(CNSNews.com) – Two weeks after a G7/European Union cap on the price of Russian oil came into effect, E.U. energy ministers on Monday agreed on a natural gas price cap, after difficult negotiations divided the bloc on how best to deal with the energy crisis sparked by the fallout from Russia’s invasion of Ukraine.
But in an unrelated development that could complicate matters for Europe, key gas exporter Qatar warned that its cooperation could be affected by European institutions’ response to a major corruption scandal allegedly involving the wealthy Gulf state.
The Kremlin, as it did after the oil price cap ($60 a barrel for seaborne Russian crude oil) took effect on December 5, slammed the latest E.U. decision, calling it “unacceptable” and “a violation of the market price-setting.”
Spokesman Dmitry Peskov said Moscow would weigh its options and decide on a response – as it was doing with regard to the recently-instituted oil price cap.
Under Monday’s agreement, from February 15, the price cap will be triggered if the price of gas on the European TTF benchmark rises above 180 euros ($190) per megawatt hour for three consecutive working days.
In a bid to win over skeptical member-states concerned that a price cap would prompt gas suppliers to send their product to China or other markets instead, the ministers also agreed the cap would kick in only if the TTF price is also 35 euros ($37) per megawatt hour (MWh) higher than a global reference price for liquefied natural gas (LNG), for the same three consecutive working days.
The compromise was designed as a safeguard, to ensure that the E.U. market “remains attractive for gas suppliers from third countries,” according to the Czech Republic, which holds the E.U.’s rotating presidency.
The E.U.’s executive Commission originally recommended a much-higher cap of 275 euros ($291) per MWh but countries advocating for a price cap said that was not a serious proposal. As it is, the TTF price has hardly ever exceeded 180 euros/MWh, having done so for the first time in March of this year, and then again for a protracted period in late summer and the fall, with a high of almost 340 euros/MWh in late August. On Monday the price was around 108 euros/MWh.
Still the Czech Republic hailed the agreement as an important mechanism to ensure prices do not soar to similar heights again next summer.
“This measure will operate as an emergency brake, and so its task will be to keep gas prices under control to prevent a repeat of the situation this summer when gas prices were multiple times higher than previous peaks,” said Czech Industry and Trade Minister Jozef Síkela.
Along with changes aimed at speeding up the building of renewable energy sources, Síkela said the package would “significantly help Europe in its preparations for next winter to ensure that European households and businesses have sufficient energy at affordable prices.”
Energy has dominated the Czech Republic’s six-month presidency, which ends in 12 days’ time, and Síkela has convened no fewer than five extraordinary councils of energy ministers to grapple with the energy crisis. (On Monday he was wearing a sweater sporting the slogan “We will convene as many Energy Councils as necessary.”
The Qatar factor
Monday’s agreement came as Qatar, a crucial energy supplier, warned the E.U. that its response to a criminal corruption scandal embroiling the European Parliament – with Qatar allegedly at the center – could negatively impact energy supplies.
Qatar denies any involvement in the affair, which has so far seen a senior member of the European Parliament and three other people charged in Belgium with “criminal organization, corruption and money laundering.”
In response to the cash-for-influence investigation, the European Parliament voted late last week to ban Qatari representatives from its premises, and to suspend all current work on legislation involving the Gulf state.
The AFP news agency quoted a Qatari diplomat as saying that placing those “discriminatory” restrictions on Qatar while the legal process was still underway “will negatively affect regional and global security co-operation, as well as ongoing discussions around global energy poverty and security.”
Qatar is the world’s fifth-biggest natural gas producer, and was the world’s second-biggest LNG exporter in 2021.
European countries stepped up their imports of LNG this year to make up for reduced supplies of natural gas by pipeline from Russia.
In the first six months of 2022, Qatar accounted for 15 percent of Europe’s total LNG imports, second only to the United States, which provided 47 percent of the total.
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