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Ministers aim to agree EU gas price cap on 13 December


24 Nov 2022 16:41

Siobhan Hall


24 Nov 2022 16:41

(Montel) Energy ministers aim to agree on a temporary EU gas price cap at their next meeting, likely to be on 13 December, said Czech industry minister Jozef Sikela on Thursday.

The ministers had had a “heated” first debate on the European Commission’s proposal for a “market correction mechanism” targeting Europe’s gas benchmark, the Dutch TTF front-month contract, unveiled on Tuesday, he said.

They had very different views on how the mechanism should work, but they had left intending to work on reaching an agreement, said Sikela, who led the debate on behalf of the Czech EU presidency.

He was “pretty sure” that the mechanism would be approved in a way that the EU could use it when needed without causing adverse market or supply security issues.

“I do not expect not to have a consensus on this issue. There is simply too much at stake,” he said.

EU energy commissioner Kadri Simson rebutted criticisms from some EU countries that the price cap in the mechanism was set too high to be useful.

Specific mandate

The EC had been given a very specific mandate by EU leaders in October for a proposal to limit “episodes of excessive gas prices” without adverse consequences for security of supply or the market, she said.

It was ready to provide ministers with all the data they needed if they wanted to negotiate and change the parameters. “It’s not just one number,” she warned, however. “There are several parameters and changing one could increase risks.”

The proposed mechanism would set a temporary bidding limit of EUR 275/MWh for front-month TTF contracts on exchanges automatically if certain conditions were met.

These conditions included that the European Gas Spot Index is at least EUR 58/MWh higher than a reference LNG price for 10 consecutive trading days during a two-week period when front-month TTF contracts are above EUR 275/MWh.

Analysts have said the mechanism would have little or no market impact given the stringent conditions for triggering it.

French energy transition minister Agnes Pannier-Runacher told reporters before the meeting that the mechanism was not enough to protect European industry from high gas prices. France is a vocal supporter of price caps, particularly on gas used for power generation.

Germany, meanwhile, is sceptical of price caps and worried about their potential to deter producers from supplying gas to the EU. German energy state secretary Sven Giegold said the mechanism needed more debate. “We agree here that security of supply in Europe must remain guaranteed,” he said after the meeting.

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