Some would say that 2020 is the year of major infrastructure projects in the transport and distribution of natural gas. CIS GAZ is one of the main players in this segment, mainly in terms of actual pipeline execution. We have talked to the CEO of the company, Sebastian Călugăr, about CIS GAZ projects, but also about the challenge of preserving the values of a family business, at the same time when want to modernize the how you work and the management system.

Dear Mr. Sebastian Călugăr, how did you feel the year 2020?

A special one, from a number of different perspectives. First, people are at the heart of all our actions, and in these difficult times, we have all made a joint and sustained effort to keep our work to the same standards as before.

The initial shock of the pandemic affected most industries, including energy and gas. We have experienced both the lack of materials, delays in the logistics chain on the external market, delays in the receipt of bills, especially in the area of gas supply for business customers, and the increased volatility of gas prices in the market.

However, even in these circumstances, we have managed to maintain a stable and safe working environment. We have supported and executed many projects this year, and we retained our customers in the supply segment.

You once spoke about the efforts to modernize your company’s work system. Is this process completed? How is the CIS GAZ of today different from the organization 5 or 6 years ago?

I think there is always room for more and better. If a few years ago we were talking about a transition between generations, we are now talking about a transition from a local player to a regional group of firms, with ambitions on the international market.

From the very beginning we have assumed the company’s orientation toward innovation and performance, as well as the consolidation of CIS GAZ’ position on the Romanian energy market. This is why CIS GAZ has entered a new stage of organization and restructuring of the company, where we will add new branches of services, but we will certainly remain in the industrial area.

I believe that a parallel is not very well placed, but rather I would like to emphasize that we have experienced gradual and consistent growth. Thus, at present, we can say that CIS GAZ has secured its role as a strategic supplier in the gas market, as well as its position as a pipeline builder for the development of the national gas transmission system, being one of the first options in the top of the most active local players. Our latest completed projects support my statement.

The latest works carried out by CIS GAZ are included in the Romanian natural gas transport system development plan 2020-2028. Please refer to some of these works, carried out in 2019-2020!

We are pleased to actively contribute as a manufacturer to the sustainable development of the Romanian natural gas transport infrastructure and to the exploitation of the geostrategy of European energy routes, which brings our country multiple advantages.

Indeed, in 2019-2020, we carried out some of the most important and representative projects in the history of our company, which focus on the development directions of the Romanian natural gas transport network.

We are especially proud that these projects are included in the Romanian natural gas transport system development plan 2020-2029, and the challenge we have taken was not easy. During 2020, a difficult year taking into account the pandemic, we carried out and completed at the same time two large works, plus the largest work contracted by CIS GAZ in its nearly 30 years of existence: the works for the gas transport pipeline DN700 Onești – Gherăești – Lețcani (lot I and lot II), already executed more than 50%, with completion due in autumn 2021.

Another project completed by our team, which is also the first step we made in expanding CIS GAZ regional expertise is the extension of the interconnector Iasi – Ungheni – Chisinau (phase II, lot I and lot II), which involved the construction of a natural gas transport pipeline for a length of 63 km (lots I and II), on the territory of the Republic of Moldova. The importance of this project to our company is mainly due to the fact that the works carried out on the gas pipeline will contribute to the growth of the national economy of the Republic of Moldova, in the context of its need for diversification of gas sources. The extension of the interconnection from Ungheni to Chisinau is also a major objective for the Romanian-Moldovan energy sector. Its connection with the gas market in Romania and the European gas market is the first step toward reducing energy dependence, by means of diversification of energy sources and routes, and thus strengthening the country’s energy security.

The projects carried out and completed by our company have an important impact for the Romanian society: besides developing the national gas transport system, we are also talking about the connection of local communities to the gas network. Among the specific examples there is the natural gas pipeline Mintia-Brad-Stei, stage I section Mintia – Brad DN300 35 km, we completed already, and also is the completed works for the natural gas pipeline DN500 Craiova-Segarcea-Calafat – reconsideration of the pipeline section Craiova-Segarcea. 39,3 km in length, this is an important project for the Oltenia region, but also for the Romanian economy. At present, the completion of the project allows natural gas to be supplied to the municipalities in the area.

Since its establishment in 1990, CIS GAZ has offered gas pipeline construction and assembly services, and over time it has attracted strong partners such as T.D. Williamson or Polyflow (at present Baker Hughes). To what extent do such references matter in the expansion of CIS GAZ activity?

We have evolved from a family business, relevant at local level, to a national and international supplier, a partner in strategic infrastructure projects. Over the 30 years of activity, we have been happy to realize that much of the core elements to our business lies in our partners and long-term relationships with them.

For more than 10 years we have been exclusive distributor in Romania and the Republic of Moldova for a complete range of products and solutions from internationally renowned companies such as the US T.D. Williamson, a company with which we have managed to implement numerous projects so far.

We are also representatives of Primus Line (Germany) and Polyflow (now, Baker Hughes) (FPS onshore). Looking back, I believe that these sustainable partnerships have provided us with increased industry-specific know-how, adapting the expertise of our partners to the needs of the local market.

Moreover, together with these partners we have had a nice and steady course, marked by fundamental steps in our development. Thus, in 2009-2010, we first implemented in Romania a new concept of pipeline rehabilitation, namely rehabilitation of pipelines through the relining method, along with partners from Polyflow (now Baker Hughes). In 2017, we carried out the first Romanian relining project with PRIMUS LINE technology. At present, we can say that in 2019 and 2020 the main gas pipeline construction division was the growth engine of our business, with more than 200 km of main gas transmission pipelines.

Currently, what type of projects dominate the activity of CIS GAZ – new pipelines or upgrading, modification of existing pipelines?

Indeed, in recent years, the projects that have prevailed in our portfolio are construction and installation of new pipelines infrastructure, but an important share is also the relocation and protection of existing pipeline projects on new infrastructure routes – such as motorways, as well as the relining projects.

Since 2005, CIS GAZ has also been a supplier of natural gas. What does the company portfolio look like today in this segment? What is the share of supply business in the total CIS GAZ revenues?

Indeed, we have been for 15 years in the gas supply market, but the development of this division have started more consistently since 2014-2015, when we took the first steps in diversifying our portfolio of clients: trading, business and retail. Today, we have over 3.000 household consumers in our portfolio and the number is growing every month. In fact, we are very active in trading both in centralized markets and in bilateral contracts, and we manage 200 business clients from different business lines. The share of trading and gas supply business in the total revenues is somewhere between 35% and 40%.

How do you see the evolution of this segment once the liberalization of the gas market is now completed?

Although the liberalization of the Romanian market has been delayed for very long time, we now have the opportunity to establish our own strategies to increase our market share, as well as to think about integrated packages of services.

Another good news is that as of November this year CIS GAZ was designated by ANRE as the last resort supplier.

For about 7 years, CIS GAZ has been operating a photovoltaic park in Mureș county. What can you tell us about this business line? Is this a direction that you think is worth following on?

7 years ago, we implemented this project in order to complement our existing gas services. By setting up the CIS Energy, a subsidiary that deals with the operation of the photovoltaic park in Cuci (Mureș county), we wanted to diversify the company’s portfolio.

Of course, we would have liked to have continued investment in this area, but the legislative changes that followed made it impossible to develop other projects in this direction.

We are currently looking at various investment scenarios, but we have not yet made a decision on this aspect. We note, however, that things seem to improve, and now there are certain facilities, such as lower investment costs and the possibility of accessing co-financing from European funds.

In the Romanian energy sector there is a feeling of confidence that investments may intensify in the coming years. Do you have similar signals, too?

We also have new positive signals in view of the investment that is emerging in the development of this sector. I believe that a consistent investment effort is still needed in order to ensure energy production and transport, to optimize technological processes, but also to keep the already functioning pipeline infrastructure in optimum operating conditions.

Today, our company has the technical equipment, logistics and human resources and is ready to take an active part in the future investments, especially in the construction area of main gas pipelines, in the construction of new gas distribution systems and relocation/protection of utility routes on new road infrastructure projects (motorways).

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This interview firstly appeared in the printed edition of Energynomics Magazine, issued in December 2020.

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