Natural Gas: On the ‘Table’ is the New Lower Price Cap


What do Price Cap Proposals Provide – Greek Proposal

In a last attempt to reach an agreement on the energy crisis, with the approaching cold snap, the European Union countries are expected to consider today, Friday, another proposal to impose an upper limit on natural gas prices. According to information reported by Reuters, the ceiling under discussion is slightly lower than the proposal put forward by the commission, which some consider too high.

The new round of negotiations will start on Friday evening on the European Commission’s proposal to limit price increases that hurt businesses and households. The aim is to reach an agreement by December 13, the date of the Extraordinary Council on Transport, Communications, and Energy.

It is worth noting that last week the Commission proposed a cap on natural gas which would apply if the first-month TTF price exceeded €275 per MWh for two weeks and was €58 above the reference gas price for the LNG price for 10 days.

Some countries have criticized the EU’s initial proposal, pointing out that it was designed with such a high price and such stringent standards that the cap will not be triggered and therefore will not protect their economies from price hikes.

The revised proposal, seen by Reuters, would extend the cap to cover not only the gas contract for the first month, as proposed by the commission but also contracts that expire by up to a quarter. However, many countries still disagree about whether to cap prices, with at least five countries pushing for a lower cap.
Indeed, in a document shared with other EU member states this week, Italy, Poland, Greece, Belgium, and Slovenia presented two options: either a fixed price cap well below €160/MWh, i.e. a “dynamic price ceiling” that can be set in response to reference prices current LNG.

But countries such as Germany and the Netherlands warn that capping prices could make it difficult for Europe to attract much-needed gas supplies from global markets.

Gas prices have soared in the European Union this year as Russia cut off gas supplies to Europe after its invasion of Ukraine, prompting governments to spend hundreds of billions of euros to protect their savings from rising energy costs.

It should be noted that any agreement at the level of the European Union requires the support of all member states, in addition to the Group of Seven.

Multivariate Ceiling Equalization

As Orascom Telecom wrote yesterday, December 1, the negotiations within the 27 member states of the European Union. Aiming to cap natural gas prices, is in full swing. The Minister of Environment and Energy, Kostas Skrekas, and the Energy Adviser to the Prime Minister, Nikos Tsavos, are holding continuous telephone conferences with ministers from other countries to reach an agreement that satisfies as much as possible the demands of Greece and the Group of 15 countries.

The bottom is great. And the process is complicated. Why, On the one hand, a common position had to be reached between the countries of the so-called “heart of fifteen”. That means between Greece, Belgium, Poland, Italy, and Slovenia (added recently). Then the aforementioned five nations had to persuade the other ten into the alliance.

Then the first group representing the 15 negotiated with the competing countries, ie represented by Germany and the Netherlands. We remind you of the last one. They listen to the ceiling and smoke and of course, the last front is the commissariat.

As we have learned, the negotiations between supporters and opponents of the cap are now creative but what will happen on December 13 at the Council of Energy Ministers of the European Union is very difficult to predict.


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