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Romania Economic Newsletters 2016

 

   

Transgaz extended with 9 months the transit contract with Gazprom, Romanian gas exports to Ukraine are postponed2

Romgaz wants to withdraw from Poland after an investment of 5 million euros  3

Transgaz estimated a total gas demand of about 17 million MWh in January 2016  3

Gazporm assets, coveted by Ukraine and the EU. Antitrust lawsuits are being prepared  3

Bulgaria wants to become a regional hub for the gas transit to Europe4

Russia refuses to continue gas purchases from Turkmenistan4

The large oil and gas companies will reduce investments in 20164

EBRD is out of the shareholding of the company by which E.ON controls its power and gas distributors in Romania5

Russians are helping Romania to complete in advance the liberalization of the gas market for households. A single price increase will follow.. 5

Bulgaria has avoided a crisis of gas and energy industry5

Source: OMV agreed with Gazprom for an important exchange of assets involving Romania. OMV Position: Any active exchange assumption is false, being at the beginning of the negotiation process and decisions are not yet made6

   

 

Transgaz extended with 9 months the transit contract with Gazprom, Romanian gas exports to Ukraine are postponed

The operator of the national transport system of natural gas Transgaz extended by 9 months, until September 30th 2016, the contract for the transit of Russian gas to Western Europe through the pipeline Isaccea 2 - Negru Voda 2, which was to expire at the end of the year, although the transport capacity of that pipeline, reserved exclusively for Gazprom, was supposed to be auctioned to comply with European legislation in the field. "For the period January 1st to September 30th 2016, the transport capacity related to the pipeline Isaccea II - Negru Voda II was reserved by extending in the same terms of the current natural gas transportation contract", Transgaz announced. The company says that, due to objective reasons, related to the complexity of the problems arising during the steps made in order to conclude the interconnection agreements with the adjacent transport and system operators, these agreements could not be concluded in due time so the provisions of the ANRE President Order no. 159/2015 approving the Methodology for capacity allocation and tariff setting on the natural gas transport pipeline Isaccea II - Negru Voda II can not be applied starting on December 1st 2015. "We emphasize that Transgaz makes further efforts for the conclusion of the agreements mentioned above so that the capacity of Isaccea III - Negru Voda II pipeline can be sold by auction starting with the gas year 2016 - 2017", Transgaz mentioned.

 

Agreements with the Ukrainians and Bulgarians have to be signed

 

The interconnection agreements mentioned must be signed with the counterparts of Transgaz in Ukraine and Bulgaria.

 

The last half-yearly report of the national natural gas transport operator Transgaz, shows that, at the end of 2015, the gas transit contract signed with Gazprom on June 3rd 1987 expired. The contract was originally supposed to expire at the end of 2011, but it was extended until December 31st 2015 by two successive addenda.

 

The same document shows that, in the first half of 2015, a trilateral meeting was held between the representatives of the companies Transgaz and those of their counterpart transport companies in Bulgaria and Ukraine.

 

"The meeting was occasioned by Ukrtransgaz request to conclude an interconnection agreement with Transgaz and the expiration on 31.12.2015 of the gas transit contract signed with Gazprom for thread II. At the same time, an internal working group was constituted to negotiate the provisions of the interconnection agreement with Ukraine, the International Relations Department providing support and interface with the representatives of Ukrtransgaz and Naftogaz", reads Transgaz report, which does not provide details about the results of that meeting.

 

Plans to export to Ukraine

Moreover, Transgaz has initiated the development of technical changes to the gas metering stations Isaccea I and Isaccea II, so that the gas could also flow in the opposite direction, from Romania to Ukraine, not only from Ukrainian to Romania, as is the case at the moment. In June this year, Transgaz and the gas transporter in Ukraine, Ukrtransgaz, signed a memorandum of understanding for the development of the gas infrastructure so that Ukraine can buy gas from Romania, a memorandum which provides that the two companies will collaborate to sign agreements for interconnecting the pipes and to identify technical solutions for the reverse flow of gas. One month before, Ukrtransgaz announced that it has started discussions with Transgaz, Ukraine being interested in importing from Romania 1-2 billion cubic meters of gas per year. Recently, at the beginning of the month, the general manager of the Ukrainian state-owned energy monopoly, Naftogaz, said that Ukraine could import next year up to 1 billion cubic meters of natural gas from Romania."I expect that next year we can import the insignificant gas surplus accumulated by Romania," Andrii Kobolev, Naftogaz CEO, declared. According to Kobolev, imports of natural gas from Romania could reach 1 billion cubic meters. Russia, the main supplier of Ukraine, stopped at the end of November gas supplies to the former Soviet state because Kiev did not pay in advance the necessary funds for gas purchases. At that time, Kobolev said that Ukraine will be able to cover its gas needs from Europe if Russia decides to cease deliveries. (profit.ro)

 

Romgaz wants to withdraw from Poland after an investment of 5 million euros

Romgaz marks a loss of almost 5 million euros after unsuccessful attempts to find new resources in Poland. A report of the producer shows that it has invested a total of EUR 4.7 million in the exploration operations carried out in Poland, activities in which the company wants to give up. The document is a report in which Romgaz argues that it has requested the shareholders the withdrawal from the two concessions in Poland where the Romanian gas producer has a share of 30%. Romgaz has already established in 2014 a provision of EUR 4.7 million for these projects. Of the total, EUR 3.9 million represents the actual work, and EUR 781,000 are amounts paid at the entry into the partnership in 2008. The other two partners in the two concessions in Poland will make a decision in January 2016 on remaining in this project. Except for Romania, Romgaz also conducts activities in Slovakia, where it owns 25% of three oil concessions. At the end of December, Romgaz officials said that they will continue the operations in Slovakia, where they will drill the first exploration wells early next year. (digi24.ro)

 

Transgaz estimated a total gas demand of about 17 million MWh in January 2016

The total demand for natural gas in January 2016 is estimated by Transgaz at 16.978 million MWh, according to data of the national operator of the gas transport system submitted to the Romanian Energy Regulatory Authority (ANRE). For regulated households, the domestic demand is estimated at 5.948 million MWh, for eligible households to 36,358 MWh, and for the producers of heat for the population to 2.142 million MWh. The demand for industrial customers is expected to stand at 8.15 million MWh and technological consumption to 701,471 MWh. Regarding the gas mixture for households and heat producers, ANRE approved it to be covered from domestic production in a proportion of 98% and 2% from imports. The demand approved by ANRE for heat producers for household customers is 8.127 million MWh. The storage program for the month of January 2016 provides the injection of a quantity of 6.132 million MWh, of which 6.125 million MWh from domestic production and 6,661 MWh from imports. (AGERPRES)

 

Gazporm assets, coveted by Ukraine and the EU. Antitrust lawsuits are being prepared

 

Ukraine wants to seize the shares that Russia's Gazprom owns in neighboring countries, including in the Republic of Moldova. The decision comes after the Antimonopoly Committee of Kiev blamed Russian giant that it operates in uncompetitive conditions and causes damages to the Ukrainian economy, Delovaya Stolica news portal wrote. Gazprom was described as monopolist in the neighboring country in the period 2009-2015, after having violated the competition law. The government in Kiev will sue the Russian giant on January 14th 2016. In case of a favorable outcome for Kiev, Ukraine would fine Gazprom with 30 percent of the turnover obtained from the gas transit during this period. The amount rises to six billion dollars. Given that Gazprom holds shares of only 350 million dollars in Ukrainian companies, the government in Kiev will be forced to turn to other countries. Thus, the assets which the Russian company holds in Moldova, Belarus and Turkey, represent targets for Ukraine. The European Commission also accused the Russian giant that it is violating the antitrust laws of the natural gas market in eight member states, including Bulgaria, Czech Republic and Poland. According to forecasts, the fine varies between 10 and 20 billion dollars. (publika.md)

 

Bulgaria wants to become a regional hub for the gas transit to Europe

The Bulgarian Prime Minister Boiko Borisov has expressed his ambition to transform Bulgaria into a key state for the transit of natural gas in Central and South-Eastern Europe, novinite.com publication reported Tuesday. In an interview granted Monday to Deutsche Welle, Borisov referred to the 'Balkans' gas storage that Sofia intends to build near Varna, considered the sea capital of Bulgaria, because it is the largest Bulgarian city at the Black Sea. His government is working hard on this project, Boyko Borisov added in the same interview. The gas will be pumped to the planned deposit near Varna from Russia, Azerbaijan and Turkmenistan, as well as from deposits in Romania and Bulgaria. The Bulgarian government and the European Commission are jointly developing this project, collaborating in terms of ensuring its financing, according to the Bulgarian Prime Minister. According to the authorities in Sofia, the construction of the hub, which was first announced on February 9th 2015 at an energy forum in Sofia, will allow the partial diversification of gas supplies to European countries. From the gas storage facility that will be built near Varna, the hydrocarbons will go towards Bulgaria, Romania and Serbia. About 43 billion cubic meters of gas will be provided to countries in Central Europe, according to the authors of the project. (Adevarul)

 

Russia refuses to continue gas purchases from Turkmenistan

Gazprom Export, the export division of the Russian giant Gazprom, has notified Monday the national natural gas company from Turkmenistan, Turkmengaz, about the intention to stop buying gas from Turkmenistan starting in January 2016, the Russian news agency RIA Novosti informed. Turkmengaz said that Gazprom Export has motivated the decision by 'changing conjunctures on the international market of natural gas, and through a series of financial and economic aspects'. Turkmenistan produces about 70 billion cubic meters of gas per year, of which a third goes to domestic consumption and the rest for export, mainly to China, Russia and Iran. Two weeks ago, Turkmenistan has announced that it has completed a gas pipeline that connects its deposits of natural gas in the east and the coast of the Caspian Sea, from where it can go further to Azerbaijan and even Europe, via another pipeline (Trans-Caspian Pipeline - TCP) which would cross the Caspian Sea. (Economica.net)

 

The large oil and gas companies will reduce investments in 2016

 

The large companies producing oil and natural gas are experiencing the longest period of investment reductions in decades, given that the price of a barrel of oil is at its lowest level in the last 11 years, but would have to borrow more to keep the dividends demanded by the investors, Reuters informed. According to the Norwegian consulting company Rystad Energy, global investments in oil and gas would go down in 2016 to  522 billion dollars, the lowest level in the last six years, after in 2015 they recorded a decline of 22%, to 595 billion dollars. By reducing the number of new projects and maintenance works, oil and gas companies jeopardize their future because they will not be able to take advantage of any rebound in oil prices. One possible solution would be the acquisition of rivals, which are in a poor financial situation. 'In the second half of 2016, if we see a stabilization of oil prices, I expect companies to be interested in replacing reserves through acquisitions", Brendan Warn declared. (Economica.net)

 

EBRD is out of the shareholding of the company by which E.ON controls its power and gas distributors in Romania

The European Bank for Reconstruction and Development (EBRD) has sold its 9.82% stake in the consulting firm E.ON Romania SRL, the majority shareholder of E.ON Distribution and E.ON Energy, stake which has a nominal value of RON 141.83 million (about 31.5 million euros). E.ON Romania SRL E.ON controls 61.8% of the capital of E.ON Distribution and 53.4% ​​ of E.ON Energy. In turn, E.ON Romania SRL is owned in a proportion of over 90% by E.ON Beteiligungen GmbH of the German group E.ON. According to a document of E.ON Romania SRL, EBRD has sold last month its 9.82% stake it held in the company to its majority shareholder, E.ON Beteiligungen GmbH. (profit.ro)

 

Russians are helping Romania to complete in advance the liberalization of the gas market for households. A single price increase will follow

The price of the Russian gas supplied to Romania is falling steadily to levels close to those of gas from domestic production for the population. From July 1st, the schedule of liberalization of the market for households could be declared due in advance and there will not be the three increases of 14% cumulatively by 2018, as provided in the original schedule agreed with the IMF. "There's a company that brings Russian gas at 175 dollars per thousand cubic meters," the president of ANRE (the Romanian Energy Market Regulator), Niculae Havrilet, declared. According to market information, the company is WIEE, wholly owned by Gazprom, one of the two intermediaries agreed by Russia that bring gas imports to Romania. This price is equivalent to about RON 65 / MWh, which is exactly the regulated price that the Romanian population will pay from July 2016 as a result of the timetable for the gas price liberalization agreed with the IMF and the European Commission. If gas prices on local stock exchanges, BRM and OPCOM, will keep the pace with the import gas price (and it is likely they will do so, given that the companies want to buy gas at the best price), then, on July 1st 2016, the liberalization of the gas market for household consumers might stop. The immediate consequence is that we will not have, from that date, further increases of the gas in a regulated regime, and the price of this commodity will be dictated purely by the market. According to the timetable in progress, the completion of the liberalization process was supposed to end in 2018 at RON 78 / MWh after three more annual increases of the gas price: RON 66 / MWh in 2016, RON 72 in 2017 and RON 78 in 2018. Basically, instead of a price increase of about 14% (the price of gas accounts in a proportion of about 50% in the final price paid by households), we will have only one increase of 5% in July this year. Petrom and Romgaz are the two biggest producers on the local gas market. The annual production stands at 11 billion cubic meters. Romania imports only small amounts of gas in winter, the only supplier being the Russian giant Gazprom. (Economica.net)

 

Bulgaria has avoided a crisis of gas and energy industry

Gazprom threatened to cut gas supplies to the population, but finally agreed to resume them through the state-owned company "Bulgargaz".

The problem with gas supplies to the population occurred in New Year's Eve when the private company "Overgaz" asked the state company "Bulgargaz" to take over the gas supply to its customers. "Overgaz" announced that it has paid all debts to the Russian concern. On December 31st, "Gazprom" warned that it will interrupt, starting on January 1st, the deliveries to the private company. Responding to the request of the Bulgarian government, the Russians agreed to resume deliveries, but through the state company "Bulgargaz". Borisov warned that a possible interruption of deliveries would have resulted into a surge in electricity consumption and a Bulgarian energy crisis. Borisov thanked Gazprom "for its understanding". The energy expert Martin Vladimirov said that the removal of the company "Overgaz" will strengthen the position of "Gazprom" on the Bulgarian market. The crisis could be averted if Bulgaria would built in due time the connections with its neighbors' pipeline systems. Bulgaria's former ambassador to Moscow, Ilian Vasilev, said that Russia will try to revive the projects "South Stream" and "Burgas-Alexandroupolis" in order to bypass Turkey. Borisov said a few days ago that only the collapse of his first government prevented the realization of the transit gas pipeline "South Stream". (Radio Europa Libera)

 

Source: OMV agreed with Gazprom for an important exchange of assets involving Romania. OMV Position: Any active exchange assumption is false, being at the beginning of the negotiation process and decisions are not yet made

 

OMV has "made an agreement  in principle" with the Russian giant Gazprom, late last year, for an exchange of assets involving Romania, several important sources in the oil field told HotNews.ro. OMV would receive access to the exploration and exploitation of some very large deposits in Siberia. In exchange, Gazprom would take over Petrobrazi refinery in Ploiesti, owned by OMV Petrom and gas stations in Bulgaria. Russia would require under this agreement to become partners in the projects that OMV is developing together with the Americans from ExxonMobil. ExxonMobil and OMV Petrom hold exploration and exploitation licenses in the Black Sea in Romania. For a better understanding of the situation, it should be noted that OMV is the majority shareholder of the Romanian oil and gas company OMV Petrom. Talks between Russians and Austrians are not completed and changes may occur anytime, the sources have told Hotnews.ro. The official position of OMV (sent by the press office, in original): "These rumors are complete nonsense. We have stated clearly, that no shares in OMV and thereof also OMV Petrom are on the table. Any assumptions regarding the asset swap are false as we are in the beginning of the negotiation process and decisions are not made yet. What we also made absolutely clear: we will not give up management rights in any of our strategic assets. OMV Petrom was, is and will be a core asset and Romania remains to be a core market.   

Energy Market Newsletter 

January 2nd – 8th 2016 

 

   

In this week’s report

 

 

CEZ Distribution to allocate RON 6 million to modernize an electric transformer station  2

ANRE has not changed the cogeneration bonus paid by consumers in electricity bill 2

ANRE: 5.51% increase of the price of electricity produced by Hidroelectrica and a 2.57% increase of the price of electricity produced by Nuclearelectrica. 2

E.ON to renounce at coal-based plants, as of January 1st 2016 - Bloomberg  3

Energy companies to cut costs and reduce staff 3

Enel Distribution Muntenia has invested about RON 57.1 million in the first eight months of 2015  4

Hidroelectrica’s profit remains above the RON 1 billion. 4

Nuclearelectrica will pay RON 56.5 million to Romanian Water company  4

Renewable energy producers have reached a capacity of 5127 MW at the end of November  4

CE Oltenia acquired C02 certificates worth about EUR 12.5mln in December  5

EBRD sold its 9.82% stake in E.ON Romania. 5

Remus Borza, proposed by the state as Hunedoara Energy Complex trustee  5

 

 

 

CEZ Distribution to allocate RON 6 million to modernize an electric transformer station

CEZ Distribution wants to pay, from its own sources, RON 6 million, without VAT, for partial modernization of an electric transformer station, the contract will be concluded for a period of nine months from the awarding date, according to a notice posted on Electronic System of Public Procurement (SEAP). According to the announcement, CEZ Distribution wants to modernize the transformer station 110 / 20KV Mioveni, Arges county. The deadline for receipt of tenders or requests to participate is January 18th 2016 at 10:00. Of the RON 6 million, without VAT, the value of materials provided by CEZ Distribution is RON 36,644.80, without VAT. Tenderers must prove they have recorded an average overall turnover for the last three years, of at least RON 8 million. Thus, the candidate will make the conversion at the annual average exchange rates communicated by NBR on the last three years, namely 2012, 2013, 2014. CEZ Distribution is one of the companies resulting from the reorganization of the former Electrica Oltenia after the company entered in 2005 in CEZ portfolio. CEZ Distribution serves seven counties, being the company with the largest number of customers of all Electrica branches. The company covers Arges, Dolj, Gorj, Olt, Mehedinti, Teleorman and Valcea counties through its network, with more than 1.4 million online customers. (Bursa)

    

ANRE has not changed the cogeneration bonus paid by consumers in electricity bill

High efficiency cogeneration bonus, paid in the electricity bill by all consumers in Romania was not changed as of January 1st 2016 and remained at a value of RON 0.01582 / kWh excluding VAT, according to a note of the National Authority Energy Regulation (ANRE). These bonuses are paid by electricity consumers and are collected by the producers of energy in cogeneration (electricity and heat at the same time) who own devices with efficiencies of over 70%. Currently, a total of 47 energy producers receive these bonuses. As of January 1st, electricity bills decreased by 3.5% for households, according to ANRE, as distribution fees (representing 40% of the final bill) will drop by 12% on average. "We decided a reduction of 3.5% starting with January 1st for final invoice. Distribution fees fell 12% on average, but the share of green certificates increased from RON 35 to RON 43," said ANRE President Niculae Havrilet, according to Agerpres. (Bursa)

 

ANRE: 5.51% increase of the price of electricity produced by Hidroelectrica and a 2.57% increase of the price of electricity produced by Nuclearelectrica

ANRE decided on a 5.51% increase of the price of electricity produced by Hidroelectrica and supplied to the regulated tariff basket, and on a 2.57% increase of the price of electricity produced by Nuclearelectrica as of January 1st, 2016, reads a release Thus, the price of hydropower supplied under regulated contracts will amount to RON 120.55 per MWh, and the price of nuclear power will amount to RON 162.51 per MWh.  ANRE also decided that 2,697,703 MWh produced by Hidroelectrica and 1,454,562 MWh from Nuclearelectrica will be incorporated in the regulated energy basket. Also, electricity household bills will be reduced by 3.5 percent, ANRE head Niculae Havrilet announced in a press conference. (Bursa)

 

E.ON to renounce at coal-based plants, as of January 1st 2016 - Bloomberg

The largest utility company in Germany, EON SE, will give up at power plants based on fossil fuels, by creating a new entity - Uniper – as of January 1st 2016, according to Bloomberg. Following the division, E.ON will create a new company, Uniper, headquartered in Dusseldorf, Germany. The company will take over the fossil fuel power plants, commodity trading activities and a quarter of E.ON employees. Uniper assets will be responsible for approximately half of current profit of E.ON. E.ON will be headquartered in Essen, Germany. The company said it would focus on renewable energy, the sale of energy to customers, distribution networks and personalized services to improve energy efficiency in order to respond to changes in energy markets, technological advances and requests from consumers, Agerpres informs. German utilities companies sell assets because of the costs of decommissioning and determined by the decision of the authorities in Berlin to encourage renewable energy development through charges that discredit thermal power plants and nuclear plants. E.ON Distributie Romania, the first integrated distributor of gas and electricity in Romania, began operations on January 1st, operates a natural gas distribution network of over 20,000 km and a distribution network of electricity of over 80,000 kilometers, serving a total of about three million customers. (Economica.net)

 

Energy companies to cut costs and reduce staff

Due to the minimum price of oil in the last 11 years, oil giants of the world are experiencing the longest period of diminishing investments in last decades. For the first time, the companies will have to borrow to pay dividends to investors. Only in November, oil and gas companies have lost more than 250,000 jobs globally, announced Graves & Co, a consulting firm for the energy industry, a trend that will continue if prices do not increase in the coming period. At around 37 USD per barrel, the oil price is well below the $ 60 taken into account by companies such as Total, Statoil and BP at establishing income and expenditure budgets, reports Reuters.  Multinationals are again forced to reduce the costs, to sell assets, to lay off of workers and postpone projects as prices shows no sign of recovery. Chevron and ConocoPhillips, both in the US, announced the reduction by a quarter of budgets for 2016 compared to last year. Royal Dutch Shell also announced a cut in spending of $ 5 billion as a result of the takeover of British gas company BG Group. Global investments in oil and gas industry will fall in 2016 to the lowest level in the last six years to USD 522 billion after in 2015 reduced by 22% to USD 595 billion, according to calculations made by consulting company Rystad Energy. "It will be the first time since 1986 when we will have two consecutive years with declining investments due to oil prices," showed Rystad Energy. The energy sector has a relatively low ratio of debt reported at share price, which allows it to borrow to cover the reduction in income and pay dividends to its own shareholders. For example, Shell has not suspended in any year since 1945, the payment of dividends, a tradition that company management does not want to interrupt. No other companies will give up at granting dividends to shareholders, which includes the largest investment funds and pension funds, fearing that investors could migrate to other forms of investment. The decrease of investments is also affecting other sectors, including those that provide services for exploration and maintenance of drilling rigs and production.  (Adevarul)

 

Enel Distribution Muntenia has invested about RON 57.1 million in the first eight months of 2015

Enel Distribution Muntenia realized in the first eight months of last year, investments worth RON 57.1 million, representing 35% of the forecasted investments for the full year, according to a document of the National Energy Regulatory Authority (ANRE). Enel Distribution Muntenia is the largest distributor of electricity, including the capital. For Enel Distribution Banat, investments made during January – August period amounted to RON 24.6 million, respectively 27% of those estimated for the whole year 2015. In the case of Enel Dobrogea, investments stood at 18.3%, being 24% of the total estimated. In its turn, E.ON Distribution Romania has completed investments representing 33% of the total forecast, reaching RON 60.3 million, while CEZ realized 50% of investments, respectively 81.5%. Electrica Muntenia Nord has achieved 34% of investments (RON 61.1 million), Transilvania Nord - 33% (RON 63.5 million), and subsidiary Muntenia Sud - 25% (RON 47.6 million). (Capital)

 

Hidroelectrica’s profit remains above the RON 1 billion

Hidroelectrica, the most valuable company of the Romanian state, managed to maintain its gross profit over the threshold of one billion RON last year, although the company's production fell amid hydrological conditions less favorable than in 2014. "We ended 2015 with a gross profit of around RON 1.1 billion, "said Remus Borza, the lawyer who controls Euro Insol, the insolvency administrator of Hidroelectrica. According to data from the Ministry of Finance, Hidroelectrica ended 2014 with a turnover of RON 3.4 billion, with a gross profit of RON 1.15 billion and a net profit of RON 941 million. Thus, with a margin of almost 28%, the energy producer has become one of the most profitable companies in Romania. "In 2012 we had a cost of RON 184 per MWh, but now we dropped to RON 110 per MWh and we would have been dropped at RON 78 per MWh if we didn’t receive some" gifts "from the Government, as in the case of the construction tax. We managed to maintain profits even if the production has been declining. At the end of last year we recorded a production of approximately 15.9 TWh compared to 18.4 TWh we generated in 2014. Turnover is significantly less, but the company's final results will be communicated after January 25th, said the lawyer. (Ziarul Financiar)

 

Nuclearelectrica will pay RON 56.5 million to Romanian Water company

Nuclearelectrica signed a contract worth RON 56.504 million with the Romanian Waters National Administration for the use in 2016 of the Danube waters, reads a report of the power producer, submitted on Monday to BSE. The contract was signed on December 30th, 2015 and represents a subscription of utilization / exploitation of Danube water in Cernavoda nuclear power plant, Units 1 and 2.  Nuclearelectrica also signed an addition subscription contract for the use of Danube during 2015. Thus, the supplement stood at RON 1.287 million, bringing the total subscription cost to RON 59,399,000. Nuclearelectrica paid last year RON 11.377 million to Romanian Waters National Administration. Nuclearelectrica has debts of RON 7.733 million to Romanian Waters on December 30, 2015, reads the report. The power producer concluded the first nine months of last year with a net profit of RON 131.189 million, 70% higher than that of same period last year, of RON 77.291 million. (Economica.net)

 

Renewable energy producers have reached a capacity of 5127 MW at the end of November

The capabilities of producing electricity from renewable sources reached a total installed capacity of 5127 MW at the end of November 2015, according to data centralized by Transelectrica. Thus, wind farms in the system had an output of 3,129 MW, photovoltaic panels a total capacity of 1,312 MW, small hydro power plants - 583 MW and biomass based projects had with a cumulative capacity of 103 MW. The installed capacity at the end of November was lower than that recorded on October 31st, when the system had 5.180 MW of renewable energy. The steepest decrease was recorded by wind turbines, from 3,186 MW in the previous month to 3,129 MW. At the end of last year, the system recorded production capacities of 5,200 MW of renewable energy, according to Transelectrica. For 2016, the mandatory quota of electricity produced from renewable energy sources is 12.15% of gross final consumption of electricity, according to a decision adopted by the Government on December 30th. The quota for next year is higher than in 2015, which was set at 11.9%. This level of the mandatory quota for 2016 maintains the impact in consumer bill at the level used in 2015, of about 35 lei / MWh, and does not transfer unnecessary costs in the bill, authorities say. Constanta ranks first among the counties producing the more renewable energy, with installed capacity of over 1,639 MW, followed by Tulcea (809 MW) and Giurgiu (193 MW), while at the opposite are the counties of Salaj and Covasna, with less than 10 MW installed, according to Transelectrica report. Thus, Constanta County is the champion of wind energy chapter, with 1,636 MW turbines installed and 3.5 MW photovoltaic panels. Moreover, Dobrogea is considered the are with the highest wind potential in southeastern Europe, Romania attracting investors in this sector. (Ziua News)

 

CE Oltenia acquired C02 certificates worth about EUR 12.5mln in December

Oltenia Energy Complex (CEO) acquired in December last year, a total of approximately 1.6 million C02 certificates worth about EUR 12.5 million, according to a press release of the company. The purchase was made at a price of EUR 7.94 / certificate from the National Investment Plan. In total, during 2015 were acquired 6 million CO2 certificates. The remaining 7.85 million CO2 certificates related to energy production in the previous year (14.95 TWh) will be purchased in early 2016, from the market. Oltenia Energy Complex (CEO) is the largest coal-based energy producer in Romania, set up by merging Turceni Energy Complex, Rovinari Energy Complex, Craiova Energy Complex and Oltenia Targu -Jiu National Lignite Company, being established in May of 2012 and playing an important role in Europe, with a total production capacity of 3,900 megawatts (MW). (Capital)

 

EBRD sold its 9.82% stake in E.ON Romania

The European Bank for Reconstruction and Development (EBRD) sold its 9.82% stake in E.ON Romania, part of German E.ON Group, an the integrated natural gas and electricity supplier on the domestic market. EBRD, which in 2007 bought E.ON shares for EUR 43 million, transferred the social shares to E.ON Beteiligungen Gmbh, the majority shareholder of E.ON Romania, local media informs. Following the transfer, EON Beteiligungen GmbH holds a 99.92% stake of E.ON Romania. The total value of the social shares transferred by the EBRD amounts to RON 141.83 million, namely over EUR 30 million as nominal value. E.ON Romania SRL recorded in 2014 a net profit of RON 21.2 million and a turnover of RON 56.9 million. The year before, in 2013 E.ON Romania SRL reported a net profit (RON 133.1 million) higher than the turnover (RON 71.9 million). In 2014, E.ON Distribution had a net profit of RON 83.03 million and a turnover of RON 770.5 million, while E.ON Energie - a net profit of almost RON 94 million, at a turnover of RON 4.72 billion. (Profit.ro)

 

Remus Borza, proposed by the state as Hunedoara Energy Complex trustee

Remus Borza was proposed by the state in the position of Hunedoara Energy Complex trustee, but the court decision on the insolvency of the company was postponed to Thursday. Borza eliminated the "smart guys" from Hidroelectrica and renegotiated nearly 500 contracts, leading the state-owned company from losses in 2012 to a net profit of RON 900 million in 2015, given that the company was affected by drought. The Board of Directors of Hunedoara Energy Complex decided on December 28 to seek the voluntary entry of the company into insolvency, in an attempt to avoid bankruptcy. The company has debts of RON 1.2 billion. Energy Minister Victor Grigorescu, visited in late December EC Hunedoara, demanding the company's management to assume the disastrous situation of the complex and to take steps in order to prevent bankruptcy. He said at that time that a possible bankruptcy could affect tens of thousands of families in the Jiu Valley and would jeopardize the safety of the national energy system. Hunedoara Energy Complex is the most expensive energy producer from Romania with a production price of electricity of 300 lei / MWh, twice higher than the average sale tariff on the market. The Hunedoara Energy Complex was founded on the 1st of November 2012 after the merger of two thermal power plants: Mintia and Paroseni. In this new structure, four viable mines from Valea Jiului were added: Lonea, Livezeni, Vulcan and Lupeni. The company holds a market share of about 5% of electricity production in Romania and having approximately 6,500 employees. (Adevarul)

 

 Romania Economic Newsletters Natural Gas and Energy 2015

 

  

 

Russia gradually abandoned the gas transit through Romania2

The Economy Minister: The construction of Ungheni-Chisinau gas pipeline will start in 2016 and be completed in 20182

What could the government prepare for oil and gas producers3

Romanian oil & gas companies: Taxes on extraction in Europe fell, in Romania they have increased  3

Partners in the “deceased“ Nabucco pipeline project demand the arbitration of the World Bank in a dispute with Turkey4

Gazprom wants a settlement with the EC in the antitrust case4

Victor Ponta: "Transgaz and Transelectrica want to get be involved in the privatization and development in the Republic of Moldova"5

The price of gas for the Romanians might liberalize from 20165

Romgaz Head: We are not looking for shale gas, we are focusing on conventional exploration  5

The partnership between Moscow and Ankara in the gas field remains valid despite "difficulties" (Kremlin)6

 

 

In the news

 

Russia gradually abandoned the gas transit through Romania

The contract for the capacity reservation of one of three gas transport pipelines in Dobrogea expires in three months. The Russians are not interested to extend the agreement, and Romania will have to auction the transit capacity. From January 1st 2016, one of the three pipelines in Dobrogea, Isaccea-Negru Voda, which makes the gas transit from Russia via Ukraine to Southern Europe, will be abandoned by Gazprom. The capacity reservation contract expires on December 31st 2015 and the Russians have not expressed their intention to extend it. They remain with Transit 3, valid until January 2015. Transit 1 is reserved by Bulgartransgaz until the end of 2016. Currently, Transgaz is in the procedure for auctioning the transport capacity on Transit 2, the documentation being at the Romanian Energy Regulatory Authority for endorsement. The auction must be completed by December 31st. According to market sources, no company is yet interested in taking over the transport of gas from Gazprom. "The transport in Romania is closely related to the exit from Ukraine and the entry from Bulgaria. Or, the Ukrainian network is controlled by Gazprom and Bulgartransgaz's main business partner is Gazprom. So, a company has not much to do with the transit in Romania if it cannot sign a partnership with Gazprom", according to the energy sources. Or, Gazprom is planning to gradually give up gas transport pipelines in Romania and Ukraine. The Russians want to cease the gas transit to Europe via Romania and Bulgaria from 2019, when Turkish Stream pipeline will be operational. "In the future, if the Russians will give up the gas transit through Romania, we have the chance to become a regional bus transport. Gas from southern Europe could pass through Romania to the West and vice versa", Petru Vaduva, Transgaz director, recently said. According to reports last year, Transgaz collects from transit between 60 and 70 million euros annually. The combined capacity of the three pipelines in Dobrogea is 28 billion cubic meters, divided roughly equally between each. Thus, on average, each line would annually bring about 20-23 million euros. The transit activity is not regulated, the tariffs being negotiated between Gazprom, Transgaz and Bulgargaz. (Economica.net)

 

The Economy Minister: The construction of Ungheni-Chisinau gas pipeline will start in 2016 and be completed in 2018

The construction of the gas pipeline Ungheni-Chisinau will start early next year and will end by May 2018. A declaration to this effect was made yesterday by the Deputy Economy Minister Stephane Bride during a joint meeting of the Moldovan and Romanian governments. The Economy Minister said that currently the feasibility study for the construction of the pipeline is in the process of drafting. After its approval, the technical project will be achieved and then the construction work will start. The start of the construction of the pipeline is scheduled for early 2016 and its completion is expected by May 2018. "Despite everything, the outlook for the European energy market integration and sustainable development of the energy sector in the Republic of Moldova are achievable", Stephane Bride declared. Moldova.ORG reminds that the gas pipeline Ungheni-Chisinau will be a continuation of Ungheni-Iasi gas pipeline and is to ensure the full interconnection of the gas system of the Republic of Moldova with Romania. To supply the Republic of Moldova with Romanian gas, Chisinau, which currently depends on the Russian company Gazprom, will have to build besides the pipeline Unceni-Chisinau one or two compression station. The total cost of these projects amount to about 200 million euros. Note that in March this year the Republic of Moldova started importing natural gas from Romania through Iasi – Ungheni pipeline. But only a few localities near the border with Romania can be supplied by it. To supply Romanian gas to the rest of the Republic, Moldova must have a pipeline that would connect Ungheni to the capital of the Republic. The construction of the gas pipeline Iasi-Ungheni has cost 26 million euros, of which 7 million euros have been provided as a grant by the European Union. The pipeline has a length of 43.2 km and a capacity of 1.5 billion cubic meters. (moldova.org)

 

What could the government prepare for oil and gas producers

Oil and gas companies could have an extra charge as of January 1st 2016. The draft new law on royalties will be released for public debate this year

 

The government could impose an additional tax of 30% on profits, besides the 16% tax, for the companies in the oil and gas industry, according to sources in the Ministry of Finance consulted by Evenimentul Zilei newspaper. The measure could be stipulated in the draft of the new law on royalties, which is being finalized and will be submitted to public debate this year. This additional tax would tax the gains obtained by companies from the fluctuations of market quotations. Another measure would target the increase of royalties, on average, by about 15%, according to the sources. In May, the President of the National Agency for Mineral Resources, Gheorghe Dutu, said that the charges will be differentiated depending on the degree of difficulty of the exploitation. The new law on royalties, according to official statements, was supposed to enter into public debate since the first half of this year and come into force from January 1st 2016. This after the old taxation system had already been extended by one year (2015). Frequent changes that took place at the Ministry of Finance contributed to the postponement of the public debate on the law. Now, there are big doubts that it could be implemented next year. However, the sources say that the law could be adopted directly by the Government through a GEO, which would significantly speed up the process.

 

What is the level of the royalties in Romania

The average level of royalties is currently at about 8%, slightly below the European average. They are between 3.5 and 13.5% of the revenues for oil and between 3.5 and 13% for gas, depending on the size of the deposit. The profit tax of 16% adds to this. Romania resembles, from this point of view, with Italy, but Italy has a higher tax on profits, of almost 30%. (Evenimentul Zilei)

 

Romanian oil & gas companies: Taxes on extraction in Europe fell, in Romania they have increased

The effective tax for the oil companies that extract oil and gas fell in Europe, with half a percentage point, while in Romania, because of the new taxes, taxation increased by nearly 2.2 points, according to a Deloitte study, conducted by the Oil and Gas Employers' Federation. The effective tax rate of the extraction activity in Europe fell from 12.2% at the end of 2013 to 11.7% at the end of 2014, an evolution explained by the lower tax base as a result of cheaper crude oil. The legislative measures adopted in some European countries to reduce the tax burden on companies in the field, to encourage investment, have also contributed, according to the study. In the first half of 2015, the average Brent oil quotations fell to 57 84 dollars / barrel, compared to $ 98.85 / barrel the average in 2014, ie $ 108.66 / barrel the average in 2013. In Romania, the effective tax rate on the upstream activity increased from 13.9% to 15 % at the end of 2014, ie 15.7% on June 30th 2015, according to Deloitte. "The evolution is explained mainly by the 60% taxation on the additional income obtained from the natural gas price liberalization. To calculate the average rate for the upstream in Romania, in addition to oil royalties, the tax on construction, tax on crude oil from domestic production, the tax on additional revenues obtained as a result of deregulation of prices of natural gas and tax of exploitation of Natural resources, other than natural gas, were considered", reads the study. Deloitte conducted a comparison of taxation for countries with similar production of hydrocarbons, and, according to the study, Romania has higher taxes. "With a production of less than 40 boe / well / day, Romania is among the countries with a low productivity per well, together with countries such as Poland, France, Bulgaria, Lithuania and Turkey. The average effective special tax rate for these countries is 7.5% vs. 15.7% in Romania", the study shows. The Oil and Gas Employers' Federation is the representative for the "Energy, oil, gas and energy mining," sector, now having two organizations representing 19 companies with a total of 24,000 employees. The largest oil and gas companies operating in Romania are Romgaz and Petrom. (Economica.net) 

 

Partners in the “deceased“ Nabucco pipeline project demand the arbitration of the World Bank in a dispute with Turkey

Nabucco Gas Pipeline International GmbH, the project company currently in liquidation proceedings which was supposed to build Nabucco gas pipeline and in which Transgaz is a shareholder, opened arbitration proceedings at the International Centre for Settlement of Disputes concerning Investments attached to the World Bank (ICSID) in Washington to settle a dispute with the Turkish state on the VAT related to some acquisitions related to Nabucco made by the Company in Turkey, according to sources close to the project company. The request for arbitration has been registered at ICSID by Nabucco Gas Pipeline International GmbH in mid-June. The application is invoking the bilateral treaty of mutual protection of investments signed by Austria and Turkey in 1988, given that Nabucco pipeline project company is registered in Vienna. In the arbitration proceeding, the Turkish state is represented by the institution of the Prime Minister and the Ministry of Energy and Natural Resources in Ankara. "It's about VAT related to some acquisitions made in Turkey by Nabucco Gas Pipeline International GmbH, acquisitions related to the Nabuccopipeline project, given that, initially, the Turkish state had undertaken to exempt from VAT the acquisitions of the company made in order to implement the gas pipeline project", the sources said, without specifying what the amounts and the acquisitions involved. (Profit.ro)

 

Gazprom wants a settlement with the EC in the antitrust case

Gazprom transmitted to the European Commission (EC) a set of proposals for an amicable settlement in its antitrust case opened against it by European organizations, Interfax reported, citing an official of the Russian giant. After more than two years of investigation, the Commission accused Gazprom, in April this year, of breaching the competition rules, respectively or abuse of dominant position in Poland, Hungary and other countries in Eastern Europe. The Commission argues that Gazprom has charged these countries prices 40% higher than those prevailing in the rest of Europe, Reuters wrote. Gazprom rejected the accusations at the time and said that it made many concessions to European countries. In May, the company announced that it is ready to offer new concessions to the EU, including on the gas price, to amicably close the antitrust case which may bring a fine of billions of dollars. Alexander Medvedev, Gazprom's deputy general manager, recently said that company officials will soon set up a meeting with the European Commissioner for Competition, Margrethe Vestager. Gazprom must submit, by September 28th, at the European Commission, a written response to the charges brought against it or a statement of its objections. Medvedev said that the proposals submitted target an amicable settlement. He has mentioned that Gazprom will send a list of objections on September 28th. (Bursa)

 

Victor Ponta: "Transgaz and Transelectrica want to get be involved in the privatization and development in the Republic of Moldova"

Prime Minister Victor Ponta announced that the Economy Minister Mihai Tudose presented in the joint session of the Government of Romania and Moldova cover letters from Transelectrica and Transgaz on the involvement in the privatization and development in the Republic of Moldova. "The Romanian companies that have gone through restructuring processes of modernization, were listed on the stock exchange, have the necessary financial resources - because, as you know, the money from the listings have not gone to the budget, they remained at the companies - can, and carry out the investment program in Moldova", Ponta said at a joint conference with his Moldovan counterpart Valeriu Strelet, quoted by Agerpres. In turn, officials from Chisinau said that the interest of Romanian companies to participate in the development of the energy system in Moldova will allow his country "to get out of the vicious circle of dependence on a single source of supply of energy resources and to discard the quality of hostage of a system which is dated". (Bursa)

 

The price of gas for the Romanians might liberalize from 2016

As of next year, there is a reasonable premise for the average price of gas on stock transactions to reach the regulated price for the population. The price of gas delivered to the population could reach convergence with the stock market price as soon as next year, which means that the liberalization agreed with the IMF could be completed two years earlier. This would have beneficial effects for the population, which will have to bear only a single threshold of price increase, on July 1st 2016, by 5%, instead of three successive increases that would increase the price by 30% until 2018. The gas price on the exchange reached values ​​of even RON 76 / MWh this summer, and there is a downward trend for several reasons. First, because the result of lower quotations of a barrel of oil occurs after on the gas market about nine months later. Or, from spring until now, the barrel lost 30% of its value, so a similar decline is expected for gas. Secondly, there is an oversupply of gas in Romania. InterAgro chemical plants, owned by businessman Ioan Niculae, were closed and they were the country's main gas consumer, while Azomures, another major consumer of gas, operates at half capacity. Finally, Iernut and Brazi gas power plants operate only when hydro production is low. Basically, out of the major gas consumers only Elcen operates at capacity, which implies that the Romanian market is affected by oversupply, with direct pressure on the stock price of gas. Moreover, the Russians have sharply reduced the price of the gas delivered to Europe, including Romania, and the reduction of VAT from January 1st will also lead to cheaper gas. All these factors can lead to a 10% lower gas price on the exchange, next year. That would mean that the price would go down to RON 68-69 / MWh, ie at par with the price of gas for the population from July 1st 2016 – RON 66 per MWh, implying that the liberalization of the gas market for households has ended. Since then, the price will no longer be set by ANRE, but will be dictated by the market. (Economica.net)

 

Romgaz Head: We are not looking for shale gas, we are focusing on conventional exploration

The natural gas producer Romgaz, owned by the state, does not intend to drill for shale gas in the next five years, as the investments scheduled for this period will focus on the exploration of natural gas by conventional methods, the general manager of the company, Virgil Metea, declared. "As we have always emphasized, the core activity of Romgaz is represented by conventional exploration, because we have much to do in this area. On the other hand, in perspective, it would be good to discover the unconventional gas potential (of Romania). In the medium term, up to five years, we do not intend to drill for shale gas", Metea said Tuesday at a summit on investments in Eastern Europe organized by Reuters. According to Metea, over half of Romgaz investments this year, totaling RON 1.3 billion, are targeting exploration works. The investments planned for this year are 22% higher than those achieved last year, and in the short term the company aims for the annual level of investments to be at least equal to the amount spent in 2015. The head of Romgaz said that the exploration works have been hampered lately because of opposition from locals who fear that the company's employees are seeking shale gas, extracted by hydraulic fracturing. The method is criticized internationally because of the impact on the environment. Regarding the drilling scheduled for this year the blocks leased in Slovakia, they were postponed due to the decline of oil prices, Metea added. Romgaz is the largest producer of natural gas in Romania. The Romanian state, through the Ministry of Energy, controls a 70% stake in the company. The Property Fund (FP) is the second largest shareholder with a 10% stake, while the remaining shares are held by individual and corporate investors. The company recorded a net profit of RON 766.6 million in the first half of 2015, down by 12% compared to the first half of last year, at a turnover lower by 11.5%, from RON 2.52 billion to RON 2.23 billion. (profit.ro)

 

The partnership between Moscow and Ankara in the gas field remains valid despite "difficulties" (Kremlin)

The partnership in the gas field between Russia and Turkey remains valid despite "difficulties", the Kremlin said on Wednesday, while Ankara announced a freeze of the negotiations with Moscow on the gas pipeline project Turkstream, AFP and Agerpres informed. During a meeting in Moscow, the Russian President Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan agreed that "works continue" about the partnership between the two countries in the gas sector, according to Kremlin spokesman Dmitri Peskov. "It is a complex work that involves difficulties, but everything is on track", he assured, adding that the two heads of state should meet "once or twice until the end of the year in order to synchronize the approach "on the Russian-Turkish partnership in the gas field. (HotNews.ro)

 

 

Energy Marker Newsletter 

September 19th – 25th 2015 

 

 

 

In this week’s report

 

 Bogdan Badea: Romanian energy sector lives from the investments made before 1990  2

Niculae Havrilet, ANRE: We want to encourage investment in biomass in Romania  2

CEZ ROMANIA: "Completing the national strategy, crucial for the energy sector"  3

"SMART has a chance to participate at projects worth USD 2-3 billion in Tanzania"  3

The memorandum of understanding of Reactors 3 and 4 to be submitted for shareholders’ approval 3

Electrica scheduled investments of over EUR 715mln by 2018  4

GDF Suez Energy Romania changed its name into Engie  4

OMV Petrom’s shareholders approved the company’s secondary listing on the London Stock Exchange  5

Electrica (EL) invested EUR 2mln in upgrading a power station in Galati County  5

 

In the news

 

Bogdan Badea: Romanian energy sector lives from the investments made before 1990

Romanian energy sector lives from the investments made before 1990 and desperately needs new projects, declared Bogdan Badea, Secretary of State for Ministry of Energy.“We are in talks with colleagues from the National Regulatory Authority for Energy (ANRE) to establish mechanisms in the distribution area. If we’ll see that the losses will increase and the consumption will also increase, we have to try to find legal mechanisms in order for operators to be motivated and cut their losses and make investments,” Badea explained. Secretary of State showed that there is a difference between the units put into service decades ago, and those that have recently become operational, where the investment must be recovered as reflected in the final energy price. Badea added that not the strategies are missing in Romania, but their proper implementation. According to him, Romania is deficient in terms of investment in networks and large production capacities. „If in renewable energy sector new investments appeared, in terms of other investments - in networks, in large production capacities - Romania It is deficient. There is a difference between units put into service decades ago, where investments are amortized, and the ones recently entered operation, where the investment must  be recovered, as reflected in the final price of energy. It is important that producers who built and that have taken over the assets at that time to understand that at some point these capabilities will exit from functioning, "added the Secretary of State for Ministry of Energy. He added that implementation of the new energy strategy should be developed through policies. (Economica.net)

 

Niculae Havrilet, ANRE: We want to encourage investment in biomass in Romania

Investments in biomass represents a great opportunity for Romania and the efforts of the authorities in the industry will go to encourage such investment, especially given that there are no requests for investments with the wind power component, said NiculaeHavrilet, president of the National Regulatory Authority Energy (ANRE), at a conference on energy issues, Agerpres informs. 'We want to encourage investment in biomass, because it represents a great opportunity for Romania. Currently, less than 1 percent of energy production is done by using biomass. The photovoltaic component requires an investment of EUR 600,000 per megawatt, the wind power component- EUR 1.4 million per megawatt and biomass EUR 600,000 per megawatt.  The wind power component no longer have  investment requests, especially given the reduction of the number of green certificates offered, however in the case of biomass three plus one certificates are being offered, Havrilet explained. Havrilet added that energy exports are an activity that has gained increasing importance lately, especially in the last year. „Romania produces more than it consumes. Energy exports represent a very important activity, especially in the last year, to countries such as Slovakia, the Czech Republic and Hungary. 900 MW were exported out of a production of 7,500 MW, representing approximately 12%. The price of energy for export is even lower than the one for the domestic market because were taken out certain taxes and the cogeneration bonus is no longer paid. In order encourage the development of electricity production in the northern area, the injection tax was zero, however in spite of this, no important producers have showed up, "said ANRE president. Havrilet also stated that at this moment an energy producer cannot sell directly, so it is unable to directly enter the export market.  “At this moment the problem is that a producer cannot enter the export market because he can’t sell directly. His production first enters the domestic market and the trader is the one who decides the direction taken by the energy produced,” Havrilet explained. ANRE  president also wanted to point out that for now gas is cheaper than electricity and a switch to using electricity instead of natural gas for space heaters it is not profitable . (Economica.net)

 

CEZ ROMANIA: "Completing the national strategy, crucial for the energy sector"

Completion of the National Energy Strategy is a crucial issue for this sector, which needs stability and predictability, said general manager of CEZ Romania, Martin Zmelik, who added: "The most important point for the energy sector is to provide players in the industry a path to follow. And it must address to all the problems facing us. First of all we need to know the energy mix and the exact role of renewables. For now the market is caught in the corner with a bunch of additions to the old law, which complicates business ". General director of CEZ Romania hopes that the strategy will have a positive impact on the business of the industry, according to Mediafax. "We understand that other sources of energy should be implemented in the sector, but we do not want instant solutions, we believe the appropriate solution would be discussions. And the main problem arises in stability and predictability of the entire system," said Zmelik. In his opinion, for the moment, the green certificates scheme is not working properly. CEZ Romania representative said that investors may have, using strategy, one direction related to the choices they have in the field, and companies want to know where and how much to invest, what to expect from the investment sector. (Bursa)

 

 

"SMART has a chance to participate at projects worth USD 2-3 billion in Tanzania"

 

Electricity carrier Transelectrica SA National recently approved in the general asembly of SMART SA (a subsidiary performing revisions and repairs for primary and secondary equipment from the transmission network) the establishment of the company SMART Tanzania. Asked why he chose to open a branch in Tanzania, Constantin Iacov, general manager of SMART SA, declared: "Tanzania has an investment plan in energy very ambitious, and we must take advantage. By 2020, authorities in Tanzania scheduled investment of USD 8.5 billion in the energy, of which USD 2.5-3 billion dollars in building new networks. Tanzania is one of the safest markets in Africa. Even if the government changes, foreign investors have the certainty that contracts are respected and there is a continuity of the development strategy of the country. In Tanzania we also found Chinese, Canadian and American investors that activated for a long time on the market. " Iacov declared that SMART Tanzania will participate in a joint venture with Tanzania Electric Supply Company (TANESCO), at construction and modernization projects of electricity transmission lines. According to Iacov, Tanzania produce 1,300 MWh and 900 MWh are distributed to consumers. SMART director added: "The authorities want to expand transport and distribution of electricity networks to all consumers. Foreign investors are currently building new capacity to be connected to the network, and the demand for energy is high. There are many consumers in Tanzania using generators and have costs of 45 cents per kWh. If it would have a network to connect, prices would be much lower. " SMART subsidiary in Tanzania will be established shortly, according to Iacov, who added that the National Development Corporation (NDC) Tanzania is interested in a partnership with the Romanian company for conducting new energy projects and will honor the invitation to visit SMART in Romania in October of this year. (Bursa)

 

The memorandum of understanding of Reactors 3 and 4 to be submitted for shareholders’ approval

The memorandum of understanding on the development, construction, operation and dismantlement of Reactors 3 and 4 at the Cernavoda Nuclear Plant will be submited for shareholders’ approval in a General Assembly, scheduled on October 22nd, aNuclearelectrica press release informs. The document was approved on September 2nd by the Romanian Government, China Nuclear Power Corporation (CGN) being the investor preferred. “In compliance with the Governmental Strategy for the continuation of theCernavoda NPP Reactors 3 and 4 Project, through the organization of an investors selection procedure, approved by the General Meeting of Shareholders on 22.08.2014, the parties, SNN and China General Nuclear Power Corporation, the qualified and selected investor for the continuation of the project, had to convene on the terms and conditions of their cooperation for the development of Cernavoda NPP Reactors 3 and 4, by negotiating and signing the current Memorandum of Understanding,” the quoted document reads.  After the sides will sign the memorandum, Nuclearelectrica and China Nuclear Power Corporation will enter the negotiation process related to the start and completion of the strategy’s final stages: the negotiation of the investors’ agreement and the document setting up the new project company, the creation of the new project company (a joint-venture company in which CGN will hold at least 51 per cent of the registered capital), the future corporate governance of the joint-venture company and the structuring of the financing for the development of the project. Also, Nuclearelectrica’s investment in EnergoNuclear will be fully transferred to the new project company. (Economica.net)

 

Electrica scheduled investments of over EUR 715mln by 2018

State-owned electricity supplier and distributor Electrica has budgeted investments of over EUR 715 million by 2018, namely by the end of the current regulatory period, according to company representatives. The investment plan for this year approved by the National Energy Regulatory Authority provides investment of over EUR 121 million in H1, resulting an increase of investment in electricity networks up 21% over the same period of 2014, reads a company release The total investments approved by the General Shareholder Meeting for 2015 amount to EUR 194 million. By 2018, Electrica aims to switch to 20 kV of about 3,000 kilometers of medium voltage lines and a total of 2,400 transformer stations, with the rehabilitation of more than 1,000 cells in power stations. Also, by 2018 it is planned the completion of the implementation of an integrated Asset Management system by integrating 437 substations, 26,000 transformer stations, over 50,000 km of medium and high voltage network and more than 85,000 kilometers of low voltage network.Electrica has recorded on the first six months of 2015 some RON 227 million in consolidated profit on a soaring trend by RON 64 million (30%), as compared to the same period of 2014. The H1 operational profit reached RON 317 million, up by 14% year-on-year while the net operating income rose RON 237 million (9.5%) to RON 2.725 billion. In first 6 month of 2015 Electrica has distributed approximately 8.5 TWh and supplied around 5 TWh in electricity to around 3.59 million end-consumers. Distribution accounted for 36% and supply for 64% of Electrica’s total income. Electrica distributes and supplies electricity in Northern and Southern Transylvania and Northern Muntenia and offers maintenance and energy services all over the country. (Capital)

 

GDF Suez Energy Romania changed its name into Engie

GDF Suez Energy Romania changed its name into Engie, a natural step in their international rebranding process announced in April, according to a company statement. “After 10 years of presence in Romania, we are ready to take a new step in the evolution of the company by adopting the new brand, Engie. This change in brand will support the new positioning that will translate locally through the development of products and services for energy efficiency to enable lower power consumption and the development of digital solutions designed to help customers better access our services and offers. I trust that all this will bring added value to the capital of confidence gained so far and will contribute to the success of the Engie brand in Romania,” says Eric Stab, chairman and CEO of GDF Suez Energy Romania. In Romania, the rebranding process will have two stages: first, GDF Suez Energy Romania will adopt the Engie brand products and services and in the second stage, the rebranding will be expanded to all subsidiaries owned by GDF Suez Energy Romania, namely Distrigaz Sud Networks, Distrigaz Confort, Braila Winds and Alizeu Wind Farm. Engie is present in Romania in three sectors: natural gas, electricity and energy services. GDF Suez Energy Romania is the main subsidiary of Engie in Romania. (Economica.net)

 

OMV Petrom’s shareholders approved the company’s secondary listing on the London Stock Exchange

Oil and gas group OMV Petrom’s shareholders approved the company’s secondary listing on the London Stock Exchange. Thus, OMV Petrom will issue global depository receipts (GDRs) for the secondary listing, which the group’s Executive Board has the mandate to carry on by end-2016.  . The decision to list the company in London was supported by Austrian group OMV, the company’s majority shareholder, with 51% of its capital, and the Property Fund, which holds 19% of OMV Petrom’s shares. The Property Fund also plans to sell a significant part of its stake in OMV Petrom through this listing. OMV Petrom is the largest listed company in Romania with a market capitalization of EUR 4.37 billion. The company’s shares lost 25% of their value in the last year, due to falling oil prices and lower profits. (Wall-Street)

 

Electrica (EL) invested EUR 2mln in upgrading a power station in Galati County

Electricity distributor and supplier Electrica (EL) invested EUR 2mln in upgrading a power station in Galati County, which takes electricity produced by 2 wind farms of 70 MW and 48 MW, one of the park being owned by GDF SUEZ Energy Romania. Electrica had few years ago its own plans to get into the wind energy production, as did some of its competitors in the segment of distribution and supply of electricity, but they have not materialized. Liesti Station, from Galati County, was built in 1973 and was refurbished between August 2013 and July 2015 with EUR 2mln, of which almost one million EUR represented refundable financial assistance from European funds, says Cezar Cristian, director of the Galati branch of the Electrica Muntenia Nord, a subsidiary of the state owned companyElectrica SA. (Ziarul Financiar)

 

 

  

 

Project: 45% tax on the profit of oil & gas companies2

Bulgaria and Slovakia ask the European Union to reject the Nord Stream gas pipeline project 2

Historic moment: the price of Romanian is now equal to the price of Russian gas. Implications  2

Investment of over RON 100 million in Sinca gas station3

The transit for Gazprom and the strong dollar increased Transgaz revenue in the first nine months of the year4

Moldovans no longer want Romanian gas. What the government in Chisinau meant: the Russian counteroffer was impossible to refuse4

Congaz integrates into GDF SUEZ Energy Romania5

Gas imports decreased by 80%.. 5

Romgaz sales and profit fell for the third consecutive quarter5

Rompetrol Well Services: loss of 1.43 million after the first nine months  6

EU dependence on Russian gas imports will increase due to lower imports from North Africa  6

Iran wants to produce 1 billion cubic meters of natural gas per day6

How well prepared is Romania for the winter: we have stored gas, but also a financial blockage between CHPs and the heat distribution companies6

OMV Petrom completed the modernization of ICPT Campina, an investment of 4.6 million euros  7

The Dutch justice requires reducing gas production because of earthquake risk  7

The European Commission: The Southern Corridor, on the revised list of projects of common interest 8

    

 

Project: 45% tax on the profit of oil & gas companies

The Ministry of Finance announced the new government: after it postponed for two years a decision on oil & gas royalties, the former Minister of Finance left his successor a proposal on a 45% tax on the profits of oil companies. The news took the companies by surprise. Over 200 wells closed, thousands of people laid off and investments by up to 30% lower. These were the effects of the decline of the price of a barrel of oil below $ 50. The proposal made at the end of the mandate by Eugen Teodorovici, to increase corporate tax, could aggravate the situation of oil companies. "There are three scenarios: 35, 40 and 45, if I am not mistaken, as proposals. But the decision is yours, I repeat once again, of the Finance Ministry and the Government," Eugen Teodorovici, former Minister of Finance, said.  The announcement came as a surprise for oil companies." We have to provide a reaction to a figure that we, the Association of Oil Producing Companies, do not have. We still don’t have it after many months of meetings with representatives from the Ministry of Finance and the National Authority for Mineral Resources. What do we want as a country? To have a healthy industry, not be a budget piggy bank today for tomorrow to cover recent wage increases or the election expenses next year", Daniel Apostol, General Secretary of ROPEPCA, declared. The figures come after Ponta government promised that the oil royalties will not increase. The new tax would apply to the profits obtained by each deposit, not to the annual earnings of the companies. (digi24.ro)

 

Bulgaria and Slovakia ask the European Union to reject the Nord Stream gas pipeline project

Bulgaria and Slovakia will ask the European Commission to treat equally the gas projects South Stream and Nord Stream II, according to the Bulgarian Deputy Prime Minister Meglena Kuneva, Novinite transmitted. The Russian gas pipeline South Stream was supposed to transport gas under the Black Sea and then to transit Bulgaria and Serbia, to the center of Europe. Russia abandoned however the construction of the gas pipeline because of opposition from the European Commission, which argued that the project violates the European legislation in the field of energy because it does not meet, among others, the provision on the separation of gas distribution to production. Kuneva said that the gas projects will be one of the topics that will be discussed at the EU summit in December. "All these problems related to gas infrastructure will be analyzed at the EU summit. The Energy Union will also be discussed at the summit due to the insistence of Bulgaria", Kuneva said. On the other hand, Slovakia is counting on EU support for the project Eastring, as a solution to diversify the gas infrastructure in Europe. According to the project, Eastring will transport gas from the Slovak-Ukrainian border to the Bulgarian-Turkish border, opening the opportunity for Bulgaria to receive deliveries from northern and western Europe. In May, Bulgaria, Hungary, Romania and Slovakia signed a joint statement supporting the idea of ​​interconnecting the gas transportation systems. (Adevarul)

 

Historic moment: the price of Romanian is now equal to the price of Russian gas. Implications

The price at which Romania currently makes imports of gas from Russia is about the same as the gas price of the transactions on the local market. Since 2016, the Russians will decrease the gas price even more, so that, effective immediately, we could see an early conclusion of the program of liberalization of gas prices for households, agreed with the IMF. The price of gas from domestic production sold on the exchange is now equal to that of imported gas supplied by Russia. It is a historic first that the local gas production reached the same price as the Russian gas, after years in a row the ratio of prices was much below par, reaching, in 2007, 2008, 2012, 2013, 2014 to be even 1:2. The reference on the two prices is given, on one hand, by the local gas exchanges, BRM and OPCOM, where transactions are done at RON 82 / MWh (the gas supplier GDF Suez Energy Romania recently bought gas at this price), and, on the other hand, by the statements of Niculae Havrilet, ANRE (the Romanian Energy Market Regulator) president, who said that the traders agreed by Gazprom, WIEE and Conef, bring gas priced at $ 220 per thousand cubic meters, i.e. RON 87 / MWh. Meanwhile, Petrom has just put on sale a consistent package of energy at prices between RON 84 and RON 89 / MWh, almost the same price as that of the Russians. Next year, gas prices on the local market could even climb over the prece of Russian gas, given that Gazprom, according to information provided by Bloomberg, has built the budget for 2016 at a price of gas supplied to the EU of $ 200 per thousand cubic meters, RON 76-78 / MWh, 10% below the current price. In these conditions, it is expected that the gas price on the Romanian would decline, the producers Petrom and Romgaz being strongly competed by Russia. However, all forecasts show that natural gas prices in Europe entered a multiannual downward trend, following the trends on the oil market, but also considering the sanctions imposed to Russia. (Economica.net)

 

Investment of over RON 100 million in Sinca gas station

* It has an important role to ensure the necessary gas during cold weather in Bucharest, but it will also be used in the future to transport resources from the Black Sea

 

The old station of methane gas turbochargers of Transgaz in Sinca Noua has been completely modernized, with an investment of RON 100.6 million in new equipment. The funding was provided both from European funds through the European Regional Development Fund, and from the national budget, and starting yesterday the new turbochargers are functional. Paul Popescu, project manager, said that the work started on March 11th and lasted 231 days. The turbochargers station of Transgaz from Sinca was built in 1974 and is practically the 'heart' of natural gas supply in Romania, connecting two major mains: the central with the southern gas main. "The biggest challenge in this project was to assemble the new equipment in the old buildings. The inauguration of the station was also attended by the US Ambassador to Bucharest, Hans Klemm, considering that 80% of the components have been delivered by a producer in America, and the remaining 20% by companies from Italy.

 

A connection from the Black Sea

The project manager said that, before installing the new equipment, only the transport of gas from the central area to the south of the country could be made, but now reverse flow is possible, and with the opening of the exploitation in the Black Sea the gas could be transported to the neighbors Hungary or Ukraine and Moldova. "What happened here is a step forward for the energy independence of Romania. This investment ensures Romania's ability to distribute the gas to be extracted from the Black Sea. Not only here we have cooperation with the US, but also in the Black Sea where the consortium OMV Petrom and Exxon are conduction prospecting activities of the gas that we will be able to exploit. So we are preparing in this regard", Andrei Gerea declared. He added that Romania currently buys up tp 10% of the country's natural gas needs, and this year a balancing reserve was created, so there will be no gas supply problems in winter. Moreover, even if we will have a cold winter, Bucharest does not risk running out of gas at all, because of the pumping station from Sinca. (Bursa) 

The transit for Gazprom and the strong dollar increased Transgaz revenue in the first nine months of the year

Revenues from transportation of Transgaz Medias (TGN - ticker) increased by 2.5% in the first nine months of 2015 mainly due to gas transit through Romania, an activity that brings the company revenues in US dollars. While the revenues from transporting gas on the internal network fell by 3.1 in the first nine months to RON 950.3 million, due to reduced consumption, international transport revenues increased by 17.7%, to RON 237 4 million, partly amid the strengthening of the dollar against the local currency. Dobrogea area is crossed by three pipelines used by the Russian group Gazprom to supply its customers in Bulgaria, Greece and Turkey. As a result of the slightly higher revenues and reducing costs by own consumption, the net profit of Transgaz increased by 2.6%, to RON 384.3 million. (Ziarul Financiar)

 

Moldovans no longer want Romanian gas. What the government in Chisinau meant: the Russian counteroffer was impossible to refuse

 

Moldova will no longer import gas from Romania, this winter, so Iasi-Ungheni pipeline, an investment of 26 million euros, no longer finds its purpose. The Moldovan Economy Ministry did not want to recognize the lack of utility of this project, and only provided comparative data on the prices of gas from Romania and Russia. From the data, it appears that Gazprom has lowered gas prices for Moldova to the level where it has become cheaper than Romanian gas, provided by Petrom. The pipeline Iasi - Ungheni is useless given that Petrom has not received requests from Chisinau to deliver gas for this winter. Moldovan authorities have come up with clarifications on the matter. Thus, the Republic of Moldova says that the pipeline Iasi – Ungheni is not useless. The construction of Iasi-Ungheni pipeline represents the first phase of the project of interconnection of the gas system of the Republic of Moldova to that of the European Union (Romania), and from the operational point of view, at this stage, the bus only ensures the natural gas supply to surrounding regions, representing up to 1% of total consumption in the country, reads a release of the Ministry of Economy of Moldova. Phase two of the project, according to the authorities in Chisinau, provides for an extension of the pipeline to Chisinau (Ungheni - Chisinau pipeline), which will allow diversifying gas import sources. The feasibility study for the construction of this pipeline is in the process of being completed, in the first half of 2016, and then the design and construction phase will follow. Until then, Moldova no longer buys gas from Petrom Romania. The Moldovan Economy Ministry said that it "could". The contract signed earlier this year with Petrom provides the supply of 1 million cubic meters of gas by the end of this year. In March and April 2015 700,000 cubic meters were delivered. The rest, according to the Ministry of Economy of the Republic of Moldova, would be delivered in the 45 days that remain until the end of 2015. This is almost impossible, because neither Petrom received any notification from Chisinau for the resumption of deliveries, nor Transgaz received any nomination to export gas via Iasi-Ungheni. Those notifications and nominations are made in advance. What the Ministry of Economy of the Republic of Moldova did not want to say is that, at this time, it is no longer worth for Moldova to buy gas from Romania, strictly for commercial reasons. "The initial price (agreed with Petrom) was RON 1,010 for 1,000 cubic meters of natural gas, and following the developments on the natural gas market in the region and as a result of negotiations it was reduced to RON 900 for 1,000 cubic meters", the Moldovan Economy Ministry said. Also, "at the moment, the price of natural gas purchased by Moldovagaz from Gazprom is US $ 210.21 per 1,000 cubic meters," according to the cited source. In other words, currently, Moldova pays $ 210 per thousand cubic meters of gas to Gazprom, while the Romanian offer, equivalent in dollars, is 220 dollars. Basically, the gas import from Romania has no commercial justification. In the future, Romanian gas could reach the Republic of Moldova only if it will be cheaper than the Russian gas. Following an investment of 26 million euros, of which 7 million euros were EU contribution Iasi-Ungheni pipeline has a capacity of 1.5 billion cubic meters. The pipeline has a length of 43.2 kilometers and passes under the Prut. (Economica.net)

 

Congaz integrates into GDF SUEZ Energy Romania

Starting on January 1st 2016, Congaz, a company whose main activity is the distribution and supply of natural gas in Constanta county, will be integrated into GDF SUEZ Energy Romania. The integration occurs as a result of the successive acquisition by GDF SUEZ Energy Romania of the stakes held by OMV Petrom, E.ON Ruhrgas International in 2014 and Petroconst in 2015, the company said. In the integration process, the supply of natural gas of Congaz will be taken by GDF SUEZ Energy Romania which recently changed into ENGIE. Also, the natural gas distribution activity of the company will be taken over by Distrigaz Sud Networks, a subsidiary of GDF SUEZ Energy Romania. Following the above mentioned integration, GDF SUEZ Energy Romania has consolidated its position as the largest natural gas distributor and provider of the regulated natural gas market in Romania. The Group currently services a portfolio of 1.5 million customers and operates a network of 18,500 km in 18 counties. (Curierul National)

 

Gas imports decreased by 80%

The amount of gas imported by Romania in the first nine months of the year fell by 80% compared to the same period last year. Romania imported in the first nine months of 2015 an amount of usable natural gas of 67,200 tons of oil equivalent (toe), 80% (268,500 toe) lower than the one imported in the same period of 2014, according to data centralized by the National Statistics Institute cited by Agerpres. The domestic gas production totaled, in the first nine months of 2015, about 6.38 million toe, with 82.700 toe (1.3%) lower than in the period from January to September 2014. According to INS, the usable natural gas imports amounted, in 2014, to 447,400 tons of oil equivalent (toe), 61.5% (714,100 toe) lower than those in 2013. Also, the domestic production of natural gas totaled over 8.675 million toe, by 73,900 toe (0.9%) higher than that reported in the previous year. The Romanian Energy Strategy Project for 2015 - 2035, published on the ministry website, reveals that Romania has the largest reserves of natural gas in Central and Eastern Europe, with proved reserves of approximately 1,600 TWh. ''At an average annual production in Romania (11 billion cubic meters of natural gas) and in terms of a steady annual decline of 5% of the reliable natural gas reserves, in conjunction with a replacement rate of natural gas reserves of 80%, it can be appreciated that the current gas reserves could run out in a period of about 14 years'', according to the Energy Strategy. (Economica.net)

 

Romgaz sales and profit fell for the third consecutive quarter

The turnover of the gas producer Romgaz (SNG - ticker) fell by 8.2% in the third quarter, to RON 698 million, and the net profit decreased by 14%, to RON 208.7 million, given that national natural gas consumption has been on a downward trend for years. Romgaz has reduced investments and also reduced production to align with the weak demand on the market. At nine months, the company's sales fell by 10.8%, to RON 2.93 billion, while the net profit decreased by 12.4%, to RON 975.3 million, Mediafax wrote. Probably to alleviate the "shock" caused by the poor results, Romgaz says that it will take some of the reserves established in the previous years to increase the profit to be distributed next year. (Wall-Street)

 

Rompetrol Well Services: loss of 1.43 million after the first nine months

Rompetrol Well Services closed the first nine months of this year with losses of 1.43 million lei, compared to a profit of RON 12.635 million reported at the end of September 2014, according to financial information submitted Friday BSE. Financial income of the company totaled 2.5 million lei and the exploitation of 39.647 million lei. Financial expenses were 1.24 million lei and the exploitation of 42.338 million lei. Turnover decreased by 40% to 38.626 million lei. Rompetrol Well Services is a member company of Rompetrol Group NV probe specialized in oil and gas exploration. (Economica.net)

 

EU dependence on Russian gas imports will increase due to lower imports from North Africa

Gas supplies from North Africa to Europe are expected to decline in the future due to conflicts in the region, a situation that will be beneficial for other exporters such as the Russian group Gazprom, Bloomberg transmitted. North Africa is the second largest gas supplier to Europe after Russia, covering nearly 10% of the demand in 2013. Instead, the Russian group Gazprom supplies one third of Europe's gas needs, but given the crisis in Ukraine Europe wants to reduce its dependence on Russia by diversifying sources of supply. Algeria and Libya could reduce their deliveries to Europe in the next two to three years due to political instability, lack of investments and the renegotiation of contracts, according to Carlo Malacarne, CEO of the Italian group Snam SpA, the largest operator of natural gas transport in Europe. The gas pipeline network of Snam in Italy also includes entry points for the gas coming from North Africa and Russia, Agerpres wrote.'The risk for North Africa to reduce exports to Europe is quite high. Attracting investments is problematic, which means it is possible that Europe's dependence on Russian gas will remain at a high level", Carlo Malacarne said in an interview for Bloomberg. (Economica.net)

 

Iran wants to produce 1 billion cubic meters of natural gas per day

Iran aims that, in the next two and a half years, to increase its natural gas production to over 1 billion cubic meters per day, the Iranian Oil Minister, Bijan Namdar Zanganeh, said Tuesday, Reuters transmitted. Between 2002 – 2012, Iran's natural gas production doubled, reaching 160.5 billion cubic meters. "According to our plans, in the next two and a half years the gas production Iran would grow to over 1,000 million cubic meters per day," Zanganeh declared in the week before the meeting of the Forum of the Gas Exporting Countries (GECF). (Capital).

 

How well prepared is Romania for the winter: we have stored gas, but also a financial blockage between CHPs and the heat distribution companies

Romania is technically ready to supply electricity and heat for the winter season 2015-2016, the but the financial problems of some companies may generate unpredictable situations. The preparations for winter are met almost entirely in terms of natural gas stocks, oil fuel or water in the storage lakes, but the financial situation of some energy companies could "hamper" the supply of heating in winter, despite these measures. Victor Grigorescu, proposed for the position of Minister of Energy, said Monday at the hearings in the reunited committees of Parliament, that among the first steps he would take as Minister is convening the Winter Command to check if the necessary stocks of gas natural, coal and oil fuel for the next period have been made.

 

2.5 billion cubic meters of gas in storage

 

Niculae Havrilet, president of the Romanian Energy Regulatory Authority (ANRE), says that on November 10th the institution he leads has asked suppliers to store 1.7 billion cubic meters, but - for more safety - 2.5 billion cubic meters, the same as last year, have been stored. He also said that Romania looks good in terms of stocks of oil fuel or on the water level in storage lakes, the only problem being the stocks of pit coal. ANRE head also said that Transgaz, the national gas system operator, has the right to import gas, starting this year, to balance the national system. (Adevarul)

 

OMV Petrom completed the modernization of ICPT Campina, an investment of 4.6 million euros

OMV Petrom finalized the project of modernization of the Technological Research and Design Institute (ICPT) in Campina city, the investment amounting to RON 20.38 million, including VAT (EUR 4.6 million), of which RON 6.85 million represented EU non-reimbursable funds contracted under the SOP "Increase of Economic Competitiveness". The project started last spring and was initially budgeted at 3.7 million euros. "After more than 150 years of exploitation of oil and gas in Romania, one of the challenges the local industry is the natural decline of production caused by the maturity of the deposits. With the new technologies, such as those we have now at ICPT Campina, we can get more accurate data on the geological structures and we can test new solutions for the exploitation of existing fields, so we can increase their productivity", Gabriel Selischi, Petrom Executive Board member responsible for Exploration and Production, said in a statement. The hydrocarbon production of OMV Petrom decreased by 3% in the third quarter of 2015 as a result of the planned overhaul of key gas wells of the company in Romania. At 9 months, production has remained stable compared to the same period of 2014. On the other hand, investments in exploration of OMV Petrom increased by 36% in the first 9 months of 2015, to RON 1.087 billion. Actual exploration expenses in January-September 2015 increased by 62%, to RON 261 million. (profit.ro)

 

 

The Dutch justice requires reducing gas production because of earthquake risk

A Dutch court ordered Wednesday a greater reduction of gas production in Groningen deposit, the largest deposit of natural gas in Europe, saying that the government in Hague has not paid enough attention to the frequent earthquakes caused by the activity of gas extraction, Reuters and AFP transmitted. In January this year, the Dutch Minister of Economic Affairs, Henk Kamp, has decided to lower gas production at Groningen deposit from 42.5 billion cubic meters per year to 39 billion cubic meters, and in June decided a further reduction to 33 billion cubic meters. However, dozens of individuals and various institutions, including several municipalities, have asked the State Council, the highest administrative court in the Netherlands, to reassess these decisions on the production of the deposit in Groningen, Agerpres reported. In its decision communicated on Wednesday, the State Council of the Netherlands ordered to limit Groningen production at 27 billion cubic meters per year. "Although the Economy Minister was entitled to give priority to to the security of supply, he allowed however a level of extraction which is higher than the average amount that is required in a normal winter," reads the court's decision. The State Council stressed however that, if next winter will be a particularly cold winter, the maximum amount of gas that can be extracted will be increased up to 33 billion cubic meters. The Netherlands is the second largest European producer of natural gas, and in 2011 revenues from gas extraction have represented 8% of budget revenues. However, the gas extraction activity causes earthquakes that are becoming more frequent and stronger in the north of the Netherlands, causing damage to farms and historic buildings. (Bursa)

 

The European Commission: The Southern Corridor, on the revised list of projects of common interest

The European Commission has adopted a list of 195 key projects of energy infrastructure, known as the projects of common interest which will contribute to achieving the energy and climate targets in Europe and the essential elements of the energy Union of the EU, reads a press release. The list of projects is primarily an updated list of projects of common interest adopted in October 2013. The list includes 108 projects in the electricity sector, 77 in the gas sector, seven in the oil sector and 3 in the area of ​​smart grids. A good balance was achieved between the projects in the electricity and the gas sector, including due to a clear identification of priority projects in the regional context. The reviewed list also includes the Southern Corridor, which provides the transportation of natural gas from the Caspian region to the European markets as well as several projects that allow the transport of gas from the Southern Corridor and / or BNL terminals in Greece through Bulgaria, Romania, Serbia and Hungary and the integration of the transport systems in the countries of transit. (AGERPRES)

 

 

Energy Market Newsletter

November 14th – 20th 2015

 

  

In this week’s report

 Net profit of RON 131 million for "Nuclearelectrica"  2

Rompetrol Rafinare posted a USD 14.8 million profit in first 9 months  2

Electromagnetica ended the first 9 months with RON 3.64 million losses  2

Transelectrica posted a profit of RON 305 million in first nine months  3

The two Cernavoda units produced over 8.5 million MWh in the first nine months of 2015  3

Enel Green Power passed on losses of EUR 97mln in Q3, after reviewing the assets in Romania  3

Electrica posted in the first nine months a net profit of RON 428 million, up 27%   4

EDP Renováveis was forced to move to impairment of assets on local market 4

Romania's renewable capacity exceeded 5,000 MW    4

Hidroelectrica posted a gross profit of RON 970 million in the first ten month  5

Former government negotiated with IMF the introduction of a new tax of 35% on the profits recorded by the oil companies  5

Gerea rectifies massively SAPE’s budget: triple profit and revenues, quadruple spending, 16 times larger bonuses  5

Enel scheduled investments of EUR 600mln in Romania during 2016-2019 period  6

 

In the news

 

 Net profit of RON 131 million for "Nuclearelectrica"

Romanian electricity producer Nuclearelectrica ​​(SNN) earned a net profit of RON 131 million in the first nine months of this year, 70% higher than in the same period last year, according to a release submitted to Bucharest Stock Exchange. According to the company, the amount of energy sold in the first nine months was the same as in the corresponding period of 2014, of around 7900 GWh. Operating income decreased slightly compared to January-September 2014 period, to RON 1.3 billion, given that the total amount of energy sold has not varied significantly, shows the company, adding: "On the regulated market, the amount of energy sold during January-September 2015 period decreased by 40% compared to the same period of 2014, but this difference was reflected in a 21% increase in the amount of energy sold on the free market in the same period compared to January-September 2014. This change in the sales structure has not led to an increase because, while on the regulated market the energy price registered an increase (7% compared to January-September 2014), on the competitive market of bilateral contracts prices fell by 3% compared the same period of 2014 ". Total debt in the first three quarters of the year reached RON 2.1 billion, 8.7% lower than in the same period last year, according to the financial report of the company. (Bursa)

 

Rompetrol Rafinare posted a USD 14.8 million profit in first 9 months

Rompetrol Rafinare, part of KMG International, posted during the first nine months of the year a profit USD 14.8 million, representing a significant increase compared to the negative result recorded in the similar period of last year, of USD 41.7 million. The consolidated operating result (EBITDA) amounted to about USD 91 million, up by 45% compared to the same period of 2014, when the company reported EBITDA of USD 62.6 million. The results were positively influenced by increasing processed volumes at the company’s three production units – Petromidia, Vega and Petrochemicals division – which have processed 4.25 million tons of raw materials, up 11% compared to the same period in 2014. Net refining margins increase of USD 12.68 / tonnes in the first nine months of 2015 compared to the same period of 2014 also had a positive impact on company results. (Wall Street)

 

Electromagnetica ended the first 9 months with RON 3.64 million losses

Electrical equipment manufacturer Electromagnetica reported in the first nine months of 2015 losses of RON 3.64 million, compared to a profit of RON 7.889 million in the same period of the previous year, according to financial information submitted to the Bucharest Stock Exchange (BVB). Revenues amounted during January – September period to RON 302.32 million, down from RON 318.82 million reported in the same period in 2014. "Total revenues decreased by 5.4% over the same period in the previous year, while total expenditure declined by 1.5% compared to the same period in 2014,  and the company passed in losses. The losses were caused by the activity of energy supply, due to worsening market conditions manifested by the sharp decrease of sales prices vs. average purchase prices of electricity, "reads a company release, according to Agerpres. On September 30th 2015 Electromagnetica had total debts of RON 52.076 million, of which RON 41.23 million were current liabilities. (Bursa)

 

Transelectrica posted a profit of RON 305 million in first nine months

Romanian power grid operator Transelectrica's net profit increased marginally in the first 9 months of 2015 by 0.6% to RON 305 million and the operating result decreased by 1.5% to RON 598 million, increasing energy consumption offsetting regulatory tariff cuts approved by ANRE for the services of the company. Net energy consumption increased by 4.2% during analyzed period, to 41 TWh, and net production increased by 3%, to 45.7 TWh. Transelectrica volume of energy in the first nine months of the year stood at 38.9 TWh, up 3.4% from the same period in 2014. The volume of transported energy increased by 3.2% to 31.9 TWh, shows the report for the first 9 months of 2015. Starting July 1st 2015, ANRE reduced transport fee charged by Transelectrica by 6.8% and the one for functional system services (dispatching activities of the national energy system) by 17.6%. The price for transport and system services was increased slightly by 0.3%. "Domestic consumption of electricity has become the main determinant of the revenues from the regulated tariff", reads Transelectrica report. (profit.ro)

 

The two Cernavoda units produced over 8.5 million MWh in the first nine months of 2015

 

The two units of Cernavoda nuclear power plant produced in the first nine months of 2015 an amount of electricity of 8.556 million MWh and delivered into the National Power Grid around 7.853 million MWh, the difference of 702,000 MWh being represented by their consumption, according to a report submitted to the Bucharest Stock Exchange. Compared to January - September 2014 period, when the units produced and delivered 7.93 million MWh, a decrease of 0.96% was recorded. Electricity production program approved by the Board of Directors of the National Company Nuclearelectrica for 2015 took into account for January – September period an amount of electricity produced and delivered of 7.734 million MWh, which was conducted at a rate of 101.54%. In the third quarter, the two units of the Cernavoda NPP produced a quantity of electricity of 2.999 million MWh and delivered 2.751mln MWh in SEN. In same period last year, the units produced and delivered 2.784 million MWh into the National Energy Grid, representing a decrease of 1.2%. The program approved by the Nuclearelectrica Board took into account for the third quarter an amount of electricity produced and delivered of 2.723 million MWh, conducted at a rate of 101.01% . Nuclearelectrica officials stated that in the third quarter there were no unplanned stops at CNE Cernavoda units. (Capital)

 

Enel Green Power passed on losses of EUR 97mln in Q3, after reviewing the assets in Romania

 

Enel Green Power passed on net losses of EUR 97 million in the third quarter, after a profit of EUR 102 million a year ago, following the downward revision of the value of assets in Romania, by 155 million, according to data released by the Italian company. The revaluation decision to decrease the value of assets in Romania was taken because of legal uncertainty and market conditions, reads the company's financial report. "2015 year is difficult to Enel Green Power, which must bear the contractions of prices on the main European markets," reads a statement of the company. In first nine months, Enel Green Power's net profit fell 38% to EUR 245 million from EUR 395 million in the same period in 2014, including revaluation result from declining assets in Romania. Enel Green Power revenues increased in the first nine months by 7.6% to EUR 2.24 billion. In the third quarter, revenues fell 3.7% to EUR 649 million. At the end of September, Enel Green Power had debts of EUR 7.34 billion, up from EUR 6.03 billion at the end of December. The company increased its capacity by over 1,000 megawatts in the first nine months compared to the same period last year, to a total installed capacity of 10,600 megawatts. Enel Green Power wants to expand its business in emerging markets where there are large resources of renewable energy, stable regulation and solid economic growth. (Wall Street)

 

Electrica posted in the first nine months a net profit of RON 428 million, up 27%

Electricity distributor and supplier Electrica posted in the first nine months of 2015 a consolidated net profit of RON 428 million, up 27% (RON 92 million)  compared to the same period last year, reads a company’s reads. The operating profit in the same period stood at RON 497 million, increasing by 22% compared to the first nine months of 2014. During the nine months until the end of September 2015, Electrica recorded operating incomes of RON 4.13 billion, up RON 384 million (10%), while operating expenses decreased by RON 32.5 million (2%). The income increase was mainly fueled by increases in the electricity distribution segment (advancing by 6% to RON 1.84 billion) and the electricity supply segment (up 7% to RON 3.28 billion). In the first nine months of 2015, Electrica distributed electricity of 12.7 TWh, and provided approximately 7.6 TWh of electricity to 3.6 million end users.  “We continue to do what we committed to, including the listing prospectus, to invest in distribution networks, the latest technology, which is already reflected positively in our operational results, but also in the improved quality of services offered and lowering of maintenance costs,” said Ioan Rosca, Electrica’s general director. (Economica.net)

 

EDP Renováveis was forced to move to impairment of assets on local market

EDP Renováveis, division of renewable energy of Portuguese group Energias de Portugal, the third most powerful investor in renewable energy in Romania, was forced to move to the impairment of assets on the local market as a result of legislative changes that have affected the profitability of these investments . EDP Renováveis joins a "select group" of large investors in green energy which were forced to take the same measures including CEZ (Czech Republic), Enel (Italy) and Verbund (Austria). EDP Renováveis invested, according to ZF calculations, almost EUR 800 million in Romania in a park of renewable energy projects of 521 MW, of which 471 MW are wind projects, the remaining ones being solar projects. (Ziarul Financiar)

  

Romania's renewable capacity exceeded 5,000 MW

The capabilities of producing electricity from renewable sources reached a total installed capacity of 5168 MW at the end of September 2015, according to data centralized by Transelectrica. Thus, wind farms had in the system an installed capacity of 3,176 MW, photovoltaic panels a total capacity of 1,306 MW, small hydro power plants - 583 MW and biomass based projects had a cumulative capacity of 103 MW. At the end of last year, the system had a production capacity of 5,200 MW of renewable energy. Secretary of State in Energy Ministry, Bogdan Badea, announced recently that the institution he represents will support initiation of procedures to amend laws on support scheme for renewable energy, given that some measures of the scheme did not produce the desired effects for investors in this field.This summer, representatives of associations in the renewable energy sector showed that keeping the quota of green certificates at a very low level for the third consecutive year represents "a blow" for many of the producers of energy from such sources. According to the Manufacturers Employers Organization of Renewable Energy (PATRES) the green certificate market is in “total collapse” due to a major reduction in the annual mandatory quota of electricity produced from renewable energy versus the values set out in Law 220: to 11.1% compared to 15% in 2014 and to 11 9 % compared to 16% in 2015. PATRES representatives point out that the current quota of 11.9 percent as opposed to the initial 16 percent in Act/Law 220, coupled with the 12 months green certificates validity period, will cause significant losses for renewable energy producers. According to ANRE, in 2016 the market for green energy production must be diversified in terms of technology, to meet the 24 percent national target for the share of renewable energy in the gross final consumption in 2020 and also to be affordable for consumers. Energy from renewable sources has priority access to the transmission and distribution network where safety is not affected. (Focus Energetic)

 

Hidroelectrica posted a gross profit of RON 970 million in the first ten month

State-controlled hydropower producer Hidroelectrica registered a gross profit of RON 970 million in the first ten months of this year, according to company’s trustee Remus Borza.  In the first 9 months, the company’s profit stood at RON 875 million.  According to Borza, due to the absence of water, the daily production of Hidroelectrica rarely exceeds 2,000 MW lately and the state owned-company started to make massive energy trading, by buying energy from other sources and selling it at advantageous prices. “We bought cheap and sold expensive. If at end-October last year we had sold 111 GW of energy, now we count for 900 GW,” Borza says. In the first ten months of 2015, Hidroelectrica produced about 13 TWh. Until year-end, Borza estimates that the company would obtain a gross profit of RON 1-1.2 billion and about 14.5 TWh of produced energy. Last year, the company’s production reached 18.4 TWh. By this date, Hidroelectrica has contracted 14 TWh of energy. (energynomics)

 

Former government negotiated with IMF the introduction of a new tax of 35% on the profits recorded by the oil companies

Former Romanian government negotiated with the International Monetary Fund (IMF) the introduction of a new tax of 35% on the profits recorded by the oil and gas companies strictly from their upstream activities, according to ministerial sources.  The tax would have been additional to the current royalty system. The talks started in October and should have continued. The hydrocarbon producers currently pay the royalties specific to the oil and gas sector, as well as the general tax on income of 16% paid by all local companies. (profit.ro)

  

Gerea rectifies massively SAPE’s budget: triple profit and revenues, quadruple spending, 16 times larger bonuses

Government rectified massively during Andrei Gerea’s last day in office as Minister of Energy the 2015 budget of the Society for Management of Company Ownership in Energy (SAPE), fully controlled by the ministry, by tripling revenues and profits compared to the initial budget of the Company on this year, increasing spending by 4 times and increasing 16 fold the amount allocated for bonuses granted to employees. Thus, government’s decision amending 2015, published in the Official Gazette, triples the company’s budgeted profit, from RON 24.6mln to RON 73.4mln, and also its total revenues, from RON 50mln to RON 164,1mln. Also, SAPE’s expenditures were increased by 4 times, from RON 20.6mln to RON 85,6mln. (profit.ro)

 

Enel scheduled investments of EUR 600mln in Romania during 2016-2019 period

Italian utility group Enel scheduled investments of EUR 630 million in Romania during 2016-2019 period, on the infrastructure and networks, according to calculations made based on the data presented by Livio Gallo, Director of Infrastructure and Networks withinEnel, Mediafax informs. Overall, Enel will increase its capital expenditure by EUR 2.7 billion to EUR 17 billion for the 2016 to 2019 period. In 2014, 3% of the operating profit of the infrastructure and distribution division of Enel Group was achieved in the Romanian market, where the company has 2.7 million users. The amount of distributed energy amounted to 14 TWh. At group level, Enel announced it now expects recurring earnings before interest, tax, depreciation and amortisation or EBITDA, a key earnings metric, in 2015 of EUR 15 billion, in 2016 of EUR 14.7 billion and in 2017 of EUR 15.5 billion. Further, the company continues to expect net ordinary income for 2015 of EUR 3 billion, for 2016 of EUR 3.1 billion and for 2017 to be around EUR 3.4 billion. Enel has reportedly gotten closer to selling half of its share in Slovenské Elektrárne (SE), Slovakia’s main electricity producer, to Czech Energetický a Průmyslový Holding (EPH). The deal on a 33% stake in SE for EUR 350 million should be agreed by the end of the month. (Profit.ro)

 

 

 

 

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