Tuesday, December 5, 2023
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EU ministers fail to agree on price cap, whilst joint gas purchasing approved: round-up of yesterday’s developments

Yesterday, EU energy ministers met in Brussels to discuss the energy price cap (Market Correction Mechanism), proposed by the European Commission this week. Other topics of discussion included setting EU regulations on joint energy purchasing, agreeing on a new benchmark for gas prices and approving further solidarity measures. However, an agreement on the price cap was not reached – with it now set to be addressed separately in a “coherent manner”. Further progress on the Commission’s proposal will not be made until a “political agreement is found as soon as possible”.

The Polish Energy Minister, Anna Moskwa, was among the Member States calling for a “maximum gas price gap”. After yesterday’s meeting, Minister Moskwa tweeted: “Poland, Greece, Italy and Belgium are the countries that dominate today’s TTE Council of Energy Ministers. We want concrete solutions in the field of gas. After the conclusion of the discussion on the maximum price, we will continue to talk about further documents and accept them as a package”. It is believed that Lithuania is also in the group of countries dissatisfied with the current shape of the proposed price cap.

At a press conference following the Visegrad Summit, the Polish Prime Minister, Mateusz Morawiecki said that “the high price for Russian gas is paid by Ukrainians but also by citizens of Poland, Slovakia, the Czech Republic, Hungary and all Europeans. Therefore, we propose a maximum gas price cap at a level acceptable to gas producers and consumers” – standing alongside the leaders of Hungary, Czech Republic and Slovakia.

Green light for stronger coordination of the joint gas purchases

Whilst further work awaits the energy cap mechanism, an agreement on the content of the proposal on the joint purchasing of natural gas was reached. The new rules will make it possible for Member States and energy companies to purchase gas jointly on global markets. It hopes to ensure “better leverage” by pooling demand and preventing Member States from outbidding each other in the process.

In practice, the Ministers agreed that gas companies and companies consuming gas in the EU and the Energy Community countries will submit their gas import needs. The EU will hire a service provider to calculate the aggregated demand and seek offers on the global markets to meet the total demand.

Member States will require domestic undertakings to use the service provider to aggregate demand for volumes of gas equivalent to 15 per cent of their respective gas storage filling obligations for 2023 (around 13.5 billion cubic metres for the EU as a whole). Beyond 15 per cent, the aggregation will be voluntary but based on the same mechanism.

Gas companies and companies consuming gas may choose to purchase gas through the platform, individually or in a consortium with others, from natural gas producers or suppliers that have matched the aggregated demand.

Separately, the regulation includes provisions to increase the transparency of intended and concluded tenders and gas supply purchases, with an obligation for companies to notify the Commission and member states in advance if they plan to purchase more than 5 terawatt-hours (TWh)/year (just over 500 million cubic metres).

In addition, EU ministers clarified that the tasks of the service provider include a clause of proportionality to ensure equality of treatment between larger and smaller companies. They also specified how under-utilised capacity in the infrastructure would be used more efficiently.

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