February 17, 2023 (11:46)

The Romanian natural gas market in 2023

The regulatory decisions of the Romanian government, aimed at providing gas to domestic consumers at a low regulated price, hinder further development, liberalization, increasing the liquidity of the gas market in the country, creating conditions for increased production and export of Romanian gas to neighboring markets.

Resolution of the Government of Romania, introduced in March 2022 and extended this year. until March 2025, requires gas production companies to sell products to household suppliers and electricity producers in the amount necessary to cover domestic consumption in the country. The sale price is fixed at 150 Romanian lei/MWh without tax, or about 30.50 EUR/MWh at the exchange rate of mid-March this year. The decree restored in Romania the control of regulated prices for households, which was abolished on 01.07.2020. The negative effect of this decision on the industry was reinforced in September 2022 by the introduction of a 98% tax on excess profits from gas and electricity trading.

According to our experts, the 2% of profit remaining after tax does not currently cover the operating costs of the vast majority of energy trading companies in Romania.

Analyzing the potential for increasing gas production in Romania in the medium-term perspective, experts draw attention to the continuation of the downward trend in production volumes in exploited fields in 2023. At the same time, additional gas from new fields, such as the Midia and Neptun Deep offshore projects in the Black Sea, could provide the possibility of gas exports from Romania.

Thus, production increased in the second half of 2022 after the commissioning of the fields of the Midia project (the operator is Black Sea Oil & Gas, BSOG). According to the expert’s assessment, over the next 10 years, at the expense of Midia resources, total gas production in Romania will increase by 1 billion cubic meters per year (10% of the country’s annual consumption). The commissioning of the Neptun Deep project (the operator is OMV Petrom) is expected in 2027, which will provide Romania with an increase in production by 6.3 bcm/y from field reserves of 42-84 bcm. Despite the fact that most of Neptun’s products will be intended for domestic consumption – the oversupply on the market will create conditions for the export of Romanian gas.

According to experts, the government’s anti-crisis measures may jeopardize or delay investments in the Romanian oil and gas sector; if the Neptun project is not implemented, by 2030, Romania’s natural gas import needs may increase to 50% of total consumption. In the period until 2027 of changes in gas logistics in the region, the Romanian side will try to increase the volume of transit from Greece and Azerbaijan in the direction of Hungary and Moldova, including in the interests of diversifying its own sources of energy.

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