EU is Preparing for Joint Gas Purchases
After more than a year of preparation, the European Commission has launched the procedure for joint gas purchases for the first time. Since Tuesday morning, companies can indicate on a European platform how much gas they want to purchase.
It is hoped that the first contracts will be signed before the summer.
Soon after the Russian invasion of Ukraine in February last year, the Commission proposed that the Member States purchase gas together, following the corona vaccines. Instead of competing with each other in the search for alternatives to Russian gas, Member States could thus play out their collective market power and negotiate lower prices.
Member States want to achieve at least 15 percent of their national gas storage target through joint purchases, amounting to some 13.5 billion cubic meters annually. So far, 76 companies from the 27 Member States of the European Union and several partner countries have registered on the platform, and the Commission expects the number to increase.
In the first phase, until 2 May, these companies can register their purchasing needs on the AggregateEU platform. After all the requests are submitted, the volumes are added and tendered on the world market. From May 9, suppliers can make bids. The companies will then negotiate the contract terms for purchasing and delivering LNG or pipeline gas with the suppliers.
These negotiations with the suppliers can be conducted by one participating company, acting as a central buyer or intermediary. The Commission is no longer involved in these negotiations but expects the first contracts to be finalized by the summer. In addition, a demand bundling round will be organized every two months in the coming period.