Joint gas buying no quick fix for Europes supply crunch

div classBodysc17zpet90 cdBBJodivpBy Kate Abnettp

pBRUSSELS Reuters – The European Unions plan for countries to buy gas jointly could maximise supplies and ensure better contract terms in the coming years, but is unlikely to help in the event of a sudden supply cut off, analysts and EU officials said.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pPressure on Europe to secure alternative gas supplies increased on Thursday after Moscow imposed sanctions on European subsidiaries of stateowned Gazprom and Ukraine stopped a gas transit route, pushing prices higher.p

pTo become more independent of Russian gas and build a buffer against supply shocks, the EU in April launched a platform to pool demand and jointly buy gas. The dash for alternative supply has acquired further urgency after Russia cut gas supply to Bulgaria and Poland.p

pBut together or alone, EU gas buyers face a market of soaring prices and tight supply. European gas prices hit record highs after Ukraines invasion by Russia, which supplies 40 of EU gas, following months of climbing prices. p

p“Its very hard to see that there is any noncommitted gas in the market. Why would the EU find new gas that the member states at the current prices could not find？” said Christian Egenhofer of the Centre for European Policy Studies.p

pEU leaders said in March they would work on joint gas buying “with a view to next winter”. The executive Commission, however, appears to be looking to the longer term.p

pA draft Commission document, part of a package to cut reliance on Russian energy to be published next week, said the joint buying platform would work “notably to establish longterm partnerships with energy supplying countries”.p

pAnalysts said the EU could potentially use its clout as the worlds biggest gas buyer to negotiate longerterm contracts, also for hydrogen or imports of lowcarbon electricity.p

p“Where I think it could potentially help is when setting contractual terms with large suppliers,” said Jacob Mandel, Senior Associate at Aurora Energy Research. p

pBut first, Brussels would need to navigate the complexity of coordinating negotiations and purchases among the EU, national governments and individual companies – and avoid potential legal issues over EU competition rules posed by large companies banding together.p

pUnder the EU plan, Commission and EU government officials would negotiate deals, but it is not clear at what point companies would be involved, or what say they would have on prices and contract terms.p

pBecause participation in the EU scheme is voluntary, it also raises the question of whether enough big buyers would join to create a powerful negotiating bloc.p

pBulgaria, Poland, Spain and the Czech Republic are among the countries interested, EU officials said. The biggest EU gas buyer, Germany, also supports the plan, but it will be up to companies to decide to participate, a German official told Reuters.p

pOne EU official said some large energy firms were reluctant, howver, since they can already negotiate their own deals with major suppliers. “The big ones dont see a business case in it for them,” the official said, speaking on condition of anonymity.p

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pp Reporting by Kate Abnett, additional reporting by Gabriela Baczynska editing by Jan Strupczewski and Barbara Lewisp

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