As part of the sanctions imposed on the Russian Federation as a result of the Russo-Ukrainian War, on 3 December 2022, the European Union (EU) agreed to cap the price of natural gas in order to reduce the volatility created by Russia in the gas market.
[2] The EU originally proposed that a gas market correction mechanism would kick in when the price of month-ahead contracts on the Dutch Title Transfer Facility (TTF) exceeded €275 per megawatt hour and the gap between world prices was greater than €58.
[3] The Czech Republic, which holds the rotating presidency of the bloc, proposed a second compromise for a broader price cap — lowering the intervention threshold to €220.
Lithuania, Latvia, Poland, Romania, Italy, Greece, Croatia, Slovenia, Slovakia, Belgium, Bulgaria, and Malta came out in favour of lowering gas prices.
[2] The European Energy ministers agreed, on 19 December 2022, on a price cap for natural Gas at €180 per megawatt-hour,[3] with Austria and the Netherlands abstaining and Hungary voting against.
Gazprom holds the monopoly rights for gas exports via pipelines, enshrined in Russian law.
Russian deputy prime minister Alexander Novak said that the cap on the price of gas was "just another political decision, absolutely not an economic one.
[23] Ukraine increased the price of transit fees on Russian gas to Hungary and Slovakia by 18% to $13.90 per ton from 1 January 2023.
Operational from 15 February 2023 and applying to gas contracts traded on the TTF between one month and a year ahead.
[citation needed] At 28 December, the EU storage capacity was at 83.2% and the price of January delivery gas had fallen to €76.18pmh.
[28] Russian gas exports to countries outside of the Commonwealth of Independent States (CIS) totaled 100.9bcm in 2022 compared to 185.1b in 2021 a fall of 45.5%.
[34] Gazprom's pipeline gas exports to Europe are taxed at 30%, but have fallen 75% from pre-war levels in January on the remaining routes through Ukraine and Turkey.
[39] 2023 Exports to Europe total just 8.14Bcm in first 4 months of 2023,[40] with gas continuing to move through a Ukraine pipeline at 40-42mcm per day.