Revamping Romania’s Energy Sector
Government Approves Plan to Consolidate State-Owned Power Companies
Planning to enhance their future role as a major regional energy supplier, the Romanian government recently announced plans to restructure the country's energy sector.
Since joining the European Union on January 1, 2007, Romania has sought to make its mark on the European energy sector. Poised to take advantage of regional fears over dependence on Russian-supplied energy, the Romanian government has announced an overhaul and privatization of its own energy sector.
New Energy Sector Plan
The Romanian government has recently approved a plan for massive changes to the country’s energy sector. These changes include the creation of a new holding company that will consolidate state-owned nuclear, thermal and hydro-electric power companies. The goal of this strategy is to increase efficiency, boost renewable energy, modernize and protect critical infrastructure, and diversify import sources and transport routes.
Varujan Vosganian, Romania’s Finance and Economy Minister, revealed that the government will own 25-40% of the new holding company, investment fund Fondul Priprietatea will hold 20%, and the remaining shares will be listed on the Bucharest stock exchange. At some point in the future, the government expects the holding company to be fully privatized.
Existing Romanian Energy Companies
- Oil Sector
- Petrom, is the largest energy company in Romania. The company operates 15,000 oil and gas drilling operations onshore and seven offshore platforms in the Black Sea. Petrom operates two refineries, Arpechim and Petrobrazi, with an annual capacity of eight million tons.
- Rompetrol is the second largest oil company in Romania. The company owns two refineries, Vega Ploiesti and Petromidia. Petromidia has a capacity of over 4 million tons of crude and is able to distribute over 7 million tons of oil products annually through its own distribution network.
- RAFO Onesti is the second largest refinery in Romania. The company privatized in 2001 and eventually found itself in the midst of some major scandals. The company has recovered and relaunched operations in August 2007 with a maximum annual working capacity of 3.6 million tons.
- Lukoil is a Russian company that controls the Petrotel-LUKoil refinery.
- Natural Gas Sector
- Romania continues to use a state monopoly, Romgaz, for the exploration of its natural gas deposits. Romgaz is a conglomerate controlling 3,600 production drills and five subterranean supply deposits. The company produces an annual capacity of 2,550 million cubic meters/cycle and owns over 1,900 kilometers of pipeline. Investor interest has been high for the privatization of Romgaz since the Russian gas crisis earlier this year.
- Electrical Energy Sector
- Hidroelectrica is the largest electrical energy producer in Romania, providing 22-33% of Romania’s total energy production. The company runs 326 hydro-power plants, 365 dams, and 20 hydro-aggregates. Much of its infrastructure is built from older technology and needs investment to upgrade its technologies.
- Termoelectrica is a thermo-electric company producing approximately 5,500 MW of power. Approximately 75% of its installed capacity is woefully outdated and it is having trouble raising the capital for improvements. Due to these issues, the company’s power capacity has dropped 60-90% from its initial potential.
- To guarantee its energy independence, Romania is toward an expansion of nuclear power. Presently, a single reactor producing 770 MW of power at the Cernavoda nuclear power plant on the Danube river is the only nuclear installation. A second Canadian CANDU model reactor is scheduled to begin production at the plant by the end of 2007.
Future Energy Sector Goals
Romania hopes to become a key electricity exporter to the rest of the European Union by 2020. This will be accomplished by the doubling of the country’s power output to 100 TWh by 2020, exceeding domestic energy needs. Romania also plans to promote renewable energy so that these sources account for 33% of overall power consumption by 2010.
References
Ilie, Luiza. “Romania government approves energy sector revamp.” Reuters UK. September 5, 2007.
“Romania and Bulgaria join the EU.” BBC News. January 1, 2007.
“The makers and breakers on Romania energy market.” HotNews.ro. August 30, 2007.
Watson, Clare. “Romania to overhaul energy sector - report.” Energy Business Review. September 7, 2007.
“World Bank Supports Romania Energy Sector Privatization.” FiFoOst. December 31, 2004.
