Brussels plans to use a new gas index for LNG operations


The European Union (EU) expects to develop a new index that serves as market reference for operations with liquefied natural gas (LNG) and that it will work as of March 31, according to the political agreement reached this Thursday by the Energy Ministers of the Twenty-seven.

This is one of the points negotiated and agreed upon at the Extraordinary Energy Council held today in Brussels, but which will not be formally approved until the final design of a future ceiling is also agreed price to gas purchases, an extreme that generates great division between different countries.

The ministers will meet again on December 13 in Brussels, in what will be the fifth extraordinary Energy Council of the semester, and at that meeting they hope to be able to agree on the controversial cap on gas and formally adopt all the regulations that have been suspended, reported the Council in a statement. One of these is the aforementioned index, which is already developed by the Agency for the Cooperation of Energy Regulators (ACER).

Seeks to complement the shortcomings of the futures indicator Amsterdam Title Transfer Facility (TTF)which serves as a reference for wholesale gas purchases in the center-north of the EU and is used as a reference in a large part of the contracts in Europe, but which does not adequately reflect the growing LNG market.

The regulation, once adopted, will also include a “emergency break” in the intraday wholesale gas market at specific moments of extreme volatility, the implementation of which will be the responsibility of the European Financial Markets Authority (ESMA).

Joint purchases and solidarity

Sequestered as everything agreed until the future mechanism to cap the price of gas purchases in the EU is agreed, the holders of Energy of the Twenty-seven also agreed on the details of the system of joint purchases of gas for the next winter 2023-2024. The objective of obtaining cheaper prices by contracting more volume and preventing European partners from bidding against each other.

Member States undertake to add demand for 15% of your reserves (around 13,500 million cubic meters for the whole of the EU), which will be negotiated by a common service provider in global markets. Beyond 15%, the aggregation will be voluntary but with the same mechanism, the Council specified on an agreement that allows further development of this joint acquisition system and contemplates certain rules to increase transparency in tenders and large purchases of gas companies.

“Member States made it explicit that Russian gas will be excluded from the joint purchase“, stressed the Council. On the other hand, the Twenty-seven also committed to share gas in the event of a shortage of supply for the electricity generation of another partner, a point that especially worries countries that still depend on Russian imports.

The beneficiaries of this solidarity would pay for the gas received at the market price and would also take charge of possible litigation or arbitration or financial damages that the loss of customers could generate. The regulation includes a set of rules for share gas in case of “real emergency”which will enter into force only if the Member States have not concluded bilateral agreements setting out the specific conditions.

The new rules also allow member states “to reduce the non-essential gas consumption of protected customers, in order to supply gas to essential industries and services,” the Council said. It refers to outdoor heating or the heating of swimming pools in residential homes, but in no case does it refer to indoor heating of homes, schools and hospitals, the institution specified, adding that it will be the countries that define “what constitutes non-essential gas consumption“.

Deployment of renewables

The Twenty-seven also agreed, but left unapproved, a regulation in force for 18 months and extendable to accelerate the deployment of renewable energy generation facilities “that have the greatest potential for rapid implementation and the least impact on the environment.”

“The new regulation of temporary wills will establish Maximum deadlines for the granting of permits for solar energy equipmentthe improvement of existing renewable power plants and the deployment of heat pumps,” the Council reported.

In addition, they will introduce a “presumption of overriding public interest for renewable energy projects“, which will allow said projects to benefit from a simplified assessment of a series of environmental obligations, although States may restrict the application of these provisions in certain parts of their territory, types of technologies or projects. E


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