EU meets to try to break gas price cap impasse

European Union energy ministers are meeting in Brussels on Tuesday to try to agree a bloc-wide cap on gas prices after months of deadlock over whether the measure can ease Europe's energy crisis.

After weeks of infighting between countries, the European Commission proposed a price cap last month - the latest EU response to a crisis caused by Russia cutting gas deliveries to Europe this year, leading to energy price spikes.

"European citizens are in agony, European businesses are closing and Europe has been needlessly debating," Greek Energy Minister Konstantinos Skrekas said on Tuesday, calling for a swift deal on the cap.

Greece and other countries including Belgium, Italy and Poland say a cap is needed to shield their economies from high energy prices, while Austria, Germany and the Netherlands fear it could divert much-needed gas cargoes from Europe.

"Everybody has to show some flexibility and everybody has to be able to propose some compromises," EU energy commissioner Kadri Simson said.

A senior EU diplomat, speaking on condition of anonymity, said it was probable none of the 27 EU member states was happy with the proposal.

"This is now purely up to the ministers to show if they are ready to reach an agreement or not," said the Czech Republic's industry minister Jozef Sikela, who chairs Tuesday's meeting.

If no deal is reached on Tuesday, the debate would likely get escalated to a meeting of EU country leaders on Thursday, before energy ministers meet again next week.

TECHNICAL DETAILS

Any deal could rest on technical details including how high the price limit is, to which gas contracts it applies, and safeguards, such as enabling the EU to suspend the cap immediately if it has unintended consequences.

Hunting for a compromise, the Czech Republic - which holds the EU's rotating presidency - drafted a new proposal which would trigger the cap if prices exceed a range of 200-220 euros per megawatt hour over three-to-five days on the front-month contract in the Dutch Title Transfer Facility gas hub.

The contract price would also need to be 35 euros higher than a reference price based on existing liquefied natural gas (LNG) price assessments.

The proposal is below the 275 eur/MWh price cap proposed by the European Commission. A previous compromise had included a 220 eur/MWh limit, but a dozen countries including Greece and Italy asked for it to be lower.

The pro- and anti-cap camps of countries could each have enough votes to block a deal.

France could prove decisive. It initially backed a price cap, but last week expressed concern over its possible impact on financial markets, three EU country diplomats said.

French ecological transition minister Agnès Pannier-Runacher said on Tuesday any price cap must aim to "ensure the stability of the financial markets".

Last week the Intercontinental Exchange said the EU proposal could drive gas prices higher, while the European Central Bank said it could jeopardise financial stability.

The EU has already agreed emergency energy measures this year, including gas storage requirements.

The outcome of the debate on the cap may also determine other policies - including faster permits for renewable energy projects - after countries opted to withhold approval last month without a deal on the gas price cap first.