European Union energy ministers are discussing proposals related to the joint purchase of gas and accelerating the process of replacing current energy resources with renewable ones, amid disagreement over the proposal to cap the price of Russian oil.

Roofing the price of Russian gas

European energy ministers are facing difficulties due to the absence of a unified position on energy pricing, in addition to a wide divergence of views on alternatives to Russian gas and oil.

The EU ambassadors' talks - with the aim of approving the ceiling mechanism and the proposed oil price level - had stumbled and reached a dead end.

According to sources - who spoke to Bloomberg - the seven major countries are seeking to impose a cap on the price of Russian oil between $ 65 and $ 70 a barrel, a level that would be more generous to Moscow than many expected when the group first proposed this idea.

These sources added that this range is much higher than the cost of production in Russia, and higher than what some countries were paying for.

But several EU diplomats said the proposed level was too high, in line with the historical average from before Russia's war with Ukraine.


The need for a European consensus

Meanwhile, the European Commissioner for Energy, Cadre Simson, stressed the necessity of agreeing at the meeting of energy ministers on the joint purchase of gas and finding an alternative platform for pricing it, noting the lack of time with the onset of winter.

For his part, Czech Energy Minister Josef Sekela said that the files presented for the agreement include the joint purchase of gas, and the start of the transition to renewable energy sources, in addition to setting a ceiling for gas prices.

Sekela pointed out the importance of redoubling efforts and agreeing on procedures to ensure energy supplies at reasonable prices for the current winter and for the coming years.

He pointed out that the energy situation in Europe is still very critical, blaming Russian President Vladimir Putin for that.

Spanish accusations

Meanwhile, the Spanish government on Wednesday accused the European Commission of "mocking the world" with its proposal to set a temporary ceiling for gas prices, stressing that it would "strongly oppose it."

"We asked the European Commission to draw up a proposal, and at the last moment, this proposal was presented to us, and it is not a proposal," Spain's Environmental Transition Minister Teresa Ribera told the press, describing the mechanism sought by Brussels as a "farce."

Ribera added, "What this proposal will generate is the opposite of the desired effect... It will lead to a greater increase in prices and endanger all policies to control" inflation.

"I know that there is strong resentment among the majority of member states" towards this proposal, she stressed, noting that Madrid will strongly oppose this mechanism during the meeting of European energy ministers today, Thursday.

"The Commission will hear very tough things from the vast majority of ministers," Ribera said, calling on Brussels to "submit a serious proposal ... otherwise we will simply stop supporting the Commission's proposals on other issues that may be important to it."


In turn, Socialist Prime Minister Pedro Sanchez said, after a meeting with his Romanian counterpart, Nicolae Chiocca, in Castellón, eastern Spain, about this proposal, "It is clear that it is not sufficient ... and does not go in the right direction."

For its part, the French Ministry of "Energy Transition" criticized this mechanism, saying that it was "insufficient and does not respond to the reality of the market."

"The commission should propose an operational text, not just a text that presents a political position that may or may not have negative effects," she added.

How does the roofing mechanism work?

The European Commission proposed on Tuesday a temporary mechanism to reduce wholesale prices in the reference gas market in the European Union, but on conditions described as very harsh in order to persuade reluctant member states to adopt this mechanism.

The mechanism aims to set a ceiling, as of January 1, for monthly contract prices (delivery of the following month) in the Dutch market and the European “gas exchange” used as a reference in most European Union operators’ transactions.

The mechanism will automatically trigger once prices have exceeded €275/MWh for two consecutive weeks, provided they are at least €58 higher than the “global average reference price” for LNG for 10 days.

It is a condition seen as necessary for Europe to remain important enough to ships transporting LNG and could easily find other customers in Asia.