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News 16 May 2023

Top story of the week: Joint gas purchasing: EU Member States to buy 11.625 bcm of gas through AggregateEU

On 10 May, the European Commission launched an international tender for gas supplies through the AggregateEU mechanism, which will match gas sellers with EU buyers, improving coordination and increasing leverage in the EU gas market.

According to Vice-President Maroš Šefčovič, this represents a "historic milestone" in increasing the Union's energy security and tackling high gas prices. The VP also highlighted the market's positive response, signalled by the participation of 77 European companies that have submitted requests for a total volume of 11.625 billion cubic meters (bcm) of gas demand, most of which (8.9 bcm) is requested via pipeline. Until 15 May, international suppliers, except for Russia, may submit their bids for deliveries from June 2023 until May 2024.

With recurrent tendering rounds, AggregateEU will become the new marketplace for trading gas within the EU. The mechanism is a central component of the EU Energy Platform, established in April 2022 to coordinate EU action and negotiations with external upstream suppliers, preventing EU countries from outbidding each other.

Joint gas purchasing was first endorsed by the European Council in October 2022 as part of the EU's efforts to phase out Russian gas supplies in the short term, under the REPowerEU Plan. Then, it was provided with a legal framework two months later by the Council Regulation (EU) 2022/2576 on enhancing solidarity through better coordination of gas purchases, exchanges of gas across borders, and reliable price benchmarks. Under this regulation, EU countries are obliged to use the platform for at least 15% of their needs, corresponding to approximately 13.5 billion cubic meters (bcm) of gas. Beyond the 15% target, the aggregation will be voluntary but based on the same mechanism.

AggregateEU should help achieve this goal by pooling gas demand from companies established in the EU or Energy Community countries[1] and matching it with the most competitive supply offers in time to fill their storage ahead of the next winter. Suppliers are not necessarily non-EU companies but can also participate. Following the matching of demand with supply, companies can voluntarily conclude purchasing contracts with gas suppliers, either individually or jointly. Cooperation is intended to be particularly beneficial for smaller companies and companies from landlocked countries with less global outreach or negotiating power.

This first tender will be followed by further ones once the demand aggregation exercises scheduled for June, August, October, and December 2023 are completed.