Romania’s domestic energy production decreased by 8% in the first six months of the year, and energy demand decreased by 5%, Christina Verchere, the general director of OMV Petrom, said in a press conference on Thursday.
“What we see in this volatile market context is that prices are already starting to destroy demand. This is more visible in the case of gas and energy and less so in the case of fuels. Natural gas consumption in Romania decreased by 13% mainly due to higher energy prices, as a result of the geopolitical context and market imbalances. We also have to take into account the large base effect, since in the first months of 2021 consumption was at unusually high levels due to the cold weather. In Romania there is an obligation to store gas to ensure winter consumption. At the end of June 2022 we had 1.5 TW/hour of gas in storage more than in June 2021, and we are fulfilling our storage obligation. energy in Romania decreased by 5% compared to the same period of the previous year. Romania was a net importer of energy, as domestic production decreased by 8% in the first 6 months. Gas and renewable energies have a saw a higher production in the energy mix, partially counterbalancing the decrease in hydro and nuclear energy production, and the Brazi plant had a 7% weight in the energy mix. We have a similar tendency with regard to fuels. On the retail side, fuel demand decreased by 2% in the second quarter of the year and the biggest decrease was in June. However, the decrease was counterbalanced by the increase in the first quarter,” said Verchere.
According to the head of OMV Petrom, in terms of energy prices, Romania followed the developments on the regional market.
“On the next-day BRM market, volumes were traded at 506 lei/MWh, in the second quarter of 2022, increasing over 330% compared to the previous year. Prices on OPCOM increased from 326 lei/MWh to 1,000 lei /MWh compared to the previous year, while base energy prices increased by more than 200% and fell by 7% compared to the previous quarter. What are the causes of these unprecedented market developments? Like the oil markets, international gas markets began to overheat in 2021 amid supply-demand imbalances, which led to high prices. The regional geopolitical context amplified these trends generating a record high price environment across the EU market. Gas demand in Europe fell in the first 6 months, while Russian gas exports to Europe fell significantly. According to the European Commission, gas flows from Russia to the EU were less than 30% below the 2016-2021 average. Pre winter supply shortages in Europe led to efforts to restore gas storage during the summer season, and prices also affected the energy sector, where natural gas has a significant presence in the energy mix: 20% in the EU, compared to 18% in Romania. Against the background of these concerns, we have witnessed a return to coal-based production. CO2 prices contributed to an increase in prices and there was a 90% increase compared to the first 6 months of 2021,” explained Christina Verchere, according to Agerpres.
It added that in the early months of 2022, we saw solid growth in fuel demand due to higher seasonal mobility and demand for diesel from agriculture, as well as the relaxation of COVID restrictions and the resumption of air travel.
“Globally, this coincided with the refinery shutdown season in the spring, followed by a series of unplanned shutdowns. This overlaps with the already strained supply and demand environment for fuels as a result of sanctions on Russia. in this context, refineries have had to find other sources to bring products to market. Now, in terms of gas and energy markets, we are seeing similar price trends in regional markets. Natural gas prices have risen significantly. Starting with the oil and fuels, the price of Brent increased by 65% in the second quarter of 2022 compared to the same period of the previous year, to an average of $114 per barrel. Crude oil prices were affected in the fourth quarter of 2021 as a result of demand recovery after COVID, and in the context of the war in Ukraine, which began in February 2022, the European Union and other countries agreed on an embargo on most im oil ports in Russia, approximately 90% being reduced by the end of this year. European buyers began to impose self-sanctions on Russian oil, and Brent prices rose at an accelerated pace, surpassing $130 per barrel in March. As a result, Russian crude is now heading to non-EU markets. Our company’s approach is in line with that of the European Union. Starting from March this year, we have diversified our import sources to include other sources besides those from Russia”, stated the general director of OMV Petrom.
In Verchere’s view, the entire energy sector and global international trade has been disrupted by economic sanctions, logistical problems and inflation, which has led to increased concerns about energy security.
“In the first half of the year we faced an unprecedented market environment with record and volatile commodity prices and supply chain disruptions. This was the result of the geopolitical crisis caused by the war in Ukraine, which overlapped a market already heated up after the lifting of COVID restrictions last year. Imbalances between supply and demand have led to steep and significant increases in commodity prices. The importance of domestic production, diversification of sources and reliable supply chains has become especially great for Europe in the effort to reduce its dependence on petroleum products, on Russian oil and gas. For us, as an energy company, this context brings two significant challenges. First, to ensure that we ensure the country’s energy supply without interruption, that is, to identify sources of non-Russian imports and, secondly, high commodity prices, which started to erode the demand on the market,” she added.