The European Union’s joint natural gas purchase mechanism, AggregateEU, has not turned into a game-changer for Europe’s gas market or supply of the fuel, according to sources familiar with the confidential data quoted by the Financial Times.
At the height of the energy crisis, the EU launched the so-called AggregateEU to enable demand aggregation and joint gas purchasing at the European level, in a bid to boost the EU’s energy security. The mechanism aims to collect and pool gas demand from companies established in the EU or in Energy Community countries and match it with the most competitive supply offers in time for the next storage filling season.
However, this mechanism and the platform for pooling and matching demand and supply have resulted in gas contracts for just 2% of the potential demand, sources with knowledge of the data told FT.'
The EU has hailed the joint gas purchase mechanism as a success. In May 2023, the EU announced the successful outcome of the first-ever international tender for joint purchasing of EU gas supplies.
“This is a remarkable success for an instrument that did not exist some five months ago,” European Commission Vice-President Maroš Šef?ovi? said at the time.
“The Commission has played its role as aggregator and matchmaker, and now it is for the respective parties to conclude their agreements.”
However, the concluded agreements were a fraction of the potential demand, per FT’s sources.
One energy company, which requested anonymity, told FT that the joint gas purchase platform “didn’t bring additional volumes to the market…so it did not achieve what it set out to do”.
The tiny joint purchase volumes throw doubts on the effectiveness of the mechanism in giving Europe more power in the procurement of supply. It also questions the European Commission’s plans to extend the joint gas purchase mechanism to critical minerals and hydrogen.
“We must use the power and size of our market to secure supplies,” Ursula von der Leyen, Candidate for the European Commission President, wrote in the political guidelines for the 2024-2029 mandate of the new Commission.
“This is why I will propose to activate and extend our aggregate demand mechanism to go beyond gas and include hydrogen and critical raw materials,” von der Leyen said.
By Tsvetana Paraskova for Oilprice.com
