Thanks to its own resources, Romania is in a better position than most European countries, for which the security of energy supply this winter is the main concern. Until the exploitation of gas from the Neptun Deep perimeter in the Black Sea, we are still dependent on imports and investments in production are needed, for which the authorities must ensure a stable and reliable legislative framework that does not affect market rules. These are some of the main ideas outlined in first day of the Romanian International Gas Conference (RIGC 2022), attended by high-ranking officials and experts from Romania and Europe.
Below are the main statements of the day:
- Nicolae Ciucă, Prime Minister of Romania
The energy transition process must result in a robust, modern energy system based on the rapid expansion and deployment of all available and innovative technologies. We are thus generating opportunities to increase energy security, support economic development, social inclusion and create as many jobs as possible.
Most best practice models show that the optimal solution for accelerating the coal disposal process is the use of natural gas, Moreover, natural gas is seen as both a viable option to ensure the green transition and, similar to nuclear power, which we encourage, a vital resource for balancing the electricity grid.
- Virgil Popescu, Minister for Energy
We are invited to Bulgaria on 1 October to see the completion of the Greece-Bulgaria interconnector, which operationalizes the vertical corridor and opens a new transport route for Azerbaijani gas.
Gas production in the Neptun Deep perimeter should start in late 2026-early 2027, by which time Romania will be independent in terms of gas supply and will export the surplus to the region. Until then, we are preparing to use natural gas as a transition fuel, to phase out coal. We want to enhance natural gas processing in Romania. Romania supports the use of indigenous resources. We want to develop on natural gas because we have it. It has to be extracted and used.
The Caragele Deep perimeter is in the works and I am convinced that the first gas will be produced in 2024.
- Franck Neel, President of the FPPG
Energy fundamentals are changing before our very eyes; all energy resources are exposed to numerous volatilities. Pandemics, the war in Ukraine and severe drought have created the perfect storm that we will face in the coming months.
The current crisis shows that we need investment to address the biggest vulnerability of the energy system: increasing local energy production with local resources, diversifying import supplies and advancing the energy transition.
- Matthew Baldwin, Deputy Director-General, European Commission, DG Energy
We are trying to avoid competition among ourselves in the EU for access to natural gas.
We want to make sure that gas gets to the market in the normal way, we don't want to interfere in the market.
- François-Régis Mouton, Regional Director Europe, IOGP
Europe is being tested in every way, including militarily. Solidarity and determination, that is what we must show. We must rise to the moment.
In Bucharest we realize that Europe must show solidarity, especially with Ukraine. It's a complicated situation, we don't know how long this situation will last, all we can do is to take the best possible measures, to the extent that we can. We need to diversify our energy sources in general. We need to seize the opportunities and find common solutions. In the EU, we need to protect the most vulnerable consumers, not just in the coming winter, but in general.
The Black Sea has a very important role to play in order to diversify our sources and increase our domestic production and to strengthen our autonomy in Europe.
There is one area where the EU must not compromise: our environmental ambitions.
- Cristian Bușoi, MEP
We need to adapt quickly to this new situation and take tough but necessary decisions in the short term. The measures must be in favor of European citizens. Russia's aggression complicates the situation. All options must be considered as long as they do not jeopardize our climate and strategic objectives.
We need to look at domestic sources in the EU. For example, with Romania, The Black Sea has many resources that could enhance energy security and we need to focus on extracting these resources. European production meets the highest environmental standards.
Natural gas is very important for Europe's economy. Member States need to meet the 2030 targets and we expect natural gas to play an important role in the energy transition, especially with decarbonization targets up to 2050.
- Axel Ghanimi, Senior Consultant, EMERTON
Romania is one of the countries that has taken a very protective approach. The measures (to protect consumers from rising energy prices - editor's note) adopted by Romania are generally inconsistent with EU proposals, in particular as regards wholesale market interventions and the regulation of profit margins. The European Commission does not support market intervention, at least not in the wholesale market. We also see that Romania has introduced an additional tax on energy and gas above the EU-recommended level of 33% of profit.
Some countries have introduced vouchers for vulnerable consumers, others have lowered energy-related taxes and charges.
Romania's measures could have undesirable effects on the market. The cap on wholesale margins will affect Romania's ability to import gas when it is needed most, in winter. Such measures are likely to have a serious impact on security of supply for winter 2022/2023.
One of the possible effects is the exit of some suppliers from the market, jeopardizing security of supply.
- Axel Scheuer, Head of Energy & Climate Policy, IOGP Europe
Confidence and stability of the game are essential for investors. Direct support does not mean lower prices, because if we cap prices, gas will not get to where it is needed most. When the government intervenes on prices, the investor will pull out. What we need in the long term is to make the right decisions so that in a few years' time Europe will have a sufficient gas supply.
- Eric Stab, President & CEO, ENGIE Romania
Despite domestic gas production, Romania has always needed imports, despite being the EU's second largest gas producer. This will remain the case until the Neptun Deep project is realized.
If we have a mild winter, we can manage without imports, only with domestic production.
The problem we face today, especially with the adoption of the GEO on September 1, is that traders are no longer incentivized to supply gas to Romania. With that 2% margin, the feedback we get is: why send gas to Romania? It is a matter of concern. There is a supply risk if we don't make sure the gas gets to Romania.
- Volker Raffel, CEO, E.ON Romania
Investors need confidence, stability, predictability.
We have 2 challenges now: the geopolitical challenge in the East and security of supply this winter. We need to fix the stability of the system right now.
- Cristian Popa, Member of the Board of Directors of the National Bank of Romania
Latest figures show 15.4% annual inflation rate. More than half comes from energy prices. Without cap schemes, inflation would have been over 20%.
Romania is lucky to be relatively energy independent. Otherwise you have the problem when you produce 70-80% of your energy domestically.
- Zoltan Nagy-Bege, Vice-President, National Energy Regulatory Authority (ANRE)
We have warned that there are risks for suppliers related to market conditions, given the prices at which energy is being bought and financing difficulties.
There are no very big differences compared to what has been applied in Romania (compared to the European Commission's recommendations - editor's note) and we are even pioneers in certain areas. The fact that there are some question marks, I am convinced that Parliament can intervene in order to harmonize with the provisions or regulations to be taken at EC level.
