With over 150 years of tradition in the exploitation of crude oil and natural gas, Romania is the sole significant hydrocarbon producer in Southeast Europe. However, reserves have constantly diminished over the years and the average annual production has declined by more than 2% over the last five years.
At the current rate, certified oil reserves will be depleted within approximately 12-15 years. Romania has, therefore, adopted a strategic priority to increase investment which is intended to increase recovery from existing oil fields and, in the long run, to develop projects for the exploration of oil resources below 3000m and complex geological onshore projects along with deep water (below 1000m) off-shore projects.
Starting in 2014, the extreme and abrupt decrease in the price of oil, when the production of crude oil from non-conventional sources was launched in the US, discouraged investment in oil exploration and exploitation. Romania’s domestic production of crude oil covers approximately 40% of its demand.
Romania produces more refined petroleum than there is an internal demand for. Romania has also followed the European trend of reduced competitiveness in this sector caused by the relatively high price of energy in the EU compared with non-EU competitors and the costs imposed as a result of the drive to reduce greenhouse gases. As such, whilst Romania has imported crude oil mainly from Kazakhstan, Russia, Azerbaijan, Iraq and Turkmenistan, it continues to be a net exporter of petroleum products.
Natural gas represents approximately 30% of Romania’s internal energy consumption due to both the domestic availability of this resource and because its use has little impact on the environment. Natural gas can also balance RES-produced energy due to the flexibility of gas-fired generation facilities. The extraction, transportation, underground storage and distribution network covers the whole nation, and it has the potential to connect the Romanian national transport system with the central European system and the Caspian Sea resources via the south gas corridors. Domestic natural gas production routinely makes up more than 90% of internal consumption. However, in 2016, because of low oil prices, the long-term gas import prices reached lower levels than those of domestic producers and natural gas producers will now have to attempt to remain competitive with import sources.
2. Transmission, storage, distribution, and the gas market
The recently discovered resources in the Black Sea require the construction of reverse flow connectors.
The most important pipeline to be constructed is the Bulgaria-Romania-Hungary-Austria pipeline (BRUA), which is included in a list of common interest projects for the EU. Another priority is to ensure suitable transport capacity towards the Republic of Moldova.
Romania must invest in the modernisation and maintenance of its national gas transport, storage and distribution networks in order to allow operation at high pressures, to reduce network losses and to increase operational flexibility. The national transport system is under-utilised because it was built in 1960 and its dimensions are no longer consistent with current consumption requirements and standards. As a result, network charges are the highest in Europe and this is reflected in consumer bills. In the future, high-pressure transmission will have to adapt to the operating levels of neighbouring countries if it is to allow reverse flow.
Completing these upgrades will create a competitive gas market that does not currently exist. To aid in creating this market, the Regulatory Authority is drafting a Network Code that will allow the reservation of capacity at exit and entry points in the national transport system. Significant investments in IT will be required to allow cross-border transactions (SCADA compatible with neighbouring countries) as well as to develop transaction platforms for the day-ahead and intra-day markets, which are currently being carried out through a Hungarian platform.
At present, most of the domestic gas is produced by two main entities, which creates vulnerability and leads to closed supply markets, even though legislation requires that most of the gas is traded by suppliers and producers on OPCOM, the Romanian electricity and gas stock exchange.
Currently, the gas market is extremely focused on the production and import sectors. Romgaz and OMV Petrom cover around 95% of domestic production whilst the first three importers cover around 95% of imports. On the competitive supply market, there are numerous suppliers but the first three companies have a market share of around 65%.