On Monday, Prime Minister Andrej Plenković expressed his satisfaction with the fact that the energy ministers of the EU member states agreed that the gas price limitation mechanism will be activated when the price reaches 180 euros per megawatt hour, which is a good decision for both citizens and the economy.
– I think it is a great message to the markets, a great message to those who made money from speculations on the price of gas, different stock exchanges.
Filipović: The agreement will help citizens and the economy
The agreement on limiting gas prices in the EU should help citizens and the economy so that the situation from August 2022 does not repeat itself, when the price reached up to 350 euros per megawatt hour, Croatian Minister of Economy and Sustainable Development Davor said on Monday in Brussels. Filipović.
The energy ministers of the member states agreed on Monday that the gas price cap mechanism will be activated when the price reaches 180 euros per megawatt hour and 35 euros more than the reference price of LNG in a period of three working days.
“We are satisfied with the agreement reached and I believe that in this way we will help the citizens and the economy to limit prices, so that the situation from August this year, when the price of gas went to 350 euros per megawatt hour, does not repeat itself,” said the minister. Filipović after the meeting.
The mechanism will be able to be launched from February 15 next year.
At their last week’s meeting, the energy ministers failed to agree on gas price limits, because the Commission’s proposal, which set the gas price ceiling too high, was unacceptable for most member states.
At the end of November, the European Commission proposed the establishment of a corrective market mechanism that would be activated when the price on the Dutch gas exchange (TTF) is above 275 euros per megawatt hour for two weeks and 58 euros higher than the LNG reference price for ten consecutive days during two weeks.
Later, the Commission lowered it first to 264 euros, and last week to 220 euros.
The Czech presidency came to the meeting with a new proposal according to which the mechanism would be activated when the price of gas reaches 188 euros per megawatt hour in a period of three days.
According to the agreement reached today, the market correction mechanism would be activated in the event that gas prices reached 180 euros for three working days, which means that contracts for the delivery of gas above that amount could not be concluded.
The agreement on the upper limit also foresees a kind of fuse that would be activated in the event of market disturbances, especially if the producers would direct their ships with liquefied gas towards other markets that are willing to pay more than in the EU.
The mechanism would be activated for at least 20 business days, after which it would be deactivated when gas prices fall below that upper limit.
The mechanism would also be deactivated if the gas price falls below 153 euros per megawatt hour for three working days. If there was an increase in gas demand by 15 percent within a month or by 10 percent within a two-month period, the mechanism would be automatically suspended.
Consensus is not required for the decision to limit gas prices, a qualified majority is sufficient.
Only Hungary was against this ceiling, Austria and the Netherlands abstained, and Germany supported it. All these countries have previously opposed intervention in the gas market and price caps.
In the end, Germany agreed to support, but also made a statement stating that it does not want to undermine European unity.
“Germany remains critical of the introduction of a gas price cap. However, it would be even more critical if the European Union did not act unitedly today. In this sense, we support the market correction mechanism for political reasons. However, the various control mechanisms would have to be carefully applied and adhered to,” the German statement said.
This is unacceptable for the Kremlin
On Monday, the Kremlin assessed the EU’s decision to limit gas prices as “unacceptable”.
“It is a violation of the market process of price formation,” Kremlin spokesman Dmitry Peskov said, Russian news agencies reported.
“Any reference to a ‘limit’ (price) is unacceptable,” he stressed.