BRUSSELS, Dec 19 (Reuters) – European Union energy ministers on Monday agreed a gas price cap, after weeks of talks on the emergency measure that has split opinion across the bloc as it seeks to tame the energy crisis.<\/p>\n
The cap is the 27-country EU’s latest attempt to lower gas prices that have pushed energy bills higher and driven record-high inflation this year after Russia cut off most of its gas deliveries to Europe.<\/p>\n
Ministers agreed to trigger a cap if prices exceed 180 euros ($191.11) per megawatt hour for three days on the Dutch Title Transfer Facility (TTF) gas hub’s front-month contract, which serves as the European benchmark.<\/p>\n
The TTF price must also be 35 eur\/MWh higher than a reference price based on existing liquefied natural gas (LNG) price assessments for three days.<\/p>\n
“We have succeeded in finding an important agreement that will shield citizens from skyrocketing energy prices,” said Jozef Sikela, industry minister for the Czech Republic, which holds the rotating EU presidency.<\/p>\n
The cap can be triggered starting from Feb. 15, 2023. The deal will be formally approved by countries in writing, after which it can enter into force.<\/p>\n
Once triggered, trades would not be permitted on the front-month, three-month and front-year TTF contracts at a price more than 35 euros\/MWh above the reference LNG price.<\/p>\n
This effectively caps the price at which gas can be traded, while allowing the capped level to fluctuate alongside global LNG prices – a system designed to ensure EU countries can still bid at competitive prices for gas in from global markets.<\/p>\n
Germany voted to support the deal, despite having raised concerns about the policy’s impact on Europe’s ability to attract gas supplies in price-competitive global markets, three EU officials said.<\/p>\n
An EU official told Reuters Germany agreed to the price cap after countries agreed changes to another regulation on speeding up renewable energy permits, and stronger safeguards were added to the cap.<\/p>\n
Those safeguards include that the cap will be suspended if the EU faces a gas supply shortage, or if the cap causes a drop in TTF trading, a jump in gas use or a significant increase in gas market participants’ margin calls.<\/p>\n
Soaring power and gas prices have rocked energy companies across Europe, forcing utilities and traders to secure extra funds from governments and banks to cover margin call requirements.<\/p>\n
Germany’s Uniper\u00a0(UN01.DE)<\/a>\u00a0has booked billions of euros of losses on derivatives, exacerbating a crisis as it rushed to fill the gap left after Russia cut supplies.<\/p>\n Jacob Mandel, senior associate at Aurora Energy Research, said the TTF front-month contract has rarely closed above 180 eur\/MWh, noting this has occurred on 64 days in its history. All of those were in 2022.<\/p>\n Two EU officials said only Hungary voted against the price cap.<\/p>\n The Netherlands and Austria abstained. Both had resisted the cap during negotiations, fearing it could\u00a0disrupt Europe’s energy markets<\/a>\u00a0and compromise Europe’s energy security.<\/p>\n Dutch energy minister Rob Jetten said: “Despite progress the last couple of weeks, the market correction mechanism remains potentially unsafe.”<\/p>\n “I remain worried about major disruptions on the European energy market, about the financial implications and, most of all, I am worried about European security of supply,” he added.<\/p>\n The EU proposal has also drawn opposition from some market participants, who have said it could cause financial instability.<\/p>\n The Intercontinental Exchange (ICE)\u00a0(ICE.N)<\/a>, which hosts TTF trading on its Amsterdam exchange, last week said it could move TTF trading to outside of the EU if the bloc capped prices.<\/p>\n On Monday, it said it will assess whether it can continue to operate fair and orderly markets for TTF gas hub trading. For now, ICE TTF markets will continue trading as normal.<\/p>\n The front month TTF gas price closed trading on Monday 9% lower, at 107 euros\/MWh, Refinitiv Eikon data showed.<\/p>\n The contract hit a record high of 343 euros in August – a price spike that prompted the EU to move ahead with its price cap.<\/p>\n Italy’s energy authority ARERA expects further increases in gas prices as the winter season kicks in, its President Stefano Besseghini said on Monday.<\/p>\n Meanwhile, Russia’s Kremlin spokesman Dmitry Peskov said the cap was an attack on market pricing, and unacceptable, Russia’s Interfax news agency reported.<\/p>\n The deal follows\u00a0months of debate<\/a>\u00a0on the idea and two previous\u00a0emergency meetings<\/a>\u00a0that failed to clinch an agreement among EU countries that disagreed on whether a price cap would help or hinder Europe’s attempts to contain the energy crisis.<\/p>\n Roughly 15 countries, including Belgium, Greece and Poland, had demanded a cap below 200 euros\/MWh – far lower than the 275 euros\/MWh trigger limit originally proposed by the European Commission last month.<\/p>\n Poland’s prime minister said the price cap would end Russia and Gazprom’s ability to distort the market.<\/p>\n “At the recent meetings in Brussels, our majority coalition managed to break the resistance – mainly from Germany,” Mateusz Morawiecki wrote on Twitter. “This means the end of market manipulation by Russia and its company Gazprom.”<\/p>\n","protected":false},"excerpt":{"rendered":" BRUSSELS, Dec 19 (Reuters) – European Union energy ministers on Monday agreed a gas price cap, after weeks of talks on the emergency measure that has split opinion across the bloc as…<\/p>\n","protected":false},"author":1,"featured_media":6511,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,22,23],"tags":[40,46,48,50,57,68,76,77,78,79,80,82,86,87,88,90,95,96,98,99,103,107,109,111,112,114,121,123,137,139,146,148,153,159,174,176,181,182,184,187,196,201,202,203,209,217,221,222,229,231,232,233,239,241,244,246,249,250,251,252,256,262,263,266,268,277,279,280,283,285,288,300],"class_list":["post-6510","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lng","category-oil-gas","category-politics","tag-alleviation","tag-aramco","tag-athens","tag-athensenergydialogues","tag-baroudi","tag-carbon","tag-climate","tag-climate-change","tag-climateaction","tag-climatechange","tag-closure-of-nuclear","tag-co2","tag-cyprus","tag-decarbonising","tag-decarbonization","tag-democracy","tag-disputes","tag-doha","tag-east","tag-eastmed","tag-egypt","tag-embargo","tag-emissions","tag-energy","tag-energy-market","tag-energyindustry","tag-europe","tag-european-fuels","tag-gas","tag-gazprom","tag-greece","tag-greenenergy","tag-hydrocarbons","tag-international","tag-lebanon","tag-liquefied-natural-gas","tag-maritime","tag-maritime-boundaries","tag-maritime-disputes","tag-mediterranean","tag-natural-gas","tag-offshore","tag-oil","tag-oil-and-gas","tag-opec","tag-peace","tag-plants","tag-pollution","tag-poverty","tag-power","tag-putin","tag-qatar","tag-renewable-energy","tag-reserves","tag-rosneft","tag-roudi","tag-russia","tag-russia-in-the-european-energy-sector","tag-russian-gas","tag-russian-sanctions","tag-saudi","tag-solar","tag-solar-power","tag-straddling","tag-sustainability","tag-total","tag-trump","tag-turkey","tag-ukrain","tag-unclos","tag-usa","tag-300"],"_links":{"self":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/6510","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6510"}],"version-history":[{"count":0,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/posts\/6510\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=\/wp\/v2\/media\/6511"}],"wp:attachment":[{"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6510"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6510"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/emimer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6510"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}