EU platform to pool gas demand in bid to lower prices seeing ‘remarkable success’, Brussels says

The first tender process from the EU’s joint gas purchase platform has been a “remarkable success” with energy-vulnerable countries having nearly all of their needs met, the European Commission said on Tuesday.

Energy companies across the bloc and other participating countries — Ukraine, Moldova, Georgia, and Western Balkan states — had by last week put in bids of 11.6 billion cubic metres (bcm) on the AggregateEU platform.

Suppliers responded to the aggregate demand by offering a total volume of more than 13.4 bcm, Commission Vice-President for Interinstitutional Relations Maro? ?ef?ovi? told reporters.

“This is nothing short of a remarkable success. It shows that we were right to pool our demand, to use Europe’s collective pulling power, and to work together to fill our gas storages for next winter,” he added.

The overall volume that has actually been matched to customer demands represents 10.9 bcm. About a fifth of this is for liquified natural gas (LNG), which is delivered by ships to terminals located primarily on the Iberian peninsula and on the North Sea, with the remaining 80% requested via pipeline.

Matching in the most vulnerable countries “is particularly positive,” ?ef?ovi? said with requests by Bulgaria and Ukraine fully met while 80% of Moldova’s requested volumes have been matched.

Buying and selling companies will now start the negotiating process outside of the platform, with the first deliveries tabled for late June, early July. The Commission wouldn’t, however, comment on price, arguing it is not involved in the talks.

Prices for gas are currently hovering between EUR30-EUR35 per megawatt-hour, well below the record highs of over EUR300 per megawatt-hour observed over the summer, but nearly ten times higher than pre-pandemic levels.

“Of course, our overall goal here is that we do our utmost to make sure that people have adequate supplies of gas to prevent any shortages or any scarcity as we have seen it in the last year. And with this new instrument that we are bringing new players to the market, we believe that we are also contributing to the tendency which we see now on the gas market, which is clearly demonstrating that the prices are getting lower and they are more competitive for the European customers,” ?ef?ovi? said in response to a Euronews question.

The EU official nonetheless said that despite the first tender round’s positive outcome, there was no time for complacency.

“We still have war raging on in Ukraine. We still have to remember hard lessons we learned the last year. We have to work to make sure that our energy security will be much stronger than the last year. And we cannot be satisfied with the level of energy prices across Europe.

“Our work continues and therefore we will proceed with further intensive outreach to all potential suppliers from all over the world to make sure they will be well prepared for the next winter. And we will secure adequate supplies of gas to make sure that our energy-intensive companies can benefit from better prices and they can start to get their production back to their pre-war levels, because we shouldn’t forget that still, because of the energy prices level, they are not performing at 100%,” he added.

There are currently 110 companies subscribed to the platform.

AggregateEU plans to launch four more rounds of tendering before the end of the year with the second one planned for the second half of June.