Twenty-five suppliers have responded to the first tender launched last week by the EU to carry out joint gas purchases, for a proposed volume well above the aggregate demand of participating European companies, the European Commission announced Tuesday.
The objective is to aggregate on a Brussels-led platform the demand of European companies, in particular SMEs in energy-intensive industrial sectors, so that together they can have a greater influence on the gas market in order to obtain better prices and ensure the replenishment of stocks before the winter of 2023-2024.
These “grouped purchases” are part of the solutions adopted last year by the EU-27 to respond to the energy crisis caused by Russia’s invasion of Ukraine and the drastic reduction of Russian gas supplies. For this first tender, 25 “reliable international suppliers” have made proposals totaling 13.4 billion m3 of natural gas, well above the 11.6 billion m3 of aggregate demand from the 77 European companies, announced Commission Vice President Maros Sefcovic. He hailed “a remarkable success”.
For deliveries expected between June 2023 and May 2024, offers deemed adequate corresponding to 10.9 billion cubic meters – for 20% of the liquefied natural gas(LNG) and for 80% of the gas transported by pipeline – have been sent to client companies. These companies will now have to enter into commercial negotiations to finalize the terms of purchase by the end of June, talks in which the Commission will no longer be involved. New tenders will be issued every two months until the end of 2023.
Despite the sharp decline in energy prices in recent weeks, especially in the LNG market, “the aggregate demand and the massive response from suppliers clearly demonstrate that this instrument is well received and confirm the relevance of joint purchasing,” argued Maros Sefcovic.
These European “grouped purchases” should also avoid the situation of the summer of 2022, when States and companies rushed at the same time on the gas market to fill their stocks, feeding the surge in prices. According to the regulation finalized in mid-December, EU states must participate in this demand aggregation mechanism for at least 15% of the volumes needed to reach the filling target set by the EU (Europeans are required to fill 90% of their storage capacity by November).
Companies from the EU, but also from the countries of the “European Energy Community” (Ukraine, Albania, Bosnia, Kosovo, Northern Macedonia, Georgia, Moldova, Montenegro and Serbia) can participate in the group purchases.
