Sunday, 14 April 2024

The EU Wants to Do More Joint Purchasing

After its initial attempt at aggregated gas purchases was unsuccessful due to oversubscription, the EU announced it will move through with its plans to jointly purchase hydrogen and essential raw materials. The first round of joint gas purchases, which matched 10.9 billion cubic meters of demand — more than 80% of the EU’s year-end target of 13.5 bcm — from gas purchasers with potential supplies, involved several major energy firms.

Participants included the Swiss company Axpo, the state-owned Equinor of Norway, and the French utility Engie. Also participating was TotalEnergies. The EU’s desire to make collective petrol purchases underscores Brussels’ need to assure supplies of essential goods and maintain price stability.

EU Wants More Purchasing

Before Moscow invaded Ukraine, just over 40%, or roughly 155 bcm, of the EU’s 360 bcm of gas demand came from Russia. A platform for petrol has been established by the EU to coordinate demand and drive down costs.

Overall, 18.7 bcm of supply was made available by suppliers, but not all of it was purchased because of the terms of the anticipated contract or issues with pricing. The initiative, which is a part of the EU’s drive to diversify away from Russian imports, has attracted 110 energy purchasers. Contracts haven’t been finalized, and the commission won’t be included in the pricing negotiations.

  • EU to jointly purchase hydrogen and essential raw materials.
  • EU seeks to ensure essential goods and maintain price stability.
  • Jera, Kogas, and Cnooc plan to create a new market for essential components and hydrogen.

The platform might make it easier to identify clients and sell volumes in greater chunks, but with global demand outstripping supply, why would vendors offer lower pricing here than they would elsewhere? To increase the bloc’s reserves of minerals essential to the development of green technologies like wind and solar energy and battery manufacturing, Brussels has suggested a unified gas procurement.

In April, Jera of Japan and Kogas of South Korea inked a Memorandum of Understanding. In 2017, Cnooc of China signed a comparable contract. The plan would serve as a “blueprint” for a “new market” for essential components and hydrogen, which will aid in the decarbonization of energy-intensive businesses. Several Middle Eastern businesses expressed interest in providing hydrogen, and this year, Brussels will conduct four additional rounds of joint gas purchases.

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