Bucharest, Romania: The Romanian Petroleum Exploration and Production Companies Association (ROPEPCA) is deeply concerned about the intention to cap the domestically produced gas sale price from producers to suppliers to RON 68/MWh by 2022.
Limiting the domestically produced gas sale price is a counter-competitive measure. If adopted, it will place domestic producers in a discriminatory position in relation to the import of natural gas. Small gas producers will affected the most, since they depend on external financing and loans for sustaining projects, with the higher production costs. They are more exposed and vulnerable from an economic standpoint to such shocks, still they represent the base for competitiveness and diversification of the Romanian gas market. The measures jeopardize investments in exploration programs for new fields and in the development of the mature ones, which would allow more producers to enter the market in order to balance it.
Price capping not only breaches the market principles and current concession agreements’ conditions, but also questions the economic viability of some deposits, which can lead to their shut down, with an immediate impact on production, jobs and diversity of the Romanian natural gas sector.
Petroleum industry is characterized by a considerable volume of investment needed for a long period and with a high rate of associated risk. The radical and immediate change in the regulatory framework will invalidate any long-term investment calculation. There will be a risk of canceling planned investments in new exploration and development programs, as well as mature fields development, which would have allowed more producers to enter the market.
In the medium to long term, in addition to reduction of competitiveness and diversity on the internal gas market, such a measure leads to increased dependence on external sources. Increasing imported quantities will have a negative impact on both the security of supply for consumers and the current account balance.
Domestic gas producers contest both the object of this decision and the way it is taken without proper consultation with the parties involved and a thorough analysis of the immediate and medium term effects on the industry.
The Romanian Petroleum Exploration and Production Companies Association is composed of 15 concession agreements titleholders. These agreements were signed by member companies with the Romanian state, based on the Petroleum Law in force. At present, ROPEPCA members hold the majority of the petroleum concession agreements for the onshore development and production blocks in Romania, representing for the year 2017 cumulated investments of EUR 900 million, a turnover of almost EUR 3.4 billion, contributions to the state budget of EUR 300 million, and the creation and maintenance of 13,700 jobs.
Daniel Apostol, Secretary-General
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Anca Budu, Executive Administrator
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