The idea to cap prices has divided EU countries for many months and diplomats said the level proposed on Tuesday was unlikely to be popular when energy ministers from the bloc's 27 member countries debate it on Thursday.
"We propose to put a ceiling on the TTF (Title Transfer Facility) gas price to protect our people and businesses from extreme price hikes," EU energy commissioner Kadri Simson said.
If approved by EU countries, the cap would be available for one year from Jan. 1.
It would only take effect if the contract surpasses that level and, at the same time, the difference between the cap and the global liquefied natural gas (LNG) price exceeds 55 euros for 10 consecutive trading days, Simson added.
Over the months of debate about how to tackle a surge in gas prices brought about by energy producer Russia's invasion of Ukraine, those opposed to the idea of a price cap have said it could lead to increased consumption, make procurement difficult and trigger legal risks related to existing contracts.
Simson said the mechanism was "carefully designed to be effective, while not jeopardising our security of supply, the functioning of EU energy markets and financial stability".
She also said it was not a regulatory intervention to set the gas market at an artificially low level.
Rather, it was "a mechanism of last resort to prevent, and if necessary, address episodes of excessive gas prices which are not in line with global price trends".
The contract stood at 119.8 eur/MWh, up 4.5% on the day at 1540 GMT. It peaked at above 340 euros on Aug. 26.
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