EU’s joint gas purchasing platform: A new marketplace for Europe?
The European Commission has recently launched its first call for companies to jointly buy gas on international markets via the EU Energy AggregateEU Platform, and while it offers smaller companies access to new gas suppliers, it raises questions related to EU competition law, writes Ernesto Bonafé and Simina Suciu.
The REPowerEU Plan seems to bear fruits. By February 2023, the EU imported only 500 mcm from Russia (compared to 155 bcm in 2021), and gas prices fell below €50/MWh (from €300/MWh in August 2022). Yet this is a mission partially accomplished since the EU could still face a 30 bcm shortfall of gas needs during the winter of 2023-2024, according to the International Energy Agency.
The European Commission has recently launched the first call for companies to jointly buy gas in international markets via the EU Energy AggregateEU Platform. Member states must aggregate demand volumes of gas equivalent to at least 15% of their respective storage filling obligations, representing around 13.5 bcm of gas per year.
Considering the total EU gas demand of around 360 bcm, the minimum required aggregation might look small. Put differently, gas storage facilities in the EU must be filled 90% by November 2023, while on average, winter gas storage covers 25-30% of total gas consumed across the EU.
The call for companies to jointly buy gas is a step in the EU’s determination to use its economic weight in global markets. Indeed, the Platform was established for the common immediate purchase of pipeline gas and liquified natural gas (LNG) and hydrogen in the longer term. Rather than a new specialised body, the Platform has been referred to as a mechanism, a task force, a facility and a service. A new paper looks for the first time into the policy, legal and institutional aspects of the new Platform to better understand its role in the context of REPowerEU and the European Green Deal.
Making full use of the Union’s collective weight through the Platform should not imply the undermining or relaxation of the competition rules according to the European Commission, which has made it clear that any contracting of gas would be handled solely by the companies involved, outside the aggregation mechanism, and supply contracts will not be signed by the European Commission itself nor Prisma, the largest capacity booking platform for gas transmission services in the EU.
The current models proposed for the Platform’s way of working (Central Buyers and Agents-on-Behalf) alleviated certain antitrust concerns initially expressed by the energy market. However, companies should conduct their own antitrust exposure self-assessment before embarking the Platform’s activities.
The stiff decrease in gas imports from Russia means that the EU needs to increase gas imports from elsewhere, mostly LNG (+50 bcm) and pipeline gas (+10 bcm or more). Pipelines from Norway, Algeria and Azerbaijan deliver gas to nearly their maximum capacity, while the largest LNG imports come from Qatar, Nigeria and the United States.
A deal between the US and the EU for the supply of an additional 15 bcm of LNG in 2022 and 50 bcm by 2030 was mentioned as an example of the work of the Platform. However, the involvement of the Platform in international outreach remains unclear, not least because member states have sought their own gas deals with third countries.
Another area that needs further exploration is the efficient use of EU gas infrastructure under the Platform, which involves maximising gas imports absorption, coordinated action on gas storage and identification of infrastructure needs. To this end, the Platform, including its regional groups, faces the challenge of building on (and avoiding overlapping with) existing coordination structures such as the Gas Coordination Group, ENTSO-G and High-Level Groups for the regional assessment of energy infrastructure.
In the short term, the added value of the Platform seems to lie in the opportunity for smaller companies to gain access to new gas suppliers by relying on the EU’s collective market weight, mainly through the assistance of Central Buyers or Agents-on-Behalf. Furthermore, the aggregation mechanism is open to Ukraine, Moldova, Georgia and Western Balkans.
While seeking stable delivery of natural gas, the European Commission is trying not to compromise on the long-term decarbonisation objectives in line with the European Climate Law. For instance, the memorandum of understanding on gas exports between Egypt, Israel and the EU was complemented with an EU-Egypt statement to work jointly through a Mediterranean Hydrogen Partnership.
Some fundamental questions inevitably arise: What is the role of natural gas in the energy transition as the REPowerEU Plan unfolds? Will the Platform be equipped to influence energy policy or a new approach towards EU competition law?
Another question, arguably more pressing and disturbing, may be looming. Does the temporary nature of the so-called Solidarity Regulation mean that the EU solidarity principle, which underlines many REPowerEU measures, including the Platform, is also temporary?