The oil and gas producer therefore joined the big league of electricity producers along Complexul Energetic Oltenia, which generates power using coal, hydropower producer Hidroelectrica and nuclear power producer Nuclearelectrica.
Petrom got a significant incentive from the Romanian government in that it does not have to comply with the gas basket structure rules, which require using both locally drilled gas and gas imported from Russia to generate power. As Romania’s domestic gas production does not meet demand, consumers get a mix of two thirds of domestically drilled gas and one third of gas imported from Russia.
The other thermoelectric power plants running on gas will not get this incentive, which is only intended for gas producers that also include state-owned Romgaz, according to a government decision published on September 4, 2012. The decision was signed by the Prime Minister Victor Ponta, Economy Minister Daniel Chitoiu and Finance Minister Florin Georgescu. Asked why he had signed the document, Ponta said that was the only way for the plant to be able to operate.
To get the incentive, Petrom agreed to sell 1.8 TWh of the estimated 5 TWh production of the power plant in Brazi on the regulated market (households and small consumers), at a price of 169 lei (EUR37) per MWh. The incentive will be in force until December 2014, during which time the power plant in Brazi will be an interruptible consumer.
Despite its benefits, this investment is not without problems. Romania’s imports of natural gas from Russia will increase and old thermoelectric power plants using gas, but not covered by incentive will suffer as a result.
Petrom’s projected capacity for the plant in Brazi is 860 MW, higher than a nuclear reactor at the Cernavoda power plant. The facility in Brazi could supply 8% to 9% of Romania’s electricity needs in one full year of operation, which is as much as Bucharest uses. While similar local plants are operating at 30% yield, Petrom’s plant will operate at double that rate.
(English version by Loredana Fratila-Cristescu)