OMV Petrom, Romgaz say obligation to trade gas on stock exchange contradicts idea of free market

The obligation of gas producers, imposed by law, to sell on the stock exchange certain quantities, at certain prices, through the gas release program, which enters into force on July 1, contradicts the idea of free market, say the representatives of the two major gas producers in Romania, OMV Petrom and Romgaz, present on Thursday at the webinar "Black Sea in the New Economy", organized by Sustainable Romania and EM360.

"This gas release and the trading obligation make the market not free and this is certainly not positive for investors. Moreover, to increase from 30% to 40% [ed.n. - the share of production to be traded on the stock exchange] is certainly negative from the perspective of investors who rely on a free market, as it is promoted at European level," said Alina Popa, the financial director of OMV Petrom.

She mentioned that the existence of a free market is an essential element for unblocking investments in Black Sea gas projects.

The idea was also shared by Vasile Ciolpan, Romgaz's commercial director, who stated that as long as there are certain obligations for companies, that market is no longer free.

"The most important thing about these percentages is not their size, but the correctness with which they are designed. Simply put, the term 'mandatory' distorts the freedom to conclude contracts, that is what bothers us. Once you are obliged, you are deprived of certain quantities to make contracts that cannot be concluded on the stock exchange, such as the long-term contracts that the Black Sea investors are trying to negotiate, which have a different specific, a different structure," Ciolpan claimed.

In addition, not all companies have access to the stock market, he said.

"The market must be left free. When you set certain pillars in the contract, such as price, quantity, the market is no longer free. Through such obligations: imposed price, set quantity, set period, all three pillars of the contract are set, so we can no longer talk about a free market. We must let demand and supply work," the Romgaz representative specified.

Gas producers will be obliged to sell 40% of their production on the stock exchange, between July 1 and December 31, 2020, at a starting price set by ANRE [energy watchdog], according to a draft emergency ordinance initiated by the Ministry of Economy, Energy and Business Milieu, for the amendment of the Energy Law 123/2012.

This is in the context in which, from July 1, the gas market will be completely deregulated.