Friday, May 20

Europe not using negotiating power to buy energy wisely – Enel CEO

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MILAN — Europe is not using the negotiating clout it has to buy energy wisely and needs to create a longer-term market structure, the head of Europe’s biggest utility Enel said.

“In Europe we are used to projecting our (energy) market for a maximum of 2-3 years. This is a mistake,” Francesco Starace said at a conference on the Ukraine crisis and energy security.

Europe needs to think of buying and selling energy on a 10-20 year horizon, he said. “Then our leverage would be completely different and much more powerful.”

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European gas prices soared to record highs last year and have stayed high due to concerns over supply disruptions after Russia – Europe’s top gas supplier – invaded Ukraine.

The European Union has launched a platform for European Union countries to jointly buy gas as they seek to cut reliance on Russian fuels and build a buffer against supply shocks.

Starace said Europe’s energy trading market was “a perverse mechanism” since no source of gas required such high prices.

He said he strongly advocated a moratorium, or “time-out,” on a market that was creating havoc and forcing governments to put money where it should not necessarily go.

“No matter how much money we throw at this monster it will always win because the leverage the market has is huge,” he said. (Reporting by Stephen Jewkes Editing by Giulia Segreti and Mark Potter)

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