Executive Summary 4 1. MACRO UPDATE 5 Romania confirms 3.2% y/y GDP growth in Q3 driven by industry, ITC. 5 GDP recovers slowly, fiscal gap widens in 2015 – EU Autumn Forecast. 6 Industrial output up 3.7% y/y in October – trends updated. 6 1.1 REGULATORY 7 EC admits Romania can delay gas price liberalisation for residential users. 7 Romania under infringement procedures for lack of gas supply security plans. 8 1.2 RAW ENERGY RESOURCES 8 Use of primary energy resources up 2.3% y/y in Q3 as more oil refined. 8 1.3 DOMESTIC USE OF RAW ENERGY 10 1.4 DOMESTIC ENERGY PRICES 13 2. OIL, PETROLEUM PRODUCTS 15 OMV Petrom warns taxation might hurt investments in low oil price environment. 15 2.1 DOMESTIC FUEL PRICES 16 2.2 QUARTERLY UPDATED STATISTICS 17 2.3 REGIONAL OUTLOOK: CAR FUEL PRODUCTION/DEMAND; BY COUNTRY 19 2.4 CORPORATE ROUND-UP 24 GSP oil services firm plans to invest USD 1.2bn in offshore oil rigs, ships. 24 Lukoil, OMV Petrom and ExxonMobil start new explorations in Romania's offshore. 25 No bidder for bankrupt Oltchim plant. 25 Lukoil temporary stops operations at Romanian refinery. 26 SOCAR raises number of fuel stations in Romania to 29, earmarks €58mn in capital hike. 26 Local refinery of KazMunaiGas boosts revenues by 41% y/y in H1 2014, remains in loss. 26 Profit per share of OMV Petrom down 71% y/y in Q2, drops 42% y/y in H1 2014. 27 3. NATURAL GAS 30 OMV Petrom questions transparent gas trading requirements. 30 3.1 QUARTERLY UPDATED STATISTICS 31 A. DOMESTIC PRODUCTION VS. IMPORTS 31 3.2 CORPORATE ROUND-UP 34 Chevron says it has not completed shale gas evaluation in Romania. 34 Romania’s Romgaz, partners to decide on €4.5bn AGRI LNG project in January. 35 SOCAR willing to supply Romania with gas via TAP pipeline but needs interconnectors. 35 Romania plans €230mn pipeline project for Black Sea offshore natural gas. 35 Transgaz considers €750mn investments in new pipelines. 36 Bulgaria-Romania gas link to become operational in 2015. 36 Contract for Romanian natural gas delivery to Moldova to be signed by end-2014. 37 KazMunaiGas International drills first well in north-west Romania. 37 Romania proposes KazMunaiGas investment in gas processing plant. 37 Romgaz boosts gas storage capacity, plans offshore exploration… 37 … and considers building fertilizers plant. 38 Romgaz says H1 net profit up 40% y/y. 38 Appendix: Previous issue’s Content 41
Figure 1: Quarterly GDP, 2000=100 5 Figure 2: Industrial output, swda 2010=100 7 Figure 3: Raw energy resources use; thous. tonnes oil equivalent, quarterly. 9 Figure 4: The breakdown of raw energy resources; 2013. 9 Figure 5: The breakdown of raw energy resources; 2006 9 Figure 6: The breakdown of raw energy resources, 9M: 2014 vs. 2013 9 Figure 7: Domestic energy intake of energy, thousands toe; annual, last quarterly/annual data. 10 Figure 8: Annual change in the annual average energy prices – nominal terms 14 Figure 9: Annual change in the annual average energy prices – expressed in euros 14 Figure 10: Brent Europe oil price expressed in USD, €per barrel. 16 Figure 11: Car fuel retail prices in Romania vs. Brent Europe [USD, EUR, RON]. 16 Figure 12: Balance of crude oil and petroleum products, [tonnes, rolling 12 months]. 18 Figure 13: Inland deliveries of oil products, [tonnes, rolling 12M]. 18 Figure 14: Sales of petrol/gasoline and diesel in Romania, vs. CEE [thous tonnes]; see region’s definition. 19 Figure 15: CEE region’s petrol/gasoline sales in CEE [see definition]; structure by country. 20 Figure 16: CEE region’s diesel sales in CEE [see definition]; structure by country. 20 Figure 17: Romanian’s petroleum products balances [petrol, diesel, quarterly]; export, import, production, demand. 21 Figure 18: Production of petrol/gasoline, diesel in Romania, vs. selected CEE [thous tonnes]; see CEE definition. 23 Figure 19: CEE region’s petrol/gasoline production in CEE [see definition]; by country. 24 Figure 20: CEE region’s diesel production in CEE [see definition]; 2005-2011; structure by country. 24 Figure 21: Natural gas use, from domestic sources vs. import [qtrly, mn m3]. 31
Table 1: Jan-Sep, 2014 GDP dynamics 5 Table 3: Gross energy intake dynamics; 9M: 2014 vs 2006 9 Table 4: Raw energy resources: consumption, production, self-sufficiency; latest annual data. 10 Table 5: Raw energy resources: consumption, production, self-sufficiency; latest quarterly data. 11 Table 6: Primary energy resources, original balance from INS adjusted for the exports of electricity and petroleum products; annually 2000-, thousand tonnes oil eq.. 12 Table 7: Consumer prices – energy, expressed in nominal terms, real terms, euros and US dollars [annual averages and y/y]. 13 Table 8: Crude oil and petroleum products balance, annually and last quarterly data, thousand tonnes. 17 Table 9: Petrol, diesel sales in selected CEE countries [thous tonnes; annually, latest quarterly]. 19 Table 10: Petrol, diesel production in selected CEE countries [thous tonnes; annually, latest quarterly]. 21 Table 11: Petrol, diesel imports in selected CEE countries [thous tonnes; annually, latest quarterly]. 22 Table 12: Natural gas: inland delivery, production and imports; annually, latest quarterly. 31 Table 13: Domestic use of natural gas, latest annual data [by type of cunsumer; plus charts] 32 Table 14: Energy balance – natural gas [2007-2013, mn m3] 39 Table 15: Energy balance – natural gas [2007-2013, tonnes of oil equivalent / toe] 40
Romania Energy Report - Oil and Gas - Q3, 2014 Description
The report covers the period since August 1 to December 15 – including time series up to full-Q3, 2014. It also includes the detailed energy balances for the year 2013 [released in the fall of 2014]. At the end of the report, you can check the content of the previous similar report – issued on July 30.
LONG-TERM INDUSTRY SCENARIO. Romania’s energy sector is built on relatively abundant primary resources – moderate crude oil reserves, significant natural gas reserves [nearly self-sufficiency and offshore potential], abundant coal deposits and significant wind power potential. Resources are depleting, but the energy-intensive industries are also shrinking as the energy becomes more expensive. There exist a functioning power market and the potential for export of power is robust – yet not supported by sufficient transfer capacities. There exist on the other hand robust potential for the development of such connections [for power and gas] – supported and actually required by the EU directives. The government as well as other policy-makers lack any firm strategy for the sector. In the absence of such internal drive, country’s policies fully rely on the EU directives – meaning adequate but slow response to challenges and acceptance of rather global [than local] optimisation. Excessive green energy support created investment euphoria – but part if the support was already reversed prompting protests from investors.
ONGOING STORIES – OIL AND GAS. Low crude oil prices impact on local oil industry. OMV Petrom and other investors will reportedly review its investment plans, but the main project – offshore gas expected to flow from Black Sea around 2019-2020 is unlikely to see major adjustments. Government maintained the tax and royalties system and delayed major reforms in this regard for 2016. The liberalisation of the natural gas market has delayed for the residential sector. The natural gas market is not functional and the suppliers complain about government’s decision that producers [as of July 2014] and suppliers [as of January 2015] have to sell at least 20% of the gas on the free market – versus bilateral negotiations as of now. The interconnections with Moldova and Bulgaria are being developed. Alternative scenarios to failed South Stream, following the failed Nabucco, are considered in the region. Romania considers AGRI LNG project and a north-south pipeline to supply Romania from TAP (Trans Adriatic Pipeline).
• Romania confirms 3.2% y/y GDP growth in Q3, expects 2-5% growth rates in coming years
• EC admits Romania can delay gas price liberalisation for residential users
• Use of primary energy resources up 2.3% y/y in Q3 as more oil refined
• Net use of primary energy resources contracted by 4% y/y to 12.8mn toe in the H1 2014 …
• … - while the gross intake of raw energy resources increased by 3.4% y/y to 15.4mn toe.
• Sharp expansion in the exports of electricity and petroleum products.
• Crude oil indigenous production flat on year in 12m ending Aug-14, at 4.10mn tonnes
• Exports of petroleum products up 36% y/y to 4.44mn tonnes in 12M ending Aug-14
• Diesel sales, of 4.8mn tonnes exceed the pre-crisis peak level of 4.6mn tonnes in 2008
• Romania’s diesel exports soared by 138% y/y to 1.55mn tonnes
• GSP oil services firm plans to invest USD 1.2bn in offshore oil rigs, ships
• Lukoil, OMV Petrom and ExxonMobil start new explorations in Romania's offshore
• Profit per share of OMV Petrom down 71% y/y in Q2, drops 42% y/y in H1 2014
• Domestic consumption of gas edged down by only 2% y/y in the 12M ending July 2014
• Use of gas in chemical industry plunged by 21% y/y
• Romania's Romgaz, partners to decide on €4.5bn AGRI LNG project in January
• Contract for Romanian natural gas delivery to Moldova to be signed by end-2014