EU Opens New Infringement File Against Romania
Due to restrictions imposed, Romania's OMV Petrom and Romgaz are not in a position to export natural gas.
Government sources have disclosed to Natural Gas Europe that the European Commission (EC) has launched an infringement procedure against Romania further to the banning of gas exports by Romanian authorities. Market sources, as well as various EC officials confirmed the information also. The procedure will be made public by the end of the year, when Bucharest is to receive official notification.
European legislation compels members to ensure gas transportation through the interconnection of pipelines for both import and export, in order to increase security of gas supply. According to EU Regulation 994/2010 of 2013, all interconnecting pipelines from Romania must allow 'outward flow' that is, allow gas exports.
Although technically exports can be performed, the producers (Petrom, Romgaz) who are interested in selling on foreign markets will be faced with certain restrictions imposed by the new law on electricity and gas, which is presently being developed by the Ministry of Economy, and is to be submitted for debate to the new Bucharest Parliament under emergency procedure.
A provision of the new law states that gas producers will be bound to give priority to providing for the consumption of the regulated market. Gas producers are in fact compelled to firstly provide the domestic suppliers with the quantity of gas required to satisfy consumption on the regulated market, according to ANRE regulations on price liberalization schedule. The balance of domestic production, less the quantity of natural gas for technological consumption, will be made available on the competition market. However, after the supply on the regulated market, there will be no quantities left for export. Liberalization will be achieved gradually by 2013 for industrial consumers and by 2018 for household consumers.
Liberalization will be accompanied by a gradual increase of Romanian market sale price for domestic gas production, as to the imported gas price, which will lead to a triplication of the present gas price amounting on the domestic market to approximately 80 dollars per thousand cubic meters.
On the other hand, the two main Romanian gas producers, Romgaz and OMV Petrom, have generally agreed in front of state authorities to no longer export gas during the liberalization period, or at least until 2015. Romgaz and Petrom have committed not to sell on foreign markets, even though exports will be possible from a technical and legal perspective.
According to EU Regulation 994/2010, until December 3rd 2011, each member state was to appoint the competent authority to ensure the application of measures including the evaluation of certain risks. It was only during the summer that the Ministry of Economy has been designated as the competent authority guaranteeing the security of natural gas supply. According to the Regulation provisions, one of the Ministry’s tasks is to evaluate the risks presented to the security of Romanian gas supply, to elaborate projects for preventive action plans and emergency plans, and to adopt and issue such plans by the end of 2012. Moreover, the Ministry must identify the natural gas companies, which are to implement the measures to be taken in order to ensure the supply of natural gas to the protected consumers.
From a technical point of view, exports can be made through the interconnected pipelines Arad-Szeged, Giurgiu-Ruse and Ungheni-Iaşi. These projects are in various phases of development and are to be finalized between 2015-2016, according to the Minister of Economy, Daniel Chitoiu, to the Bucharest press.
The present ban on gas exports is not the first such attempt in Romania. In December 2011 the Parliament approved a law explicitly blocking gas exports. The President, however, did not promulgate the law.
This is not the first infringement procedure for Romania due to non-compliance with European legislation in the energy field. Romania has several infringement files for failure to apply the European directives on the liberalization of the energy and natural gas market. Moreover, the EU member state was summoned in front of the European Court of Justice for breaching a EU Regulation regarding the access terms. On Monday November 26th Prime Minister Victor Ponta said on the matter that if Romanian gas is being exported this means, in other words “that Romania will have to import Russian gas at three times the price in order to compensate for its exports, such a solution being considered a disaster.” According to government sources, the EC has launched a new infringement procedure against Romania further to the banning of gas exports by Romanian authorities.
In a short dialogue with the press, Victor Ponta declared that “The idea is as follows: we are exporting Romanian gas and importing Russian gas at three times the price. Mr. Chitoiu has my support for the liberalization of gas exports, but this fact has to do also with a long-term strategy. So far, on the gas market, some are more equal than others. For instance, we are importing from Gazprom at 450 dollars / 100 cb.m, while the Germans do it at 180… The present solution of a plain and simple liberalization of exports is a disaster, not only for the population, but also for the industry.”
Romanian Prime Minister Victor Ponta