EU adds Ukraine to its gas cartel
Ukraine will participate in the European Union’s new mechanism of collective gas purchases, which will provide the country with additional energy volumes, EU Energy Commissioner Kadri Simson announced on Thursday.
“We have integrated Ukraine in the gas joint purchasing platform with a view to help secure 2 billion cubic meters of additional gas,” Simson told a meeting of EU lawmakers.
She also reported that the bloc had provided Kiev with 1,600 power generators and 1,400 electric transformers, along with a supply of solar panels.
In December, the EU approved the creation of a mechanism for joint purchases of gas within the bloc in order to combat the energy crisis, which occurred as the result of anti-Russia sanctions and its decision to abandon Russian energy. The tool will reportedly give EU member states the ability to negotiate better prices and thereby reduce the risk of them outbidding each other on the global market.
It is expected that the platform will start working in April, with at least 13.5 billion cubic meters of gas expected to be purchased through it this year. EU countries reportedly plan to sign their first contracts to jointly buy gas by this summer.
According to Simson, the new correction mechanism, which is designed to cap prices in EU gas markets, could be extended to cover not only the TTF Dutch trading platform but “other hubs” as well. The mechanism will be triggered when the price of a monthly TTF futures exceeds €180 per MWh ($2,000 per thousand cubic meters) for three consecutive days.
While the member states are hoping that the scheme of joint gas-buying will help make prices “reasonable,” economists worry that, with the demand for gas in the EU as high as it is, bulk buying could actually push prices higher instead of cooling them.
For more stories on economy & finance visit RT's business section