EU Members Want To Lower Gas Price Cap To $230 - Reports

MOSCOW (UrduPoint News / Sputnik - 07th December, 2022) The EU member countries want to lower the gas price ceiling proposed by the European Commission from 275 Euros ($288) to 220 euros ($230) per megawatt hour, the Financial Times reported on Tuesday.

On November 22, the commission proposed a "safety ceiling" of 275 euros for gas futures on the TTF, Europe's main trading hub for natural resources. On November 24, EU energy ministers failed to reach agreement and scheduled a new meeting for December 13.

According to an amended version of the proposal obtained by the FT, the cap will be implemented if gas futures exceed 220 euros for just five days and are 35 euros higher than global liquefied natural gas (LNG) prices. Meanwhile, according to the initial plan, the ceiling would have been activated if the gas price had exceeded 275 euros for two weeks and the spread between prices on the TTF and LNG market had been at least 58 euros for more than 10 trading days.

In the entire history of the TTF, the price of gas futures surpassed 275 euros only for a couple of days in August.

The commission's proposal has instantly created divisions between EU members and caused caution among market experts. For example, Italy said that the mechanism seemed inefficient and could stimulate speculation, while the Association of European Energy Exchanges (Europex) noted that the cap could force market actors to resort to off-exchange trading, which, in turn, would bring serious risks for the financial stability of the EU.