Natural gas suppliers will no longer be obliged by the Romanian Energy Regulatory Authority (ANRE) to make stocks for the coming winter if the Parliament adopts a draft law that is now at the Committee for Industry of the Chamber of Deputies.
„The security of gas supply is to be ensured by a strategic reserve that should be established by Transgaz (TNG), which operates the national transport system and is responsible for its security. Transgaz will intervene if the market fails to deal with the supply shortage in the market,” said Nicolae Havrilet (foto), president of ANRE, for cursdeguvernare.ro.
Otherwise, „suppliers will be responsible for meeting the consumer demand and will be able to make stocks based on contracts negotiated with Romgaz,” added Nicolae Havrilet.
The size of the strategic reserve that Transgaz or the designated entity would make is to be set by the Ministry of Energy.
It is not certain, though, that Transgaz will be the operator of the strategic gas reserve nor the mechanism for establishing it. Nicolae Havrilet had previously suggested the alternative for the „strategic stock” to be established by the National Administration of State Reserves, according to a statement quoted by Agerpres.
Suppliers are currently required to store certain gas quantities between April and October, at regulated prices, for the security of supply at the peak of consumption during the winter.
Reserves
Authorities should have made public the requirements on the natural gas stocks as early as February, according to Razvan Nicolescu (foto), executive lead adviser of Deloitte and former Minister of Energy.
„Without natural gas deposits, we have three options for the following winter:
a) rely on the Russians;
b) tremble;
c) pray for God to have a mild winter,” says the former Energy Minister in a Facebook post.
There are 1.1 billion cubic meters of gas in the Romgaz reserves, compared to a minimum required of 1.7 billion.
„At the current pace of making the reserves, we will reach 2.7 billion cubic meters,” the ANRE president estimated.
„If the law will not be adopted in due time, ANRE will propose a government decision that will establish only the necessary reserve quantities, but not the tariffs for accessing the deposits, because of the complete liberalization of the market,” said Nicolae Havrilet following a request of Cursdeguvernare.ro.
The law should be adopted in about three weeks to be enforced for the upcoming winter, the official said.
Problem invoked: „to not put a burden on consumer”
Imposing the requirement on natural gas suppliers to establish the deposits „is no longer possible after the complete liberalization of the market. Any possible differences between the cost of the stored gas and market prices can no longer be imposed on anyone,” added the President of ANRE.
„We need to also think about who pays the security (of supply, editor’s note). The consumer may not be willing to, who asked him? It could be interpreted that we grant state aid to a company that stores”, also said Nicolae Havrilet, who invoked the differences between the gas price on the market and price of access for the stored gas.
„Now, the reference price is 71 lei/MWh, and the regulated storage tariff is 20 lei, so 91 lei, and on the foreign market it is about 84 lei in equivalent”, the President of ANRE calculated.
On the other hand, there are opinions on the market saying that ANRE should establish balanced market-based tariffs in order to avoid problems.
Controversies: Make reserves
„It is irresponsible to not make mandatory gas reserves for winter,” said one of the experts close to the discussions, who asked for anonymity, consulted by cursdeguvernare.ro.
Neither the suppliers are satisfied with the legislative initiative. „We firmly believe that the requirement on gas reserves is very important for everyone to ensure the security of supply, at least during the period when the wholesale gas market cannot ensure this role, as is the case in some Western countries, where there are strong wholesale markets,” said Eric Stab (foto), CEO of Engie Romania, quoted by Agerpres. Engie is one of the two largest suppliers in Romania, covering the southern region of the country.
„The functioning of the wholesale market is a problem, indeed, but on the other hand, it is easier to have a more liquid market if you can store the product freely, without unnecessary administrative interventions. We cannot use endlessly the argument that the wholesale market is not developed to avoid taking measures to improve the functioning of the wholesale market – that is what is called a circular argument”, said Otilia Nutu, market analyst at Expert Forum, for cursdeguvernare.ro.
The existence of a „mandatory minimum strategic security reserve makes sense for unforeseen situations”. It has to be „regulated, with socialized costs for all consumers, like any energy security expenditure. Otherwise, beyond this mandatory minimum stock, suppliers can make lower or higher inventories, depending on what they expect from the market demand in the future. For instance, I make a higher stock if I expect for the prices to increase very much during the winter and have a gain from the difference. I might also lose if I made wrong calculations. In other words, it is about the liberalization of the storage capacity,” explained Otilia Nutu, energy market expert of the Expert Forum think tank.
