EU ministers to meet over gas price cap

plans to approve the latest set of emergency measures to mitigate an energy crisis risk being eclipsed, by disagreements over whether and how to cap gas prices.

Also on the table are plans to launch joint gas purchases for the 27 EU countries. Picture: Hollie Adams/PA

EU energy ministers meet in Brussels on Thursday to approve the latest set of emergency measures to mitigate an energy crisis, but the plans risk being eclipsed by disagreements over whether and how to cap gas prices.

On the table are new draft laws to speed up permitting procedures for renewable energy sources, and to launch joint gas purchases for the 27 EU countries.

Poland, Belgium, Italy, and Greece threatened to block these if the package does not contain a gas price cap as well. A small but powerful camp led by Germany is opposed to a cap, however, saying that would prompt suppliers to sell elsewhere.

Europex, the association of European energy exchanges, was among market participants to criticise plans for such an intervention.

As temperatures drop on the continent ahead of the winter, the ministers will have another go at the matter that has divided the bloc for many months.

The European Commission has so far proposed applying the cap to month-ahead derivatives on the Title Transfer Facility (TTF), the Netherlands-based gas exchange that serves as Europe's price benchmark.

The proposed mechanism would get activated if there was an extreme jump in gas prices in Europe without a similar move on global markets, meaning the EU would diverge from global liquefied natural gas prices (LNG).

The second condition is key to continue attracting LNG supplies to Europe, according to the Commission. 

As an example of such extreme market behaviour where the proposed cap would apply, the Commission has pointed to TTF price spiking last August while global markets were relatively stable. 

• Reuters