Ceiling and joint purchases: EU came up with how to limit gas prices with Russian Federation

If the proposed developments are agreed by all EU countries, the restriction will be imposed for three months. The European Energy Regulatory Agency (Acer) will be instructed to set by March 23 a control price for liquefied natural gas built by Europe. According to Reuters, the draft proposal also states that the EU trading platforms have to establish a border by January 31, 2023, in which energy derivatives with the next month of supply will be able to move up or down within one day.

According to the proposal, the potential interference with the price will be able to carry out TTF gas hub in the Netherlands, which concludes contracts for the supply of blue fuel in Europe. Other EU gas trading centers will be tied to the adjusted TTF spot price through a dynamic price corridor. The project emphasizes that these measures should not affect the reliability of supply, lead to an increase in gas consumption or affect the orderly functioning of energy markets.

The European Commission's proposal also includes the idea of ​​joint gas purchases, a solidarity mechanism, which avoids sharp changes in all over the block, and the desire to reduce gas demand. Earlier, the British newspaper Financial Times wrote that the European Commission has developed 2 options for limiting the price of Russian gas. In the first embodiment, it is proposed to limit the price for all European countries.

European officials want to create a company for the purchase of gas to the Russian Federation. In this case, there are risks, because Gazprom monopolist recognizes this situation with a force majeure and terminate the current gas agreements. But there is also the second option by which the European Union will be divided into red and green areas based on current gas reserves and disruptions with the supply of blue fuel.

The country from the red zone will allow to buy gas in Russia at any price, and the green amounts will be limited. Meanwhile, the consumption of Russian gas in Europe has decreased from more than 40% to 8% as a result of September and continues to decline. And the cost of natural gas in Europe, according to the data of the TTF gas hub in the Netherlands, dropped below $ 1. 4 thousand per 1 thousand cubic meters (or $ 133. 2 per megawatt/h).