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Europe Tussles Over Potential Gas Price Cap

NATURAL GAS

EU energy ministers are set to meet in Brussels this week to combat the energy crisis but there are still disagreements over how to cap gas prices.

  • The EU is also looking at speeding up procedures for renewable energy sources and to launch joint gas purchases for the 27 EU member states.
  • Poland, Belgium, Italy and Greece have threatened to block the package if it does not contain a gas price cap.
  • Germany and the Netherlands have opposed a gas price cap, stating it would not allow the region to be competitive on the global market.
  • The European Commission has so far proposed applying the cap to month-ahead derivatives on the Title Transfer Facility (TTF). It would not affect over-the-counter (OTC) trade.
  • The proposed mechanism would get activated if there was a large jump in gas prices in Europe without a similar move on global markets, meaning the EU would diverge from global LNG prices.

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