Price hikes and projects in the pipeline

Transgaz will also organize a public bid to build the DN 700 Sarmasel-Band gas pipe in Mures county, a RON 41.6 million investment, according to information it posted on the electronic bidding system. The Romanian state-owned gas company will pump more than RON 250 million in the next two-three years to build a new compressing station at its gas deposit in Sarmasel, in the central county of Mures, the company's technical manager Marin Zamfirescu said. The gas deposit could reach a total storage capacity of 1.3-1.5 billion cubic meters per year, from 700 million at present.
Meanwhile, Romgaz will invest RON 150 million in 2009 to increase capacity at its deposit in southern town Urziceni to 300 million cubic meters per year. The firm currently has six underground natural gas deposits in Sarmasel, Cetatea de Balta (in central Transylvania), Bilciuresti, Balaceanca, Urziceni and Ghercesti, with a total storage capacity of 2.6 billion cubic meters, which it plans to raise to 4 billion by 2013.
But while companies press on with projects, uncertainty lingers about what prices their products will be able to command. The price of gas sold to the public could drop significantly in the future if Romania imports natural gas straight from Russia, said Adrian Borotea, one of the managers of CEZ Romania, the local unit of the largest Czech utility CEZ. However, the commercial manager of Romania's state-owned gas company Romgaz, Alpar Kramer, said in October that gas imports from Russian giant Gazprom would not lower prices for gas delivered to the public, as they are tied to politics. He said this alternative would cut prices by less than 10 percent.
Natural gas distributor Distrigaz Sud wants a price increase from next year to make up for previous losses brought about by the rise of the importing price, said the company's general director, Bernard Arnaud. The firm claims it now sells gas at less than the importing price of USD 520 per thousand cubic meters. Predictions show that by the end of the year the cost will rise to USD 540. However, Arnaud said that the importing price is expected to fall in the first quarter of 2009, as an effect of the decrease in the price of oil.
Distrigaz Sud and E. ON Gaz pleaded with the Romanian power market regulator ANRE in September for the gas price to change from October 1. But the ANRE said no, arguing that the security and continuity in supplying the gas need not be affected, as future favorable changes in the importing price are expected. The ANRE stated that that next year the price of gas could even drop in the second half of 2009.
Gas prices were last raised on July 1, by 12.5 percent for Distrigaz customers and 11.6 percent for E.ON Gaz
Romania, with the suppliers attributing the move to the hike in acquisition
costs.
Romanian participation in multinational energy projects has also been a hot topic this year. Representatives of Gazprom and Romania's Romgaz and Transgaz met in Bucharest late October to discuss the South Stream pipeline project and the possibility of transitting and storing gas on Romanian territory.
Gazprom, the biggest gas company in the world, would transport the 18.7 billion cubic meters of gas destined for Turkey and the Balkans every year through Romania, should a gas pipeline construction eventually be agreed upon, according to Gazprom. Gas transported through Romania and destined for Turkey, Greece and Macedonia reached 17.2 billion cubic meters in 2007 and 15.2 billion cubic meters in 2006. Thanks to its geographical position, the country holds a key role in insuring the transit of Russian gas to Bulgaria, Turkey, Greece, Macedonia and – in the future – Serbia, according to Gazprom.
The probability of Romania's participation in the South Stream project, replacing Bulgaria, is not determined by Gazprom and depends on the speed of the negotiations and on the interest of possible participants. Romania is already a member of the rival project Nabucco.

By Dana Ciuraru