The EU’s <a href="https://www.thenationalnews.com/world/2022/11/24/france-and-spain-reject-eu-commission-proposal-to-cap-gas-prices/" target="_blank">proposed natural gas price cap </a>is “unlikely” to have a significant effect on short-term prices, Rystad Energy said in a report on Thursday. The current proposal is to cap the price of Dutch TTF gas futures, the benchmark European contract, at €275 ($287) per megawatt-hour (MWh) for month-ahead derivatives. “Market participants are against the idea, given it would interfere with the liberalised market and could jeopardise the financial stability of various European regions,” the Norway-based consultancy said. Several countries, including France and Spain, have rejected the European Commission’s proposal for a temporary gas price cap and are preparing a response before an extraordinary energy council session in Brussels on Thursday. <a href="https://www.thenationalnews.com/business/energy/2022/11/19/eus-proposed-natural-gas-price-cap-will-distort-market-signals-rystad-says/" target="_blank">European gas prices</a> are rising again over fears of further curtailment of exports by Russia as cold weather approaches. Russia's state-owned producer Gazprom has said it will reduce the supply of gas entering Ukraine at the Sudzha entry point from November 28 if an imbalance in volumes delivered through Ukraine to Moldova persists. The Ukraine transit route is one of two pipelines still moving gas from Russia to Europe after the Nord Stream 1 pipeline supply was suspended indefinitely in September. “The impact on prices would likely be muted given that the market has largely factored in the risk that Russian flows to Europe could drop to zero,” Rystad said. But this could mean that Europe may have to start withdrawing gas from storage, which is nearly 95 per cent full, the consultancy said. Europe’s liquefied natural gas regasification capacity is at about 90 per cent utilisation as the region continues to import high volumes, said Rystad. The continent has boosted its LNG imports from the US and Gulf countries following Russia’s invasion of Ukraine. To resolve existing bottlenecks, several EU countries are increasing their LNG imports capacity by pumping more money into building new terminals. The current strains on gas supply have led to energy shortages in several parts of the developing world that rely on imported gas, notably Pakistan and Bangladesh. Major growth markets for gas, such as India and China, have sharply reduced their LNG imports in 2022. This week, China, the world’s largest energy consumer and top buyer of crude oil, <a href="https://www.thenationalnews.com/business/energy/2022/11/21/qatarenergy-signs-27-year-deal-to-supply-natural-gas-to-china/" target="_blank">signed a 27-year deal</a> with QatarEnergy for four million tonnes per annum of LNG. Chinese importers are opting to secure a supplier for the “mid to long term” amid tight supply and increasing volatility in prices, Rystad said. The share of contracted volumes in China’s LNG imports has risen to more than 80 per cent this year, compared with about 60 per cent in 2021. Last week, Japan and Thailand signed a preliminary agreement to share LNG during severe shortages. Spot LNG prices in Asia have slightly rebounded to $29.2 per million British thermal units, up 5 per cent from the previous week as high inventory levels limit the region’s buying interest, Rystad said. “Recent mild weather has also weighed on the likelihood that Asian buyers will turn active in the coming week,” it said. The shutdown of Freeport’s LNG export plant in Texas has added to the squeeze on global gas supplies. Freeport LNG said it was aiming for a partial restart of the terminal, one of the largest in the US, in mid-December, with full renovation expected to be completed by late November. “Temperatures across the US are expected to drop below average as December approaches, which combined with supply risks in the Permian, could offset downsides from Freeport’s delayed restart,” Rystad said.