European energy ministers do not agree on setting a ceiling for gas prices

European Union energy ministers failed on Thursday to agree a cap on gas prices to ease Europe’s energy crisis amid deep divisions over an initial proposal many called a “joke”.

The Italian energy minister said that 15 European countries oppose setting a ceiling on the price of Russian gas.

Read more: Bloomberg: European talks on Russian oil price ceiling have reached an impasse

For his part, Czech Industry Minister Josef Sekela, whose country holds the current presidency of the European Union, said ministers would meet in the first half of December to try to settle differences.

He added that the ministers have been in able to take other “significant steps”, including joint gas purchases to avoid intra-EU competition that drives up prices, providing solidarity in times of need and speeding up licensing for renewables.

Several ministers attending Thursday’s meeting complained that the proposed gas price cap, which the European Commission tabled just two days ago, was clearly designed never to be used.

The energy ministers of Poland and Spain called the proposal a “joke”.

“We are wasting precious time with no results,” said Greek Energy Minister Kostas Skrekas.

Plan price cap envisages a cap of 275 euros per MWh.

But it has so many conditions that it would not have triggered even in August, when the price of gas briefly rose above 300 euros, causing concern in Europe, which is used to historical prices around 10%.

The cap proposal will only be activated if the €275 limit has been violated continuously for at least two weeks and only if the price of LNG exceeds €58 for 10 days.

The wholesale price of gas in Europe was around 124 euros on Thursday, according to the leading benchmark TTF.

The committee’s proposed price cap was deemed neutral under pressure from members including Germany and the Netherlands, who fear a cap would divert gas supplies to more profitable markets, in especially Asia.

Still, at least 15 EU countries — more than half the bloc — want some form of practical cap on wholesale gas prices to address Russia’s war-caused supply crunch in Ukraine.

While the EU has not banned Russian gas, the Kremlin has cut off the flow of gas in response to the sanctions imposed by Brussels in following the invasion of Moscow.

Before the war, Russian gas supplies accounted for more than 40% of all gas imported into the European Union, and Germany, an exporting power, was in particular need. This has now dropped to less than 10%.

But alternative sources – such as liquefied natural gas shipped from the US and the Gulf – cannot fill the deficit, and Europe faces a heating bill for the winter.

European Energy Commissioner Cadre Simpson acknowledged the divisions on price caps while attending the meeting.

He indicated that ministers are likely to meet on December 13.

Plan price cap, if adopted, will start in January. This will be done alongside a voluntary initiative by EU Member States to reduce the use of natural gas by 15%.

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