EU Touts Matchmaking Platform to Hold Down Gas Prices

The European Union wants international gas suppliers to offer to sell gas on its newly created purchase platform in order to prevent spiraling prices from battering industry again this year, according to Commission Vice President Maros Sefcovic.

The EU is in the middle of its first round of joint gas purchases, a plan to make sure that the region’s storages are filled, without the kind of extreme price rises seen last summer. A window to capture demand from buyers closed this week and will now be aggregated to match it with buyers’ offers. There has been skepticism over whether the plan would actually result in gas deals being signed.

“All international suppliers of gas should come and bid,” Sefcovic said in an interview with Bloomberg TV. “We have to be vigilant, the situation is still very fragile,” he added, referring to Europe’s energy security this year.

Goldman Sachs warned this month that Europe’s gas market crunch could return next winter, with prices potentially more than doubling. It comes of the back of similar warnings by the International Energy Agency that global demand could pick up, especially from China, leaving Europe competing for scarce supplies.

It remains to be seen if major buyers — such as Germany’s Uniper SE or France’s Engie SA — will actively use the mechanism and how big the collective buying might be. The EU plans to organize more joint purchases every two months, mandating that buyers pool demand for 15% of their storage-filling obligations. That target equates to roughly 13 billion cubic meters this year, or about 3% of the EU’s total demand for the fuel.

More than 100 companies are participating on the platform, with 65 wanting to buy gas, according to Sefcovic. The goal is to help push prices lower, he added. They have already fallen significantly in recent months.

“Prices are still too high, this is clearly not acceptable for us,” he said. “Last year was the year of survival. We want to go back to normal.”