EC suspects Romanian gas companies formed cartel to hinder gas exports

By bne IntelliNews June 8, 2016

The European Commission confirmed in a statement on June 7 that it has started investigating potential anticompetitive practices in the transmission and supply of natural gas in Romania, in particular relating to suspected anticompetitive behaviour aimed at hindering natural gas exports from Romania to other member states.

Romania was the subject of infringement procedures related to the natural gas market in 2012-2013. Until then, Romania’s legislation more or less openly prevented gas exports, while the infrastructure for exports was non-existent. Some investments have since been made into interconnectors with neighbouring countries, but the technical export capacity is still limited

The unannounced inspections are a preliminary step into investigating suspected anticompetitive practices, the Commission commented. There is no legal deadline to complete inquiries into anticompetitive conduct.

Natural gas producers OMV Petrom, Romgaz and the national gas transportation company Transgaz have confirmed that they are under investigation. However, they have not commented on the subject of the investigations.

OMV Petrom is 51% controlled by Austria’s OMV while the other two companies are majority controlled by the Romanian state. However, both Transgaz and Romgaz have held IPOs, and their corporate governance has improved consequently. Furthermore, the restitution fund Fondul Proprietatea is a significant shareholder in both Transgaz and Romgaz.

After Romania became the subject of infringement procedures in 2012-2013, the EC urged Romania to develop bi-directional interconnectors, warned that the Russian pipeline crossing the country towards Bulgaria should be made available to local operators and called on the country to prepare a preventive plan and an emergency plan to address natural gas supply security.

However, except for lifting the ban on natural gas exports in 2013, the country did little to address the issues spotted by the EU, which require investments that are not on the agenda of the private companies operating in the sector given the circumstances on the oil and gas market. On the upside, Romania has fully liberalised the non-residential gas market and lifted the regulated prices on the residential market to close to the import and market prices.

Romania has traditionally covered a large share of its natural gas consumption from local production and the self-sufficiency ratio is currently close to 100%, after the country carried out a pre-liberalisation process during which it increased the regulated price of local natural gas to close to the import prices.

There are few interconnectors with other countries, so the capacity to export potential surplus production of OMV Petrom and Romgaz is limited. Indeed, earlier this year, Romgaz admitted that it had to reduce production in line with sales.  

So far, one interconnector has been built to Moldova and another is being built to Bulgaria. The interconnector with Hungary is mainly aimed at imports, with little export capacity.

Notably, Romania's offshore gas production is set to increase substantially around 2020, when OMV Petrom and its partner ExxonMobil expect to start commercial production at their Black Sea blocks. To channel the gas through Romania, Transgaz is planning to connect the Black Sea shore with the BRUA (Bulgaria-Romania-Hungary-Austria) route that will cross the country from Bulgaria to Hungary.

Transgaz will use loans and its own profits to finance 60% of the €450mn BRUA pipeline project and has already started discussions with banks. The European Union has extended a €179mn grant to Transgaz for the development of a pipeline on the route, the Commission announced on January 19. This will cover the remaining 40% of the financing for the project.

Related Articles

Latvia issues permits to new gas infrastructure holding

The Latvian Public Utilities Commission (SPRK) announced on January 5 that it has issued licences to Conexus Baltic Grid for the transmission and storage of gas. Conexus Baltic Grid will control ... more

Iran to seek arbitration over termination of gas flow from Turkmenistan

The National Iranian Gas Company (NIGC) intends to take its recent gas dispute with Turkmenistan to international arbitration, Mehr News Agency reported on January 4, citing ... more

CEZ ignores Czech finance minister and re-elects CEO

The supervisory board at Czech power group CEZ ignored pressure from the finance ministry to dump the current management, local media report. Finance Minister Andrej Babis has been accumulating ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss