Moreover, the actual vision of the government about the development of the key sector turned out to be emptying the accounts of the rich energy companies to offset the budget deficit. In an eventful year, Ziarul Financiar is reviewing the ten most important events in the energy sector.
1. The offshore law, the most important document for Romania’s gas future
The president signed the offshore bill into law, a document that regulates the taxation of the exploration and production operations in the Black Sea, after an entire year of debate. The ink was barely dry on the document when the deputies started saying the law needed amendment.
None of the companies involved in the new explorations in the Black Sea has made a final investment decision in this regard due to this uncertainty, choosing to wait until 2019. Even so, the first contracts to sell the gas from the Black Sea have been signed and Transgaz got to work on preparing to transport the gas abroad via pipelines.
On the other hand, no one got to work on connecting the schools in Romania to the future gas sources or to supply the necessary heat for the millions of homes still using wood or corncob for that purpose.
2. Changes at the energy sector heavyweights
For the first time ever, OMV Petrom, the only local oil and gas producer, got a foreign executive to run it. The arrival of Christina Verchere at the helm of Petrom ended the 12-year term of Mariana Gheorghe as CEO. This was not the only such change in the sector, as Romgaz and Electrica got new bosses as well, and so did the Petrotel Lukoil refinery and the NIS Petrol gas station chain. The changes affected all management tiers, not just CEO positions.
3. Rise in energy prices
Following the 2017 energy crisis, when the surging energy prices caused the insolvency of significant supply actors, 2018 was not any easier for the sector. In the absence of domestic demand to keep the rise in prices going, the energy traded for as much as 500 lei(EUR110)/MWh anyway.
Moreover, the Competition Council started an investigation into Hidroelectrica, the cheapest energy generation company in Romania, for abuse of dominant position. No conclusion has been issued so far, but the prices remain high.
4. Freeze of major energy markets
The fuel market could be flat in volume at best this year, after having gone up 5% to 7% in the past three years to about EUR10 billion. The other major energy markets did not fare well, either. The electricity consumption rose by merely 2% in the first nine months compared with the year-ago period, after having gone up 4.4% in 2017, while the natural gas consumption fell.
5. Attack on the major energy piggybanks
Early in November, the state-run energy sector crown jewels, started assessing their reserves, following a government request for additional dividends. While the system is hurting for investment, so the does state budget after money, and the strategy is to use energy company money to cover the pension and salary deficits.
Hidroelectrica, Nuclearelectrica and Romgaz, they all made generous donations to the state budget, which is one more proof of how Romania understands to its energy sector trump cards.
6. Energy strategy draft
This year, the Energy Strategy 2018-2030 with an outlook to 2050 draft was put up for public debate. Although eagerly awaited by the entire market, the new strategy turned out to be largely a collection of energy projects such as the Tarnita-Lapusesti hydropower plant or Reactors 3 and 4 of the Cernavoda nuclear plant, which have been frozen for years precisely because of the lack of interest in them.
7. Freeing of the household consumer
At the moment, almost one third of the household consumers have either changed their electricity supplier or chose a different plan from their suppliers, which equals the move into the competitive area of the market.
This is one of the biggest migrations on the energy market that has already changed the balance of power at the top. Electrica Furnizare lost the top position to rival Enel Energie Muntenia on the competitive market and the fight is just beginning.
8. Lower investments in electricity networks
Romania ranks at the bottom of the EU in terms of energy distribution service quality, due to it having the highest duration of unplanned outages.
Things might become worse as the league of distribution companies – Electrica, Enel, CEZ (Czech republic) and E.ON (Germany), warned that investments could go down as a result of Romania’s energy market watchdog cutting the rate of return regulation, which makes an impact on the profitability of companies in the industry. Effects will start showing next year.
9. Government builds first gas-fired power plant in a decade in Iernut
Early in 2020, Romgaz, the largest local natural as producer will compete a EUR268.8 million investment in a new gas-fired power plant. With a capacity of 430MW, the plant will power one million homes and cement Romgaz’s status as a key player on the energy market, as the company will account for about 3% to 4% of the country’s electricity production. The first parts for the new plant arrived in early 2018.
10. Romania on fourth place in solar house competition through EFdeN
The EFdeN team returned home early in December after 45 days in Dubai, during which it assembled a solar house prototype competed with 14 other teams and disassembled the house to put it back together in Romania in 2019.
The teams in the final round include: USA, Australia, France, Italy, Netherlands and Asia and Middle East teams. After two years of preparations in Romania and 2 weeks of competition in Dubai, EFdeN finished fourth in world ranking in the biggest solar house competition, Solar Decathlon.
The EFdeN Signature house designed and built by young Romanians is one of the most sustainable houses in the world, 100% electric, automated and generates its own power using the sun.
(English version by Loredana Fratila-Cristescu)