Prices have passed from an extreme value to another, and currently they have reached values that were unimaginable two years ago, said Zoltan Nagy-Bege, vice president of the National Energy Regulatory Authority (ANRE), at the Romanian International Gas Conference 2021, event organized by the Federation of Petroleum and Gas Employers FPPG, with the support of the Energy Policy Group.
“I was looking at yesterday’s contracts, both in the Netherlands and in Austria they were concluded at prices of 120-130 euro/MWh, we are talking about natural gas. It is obvious that we are in the middle of an energy crisis, because the same developments can be seen in the electricity markets: during this week, most countries in the European DAM market have exceeded the average price of 300 euros – we see that more and more countries reach this threshold, and the gap between the minimum price and the maximum price on the electricity markets in Europe it is very low – of up to 20% – so it is a very high price everywhere,” said Nagy-Bege.
However, the crisis covers most industries.
“It is clear that we are in the middle of a crisis, but it is not incomprehensible. We see that in many other areas we are witnessing crises. After last year’s lockdown, we have a crisis of chips, containers, supply chains, soon we will probably have a food crisis … we have a crisis in health, in education … it is possible to have a geopolitical crisis, to get to war, in our region… And if we thought that the fight against the virus will be the biggest challenge, this is not the biggest challenge, but these crises that follow this pandemic. It is terribly difficult to explain to a consumer, whether in the domestic or industrial area, that he has to pay 5-6-7 times more for gas or 2-3 times more for electricity … it’s hard to explain even to a top manager, let’s take two relevant examples – Alro and Azomureș, to understand why electricity and natural gas have become so expensive. Even we don’t fully understand it, either. There are some explanations, causes that we know – the increase in demand, the inability of suppliers to respond to this demand, may have a role also the the decarbonization policy of the European Union, which, given this increase in demand does not allow us to return to the use of fossil sources that result in increased greenhouse gas or CO2 emissions. It’s probably also about a geopolitical fight between Europe and Russia, a bit of blackmail from some or others … and these are just important and big causes. I am convinced that at the level of every member state of the European Union there are other local causes, apparently minor, if we compare them with the big ones, which we talked about, but these contribute to the complete picture of this crisis,” he added.
“If we talk about local specificities, we know that Romania is not 100% energy independent, we know that, historically speaking, about 20% of the needed natural gas is imported. We know that, starting in 2019, we have become dependent on the import of electricity, we are no longer net exporters of energy, we import more than we export and we are unable to provide the energy needed for the relatively low consumption…. In addition to all these things that are manifesting in the long term, lately, for example, this decision was taken about the Law 259 on capping prices for certain categories of consumers … It is very difficult to make an analysis – which will be the long-term effects of this law, because one thing is clear, even if this law applies for five months, until the end of March, the effects will be felt for a much longer period … By the price capping, competition has disappeared from the retail market, both for gas and electricity,” Nagy-Bege added.
“There is no competition, and I am afraid that from April 1, when these measures will no longer be applied, this competition will not suddenly recover, because it takes time. In the meantime, some market players are disappearing and we already see that over 10 natural gas suppliers have left the market and left their customers to the suppliers of last resort. What is important, from my point of view, is not to give up looking for solutions in the long and medium term,” he added.
