Brussels, Dusseldorf The joint procurement of gas at the European level could start later than expected. The General Court of the European Union has ruled that the contract to establish the procurement platform cannot be awarded at this time. The decision is exclusively before the Handelsblatt.

The EU Commission is facing a lawsuit that aims to cancel and restart the previous tender. The Commission has not published the tender for the contracting platform, which is only provided for under special conditions such as “extreme urgency”.

As a result, not all interested companies were able to apply. The actor argues that there was no unforeseen event that created an extreme urgency. The EU Commission has been working on bundling its companies’ gas requirements since March 2022. Since then, it could have taken over the tender, according to the claimant.

“The Commission is convinced of the legality of its actions,” a spokeswoman for the Brussels authority told Handelsblatt. The order will be placed as soon as possible. The Commission argued in court that “immediate and incomparable” damage to the EU and its citizens could be expected if the court does not swiftly overturn its decision.

The best jobs of the day

Find the best jobs now and
be notified by email.

The plaintiff is the company Enmacc from Munich, which operates an over-the-counter gas trading platform and would have liked to apply for the order. “We are convinced that we can deliver what the Commission is looking for faster and better than anyone else,” said Managing Director Jens Hartmann of Handelsblatt.

Poster against excessive prices

With the new trading platform, the EU wants to avoid a repeat of the disaster of 2022. At the time, EU countries were under pressure to fill their gas storage facilities as quickly as possible. They fought over every cubic meter that was offered, raising prices. The stock price of gas has quadrupled in six weeks. In August it briefly exceeded 300 euros per megawatt hour.

>> Read here: Economy Minister Habeck demands the price of European industrial electricity

The supply situation has easedbut a future shortage is anything but impossible: in 2022 there was still plenty of Russian gas stored in storage facilities until the summer gazprom large amounts of it. It is not yet clear if this can be fully replaced with liquefied natural gas purchases in 2023.

“We could face a potential shortfall of almost 30 billion cubic meters of natural gas next year,” Commission President Ursula von der Leyen said just before Christmas. “By making the joint purchase of gas, we will use the economic and political weight of the EU to ensure the supply of our citizens and the industry.”

Even in the event of a shortage, Europeans should not have to pay lunar prices for gas. That is why the EU is forcing gas buyers to form a cartel. They are supposed to buy some of the gas through a joint electronic platform that bundles the needs of many buyers into large tenders.

graphic

As a result, not many European companies are bidding for an LNG delivery anymore, but many LNG providers are bidding for some common European demand packages. This is how the price should be pushed down.

The algorithm plays a crucial role

It is this platform that the Commission may have wrongly announced as operational. On November 30, 2022, the commission sent the announcement to potential applicants.

The 40-page document specifies what is required. Its core is a computer system into which merchants can enter their gas needs and which uses an algorithm to group requested quantities into sensible packages.

This algorithm could become the crucial point for the success of the platform: only if the demand packages it generates are attractive enough in the global market, sellers will be interested in them.

graphic

In addition, there are requirements in the tender for the processing of commercial transactions, for computer security and an obligation to inform and document. “A lot of things in this tender are not very specific,” says Hartmann. “It would be even more important that the different applicants be able to present their concept of a trading platform to the Commission. We have tried in vain to work together constructively. Unfortunately, the only option left to us was legal action.”

Lawyers not related to Hartmann have also expressed doubts about the Commission’s actions. “Extreme urgency is very often used as an excuse for not having to do public advertising,” says Bettina Tugendreich, an expert in public procurement law, at the Raue law firm. “But in my experience, that almost never stands up to legal scrutiny by the courts.” Energy lawyer Martin Riedel of the Aecoute law firm says: “Usually, plaintiffs have a good chance of success when they take action against these types of non-public tenders.”

Under the law, gas storage tanks must be 90 percent full by fall 2023. At least 15 percent of the amount required for this must be purchased through the new platform. In any case, it should be volumes of gas worth many billions of euros that are sold through the system.

Relevant for the hydrogen economy of the future

Companies can voluntarily buy more gas through the platform. But even 15 percent can have a decisive effect on the market. More than half of the gas reaches the EU under long-term contracts. So 15 percent probably represents at least a third of the amount traded in the short term. If the price of these quantities goes down, the prices quoted for short-term transactions at other trading venues also go down.

>> Read here: Imports from Europe make LNG scarce and expensive for emerging markets

This, in turn, would have an effect on the agreed deliveries in the long run. The prices of these deliveries are often tied to stock market prices.

It is not yet clear if the platform will continue to be used after 2023, but it is not entirely unlikely. Energy experts recommend organizing the purchase of hydrogen at the European level. “Perhaps the course for the future will be set here,” says Hartmann. “Then it would be even more unfair if not all competitors have a chance to win the contract because the EU Commission has unnecessarily chosen a non-transparent procedure.”

More: How Germany wants to bring down gas prices in the EU

NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA
NBA

By yjawq

Leave a Reply

Your email address will not be published. Required fields are marked *