Sweden announces emergency support for energy producers

Sweden will give emergency liquidity support to electricity producers as its prime minister warned that Russia’s decision to halt gas deliveries to Europe could place its financial system under severe strain.

Magdalena Andersson said on Saturday that the government would offer hundreds of billions of kroner in funding to electricity producers, who have seen the amount of collateral they must post with exchanges balloon in response to soaring gas and power prices and increasing volatility.

EU energy ministers will also consider taking steps to ease the lack of liquidity for energy companies across the bloc at an emergency meeting on Friday, according to two officials briefed on the discussions.

Andersson warned that, left unchecked, rising collateral demands for electricity producers could ripple through the main Nasdaq Clearing market in Stockholm and, in the worst case, spark a financial crisis.

Her remarks came after Russia said on Friday that it would no longer supply gas via the Nordstream 1 pipeline. That announcement came after energy markets had closed for the weekend.

“Yesterday’s announcement not only risks leading to a ‘war winter’ but also threatens our financial stability,” Andersson said, standing alongside Sweden’s financial regulator, central bank governor and finance minister at an emergency press conference on Saturday.

Finnish finance minister Annika Saarikko said on Twitter that her country would also act. “The concern is shared….