Romanian gas network 'ill equipped' for daily balancing operations

01 October 2018 13:12 Source:ICIS

LONDON (ICIS)--Romanian gas market stakeholders have expressed concerns about daily balancing operations amid fears the country’s antiquated transmission system would not be able to respond to latest arrangements introduced by the network code.

The market switched from monthly to daily balancing operations on 1 October, which means that companies would no longer have the possibility to adjust their positions on an ex-post basis.

Romania is one of the last countries in the EU to introduce an entry-exit system and transfer all trading activities to a virtual trading point (VTP), as required by EU legislation.

However, companies interviewed by ICIS in the run-up to the switchover said the system was physically underequipped to respond to the latest regulatory changes due to years of underinvestment and lack of vision. They also note that accurate daily balancing hinged on a functional forecasting system, which is yet to be developed.

Several market participants told ICIS that although Transgaz is one of the most profitable companies in the country, its income is often heavily taxed as the government needs cash to pay out salaries or plug gaps in the budget.

Transgaz itself has repeatedly blamed its inability to ramp up exports to neighbouring countries on differences in the pressure levels between its own system and those of neighbouring countries.

“The grid is in a very bad shape, requiring not only upgrades, rehabilitation and maintenance, but also a complete overhaul,” said Dumitru Chisalita, head of the Romanian-based Asociatia Energia Inteligenta.

“The Romanian transmission system is not a unitary network. It’s made up of five sub-systems which were built in three different stages starting from 1914. This means the system is disjointed and there are different pressure levels throughout,” he said.

Heavy costs

Chisalita, a former Transgaz expert, said that in order to allow companies to perform physical balancing operations, the system would need to be flexible enough to allow such operations.

However, he noted that under current arrangements it would not be possible to perform physical balancing operations.

“If physical balancing cannot be performed, the new arrangements ought to allow companies to perform virtual swaps, but the concept is not acknowledged in the amended network code,” he added.

Chisalita pointed out that Transgaz should devise a long-term vision for a unitary transmission system. He argued that such a network would include 3,500km new pipelines and five new compressor stations and estimated total investment costs at $3.5bn (€3bn).

He warned that while the current transmission system suffered from severe under-investments, with system pressures dropping to 2-3Bars in some parts of the country, there was a danger that new consumers were being connected to the system.

“Under latest domestic regulations, distribution companies cannot turn down applications for connections to the grid,” he explained, noting that any new connections should be performed according to a long-term strategy, rather than in a haphazard manner.

He pointed out that even current pieces of infrastructure were antiquated, with pipelines being exposed to water infiltration and impurities.

“Out of the total upgrade, rehabilitation and maintenance target over the last five years, I expect that only 25% have been achieved,” he said.

Transgaz investment

According to annual reports published by, Transgaz, annual grid investments ranged between New Lei 95.6 million (€20.50m) to New Lei 203million in the last five years.

Last year the level of investment and rehabilitation of the transmission grid was the lowest in the last five years, although, at New Lei 1.8bn, the company’s turnover was the highest over the same period.

In 2017, Transgaz allocated a total budget of New Lei 505m for investments in the network, but only New Lei 70.2m were actually spent. This meant that the company invested 13.9% of the totally allocated budget.

Transgaz did not reply to ICIS requests for comment.

However, in a previous interview, Ion Sterian, the company’s general director, said the TSO was planning investments of up to €1.6bn over the next decade to upgrade the domestic grid and smooth out regional interconnections.

He said the most significant investments would be made in the Romanian segment of the Bulgaria-Romania-Hungary pipeline this and next year. This infrastructure aims to guarantee the transport of natural gas sourced in south-east Europe to central European hubs.

Sterian said at the time that apart from investments to facilitate the export of gas regionally, the money would also be allocated for upgrades to the domestic system.

By Aura Sabadus