Joint gas purchases, volumes down. Brussels gives up on fifth round of demand aggregation

Brussels – Falling numbers and Brussels skips the fifth round of joint gas purchases. It closed this week the fourth round with bids from 13 international suppliers for a total volume of 9.13 billion cubic meters. This was announced by the European Commission, recalling that the aggregate demand gathered by European companies between November 23 and 29 was 10.06 billion cubic meters of gas.

The platform has combined bids for 7.35 billion cubic meters of aggregate demand and now commercial negotiations between European companies and international suppliers will cover deliveries between January 2024 and March 2025. This fourth round in Brussels closes a cycle that had opened in early April with the launch of the joint gas purchasing platform, launched in the midst of the energy emergency driven by Russia’s war in Ukraine and in the wake of joint purchases of vaccines during the Coronavirus health crisis.

The initial idea of the European Commission was to attract suppliers on a regular basis, indicatively every two months (June, August, October and December) until the end of 2023, allowing all companies from time to time to contract gas for the next 12 months. The decision to reduce tenders to four could be attributable to the declining numbers compared to initial expectations.

The first round of joint purchases closed in mid-May with bids for more than 13 billion cubic meters of gas, against a total demand of 11.6 billion cubic meters requested by EU companies. Supply and demand were matched for about 10.9 billion cubic meters of gas, between EU member states and Ukraine, Moldova, and the Western Balkans that have joined the joint procurement platform.

The second joint purchasing tender closed last July 10, with a total of 25 international suppliers responding to the tender with bids to supply a total volume of 15.19 billion cubic meters of gas to meet aggregate European demand of 15.92 billion cubic meters of gas. The recipients of most of the joint purchases were the Netherlands, France, Italy, Bulgaria and Germany. The third tender opened in September and closed against a demand of 16.49 billion cubic meters of gas and supply bids of 18.1 billion cubic meters.

Also aided by stabilizing energy prices, the latest tender closed last Tuesday with 9.13 billion cubic meters of bids in response to aggregate European demand of 10.06 billion cubic meters (with matched volumes of 7.35 billion cubic meters).

Despite declining volumes, Brussels plans to make the joint procurement mechanism a permanent tool (with a view to extending it to hydrogen and critical dual-transition feedstocks as well) and to extend the gas solidarity regulation that forms the legal basis for the platform, which expires at the end of the month. The EU Commission proposed to extend it for another year and the decision is on the table for European energy ministers at the December 19 EU Council.