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Iulian Chifu: Romania has the chance to become the main gas supplier for Republic of Moldova and even Ukraine

27 August 2013
Electricity
energynomics

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Not often a state happens to stumble upon the right mix of internal and external condition and to use this match to provide for its economic lift of. The rarity of such moments in a country’s history demands a clear mind, political will and a general consensus between all the social actors or this opportunity is lost. The energy sector is one of those strategic sectors that lead states and their societies to wealth and power, along with the cultural and communication sector, intelligence and the army.

At the moment, Romania is going through big transformations, debates and conversations as to how it is managing its energy affairs. As a consequence of this reality we decided to find out more together with the Presidential Advisor for Strategic Affairs and International Security Iulian Chifu. Out talk was about the challenges of the Romanian energy system, its strategies, objectives and measures necessary to improve it.

To what strategic imperatives should the future National Energy Strategy answer to?

First, Romania has a series of European commitments to obey, such as the European Strategy 20/20/20. Second, there is the calendar for the liberalization of the energy market. Third, “the national” commandments dictates that Romania needs to create a competitive energy market. The main energy security objective for Romania is to have sufficient energy for household and industrial consumption of for development, and at affordable and competitive prices. In this way our goods and services can compete on other markets.

These stated objectives demand a great deal of money, money which Romania can’t afford. If in the power department things are relatively good – except the environmental criterions for many urban thermal power plants, these should change – the big problem is with those pipe-received commodities, linked to sources and previously established routes, with long-term contracts not always in our favor and not adapted to a market mechanism.

AGRI remains a feasible project, extremely interesting but only if it starts relatively fast

In this case the solution is to identify alternative suppliers and transportation routes, mainly because, as you know, the natural gas market is not a spot market, there is no direct exchange energy market, but there are dependencies regarding the existing pipelines. All this means huge investments. Shale gas and the reserves from the Black SEA EEZ (Exclusive Economic Zone) are the solutions most straightforward, but they come online after a while, 3 to 5 years. Nabucco was and remains a relevant project in the long run, but also its timeline now will exceed those 5 years for Black Sea shale gas and oil. AGRI remains a feasible project, extremely interesting but only if it starts relatively fast.

Other elements that encircle the energy security notion are those regarding the technology transfer – shale gas, deep drilling are also solutions, together with old well recovery – and the energy efficiency measures – the reducing of energy unit consumed for one unit of GDP, increased energy efficiency in the household and industry sectors, energy-saving technologies, household energy certificates.

In the final analysis, the finalizing of interconnection with its neighbors may permit the total integration of Romanian energy market into the European unique market, and energy could be brought in the country from anywhere at the most competitive prices. Distances and transport of energy products still play an important role. Romania is one of the largest producers of wind energy and in the potential department, one of the most important and attractive locations for investment in energy – wind, solar, biomass, shale gas, oil, gas, etc.

What the assessments of Presidential Administration say about the current state of the National Energy System?

The Presidential Administration does not have the tools to make such an assessment independently; it is done on the data received from the governmental level, from the authorities. There are problems related to large consumers market and preferential access to cheaper energy, but also problems regarding the absence of national energy champions in the power production department, that can compete and produce energy based on the balanced energy mix. There are also problems regarding the convenient adjustment costs for the manufacturers, preferential contracts, etc. All are monitored by the Executive, and the Council of Competition, specialized authorities, and the Prosecutor, if appropriate.

What main directions of development and regional integration should be drawn for the internal energy market to become a competitive and part of the European single market?

Directions are discussed above. Romania shouldn’t allow itself to discharge lakes because it has no use of hydropower, the cheapest kind of power there is. Romania needs to achieve high power interconnections and to have the ability to export and import sufficient quantities of power, oil and gas. When it will identify suitable markets and it will have sufficient export capacity available then Romania will be able to use all the resources and will attract investment to supplement energy production. It is very important the connection of Republic of Moldova and of Ukraine to Romania, with the possibility to export power and gas, because this has geopolitical relevance and could increase our country’s strategic weight in the region.

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