EU Commission told member states gas cap impossible as requested - diplomats

Brussels, Nov 8 (Reuters) - The European Union's executive told the 27 member countries at a seminar on Monday that it was not possible to create a gas price cap that would at the same time not affect long-term contracts or security of supply, two diplomatic sources told Reuters.

After much wrangling at an all-night summit, EU leaders agreed last month to task the executive European Commission to propose "a temporary EU framework to cap the price of gas in electricity generation" and "a temporary dynamic price corridor on natural gas transactions" to bring down prices.

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But a compromise between those like France, Spain and Belgium that want a cap, and the German-led camp opposing it meant additional conditions were attached, namely that any cap could not affect long-term contracts, lead to an increase in gas consumption or provoke producers to reroute supplies elsewhere.

"Now, the Commission has said it's impossible to have a cap that meets these criteria," said one of the diplomats, adding national envoys of the 27 EU member countries to the bloc's hub Brussels would discuss that next on Friday.

The matter has divided EU countries for months as they look for ways to address an acute energy crunch that is driving record-high inflation and threatens recession in the bloc.

The second diplomat said the Commission instead offered a voluntary "market correction mechanism" that, however, did not go far enough for those countries demanding a cap to be able to instantly limit price spikes.

Both said some of as many as 15 countries demanding a cap threatened to block other elements of the leaders' October energy deal - that also includes launching joint purchases and working out a new price benchmark - for as long as the Commission does not present a solid cap proposal.

(Reporting by Gabriela Baczynska; Editing by Jan Harvey and Lisa Shumaker)