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
A $2 trillion arms race redefines modern warfare
A new multidimensional arms race is underway across three continents, with more than two trillion dollars pouring into the attempts to master the drones, the hypersonic weapons, the artificial intelligence, and the other emerging technologies that may dominate the future battlefields, a spending spree that mirrors the Cold War nuclear buildups but with more players, less certainty about the impact, and only the shared conviction that getting left behind could be catastrophic.
The dissolution of the arms control architecture marks the race’s departure from the Cold War precedent. The longstanding agreements, the Intermediate Nuclear Forces, the Strategic Arms Reduction, and the Anti-Ballistic Missile treaties, are being ripped up to avoid missing out on the promise of the unstoppable lethality, removing the guardrails that the earlier competition eventually developed.
Pentagon awards $245M antimony deal to secure defense stockpile
The United States has taken a decisive step to secure its supply of antimony, a mineral long recognized as a strategic vulnerability in the defense industrial base. The U.S. Defense Logistics Agency (DLA) has awarded United States Antimony Corporation (USAC) a sole-source, five-year contract worth up to $245 million to supply antimony metal ingots for the national defense stockpile.
With the deal, USAC, which operates the only two antimony smelters in North America, will begin deliveries immediately, marking a major milestone in the Trump administration’s drive to strengthen critical mineral supply chains against foreign dependence.
Netherlands prepares for cold weather by activating “pilot light” at Groningen gas field
The Dutch government has announced plans to activate the “pilot light” at two stations in the Groningen gas field due to anticipated cold temperatures in the Netherlands. This decision comes despite the government’s earlier commitment, made in June, to cease production at Groningen…