Energy Sector in Romania - 2017 - MarketScope Aug 2017 PDF

Energy Market Overview in Romania
- 2017 -
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TABLE OF CONTENTS
___________________________________________________________________
INTRODUCTION ...............................................................................................................................................................3
I. BRIEF OVERVIEW OF ROMANIA ............................................................................................................................4
I.1. COUNTRY PROFILE ...............................................................................................................................................4
I.2. MACROECONOMIC OVERVIEW OF ROMANIA.............................................................................................................5
I.3. ROMANIA’S ENERGY SECTOR IN AN EUROPEAN CONTEXT ...........................................................................................8
I.4. OVERALL ENERGY SECTOR IN ROMANIA: ECONOMIC, POLITICAL AND LEGAL FRAMEWORK ............................................ 10
II. COAL MARKET IN ROMANIA ................................................................................................................................ 11
II.1. MARKET SIZE AND STRUCTURE ............................................................................................................................ 11
II.2. COMPETITIVE LANDSCAPE ................................................................................................................................... 15
II.3. PRICES............................................................................................................................................................. 16
III. NATURAL GAS MARKET IN ROMANIA ............................................................................................................. 17
III.1. MARKET SIZE AND STRUCTURE ............................................................................................................................ 17
III.2. COMPETITIVE LANDSCAPE ................................................................................................................................... 19
III.3. PRICES............................................................................................................................................................. 21
IV. OIL AND OIL PRODUCTS MARKET IN ROMANIA ............................................................................................ 22
IV.1. OVERALL REFINING SECTOR IN ROMANIA .............................................................................................................. 22
IV.2. OIL PRODUCTS MARKET SIZE AND STRUCTURE ....................................................................................................... 25
IV.3. COMPETITIVE LANDSCAPE ................................................................................................................................... 31
IV.4. PRICES............................................................................................................................................................. 36
V. ELECTRICITY MARKET IN ROMANIA.................................................................................................................... 38
V.1. MARKET SIZE AND STRUCTURE ............................................................................................................................ 38
V.2. COMPETITIVE LANDSCAPE ................................................................................................................................... 41
V.3. PRICES............................................................................................................................................................. 42
VI. CONCLUSIONS AND RECOMMENDATIONS ..................................................................................................... 43
ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 2

Introduction
Project background
MARKETSCOPE is a dynamic marketing research consultancy focused on Romanian and European markets,
with a team of highly experienced professionals who have previously researched a broad spectrum of
industrial markets in Romania and Europe and provided valuable business intelligence to various market
entrants and incumbent players.
Brief methodology
The project is a desk research study (identification and analysis of relevant information available in secondary
sources).
The main sources were:

 Available statistical data (INS – Romanian National Institute of Statistics, Eurostat, foreign
trade statistics, relevant Ministries, chambers of commerce, financial data, BNR – National
Bank of Romania etc.)
 Economic and specialized media (articles, media presentations, press releases, market
reports, electronic archives of relevant publications etc.)
 Internet research (competitors’ websites, B2B online directories, lists of relevant players,
annual reports etc.)
 Own knowledgebase & previous research
The accuracy and detailing of final outputs are influenced by the availability and relevance of secondary
information obtainable via the proposed methodology. Some data for recent years (2015, 2016) can be
provisional or estimated and can be adjusted or corrected in subsequent reports (differences are usually
small).
Abbreviations
mt = metric tons = 1000 kg
mc3 = cubic meters
TJ = Tera joule
GJ = Gigajoule
GWh = Gigawatt-hour
LNG = Liquefied Natural Gas

CNG = Compressed Natural Gas
Definitions of terms used in the current report

Hard coal = pit coal, anthracite and other types of hard/compact variety of coal;
Hard coal derivatives = coke, semi-coke and tar obtained from hard coal
Lignite derivatives = coke and semi-coke or lignite or peat

I. Brief Overview of Romania
I.1. Country profile
Romania
Location: South-Eastern Europe
Surface: 238,397 km2
Population: 19,638,309
Capital: Bucharest
Currency: Romanian Leu (RON)
EU member: since year 2007
GDP (billion RON): 761

I.2. Macroeconomic overview of Romania
Romania had a population of 19.76 million at January 1st 2016 (3.9% of the entire population of the European
Union). Romania’s population decreased slightly during year 2016, reaching 19.6 million at January 1 st 2017.
Macroeconomic indicators for Romania VS European Union (years 2011-2016)

Country Indicator 2011 2012 2013 2014 2015 2016
Population (mil.) 20.20 20.10 20.02 19.95 19.88 19.76
Unemployment rate 7.20% 6.80% 7.10% 6.80% 6.80% 5.90%
Average rate of inflation (%) 5.80% 3.40% 3.20% 1.40% -0.40% -1.10%
Exchange rate (RON/EUR) 4.24 4.46 4.42 4.44 4.45 4.49
Romania
GDP (billion RON) 565 595 637 668 711 761
GDP (billion EUR) 133 134 144 150 160 170
Real GDP growth rate (%) 1.10% 0.60% 3.50% 3.10% 3.90% 4.80%
GDP per capita (EUR/cap.) 6,600 6,700 7,200 7,600 8,100 8,600
Population (mil.) 502.96 504.04 505.14 506.97 508.50 510.28
GDP (billion EUR) 13,192 13,449 13,559 14,021 14,755 14,855
EU28
Real GDP growth rate (%) 1.70% -0.50% 0.30% 1.70% 2.20% 1.90%
GDP per capita (EUR/cap.) 26,100 26,600 26,700 27,600 28,900 29,000
Sources: Eurostat, Romanian National Institute of Statistics (INS), National Bank of Romania
Romania is an attractive developing market, part of the European Union since year 2007. Although Romania
had the second smallest GDP per capita in year 2016 in the European Union (surpassing only Bulgaria), the
country had the third highest real DGP growth rate in EU in year 2016 (4.8%, being surpassed by only Ireland
and Malta).
Average yearly exchange rate: RON/EUR, years 2011-2016

4.6
4.49
4.5 4.46 4.44 4.45
4.42
4.4
4.3
4.24
4.2
4.1
4
2011 2012 2013 2014 2015 2016
The value of Romanian Leu (RON) has generally decreased in relation to EUR during recent years. As such, the
average yearly exchange rate in year 2016 was about 4.49 RON/EUR.

E VO LU TI ON O F G D P P E R C A P I TA I N RO M A NI A A N D E U
( E U R /CA P.)
Romania EU
29,000
28,900
27,600
26,700
26,600
26,100
8,600
8,100
7,600
7,200
6,700
6,600
2011 2012 2013 2014 2015 2016
As it can be observed in the above chart, GDP per capita in Romania is considerably lower than the EU
average: only 8.6 thousand EUR/capita in year 2016 (about 30% of the value of the EU average – 29 thousand
EUR/cap.)
Although Romania has an about 4% share in the total of EU population, the country only contributed with
about 1.1% in the total EU GDP in year 2016.
Population in year 2016: %Romania in EU GDP in year 2016: %Romania in EU
Romania Romania
3.9% 1.1%
Rest of EU Rest of EU
96.1% 98.9%
Still, GDP per capita increased in Romania with about 37% in year 2016 compared to year 2010, while the
same indicator increased with about 14% during the same time period for the European Union (average,
suggesting that the economic sector has a more dynamic development in the country.

GDP evolution in Romania, years 2011-2016
180 6.00%
160
5.00%
140 4.80%
120 3.90% 4.00%
100 3.50%
3.10% 3.00%
80 170
160
144 150
133 134
60 2.00%
40
1.10% 1.00%
20 0.60%
0 0.00%
2011 2012 2013 2014 2015 2016
GDP (billion EUR) Real GDP growth rate (%)
GDP in Romania has increased from 133 billion EUR in year 2011 to about 170 billion EUR in year 2016,
while real GDP growth has generally increased from 1.1% in year 2011 to about 4.8% in year 2016 (while on
average, the real GDP growth of EU was about 1.1%). Romania had one of the highest real GDP growths in EU
in year 2016.
GDP evolution in EU, years 2011-2016

15,000 2.50%
2.20%
14,500 2.00%
1.90%
1.70% 1.70%
1.50%
14,000
1.00%
13,500 14,855
14,755
0.50%
0.30%
13,000 14,021
0.00%
13,449 13,559
13,192
12,500 -0.50% -0.50%
12,000 -1.00%
2011 2012 2013 2014 2015 2016
GDP (billion EUR) Real GDP growth rate (%)
Romania is expected to continue its economic increase during the following years. As such, the International
Monetary Fund (IMF) has estimated that Romania will have one of the highest GDP growths among the EU
member states in year 2017.

I.3. Romania’s energy sector in an European context
As part of the European Union, Romania follows EU’s energy strategies and directives. The main EU strategies
include the following:
 Increasing EU’s energy security by creating and consolidating an integrated EU energy market,
diversifying external sources of energy supply and associated infrastructure, moderation of energy
demand and increasing energy production in EU, coordination of national energy policies, increase in
security, solidarity and trust between states and protection of critical infrastructure etc.
 Reducing greenhouse gas emissions in comparison to year 1990 with 80-95% by year 2050, 60% by
year 2040, 40% by year 2030 and 20% by year 2020.
 Increasing energy efficiency with at least 30% by year 2030 (target increased with a recent article
from 27%), a major focus being made on increasing energy efficiency of buildings.
 Promotion of renewable energy sources through six main directions – principle of technological
neutrality (ensuring transparency, economic efficiency and a competitive market by reducing
bureaucracy and a simplified authorization process), use of renewable energy sources in heating and
cooling (biomass, biogas, geothermal etc.), increasing the share of renewable energy sources or fuels
with low carbon emissions used in transportation (biofuels, hydrogen etc.), informing consumers on
renewable energy sources, strengthening sustainability standards for biomass-based energy, ensuring
a share of at least 27% energy from renewable sources in total gross final energy consumption by
year 2030.
 Designing an EU market of electrical energy with common rules for the functioning of the internal
market with a focus on promoting renewable energy sources, redesigning the wholesale market
(removing price caps, harmonization of dispatch rules, reducing transmission congestions of cross-
border interconnection in the power system, better remuneration for the participation of electricity
consumers in the electricity balancing market) and of the retail market (mostly through better
informing the consumers and increasing consumer rights).
 Improving the governance of the European Union for a more unified, simplified and more efficient
implementation of its energy strategies and policies.
In order to reach a 27% share of energy from renewable sources by year 2030, each country part of the EU has
adopted a target of at least 20% share of energy from renewable sources by year 2020 – at least 10% of
renewable energy being for the transport sector. According to EEA (European Environment Agency), by year
2014, Romania has reached a 24% share of energy from renewable sources, but only 4.7% of energy in the
transportation sector is from renewable sources (as highlighted in the following graph).
Share of renewable energies in year 2014 in Romania

compared to EU 2020 targets
30%
24%
25%
20%
20%
15%
10%
10%
4.70%
5%
0%
EU 2020 target Romania
Total Transport
Sources: EEA (European Environment Agency)

Furthermore, in order to minimise dependence on oil, EU promotes the development of alternative fuels
infrastructure (as per Directive 2014/94/EU):
 Electricity;
 Hydrogen;
 Biofuels;
 Synthetic and paraffinic fuels;
 Natural gas (including bio-methane) either in gaseous form ( CNG – compressed natural gas) or liquid
form (LNG – liquefied natural gas);
 LPG – Liquefied petroleum gas.
In order to meet the target of 10% of energy used in transportation to be from renewable sources, Romania
will need investments in infrastructure supporting use of alternative fuels – fuelling points for cars running on
alternative fuels.
Taxation of energy products and electricity in the European Union is controlled by Council Directive
2003/96/EC which restructures the EU framework for taxation of energy products and electricity. EU
legislation sets a minimum rate for fuels, although excise duties differ from one member state to another. As
it can be observed in the graph below, taxes in Romania for fuels are slightly higher than the EU minimum.
EXCISE DUTY FOR MOTOR FUELS (USED IN

TRANSPORTATION) AT 01 JANUARY 2017 (EUR / 1000
LITRES)
341
372
Romania
438
330
359
EU minimum
421
0 100 200 300 400 500
Diesel Unleaded gasoline Leaded gasoline

Source: European Commission

I.4. Overall energy sector in Romania: economic, political and legal
framework
Following the annexation of the Crimean peninsula in year 2014 by Russia, the Black Sea Basin has become
an area with high risk of political conflict. Furthermore, Russia has announced that it will cease using Ukraine
as a transit area to export natural gas in Europe by year 2019. In this context, Romania has to adjust its
infrastructure and contractual arrangements to ensure a safe supply route for natural gas import.
The Romanian energy market has evolved over the past years in order to be harmonised with EU’s legal
framework. The liberalization of the energy market has started since year 2007, when electricity suppliers
were separated from electricity distributors, but it has been an ongoing process, expected to be completed by
the end of year 2017.
As it can be observed in the following chart, Romania currently has a high self-sufficiency rate for coal, natural
gas and electricity and a smaller one for crude oil.
Energy self-sufficiency of Romania, years 2010-2016

100.0% 98.6% 98.1% 97.4% 99.1% 98.0% 98.4%
93.6% 93.1% 94.2%
90.0% 87.8%
85.4% 84.0% 84.9%
80.0% 79.9% 81.8% 80.3% 81.9% 80.4% 80.0%
78.0% 77.8%
70.0%
60.0%
50.0%
41.50% 42.80% 43.90% 43.40%
40.0% 38.20% 37.60%
30.0% 32.61%
20.0%
10.0%
0.0%
2010 2011 2012 2013 2014 2015 2016*
Coal Crude oil Natural gases Electricity

Sources: Romanian National Institute of Statistics (INS), Eurostat, Marketscope estimates
*Marketscope estimates
Energy self-sufficiency is estimated to drop in the long term as the Romanian Ministry of Energy estimates
local natural gas production to drop to zero by year 2035, followed by crude oil production which is expected to
drop to zero by year 2045.
The Energy Strategy of Romania for 2016-2030 puts a focus on the increase of nuclear energy within the
country’s energy mix, while decreasing the contribution of energy from natural gas and coal. Renewable
energy seems to no longer be supported by national programs, which will most likely lead to lower rate of
investments in wind, solar, hydro, biomass or other renewable energy following the next period (although
Romania still has a high potential for the sector).
The 220/2008 law for the promotion of renewable energy production regulates the green certificate market in
Romania. Green certificates are certificates which attest that some electricity is produced with renewable
energy. Green certificates are a tradeable commodity and are used especially in Europe to promote the use
and production of renewable energy: producers of electricity from renewable energy (wind, solar, aerothermal,
geothermal, hydrothermal or hydro) can sell them to distributors of electricity which are obligated to have a
percentage of their delivered electricity be produced from renewable sources. For year 2017, the minimum
value of a green certificate was 133 RON (29.45 EUR).

II. Coal market in Romania
II.1. Market size and structure
 Romania has an estimated total reserve of 12.6 billion MT of lignite, brown coal and peat (with
deposits of 986 million MT being in exploitation);
 The total reserves of hard coal are estimated at around 2.2 billion MT, 592 million MT being in
exploited deposits;
 Although one of Romania’s strategic long-term goals is to decrease its reliance on coal as an energy
source, this is expected to be implemented slowly as coal is estimated to keep having an important
role in the country’s energy mix in a short and medium turn as coal provides a third of the country’s
necessary electricity production and coal facilities can work under extreme weather conditions, both
during the summer and during the winter;
Coal consumption in Romania (million MT), years 2010-2016

37
36
33 0.8
0.7
1.0
27 27
25 25
0.7 0.8
0.7 0.8
36 34
31
25 24 25
23
0.8 1.0 1.3 1.0 0.8 0.8 0.8

2010 2011 2012 2013 2014 2015 2016
Hard coal Lignite, brown coal, peat Hard coal derivatives

Lignite derivatives Total
Source: Eurostat, national institutes of statistics, Marketscope calculations
*data for 2016 is estimated
 Coal and coal derivatives consumption decreased significantly in year 2013 in Romania and has
remained at around 24-27 million MT during the following years;
 Total coal consumption is estimated to have been the lowest in year 2016 during the 2010-2016 time
period;
 Consumption of lignite, brown coal and peat had a 94% share in coal consumption in Romania in year
2016, while hard coal had a 3% share in total consumption;
Coal PRODUCTION in Romania (million MT), years 2010-2016

36
34
31
0.002 25
25 24 23
35 34
31
25 23 25 23
0.004 0.04 0.04 0.05 0.08 0.01 0.01

2010 2011 2012 2013 2014 2015 2016
Hard coal Lignite, brown coal, peat Hard coal derivatives Total


 Over 90% of total consumption is covered by local production, although it has overall decreased
during years 2010-2016;
 Romania is among the top 10 producers in EU of lignite, although production of hard coal is rather
small;
 Production is expected to decrease in year 2017 and 2018 as multiple mines are to be closed during
these years;
Coal IMPORT in Romania (million MT), years 2010-2016
2.08 2.07 1.99

0.02 1.83 0.03 1.86 1.86 1.86
0.05
0.02 0.02 0.03 0.05
0.71
1.06 0.70 0.75
0.78 0.71 0.76
0.04
0.04 0.21 0.39
0.13 0.42 0.25
1.28
0.86 0.99 0.93
0.70 0.80 0.80
2010 2011 2012 2013 2014 2015 2016

 Import of coal and derivatives has also slightly decreased in the analysed period,
 Most imported products are hard coal and hard coal derivatives, as production of hard coal in
Romania is mostly very small;
Coal EXPORT in Romania (million MT), years 2010-2016
0.39
0.00
0.38
0.10
0.01
0.02 0.04 0.04
0.03 0.01
0.07 0.01
0.04 0.01 0.04
0.02 0.01 0.01 0.01
2010 2011 2012 2013 2014 2015 2016

 Exports of coal or coal derivatives are very small and rather insignificant on the overall market as
most coal production is used on the internal market;
 Although Romania has a high production of lignite, exported quantities are small;

Hard Coal - Main countries of import and export in ROMANIA, year 2016
IMPORT EXPORT
Country mil. EUR % 000MT % Country mil. EUR % 000MT %
Russia 51.3 77.8% 600.7 75.2% Serbia 0.3 99.5% 10.26 100.0%
South Africa 7.2 11.0% 109.6 13.7% Other 0.001 0.5% 0.003 0.0%
Poland 4.8 7.2% 52.0 6.5%
Czech Republic 1.1 1.7% 9.3 1.2%
Other 1.5 2.3% 27.2 3.4%
Source: Eurostat
 Over 75% of imports of hard coal in Romania in year 2016 were from Russia and about 14% were
from South Africa;
 Exports of hard coal are mostly very small;
Lignite, brown coal, peat - Main countries of import and export in ROMANIA, year 2016
IMPORT EXPORT
Hungary 4.2 45.5% 216.5 86.0% Bosnia and Herzegovina 0.07 53.8% 2.9 78.7%
Lithuania 1.3 13.5% 9.1 3.6% Moldova 0.03 26.6% 0.7 18.7%
Other 3.8 41.0% 26.2 10.4% Other 0.02 19.6% 0.1 2.6%
Source: Eurostat
 Hungary was the main source of import of lignite, brown coal and peat in year 2016;
Hard coal derivatives - Main countries of import and export in ROMANIA, year 2016
IMPORT EXPORT
Poland 96.7 78.1% 551.4 72.4% - - - - -
China 9.8 7.9% 85.3 11.2%
Other 17.4 14.0% 125.0 16.4%
Source: Eurostat
 Over 70% of imports of hard coal derivatives were from Poland in year 2016;
 There was no export of hard coal derivatives from Romania in year 2016;
Lignite derivatives - Main countries of import and export in ROMANIA, year 2016
IMPORT EXPORT
Poland 7.5 95.5% 43.5 94.5% United Kingdom 0.01 85.6% 0.017 88.5%
Russia 0.2 2.4% 1.7 3.6% Other 0.002 14.4% 0.002 11.5%
Other 0.2 2.1% 0.9 1.8%
Source: Eurostat
 Most imports of lignite derivatives in year 2016 were from Poland;

Overview of the coal market in Romania
Legend:
Hard coal mining area
Lignite mining area
Hard coal external trade
Hard coal derivatives

external trade
Lignite external trade
*only external trade for quantities

>100,000 is highlighted in the map
Map source: Google Maps

II.2. Competitive landscape
Following year 1990, mining production decreased significantly in Romania. Currently, no coal mine is
profitable and multiple exploitation sites are to be closed in year 2018. Main reasons behind the closing of
mines are: small value of coal produced, high production costs due to old extraction technology, lack of
investments for production efficiency, increasing costs for meeting environment standards, decreasing
internal demand of coal.
Main areas of coal mining in Romania are:

 Valea Jiului, in Hunedoara County (South-Western Romania), for hard coal (2 out of the 4 currently
running mines are planned to be closed in year 2018);
 Rovinari basin, in Gorj County (South-Western of Romania), for lignite (multiple mines entered
conservation in year 2017 and more will close during the following years);
 Filipestii de Padure and Valea Pucioasa, in Prahova County (Southern Romania), for lignite (only two
more mines, exclusively with surface extraction);
The two main producers in Romania are the national companies Complexul Energetic Oltenia (Oltenia Energy
Complex) and Complexul Energetic Hunedoara (Hunedoara Energy Complex), both in a critical financial state.
Complexul Energetic Oltenia (http://www.ceoltenia.ro)

 Company main activities include lignite extraction and preparation and electricity and
Overview thermal energy production;
 The company covers more than 95% of the country’s lignite production;
599 577 607

502 509
27 1
Financial data
(mil. EUR) 2012 2013 2014 2015 2016-31
-156
-216
Turnover Profit
 The company has had a financial loss since year 2014;

 The company is in negotiation with China Huadian Engineering Company for
Investments
construction of a new lignite based power plant in order to replace old, defunct ones
Complexul Energetic Hunedoara (http://www.cenhd.ro)

 Main producer of hard coal in Romania;
 The company also produces electricity (in two locations, at Deva and Paroseni) and
Overview thermal energy;
 Out of its 4 current mining locations, two are scheduled to be closed in year 2018
(Lupeni and Lonea), leaving only two to remain active (Livezeni and Vulcan)
189
151 118 90
52
9
2012 2013-33 2014 2015 2016

-79
Financial data -191
(mil. EUR)
-374
Turnover Profit
 The company has had financial losses since year 2013 and been in insolvency since
year 2016;

II.3. Prices
 Average yearly import prices of coal (hard coal and lignite) as well as hard coal and lignite derivatives
have had a generally decreasing trend in the previous years, with the largest drops in years 2012 and
2013;
 Only lignite import price had a significant recovery in year 2016;
 Market analysts estimate that prices for coal and lignite will continue to drop during the following
years;
 The following chart highlights the evolution of yearly average import prices for hard coal, lignite, hard
coal derivatives and lignite derivatives in Romania (export prices are not highlighted as exported
quantities are low);
Average import prices for coal in Romania (EUR/MT), years 2010-2016

350
320
300
250 256
236 228
216
200 206
196 191
186
184 179
165 171
163
150
117 117
100 106 103
88 86 82 87 82
50
40 36 37
27 29
0
2010 2011 2012 2013 2014 2015 2016
Hard coal Lignite, brown coal, peat Coal derivatives Lignite derivatives
Source: Eurostat, Marketscope calculations

III. Natural gas market in Romania
III.1. Market size and structure
 Natural gas represents about 30% of the country’s primary energy consumption;
 Advantages for using natural gas as an energy source in Romania’s energy market are: increased
availability of domestic resources, reduced environmental impact, high flexibility of natural gas based
power plants (which can balance out intermittent production through renewable sources such as wind
or solar), existing infrastructure for extraction, transport, storage or distribution;
 The local market also benefits from a favourable position in relation to the transport capacities in SE
Europe and the possibility of interconnecting the national distribution network with transport systems
from Central Europe and with natural gas resources in the Caspian Basin, East of the Mediterranean
Sea and the Middle East through the Southern Corridor;
 Unlike most countries in SE Europe, Romania has the capabilities to cover its own natural gas
demand from local production and does not rely on imports from Russia;
 Main uses of natural gas in Romania are: electricity production, energy (for industrial sector, heating
for commercial and non-commercial sector), production of chemical fertilizer etc.
Natural gas consumption in Romania (Tj), years 2010-2016
485,976 474,098
449,703
416,272
388,639 375,608 379,012
360,844 362,862 363,527 360,068 366,995 367,820
321,843
123,114 110,571
88,859
56,204 57,215
21,644 7,846
58 46
2010 2011 2012 2013 2014 2015 2016
Consumption Production Import Export
Source: Eurostat, national institutes of statistics, Marketscope calculations; *data for 2016 is estimated
 Consumption of natural gas in Romania had a decreasing trend during years 2012-2015;
 Production of natural gas has reached over 360,000 Tj yearly during years 2010-2015, but dropped to
about 320,000 Tj in year 2016 (mostly on behalf of decreasing prices of imported gas compared to
locally produced natural gas);
 Production covered about 98% of total natural gas consumption in year 2015, though the percentage
dropped to about 85% in year 2016;
 Imports followed the general trend of consumption, with an increase in years 2011 and 2016 and a
decrease in years 2012-2015;
 Exports generally represent a negligible quantity as Romania lacks the necessary infrastructure to
export natural gas (only pipeline which allows export of natural gas from Romania connects the
country to Republic of Moldova, however, quantities delivered through this pipeline are low, or the
pipeline is entirely unused);
 Romania is obligated by EU regulations to ensure the necessary infrastructure for the export of natural
gas to its EU neighbours: Hungary and Bulgaria (the country has begun taking necessary steps
towards this);
Natural gas - Main countries of import and export in ROMANIA, year 2016
IMPORT EXPORT
Country mil. EUR % Tj % Country mil. EUR % Tj %
Russia 243.0 98.9% 56,612.0 98.9% Moldova 0.23 100.0% 46.0 100.0%
Hungary 2.7 1.1% 603.0 1.1%
Source: Eurostat

Overview of the natural gas market in Romania
Legend:
Major natural gas deposits
Natural gas external trade
*only external trade for quantities >1,000

Tj is highlighted in the map

III.2. Competitive landscape
Development of the natural gas transportation network in Romania
Source: Gas Infrastructure Europe
 Major producers of natural gas in Romania are SNG Romgaz and OMV Petrom, with a cumulated
share of 94.6% in year 2015;
Romgaz (https://www.romgaz.ro)
Overview  The company had a share of 48.5% in natural gas production in Romania in year 2015;
994 1,011
862 881 912
760
279 317 269

243 225 228
Financial data
(mil. EUR)
2011 2012 2013 2014 2015 2016
Turnover Profit
 Turnover and profits decreased in years 2015 and 2016, however, the company
managed to reach profits of over 200 million EUR/year during 2011-2016;
 Major investments made by the company are tied to geological exploration for new
natural gas reserves, development of new production capacities, improving
Investments
performances of installations and equipment and safety, improving capacity, flexibility
and safety of storage facilities;

OMV Petrom (http://www.omvpetrom.com)
Overview  The company had a share of 46.1% in natural gas production in Romania in year 2015;
4,378
3,909 4,090
3,715
3,079
2,789
870 864 1,095

Financial data 413
(mil. EUR) 202
2011 2012 2013 2014 2015

-142 2016
Turnover Profit
 Company profits decreased during years 2014-2015, but had a recovery in year 2016;
Transgaz (http://www.transgaz.ro)
 Transgaz is the national company responsible for the transportation of natural gas in
Overview Romania and with the maintenance and usage of the natural gas pipeline network in
the country;
390
364 356
317 336
298
113 110 132

90 74 76
Financial data
(mil. EUR)
2011 2012 2013 2014 2015 2016
Turnover Profit
 Profits and turnover have generally been on an increasing trend over the past few
years;
 The Romanian state owns about 58.5% shares in the company;
 The national distribution network of natural gas in Romania is rather old and in need of
major investments for repair, maintenance or rehabilitation, however, these have
Investments proven to be difficult to implement by the company (motives invoked by company
officials are increased bureaucracy, delays in obtaining authorizations, cumbersome
procedures to organizing auctions for different project etc.)
 The European Union has a long term strategy to increase the usage of natural gas in transportation
(as CNG or LNG) as the fuel has a less environmental impact than other fossil fuels;
 As such, many EU countries have made considerable investments in developing a CNG and LNG
infrastructure (filling stations, transport routes, storage units etc.);
 According to an alternative fuel strategy adopted by EU member states, a harmonised network of CNG
and LNG filling stations is to be implemented by year 2020 at a national level throughout EU (with a
maximum of 150 km between each CNG filling station and a maximum of 400 km between each LNG
filling station);
 In spite of this, CNG and LNG infrastructure is grossly underdeveloped in Romania, with only one
player on the market, Antares Group, having opened a CNG filling station in the country (at Ramnicu
Valcea) and planning to make further investments in CNG infrastructure in Romania;
 In terms of LNG infrastructure, a planned project named AGRI would connect Azerbaijan with Georgia
and Romania and would include an LNG terminal in Constanta, Romania;

III.3. Prices
 In year 2016, declining international oil prices led to low import prices of natural gas, especially for
long-term contracts, which reached even or even lower prices than domestic prices;
 Furthermore, starting with year 2016, the tariff for reserving capacity in the natural gas national
transport system has been the same for imported and locally produced gas (up until then, tariffs for
imported natural gas was higher, giving local producers a competitive advantage);
 In the following years, natural gas producers in Romania should maintain a competitive level in
relation to imports;
Evolution of natural gas prices in Romania (EUR/GJ), year 2010-2016
10.31 10.59 10.34 9.99

9.64 9.93 9.57
9.02 9.09 9.01
8.53 9.45
7.81 8.85 9.22 8.98
7.37 7.57 8.52 8.58 8.65
7.64 7.73 7.90 7.68 7.61 7.91
7.52
5.75 5.76 5.92 5.87 5.75 5.64

5.29 5.40 5.37
4.83 4.98
4.12 4.06 4.23 4.98 4.87 4.65
4.18 4.14 4.22 4.46 4.44 4.26 4.17
4.02 3.99 3.94 4.05
Commercial users (taxes included) Household users (taxes included)

Commercial users (no taxes) Household users (no taxes)
Notes: Graph highlights prices with all taxes and levies included vs prices with no taxes and levies;
Prices for domestic consumers are average prices for consumption between 20 GJ and 200 GJ;
Prices for industrial consumers are average prices for consumption between 10,000 GJ and 100,000 GJ
 Natural gas prices for commercial users followed an upward trend during years 2010-2014 and
started to fall during the following analysed period;
 The highest increases in natural gas prices for households were in 2013 S2 and 2015 S2 and
decreased slightly in year 2016;
Average import prices of natural gas in Romania (EUR/GJ), years 2010-

2016
9.12
7.95 7.94 7.65
6.89 6.79
4.29
2010 2011 2012 2013 2014 2015 2016

Source: Eurostat

IV. Oil and oil products market in Romania
IV.1. Overall refining sector in Romania
Romania’s refining sector has followed the general European trend of closing capacities over the past
decades. Refineries with smaller capacities or refineries with older equipment have been the most affected,
most refinery closures falling into one or both categories. Only one of the closed refineries (Arpechim) was
transformed into a storage and distribution facility, while the others were demolished or abandoned.
Main factors behind the closures of refineries are:

 Deterioration of installations, equipment and of old and inefficient technology used by refineries
which increase production costs beyond profitability margins, combined with lack of financial
possibilities for investments in modernising such refineries (or investments are deemed unprofitable);
 Increasing prices of crude oil and low profit margins (as such, only modern refineries which use
efficient technologies and have a substantial yield can survive in the current market conditions);
 Increasing competition from Russia, India or Middle East which have refineries with much bigger oil
refinery capacities then those in Europe;
 Challenges regarding the transition to low carbon economy and higher regulation and costs compared
to anywhere else in the world (especially in regards to refineries in EU member states);
 Difficulties in supply with crude oil;
Crude oil consumption in Romania (million MT), years 2010-2016

11.08
10.64 10.45
9.91
9.45 9.28
8.84
7.47
6.73 6.60
5.82 5.45
5.03 5.30
4.17 4.08 3.86 4.04 3.96 3.90 3.66
0.08 0.08 0.05 0.06 0.05 0.05 0.05

2010 2011 2012 2013 2014 2015 2016
Crude oil - Main countries of import and export in ROMANIA, year 2016
IMPORT EXPORT
Russia 920.3 44.4% 3,308.8 44.3% Serbia 7.81 66.1% 32.9 70.1%
Kazakhstan 780.7 37.7% 2,847.3 38.1% Ukraine 3.98 33.8% 13.9 29.8%
Azerbaijan 100.9 4.9% 329.6 4.4% Other 0.01 0.1% 0.0 0.1%
Turkmenistan 89.7 4.3% 320.8 4.3%
Iran 77.5 3.7% 277.7 3.7%
Other 104.2 5% 384.1 5%
Source: Eurostat,
Local production of crude oil covered about 33% of consumption in year 2016, import having generally
increased during years 2013-2016, while exports have generally been insignificant.

Main oil refineries in Romania and external trade with crude oil
Legend:
## Large active refinery (annual capacity >= 1 mil. MT/year)
## Small active refinery (annual capacity < 1 mil. MT/year)
## Inactive refinery
Crude oil external trade

10
*only external trade for quantities >1million MT is highlighted in the map
7
6
9
8
1
2 5 4
3 Kazakhstan

Note: Numbers in the map above correspond to the numbers in the table below

Annual oil
processing
# Location Name Ownership capacity Status / Products Website
(million
mt/year)
Gasoline, diesel, jet fuel, LPG,
1 Ploiesti Petrobrazi Refinery Ploiesti OMV Petrom 4.5 http://www.petrom.com/
chemicals etc.
2 Pitesti Arpechim OMV Petrom 3.5 Closed. http://www.petrom.com/
Gasoline, diesel, LPG,
3 Constanta Petromidia Rompetrol Group 5 http://www.rompetrol.ro/
chemicals etc.
4 Ploiesti Vega Rompetrol Group 0.5 Bitumen, chemicals etc. http://www.rompetrol.ro/
5 Ploiesti Petrotel Lukoil 2.4 Gasoline, diesel, LPG etc. http://www.lukoil.com/
6 Onesti Rafo Rafo SA 3.5 Closed. http://www.rafo.ro/
Petrochemical
7 Darmanesti Rafinaria Darmanesti 0.7 Closed. n/a
Holding
8 Ploiesti Astra Romana Interagro 0.9 Closed. n/a
9 Campina Steaua Romana Omnipex Group 0.4 Closed. n/a
10 Suplacu de Barcau Petrolsub Ecodiesel Oradea 0.4 Closed. n/a
Map source: Company websites, annual reports, online directories, articles
Recent investments in the refining sector in Romania include:

 Romania, OMV, Petrobrazi – a total of 1.1 billion EUR were invested in the refinery after its privatization, 600 million EUR were invested between years
2010 and 2014; the main focus of the most recent investment in year 2014 was to increase the refinery’s competitiveness
 Romania, Rompetrol, Petromidia – recent investments have been bade in modernization and increasing the refinery’s capacity; company officials have
declared that they plan on continuing investments in Romania in order to double the refinery’s current processing capacity (to 10 million mt per year),
increase the company’s retail distribution points as well as expand the company’s portfolio (ex, electricity production);
Increasing competition and oil prices will continue to drive players on the sector to invest in modern and efficient refining technologies as well as diversification of
their portfolio in order to survive.
Main sources of crude oil for the currently active refineries are: local production for OMV Petrom Petrobrazi refinery, Russian imports for Lukoil Petrotel refinery,
Kazakhstan imports for Rompetrol Petromidia and Vega refineries.

IV.2. Oil products market size and structure
 Share of diesel among fuel consumption in Romania has slowly increased in recent years, following a
general European trend (diesel is a preferred motor fuel in Europe due to lower emissions and higher
efficiency);
 As such, local refineries have worked on increasing their diesel production capacities in recent years;
Stock of vehicles in Romania

Year Total Diesel Gasoline Other
Year 2016 7,010,608 3,036,545 3,586,686 387,377
Year 2010 5,418,989 1,944,333 3,221,317 253,339
Structure of stock of vehicles Structure of stock of vehicles

in Romania, year 2016 in Romania, year 2010
6% 5%
43% 36%
51% 59%
Diesel Gasoline Other Diesel Gasoline Other
Source: Ministry of Internal Affairs, Romania

*other category includes vehicles with no motor or motors with alternative fuels such as electricity, LPG, natural gas etc.
Oil products consumption in Romania (million MT), years 2010-2016
7.69 7.74
7.24 7.36
7.01 6.86 7.02 0.53 0.56
0.43 0.49 0.28 0.31
0.47 0.49 0.43 0.34
0.42 0.55 0.40
0.41
4.82 5.24 5.23

4.35 4.45 4.64 4.60
1.60 1.31 1.32 1.30 1.35 1.30 1.24
0.17 0.21 0.30 0.29 0.35 0.34 0.40

2010 2011 2012 2013 2014 2015 2016
Aviation spirit Kerosene Gasoline Diesel

Fuel Oil LPG Total
 Total consumption of petroleum products has increased during years 2010-2016 (about 10% increase
from year 2010 to year 2016), due to increasing consumption of diesel, kerosene and LPG, while
consumption of gasoline, fuel oil and aviation gasoline decreased;
 Biofuel usage has slowly increased in Romania in recent years, with minimum biofuel targets in year
2016 being 6.5% for diesel and 4.5% for gasoline;

Structure of oil products market in Romania, years 2010 VS 2016
7% 0% 5%
4%
7% 0%2% 16%
6%
23% Aviation spirit
Kerosene
Gasoline
2010 2016
Diesel
Fuel Oil
LPG
62%
68%
 Production had a significant increase in year 2014 (14% increase compared to the previous year) and
a slight decrease in year 2012 (-6% change compared to year 2011);
 In year 2016, production had 4% increase compared to year 2015;
 Between years 2010-2016, total production of oil products had an overall increase of about 16%
(most significant increases during the analysed period were for kerosene – 39% and diesel – 33%,
while production for gasoline increased with about 12%, for LPG with about 4% and fuel oil decreased
with about 59%);
Oil products production in Romania (million MT), years 2010-2016
9.77
9.43 9.38
8.44 8.46 0.60
8.26 0.56 0.57 0.31
7.92 0.32 0.31
0.57 0.58 0.52
0.76 0.72 0.53 0.36
0.56
5.17 5.22
5.12
3.91 3.90 4.21
3.81
2.90 2.96 3.00 2.98 3.24

2.75 2.86
0.30 0.30 0.28 0.30 0.38 0.41 0.41

2010 2011 2012 2013 2014 2015 2016

Fuel Oil LPG Total

Oil products import in Romania (million MT), years 2010-2016
2.04 2.02
1.79 0.17 0.18
0.02 0.02
1.56 0.08
0.00 1.55 1.58
1.51
0.11 0.10 0.11 0.13
0.08 0.01 0.04 0.06
1.55 1.73 1.67
1.27 1.27 1.26 1.29
0.06 0.07 0.11 0.13 0.08 0.11 0.13

0.04 0.06 0.04 0.01 0.02 0.02 0.02
2010 2011 2012 2013 2014 2015 2016

Fuel Oil LPG Total
 Imported and exported volumes have also generally increased (with 29% and 35% respectively in year
2016 compared to year 2010), although Romania remains a net exported of petroleum products;
Oil products export in Romania (million MT), years 2010-2016
4.04
3.65 3.73
0.22
0.02
0.20 0.21
3.11 0.04 0.05
2.99
0.20 2.79
0.21 1.66
0.33 2.47 0.20
0.00 1.63 1.61
0.43
0.18
0.01
0.72 0.87
0.83 0.71
1.71 2.12
1.69 1.73 1.78
1.36 1.55
0.16 0.15 0.02 0.03 0.05 0.08 0.03

2010 2011 2012 2013 2014 2015 2016

Fuel Oil LPG Total

Aviation gasoline - Main countries of import and export in ROMANIA, year 2016
IMPORT EXPORT
Poland 0.62 99.9% 0.74 100.0% Other 0.0014 100.0% 0.0004 100.0%
Other 0.0007 0.1% 0.0003 0.0%
Source: Eurostat
Kerosene - Main countries of import and export in ROMANIA, year 2016

IMPORT EXPORT
Bulgaria 3.7 42.4% 8.7 42.1% Georgia 5.58 51.7% 14.6 56.0%
Serbia 3.6 40.7% 8.5 41.3% Moldova 2.78 25.7% 6.6 25.1%
Austria 1.0 11.6% 2.4 11.7% Bulgaria 1.03 9.5% 2.2 8.3%
Hungary 0.4 4.5% 1.0 4.9% Hungary 0.65 6.0% 1.4 5.4%
Other 0.07 0.8% 0.007 0.0% Other 0.77 7.1% 1.4 5.2%
Source: Eurostat
Gasoline - Main countries of import and export in ROMANIA, year 2016

IMPORT EXPORT
Hungary 42.4 70.5% 89.2 70.4% Georgia 119.98 13.9% 298.2 14.0%
Slovakia 6.2 10.2% 13.7 10.8% Egypt 90.04 10.4% 229.1 10.8%
Austria 6.3 10.5% 13.2 10.4% Lebanon 77.11 8.9% 188.2 8.9%
Italy 4.8 8.0% 10.3 8.1% Bulgaria 74.53 8.6% 181.7 8.6%
Other 0.5 0.8% 0.3 0.3% Turkey 72.65 8.4% 172.2 8.1%
Greece 72.40 8.4% 171.2 8.1%
Moldova 71.99 8.3% 168.1 7.9%
United Arab Emirates 60.60 7.0% 163.4 7.7%
Israel 64.96 7.5% 159.9 7.5%
Tunisia 36.48 4.2% 92.5 4.4%
Hungary 26.11 3.0% 59.2 2.8%
Other 96.55 11.2% 240.3 11.3%
Source: Eurostat
 Quantities of gasoline exports were considerably higher than imports in year 2016;
 Main countries of exports were countries outside the EU or neighbouring countries’
Diesel - Main countries of import and export in ROMANIA, year 2016

IMPORT EXPORT
Russia 384.7 59.3% 1,017.7 60.9% Moldova 155.87 25.6% 408.3 24.6%
Hungary 95.2 14.7% 238.6 14.3% Bulgaria 141.05 23.2% 372.8 22.5%
United States 65.0 10.0% 173.1 10.4% Turkey 76.76 12.6% 237.5 14.3%
Bulgaria 32.2 5.0% 73.9 4.4% Hungary 60.30 9.9% 158.2 9.5%

Greece 26.7 4.1% 63.5 3.8% Greece 53.43 8.8% 149.4 9.0%
Canada 15.4 2.4% 36.4 2.2% Serbia 54.70 9.0% 145.9 8.8%
Slovakia 13.9 2.1% 29.3 1.8% Georgia 35.81 5.9% 103.4 6.2%
United Arab Emirates 8.5 1.3% 18.8 1.1% Slovakia 19.62 3.2% 48.0 2.9%
Netherlands 4.2 0.7% 14.8 0.9% Albania 5.19 0.9% 17.5 1.1%
Other 3.0 0.5% 4.4 0.3% Gibraltar 2.60 0.4% 10.0 0.6%
Other 2.94 0.5% 6.8 0.4%
Source: Eurostat
 Diesel imports were about the same as diesel exports in year 2016 (1.7 million MT), with Russia being
the main country of import, while the main countries of export were Moldova, Bulgaria, Turkey,
Hungary, Greece, Serbia and Georgia;
Fuel oil - Main countries of import and export in ROMANIA, year 2016
IMPORT EXPORT
Russia 3.1 61.1% 11.2 61.7% Turkey 1.41 47.1% 10.3 58.8%
Kazakhstan 1.9 38.3% 6.9 38.3% Bulgaria 0.81 27.0% 2.9 16.8%
Other 0.0292 0.6% 0.0014 0.0% Georgia 0.36 11.9% 1.6 9.2%
Moldova 0.22 7.2% 1.4 8.0%
Israel 0.20 6.7% 1.3 7.2%
Source: Eurostat
LPG - Main countries of import and export in ROMANIA, year 2016

IMPORT EXPORT
Kazakhstan 37.1 65.0% 125.6 70.0% Bulgaria 33.17 61.6% 137.1 62.6%
Russia 4.2 7.4% 14.2 7.9% Serbia 6.29 11.7% 23.6 10.7%
Hungary 5.1 8.9% 14.2 7.9% Moldova 4.00 7.4% 13.3 6.1%
Other 10.7 18.7% 25.4 14.2% Egypt 3.16 5.9% 13.2 6.0%
FYR of Macedonia 2.55 4.7% 9.7 4.4%
Morocco 1.17 2.2% 7.9 3.6%
Tunisia 1.17 2.2% 6.7 3.1%
Other 2.38 4.4% 7.7 3.5%
Source: Eurostat
 Poland was the main country of import for LPG in year 2016, while the main country of export was
Bulgaria;
 Most of imported volumes of total petroleum products in Romania seem to be from Russia or
Hungary, while exports are towards neighbouring countries such as Bulgaria or Moldova, but also
towards countries outside of the EU such as Georgia and Turkey.

Overview of petroleum products market in Romania
Legend:
Gasoline external trade
Diesel external trade
*only external trade for quantities

>200,000 is highlighted in the map
Georgia

IV.3. Competitive landscape
 There are 4 main types of players identified on the oil fuels market:
 Vertically integrated companies (either international companies who also have a subsidiary in the
respective country or a local player with both upstream and downstream operations) who own one or
more refineries in the respective country (supplied via crude oil imports or own oil exploration and
production operations) and have a developed distribution network for selling petroleum products via
own retail network, to wholesale consumers (transportation and construction companies etc.) or to
local distributors and resellers;
 Importers of petroleum products: this mostly includes international companies who use their own
refineries from other countries to supply a local market but may also buy petroleum products from
local producers;
 Independent retail networks are players with no production capacities but are supplied by local
producers or distributors. They are less present in more mature markets such as Austria, Greece or
Czech Republic, but have a larger share in more evolving markets (Ukraine, Bulgaria. Bosnia and
Herzegovina etc.);
 Local distributors who buy petroleum products and resell them to independent retail networks, other
distributors or wholesale consumers.
Petroleum products
Refineries importers
OMV Petrom MOL
Rompetrol NIS / Gazprom
Lukoil SOCAR
Oscar Downstream
Storage facilities
Independent retail
Local distributors
networks
Retail consumers Wholesale consumers

 There are an estimated 2,000 gas stations in Romania, with the major retail chains holding more than
90% of the entire retail distribution network and more than 90% of total retail diesel and gasoline
sales on the market;
 The number of independent stations has decreased during the past two decades as international
players with a more efficient supply and distribution network have expanded their retail network in
Romania;
Number of gas stations in Romania by major retail chains, year

2017
716
552
308
210
158
38 18
OMV Petrom Rompetrol Lukoil Mol SOCAR NIS/Gazprom Other

Source: Player websites and reports, articles
Note: Rompetrol number also includes partner stations (gas stations which work under the Rompetrol brand through a franchise
partnership)
OMV Petrom (http://www.omvpetrom.com)

 Austrian company;
 The company is a leader on the local market of oil fuels;
Overview  Supply sources: own refinery and imports;
 The company operates under two brands on the local market: OMV (153 gas stations)
and Petrom (399 gas stations);
4,378
3,909 4,090
3,715
3,079
2,789
870 864 1,095

Financial data 413
(mil. EUR) 202
2011 2012 2013 2014 2015

-142 2016
Turnover Profit
 Company profits decreased during years 2014-2015, but had a recovery in year 2016;
 Investments have mostly been focused on crude oil and natural gas exploration and
Investments extraction, expanding the refining capacity of the Petrobrazi refinery and expanding its
distribution network

Rompetrol / Kaz Munai Gaz (www.rompetrol.ro)
 Kazakh company;
 The company’s extensive retail network in Romania includes: own stations, partner
Overview stations, express stations and LPG retail points;
 The company also operates 10 storage facilities in Romania and bottling stations;
 Supply sources include own refinery and imports;
2,135
1,966 1,854
1,804 1,830 1,826
-26 10 14
-34 -1 -31
Financial data
2011 2012 2013 2014 2015 2016
(mil. EUR)
Turnover Profit
 The above financial data is for the company Rompetrol Downstream, part of the
Rompetrol group in Romania, which deals mostly with the distribution and selling of
petroleum products;
 As it can be observed in the above chart, profits have been considerably lower than
turnover (which had a significant decrease in year 2015);
 Company’s investments have focused mostly on increasing the refining capacity and
Investments modernizing the Petromidia Navodari refinery as well as expanding and increasing the
efficiency of its distribution and retail network;
Lukoil (http://www.lukoil.ro/ro/)
 Russian company
Overview
 Supply sources: own refinery and imports;
1,288 1,353 1,319

1,223 1,195
1,126
Financial data
(mil. EUR) -27 -50 -11 -0.04 8 -4
2011 2012 2013 2014 2015 2016
Turnover Profit
 As it can be observed in the above chart, the company only had a financial profit in one
year during the 2011-2016 period;
 Company officials have occasionally declared in the press that they consider a market
exit and the possibility of selling the Petrotel refinery;
Other information  The Lukoil owned Burgas refinery in Bulgaria which has a considerably higher refining
capacity compared to the Petrotel refinery in Romania is more likely to attract
investments by the player;

MOL (https://molromania.ro/ro/)
 Hungarian company
Overview
 Supply sources: imports (especially from Hungary);
995 1,054
931 979 979
740
Financial data 34
-3 17 20 21 16
(mil. EUR)
2011 2012 2013 2014 2015 2016
Turnover Profit
 Turnover has generally increased during years 2011-2016 and the company managed
to obtain a financial profit in years 2012-2016;
Investments  The company has worked on modernising and expanding its retail network;
SOCAR (https://www.socar.ro/)
 Company from Azerbaijan;
Overview
 Supply sources: imports;
746
583 616
573
233
Financial data 23.34 -26 -15 -12 -9 2 4

(mil. EUR)
2011 2012 2013 2014 2015 2016
Turnover Profit
 The company is a recent market entrant and has managed to turn a profit in years
2015 and 2016;
 Up until year 2015, the company had made total investments of about 50 million EUR
Investments in Romania and company officials declared that they plan on continuing investments in
Romania for expanding its retail network;
NIS/Gazprom (http://www.gazprom-petrol.ro)
 Serbian/Russian company
Overview
 Supply sources: imports (especially from Serbia and Russia);
49
39
33
19
0.05 -10 -13 -8 -5

Financial data -4
(mil. EUR) 2012 2013 2014 2015 2016
Turnover Profit
 As a recent market entrant (the company’s Romanian branch was founded in year
2011), the company has so far only had financial losses, though turnover has
significantly increased;
Investments  The company plans to significantly increase its retail network in Romania;

Oscar Downstream (http://www.oscars.ro/)
 Romanian company;
 Supply sources: imports;
 The company focuses on distribution of motor fuels (especially diesel) to
Overview industrial/commercial consumers through wholesale, in-house fuelling stations (the
company periodically refuels the stations according to the customer’s needs) or
unmanned fuelling stations which can be operated by card;
 The company operates 7 storage facilities across the country for a total coverage of
Romania and has its own auto fleet for distribution of motor fuels;
2,468 2,359
2,250.31
1,902 1,764 1,717
Financial data
27 30 35 40 44 52
(mil. EUR)
2011 2012 2013 2014 2015 2016
Turnover Profit
 Although turnover has decreased in years 2014-2016, the company is the 5th on the
Romanian market of petroleum products after OMV Petrom, Rompetrol, Lukoil and
MOL;

IV.4. Prices
 Prices of petroleum products are greatly influenced by international crude oil prices, production and
distribution costs, market demand, taxes and other factors;
Average import prices of petroleum products in Romania (EUR/MT), years 2010-

2016
837
779 769
809 754
795 780
770
729 743 733
618 669
705 570
599 669
554 625 628 474
580 577
547 484
473
491 503 428
388
386 368
318
280
257
2010 2011 2012 2013 2014 2015 2016
Kerosene Gasoline Diesel Fuel Oil LPG

Data for aviation spirit is not included due to small quantities of foreign trade
 Average import and export prices followed a similar trend during years 2010-2016, with increases
during years 2010-2012 and decreases during the following years;
 Of the analysed petroleum products, gasoline, kerosene and diesel seem to have the highest average
import/export prices, while LPG and fuel oil have the lowest average prices for import/export;
Average export prices of petroleum products in Romania (EUR/MT), years 2010-

2016
912
777 769
775 790
709 731 643
697 703
594 646 667
634
551 492
529 542
514 572 508 493
554 467 414
385 461 469 406

367
379 308
246
211
172
2010 2011 2012 2013 2014 2015 2016
Kerosene Gasoline Diesel Fuel Oil LPG

Data for aviation spirit is not included due to small quantities of foreign trade

 The following chart highlight the estimated evolution of average retail prices for motor fuels in
Romania between years 2010 and 2017;
Average retail prices of petroleum products in Romania, years 2010-2017

Gasoline (EURO95) (EUR/1000 litres) Diesel (EUR/1000 litres)
Fuel Oil (EUR/MT) LPG (EUR/1000 lintres)
1,600
1,400
1,200
1,000
800
600
400
200
0
04/01/10 04/01/11 04/01/12 04/01/13 04/01/14 04/01/15 04/01/16 04/01/17
Note: Prices represent average pump prices and include VAT, taxes and duties;
Source: European Commission
 As it can be observed in the above chart, average LPG retail prices are about half of average retail
diesel and gasoline prices;
 Gasoline and diesel prices have generally followed a similar trend, reaching a high in June 2014 and
then dropping to about 1,000 EUR/1000 litres in May 2017;
 Average retail prices for LPG in May 2017 were about 490 EUR/1000 litres;

V. Electricity market in Romania
V.1. Market size and structure
 Romania is a net exporter of electricity;
 Electricity production surpassed 60 thousand GWh in year 2014 and continued to increase in years
2015 and 2016;
 Both exports and production had significant increases in years 2014-2015;
 Electricity imports have generally remained low (under 5 thousand GWh during the analysed years);
Electricity consumption in Romania (GWh), years 2010-2016
66,122
60,699 61,277
55,923 56,490
53,694 54,134
61,105
53,649 54,583 53,947 52,118 53,574 54,549
10,504 8,587
8,200
3,041 2,942 1,149 2,466
3,776 3,570
767 1,036 1,402 450 1,075
2010 2011 2012 2013 2014 2015 2016
Structure of electricity capacity and generation in Romania, year 2015

Thermoelectric Hydroelectric Wind Solar Nuclear
Electricity generation 43% 26% 11% 3% 18%
Capacity 48% 28% 13% 6% 6%
Source: INS
 Romania’s total installed electricity capacity is estimated to be around 23.829 GW in year 2015;
 Romania has one of the most diverse electricity market in terms of gross electricity generation, hydro,
nuclear, wind, coal and natural gas each having over 10% share in the country’s electricity generation;
 The top industries in Romania which are consumers of electricity are:

o Metallurgy;
o Metallic constructions, machines and equipment;
o Non-metallic minerals;
o Chemistry and synthetic fibres;
o Food, drinks and tobacco;
o Processing of rubber and plastics;

Electricity - Main countries of import and export in ROMANIA, year 2016
IMPORT EXPORT
Country mil. EUR % GWh % Country mil. EUR % GWh %
Hungary 76.2 66.0% 2,310.6 64.7% Serbia 124.40 41.6% 3,473.1 40.4%
Serbia 26.5 22.9% 908.3 25.4% Hungary 104.84 35.1% 3,127.8 36.4%
Other 12.8 11.1% 351.4 9.8% Bulgaria 61.94 20.7% 1,772.1 20.6%
Other 7.90 2.6% 214.2 2.5%
Source: Eurostat,
 Main country of import for electricity in Romania in year 2016 was Hungary, while main countries of
export were Serbia, Hungary and Bulgaria;

Overview of the electricity market in Romania
Legend:
Electricity external trade
*only external trade for quantities >1,000

GWh is highlighted in the map
Bulgaria

V.2. Competitive landscape
 The electricity distribution market in Romania will be fully liberalised starting with year 2018,
however, in practice, most final users (especially individuals) won’t seek alternative offers to their
current supplier (due to lack of interest on their part, due to not being informed on the subject,
restrictive contractual clauses introduced by current suppliers etc.);
 Top producers of electrical energy in Romania are: Hidroelectrica (hydroelectric power plants),
Complexul Energetic Oltenia (lignite power plant), Nuclearelectrica (nuclear power plant at
Cernavoda), Electrocentrale Bucuresti (thermoelectric stations), Complexul Energetic Hunedoara (hard
coal power plants), OMV Petrom (Brazi natural gas power station);
 Main distributors of electricity in Romania are: Enel, E.ON, CEZ and Electrica Furnizare;
 Currently, Romania’s long term energy strategy focuses on nuclear energy, most investments being
planned for the nuclear power plant at Cernavoda. As such, the Romanian government is currently in
works to attract about billion EUR worth of investments from China General Nuclear Power
Corporation (CGN) for the construction of reactors 3 and 4 at the Cernavoda nuclear power plant;
 Investments in renewable energy seem to no longer be supported by the current long-term energy
strategy adopted by the Romanian government (due to closure of eligibility period for the support
scheme for electricity from renewable sources);
 In year 2017, new legislature in relation to green certificates used to promote energy from renewable
sources was adopted; measures implemented by the new law include:
 Extending the availability of green certificates from 12 months to the date of Match 31 st 2032 (in
order to avoid the risk of producers of electricity from renewable energy to be unable to sell their
green certificates due to them expiring);
 Changing the procedure for calculating the total number of mandatory green certificates acquisitions
by electricity suppliers/distributors;
 Changes in green certificate trading – the new system will permit trading of green certificates through
centralised anonymous markets;
 Green certificates will only be available to be bought once – electricity supplier/distributor will buy
them from the producers – and players will not be able to resell them;
 Green certificates will be registered in accountability by electricity producers at the moment of their
transaction, not when they are released;
 Furthermore, the new law limits the possible financial impact green certificates can have on final
consumers;

V.3. Prices
The following chart highlights the evolution of average electricity prices in Romania.
Evolution of electricity prices in Romania (EUR/KWh), year 2010-2016
0.132 0.128 0.129 0.130 0.132 0.126

0.125 0.123
0.134
0.108 0.109 0.105 0.108
0.103 0.105 0.119
0.102 0.101 0.102 0.106 0.106 0.109 0.109
0.103 0.099
0.100
0.089 0.090 0.091 0.091 0.093 0.094 0.091 0.089
0.093
0.086 0.084 0.085 0.082
0.080 0.075 0.090
0.085 0.081 0.080 0.080 0.083 0.082
0.076 0.075 0.071 0.071 0.068
0.064 0.064
Commercial users (taxes included) Household users (taxes included)

Commercial users (no taxes) Household users (no taxes)
Notes: Graph highlights prices with all taxes and levies included vs prices with no taxes and levies;
Prices for domestic consumers are average prices for consumption between 2,500 kWh GJ and 5,000 kWh;
Prices for industrial consumers are average prices for consumption between 500 MWh and 2,000 MWh
Source: Eurostat
 Electricity prices for commercial users have decreased significantly since they reached a peak during
semester 1 of year 2013;
 Prices for household users however, have generally oscillated around similar values following the
peak reached in semester 1 of year 2013;
Average import and export prices of electricity in Romania (EUR/kWh),

years 2010-2016
0.058
0.050 0.048
0.046 0.047
0.042
0.040 0.039 0.038
0.037 0.035 0.035
0.032
2010 2011 2012 2013 2014 2015 2016
Import Export
Source: Eurostat

VI. Conclusions and recommendations
 Romania has one of the highest real GDP growth rate in Europe;
 Unlike most countries in SE Europe, Romania has a high level of self-sufficiency (exception being
crude oil due to the fact that 2 out of the major 3 refineries in Romania import crude oil from own
sources, outside the country’s borders), giving the country an advantage in the region’s energy sector
(many countries in the region being reliant on imports from Russia, especially for natural gas, which
can be used as a tool by Russia for gaining political and economic power in the region);
 As Russia continues to be a main supplier of energy in the region, Romania has a strategic
importance as an interconnecting node between Europe and alternative sources of energy – Middle
East, Caspian Basin etc.
 Major impediments/risks for new businesses in the country include: the informal sector, the
development of grey economy and undeclared work, political instability and corruption, high taxes,
difficulties in accessing financing, poor infrastructure etc.;
 EU is a major influence on Romania’s energy policy and market (Romania also following the major
directions and strategies settled by EU): reducing greenhouse gas emissions, increasing the share of
energy from renewable sources and increasing energy efficiency etc. EU is also a major potential
source of investment for financing projects in the electricity sector.
 The coal sector in Romania has matured, with production decreasing significantly over the past
decades. As EU seeks to limit the usage of coal as an energy source in Europe (due to high levels of
pollution, inefficient and old plants etc.), Romania will join the European countries banning
investments in new capacities starting with year 2020. Until then, Romania has planned investments
for refurbishing and modernizing existing power plants.
 Solid fuels continue to be an important source of energy in SE Europe (especially in non-EU countries),
however, the industry is expected to decrease in the following years in favour of less polluting and
more efficient energy sources. As some countries plan to ban investments in new capacities starting
with year 2020, it is expected that solid fuels solid fuels market will decrease naturally as coal plants
increase in age and become less efficient. The fact that solid fuels remain a cheaper alternative to
other energy sources and large deposits of solid fuels, however, does attract new investments in the
industry in some countries in SE Europe;
 Usage of CNG and LNG (along with investments in infrastructure) should increase in the country in
order to meet the EU standards by year 2020;
 The refining sector in Romania has decreased during the past decades; investments in expanding
refining capacity and/or modernizing it seem important in order for refineries to survive;
 A main advantage of Romania’s electricity sector is its diversity in sources: both from fossil fuels and
renewable sources.


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Energy Market Overview in Romania

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ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 2

The main sources were:

LNG = Liquefied Natural Gas

Definitions of terms used in the current report

ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 3

Location: South-Eastern Europe

Surface: 238,397 km2

Currency: Romanian Leu (RON)

EU member: since year 2007

GDP (billion RON): 761

ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 4

Macroeconomic indicators for Romania VS European Union (years 2011-2016)

Average yearly exchange rate: RON/EUR, years 2011-2016

ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 5

2011 2012 2013 2014 2015 2016

Population in year 2016: %Romania in EU GDP in year 2016: %Romania in EU

ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 6

120 3.90% 4.00%

GDP (billion EUR) Real GDP growth rate (%)

GDP evolution in EU, years 2011-2016

GDP (billion EUR) Real GDP growth rate (%)

ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 7

Share of renewable energies in year 2014 in Romania

ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 8

EXCISE DUTY FOR MOTOR FUELS (USED IN

0 100 200 300 400 500

Diesel Unleaded gasoline Leaded gasoline

ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 9

Energy self-sufficiency of Romania, years 2010-2016

Coal Crude oil Natural gases Electricity

ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 10

Coal consumption in Romania (million MT), years 2010-2016

0.8 1.0 1.3 1.0 0.8 0.8 0.8

Hard coal Lignite, brown coal, peat Hard coal derivatives

Coal PRODUCTION in Romania (million MT), years 2010-2016

0.004 0.04 0.04 0.05 0.08 0.01 0.01

Source: Eurostat, national institutes of statistics, Marketscope calculations

ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 11

Coal IMPORT in Romania (million MT), years 2010-2016

2.08 2.07 1.99

2010 2011 2012 2013 2014 2015 2016

Hard coal Lignite, brown coal, peat Hard coal derivatives

Coal EXPORT in Romania (million MT), years 2010-2016

Hard coal Lignite, brown coal, peat Hard coal derivatives

ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 12

 Most imports of lignite derivatives in year 2016 were from Poland;

ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 13

Hard coal mining area

Lignite mining area

Hard coal external trade

Hard coal derivatives

Lignite external trade

*only external trade for quantities

Map source: Google Maps

ENERGY MARKET OVERVIEW IN ROMANIA: YEAR 2017 Page 14

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Main areas of coal mining in Romania are:

Complexul Energetic Oltenia (http://www.ceoltenia.ro)

599 577 607

 The company has had a financial loss since year 2014;

Complexul Energetic Hunedoara (http://www.cenhd.ro)