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    Romanian Gas Price Liberalization Delayed



Completion of the gas price liberalization in Romania for household consumers is to be postponed for two more years.


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Natural Gas & LNG News, News By Country, Romania

Romanian Gas Price Liberalization Delayed

 The gradual liberalization of gas prices for household consumers will be completed in 2017, two years later than foreseen in agreements between Romania, the European Commission (EC) and International Monetary Fund (IMF).

At present, prices natural gas prices in Romania are regulated by the National Energy Regulation (ANRE) and are subject to subsidization or “social tariff.”

Along with the liberalization of energy prices and power generation, natural gas price liberalization is a requirement of the EU and IMF the final result is bringing prices in Romania at the same level as in the EU, leading to the gradual abolition of the social tariff.

Liberalization of the gas price for household consumer will be introduced gradually. Specifically, 7.0 - 7.2 million households, representing 83-86% of the total in 2013, may face higher gas prices, while only 14% -17% would receive support from the State.

However, regulated tariffs for industrial consumers will be phased out by the end of 2013, as initially planned.

Ion Niculae, principal of integrated chemical and fertilizer producer InterAgro group, the largest consumer of gas in Romania, had accuses IMF of imposing the gas price liberalization to serve the interests of Petrom, part of the Austria’s OMV group.

The implication being that OMV Petrom, as a significant producer of domestic gas deposits, wants to "artificially" increase the price of natural gas in Romania.

Romanian natural gas production is dominated by two players Romgaz and Petrom. In 2009 Romania produced around 11 billion cubic meters of natural gas (400 billion cubic feet) which represented 85% of all gas consumed in the country, ranking Romania ranks fourth in the European Union.

Though most industry followers including the IMF, expect gas prices to rise, Niculae is relishing the opportunity to source gas in an less regulated environment, believing that pricing will be result of negotiations, based on market dynamics.

"Who says that liberalization will bring up the price. Why not down? However, personally, I can not wait for the abolition of (regulated) gas. It would enable me to get my gas at the price that I negotiate myself, not the one imposed,” said the entrepreneur, regarded as one of the wealthiest individuals in Romania.

Liberalization also provides the opportunity for Romanian natural gas producers to find an export market at a better price than that charged on the Romanian market.

The Arad – Szeged pipeline, which connects the two natural gas national grids of Romanian and Hungary with commercial pipelines in Western Europe, facilitates the export of technical possibility for Romanian gas exports.

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