Italy’s energy minister calls for EU gas price cap to be set at Eur50-60/MWh

The EU's gas price cap should be set at Eur50-60/MWh, a level that could limit financial speculation in the gas market, Italy's energy minister Gilberto Pichetto Fratin said Jan. 3.

In an interview with Italy's Radio Radicale, Pichetto said the EU should renew its price cap, but at a lower level compared with the existing Eur180/MWh.

"[The price cap] should be at 50-60 euros," he was quoted saying in an interview by Italian newspaper Il Sole 24 Ore.

This, he said, would "put a stop to purely financial operations that then weigh on families and businesses."

The minister said it was necessary to have long-term contracts in order to avoid "speculative bubbles", adding that in Italy's case, long-term contracts had shielded it from "a disastrous situation."

European spot gas prices hit record highs in the summer of 2022 after Russia curtailed pipeline exports and EU countries rushed to fill gas storage sites.

Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at an all-time high of Eur319.98/MWh on Aug. 26, 2022.

It led the EU to impose a European gas price cap to limit the impact of high prices on consumers.

The so-called market correction mechanism came into effect in February 2023 and would kick in if the TTF month-ahead contract breaches Eur180/MWh for three working days and is Eur35/MWh above a reference global LNG price for the same period of time.

The market correction mechanism was initially due to run for one year but was extended in December 2023 until Jan. 31.

It remains to be seen whether the European Commission will propose to extend the mechanism again before it is due to expire at the end of this month.

The EC had no immediate comment when contacted by S&P Global Commodity Insights Jan. 3.

European gas prices remain volatile on the back of supply-side concerns. Platts assessed the Dutch TTF month-ahead price at Eur49.945/MWh on Jan. 2, up by 2.94% day over day.

Italian supply

Citing the latest turmoil in gas markets, following the expiry of the Russia-Ukraine gas transit agreement, Pichetto said there were no supply concerns in Italy.

"At a national level, as regards to the quantity of gas, I reassure everyone, we have no problems," he said.

Pichetto said Italian gas storage was currently filled to close to 80% of capacity. "We are able to cope with the winter transition of the next two months," he said.

Italian gas storage facilities were recorded at around 78.41% full as of the Jan. 1 gas day, slightly down on the storage fill level of 80.96% at the same time last year, according to data from Gas Infrastructure Europe.