EU to Continue Price Cap Talks Despite Divisions Among Member States

MOSCOW (Sputnik) - The European Union will need more time to reach an agreement on the G7 price cap on Russian oil, European Commissioner for Energy Kadri Simson said on Thursday.

EU energy ministers will discuss the price cap proposal on Thursday.

"Late last evening they decided [the EU ambassadors] that they will continue the discussions," Simson said, ahead of the Extraordinary Transport, Telecommunications and Energy Council in Brussels.

According to reports, the proposal instantly created divisions between EU members, thus energy ministers are unlikely to reach an agreement on Thursday. Italy, in turn, said that the mechanism seemed inefficient and could stimulate speculation. And according to Greece, the EU needs a "more realistic" market correction mechanism to tackle rising gas prices.

"For sure, a correction mechanism, which is going to be more realistic because even during August when we suffered from skyrocketing gas prices this correction mechanism could not be applied, could not be triggered, so for sure it needs to be different, more reasonable and of course it needs to be the one it will help us to bring down the gas prices," Greek Environment and Energy Minister Kostas Skrekas said ahead of the EU ministerial meeting.

Euro banknotes are displayed next to an European Union flag, in Lille, on March 22, 2019

© AFP 2023 / PHILIPPE HUGUEN

On Tuesday, the European Commission presented a Market Correction Mechanism to curb extreme gas price surges in the European Union. The mechanism implies a price ceiling of 275 euros ($283) for gas futures on the TTF, Europe's main natural gas futures market. The ceiling will be activated only if two criteria are met: first, the gas price exceeds 275 euros for two weeks and, second, the spread between the TTF price and global liquefied natural gas price is 58 euros or more for more than 10 trading days.

Western countries have been seeking ways to limit Russia's income from oil and gas exports since the country launched a military operation in Ukraine on February 24. In September, the G7 finance ministers confirmed their intention to impose a price cap on Russian oil and urged all nations to support the initiative. In October, the EU introduced its eighth package of sanctions against Moscow, which included a legislative basis for setting a price cap for maritime shipments of Russian oil to third countries.

Moscow, in turn, has pledged to altogether stop exporting Russian oil to countries that impose the price cap.