 October – European Centre for Medium-Range Weather Forecasts to give updated winter forecasts

As they seek an EU solution for the energy crisis, EU leaders will also be hoping for mild, windy conditions this winter. While the La Niña weather pattern, currently in play, gives a higher chance of having a cold snap in November, if these conditions persist that would typically see milder conditions for the second half of winter in Europe.

An updated forecast will be presented by the European Centre for Medium-Range Weather Forecasts on Thursday – energy markets have typically paid most attention to forecasts produced in and around November. Given the importance of wind energy, a prolongation of calm conditions will also have a significantly negative impact of the EU energy mix this winter.