WIEE Romania: Solutions to crisis don�t compensate the sluggish natural gas demand

“The general demand was very weak in the first half of 2009, due to the ongoing economic crisis. In 2009 the quantities will drop compared to the previous year. The reduction in gas consumption in Romania was transferred almost integrally to imported gas. As WIEE Romania deals mostly with such imported gas we expect that our sales will decrease, we expect the sales for the remainder of the year to continue to be sluggish”, Serban Stanescu (photo), managing director of WIEE Romania said.

Natural gas consumption fell 30% in the nine months through September this year, the reduction being transferred mostly to imported gas, and the Russian gas too, which accounts for a third of the internal demand. The company didn’t disclose further details.

The solutions to crisis adopted by WIEE Romania so far, such as gas storage with injection in summer, extraction in winter and also flexible pricing agreements couldn’t compensate the falling consumption level, Stanescu added.

“WIEE Romania has implemented a risk management system and is thus in position to appropriately overcome future challenges”, the head of the natural gas trading company pointed out.

After a strong increase in gas prices at the beginning of the year, consumption fell weighed down by a deepening economic crisis, and the main challenge of the power industry being to ensure security of supply for the country for the winter season.

“Gas is generally short and a transit crisis like we have seen in January 2009 can not be categorically excluded in the future. Nevertheless due to its significant domestic production backed up by storage capacity, Romania has a stronger position in comparison to other states”, he continued.

In Romania, ensuring security of natural gas supply remains one of the biggest challenges, as the gas market regulator, ANRE has enacted rules which is putting a heavy strain on the suppliers and do not adequately consider costs of the suppliers. “In the long run such a development can endanger the security of supply of the country”. A market should regulate itself whereas the state should only establish an investment-friendly business environment, WIEE executive opined.

For the remainder of the year, natural gas companies expect natural gas sales to pick up following an increase in consumption in the cold season. “The the world economy is showing slight signals of recovery and this will have in a global world also a positive impact on the Romanian economy. Despite this recovery signals we have to be patient because it will take some time to get back to the level before the crisis”, Serban Stanescu added.

Last year, WIEE Romania, that sells gas to Wirom, reported revenues of €390 million, and sold 1.4 billion cm of gas to local players, which entails a market share of around 40%. WIEE has a contract with Gazprom until 2030, and Romania buys Russian gas only through trading companies. 51% shares of Wirom are held by Wintershall Switzerland and 49% shares are held by Distrigaz Sud.

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