ROMANIA-RUSSIA: IN OCTOBER 2011, "Gazprom" has expressed its willingness to sell natural gas to Romania directly

In October 2011, "Gazprom" CEO Aleksei Miller announced the company's willingness to give a positive answer to the requests of the Romanian party to establish direct contractual relations fro selling natural gas to Romania, by clarifying that the priority segment was ensuring natural gas consumption for the production of electricity.

In a meeting with the minister of the Economy, Ion Ariton, Aleksei Miller expressed the interest of "Gazprom" in making investments in the electrical plants of Romania.

During the visit of the Gazprom officials to Romania, the Romanian party as well as the Russian one, have discussed other opportunities for investments in Romania. In this regard, the management of "Gazprom" has also expressed its interest in investing in the underground gas storage in Romania. On the same occasion, the outlook for the continuing the agreements on the transit of natural gas through Romania to the South-Eastern European market was assessed. Also reaffirmed was the mutual interest in beginning a productive cooperation between "Gazprom" and Romanian companies "Romgaz" and "Transgaz" on third-party markets in the areas of exploration, exploitation and transport of natural gas.

Sources from the natural gas market claim that the intention of the authorities to cooperate closely with "Gazprom", especially in order to cheapen the natural gas imported by Romania, is only praiseworthy on the surface, because, "in actuality", no serious negotiations have even begun. The willingness of the Russians to give us cheap gas and to invest tens or maybe even hundreds of millions of Euros in Romania has been well known for three or four years.

Even though some officials claim that 2012 (when some of the agreements of the intermediaries will expire) is decisive in the Romanian-Russian negotiations on the direct imports of natural gas, the quoted sources are saying that in fact, we could begin importing natural gas directly at any time if the authorities were to actually get serious about beginning the negotiations. What is at stake is not just the reduction of the price of imported natural gas, but also attracting the hundreds of millions of Euros which "Gazprom" has prepared for this area of Europe.

Romania currently imports natural gas from "Gazprom", through intermediaries, namely WIEE - a joint venture between "Gazprom" - "Wintershall", a company registered in Switzerland, and IMEX - a "Gazprom" - "Conef" joint-venture, a company registered in Cyprus. "Wintershall" is 100% owned by German consortium BASF, and "Conef" is a Romanian company, owned by Russian magnate Vitaliy Machitski, who is the owner of "Alro" Slatina.

The aforementioned sources claim that in fact, the Romanian side has not even had one serious talk with the representatives of the Russian giant to import the natural gas directly because it would harm the interests of the intermediaries and of some Romanian officials ("the clever boys in the energy sector"). According to the same sources, the intermediaries and the "clever boys" are making a serious profit from the fact that Romania pays the highest price in Europe for the Russian natural gas: "Gazprom has a unified price for the natural gas exported to Europe and Romania is not an exception. There is no discrimination between countries. So the very high price paid by Romania for the Russian gas is owed exclusively to the intermediaries. The people of Gazprom have no issue with selling us natural gas directly at a much lower price. For that to happen Romania needs to negotiate very strictly and without any hesitation with Gazprom, unlike it did so far and to attract the important financial resources of the Russian giant into the Romanian oil and electricity generation industries".

• "Gazprom Neft" wants to invest several hundreds of millions of Euros until 2015

Also in autumn last year, during a meeting with then-prime-minister Emil Boc, a delegation of NIS, a subsidiary of "Gazprom Neft", led by Kirill Kravchenko, general manager for Serbia and deputy general manager for the foreign assets of "Gazprom Neft", presented the PM the intentions of the company to expand into Romania. The plans include investments in the oil sector of several hundred million Euros by 2015 and the creation of approximately 500 jobs.

Present at the meeting, PDL deputy Adrian Gurzău said: "I think that Romania will succeed in importing natural gas directly from the Russian Federation and will also succeed in importing natural gas directly from the Russian Federation and will also succeed in attracting the money of Gazprom in our energy sector. The signals are positive and the Romanian authorities are also making efforts to set the terms of these partnerships. I support the plan of Gazprom to invest in the exploration and the exploitation of the oil resources on our territory and to lay the foundation of a chain of gas stations. Gazprom will also pose serious competition to the companies present on the market for oil products and this will also be beneficial by consumers".

He also said that the interests which exist on the natural gas market, which he has been studying closely for almost three years have led to Russia being demonized: "The overall perception is that Romania is wary of Russian capital, and the Russian-Romanian meetings of late have led to convincing Russia that we have a maximum of willingness to attract the investments of Gazprom in Romania. From my point of view, the blame for the imports of Russian natural gas at exorbitant prices lies with the team led by former minister Dan Ioan Popescu. At the time, the price of natural gas was set according to the transit volumes, which placed Romania at an advantage. This kind of taxation system was replaced with the contracts through intermediaries, which have led to the exorbitant prices which we have now".

• 140 NIS gas stations by 2020

NIS wants to set up companies in Bulgaria, Romania, Bosnia and Herzegovina to buy attractive investment opportunities (gas stations and locations). The targets of NIS for 2011-2012 are to begin the regional research, the framework research works and the incorporation in Bosnia and Herzegovina, Romania and Montenegro, as well as the registration of the companies and the opening of regional offices. This also includes the hiring of NIS as the oil services works in the target countries.

NIS wants to become a vertically integrated company in the Balkans, which deals in the manufacturing and processing of oil and natural gas and the traffic of oil derived products and has seen a sudden boost. In Romania the company has made its goal to establish a high quality retail network with a market share of 10%, as well as expanding output and reserves in the regions which take precedence in the production of oil and gas.

Thus, by 2020, NIS wants to own 140 gas stations with an average turnover of 2.55 thousand tons per year/per gas station (about 7 tons a day). In 2012, the company plans to create (through acquisitions and/or new constructions) 54 new gas stations.

Russian officials have asked that Romania contribute to the full development of the NIS through the long term taxation rates favorable for the investments which concern increased exploitation and storage, the support in setting up the common investments with the top ranking domestic companies in terms of exploitation, as well as favorable terms for the rebuilding of the Panciova-Timişoara pipeline. Other requirements of the NIS have been the support of the state through the development of the road infrastructure and through help in obtaining the research and exploitation licenses for the need of selling the oil derived products and in obtaining the licenses for the building of gas stations and the capacity of gas storage tanks, as well as the participation in major projects.