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Limits do not converge: the EU again changes the gas price ceiling formula

The Greater Middle East (bbabo.net), - At a meeting of EU energy ministers, emergency measures were to be approved to resolve the gas crisis in Europe. However, all but them were approved. Proponents of manual price management failed to reach an agreement with those who fear the consequences of radical market interventions. As a result, the European Commission went in a new circle and the new price ceiling will be discussed in December.

“At the beginning, we had a problem with the fact that the European Commission could not submit proposals. Now we have a problem that she did it,” Josef Sikela, Minister of Industry and Trade of the Czech Republic, which presides over the EU Council, summed up the situation. He suggested that the champagne was not opened yet, but already in the fridge.

The main thing that the ministers had to do was to approve a ceiling on gas prices, which would come into force on January 1. In the final version, the European Commission proposed to launch price restrictions if the cost of wholesale gas supplies for the month ahead (TTF futures) rises above $ 2,900 per thousand cubic meters and stays at this level for two weeks. At the same time, one more condition must be observed: the difference with spot LNG prices for the Mediterranean Sea and Northern Europe must exceed $ 600 per thousand cubic meters within 10 trading days.

Such a high ceiling did not suit the countries that require a radical price reduction. Therefore, they have not been able to reach an agreement with countries that fear drastic interventions in the market and the consequences when suppliers simply redirect LNG cargoes to other regions of the world. As a result, they settled on the option of limiting the price when trading in wholesale gas lots with delivery during the day, but the price was not determined. It should be agreed on by December 13, when a new meeting of ministers will take place.

All other measures approved by the EU countries relate to the next year. Thus, the EU Council agreed on joint purchases of gas at the level of 13.5 billion cubic meters per year, which is equivalent to 15% of European storage reserves. Brussels expects that bulk purchases and the absence of competition from EU countries for the same cargo will reduce the cost of fuel. In a statement, the EU Council stressed that Russian gas will not be purchased.

The remaining measures are the creation of our own gas price standard instead of TTF, the approval of gas solidarity rules and the acceleration of the process of regulatory approvals of new energy-saving technologies.

“Ritual dances with a tambourine continue around the gas market destroyed by one's own hands. It's hard to comment meaningfully. The European Commission tried to introduce a “ceiling”, so that in fact it does not exist and thereby de facto avoid explicit intervention in the market. But they were caught by the hand and told that this would not work. And we have already gone to the fourth or fifth round of discussion,” says Alexei Grivach, Deputy Director of the National Energy Security Fund (NESF).

The exclusion of Russian gas from the sources of purchase will mean a legal reduction in opportunities, the expert believes.

“And this, as you understand, means rising prices. However, the very appearance of an intermediary is a rise in prices. On the other hand, the question is who will pay for these purchases. If at the expense of the EU budget, then everyone will only "for". “Kolkhoz” money is not a pity to anyone,” added the deputy director of the FNEB.

Limits do not converge: the EU again changes the gas price ceiling formula