The EU’s joint natural gas procurement scheme is failing to gain traction

The European Union’s common natural gas purchase mechanism, AggregateEU, has not turned out to be a game changer for the European gas market or fuel supply, according to sources familiar with the confidential data cited by the Financial Times.

At the height of the energy crisis, the EU launched the so-called AggregateEU ​​to enable the aggregation of demand and the joint purchase of gas at European level in an attempt to increase the EU’s energy security. The mechanism aims to collect and pool gas demand from companies established in the EU or Energy Community countries and match it with the most competitive supply offers in time for the next storage filling season.

However, this mechanism and platform for pooling and matching supply and demand resulted in gas contracts for only 2% of potential demand, sources with knowledge of the data told the FT.

The EU has hailed the common gas purchase mechanism as a success. In May 2023, the EU announced the successful outcome of the first international tender for the joint purchase of EU gas supplies.

“This is a remarkable success for an instrument that did not exist about five months ago,” said European Commission Vice President Maroš Šef?ovi? said then.

“The commission has played the role of aggregator and matchmaker, and now it is up to the respective parties to conclude their agreements.”

However, the deals struck represented a fraction of the potential demand, according to FT sources.

One energy company, which requested anonymity, told the FT that the joint gas buying platform “didn’t bring additional volumes to the market… so it didn’t achieve what it set out to do”.

The low volumes of joint purchases raise doubts about the effectiveness of the mechanism to give Europe more power in purchasing supplies. It also questions the European Commission’s plans to extend the joint gas purchase mechanism to critical minerals and hydrogen.

“We must use the strength and size of our market to ensure supply,” European Commission President-designate Ursula von der Leyen wrote in the political guidelines for the new Commission’s 2024-2029 mandate.

“That is why I will propose that we activate and expand 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

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