Member Article

Setting natural gas prices, directly or indirectly, is already a tradition in Romania and 2020 is not an exception to the rule.

In spite of the good news at the beginning of the year, when the Government gave producers a breath of fresh air by setting a clear end date for the regulated gas price of RON 68 /MWh (imposed for gas sold for the consumption of household clients and thermal energy producers), it seems that good things do not last forever – in this case, not even until the end date of the RON 68 regulated gas price.

On 19 May 2020, the Romanian Energy Regulatory Authority (“ANRE”) published in the Official Gazette Order no. 79/2020 on the obligation to offer natural gas on the Romanian centralized markets (the “Order 79/2020”).

Pursuant to Order 79/2020, producers having an annual production above 3,000,000 MWh must offer 30% of their 2019 production on the Romanian wholesale centralized markets in accordance with a predetermined calendar. The obligation will be applicable between 1 June 2020 – 31 December 2022, while the exact quantities that have to be offered each month on the double competitive platforms of the centralized market operators were already determined and included in an annex to Order 79/2020. The total quantity of gas that is subject to this obligation is 61,094,535 MWh.

Disguised as rules for the performance of the already existing 50% centralized market obligation, Order 79/2020 also provides the producers’ obligation to observe a maximum starting price for the gas offered on wholesale centralized markets, to be calculated and published by ANRE based on the following rules:

a) for the period 1 June 2020 – 31 December 2020, the maximum starting price will be equal to 95% of the sum of: (i) 20% of the last settlement price published by the Central European Gas Hub AG (CEGH) located in Vienna, and (ii) 80% of the weighted average price of similar products registered on the centralized markets from Romania in the last working day of the previous month; and

b) for the period 1 January 2021 – 31 December 2022, the maximum starting price will be equal to 95% of the weighted average price for similar products registered on the Romanian centralized markets in the previous 6 months.

Hence, despite the fact that early this year the Government decided to eliminate the regulated prices for producers as of 1 July 2020 (following intervention from the European Commission), Order 79/2020 imposes a new regulated price for part of the Romanian gas, that will be applicable beyond such date. Such measure is not compatible with European law and it lacks legal support in the primary legislation.

On the other hand, also starting 1 July 2020, the prices for end-clients will be fully liberalized, meaning that suppliers will be free to negotiate gas prices with their retail client.