The European Union has reached agreement in principle on an anti-crisis plan to deal with the energy crisis. This was stated by the head of the European Council Charles Michel in his Twiiter. The countries refused to introduce a ceiling on gas prices, and also agreed on a single gas purchase in the event of a sharp depletion of reserves, Bloomberg notes .
“We sent a clear signal to the market. We are ready to act together, we can work together, we have a strong political will. I am sure that a positive effect will be achieved very soon,” wrote Michel.
Prior to the start of negotiations, the European Union split into two camps: supporters and opponents of a hard price ceiling for gas supplied to the EU. A group of countries led by France and Belgium insisted on the need for such a measure; a group led by Germany and Hungary opposed it. Representatives of these two countries fear that the introduction of severe price restrictions will lead to the refusal of companies to supply gas to the EU, which will cause a shortage of fuel in the market and only exacerbate the crisis.
The parties have not yet been able to reach an agreement on this issue, but there is a softening of the positions of the opposing groups: Germany has become more loyal to the idea of a limiting price corridor, and France has come to terms with the fact that it will not be possible to introduce a hard price ceiling. In this context, EU members have focused on alternative measures and solutions that should reduce risks in the upcoming and subsequent heating seasons.
Fundamental agreement was reached on the creation of a new trading indicator (benchmark) for exchange trading in liquefied natural gas (LNG). The new trading format is expected to institutionalize LNG trading and reduce pressure on the gas market by speculators.
“We will develop an additional new index to better reflect the situation with LNG prices, but in the meantime we will create a market correction mechanism to limit cases of gas price gouging,” European Commission President Ursula von der Leyen said at a press conference. Formal questions on the creation of a new index will be discussed by energy ministers next week, she specified.
The key decision of the last summit was an agreement on joint purchases of gas and redistribution of gas capacities in the event of a crisis in any national market within the European Union. Joint purchases of gas are envisaged in case of depletion of gas storage facilities below 15% of the total volumes. The joint purchase of gas is expected to strengthen the EU's negotiating position, since in this scenario it will be possible to avoid competition between countries within the union.
Nevertheless, one cannot yet speak of impeccable agreement within the EU: most countries turned out to be extremely dissatisfied with Germany's national measures aimed at overcoming the consequences of the energy crisis. The €200bn aid package for individuals and companies, according to some EU countries, creates unequal conditions for jointly overcoming the crisis, since other countries simply cannot afford such expenses. Also, some EU members are dissatisfied with Germany's decision to impose restrictions on prices within the country, although at the pan-European level the country is categorically against this decision.
The European Union is facing a new energy crisis amid Russia's refusal to supply gas. Europe is confident that Moscow made this decision in connection with the EU's support for Ukraine in the war against Russia. The Russian side insists that the reason is sanctions that prevent the country from supplying gas to the European Union. Moreover, after the Nord Stream 1 and Nord Stream 2 gas pipelines were blown up, supply routes and capacities were limited. In this context, Europe has decided not to rely on gas supplies from Russia and to replace it with other suppliers. According to Ursula von der Leyen, the EU has successfully replaced about 70% of Russian supplies.