Romanian gas price deregulation to push up feedstock costs – bank

21 May 2012 11:51  [Source: ICIS news]

LONDON (ICIS)--Romania appears to be moving forward with gas price deregulation that will push up costs for the country’s fertilizer and other industrial chemical producers, an investment bank said on Monday.

It is likely the industrial gas price will start rising in December this year, with an initial 5% increase. The price will then rise quarterly by 5% over seven stages until October 2014, Wood & Company said.

The price will eventually reach $380/million cubic metres (mm³) (€296/mm³), which is approximately the European hub price plus transport costs, the bank added.

The Romanian government is drawing up its roadmap for gas price deregulation in consultation with the International Monetary Fund, which is helping the country to restructure its economy.

“The schedule looks reasonable, although inherent uncertainties remain in such a long period of adjustment,” said Robert Rethy, a Wood & Company analyst.

In April last year, Romania’s InterAgro completed the closure of six fertilizer units, citing a government refusal to adjust its gas policy and provide cheaper supplies of natural gas feedstock for the fertilizer industry.

Ministers defended the move, saying the discounts it has gradually reduced since November 2010 had pushed up gas prices for other industrial producers and domestic consumers.

Romania produces around 13 billion cubic metres of gas a year – about 60% of its annual needs. It imports the rest, mostly from Russia.

($1 = €0.78)

By: Will Conroy
+44 20 8652 3214

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