Romania exercises preemption right on Black Sea gas

The Romanian state, through the State Reserves Administration (ANRSPS), has exercised its legal right of preemption to acquire a share of natural gas to be extracted from the Black Sea, beginning in 2027. The agreement with OMV Petrom covers 5 billion cubic meters of gas over seven years, starting in 2028, averaging 700 million cubic meters annually.

This preemption right is stipulated in Romania's offshore law, granting the state the ability to purchase quantities of gas intended for trade under contractual terms negotiated by the economic operators. The specific price formula for the gas is still under discussion, as are the payment and delivery methods. By 2027, ANRSPS will require significant budget allocations to facilitate these purchases.

Economedia reported that while the exact price is subject to negotiation, current local market prices on the BRM exchange are around 350-360 lei per megawatt-hour (MWh), equating to approximately 370 lei per 1,000 cubic meters. Based on this, 700 million cubic meters annually would cost roughly 2.6 billion lei, or about 532 million euros.

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The price of gas from the agreement is calculated using a more complicated formula, and is still the subject of extensive discussions.

Hungarian state company MVM had previously expressed interest in purchasing Black Sea gas from Petrom. However, the Romanian state's preemption does not preclude Hungary from acquiring certain quantities through a separate agreement with Petrom. Beyond these volumes from Petrom, the Romanian state, via Romgaz, has access to additional Black Sea gas as a 50-50 partner in the Neptun Deep project.

Romgaz could potentially utilize its share for fertilizer production at Azomureș, a facility recently acquired by Romgaz. Azomureș has the capacity to consume about 1 billion cubic meters of gas annually. Neptun Deep holds estimated reserves of 100 billion cubic meters, with plateau production projected at 7-8 billion cubic meters per year by 2030, nearly doubling Romania's current gas output. While the start of production in 2027 could lower domestic gas prices, the impact on consumer bills is uncertain due to various economic, fiscal, and geopolitical factors.

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Without claiming this will be the price in the agreement, it must be said that, currently, gas costs 350-360 lei/MWh on the local BRM exchange, which is approximately 370 lei/1,000 mc. 700 million mc per year would cost about 2.6 billion lei or 532 million euros.