Proposed ceiling on the European gas exchange “does not serve” Portugal
“ONE proposal is not suitable for Portugal. We made our arguments clear and proposed suggestions for improvements, as other countries have done”, declared the Secretary of State for the Environment and Energy, João Galamba, speaking to Portuguese journalists in Brussels at the end of an extraordinary meeting of European ministers responsible for .
According to João Galamba, “Portugal’s position is that the Commission’s proposal mixes two themes that should not be mixed: mixing the dysfunctionality of an index when compared to other indices, namely liquefied natural gas [GNL]and another issue at the level of gas prices”.
“The dysfunctionality in the TTF index [a principal bolsa europeia de gás natural]when verified with other indices, it should not make reference to absolute price values because market dysfunctionality can either exist with low, medium or high prices and, therefore, Portugal’s position is that we should separate the themes”, he added.
Alluding to the next Extraordinary Energy Council, scheduled for mid-December, João Galamba argued that it was necessary to “continue working on a proposal” until the 13th, given the still “quite divergent” positions between the countries.
European energy ministers today reached an informal agreement on joint gas purchases and guaranteeing solidarity, but will still have to formally approve in an extraordinary council in December, along with the cap on the gas exchange.
On the day that those responsible for the EU’s Energy sector met in an extraordinary meeting in Brussels, another was then scheduled for December 13, on which occasion it will again be the creation of a market correction mechanism aimed at limiting the Excessive peaks in gas prices, presented this week by the community executive and have already generated criticism among the 27.
At issue is a “last resort measure” to face situations of excessive natural gas prices, establishing a maximum dynamic price at which natural gas transactions can take place one month in advance on the markets of the TTF, the main European gas exchange Natural.
The European Commission’s proposal therefore provides for a temporary “security ceiling” to control gas prices in the TTF, and this limit requires permanent monitoring and will only be triggered under two conditions: prices above 275 euros for two weeks and when the value by 58 euros is higher than the reference price for LNG during 10 trading days.
Despite the fact that natural gas prices have hovered between €5 MWh and €35 MWh over the last decade, the values traded in the TTF one month in advance have been, in recent months, above €200/MWh and reached a peak of almost 314 euros/MWh last August. However, even then the now standard correction mechanism could not have been activated as two conditions stipulated by Brussels were not met.
The executive wants to move forward with this temporary mechanism for prohibited prices in the TTF while working on a new complementary benchmark, which he will present in early 2023 to include real conditions in the European market, such as the use of LNG.
At the December 13 meeting, the ‘green light’ should also be given to joint gas purchases, similar to that carried out for anti-covid-19 vaccines, and EU solidarity rules for making gas available to all Member States in an emergency .
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