This report covers market trends and outlook for Romania’s energy sector up to Q42013. The report also includes corporate news for market players including Chevron, Kazakhstan’s KazMunaiGaz, Rompetrol, OMV Petrom, Hidroelectrica, France’s Filasa International, the Netherlands’ Enel Green Power, ArcelorMittal, China’s Green Vision Seven, Italy’s Saras Group, Russia's Gazprom Neft, Energias de Portugal, ExxonMobil, and others.

The most important macro developments facing Romania’s energy sector in 2013 were the drop in energy consumption (particularly gas and power), and the change in the renewable energy support schema and ensuing investor reactions. The failure of the Nabucco project has had a significant impact on the country’s energy sector. The natural gas market, though already formally set up, faces even weaker prospects of becoming a fully functioning market as long as the supply side is currently supported by only two producers plus imports from Russia. Shale gas production could completely change the market structure—though for the time being this is purely speculative.

The power generation sector, if helped by adequate regulations and significant investments in interconnections, could also generate significant surpluses in the coming years. But again, it is premature to predict the country’s involvement in major power exports since Europe’s energy policy seems slightly unclear at this moment. As elsewhere in Europe, an awkward combination of green renewable energy and cheap, lignite-based power is gaining ground.

Key Points:

• In corporate news, France’s Filasa International has confirmed its plans to resume works at a 519MW/EUR 780mn wind project in Romania's Suceava county after the project was delayed for more than a year.

• In the solar segment, Dutch firm Enel Green Power has completed 36MW of photovoltaic capacity and is diversifying from major wind farm projects. Chinese investor Green Vision Seven is to build a 85MW solar power farm.

• Chevron started shale gas explorations in its two blocks despite public protests.

• OMV and ExxonMobil are expected to deliver the first quantities of natural gas from the deep water offshore field around 2020.

• In the oil industry, KazMunaiGaz is close to reaching a deal with the authorities on past debt issues; this would help Kazakh owner KazMunaiGaz further expand into Europe. Rompetrol, which operates the largest refinery in Romania, might acquire another one in Europe through The Rompetrol Group. The business models of OMV Petrom remains the exploitation of domestic resources while Rompetrol is mainly involved in oil refining/processing, where the profit margins are thin (if positive at all).

• Romania’s Conpet and Russia’s Gazprom Neft are to build oil pipeline from the Black Sea to Serbia.

• Energias de Portugal has moved forward with building its 264MW/EUR 300mn wind farm in Romania. Italy's Saras group has put on hold plans for EUR 200mn wind farm.