Capping of gas price: Romgaz and OMV Petrom shares fall. ROPEPCA warns gas imports will grow. ANRE to increase tariff by 5.83pc

The shares of gas companies Romgaz and OMV Petrom fell on Thursday on the Bucharest Stock Exchange (BVB) after the Ministry of Finance has put for public debate a draft Government Decision that envisages cutting the gas price to RON 55/MWh and capping it at this level for three years. Around 13:00h, the BET-NG Index for energy and utilities fell by 2.32%, an index where Romgaz and OMV Petrom hold more than 60%, hotnews.ro informs.

Romgaz’s shares were down by 3.93% and the OMV Petrom shares fell by 3.56%.

ROPEPCA – disputes the capping of prices

On the other hand, the Romanian Petroleum Exploration and Production Companies Association (ROPEPCA) disputes the capping of prices for natural gas produced locally. A release from the association reads that  it is deeply concerned about the draft Government decision on capping the gas price below the level registered before the market liberalisation of RON 60/MWh. Over medium and long term, such a decision will lead to increasing dependence on external sources, the association informs.

ROPEPCA argues that the companies in Romania could not sell gas for disadvantageous prices so the imports from Russia will increase. The supply has to be achieved from somewhere and if not possible from domestic production, the option is the gas imports from Russia, the association’s release reads. Imported gas is more expensive than the domestic gas.

“Domestic gas producers dispute the aim of this decision and the way it is intended to be adopted, without a fair consultation with the involved parties. ROPEPCA argued that the capping of the selling price for natural gas produced locally is an anti-competition decision, meant to position the domestic producers in a discriminatory place against the gas imports,” the ROPEPCA release reads.

It adds that “the state collects 60% of the gas price increase after the market liberalisation, by over-taxation. Furthermore, the royalties are paid according to the reference price set in relation with the Baumgarten market, much higher than the prices in Romania.”

ROPEPCA argues that in order to ensure a fair competition environment in Romania for natural gas the Government needs to adopt decisions meant not to discourage the investments in natural gas domestic production,” ROPEPCA President, Harald Kraft, said.

The association further claims that a price of RON 55/MWh questions the economic viability of certain deposits, which could lead to their closing down, impacting on output and jobs.

ANRE increases tariff by 5.83%

The National Authority for Energy Regulation (ANRE) informs that has reached the conclusion that the condition for price adjustment are met, so the gas price for household consumer will increase by 5.83% as of August 1, 2018, a release informs.

The decision is made upon the requests of natural gas suppliers.

ANRE informs that the average selling price for domestic gas increased from April 1, 2017 (liberalisation) of RON 67.88/MWh to RON 77.7/MWh currently. The imported gas increased from RON 80.14/MWh to RON 94.58/MWh in March 2018.

The Finance Ministry proposes the capping of natural gas price from domestic production until June 30, 2021 to RON 55/MWh, a draft project posted on the website reads.

“In order to ensure a competitive environment in the natural gas sector in Romania and to stop the uncontrollable growth of gas price from domestic production, the MFP representatives met on Wednesday, July 18, to analyse the possibility to set up forms to control the gas price used by domestic producers until June 30, 2021,” the Finance Ministry informs.