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Intellinews - Romania Energy Sector Report -March 2013

  • March 2013
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 43 pages

The key topics for Romania’s energy sector remain i. the renewable energy support [to be trimmed down], ii. the natural gas market liberalisation and iii. the new royalties for natural resources extraction to be enforced by the government as of 2014 amid what it looks like a vibrant upstream activity.

What we foreseen from the very beginning eventually happened: the high energy prices prompted by the robust support given to renewable energy producers have a visible negative impact on the real sector and on the households. The government considers adjusting the system, but it has not decided yet whether to amend or not the law 22-/2008 itself – or only to enforce the mechanism built-in the law for avoiding overcompensation. The real problem is that the mechanism specified in law 220 cannot deal with overcompensation of projects already commissioned. This can be done only by cutting the maximal value of the tradable green certificate – which is, by amending law 220. This is naturally more complicated than simply enforcing a mechanism already stipulated in the law.

The natural gas liberalisation was already sketched last year under the new electricity and natural gas law. Higher end-user consumer prices are likely to push down consumption to the point where Romania could become self-sufficient. The challenges stems not from enforcing the law itself – but from setting up the institutional and physical infrastructure needed by smooth functioning of the market. The government is already late in setting up a natural gas exchange to be operated by the electricity market operator OPCOM, as promised to the IMF. An even higher obstacle is the lack of connections with neighbouring countries and particularly the lack of alternative gas suppliers apart from the two major local producers and the Russian gas. The new gas produced in the Black Sea would provide certain diversification since half of it would be owned by ExxonMobil. But genuine alternative sources of foreign natural gas are critical for the functioning of the domestic and regional gas markets.

The government already started talks with OMV Petrom on amending the oil and gas extraction royalties. Current royalties expire at the end of 2014. In the meanwhile, the government introduced an interim taxation system aimed at the supplementary revenues/profits generated by the natural gas market liberalisation. The government will charge 60% of the supplementary profits. Separately, the government enforced supplementary taxes on the companies that exploit natural mineral resources – a substitute for higher extraction royalties. The supplementary taxes are supposed to remain in force by the end of 2014 – visibly replacing on short term the higher taxation supposed to be enforced afterwards.

Romania also set up for this year an ambitious privatisation programme for its state-controlled companies. It plans to sell 51% in CEN Hunedoara mining/power holding [5% of national electricity] and sell 15% in its other mining/generation holding CEN Oltenia [30% of the country’s electricity]. A 10% IPO at hydropower company Hidroelectrica is considered as well as a similar 10% IPO at Nuclearelectrica and a 15% IPO at Romgaz.

Romania’s use of raw energy resources decreased by nearly 3% y/y to some 34mn tonnes oil equivalent in 2012 adding up to a plunge of nearly one fifth [18%] over the past six years since the 42mn toe in 2006. Net energy intake [the gross intake less electricity export and petroleum products exports] edged down a mere 1.6% y/y to 30.9mn toe in 2012; the energy intake remains visibly below the pre-crisis level.

Table Of Contents

Intellinews - Romania Energy Sector Report -March 2013
Executive Summary

1. MACRO UPDATE
Romania wants to develop as regional power market hub.
REGULATORY
Renewable energy capacities impede thermal power projects in Romania - study.
Romanian PM supports shale gas exploration, sees green power grants excessive.
Romania's aluminium maker Alro falls into losses amid high electricity price.
Romania's largest steel maker warns of rising competition from Russia, Ukraine.
Romania to cut support for renewable energy production.
Romania to levy tax on revenues prompted by gas price liberalisation.
STRUCTURAL REFORMS - PRIVATISATION
Romania to sell 51% in power company CEN Hunedoara to strategic investor.
Romania to raise capital of power generator CE Oltenia, keep majority stake.
Romania's Hidroelectrica to up capital 12.5% via new share issue - draft bill.
OMV Petrom ready to sell Arpechim refinery alongside state's Oltchim.
Romania to double capital of power company Electrica, privatise it under IPO.
RAW ENERGY RESOURCES
Use of raw energy down 3% y/y at 34mn tonnes oil equiv., 18% down from 2006
DOMESTIC USE OF RAW ENERGY

2. BROAD LONG TERM OUTLOOK ENERGY SECTOR

3. OIL, PETROLEUM PRODUCTS
3.1 DOMESTIC FUEL PRICES
3.2 QUARTERLY UPDATED STATISTICS
3.3 REGIONAL OUTLOOK: CAR FUEL PRODUCTION/DEMAND; BY COUNTRY
Romania's OMV Petrom 2012 net profit stays strong thanks to EandP results.
OMV says to cut downstream operation in Romania and the region
Romanian refinery Rompetrol cuts loss to USD 157mn in 2012.
Rompetrol Group to invest USD 300mn in its Romanian operations.
Lukoil announces technical outage at its Romanian refinery Petrotel .
No settlement over Romania's EUR 516mn claim against Rompetrol refinery.
OMV Petrom starts talks on extraction royalties with Romanian government.
ExxonMobil to spend USD 1.2bn for exploration in offshore Romania.
Petrom, Exxon to give Romgaz option to buy 10% of Romanian Black Sea perimetre.
OMV Petrom, Repsol, announce joint deep onshore drilling programme in Romania.
Romania's OMV Petrom starts 3D seismic survey of Neptun offshore perimeter.
Norway's Dolphin wins EUR 95.4mn seismic survey contract in Romania.
Canada's Oracle Energy sells stake in Romanian gas, oil concession to Amromco.
Canada's Sterling Resources finds natural gas in Romanian offshore.
Chevron gets preliminary permits for shale gas explorations in Romania.
Romanian oil services firm GSP signs Black Sea drilling deal with Petrocelic.
Lukoil starts 3D seismic survey at two blocks off Romania's Black Sea coast.

4. NATURAL GAS
4.1 QUARTERLY UPDATED STATISTICS
A. DOMESTIC PRODUCTION VS. IMPORTS
B. STRUCTURE OF THE NATURAL GAS MARKET, BY FINAL USER
Romanian energy regulator drafts new rules for free natural gas market.
EC to start infringement against Romania on reversible gas flow capacities.
OMV warns Romania on possible sale of Black Sea gas on other markets.
Romania to levy tax on revenues prompted by gas price liberalisation.
Regulated gas prices for Romanian non-residential users rise 5% as of February.
Romania's Romgaz takes over Iernut power plant…
… and seeks investors for new power generation units.
Crimbo Gas gets EUR 16.5mn UniCredit loan, buys OMV Petrom's LPG division.

5. POWER
5.1 QUARTERLY UPDATED STATISTICS
Romania's electricity consumption up 0.2% in 2012.
Romania's OMV Petrom starts operations at 860MW power plant.
Romanian nuclear plant expansion project is feasible - Nuclearelectrica.
CEZ reports 75% y/y higher EBITDA in Romania in 2012.
Romania's Electrica to sue foreign owners of power distribution firms
Romania re-evaluates nuclear power project up to EUR 6.45bn.
China Guandong considers financing 40% of 1.4GW nuclear project in Romania
Romania's Hidroelectrica terminates EUR 71mn contract with Andritz Hydro.
Romania's Hidroelectrica prepares to exit insolvency on June 26.
Romania's Hidroelectrica to invest EUR 250-300mn in 2013.
Romanian company to build 130 MW hydro power plant.
Alstom-led group wins EUR 21.1mn contract to upgrade Transelectrica station.
Romanian solar power capacity to reach 1,500MW by 2016 - market regulator.
Romania to install 500-600MW of solar capacities in 2013 - equipment supplier.
Romanian power trader Tinmar-Ind to develop 50MW solar farm.
China's Astronergy to build EUR 100mn solar farm in Romania.
Electroalfa to invest EUR 10mn in solar power plant in Romania.
EDP Renovaives orders Suntech PV panels for 39MW Romanian solar farm.
CEZ completes 600MW wind farm in Romania.
CEZ adjusts downwards planned investment in Romanian wind farms.
GDF Suez mulls over buying wind farms in Romania.
Verbund completes first 100MW stage of Romanian wind farm.
Chinese wind power firm Sinovel to open production capacity in Romania.
Nordex to deliver wind turbines for Romanian 80MW wind farm.
Germany's Max Boegl invests EUR 180-200mn in Romanian wind farm.
EBRD lends Portugal's EDPR EUR 50mn to support its Romanian wind farms.
Lukoil, ERG to invest EUR 135mn in Romanian wind farm.
Investment funds take over 80% in EUR 130mn wind farm project in Romania.
InterAgro Romania completes EUR 21mn biomass-fired power unit.
5.2 USE OF ELECTRICITY IN ECONOMY



List of Tables and Figures

Figure 1: Raw energy resources intake; thous. tonnes oil equivalent, quarterly, 2003-2012 [INS]
Figure 2: The breakdown of raw energy resources; 2012;
Figure 3: The breakdown of raw energy resources; 2006
Figure 4: Domestic energy intake of energy, annual, thousands toe, 2002- 2012
Figure 5: Brent Europe oil price expressed in USD, EUR and RON per barrel; monthly; 2004-January 2013
Figure 6: Car fuel retail price vs. Brent Europe [USD, EUR, RON]; 2004-Aug 2012
Figure 7: Balance of crude oil and petroleum products, 2006-Nov 2011 [tonnes, rolling 12 months]
Figure 8: Inland deliveries of oil products, 2006-Nov 2012 [tonnes, rolling 12M]
Figure 9: Sales of petrol/gasoline and diesel in Romania, vs. CEE [thous tonnes]; see region's definition
Figure 10: CEE region's petrol/gasoline sales in CEE [see definition]; 2005-2011; structure by country.
Figure 11: CEE region's diesel sales in CEE [see definition]; 2005-2011; structure by country.
Figure 12: Romanian's petroleum products balances [diesel, petrol, quarterly]
Figure 13: Production of petrol/gasoline, diesel in Romania, vs. CEE [thous tonnes]; see CEE definition
Figure 14: CEE region's petrol/gasoline production in CEE [see definition]; 2005-2011; by country.
Figure 15: CEE region's diesel production in CEE [see definition]; 2005-2011;
Figure 16: Total vs. heating/power natural gas use [mn cubic metres, monthly, January 2006 - December 2012]
Figure 17: Natural gas use, from domestic sources vs. import [qtrly, mn m3, 2004-2011]
Figure 18: Use of nat. gas monthly, mn m3, by sector; 2005- Feb-12
Figure 19: Breakdown of nat. gas use in 12 months ending in Feb-12
Figure 20: Use of gas by main sectors, in rolling 12 months [mn m3]; Jul 2006 - Dec 2012
Figure 21: Use of natural gas in households, 12 months rolling average; mn m3;
Figure 22: Use of natural gas in industry, 12 months rolling average; mn m3;
Figure 23: Power generation, by source (mn MWh)
Figure 24: Dynamics of main electricity market segments [TWh];
Figure 25: Electricity use in economy vs. GDP;
Figure 26: Use of electricity in households
Figure 27: Graphic representations of the electricity use by economic sector.

Table 1: Raw energy resources: consumption, production, self-sufficiency; 2011 and Q1/2012 thous. toe
Table 2: Primary energy resources, original balance from INS adjusted for the exports of electricity and petroleum products; annually 2000- 2011, thousand tonnes
Table 3: Crude oil and petroleum products balance, annually, thousand tonnes, 2005-Nov 2012
Table 4: Petrol, diesel sales in CEE region's countries [thous tonnes; quarterly]
Table 5: Petrol, diesel production in CEE region's countries [thous tonnes; quarterly]
Table 6: Petrol, diesel imports in CEE region's countries [thous tonnes; quarterly]
Table 7: Natural gas: inland delivery, production and imports; annually; 2000-2011
Table 8: Structure of the domestic electricity market [TWh]; by free/regulated and residential/non-residential segments;
Table 9: Electricity simplified balance quarterly, mn MWh.

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