EU finally reached an agreement on the implementation of a floating gas price cap

The Council of the European Union announced the final decision to create a temporary mechanism for regulating the gas market in the region with an indefinite price cap.

The council said it will protect consumers and the economy from excessive prices by forming a mechanism to regulate the gas market.

On Monday, Energy Ministers from EU countries agreed to create this temporary regulatory instrument. The mechanism will be guided by the monthly futures price on Europe's largest gas hub, the TTF. It should not exceed 180 euros per MWh (about 1861 euros per 1000 cubic meters) for 3 working days. In addition, the price must be 35 euros above the indicative price of LNG on the global markets. In this case, the mechanism will be triggered automatically.

The operation start of the mechanism as a regulatory tool is scheduled for February 2023. It will cover all virtual gas trading platforms in the EU. The European Commission will be able to present a list of exceptions at a later date. Futures contracts for one, three and twelve months forward come under the mechanism. Over-the-counter transactions are not included under the mechanism.