OMV Petrom: Energy security is in danger; natural gas imports will increase, internal production will fall

The draft Government Ordinance on the new fiscal measures announced by the Finance minister on December 18 will have a strong negative impact on the Romanian energy sector, in terms of energy supply, employment and investments, says a press release from OMV Petrom. 

If implemented, the measures will take the Romanian gas market back at least 10 years in time, to a regulated market, and away from liberalization. Investments play a fundamental role in generating future growth. In the absence of a well-functioning economy, investments, supply, jobs and economic growth are all threatened.

”One of the proposed measures is capping the natural gas price at 68 lei/MWh, for three years. We draw attention to the fact that artificially setting the price at which producers are forced to sell gas is against European Union free market rules, it distorts competition, discriminates Romanian producers against importers and can have serious consequences for gas supply:

• Gas production in Romania would decrease in the next years due to reduction of investments. The artificially established price of 68 lei/MWh threatens important investment projects in the sector.
• Gas imports would increase, severely impacting security of energy supply in Romania and increasing gas prices in the future Without investments, domestic gas production is expected to decrease abruptly with the difference covered by additional gas import, which is significantly more expensive. According to OMV Petrom’s estimations, without any investments, imports could increase to 40-50% of consumption by 2030 (vs. approx. 10% currently), due to lower domestic gas production.
• Lower investments would impact job market OMV Petrom is among Romania’s largest private employers, the largest budget contributor and the largest private investor. In addition to its own 13,000 employees, OMV Petrom works with a large number of Romanian companies, who employ more than 40,000 people.

We are deeply concerned about measures being imposed without impact studies and without any prior consultation. Such measures negatively impact Romania’s attractiveness for investors, discourage investment projects and have a negative impact on the economy and on employment.

OMV Petrom is the largest energy company in South-Eastern Europe with an annual hydrocarbon production of about 61 million boe in 2017. The Group has a refining capacity of 4.5 million tons annually and operates an 860 MW high efficiency power plant. The Group is present on the oil products retail market in Romania and neighboring countries through 789 filling stations, at end of September 2018, under two brands – OMV and Petrom.”

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