EU countries look to map out path to gas price cap

European Union energy ministers will discuss a bloc-wide gas price cap on Tuesday, attempting to navigate their next steps although it is likely to be weeks before any final decisions.

Europe has been scrambling to tame high energy prices after Russia slashed gas supplies following its invasion of Ukraine - sending gas prices skywards and pushing European power prices to record levels in August.

With no legal proposal for a price cap on the table yet, ministers meeting in Luxembourg are expected to debate the principles of how an EU gas price limit could work, as well as possible drawbacks.

But gas costs have tumbled in recent days, amid mild weather and as countries have filled storage tanks. Some EU diplomats suggested this could dampen momentum to cap energy costs, but others said a cap was still needed to guard against potential price spikes as Europe heads into winter.

The European Commission last week asked for countries' approval to draft a proposal for a price limit on trades at the Title Transfer Facility (TTF) Dutch gas hub, which could be triggered if prices spiked.

A few days later, EU country leaders requested "concrete decisions" from their ministers and Brussels on this idea.

EU diplomats said Tuesday's talks could give the Commission the green light on that proposal, but some countries were seeking more details on how a price cap would work.

"I'm missing a lot of things within the proposal... the Commission should deliver the remaining parts of the puzzle," said Czech industry minister Jozef Sikela, who chairs Tuesday's meeting.

"I am slightly disappointed that we are not going as fast forward as possible," he added.

Ahead of Tuesday's talks, the EU Commission shared a document with countries that cautioned against another type of price cap, for gas used to generate power, which it said could cause an increase in gas use.

One senior EU official said it was not yet clear when Brussels would make a firm proposal on a price cap. Any proposal would need to be negotiated by EU countries, possibly with the aim of approving it at an emergency meeting of energy ministers in November.

The benchmark Dutch front-month gas contract traded at a low of 93.35 euros/MWh on Monday, its lowest level since June, although still far higher than prices in 2021.