Brussels seeks to prevent internal EU bidding for LNG

A European Commission proposal for joint European gas orders, one of the most crucial aspects of Brussels’ energy-crisis package to be discussed at tomorrow’s EU summit, aims, besides boosting Europe’s bargaining power, to prevent EU member states from bidding against each other, an unwanted prospect that would increase prices, ultimately favoring stronger members.

The Brussels proposals also include a measure that would discourage speculation in derivatives through the establishment of a temporary intraday price-increase mechanism. It would protect market players from huge price fluctuations within the same day by setting limits. TTF fluctuations above and below limits set will be prohibited, according to this proposal.

The details of how these two proposals could actually work remain to be seen.

“The LNG market is in danger of becoming a jungle. Things will be tight in coming years and a first-come, first-served logic could prevail. In practice, this means bigger countries will manage to buy faster and cheaper than smaller ones, so a brake is needed,” Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, told energypress.

Unrestricted competition between countries would drive up prices, undesired by all, as an oligopoly exists in LNG supply, the professor added.