Court of Accounts Report: The Ministry of Energy has not developed the new National Energy Strategy

Our country has not yet approved a National Energy Strategy (SEN), which defines the objectives of the natural gas sector in the medium and long term and the ways to achieve them, in the conditions of ensuring a sustainable development of the national economy, the Court of Accounts says following the publication yesterday of the performance audit report on the implementation of strategies and policies in the field of investments and natural gas production, carried out between February 2022-May 2023, at the Ministry of Energy and the National Agency for Mineral Resources (ANRM).

During the audit mission, which covered the period 2017-2021, the auditors found that the Ministry of Energy did not monitor the fulfillment of the objectives established by the old strategic document (SEN 2007-2020), which expired almost three years ago. Also, the audit report mentions that the strategic objectives in the gas sector have not been reviewed and updated according to the national and international context.

The cited document shows: "During the audited period, an energy policy was not developed that would follow the directions provided by the SEN, with deadlines for the implementation of priority investment projects. At the same time, no studies were developed on the basis of which the priorities regarding investments in the natural gas sector were to be established, and no activities were carried out to attract investments. The domestic production of natural gas decreased by 16.81% in the period 2017-2021, and the imported amount increased more than three times during the audited period. Due to the higher volume of imported gas, at the national level, between 2017-2021, a trade balance deficit of 2,056.3 million euros was recorded (import of 2,335.8 million euros - export of 279.5 million euros ). Regarding the planned investments in the natural gas sector, in a total amount of 1,527 million euros, the audit noted that the established objectives were not fully achieved. Thus, the auditors noted: the reduction in the volume of geological prospecting works (-51.6% for 3D surveys) and exploratory drilling (-29.2%) at the main producers; failure to achieve the objectives regarding the performance of the storage warehouses (increasing the storage capacity by only 8.6%, while a 54.31% increase was foreseen); the abandonment of some planned objectives (the Nabucco Project, the Cogealac compression station)".

The experts of the Court of Accounts claim that since 2010 ANRM has not initiated public calls for tenders for the concession of oil operations, although the existence of free geographical areas for the concession of operations (68 perimeters) has been noted. Of the 20 perimeters for which Oil Concession Agreements were concluded between 2011-2015, only in the case of six perimeters exploration operations were still being carried out at the date of the audit, and in the remaining 14 perimeters the agreements had ceased or were in various phases of termination, which reveals the lack of effective levers for analyzing the financial capacity of the operators at the time of granting the concession.

At the same time, the audit report specifies that the investments in the construction of natural gas distribution networks were not completed in all cases by the agreed deadlines, being situations where the projects were not fully completed even after several years from the date set for the completion of the investments (in the municipalities of Oradea, Drobeta Turnu Severin, Sighetu Marmaţii, Salonta and in the communes of Sarasău, Scobiti, Poiana Lacului and Muntenii de Jos).

According to the data from the audit report, the Ministry of Energy/Administrative-territorial Units (UAT) did not conclude additional documents establishing the minimum investments borne by the concessionaires, but UAT submitted requests for funding through the Anghel Saligny Program (394.6 million lei). At the same time, additional acts were concluded for the creation of networks in 1,032 localities, but only for 13 localities it was decided to expand the distribution systems, it is also stated in the quoted document.

The auditors claim: "Investments for the development of storage warehouses were not made at the programmed level. In the context where the cumulative value of the investment works scheduled to be carried out was 332,625.57 thousand lei, the average degree of their realization was only 57.54%. Under these conditions, the report states, the performance of the deposits did not improve as the storage capacity decreased by 3.15%, the injection flow remained constant, and the average extraction flow decreased by 7.2%".

Among the positive aspects noted during the audit are the unblocking of offshore natural gas exploitation projects in the Black Sea and the fulfillment of the objective aimed at involving Romgaz SA in the Neptun Deep project, increasing the length of the main transport pipelines by 6.81% (906.5 km) , exceeding the drilling work programs undertaken by Romgaz SA within the exploration programs (141.86% completion rate).

Following the deficiencies found, the experts of the Court of Accounts formulated several recommendations for the Ministry of Energy, among which are: the urgent steps for the approval of the National Energy Strategy and the establishment of well-defined objectives, with clear deadlines and responsibilities; the elaboration of the energy policy in the field of natural gas; taking steps to attract investments to economic operators in the field of natural gas under the authority of the Ministry; the conclusion of additional documents to the concession contracts and the establishment of the minimum investments to be made by the distribution operators; carrying out controls regarding the stage of completion of the works assumed by the concessionaires through the concession contracts.