EU reach deal to cap natural gas price at $191 per MWh

European Union energy ministers have reached an agreement to set a price cap for natural gas in the bloc, officials said, with Malta's minister saying the threshold would be the equivalent of $191 per megawatt-hour (MWh).

"We are speaking about a price cap set at 180 euros," Maltese Energy Minister Miriam Dalli said on Monday.

"It wasn't an easy thing to achieve."

Since it could not find a consensus on the divisive topic, the Czech presidency of the European Council, which represents member countries, opted for a "qualified majority" as the voting rule to get the political agreement.

Under EU rules, a qualified majority requires that 55 percent of member countries, or 17 out of the 27, vote in favour of a proposal. Such a vote also requires that those nations represent at least 65 percent of the bloc’s population.

The agreement is seen to unlock other measures to mitigate an energy crunch Europe is facing as a consequence of Russia's armed conflict with Ukraine, including joint gas purchases and a future new benchmark for pricing gas.

It capped months of wrangling between member states.

One camp wanted to urgently bring down gas prices sent soaring by Russia's war in Ukraine by limiting how high the price for gas used in electricity generation could go.

The other, led by heavyweight Germany, was leery of a too-easily-triggered price cap that could scare off liquified natural gas (LNG) supplies to more lucrative markets in Asia. 

Moscow has reacted to EU's decision, calling the price cap, "unacceptable", according to Russian media.

READ MORE: EU fails to agree gas price cap to mitigate energy crunch

Urgent matter

Some member nations had worried that gas supplies may be diverted to more lucrative markets if the compensation offered is too low for providers.

The ministers have previously failed at overcoming their differences at five previous so-called emergency meetings, debating for months without any success.

But the issue had become more urgent in recent weeks, with Europe facing tight energy supplies as it endures winter, because Russia has cut gas deliveries in retaliation for EU sanctions over its conflict with Ukraine.

Roughly a dozen countries, including Belgium, Poland and Greece, have demanded a cap below 200 euro/MWh 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.

But Germany, the Netherlands and Austria fear the cap could disrupt Europe's energy markets and divert much-needed gas cargoes away from the EU.

In the end, Germany voted in favour of the 180-euro ($191) price cap, which was sharply lower than a 275-euro ($291.0) limit initially proposed by the European Commission, an EU diplomat said.

READ MORE: What are the EU’s various gas price caps?