The price cap plan – which the European Commission was never keen on – sets a maximum threshold of 275 euros per megawatt hour.

The EU ministers will now meet in the first half of December to try to bridge differences.
The EU ministers will now meet in the first half of December to try to bridge differences. (AFP)

EU energy ministers have failed to agree a cap on gas prices to mitigate the energy crunch in Europe amid deep divisions over an initial proposal slammed by many as a "joke".

The ministers will now meet in the first half of December to try to bridge differences, said Czech Industry Minister Jozef Sikela on Thursday.

Sikela, whose country holds the current presidency of the EU, added that the ministers did manage to adopt a couple of other "important measures", including joint gas purchases to avoid intra-EU competition driving up prices, supply solidarity in times of need, and hastening authorisation of renewable energy sources.

Several ministers going into Thursday's meeting complained that the gas price cap proposal on the table, unveiled by the European Commission just two days earlier, was clearly designed to never be used.

The Polish and Spanish energy ministers called the proposal a "joke".

Greek Energy Minister Kostas Skrekas said the cap "is not actually a ceiling" on gas prices, and "we are losing valuable time without results".

The price cap plan – which the commission was never keen on – sets a maximum threshold of 275 euros per megawatt hour.

But, it comes with so many conditions attached that it would not even have been activated back in August, when the gas price briefly soared above 300 euros, alarming Europe used to historic prices around 10 percent of that.

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Drop in Russian supply

The cap proposal would only be triggered if the 275-euro limit was breached continuously for at least two weeks, and then only if the price for liquified natural gas (LNG) rose above 58 euros for 10 days within that same two-week period.

The price of wholesale gas in Europe on Thursday was around 124 euros, according to the main TTF benchmark.

The commission's proposed price cap was seen as neutered under pressure from members including Germany and the Netherlands, which feared a cap could divert gas supplies to more lucrative markets, especially Asia.

Yet at least 15 EU countries – more than half the bloc – want some form of workable ceiling on wholesale gas prices to tackle a crunch in supply forced by Russia's war in Ukraine.

While the European Union hasn't banned Russian gas, the Kremlin has been turning off the taps in retaliation for sanctions imposed by Brussels in the wake of Moscow's offensive.

Before the conflict, Russian gas supplies accounted for more than 40 percent of all imported gas into the European Union, with export powerhouse Germany particularly needy.

That has now dropped to less than 10 percent.

But alternative sources – such as LNG shipped from the United States and the Gulf – cannot make up the shortfall, and Europe faces a pricey heating bill for winter.

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Source: AFP