EU wants to make joint gas purchases permanent after high demand
- September 6, 2023
- Posted by: Quatro Strategies
- Categories: Europe, Oil & Gas, Sanctions & Regulation
The European Commission is proposing to make its joint gas purchase scheme permanent due to its success. This scheme was initiated by the EU in 2023 after Russia drastically reduced its gas deliveries to Europe in 2022, leading to record-high energy prices in the region. Despite having refilled its natural gas storage to over 90% capacity and a bearish market, the EU is concerned about potential future disruptions in gas supply, such as the Nord Stream 2 explosion that occurred last year. Originally set to expire in December, the Commission is now proposing to make the scheme permanent as part of a broader revamp of EU gas market rules.
Under this proposal, EU companies would have the option to buy gas jointly on a permanent basis. While participation would be voluntary under normal circumstances, if the EU faces a fuel supply crisis, joint purchasing would become mandatory to prevent EU countries from competing for limited volumes of gas.
The scheme has surpassed initial expectations, with more than 27 billion cubic meters of gas demanded, double the 13.5 billion cubic meters initially targeted for joint purchases by the EU. However, it’s unclear how much of this demand has translated into firm contracts, as the EU only matches gas buyers and sellers but is not involved in the commercial negotiations that follow. The new EU proposal would require companies to report when they sign contracts through the scheme.
Negotiations on the proposal will take place between EU member states and the European Parliament, with the aim of finalizing the law by the end of the year. Key discussions will revolve around defining a “supply crisis” that would trigger mandatory joint buying and whether to extend this approach to other energy commodities such as hydrogen. The proposal suggests expanding the scheme to assist the planned European Hydrogen Bank, set to launch in November. Although the joint purchases constitute only a small portion of the EU’s total gas demand, they aim to help countries prepare for winter when gas demand for heating peaks.
Interested in learning more?
Sign up for Top Insights Today
Top Insights Today delivers the latest insights straight to your inbox.
You will get daily industry insights on
Oil & Gas, Rare Earths & Commodities, Mining & Metals, EVs & Battery Technology, ESG & Renewable Energy, AI & Semiconductors, Aerospace & Defense, Sanctions & Regulation, Business & Politics.
Read more insights
China’s oil imports at risk as Trump plans stricter sanctions on Iranian crude
China could face major disruptions to its Iranian crude supply—representing about 13% of its oil imports—if Trump, newly elected to a second term, resumes stringent sanctions on Iran’s oil sector. These sanctions, which are part of Trump’s “maximum pressure policy” aimed at curtailing Iran’s nuclear program, would likely…
Trade war ripples hit China’s commodity demand even before U.S. tariffs bite
China’s imports of key commodities mostly declined in March compared to a year earlier, underscoring how the country’s slowing economy and intensifying trade tensions with the U.S. were already sapping demand even before President Donald Trump’s sweeping tariffs in early April brought bilateral trade to a near standstill.
March was the final full month of relatively open trade before Trump imposed a 145% blanket tariff on Chinese goods, and the data reflects the early tremors in China’s industrial engine — as well as disruptions triggered by Beijing’s own retaliatory tariffs on U.S. energy in February and agriculture in March.
Google and EDF launch MethaneSAT to track oil and gas emissions
On Wednesday, Google and the Environmental Defense Fund (EDF) announced a groundbreaking partnership aimed at identifying sources of climate-warming emissions from oil and gas operations using data collected by a new satellite, MethaneSAT. Scheduled to launch next month, MethaneSAT…
