HOW PREPARED IS THE EU AGAINST A NEW GAS CRISIS? Europe anxiously waiting for the Russian winter

• Minister of the Economy Adriean Videanu, hopes the strategy for restructuring the Romanian energy system will receive the approval of the European Commission and is to come into force this year

• European Commissioner for Energy, Andris Piebalgs, feels that the reorganization of the Romanian energy sector is needed, but said he does not agree with the Romanian government"s formula

Cătălin Deacu

Europe seems to be increasingly concerned by a reoccurrence of the Russian gas crisis in the winter of 2009. The issues of Transnistria and Turkmenistan, the strained relationship between Russia and Ukraine and the current state of the transport grids are just two of the issues that are giving Brussels officials a headache. European officials are looking for alternatives to the transport of Russian gas across Ukraine and for adequate procedures in case of an emergency. Aware of Romania"s geostrategic position and its regional role on the energy market, the European Commission seems to be increasingly indulgent when it comes to the plans of the Romanian Government in the energy sector: the involvement in the South Stream pipeline and the creation of two major national energy companies. Furthermore, the Commission hails the cooperation between Russia"s Gazprom and Romania"s Romgaz, and Bucharest may become the host of the Agency for Cooperation in the Energy Regulation sector. Present in Bucharest, energy commissioner Andris Piebalgs warned that this winter "could be difficult".

The strategy for the restructuring of the energy system will be presented to the European Commission at the end of June, and it is to become functional at the end of this year, Adriean Videanu announced yesterday, at a conference on energy issues. European energy commissioner Andris Piebalgs also attended the event.

The two officials discussed before the beginning of the event the issues of Romania"s energy sector, including the creation of the two integrated companies.

Minister Adriean Videanu said he has prepared an informational brochure he would present to the European official and he added that this topic would be the subject of a public debate, between June 15th - July 15th.

In turn, the European Commissioner for Energy said that the restructuring of Romania"s energy system is needed but he said that in doing so, Romania must comply with the European legislation.

When asked whether he agreed with the plan of the Romanian government for the energy sector, Andris Piebalgs replied: "I can not discuss whether I agree with this reorganization of the energy sector or not. It is certain that it is necessary, however. The reorganization plan is still being drafted, it is too early to discuss it, but I am convinced that Romania will be careful to comply with the European legislation".

The European Commissioner for Energy said that so far, Romania did not notify the European Commission on this topic and he expressed his conviction that there would be no disputes on this topic between Brussels and Bucharest.

The strategy for the reorganization of the energy system consists of the creation of two integrated companies that would include assets of companies operating in the energy sector. The government is also pondering the inclusion of Electrica in one of the two integrated companies. Minister Adriean Videanu emphasized that the two companies should be functional by the end of the year.

• Champions without debts

The minister of the Economy yesterday denied that the two energy companies would also include troubled companies.

Videanu emphasized that before including some state-owned energy companies in the new public-owned integrated energy companies, the Government will look for solutions to solving their financial issues, and only then would their integration be possible.

As we all know, the European Commission vehemently opposes any state aid, including debt cancellation. And even if the Commission were to agree eventually, the process is tedious and could take more than a year.

• No need for notification in the case of Electrica

According to the Minister of the Economy, the issue of including Electrica in one of the two integrated companies, which are part of the strategies of the Ministry, does not require notifying the European Commission.

"There is no need to notify the European Commission in this case, but the Commission must be notified in the case of cross-border implications that could arise", Videanu said.

When asked whether he concurred with the position of the Romanian minister on the inclusion of Electrica in one of the two integrated companies, Andris Piebalgs said that there is no need to notify the EC, but it would be better to do so, in order to avoid "further issues".

• Solution for the National Coal Company

The Government is looking for new ways to help the National Coal Company (CNH) recover. As the government will not be allowed to provide state aids after 2010, the Romanian Government will discuss new ways of providing aid with the European Commission in order to solve "Romania"s social issues in that region", as Adriean Videanu said.

According to the Ministry of Finance, Romania"s National Coal Company had 1.274.087.826 RON in debt, on March 31st 2009.

CNH is one of the state-owned companies whose situation has not improved, in spite of frequent steps taken by the Government in the past to support it.

• Gas overproduction

"We are currently seeing an overproduction of gas that will only benefit users that can interrupt switch off their gas consumption, and not individual users, because the surplus is not big enough", Adrian Videanu said, when answering journalists" question on whether the industry will benefit from cheap gas produced domestically. The minister admitted that there are discussions on this topic and said that the Commission would be notified on this matter.

Adriean Videanu also said that the gas basket would undergo modifications. The chemical fertilizer industry is one of the branches that received a discount of USD 40/cubic meter of gas bought from domestic producers, as a step intended to help troubled chemical factories.