The energy ministers of the 27 European Union member states are holding an emergency meeting in Brussels on Tuesday to try to reach an agreement over capping the price of natural gas to shield customers and businesses from spikes in prices.
Early on Tuesday before the meeting, the EU was still deeply divided over a mechanism that would ensure lower gas costs for consumers, utilities, and businesses, and at the same time keep Europe a preferred destination for liquefied natural gas (LNG) cargoes over Asia.
Last month, the European Commission proposed a new EU instrument to "limit excessive gas price spikes," which wasn't unanimously received by EU member states. The Commission proposed a so-called "safety price ceiling" of $290 (275 euros) on the month-ahead derivatives at the Title Transfer Facility (TTF), the EU's most commonly used gas price benchmark. The mechanism is designed to prevent excessive price spikes "with a temporary and well-targeted instrument to automatically intervene on the gas derivatives in case of extreme gas price hikes."
"There is no consensus at this moment on how it needs to work and on the numbers," Belgium's Energy Minister Tinne van der Straeten told Bloomberg TV ahead of the Tuesday meeting.
"Security of supply is important to the continent as a whole. We have to keep gas flowing to Europe," the Belgian minister added.
According to Bloomberg, there are divisions among member states, with Germany, the Netherlands, and Denmark insisting on a cautious approach with any market intervention, wary of a price cap that could drive LNG cargoes away from Europe. But another group led by Italy, Poland, Greece, and Belgium want more decisive measures to limit excessive price spikes and protect their economies from surging energy prices.
There may not be a deal on Tuesday, EU diplomats told Reuters, with one diplomat saying that a natural gas price cap was "one of the most complicated and difficult files you can imagine."
By Tsvetana Paraskova for Oilprice.com
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