Norway's PM Says Price Cap Won't Resolve 'Fundamental Issue of Gas Shortage in Europe'

Late last week, European Commissioner for Energy Kadri Simson announced that the energy ministers from EU countries had failed to agree on a price cap for Russian pipeline gas. She added that the European Commission would present new proposals to combat the energy crisis in the coming days.

Oslo has stated that it is ready to engage in an even closer dialogue with the EU on various proposals to resolve the energy crisis, but that it remains downbeat on setting a gas price cap.

“We approach [such] discussions in an open spirit, but we are skeptical of a maximum gas price,” Norwegian Prime Minister Jonas Gahr Store said in a statement following his phone call with European Commission President Ursula von der Leyen.

According to him, the price cap “does not change the fundamental issue that there is a gas shortage in Europe.”

The remarks came after the EU’s energy ministers failed to reach a consensus on a price ceiling on gas imported from Russia, with the bloc’s several member states, including Italy, calling for a price ceiling on all gas bought by EU members, including liquefied natural gas (LNG).

On September 2, European Commission President Ursula von der Leyen said that the EU might limit the price of Russian natural gas after G7 finance ministers confirmed their intention to impose price caps on Russian oil as part of the expanded sanctions against Moscow.

This followed Russian Deputy Prime Minister Alexander Novak slamming the idea of imposing a price cap on Russian oil as absurd. He warned that Moscow would not deliver oil and oil products to countries that support the decision. Russian President Vladimir Putin, for his part, dubbed the idea "stupid", adding that it would lead to a rise in prices and that global demand for Russian energy remains high.

In a separate development earlier this month, the Russian energy giant Gazprom said that the Nord Stream gas pipeline had been shut down for an indefinite period due to a malfunction of the only remaining working engine.

The pipeline, which is the main gas supply route to Europe, had been operating at 40% capacity or less since mid-June with a further drop to just 20% in July as Western sanctions impeded the return of the pipeline's turbines after repairs abroad.

After Russia launched its special military operation in Ukraine on February 24, 2022, and the US and its allies slapped several sanction packages on Moscow, the energy situation in Europe deteriorated considerably amid soaring inflation and fuel prices.