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ROPEPCA urges lawmakers to keep the path for liberalization in the oil and gas market

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The Romanian Association of Exploration and Petroleum Producing Companies (ROPEPCA) urges the members of Parliament to make a decision taking into account the views expressed by all stakeholders, including industry representative. The appeal comes short time before the final vote in the Committee of Industries and Services of the Chambers of Deputies on the amendments proposed to Government Emergency Ordinance 64/2016 for adoption by law.

In a press release, ROPEPCA makes an appeal to wisdom and fairness in discussing the introduction of a monopoly in the free market and warns against the risks this decision raises against the proper functioning of the gas market.

Members of the association once again emphasize the likely major negative consequences that the amendments voted in the Commission, if adopted, will have a natural gas exploration and production industry and security of supply at national and regional level, short term , medium and long.

The proposed obligation for natural gas producers to sell the entire quantity of natural gas produced exclusively on the Romanian gas trading market for an indefinite period of time is a restriction on (i) the bilateral conventions agreed through direct negotiations, (ii) the cross-border natural gas deliveries agreed through direct negotiation, in fact a ban on direct bilateral gas trade with suppliers, traders and consumers in other Member States (iii) export of natural gas; (iv) the right of producers to dispose freely of the natural gas produced, as stipulated in the concession agreements concluded with the Government of Romania. Moreover, such obligations would constitute a discriminatory regime between the rules on the marketing of natural gas for domestic production and the rules applicable to natural gas imports, since foreign producers will have the right to conclude bilateral contracts negotiated directly with large Romanian consumers, domestic gas producers natural persons are not allowed to conclude such contracts.

“In the first months of 2017, 15 million MWh of natural gas have already been traded on the Romanian Commodities Exchange, compared to a total of 14 million MWh for the whole of 2016. This evolution in the trading activity shows that the Romanian gas market is developing in the direction of increasing liquidity, so the obligation for producers to trade 100% of natural extracts on trading platforms is not justified”, says Harald Kraft, the elected president of ROPEPCA.

In addition, the proposals voted by the Commission reduce market flexibility by licensing a single operating platform, says ROPEPCA. These would essentially translate responsibility for the functioning of the gas market to a large extent to government institutions and would create a single market platform with monopolistic attributions. The amendments do not reflect the purpose and nature of European gas regulations and are not supported by precedents from other Member States.

Furthermore, the voted amendments could have a direct negative impact on the development of Romanian natural gas infrastructure and interconnection with neighboring countries, because infrastructure investments require regular long-term payment commitments by market participants.

ROPEPCA members consider that the voted amendments could have a negative direct impact on the facilities development of natural gas in Romania and interlinkage with the adjacent countries, because the facilities assets usually need long term payment commitments from the players on the market.

At present, there are over 400 oilfields in Romania and over 13,000 active wells.

ROPEPCA brings together 19 of the most important holders of oil concession agreements on land concluded with the Romanian state.

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