The normal mechanisms of the natural gas market in Romania are now normatively completely destroyed, according to the Romanian Commodity Exchange (BRM) for HotNews.ro. BRM claims that before the introduction of the price cap compensation scheme it was the most important exchange in Eastern Europe, and now it has reached a situation where no more than 25% of traditional players trade.

Prices on the stock market are below the limit

The consequences of the new legal provisions have been dramatic, with large losses, given that prices on the European market and the Romanian market are below the limits set by Romanian law, reports BRM HotNews.ro.

According to data analyzed by HotNews.ro, prices on spot gas markets have reached lower limits. For example, on the TTF platform in Amsterdam, the corresponding exchange for Europe, quotes reached around 27 EUR/MWh. On the Romanian network (ed. – the remaining one), the quotation is about 29 euros / MWh. During this time, producers are required to sell regulated to meet domestic consumption at a maximum price of 30 EUR/MWh.

BRM says that unlike Romania, the measures taken in Europe were not price interventions, but aimed at protecting consumers by directly subsidizing vulnerable consumers.

“Across Europe, market mechanisms have reduced the price of natural gas, not administrative measures,” says the BRM.

The number of gas exchange participants decreased by a quarter

Before the introduction of GEO 27/2022 regarding the restriction scheme, BRM represented the most important exchange in Eastern Europe, with approximately 60%-70% of Romania’s national consumption traded on its platforms. Currently, the current volume of quotations in the spot markets, which is largely unaffected by the legislative changes, is currently around 12-15% of national consumption, says the BRM.

“Obviously, the sharp reduction in liquidity in the futures markets was due to the emergence of new legislative provisions, which effectively canceled any interest in long-term operations on the stock market. Along with the difficulties created by the new rules, mainly the contribution to the Energy Transition Fund, but due to the lack of means of financial support for the cap/compensation mechanism and the reduction of negotiation opportunities regarding the elements of the exchange interest, the number of market participants has decreased significantly, today no more than 25% are traditional players in this are working,” BRM notes for HotNews.ro.

According to BRM, the decrease in the number of players is significant and the return to the market will be difficult for many of them.

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