The energy ministers of the European Union are discussing on Monday a new compromise proposal to cap the price of natural gas in the latest attempt to break the deadlock and put a ceiling on gas prices to protect consumers and businesses.
Late on Monday morning in Brussels, the EU energy ministers gathered for another attempt to reach some kind of deal on the price of gas, following weeks of futile meetings which exposed deep divisions among EU member states.
The ministers are discussing a price cap well below the one proposed by the European Commission last month. The new proposal for a lower price cap was advanced by the Czech Republic, the holder of the EU's rotating presidency.
According to the Czech draft proposal, seen by Reuters, the price cap would be triggered if prices on the month-ahead derivatives at the Title Transfer Facility (TTF), the EU's most commonly used gas price benchmark, exceed $200 (188 euros) per megawatt hour (MWh) for three days.
This is well below the so-called "safety price ceiling" of $292 (275 euros) per MWh proposed by the European Commission last month in a new EU instrument to "limit excessive gas price spikes."
The mechanism - designed to prevent excessive price spikes "with a temporary and well-targeted instrument to automatically intervene on the gas derivatives in case of extreme gas price hikes" - wasn't unanimously received by EU member states.
There have been divisions among member states on how to approach the gas price cap. Germany, the Netherlands, and Denmark, for example, insist on a cautious approach to any market intervention, wary of a price cap that could drive LNG cargoes away from Europe. But another group led by Italy, Poland, Greece, and Belgium want more decisive measures to limit excessive price spikes and protect their economies from surging energy prices.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More