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The European Union agrees on a gas price cap


The 27 member countries of the European Union reached an agreement on the cap on the price of natural gas, on Monday, December 19, 2022. The member states of the EU on Monday approved a mechanism allowing…

The European Union agrees on a gas price cap

Gas prices would be capped from 180 euros/MWh in the European Union, according to the agreement reached by the Twenty-Seven (Illustrative image).


Text by: RFI Follow

2 mins

The 27 member countries of the European Union reached an agreement on a natural gas price cap, Monday, December 19, 2022. EU member states on Monday approved a mechanism to cap wholesale gas prices from 180 euros/MWh.


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The capping mechanism, put in place after several weeks of tough discussions, will only be activated at a price level above the average international price of liquefied natural gas (LNG) so as not to endanger the gas supplies of the Europe, a diplomatic source said.

European energy ministers, meeting in Brussels, "

 have reached an important agreement that will protect citizens from soaring energy prices, with a realistic and effective mechanism, which includes the necessary guarantees for the security of supply and stability of financial markets,

 " said Czech Minister Jozef Sikela, whose country holds the rotating EU presidency.

The Ministers of the Twenty-Seven had already agreed on December 13 on certain terms of the mechanism, which will apply to futures contracts on the gas markets, but they still had to agree on the price where the cap will engage.

The European Commission had initially proposed to cap monthly contracts on the TTF reference market once they exceeded 275 euros/MWh for two consecutive weeks, among other conditions – factors never met, even at the height of the price surge. in August.

The TTF, a Dutch platform, is the

de facto

gas exchange of the EU and its price serves as the benchmark for the majority of gas transactions on the continent.

A hard-to-find deal

After tearing each other apart over this proposal, the Member States finally agreed on a much lower threshold, which will have to be reached during a significantly reduced period.

The contract for delivery in one month was traded Monday on the TTF around 110 euros/MWh.

Several States (Spain, Poland, Greece, Italy, etc.) had called for a clear relaxation of the conditions for activating the mechanism.

On the contrary, reluctant to any intervention, other States (Germany, the Netherlands, Austria, etc.) demanded drastic “


 ” to prevent a ceiling from threatening European supplies.

►Also read: Energy crisis: between sobriety and the search for gas, Europeans in search of solutions


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  • European Union

  • Energies

Source: rfi

All news articles on 2022-12-19

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