Brussels December 2, 2015 ROMGAZ SNGN ROMGAZ SA, Medias , is the - PowerPoint PPT Presentation

Task Force meeting on Gas Market Regulation 5th Meeting of the UNECE Gas Centre EFFECTS OF THE GRADUAL DEREGULATION OF GAS PRICES FOR HOUSEHOLDS ON THE RETAIL MARKET FOR NON-HOUSEHOLDS Eng. Ioan IGNAT SNGN Romgaz SA Brussels – December 2, 2015 ROMGAZ

SNGN ROMGAZ SA, Medias , is the main Romanian gas producer  5.663 bln Ncm – in 2014;  50.88% of Romania’s natural gas production;  3240 wells in production;  The entire production is sold on the domestic market;  Households 2014 – 22.53 %  Households 2015 – 38% from the total production allocated to the regulated market – the price is regulated in compliance with the liberalization calendar;  62% - allocated to the free market –– price resulted on the stock market;  Import < 3% - Oct 2015 - March 2016 Brussels – December 2, 2015 ROMGAZ

MARKET CHARACTERISTICS FREE MARKET – NON-HOUSEHOLD REGULATED MARKET - HOUSEHOLDS  Natural gas price - approximately 76  Natural gas price - 60 lei/MWh, set until lei/MWh - 90 lei/MWh; June 30, 2016;  Major influence on the budget;  Large variation of the annual  Annual consumption - almost constant, consumption - difference 1 : 10 times – 50% increase during winter as compared summer : winter!!!!! to summer !!!  Difference in allocation from the current  Difference in allocation from the current production - 20% : 52% – summer : production – 80% : 48% – summer : winter!!!!! winter!!!  Balancing consumption by using stored  Balancing consumption by using stored gas and imports; gas and imports;  60% taxation of the price difference  60% taxation of the price difference that that exceeds 45.71 lei/MWh; exceeds 45.71 lei/MWh; Brussels – December 2, 2015 ROMGAZ

MWh PRODUCTION HOUSEHOLDS NON-HOUSEHOLDS Natural gas allocations January 5,084,392.541 2,625,474.562 2,458,917.979 February 4,630,837.153 2,606,524.071 2,024,313.082 for the first March 5,113,733.427 1,909,886.533 3,203,846.894 April 4,677,990.939 1,617,363.866 3,060,627.073 10 months of May 4,665,127.254 1,598,412.669 3,066,714.585 June 4,539,154.300 1,621,478.219 2,917,676.081 2015 July 4,739,502.855 1,009,927.408 3,729,575.447 (published by Transgaz according to Order 161/19.12.2014) August 4,734,095.454 968,253.989 3,765,841.465 September 4,581,823.216 1,636,105.642 2,945,717.574 October 4,838,229.199 1,858,608.381 2,979,620.818 Total 2015 47,604,886.338 17,452,035.340 30,152,850.998 MWh MWh Brussels – December 2, 2015 ROMGAZ

EVOLUTION OF NATURAL GAS ALLOCATIONS  The current natural gas production is nearly constant, being affected by the natural decline;  Allocations from current production are made depending on the consumption of the regulated market, represented by households;  Allocations of natural gas differences for consumption are made from stored gas; 3,000,000.000 MWh MWh 2,500,000.000 2,000,000.000 1,500,000.000 Diferente casnici 1,000,000.000 Minim casnici 500,000.000 0.000 Brussels – December 2, 2015 ROMGAZ

PRESSURES ON SETTING THE PRICE ON THE FREE MARKET  Flexibility of large non-household consumers by planning consumption;  Low consumption level during summer;  Possibility for peak shaving by using import gas;  Large natural gas suppliers have an extended portfolio of clients;  Producers have to trade certain natural gas quantities on the stock market; MWh Brussels – December 2, 2015 ROMGAZ

EVOLUTION OF REGULATED TARIFFS FOR SERVICES PROVIDED IN THE NATURAL GAS SECTOR 9.00 8.21 8.21 • 3 times increase of the distribution tariff ! DISTRIBUTIE $ /MWh • 4.4 times increase of transportation tariff ! 8.00 TRANSPORT • 3.5 times increase of storage tariff ! INMAGAZINARE 7.00 5.96 5.85 5.58 5.58 6.00 5.06 $/MWh 5.00 4.48 4.32 4.32 TRANSPORTATION STORAGE DISTRIBUTION 3.83 3.54 Apr. 2005 2.75 0.78 1.28 4.00 Apr. 2006 3.54 1.01 1.75 2.75 3.00 Apr. 2007 3.83 1.01 1.75 3.45 2.30 2.30 2.30 2.18 1 Jan. 2008 5.06 1.33 2.18 1.75 1.75 2.00 2.54 1 Apr. 2009 5.96 1.81 2.30 1.28 2.00 2.00 2.00 1 May 2009 5.58 2.00 2.30 1.81 1.00 15 Oct. 2009 5.58 2.00 2.30 1.33 1.01 1.01 1 Jul. 2013 5.85 2.00 4.32 0.78 0.00 1 Jul. 2014 8.21 2.54 4.32 Apr. Apr. Apr. 1 Ian. 1 Apr. 1 Mai 15 Oct. 1 Iul. 1 Iul. 1 Oct. 1 Oct. 2015 8.21 3.45 4.48 2005 2006 2007 2008 2009 2009 2009 2013 2014 2015 Brussels – December 2, 2015 ROMGAZ

Brussels – December 2, 2015 ROMGAZ

Gas injection/withdrawal profile into/from Romgaz storages Brussels – December 2, 2015 ROMGAZ

USE OF STORAGE CAPACITIES FOR BALLANCING 4.000 85 85 600 600 3.500 85 85 300 300 3.000 600 200 200 600 85 50 200 2.500 50 300 200 150 300 300 200 200 200 mil. mc 200 200 200 200 2.000 1500 1500 900 700 700 700 700 1.500 1.000 1250 1250 1250 1250 1250 1250 1250 500 0 2007 2008 2009 2010 2011 2012 2013 BILCIURESTI SARMASEL URZICENI CETATE GHERCESTI BALACEANCA Brussels – December 2, 2015 ROMGAZ

Thank you! www.romgaz.ro Brussels – December 2, 2015 ROMGAZ