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EU energy ministers on Monday approved an emergency cap on gas prices, which from February 15 would be triggered if benchmark gas prices rose to €180 per megawatt hour for three working days in a row, the European Council has said.
The spread between prices on the Dutch Title Transfer Facility hub and global LNG prices also needs to reach €35 over the same period of time for the cap to be implemented. Once activated, it would remain in force for at least 20 working days.
National leaders last week urged their ministers to approve the cap on Monday to finalise a policy that has been debated for months without agreement, despite two emergency meetings.
"Another mission impossible accomplished," said Czech deputy prime minister Josef Sikela at a press conference. The Czech Republic currently presides the European Council.
"It was our duty towards our citizens and businesses, who were waiting for us to act," he told reporters. "As you know, negotiations were not easy."
Mr Sikela said that the cap, which he described as dynamic, and not fixed, could be switched off automatically in a number of cases, including an increase in gas consumption by 15 per cent in a month or 10 per cent in two months, or a decrease of quarterly liquefied natural gas (LNG) imports.
The cap will apply to month-ahead, three months-ahead and year-ahead derivative contracts. This refers to the time during which the contract can be purchased at a certain price before it expires. The cap will not be applied to over-the-counter trading, day-ahead exchanges or intra-day exchanges.
Countries such as Germany, Austria and the Netherlands had warned that a cap could divert much-needed gas cargoes away from Europe and disrupt the functioning of energy markets. Yet EU officials on Monday said Germany ended up voting in favour of the cap.
"Nobody in Germany is against low gas prices, but we know we have to be very careful not to wish for the good but to do bad," said German Economy Minister Robert Habeck on Monday, before the meeting.
The proposal required support from a reinforced majority of 15 countries representing at least 65 per cent of the EU population. The EU's Energy Commissioner Kadri Simson told the press conference only one member state, which she did not identify, voted against the price cap.
She said the EU's Agency for the Co-operation of Energy Regulators and the European Securities and Markets Authority would conduct an impact assessment by January 23.
"With such a mechanism in place, Europe will be better prepared for the next winter season and the new round of winter storage filling that will be more challenging than it has been this year," she said.
Russia appeared unimpressed with the decision. Kremlin spokesman Dmitry Peskov said the cap was an attack on market pricing and dsecribed it as unacceptable, Russia's Interfax news agency reported.
The plan adopted on Monday was far lower than the European Commission’s proposal on November 22, which suggested a ceiling on gas prices if they reached €275 per megawatt hour for more than 10 days. It was criticised by many countries as was suspected of never being introduced.
About 12 countries, including Belgium, Poland and Greece, had demanded a cap below €200 per megawatt hour to tackle the high gas prices that have inflated citizens' energy bills and stoked record-high inflation this year after Russia cut off most of its gas deliveries to Europe.