European Union (EU) energy ministers on Tuesday failed to reach an agreement on a bloc-wide cap on natural gas prices at an emergency Energy Council meeting in Brussels.
Since the European Commission proposed a gas price cap last month, the 27 member states have been split over how to reach a compromise on setting a limit on gas prices.
“There was a lot of progress but no final breakthrough yet,” said Germany’s Robert Habeck, minister for Economic Affairs and Climate Action. He spoke after the meeting.
The cut in gas deliveries this year since Russia invaded Ukraine has tightened the market in Europe and pushed prices higher. Unusually cold weather has also arrived amid warnings to residential and industrial users to save energy to avoid blackouts.
The EU’s proposal for a price cap on gas is aimed at avoiding the spikes seen this year when benchmark prices surpassed $100/MMBtu for short stretches amid supply fears. The Dutch Title Transfer Facility (TTF) was trading at around $43 as storage inventories were above the five-year average and LNG imports are strong.
European Energy Commissioner Kadri Simson before the meeting had said reaching consensus would “not be easy…Member states have very different views and different concerns regarding a price mechanism. As we have to reach an agreement, everyone has to show some flexibility.”
Another meeting is scheduled Monday (Dec. 19).
“It was a long and difficult meeting,” said Czech Republic’s industry minister Jozef Sikela. “There will be only one open issue for discussion on Monday and this is the price level triggering the mechanism.”
Last month, the EC proposed a price ceiling of 275 euros/MWh, or roughly $86/MMBtu, only if the price for two weeks remained above 275 euros and TTF prices were 58 euros, or roughly $18 higher than the price for LNG.
Several member states including Belgium, Italy and Poland called for a lower price ceiling, claiming 275 euros was too high. Other proposals included ceilings of 160-264 euros. Austria, Germany and the Netherlands have opposed the ceiling and said a cap would divert supplies to more competitive markets.
Following the meeting, Simson pointed out during a press conference that “some ministers need additional time to return to their capitals and also to discuss the changes with their colleagues, especially finance ministers, because this market correction mechanism will have implications on the financial markets…”
The European Central Bank (ECB) last week expressed concerns over a price cap impacting financial markets, saying “the current design of the proposed market correction mechanism may, in some circumstances, jeopardize financial stability in the euro area.”
Although member states agreed on other measures including joint purchasing of gas and fast-tracking approvals for renewable energy projects, these measures won’t be passed until a decision is reached on a level for the price cap at the next Energy Council meeting on Monday.
“The time for consultation has run out,” said Greece’s Kostas Skrekas, minister of Energy and Environment.
“European citizens are in agony, European businesses are closing,” Skrekas said. “All of us must heed to our responsibilities and agree without delay on the market correction mechanism and energy solidarity.”
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December 15, 2022 at 01:37AM
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EU Again Postpones Natural Gas Price Cap as Ministers Search for Consensus - Natural Gas Intelligence
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