The Industries and Services Committee within the Romanian Chamber of Deputies voted to repeal Emergency Government Ordinance 114/2018, which was strongly condemned by companies operating in Romania as hampering new investment – S&P Platts reports
Under the ordinance, the price ogas sold by producers in Romania was capped at Lei 68/MWh (Eur14.38/MWh at current exchange rates) for a period of three years and a turnover tax of 2% was imposed on energy companies.
Romania’s upstream industry body — the Romanian Petroleum Exploration and Production Companies Association (ROPEPCA) — said Wednesday the repeal of the provisions was “an obvious and stringent necessity.”
“It represents a first step toward a return to normality and the rehabilitation of investor confidence in Romania as a destination for energy projects,” ROPEPCA said.
Although in effect for only a few months, the measures imposed by Ordinance 114 have disrupted the functioning of the gas market, leading to an artificial increase in the unregulated price and affecting the economic viability of exploration and production projects.
The parliamentary committee vote comes at a difficult time for the Romanian government, after the ruling Social Democratic Party lost the support of its main coalition partner on Monday.
Romania has been widely criticized for changes to its gas sector legislation, with the European Commission in July threatening to take Bucharest to court over its policy to prioritize sales to the local market over exports.
“The proposal to repeal ordinance 114 is a positive signal. It is important that we return to the principles of legislation made with the participation of experts and consulting the business environment, which will stimulate the exploration and production activity in the long term and that will diversify the gas marke” – ROPEPCA President Saniya Melnicenco said.
The development of Neptun — which is estimated to hold up to 84 Bcm of gas — is currently on hold after Bucharest introduced the legislative changes.
ExxonMobil has been reported to be looking to sell its 50% operating stake in the project, though it has declined to comment on the speculation.
The US major, though, has been vocal — along with its joint partner in the project OMV Petrom — about the need for legislative stability in Romania.
Romania produces about 90% of its annual gas demand of around 11 Bcm/year, with the remainder imported from Russia.
New production from the Black Sea would eliminate the need for imports from Russia and could make Romania an exporter of gas to the wider southeast European region.