Keep Us Strong WikiLeaks logo

Currently released so far... 97115 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ETRD EAGR ETTC EAID ECON EFIN ECIN EINV ELAB EAIR ENRG EPET EWWT ECPS EIND EMIN ELTN EC ETMIN EUC EZ ET ELECTIONS ENVR EU EUN EG EINT ER ECONOMICS ES EMS ENIV EEB EN ECE ECOSOC EK ENVIRONMENT EFIS EI EWT ENGRD ECPSN EXIM EIAD ERIN ECPC EDEV ENGY ECTRD EPA ESTH ECCT EINVECON ENGR ERTD EUR EAP EWWC ELTD EL EXIMOPIC EXTERNAL ETRDEC ESCAP ECO EGAD ELNT ECONOMIC ENV ETRN EIAR EUMEM ENRGPARMOTRASENVKGHGPGOVECONTSPLEAID EREL ECOM ECONETRDEAGRJA ETCC ETRG ECONOMY EMED ETR ENERG EITC EFINOECD EURM EENG ERA EXPORT ENRD ECONEINVETRDEFINELABETRDKTDBPGOVOPIC EGEN EBRD EVIN ETRAD ECOWAS EFTA ECONETRDBESPAR EGOVSY EPIN EID ECONENRG EDRC ESENV ETT EB ENER ELTNSNAR ECHEVARRIA ETRC EPIT EDUC ESA EFI ENRGY ESCI EE EAIDXMXAXBXFFR EETC ECIP EIAID EIVN EBEXP ESTN EING EGOV ETRA EPETEIND ELAN ETRDGK EAIDRW ETRDEINVECINPGOVCS EPEC ENVI ELN EAG EPCS EPRT EPTED ETRB EUM EAIDS EFIC EFINECONEAIDUNGAGM EAIDAR ESF EIDN ELAM EDU EV EAIDAF ECN EDA EXBS EINTECPS ENRGTRGYETRDBEXPBTIOSZ EPREL EAC EINVEFIN ETA EAGER EINDIR ECA ECLAC ELAP EITI EUCOM ECONEFINETRDPGOVEAGRPTERKTFNKCRMEAID EARG ELDIN EINVKSCA ENNP EFINECONCS EFINTS ECCP ETC EAIRASECCASCID EINN ETRP EAIDNI EFQ ECOQKPKO EGPHUM EBUD ECONEINVEFINPGOVIZ ENERGY ELB EINDETRD EMI ECONEFIN EIB EURN ETRDEINVTINTCS EIN EFIM ETIO ELAINE EMN EATO EWTR EIPR EINVETC ETTD ETDR EIQ ECONCS EPPD ENRGIZ EISL ESPINOSA ELEC EAIG ESLCO EUREM ENTG ERD EINVECONSENVCSJA EEPET EUNCH ECINECONCS ETRO ETRDECONWTOCS ECUN EFND EPECO EAIRECONRP ERGR ETRDPGOV ECPN ENRGMO EPWR EET EAIS EAGRE EDUARDO EAGRRP EAIDPHUMPRELUG EICN ECONQH EVN EGHG ELBR EINF EAIDHO EENV ETEX ERNG ED
KMDR KPAO KPKO KJUS KCRM KGHG KFRD KWMN KDEM KTFN KHIV KGIC KIDE KSCA KNNP KHUM KIPR KSUM KISL KIRF KCOR KRCM KPAL KWBG KN KS KOMC KSEP KFLU KPWR KTIA KSEO KMPI KHLS KICC KSTH KMCA KVPR KPRM KE KU KZ KFLO KSAF KTIP KTEX KBCT KOCI KOLY KOR KAWC KACT KUNR KTDB KSTC KLIG KSKN KNN KCFE KCIP KGHA KHDP KPOW KUNC KDRL KV KPREL KCRS KPOL KRVC KRIM KGIT KWIR KT KIRC KOMO KRFD KUWAIT KG KFIN KSCI KTFIN KFTN KGOV KPRV KSAC KGIV KCRIM KPIR KSOC KBIO KW KGLB KMWN KPO KFSC KSEAO KSTCPL KSI KPRP KREC KFPC KUNH KCSA KMRS KNDP KR KICCPUR KPPAO KCSY KTBT KCIS KNEP KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG KNNB KGCC KINR KPOP KMFO KENV KNAR KVIR KDRG KDMR KFCE KNAO KDEN KGCN KICA KIMMITT KMCC KLFU KMSG KSEC KUM KCUL KMNP KSMT KCOM KOMCSG KSPR KPMI KRAD KIND KCRP KAUST KWAWC KTER KCHG KRDP KPAS KITA KTSC KPAOPREL KWGB KIRP KJUST KMIG KLAB KTFR KSEI KSTT KAPO KSTS KLSO KWNN KPOA KHSA KNPP KPAONZ KBTS KWWW KY KJRE KPAOKMDRKE KCRCM KSCS KWMNCI KESO KWUN KPLS KIIP KEDEM KPAOY KRIF KGICKS KREF KTRD KFRDSOCIRO KTAO KJU KWMNPHUMPRELKPAOZW KEN KO KNEI KEMR KKIV KEAI KWAC KRCIM KWCI KFIU KWIC KCORR KOMS KNNO KPAI KBWG KTTB KTBD KTIALG KILS KFEM KTDM KESS KNUC KPA KOMCCO KCEM KRCS KWBGSY KNPPIS KNNPMNUC KWN KERG KLTN KALM KCCP KSUMPHUM KREL KGH KLIP KTLA KAWK KWMM KVRP KVRC KAID KSLG KDEMK KX KIF KNPR KCFC KFTFN KTFM KPDD KCERS KMOC KDEMAF KMEPI KEMS KDRM KEPREL KBTR KEDU KNP KIRL KNNR KMPT KISLPINR KTPN KA KJUSTH KPIN KDEV KTDD KAKA KFRP KWNM KTSD KINL KJUSKUNR KWWMN KECF KWBC KPRO KVBL KOM KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG KEDM KFLD KLPM KRGY KNNF KICR KIFR KM KWMNCS KAWS KLAP KPAK KDDG KCGC KID KNSD KMPF KPFO KDP KCMR KRMS KNPT KNNNP KTIAPARM KDTB KNUP KPGOV KNAP KNNC KUK KSRE KREISLER KIVP KQ KTIAEUN KPALAOIS KRM KISLAO KWM KFLOA
PHUM PINR PTER PGOV PREL PREF PL PM PHSA PE PARM PINS PK PUNE PO PALESTINIAN PU PBTS PROP PTBS POL POLI PA PGOVZI POLMIL POLITICAL PARTIES POLM PD POLITICS POLICY PAS PMIL PINT PNAT PV PKO PPOL PERSONS PING PBIO PH PETR PARMS PRES PCON PETERS PRELBR PT PLAB PP PAK PDEM PKPA PSOCI PF PLO PTERM PJUS PSOE PELOSI PROPERTY PGOVPREL PARP PRL PNIR PHUMKPAL PG PREZ PGIC PBOV PAO PKK PROV PHSAK PHUMPREL PROTECTION PGOVBL PSI PRELPK PGOVENRG PUM PRELKPKO PATTY PSOC PRIVATIZATION PRELSP PGOVEAIDUKNOSWGMHUCANLLHFRSPITNZ PMIG PREC PAIGH PROG PSHA PARK PETER POG PHUS PPREL PS PTERPREL PRELPGOV POV PKPO PGOVECON POUS PGOVPRELPHUMPREFSMIGELABEAIDKCRMKWMN PWBG PMAR PREM PAR PNR PRELPGOVEAIDECONEINVBEXPSCULOIIPBTIO PARMIR PGOVGM PHUH PARTM PN PRE PTE PY POLUN PPEL PDOV PGOVSOCI PIRF PGOVPM PBST PRELEVU PGOR PBTSRU PRM PRELKPAOIZ PGVO PERL PGOC PAGR PMIN PHUMR PVIP PPD PGV PRAM PINL PKPAL PTERE PGOF PINO PHAS PODC PRHUM PHUMA PREO PPA PEPFAR PGO PRGOV PAC PRESL PORG PKFK PEPR PRELP PREFA PNG PGOVPHUMKPAO PRELECON PINOCHET PFOR PGOVLO PHUMBA PRELC PREK PHUME PHJM POLINT PGOVPZ PGOVKCRM PGOVE PHALANAGE PARTY PECON PEACE PROCESS PLN PRELSW PAHO PEDRO PRELA PASS PPAO PGPV PNUM PCUL PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PRFE POGOV PEL PBT PAMQ PINF PSEPC POSTS PHUMPGOV PVOV PHSAPREL PROLIFERATION PENA PRELTBIOBA PIN PRELL PGOVPTER PHAM PHYTRP PTEL PTERPGOV PHARM PROTESTS PRELAF PKBL PRELKPAO PKNP PARMP PHUML PFOV PERM PUOS PRELGOV PHUMPTER PARAGRAPH PERURENA PBTSEWWT PCI PETROL PINSO PINSCE PQL PEREZ PBS

Browse by classification

Community resources

courage is contagious

Viewing cable 09BUCHAREST801, ROMANIA: ROMGAZ TRIES TO ADAPT TO CHANGING ENERGY MARKET

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Understanding cables
Every cable message consists of three parts:
  • The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
  • The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
  • The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #09BUCHAREST801.
Reference ID Created Released Classification Origin
09BUCHAREST801 2009-12-03 12:47 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Bucharest
VZCZCXRO6467
PP RUEHIK
DE RUEHBM #0801/01 3371247
ZNR UUUUU ZZH
P 031247Z DEC 09
FM AMEMBASSY BUCHAREST
TO RUEHC/SECSTATE WASHDC PRIORITY 0122
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RHMCSUU/DEPT OF ENERGY WASHDC PRIORITY
UNCLAS SECTION 01 OF 02 BUCHAREST 000801 
 
SENSITIVE 
 
DEPT FOR EUR/CE ASCHIEBE AND EEB/ESC 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG ECON EINV PGOV RO
SUBJECT:  ROMANIA: ROMGAZ TRIES TO ADAPT TO CHANGING ENERGY MARKET 
 
BUCHAREST 00000801  001.2 OF 002 
 
 
Sensitive but Unclassified; not for Internet distribution. 
 
SUMMARY 
 
1.  (SBU) One of the top two gas producers in Romania, state-owned 
Romgaz, echoed in a November 20 meeting the previous public 
statements by OMV/Petrom and other private players on the domestic 
market that the regulated price of domestic gas suppresses 
production in Romania.  Until now Romgaz has maintained a public 
silence on this point.  Concerning investment plans, Romgaz hopes to 
obtain additional on- and off-shore exploration concessions, develop 
new underground gas storage areas, and begin producing electricity. 
The proposed liquefied natural gas (LNG) terminal in Constanta also 
ranks high among Romgaz's priorities.  End Summary. 
 
REGULATED DOMESTIC GAS PRICES IMPEDE PRODUCTION 
 
2.  (SBU) The regulated price of domestic gas is among the biggest 
challenges facing Romgaz.  While gas imported from Russia is sold at 
one of the highest prices paid by any European country (currently 
280 USD per thousand cubic meters (mcm)), by regulation domestically 
produced gas may be sold for no more than 160 USD per mcm.  In a 
November 20th meeting with EconOff, Romgaz Deputy Director General 
Lucian Stancu stated that the company has developed economic models 
to show the correlation between gas prices and the amount of gas 
that could be produced domestically, but the Ministry of Economy has 
never even asked for the information.  Stancu admitted that Romgaz 
was uninterested in exploiting smaller and/or unconventional 
reserves (i.e., gas found in coal beds, shale formations, or other 
non-conventional reservoirs) given the expected low rate of return 
on investment.  These fields would only become economical if either 
the gas could be exported or if the domestic wellhead price could 
approach the Russian import price, neither of which yet seems 
feasible. 
 
3.  (SBU) While Romgaz could in theory export domestic gas, the lack 
of infrastructure to do so and political pressure to use Romanian 
gas at home make this unlikely.  Instead, Romgaz would like to tap 
into foreign markets by exploring outside of Romania's borders.  To 
this end, the company has recently developed joint ventures to 
explore for gas in Slovenia and Poland.  Romgaz also hopes to 
develop activities in the Caspian Sea, building on the expertise 
gained in the region when it was part of the Soviet Union.  In 
private, Romgaz officials hope the European Commission will force 
Romania to eliminate its regulated gas pricing system, but Stancu 
admits that this would be politically unpopular, especially among 
poorer consumers in the midst of a severe recession. 
 
LOOKING FOR GAS IN NEW PLACES 
 
4.  (SBU) Romgaz is well aware of the country's potential for 
unconventional gas and that current technology could increase yields 
from existing fields.  At the same time, Romgaz points to the high 
costs it faces in the application of new technology.  According to 
Stancu, insufficient infrastructure results in well services costing 
at least twice what they would elsewhere; the price Romgaz pays to 
drill one well would easily cover drilling two wells in the United 
States.  Negotiating with service companies to lower fees in return 
for higher volume is a tactic that Romgaz has attempted, so far 
without notable success. 
 
5.  (SBU) Offshore, Romgaz plans to bid for exploration and 
production licenses in blocks near Romania's maritime border with 
Ukraine in the bidding round that the National Agency for Mineral 
Resources will conduct in May 2010.  Lacking the technical expertise 
for offshore operations on its own, Romgaz is contemplating a joint 
venture with an international oil company but has not decided 
whether it will seek the joint venture before bidding or after 
obtaining the concession.  Romgaz will also likely bid on the few 
remaining onshore blocks in the upcoming bid round. 
 
GAS PRODUCER BECOMES ELECTRICITY PRODUCER? 
 
6.  (SBU) Romgaz presents a clear case of regulations driving 
rent-seeking market behavior.  According to Stancu, Romgaz is in the 
process of taking over a gas-fired power plant in Iernut (central 
Romania) under a debt-for-equity swap arrangement with state-owned 
thermal power producer Termoelectrica.  The acquisition is 
economical due to the huge disparity between domestically regulated 
gas and unregulated electricity prices.  Per kilowatt hour of 
energy, electricity sells at double the cost of gas, according to 
Stancu.  Romgaz plans to use this plant as a peak-load generator to 
cover the electricity deficit in central Romania.  Romgaz believes 
it can avoid the regulatory requirement that gas used for power 
generation be part of a blended basket comprised of both domestic 
and imported gas.  If Romgaz integrates the plant onto its balance 
sheet as an asset and uses some of the electricity produced for 
internal consumption, it is not bound by the basket rules and can 
 
BUCHAREST 00000801  002.2 OF 002 
 
 
sell excess production (which will be most of what the plant 
produces) to the market. 
 
7.  (SBU) With regard to the long-standing proposal to consolidate 
state-owned energy companies into one or two integrated "national 
energy champion(s)," Stancu believes Romgaz has enough political 
clout to remain independent of the new company.  State-owned, but 
profitable and independently operated from the city of Medias 208 
miles from Bucharest, Romgaz has little interest in subsidizing 
inefficient and loss-making producers elsewhere in the 
state-dominated energy sector.  Despite initial plans to include 
Romgaz in the energy holding company, Stancu said he had received 
assurances from the Ministry of Economy that this proposal was 
definitively off the table. 
 
LNG IMPORTS AND MORE GAS STORAGE ARE FUTURE GOALS 
 
8.  (SBU) While unclear on the precise economics, Stancu confirmed 
that diversifying Romania's gas import capabilities to include an 
LNG option made sense.  U.S. contractor Granherne is conducting an 
LNG import terminal feasibility study for Romgaz with funding from 
the U.S. Trade and Development Agency (USTDA).  To avoid problems 
with Turkey over importing gas through the crowded Bosporus Straits, 
Romgaz hopes the terminal will be fed by Caspian Sea gas transported 
across the Black Sea, compressed in Georgia or brought via tankers 
with onboard compression capability.  Romgaz believes that using LNG 
to feed electric power plants could help make the economic case that 
the terminal is warranted.  If the LNG could be sold for less than 
pipeline Russian gas, this would also inject a new element of 
competition into the market.  As additional cross-border 
interconnections are built, LNG imported into Romania could also be 
used for gas swaps with neighboring countries. 
 
9.  (SBU) Romgaz also wants to improve its gas storage capacity. 
Over the last several months, Romgaz has invested in existing 
underground facilities to improve the gas extraction rate from 20 
million cubic meters (MMcm) per day to 25 MMcm per day.  While 
Romania had enough gas stored during the Russian supply cutoff last 
January to last through the winter, the limit on extraction capacity 
still stressed the system and forced cutoffs to some industrial 
consumers.  Romgaz currently has 2.9 billion cubic meters in 
underground storage, part of which will be drawn down over the 
course of the winter.  The company is also studying a project with 
Gazprom to develop an underground storage facility in Margineni, in 
eastern Romania. 
 
COMMENT 
 
10.  (SBU) Romgaz's shares of both the domestic market and 
production have declined compared with Petrom ever since the latter 
was acquired by Austrian-owned OMV.  While Romgaz has remained 
profitable, Petrom's increased nimbleness as a private company has 
undermined Romgaz's position as the clear market leader.  Despite 
this, the Romanian Government is broadly opposed to further 
privatization in "strategic" sectors like energy, especially when it 
comes to crown jewels like Romgaz.  While this ensures that 
important strategic priorities like Nabucco and Black Sea LNG remain 
important, ultimately it means that Romanian consumers must pay a 
price for over-regulation, underinvestment, and relative 
inefficiency in this state-owned sector.  End Comment. 
 
GITENSTEIN