E.ON: Gas prices in Romania to reach new peak next winter due to soaring oil price

The prices for natural gas will reach new high during the next winter, due to the surge in oil prices, EO.N Romania’s CEO Frank Hajdinjak said on Thursday, cited by Agerpres.

“In Romania, the price of imported gas is related to crude oil prices, which have grown a lot lately, so we expect the price to rise significantly during winter, that is clear. The import of gas will have an impact in the final price,” Hajdinjak said.

The CEO pointed out that there is no real competition on the Romanian gas market, with only two domestic producers – Romgaz and OMV Petrom -, and the price of local gas will tend to rise to the level of import price.

“There is a high risk that the domestic production price plus the storage tariff will reach the import price level,” Hajdinjak estimates.

During the last winter, the price of imported gas was 20 percent higher than in the previous winter, due to the increase in oil quotations.

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Rising prices

The German group E.ON controls gas distribution in Northern Romania, while the French energy group Engie controls gas distribution in Southern Romania through its local subsidiary Engie România SA.

In March, Romania’s energy regulator (ANRE) decided to increase by 10 percent the natural gas prices paid by 1.6 million household consumers located in the Southern part of the country, including Bucharest, a move that could have an impact on inflation.

In January, Romanian energy regulator decided another gas price increase, by 8 percent, for household consumers, after recognizing supplementary costs to gas distributors.

Romania deregulated gas prices for businesses, but retail prices are still regulated by ANRE. However, customers have the option to switch away from a regulated retail price to what’s called a market price.

Romania is the only country in the region which relies on its own natural gas reserves and imports less than 10 percent of the total consumption from Russia’s monopoly Gazprom.

According to Eurostat, Romania had the lowest retail prices for natural gas among the 28 EU member states in 2017.

Romanian household consumers paid EUR 0.032/kWh in the first half of 2017, compared with an EU price average of EUR 0.058/kWh, while non-household consumers in Romania paid an average price of EUR 0.026/kWh, the 7th-lowest in EU.