EU member states agreed on the upper limit of gas prices

EU member states agreed on the upper limit of gas prices

European Union energy ministers agreed on Monday to cap gas prices, after weeks of talks on an emergency measure that has divided opinion in the bloc as it seeks to ease the energy crisis.

The cap is the latest attempt by 27 EU member states to lower gas prices that have pushed up people’s energy bills and led to record high inflation this year, after Russia cut off most of its gas supplies to Europe.

Ministers agreed to introduce a cap if prices exceed 180 euros per megawatt-hour for three days based on the one-month gas hub contract of the Dutch Title Transfer Facility (TTF), which serves as a European benchmark, EU officials said, according to the document. which came to the attention of Reuters.

The restriction can be activated from February 15, 2023, according to the document detailing the final agreement. The agreement will be formally approved by the countries in writing, after which it can enter into force.

Once implemented, it would prevent any trading of TTF contracts at more than 35 euros per megawatt hour, above a benchmark based on existing estimates of liquefied natural gas (LNG) prices, two EU officials told Reuters.

Germany voted to back the deal, despite expressing concerns about the policy’s impact on Europe’s ability to attract gas supplies to global markets at competitive prices, three EU officials said.

“This is about our energy future. It is about energy security. It’s about having affordable prices,” said Belgian Energy Minister Tinne Van der Straeten on Monday.

Initially, the cap will not apply to private gas trading outside energy exchanges, although this may be reviewed once it comes into force.