The EU joint gas purchase platform AggregateEU, was "useful" to demonstrate that the "market was already delivering pretty well amongst active participants", EU energy traders association Efet's gas committee chair, Doug Wood, told Argus on the sidelines of the ETCSEE conference in Vienna last week.
Based on feedback that Efet received from its members that participated in the tender, "they have only been matched or connected with people they were already talking to", Wood said, adding that it remains to be seen "whether any additional deals have been done through the platform that would not have happened anyway".
Wood also expressed hope that the European Commission will publish some analysis to see whether the prices are actually higher or lower than prices struck on exchanges and through broker platforms.
And according to Wood, the commission is now seeking to focus on bringing large industrial users into the market.
While there was a period when a lot of trading activity collapsed into the most short-term contracts, Wood believes that this tendency is now moving back into the opposite direction. "I think what we see now, in the LNG market in particular, is portfolio players who are taking some long-term price risks", as there will be a market somewhere for that gas in the longer term, whether if it is in Europe or elsewhere, he said.
Russian gas phase-out requires time
With some long-term contracts between European firms and Russia's state-controlled firm Gazprom still in place, it would be "difficult" to see how a Russian gas phase-out can be achieved completely in the short term, Wood told Argus, adding that Europe still receives significant volumes of LNG from Russia.
Wood expects an increasing move away from Russian gas, but still sees a few challenges to overcome. There are greater prospects from 2026 because of the possibility of a significant increase in LNG volumes available to the market, he argued.
Wood stressed that while there are "hopeful" developments with central and south eastern European countries taking advantage of improved interconnection capacity and looking to access market supplies and diversify their sources, "political will, governmental support and the development of good regulation in this region, these all are slow at the moment".
The urgency of the situation "has caused a rethink" and there are "good" reasons for countries to adopt a more "open approach", according to Wood.
The association also expects "much less harm to overcome" if the transit agreement between Ukraine and Russia is not extended beyond 2024. "There was a huge financial impact because transit revenues are a very important contributor to the Ukrainian economy, but that has largely gone now", Wood said, adding that the volumes coming to Europe through that route are now relatively small compared with the size of the energy market.
Europe now has "better experience" of reverse flows, including along the Trans-Balkan pipeline, which introduces a new route to ship gas to Ukraine. And countries that previously received supply through the Ukrainian route "can increasingly be served from their western interconnections", he concluded.
