EU Consider Measures to Ease Gas Market Volatility

The potential EU Commission plan for a temporary dynamic price limit on TTF transaction may be planned for use as a last resort according to Bloomberg.

• They may propose a mechanism to impose a dynamic price limit for transactions on TTF to avoid extreme volatility as part of proposals to be released tomorrow. The draft document does not propose a detailed plan to work immediately according to Bloomberg. The mechanism could be agreed by member states at a later stage and would be valid for no more than three months.
• “Other union gas trading hubs shall be linked to the corrected TTF spot price via a dynamic price corridor,” according to the draft document. “In order to ensure no negative effects, the measure should allow for over-the-counter gas trades, not affect EU’s security of gas supply and intra-EU flows, not lead to an increase in gas consumption and not affect the stability and orderly functioning of energy derivative markets.”
• EU is discussing measures to ease market volatility and the surging energy prices including a new temporary LNG linked index as an alternative to TTF, joint gas purchases and further demand reduction measures. The legislative proposals are set to be presented on Oct 18 ahead of the EU summit on Oct 20 -21.