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Gas prices: Paris and Madrid up against the European Commission

2022-11-23T19:38:00.056Z

Brussels on Tuesday proposed a temporary mechanism to cap wholesale prices on the benchmark gas market, but with very drastic conditions.



The Spanish government on Wednesday accused the European Commission of

"taking the head of the world"

with a proposal to cap the price of gas deemed inapplicable, while Paris denounced a

"political display"

.

“We had asked the Commission to draw up a proposal and, at the last minute, it presents us with this proposal, which is not one,”

Spanish Minister for Ecological Transition, Teresa Ribera, told the press. , calling

the mechanism desired by Brussels a

“joke” .

"What this proposal will generate is the opposite of the desired effect: it will cause a greater increase in prices, jeopardizing all policies for controlling"

inflation, continued the minister, accusing the Commission to

"play the head of the world".

Following him, the French Ministry of Energy Transition criticized Wednesday an

“insufficient, which does not respond to the reality of the market” device.

"The Commission must propose an operational text, not simply a text which makes political display and which can potentially have perverse or null effects"

, scolded the cabinet of Agnès Pannier-Runacher.

Read alsoGas prices: the European Commission proposes a “deterrent” cap

Brussels proposed on Tuesday a temporary mechanism to cap wholesale prices on the EU's benchmark gas market, but with very drastic conditions in order to rally member states reluctant to this type of device.

This proposal is

"clearly insufficient"

and

"does not go in the right direction"

, protested Spanish Prime Minister Pedro Sanchez.

According to Teresa Ribera, the text arouses

"strong indignation among a majority of Member States"

.

Madrid will

“strongly oppose”

this mechanism during Thursday's meeting of European energy ministers, she warned, believing that the Commission

“will hear very harsh things from the vast majority of ministers»

.

Brussels wants to cap the prices of monthly contracts for one year

In the absence of a new "serious"

text

, Spain could

"simply stop supporting the Commission's proposals on other issues important to it"

, she warned.

The device unveiled by Brussels consists of capping for one year the prices of monthly contracts (for delivery the following month) on the Dutch reference market TTF.

It would be put in place automatically as soon as these prices exceed 275 euros/MWh for two consecutive weeks, and provided that they are at least 58 euros higher than an

"average world reference price"

for liquefied natural gas (LNG) during ten days -- so that Europe remains sufficiently attractive for LNG ships.

Read alsoMoldova promises to pay for Russian gas blocked in Ukraine

But monthly contracts only exceeded 275 euros/MWh this year during a very brief period at the end of August, when the Twenty-Seven were competing to fill their reserves.

And prices are currently hovering around 120 euros.

A Commission spokeswoman confirmed that given the terms of the mechanism, it would not have been triggered during the August price spike, when the €275 cap was only breached. a handful of days, well below the required two weeks.

However,

“we have designed”

this mechanism

“to anticipate and prevent this situation from occurring in the future”

, she specified.

"It's a safety net which is very very low, you have to have had a good free fall before being in it"

, laughs one in the team of Agnès Pannier-Runacher.

Paris also criticizes the Commission for not targeting over-the-counter transactions (outside regulated markets), at the risk of leaving a major flaw in the mechanism.

Source: lefigaro

All business articles on 2022-11-23

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