Into whose hands does ANRE play?

by Dumitru Chisalita

It’s hallucinating what happens in the gas market. After in the recent weeks manipulating statements of ANRE president and some players had tried to force some decisions in the market, without succeeding, ANRE has put up for debate a number of documents with the purpose of increasing gas imports. In early June 2016, a draft Order was published on ANRE website on changing the structure of gas mixture for household customers. A strange draft, on a topic entirely lacking interest in full summer, characterized by surplus of gas supplies. Probably most of those who have seen this draft Order thought the same as I did, probably finding it dull for this period of the year. Several days after that, a draft Order was published, on changing the Methodology for setting the revenue per unit related to the regulated supply activity, carried out in a regulatory year, and approving regulated prices in the gas sector, starting with 2016. Apparently, another dull order. But I wondered why were they published in this period? Reading again the first draft Order on changing the structure of gas mixture for household customers, I found an interesting article slipped in the Order: if the supplier purchases gas from import at a lower price than the price of gas from domestic production, it can supply to its customers gas in the mixture the most economically advantageous for household customers. I told myself that it was an element absolutely normal to give the supplier the possibility to purchase gas at the most beneficial price for its customers. But the interesting thing is that this article contradicts the construction of the entire Order, to establish the obligation to consume gas from domestic production with priority. Why would they slip an article to stimulate gas import in an Order which establishes the gas priority gas supplies for population? I found the answer in the following draft Order, showing that ANRE would recognize in acquisition costs of suppliers ensuring gas for population, for gas from current imports, prices lower or equal to the acquisition price of gas from domestic production extracted from underground storage facilities plus the tariffs related to the provision of underground storage services approved by ANRE. Analyzing together these two draft orders, I believe that they actually: force an increase in gas imports in Romania (ANRE Orders having a mandatory nature for the regulated gas market – if the condition is met), and allow the settlement of imports at higher prices than the acquisition price. All this while gas prices for population are unreasonably kept high. In absence of reference prices in the Romanian market, regarding the price of gas from domestic production and from import, the practice of concluding classified bilateral contracts allows certain prices for imported gas (apparently lower than the price of domestic production) but at the time of settlement higher prices are recognized, according to ANRE Order. Romania boasts of energy independence in the gas market. Independence which is not due to any institution, being conjectural, especially determined by the closure of the chemical industry. Now, we see various games made to become again dependent on import gas. It is true, the conjecture of gas exports to Europe from several years ago has changed and markets uninteresting at the time have become extremely interesting today. Energy dependence on import gas, the low amounts of gas to be found in storage facilities will determine a true stress test, with an important impact this winter on Romania’s energy security, in conditions in which ANRE:

• Urges the acquisition of imported gas, indicating that it is extremely cheap,
• Suggests that it is more advantageous not to store gas, because in winter the imported gas will be cheaper,
• Fails to ensure compliance with the obligation of suppliers to guarantee continuity of gas supplies – a mandatory requirement according to the license issued by ANRE,
• Issues Orders to allow suppliers financial tricks to purchase gas from import to the detriment of domestically produced gas, with its subsequent recognition in the price of gas for population at much higher levels.

Read the Romanian version of the article here.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net