BREAKING

EU could extend gas price limit fearing conflicts, sabotage and winter

By Al Mayadeen English
Source: Financial Times
22 Oct 2023 10:52

The European Union introduced a price-regulation mechanism in January to tame surging gas prices.

Pipes run along a technical facility for compressing natural gas on the site of Astoria GmbH’s Rehden natural gas storage facility in 2022 (AFP)

The European Union (EU) is deliberating on whether to extend an emergency gas price cap that was initially introduced in February of this year, the Financial Times reported on Sunday.

This consideration comes amidst apprehensions that the ongoing conflict in the Middle East and the potential sabotage of a Baltic pipeline could lead to a surge in gas prices this upcoming winter.

The European Commission has disclosed that since the implementation of the gas price cap, there has been "no indication of negative effects". The regulation has substantially lowered natural gas prices, which are now almost 90% less than what they were in the previous year, according to a document presented to EU diplomats.

However, senior EU officials have expressed concerns that the current decline in energy prices combined with the record-high gas storage levels might not suffice to alleviate the potential impacts caused by the Middle East conflict and possible sabotage incidents targeting gas infrastructure.

In addition to considering the extension of the gas price cap, the presentation also seeks to continue separate emergency legislation, which now enables member states to expedite the permission process for establishing wind farms and solar power parks.

A proposal is expected to be released by the commission next month, shedding light on which specific measures are planned to be extended, as per the report.

In December 2022, the European Union adopted a mechanism for correcting the gas market with a floating price limit, in an attempt to tame energy prices that surged following Western sanctions on Russia. The legislation went into effect in January and priced the gas cap at 180 euros per megawatt hour.

"The regulation aims to limit episodes of excessive gas prices in the EU that do not reflect world market prices while ensuring the security of energy supply and the stability of financial markets," the bloc's council said then.