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EC seeks input on challenging US dollar hold on EU oil, gas trade

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Staff Writer | February 16, 2019
The European Commission is seeking views on how to encourage new euro-denominated price benchmarks for crude oil and global gas as part of efforts to break the US dollar grip on EU energy trading.
Europe   The EU spent around Eur300 billion every year on average on energy imports
The EU spent around Eur300 billion/year ($338 billion) on average on energy imports over the last five years, and around 85% - worth $287 billion - of this was paid in US dollars, according to the EC. This dependence on US dollars leaves European companies vulnerable to US foreign policy-related financial sanctions, for example over Iran, where US and EU sanction policies have diverged.

The EC is seeking views on what would be needed to set up a euro-denominated benchmark "in the globalizing gas market" at European, national and price-reporting agency level.

It is also interested to know what price-reporting agencies would need to launch euro-denominated price benchmarks for crude oil.

It is interested in the potential opportunities, challenges and ways to overcome the latter.

Other questions include how to promote using the euro more in gas exploration, production, supply agreements, infrastructure projects and transportation.

They also ask what would be needed for commodity exchanges to develop more euro-denominated derivative contracts on crude oil and refined products, again at European, national and commodity exchange level.

The EC is also interested in how national governments could promote using euros more in energy trading, and also include model clauses in their intergovernmental energy agreements with non-EU countries saying that the euro is the default currency to use.

The EC's online consultation is open until March 31, and is targeted at national governments, central oil stock holding entities, energy market players, price reporting agencies, commodity exchanges, and European companies providing financial services to the energy sector.