Bucharest, September 22, 2020 – The gas market is going through a strong transformation, which will continue in the following period. We will witness increases in gas prices as commodity compared to current prices, this increase not being felt by most household gas consumers. There will be no problems in ensuring gas for consumers due to the large gas quantities in the underground storage facilities and the development of the gas transmission infrastructure, according to an analysis by Intelligent Energy Association.

Weather forecast for Central and Eastern Europe for the winter of 2020/2021 shows a mild winter with severe episodes of cold and blizzard, so that gas demand in this region will probably have the same level as in the recent years. Evolution of gas prices in the region will follow a slight upward trend, with the increase in demand, but most likely the average price of gas in winter months will not exceed EUR 14-15/MWh (RON 68-72.75/MWh).

Romania falls within the same scenario, according to a study conducted by the Intelligent Energy Association, so gas prices for the winter of 2020/2021 will be similar to those from the previous winter.

“For the end-consumer of gas in the household sector, no significant changes are expected in terms of price to be paid. Gas prices will be at an almost identical level for most household consumers as those paid in the winter of 2019/2020“, said Dumitru Chisăliţă, President of the Intelligent Energy Association.

With a forecast of mild winter, but with episodes of cold and blizzard, our country will probably register a consumption similar to the recent winters, with consumption peaks in the cold days. The large quantity of gas stored in Romania’s facilities (over 90% of the capacity of underground storage facilities), high temperatures forecast for October and November 2020, as well as the high costs of stored gas will probably lead to opening the storage facilities only towards December 2020, which makes the available stored gas at the level of January and February 2021 (months with the highest daily consumption) be at a level of 25-30 mcm/day. This will theoretically allow to cover Romania’s gas consumption exclusively from domestic production, in most winter days. During days with very low temperatures (if their consecutive number does not exceed 7 days), Romania will need 5-15 mcm/day of imported gas, which shouldn’t be (except accidentally) a problem to be purchased from import, given the comparative price of imported gas with the price in Romania, as well as the important changes in the Romanian infrastructure that will ensure a faster flow of gas from Hungary to the main consumption area of Romania, Bucharest – Ploiești, given the installation of compressor stations in the Romanian transmission system and BRUA construction. Other areas of Romania could suffer due to the current configuration of the transmission system.

The price of gas as commodity in Romania (excluding the services) will follow an upward trend in the following months, being able to reach a maximum level of RON 81.65/MWh in the winter of 2020/2021. However, this forecast does not take into account the scenario of interrupting economic activities in order to stop the spread of the SARC-COV-2 virus.

“In this analysis we did not take into account the scenario (possible, in my opinion) of stopping the activities due to the Covid Wave II Crisis, aspect which will cause declines in energy demand and generate a higher supply than demand, resulting in a decrease in the price of gas as commodity” explained Dumitru Chisăliţă.

In the recent months, the gas market had an atypical evolution, caused by the multiple legislative changes, the oversupply in the gas market due to the mild winter of 2019/2020 and the large gas quantities stored prior to December 31, 2019, as a result of the existing danger at the time of stopping gas transit through Ukraine, plus, for the winter of 2020/2021, the important changes in the transmission capacities by completing the new transmission routes and the permissiveness of increasing and diversifying the gas quantities in Central and Eastern Europe (Turkish Stream, TAP, TANAP, LNG etc.).

The study on the evolution of gas prices for the winter of 2020/2021 can be found in full here (link to the website of the association): Trend of gas prices for the winter of 2020/2021

The Intelligent Energy Association brings together professionals in the electricity and gas sectors, who advocate for a fair gas price and for increasing transparency in Romania’s energy market. The mission of the association is to contribute to a better information of gas and energy consumers in our country.

Translation from Romanian by Romaniascout.