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Oxford Institute reveals problems with joint gas purchasing

Oil&Gas Materials 6 December 2022 13:52 (UTC +04:00)
Oxford Institute reveals problems with joint gas purchasing
Laman Zeynalova
Laman Zeynalova
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BAKU, Azerbaijan, Dec.6. The most obvious problem with the proposals on joint gas purchasing in Europe is that whilst participation in the demand aggregation mechanism is mandatory, it is only voluntary in terms of joint purchasing, Trend reports Dec.6 with reference to the Oxford Institute for Energy Studies (OIES).

“It is therefore not at all clear how much gas, if any, will be bought via the mechanism. Given the practical difficulties in making such a mechanism work, as discussed below, it is likely that any participation will be minimal. Even if the participation is at the maximum possible prescribed by the demand aggregation – namely 15 per cent of 90 per cent of storage or about 13.5 Bcm – this is a relatively small volume when compared to either total EU annual gas consumption of over 400 Bcm or the quantity of gas traded on the TTF in a year (approximately 4900 Bcm). As such, it is hardly likely to have much impact,” reads the OIES report.

Secondly, the analysts note that there are clearly going to be tensions between Member States and the Commission.

“Energy is an area of shared competence between the Commission and Member States under Article 4 of the Treaty for the Functioning of the European Union. According to the European Union website: ‘”Shared competence” means that both the EU and its Member States may adopt legally binding acts in the area concerned. However, the Member States can do so only where the EU has not exercised its competence or has explicitly ceased to do so.’ This means that energy has always been a sensitive topic where Member States are wary of handing too much power to the Commission. The Commission has tried to take account of this by establishing the ad hoc Steering Board. However, this has a very limited role in the joint purchasing framework as all the decisions in the structure and awarding of the service provider contract are made by the Commission without any further involvement or oversight by Member States (for example via a delegated act). This represents a major power grab by the Commission as terms such as pricing of gas and the allocation of the gas bought under joint purchasing using the service provider are ultimately in the hands of the Commission.”

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