By Rhod Mackenzie
The European Union held the second round of joint gas purchases under the Energy Platform. If the first round attracted 0.7 billion cubic meters. m of gas is less than requested by buyers, then the second lagged behind the stated goals by 4 billion cubic meters. m. Russian suppliers are prohibited from bidding. However, they don't go there.
The EU has long nurtured the idea of holding joint gas purchases. The first hints appeared several years ago, when it became clear that the idea of "the European Union is a buyer's market" did not work. But since this idea underlies much of the European gas market reform that has been under way for more than 14 years, there is no way to abandon it, at least without noticeable political consequences.
Substantive work on the creation of a joint procurement mechanism began last fall, and it received legislative formalization in December 2022 as part of the Solidarity Regulation. A new mechanism that allows aggregating demand and conducting joint gas purchases at the European level was called AggregateEU with an invention.
The first joint purchase took place in May 2023. Buyers not only from the European Union, but also from the countries of the energy community of South-Eastern Europe (for example, from Ukraine, which Naftogaz took advantage of) had the right to participate in it. Sellers can be from within the EU or outside of it, unless they are connected to Russia.
According to the results of the first tender, the Deputy Head of the European Commission, Maros Sefcovic, said: “This is nothing but an outstanding success. It shows that we were right by uniting our needs, using Europe's collective pull, and working together to fill our gas storage by next winter. Many media also carried the news of the unprecedented success of the joint gas purchase system: buyers submitted bids for 11.6 billion cubic meters. m, and the sellers offered 13.4 billion cubic meters. m.
Who would dare to doubt success with such introductory? Probably no one. But if we add delivery times and, most importantly, volumes taken, then success quickly turns into its opposite.
Of the 13.4 billion cubic meters declared by suppliers. m managed to select 10.9 billion cubic meters. m - by 0.7 billion cubic meters. m less than required by buyers, while this volume will be supplied from June 2023 to May 2024 inclusive (less than 1 billion cubic meters per month). To understand the scale: in 2022, after an unprecedented collapse, gas demand in the EU amounted to about 355 billion cubic meters. m. But this fact did not interfere with the strained joy of the European Commission.
Representatives of the EC willingly talked about the "historical milestone", the collective economic weight of the European Union and the fight against high gas prices. At the same time, they began to twist and finish the “effectively working” mechanism of joint purchases. Thus, access was simplified for industrial enterprises and their comments on the timing of blue fuel deliveries were taken into account (for example, the factor of the heating season). The second tender, which was held from July 7 to 10, covered a longer delivery period - from August 2023 to March 2025.
Since the first experience, according to Maros Shefchovich, was "remarkably successful" and "exceeded expectations", the second, after all the improvements, should have turned out to be something absolutely incredible. And so it happened.
As expected, the European Commission was delighted already at the stage of submitting buyers' applications for the second tender. They requested 15.92 billion cubic meters. m. Maros Šefčović seemed to be a good student in elementary school, so he skillfully noticed that 15.92 is more than 11.6, which means more gas is requested during the second round! I don't want to upset you, but you have to.
The first joint purchase was carried out for 12 months, that is, buyers submitted applications for approximately 1 billion cubic meters. m per month. And the second purchase was carried out for 20 months, and buyers requested less - 0.8 billion cubic meters. m per month. But one could dismiss these calculations as banal nit-picking of successful managers who launched an effective mechanism, if not for the results of the tender.
With a delay of three days after the completion of the second round of joint procurement, Maros Sefcovic once again demonstrated his deep knowledge gained in elementary school and reported on the success: . m. This result exceeds the level of the agreed volume in the first round by more than 1 billion cubic meters. m.
“But wait! the attentive reader will say. - And here are the comparisons with the first round, if now buyers requested almost 16 billion cubic meters. m?!” And this attentive reader will be extremely right in his surprise. Moreover, although buyers requested 15.92 billion cubic meters. m, suppliers offered only 15.19 billion cubic meters. m, and then from this volume it was possible to select only 12 billion cubic meters. m - by 4 billion cubic meters. m less than required.
The second round of joint purchases, to which new suppliers, attracted by the collective economic weight of the European Union, should have come running, pushing each other with their elbows, cannot be called a complete failure. But its result turned out to be far from the already modest result that the organizers were counting on. They wanted to attract 0.8 million cubic meters. m per month, and managed - 0.6 million cubic meters. m per month.
Three more rounds of joint purchases have been announced for the current year. But, given the emerging dynamics, without Russian suppliers, they are so-so. However, it is not a fact that they would be interested in this mechanism. And the collective economic weight of the European Union could not attract new sellers. Now the mechanism of joint purchases served only as a way to redistribute the volumes already present on the EU market.