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EC threatens to sue Romania over natural gas export restrictions

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EC threatens to sue Romania over natural gas export restrictions

Highlights

Slams law requiring priority for domestic sales

Romania given two months to respond or face EU court

Law said to be delaying FID on Black Sea giant Neptun field

Brussels — The European Commission has threatened to take Romania to court over alleged illegal restrictions on exporting natural gas unless the country'sgovernment responds within two months, the watchdog of the EU treaties said Thursday.

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Romania's energy law obliges gas producers to prioritize sales to the local market before exports, a restriction which is said to be delaying afinal investment decision on the estimated 42-84 Bcm Neptun gas field in the Black Sea.

OMV Petrom, which shares ownership of Neptun with ExxonMobil, said last week that "the current legislative environment does not provide the necessary pre-requisites for a multi-billion dollar decision." The EC has sent Romania a new formal warning, following up from a prior warning five years ago, that restricting gas trade between EU countriesbreaches EU internal gas market rules on free movement of goods.

It said an obligation to give priority to domestic customers "creates unjustified barriers" to gas exports, and has told Romania to change this.

Romania has two months to respond to the EC's arguments. If the EC is not satisfied with the response, it may decide to refer the case to the EU Court of Justice.

The ECJ has the power to impose fines on EU governments that it finds are breaking EU rules.

EXPORT ROUTE

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.

The country is developing a new export route -- the BRUA corridor -- which would take Romanian offshore gas via Hungary to Slovakia and potentially to the Baumgarten gas hub in Austria.

The first phase of the project is due to be completed in October, while the second phase will only be built if significant gas resources are developed in the Black Sea.

-- Siobhan Hall, siobhan.hall@spglobal.com

-- Edited by Manish Parashar, manish.parashar@spglobal.com