EU mulls 20-year contracts on AggregateEU gas platform

• EU extends lifespan of AggregateEU, introduces longer-term products
• New products to bring more stability for buyers, sellers, EU officials claim, but traders are not convinced by usefulness of platform
• Next tender scheduled for 15 February

LONDON (ICIS)–The European Commission will be polling the market on the possibility of securing gas volumes for 20 years on the AggregateEU platform, EU officials confirmed in a press briefing on 5 February.

Responding to a question from ICIS, two European Commission officials confirmed a survey would be conducted in the upcoming weeks to understand the need for long-term products.

They insisted, however, that, if launched, such products would have to be in full compliance with the EU’s climate targets, which entail reducing emissions by limiting dependence on fossil fuels.

The announcement comes as the EU has extended beyond 2023 the lifespan of AggregateEU, a platform designed to bring gas buyers and sellers together.

The European PRISMA capacity platform had been tasked to aggregate demand and under latest changes it will also start offering mid-term products of up to five years, which will be made available in the next tender on 15 February.

AggregateEU was launched last year, with buyers and sellers being able to participate in short-term tenders and submit monthly demand until March 2025.

DEMAND AGGREGATION

Under the latest changes, demand for mid-term products will not be aggregated, effectively allowing buyers and sellers to negotiate bilaterally.

“Indeed, there won’t be any aggregation in this sense,” one of the European Commission officials said.

“There will be no intervention from Prisma. This comes from the fact that longer-term contracts [are] more complex and it will be more difficult to aggregate [demand].”

The official said the decision to introduce five-year products came in response to demand for more stability for buyers and sellers.

The mid-term contracts would be broken down into blocks of six months, running from April 2024 until October 2029. The contracts will coexist with short-term monthly products which have been offered on the platform since it was launched last year.

MARKET CRITICISM

Gas traders had been critical of the platform, calling on the European Commission not to extend it on a long-term basis. They noted it did not help to bring more liquidity or allowed companies to secure volumes at below-market prices.

The Commission official rebuffed the claims, insisting they had received genuine interest from buyers and sellers, particularly in central Europe.

“Based on different feedback we received, we decided to launch this mid-term product.

“Sources told us AggregateEU was a safe space for them because it’s backed by the European Commission,” the official said.

Another criticism levelled at AggregateEU was that companies did not benefit from financial collaterals, particularly for small companies which had been struggling to unlock longer-term LNG contracts.

The Commission representative said that some banks had made themselves available to offer services required to support transactions.

He also addressed concerns from traders who had pointed out that most of the volumes that had been delivered following previous tenders had been via pipelines rather than LNG terminals.

He said the Commission had proposed an “agent-on-behalf service” which would encourage experienced companies to help buyers secure cargoes.

“Surprisingly enough a year ago, a central European company signed an agreement with another company, without any intervention from us, that would enable the buyer precisely to buy LNG. This [other] company helped to land it and ship it to the market. This is exactly what we are looking for and the kind of cooperation we’d like to see,” he added.