EU energy ministers propose gas price ceiling

MOSCOW, 13 Oct – PRIME. The energy ministers of Italy, Poland, Greece, the Netherlands, Belgium and other EU countries made proposals to the European Commission on gas price ceilings, according to a letter received by RIA Novosti.

Energy ministers of EU countries did not agree on a price ceiling for Russian gas

The authors of the letter noted that they had identified a set of “win-win measures” to address the problem of high gas prices. These measures include: exploiting Europe’s market power through a joint procurement platform; coordination and optimization of gas storage filling trajectories; coordination and strengthening of energy diplomacy on gas imports with all reliable partners; development of a new LNG criterion to reduce the impact of the TTF index on gas contracts; the need to intensify efforts to reduce energy consumption; encouraging and accelerating the deployment of renewable energy sources, in particular by immediately removing regulatory barriers.

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In addition, the authors stated that they are looking for a solution that allows the interconnected TTF zone to rely on a well-functioning market to match supply and demand without rationing, as well as to eliminate the side effect for the non-TTF zone, since long-term contracts are often tied to the TTF.

“As a result, we would like the Commission to explore the following options and propose possible solutions. The first option is to change the references to the TTF index in the relevant contracts through an EU legal and/or regulatory measure. Opinions differed on the legal feasibility of this option and the potential side effects bifurcated markets The second option is to apply a price cap/corridor to the wholesale market and create a separate mechanism to match supply and demand if the price cap is exceeded Opinions differed on this option and whether such a measure is possible and cost-effective, would it lead to to rationing, arbitration or subsidies,” the letter says.

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Western countries continue to discuss various measures to limit Russia’s income from oil and gas exports. So far, this has not been done either by imposing an embargo on oil, including by the entire European Union on maritime transportation, or by voluntary refusals of foreign companies. The redirection of exports, alternative supply schemes and the “sanctions premium” in world oil prices allow Russia to secure budget revenues even with sales at a discount.

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