Grandstand. European states are preparing to jointly buy gas, as they did recently for the vaccine. But will they be as successful? If the advantages are even more marked than for the vaccine, the difficulties of implementation appear much more serious.
The idea of joint purchasing from different natural gas suppliers, in particular the Russian state export monopoly Gazprom, is not new. It was already defended in 2014, after the annexation of Crimea. It resurfaced in October 2021 in the face of soaring gas prices. Faced with the invasion of Ukraine, the Council of the European Union (EU) officially adopted it. The Commission must now work hard to define the organizational arrangements and specify its ambition.
The expected benefit is the same as yesterday: obtaining a lower price in negotiations with producers. It is reachable by “construction”. It is in fact a matter of forming a cartel of purchasers faced with a small number of suppliers, each having monopoly power through the extent of their resources and the size of their infrastructures.
Strong bargaining power
For the gas transported in pipes, the Algerian company Sonatrach or the Norwegian company Equinor would no longer discuss with several competing interlocutors, but with only one. In this new configuration, the European Union would have a strong negotiating power on the price. It accounts for three-quarters of global pipeline gas purchases and more than half of Gazprom’s gas trade, for example.
For gas transported by ship, Europe’s position is less favourable: it represents only 16% of world volumes purchased. But at certain times of the year, particularly during the summer period when storage sites are filled, this share can be significantly higher.
Correlatively, and still by construction, group purchasing makes it possible to avoid a generalized continental rat race which would see each government accompanied by its gas industrialists visiting the producing countries to sign supply contracts. Gas capacities being limited in the short term and running almost at full speed, what one gets is what another will not. In the medium term, their possibilities for expansion are not zero, but they are not unlimited either.
But in reality, these advantages will depend on the scheme chosen for the group purchase. It is already agreed that joining the common organization will be voluntary. If Germany and its companies intend to continue their recently started bilateral negotiations with Qatar and sign an agreement, they will not be prevented from doing so.
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