Romania at the crossroads. Are we becoming gas dependent or a regional player?

2Celsius Association launches the report Romania at the crossroads. Are we becoming gas dependent or a regional player? The report analyses the investment and strategic direction Romania has taken, being the second largest gas producer in the EU.

The report, written by energy expert Otilia Nuțu, shows that Romania is making investments that will keep us dependent on expensive gas and missing the window for reform and investment in renewable energy and, by extension, the climate targets. The energy sector needs a complete transformation and fossil fuels must remain in the past.

40% of the gas consumed in the EU is from Russia, and this accounts for 30% of its exports. That means Russia is more dependent than Europe on it. Storing gas will become impossible, and stopping production is extremely costly for Gazprom. Stopping Russian gas imports is the best option for the EU in the medium and long term, but not without short-term costs.

The EU consumes 155 billion cubic metres (bcm) of Russian natural gas annually, which should be replaced as early as this year. With logistical efforts and small network reinforcements, 70 bcm can be replaced by liquefied natural gas (LNG) imports, 60 bcm by energy efficiency and substitution with other fuels, and an additional 15 bcm could be imported from Norway or Algeria. The remaining 10 bcm can be covered in the short term from storage.

Romania’s onshore fields are gradually being depleted and, apart from Black Sea Oil and Gas, which came on stream in June, none of the other new fields are about to start actual production. New projects could start up in 2023 at the earliest, bringing the estimated 30-year exploitation dangerously close to 2050, when the EU aims to reach net zero emissions.

In addition to the huge investments needed for new exploitation, the government is allocating 21,403,250,000 lei through various programmes to expand the gas networks, while it is unclear where Romania will go in terms of gas exploitation and bills continue to rise.

The reason why we have moved slowly with the increase of gas production in Romania, as in any other energy field, is that we have almost no coherent, consistent energy policy on which there is consensus among almost all politicians and between central and local authorities, says Otilia Nuțu.

We are not connected at all to European discussions and issues, despite our ambitions as a regional player. For example, although we are the ‘second largest gas producer in the EU’, we had no position in the European strategy on methane emissions or last year’s proposal for the regulation, nor we are part of any of the dozens of international organisations dealing with the gas issue, neither with state representatives nor with private companies. Romania is the only place in the EU where gas production can increase in the next few years, says the expert.

High prices discourage domestic consumption and there is a risk of building gas networks and not using them. Extending the network means building the street infrastructure, then every household would have to install heating inside the house and then pay the bill. We don’t expect prices to fall in the coming years, on the Romanian Commodity Exchange platform, prices remain the same high for contracts with delivery in 2023, and the European Commission has warned that energy prices would remain high until at least 2024-2025.

At European level, gas may be accepted as a “transition fuel”, but the situation will certainly be temporary and we need a concrete plan to replace it from 2050 onwards. At the same time, through REPower EU, we could benefit from substantial funds for investment in renewable energy, which would put Romania on track to meet its climate targets.

The European Union is committed to a collective target of reducing global methane emissions by 30% by 2030 compared to 2020, and the new version of the Methane Regulation will be adopted in early 2023.

The report was made by 2Celsius with the support of the Environmental Investigation Agency UK, as part of its efforts to promote rapid reductions in global methane emissions in line with scientific advice on climate change and the targets agreed in the Paris Agreement.