Europe fails to penetrate details of the gas price cap

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EU energy ministers do not agree on a ceiling for natural gas prices. New crisis meeting in mid-December.

Kenzo Tribouillard | Afp | Getty Images

BRUSSELS – European energy ministers failed to reach a compromise on a cap on natural gas prices after “heated”, “ugly” and “harsh” discussions.

The 27 EU leaders agreed at the end of October to give their political support to a cap on natural gas prices after months and months of discussions on how best to tackle the current energy crisis.

The European Commission, the EU’s executive arm, and the bloc’s energy ministers were then tasked with resolving the more specific and practical differences on the measure.

However, the divergences are so acute in Brussels, that the energy ministers have failed to find a compromise and have instead called for a new emergency meeting for mid-December.

“The tension was palpable,” an EU official who followed the discussions but preferred to remain anonymous because of the sensitive nature of the talks told CNBC by phone. The same official said the talks were “very tough” because of a “false price ceiling”.

In an attempt to get everyone on board, the European Commission proposed a cap of 275 euros per megawatt hour. The cap will also only come into effect when prices are 58 euros ($60.46) higher than a global benchmark LNG (liquefied natural gas) price for 10 consecutive trading days within a two-week period.

Greek energy minister: EU gas price ceiling of 275 euros/MWh is 'not a price ceiling'

Countries keen to implement the cap, notably Poland, Spain and Greece, say this proposal is not realistic as it is so high that it is unlikely to ever be triggered.

“The gas price cap, which is in the document, currently does not satisfy any single country. It is a kind of joke for us,” Anna Moskwa, Poland’s climate minister, said in Brussels on Thursday.

Other EU officials, who spoke to CNBC on condition of anonymity, mentioned how the talks were “heated”. One of them went so far as to say that “at one point it got really ugly.”

This reflects how poorer and more indebted EU countries feel about the energy crisis that has affected the region since Russia’s invasion of Ukraine back in February. With less fiscal room to support private consumers, these countries need EU-wide measures to limit energy costs at home.

“I hope we get there next week,” another official told CNBC after the meeting on condition of anonymity.

At a press conference on Thursday, Jozef Sikela, the Czech Minister of Industry and Trade, also said: “We are not opening the champagne yet, but putting the bottle in the fridge.”

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The energy ministers are expected to meet again on 13 December, just before the heads of state meet in Brussels for the last EU summit of the year. Until then, the commission’s proposal will likely be amended in the hope of getting everyone on board.

Prices on the European benchmark Title Transfer Facility (TTF) for the first month closed at around 129 euros per megawatt-hour on Thursday. They had reached a historic high back in August at almost 350 euros per megawatt hour.

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