Gazprom and Romania - The Fox and the Grapes

Romania's intention to stop importing Russian gas will not affect export revenue of Gazprom, said Ivan Grachev, head of the RF State Duma Energy Committee. "Russian gas consumption in Romania is lower than random fluctuations of Gazprom exports to Europe", added Mr. Grachev.

(*) At the average European export price of corresponding year.

Indeed, it is too late to worry about the Romanian market. In 2008-2014, gas export volumes to Romania dropped from 4.2 to 0.33 billion cubic meters (bcm) and export revenue plunged from above $1.7 billion and to about $120 million. Remarkably, in the same period, natural gas consumption in Romania lost about a quarter matching the volumetric decline of imports from Russia.

Note that Romanian importers were and still are paying for Russian gas more than the average European buyer. In my view, Gazprom could have saved a portion of the market by offering better terms. There still is a significant gas demand in Romania but it is beyond the reach of Gazprom at the current contract terms.

Mikhail Korchemkin

Mikhail Korchemkin is with East European Gas Analysis, a Natural Gas Europe Partner