Several EU member states have expressed their concerns about the gas market correction mechanism proposed by the European Commission, the body is ready to facilitate the agreement, EU energy commissioner Kadri Simson said on Thursday.
On Tuesday, the European Commission presented its proposal to prevent excessive increases in gas prices, It would be maximized for one year from January 1, 2023 the price of contracts concluded on the Dutch TTF gas exchange, which is the governing body in Europe. According to this, if the settlement price of the front-month gas futures contract on the Dutch TTF gas exchange exceeds 275 euros per megawatt hour for two weeks and the TTF prices are 58 euros higher for liquefied gas (LNG) for 10 consecutive trading days. it would not be possible to conduct a transaction in the TTF at a price higher than the reference price or the limit.
In order to avoid security of supply problems, the price ceiling is limited to only one future quotation of the TTF, so that market participants can continue to meet demand needs and obtain natural gas in the spot market and outside the exchange.
Arriving at Thursday’s extraordinary meeting of the energy ministers of the EU member states, Kadri Simson stated that the member states may need the tool to avoid extraordinary spikes in gas prices. The commission’s proposal is designed to intervene in gas price market processes only when absolutely necessary.
He emphasized that the development of the proposal was based on the mandate of the leaders of the EU member states, taking into account the conclusions of the last EU summit, and that the member states “have the right to modify the various parameters” if they wish.
The commissioner said that he is aware that the views of the member states differ regarding the instrument, but he expressed hope that a political agreement will be reached at Thursday’s meeting regarding the new proposals also on the agenda – the promotion of joint gas procurement, the acceleration of the wider use of renewable energy.
Arriving at the meeting of the energy council on Thursday, the ministers of several member states expressed their dissatisfaction with the committee’s proposal.
According to Anna Moskwa, Polish Minister of Climate and Environment
in its current form, the proposal on the gas price ceiling amounts to a joke. Such a measure would be crucial, but the proposal was presented by the committee at the last minute and differs from what was previously proposed because the gas price cap would be higher than current market prices. I doubt that a single member state would support this proposal
According to Belgian Energy Minister Tinne van Straeten, the commission’s proposal is not appropriate because it does not clearly show the effect it would have on gas prices.
According to the Maltese Energy Minister Miriam Dalli, the conditions stipulated in the proposal would make it impossible to activate the mechanism. The committee’s proposal definitely does not cover what the member states advocating the introduction of the gas price ceiling had previously demanded.
Out of the 27 EU member states, 15 member states call for the introduction of the EU gas price ceiling, while others argue that the upper gas price limit would put safe gas supply at risk and hold back the reduction of gas consumption.
(Cover photo: Andrey Rudakov/Bloomberg via Getty Images)