Romania increases its reliance on Russian gas as imports from Gazprom hit 6-year high

Romania increases its reliance on Russian gas after years of import decline as the local consumption is growing and production is steadily decreasing. Moreover, fresh measures imposed by the government could favor imports from Russia within the next years.

Last year, Romania’s import of natural gas soared by 26.8 percent up to 1.2 million tonnes of oil equivalent (toe), the highest level since 2012, in sharp contrast with the trend seen during the previous years.

Romania’s sole source of imported gas is Russia’s giant Gazprom, through two intermediary companies.

In 2017, the import of natural gas from Russia declined by 19 percent to 962,000 tep, from 1,19 million tep in 2016, but the trend changed direction last year.

Since 2013, Romania’s gas imports from Russia have rapidly declined, reaching a decades-low of 163,000 tep in 2015. But the imports rose again in 2016, followed by a decline in 2017.

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This trend change seen in 2018 may indicate a rising reliance on Russian gas – and put at risk one of Romania’s biggest assets.

In 2016, Romania ranked 26th among the 28 European Union member states in terms of energy dependency, energy imports covering only 22.3 percent of national consumption.

The energy dependency of the EU stood at 53.6 percent in 2016.

According to EU official data, Estonia (with dependency rate of 6.8 percent) was the member state least dependent on imported energy, ahead of Denmark (13.9 percent), Romania (22.3 percent), Poland (30.3 percent), Sweden (31.9 percent) and the Czech Republic (32.8 percent).

Romania’s energy imports include mostly oil and gas.

Offshore gas at risk due to fiscal challenges

But within the next five years, Romania could become a major producer and exporter of natural gas, due to its offshore reserves in the Black Sea exclusive economic zone.

However, these new resources are now put at risk by the new fiscal challenges introduced by the government.

Last year, Romania’s main ruling party, PSD, proposed in the parliament an amendment that will increase the taxes paid by local gas producers, a move that favors imports from Russia, according to experts.

According to this proposal, the supplementary tax paid by domestic producers for the natural gas extracted in Romania will be calculated according to the trading prices of the hub from CEGH Vienna.

But the hardest measure was imposed through the famous Emergency Ordinance 114/2018, approved just before Christmas.

Running out of revenue sources, the government has introduced a tax on bank assets of 0.3 percent from January 1st, 2019, and capped the retail and corporate gas price at RON 68/Mwh.

The government also imposed special taxes of 2 percent of turnover on energy firms and 3 percent on telecom companies.

OMV Petrom, Romania’s biggest oil & gas group, said that the measure will have a strong negative impact on the local energy sector, in terms of energy supply, employment and investments.

the group also said that it will not yet be making a decision regarding a possible investment in gas production in the Black Sea’s Neptun Deep perimeter, due to the current “legislative environment”, referring to the Emergency Ordinance 114/2018.

Neptun Deep is considered the largest gas reserve in the Romanian exclusive zone at the Black Sea and the main hope to make Romania a gas exporter in the region.