The EU is getting closer to an agreement on a cap on gas prices.
Helder Faria | moment | Getty Images
The European Union is closing in on an agreement on capping natural gas prices and Brussels is already starting preparations for next winter as the worldwide energy crisis shows no sign of abating.
EU energy ministers met in Brussels, Belgium, on Tuesday to debate the small print of a cap on natural gas prices. The topic has divided the EU-27, with some pushing for a lower cap below €200 ($211) per megawatt hour, while others are skeptical in regards to the measure and want stronger assurances that it won’t create unnecessary market volatility.
“I believe we now have began to maneuver our positions closer,” Agnès Pannier-Runacher, the French Minister for Energy Transition, said before the meeting.
Officials have suggested the cap could possibly be between €180 and €220 per megawatt hour. This got here after the European Commission, the EU’s executive body, proposed a level of €275 per megawatt hour – many countries have strongly criticized it for being too low and most unlikely to ever be launched.
next winter
But while these discussions drag on, the EU is considering how best to organize for next winter. The International Energy Agency warns that there could possibly be a shortage of 30 billion cubic meters of gas in 2023.
“More is needed,” European Commission President Ursula von der Leyen said on Monday, adding that securing more LNG supplies was a priority.
“This yr we had as much as 130 billion cubic meters of LNG. To this end, we must, in fact, further intensify our contact with our international partners,” she said.
The IEA has warned of fierce competition for this raw material in 2023. They expect less LNG supplies on the market, but more demand – especially from China, which has began to ease Covid-19 restrictions and subsequently will likely need more gas in 2023. the economy returns to some sort of normality.
This yr, the EU reached agreements with the US, Qatar and others in an try and shut itself off from Russian hydrocarbons. But experts say the block may have to begin from scratch in preparation for next winter.
Georg Zachmann, a senior worker at Bruegel, told CNBC’s Squawk Box Europe that the next winter season will depend on whether “global LNG markets prove to be as kind as this yr.”
If that does not occur and other markets want LNG, “then we’re in for a tough ride,” he added.
One in all the essential concerns, nonetheless, is whether the EU will repeat the mistakes of the past and won’t be dependent on just one supplier. Before Russia’s unprovoked invasion of Ukraine, Moscow supplied around 40% of EU gas imported via pipelines.
“We’re not entering into the identical sort of dependency, but in fact that should be watched more closely for hydrogen imports and others as well, so we’re not increasing our dependency on a different front now,” added Zachmann.