The EU 27’s energy ministers appear to have made progress on a gas price cap agreement at yesterday’s emergency Energy Council, but divisions remain over the impact of such a measure.

Greek energy minister Kostas Skrekas’s proposal for a gas price cap of 200 euros per MWh, or possibly even less, applicable at all European hubs with an accompanying limit-up mechanism, appears to have gained further EU acceptance.

The European Commission’s original proposal called for a more elevated gas price cap that would go into effect if prices on the Dutch TTF hub reached 275 euros per MWh for two weeks and were more than 58 euros per MWh higher than LNG prices on the global market.

If adopted, the latest proposal’s purpose would be to subdue any rampant speculation and prevent a repeat of the spike in gas prices last August, when they briefly reached 350 euros per MWh.

A gas price cap at a level of approximately 200 euros per MWh, questioned by a group of five countries – Germany, Austria, the Netherlands, Denmark and Hungary – as they fear it could prompt market instability, and favored by roughly 12 countries, including Greece, will now be discussed by EU leaders at tomorrow’s Council summit.

If the leaders reach an agreement, the EU 27 energy ministers will meet finalize its formula and wrap up the deal at a meeting on December 19.

An agreement now would not result in an immediate drop in gas prices. Its main purpose would be to avoid any new surge in gas prices, as has been forecast by international analysts for around March, 2023, in the wake of increased winter demand and the need for countries to refill storage facilities for the rest of 2023 and the following winter.