The natural gas market in Romania will undergo a strong transformation in 2020, predicts the natural gas expert Dumitru Chisăliță’s Intelligent Energy Association. He anticipates that prices could go down by up to 18% this summer. An analysis conducted by the Association shows that market liberalization could lead to more aggressive behavior on the part of industrial consumers, as well as an increasing vulnerability of domestic consumers against suppliers.
Other factors that will influence the market this year are related to the important quantities of gas remaining in the deposits, the surplus of gas and the geopolitical resettlement in the region from the perspective of natural gas, but also to the elections scheduled in Romania.
“2020 is a complicated year on the Romanian gas market. It comes after the disruption brought by GEO 114/2018 and its implementing rules and by the obligations that Romania has assumed in relation to the European institutions”, writes the Intelligent Energy Association in a press release.
Lower prices
An analysis of the association shows that in the summer of 2020 we will see gas prices up to 18% lower than the prices of the summer of 2019 and we will also have lower gas prices during the winter 2020/2021, by up to at 2% compared to prices in winter 2019/2020 (under normal winter conditions). These price cuts are due to the fact that in the summer of 2020 we will face a surplus of gas on the Romanian market, generated by the large quantities that will remain in deposits after this winter, but also by the smaller quantities of gas that will be “managed” by ANRE, as a result of changing the quantity of gas reserved for the households, at capped price. There may also be a gas surplus in the European markets. According to the report , the average price of natural gas (tariffs not included) will be lower by 13% in 2020 than the average gas price in 2019. The average annual prices will be lower by 4% for household consumers and by 17% for industrial consumers.
Insolvency risks
2020 could also bring increased risks of insolvency for some suppliers, given that at the end of the 2019/2020 natural gas extraction cycle, a significant amount of gas will remain in the deposits, which will result in additional costs for suppliers, as a new storage tariff will be applied. “There will be a risk that some gas suppliers will go into insolvency, but there will be a great pressure on ANRE from them to increase the price of natural gas to the domestic consumers, the only possibility for some small suppliers to sell this gas. However, this is unlikely in an election year. The big suppliers will use some commercial arrangement to sell these volumes”, explains the president of the Intelligent Energy Association in the press release.
According to the data from the Intelligent Energy Association, industrial consumers will be more aggressive this year in negotiating prices and changing suppliers compared to 2019, when they were those who paid the “costs” of the harmful administrative measures taken by the authorities.
Uninformed and vulnerable
Household consumers, who theoretically from July 1, 2020 (according to official statements) will “discover themselves” in a free market will be greatly affected if this really happens. Most of these consumers have not even the minimum knowledge on contracting natural gas and they will be potential victims of the commercial abuse some suppliers might indulge into.
“Households do not believe they have the power to negotiate gas purchase contracts, and in an overwhelming proportion they want someone else, the state, to continue to negotiate the prices on their behalf. This attitude is a direct consequence of the lack of information of the households, of the fact that the institutions designed to protect them, but also those who have the power to sanction the inappropriate behaviors of the suppliers, do not work properly”, believes Dumitru Chisăliță.
About the Intelligent Energy Association
The Intelligent Energy Association brings together professionals from the field of electricity and natural gas, who advocate for a fair price of natural gas and for increasing transparency in the Romanian energy market. The mission of the association is to contribute to better information for gas and power consumers in Romania.
