Romania Energy Report
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Octombrie 2009 |
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INTERNET SECURITIES ROMANIA S.R.L. |
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March 2010
Executive summary
The use of primary energy resources plunged by 16% y/y to 34.1 mn tonnes of oil equivalent (toe), in 2009 according to the statistics office INS. The domestic production of energy resources decreased by only 6% y/y to 23.2 mn toe and therefore the necessary of resources from import shrunk by 32% y/y to 11 mn toe. The import of natural gas narrowed by 55% y/y to 1.6 mn toe (or 2 bn cubic metres) while the import of coal dropped even steeper, by 68% y/y to 0.66 mn toe. The use of energy resources dropped by only 9% y/y in Q4, after 15% and 21% negative y/y rates in Q3 and Q2 respectively, but the apparent moderation was only due to the low-base effects.
The domestic use of electricity by end-users dropped by 8.2% y/y to 48.7 mn KWh in 2009 and the negative growth was only minus 4.9% y/y in Q4 – again on low base effects. The use of electricity in industry, 76% of the total, plunged by 12.4% y/y while the households' use on the opposite increased by 8% y/y.
The refinery intake decreased abruptly to 12.5-12.6 mn tonnes of crude oil in 2009, from above 14 mn tonnes one year earlier. The domestic market for petroleum products narrowed by 12% y/y to 8.7 mn tonnes and the exports also diminished but at a slower rate – by 8% y/y to 4.6 mn tonnes. The demand dropped sharply in sectors like petrochemistry and power generation, but the deliveries of fuels used in road transportation has also decreased substantially, by some 10%. The demand must have been prompted by lower industrial activity, fewer exports and thinner turnover of FMCG operators. The demand is expected to strengthen in H2 this year.
The total use of natural gas dropped by 15% y/y to 141.4 mn MWh, according to preliminary data from the energy market regulator ANRE. The residential sector accounted for some 20% of the total use with the remaining burned by industry and power generators. Key industries such as fertilisers producers or petrochemistry have worked at low levels during the year. Out of the total, some 8% was technological use recorded by the operators (producers, transporters, distributors). The domestic output of natural gas covered 85% of the use, namely 120.4 mn MWh. Given the low share of imported gas this year, by historic standards, and also given the economic slowdown the government and ANRE decided to provide cheap natural gas to a large category of industrial users.
Structural isssues
Energy intensity plunges by 28% in 2005 to 2009, use of energy narrows by 16% y/y in 2009 alone.
The use of primary energy resources plunged by nearly one fifth (by 19% more precisely, out of which 16 pps in 2008/09 alone) since it peaked in 2006, to 34.1 mn toe in 2009. The energy intake was even 2% below the base level in 1999, when the economic cycle entered the upward episode. Lower energy use implies lower energy intensity and this is good in principle particularly in regard to the gas emission, but this reasoning depends on i. the nature of economic growth (sustainable or not) and ii. the structure of energy used (more or less environment-friendly). What seems to be a healthy improvement in terms of energy intensity may actually be driven by unsustainable causes or sharp contraction in the activity of energy-intensive industrial sectors (i.e. production of fertilisers, construction materials including steel). Such effects albeit generating genuine reduction in energy intensity are either unsustainable, in the former case, or are not likely to replicate in the following years as they do not reflect broad efforts for lower energy consumption – in the latter case. The two cases combined over the past three years in Romania – namely the GDP growth was not entirely sustainable (the 7.2% y/y plunge in 2009 fully demonstrated this) and the activity in key sectors shrunk significantly. Supplementary, the basket of energy resources changed significantly as a new nuclear reactor was commissioned.
GDP growth was backed by unsustainable, low energy-intensity sectors in past years.
Since 2006 to 2009, the GDP increased by 5.4%, but, on the opposite, the value added generated by industry shrunk marginally by some 0.5%. The GDP growth was mainly backed over the period by unsustainable profit margins, registered as value added in the national accounts, in sectors like real estate (on the back of bubbling prices) and retail (on the back of surging consumer credit financed from abroad). This explains part of the drop in the energy intake.
The use of natural gas narrowed dramatically over the past three years on a variety of reasons, the demand for electricity slumped last year as the industry lost ground and the activity in key industries (chemistry, petrochemistry, metallurgy, construction materials) dropped sharply with direct impact on the use of energy.
Use of natural gas shrinks by 27% in 2006 to 2009 on a variety of reasons.
The nuclear power substituted in 2007-2008 part of the natural gas used as a source of electricity and the use of electricity in industry shrunk by 12.4% y/y in 2009 further pushing down the amount of natural gas burned in power generation plants. The power plants furthermore preferred coal over natural gas when they had to adjust downward production; eventually, the use of coal also diminished. Thus, the use of natural gas as a source of power and (central) heating plunged from 5.3 bn m³ in 2006 to 3.3 bn m³ last year. Lower activity of fertilisers producers and petrochemical plants pushed down supplementary the use of natural gas. Thus, the natural gas intake narrowed by 27% from 18.1 bn m³ in 2006 to 13.1 bn m³ in 2009.
Activity in key industrial sectors narrows in 2008 and particularly 2009.
