Romania Gas Consumption Forecast

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Romania Gas Consumption Forecast

• 25 May 2022
• Romania
• Oil & Gas

Key View: Natural gas consumption will remain soft over the first half of the forecast period as a result of full market liberalisation bringing up prices to normalised levels. Consumption will accelerate over the second half of the forecast period as gas power generation rises and, as domestic gas production rises. Moreover, the fully liberalised market and greater availability of gas will support growth.

Latest Updates

• After around 2% y-o-y growth in 2021, we forecast gas demand to contract by 5.0% y-o-y in 2022, before rebounding to 7.0% growth in 2023.
• Demand will in part be impacted by sharp increases in natural gas and electricity prices. However, government support will provide somewhat of a cushion here. Specifically, the government has committed to cap gas and electricity prices for households and small industrial users from April 2022 to March 2023.
• Households that consumed 100KWh or less over 2021 will be charged at most RON0.68/KWh, with large consumers paying up to RON0.80/KWh. Gas will capped at RON0.31/KWh.
• For industrial users using 50,000MWh or less in 2021, electricity will charged at up to RON1/KWh and natural gas at up to RON0.37/KWh.

Structural Trends

Gas consumption has dropped significantly during the post-Soviet era as Romania's industry has become more efficient and de-industrialised. While continued economic growth will support demand for natural gas over the forecast period, the regularisation of gas tariffs as Romania's gas sector liberalises should keep demand in check.

Demand Under Pressure, As EU Gas Market Squeezes

Romania - Gas Production & Consumption Forecast (2020-2031)



e/f = Fitch Solutions estimate/forecast. Source: EIA, JODI, Fitch Solutions

The bulk of natural gas is consumed in the power, industrial and residential sectors and will be supported by continued economic expansion, ongoing urbanisation and broader energy demand growth. In 2021, the urban population represented 54.4% of the total and this share will gradually increase over time, rising to 57.1% by the end of our forecast period. That said, demographics are not overly supportive of demand, given that the overall population size continues to shrink. Over 2012-2021 the population fell at an annual average rate of 0.6%. However, declines are set to soften, averaging 0.5% over 2022-2031. The economic outlook is more positive, with our Country Risks analysts forecasting real GDP growth averaging 3.4% y-o-y over the coming decade, broadly in line with the 3.5% averaged over the previous 10 years.

A key driver of growth will be the power sector. Our Power team expects gas-based electricity generation to grow at an annual average rate of 4.3% y-o-y over the 10 years to 2031, up from the 1.8% averaged over 2012-2021. Natural gas will increase its share in the total generation mix over this period, rising from 16.9% in 2021 to 22.7% in 2031. Gas is taking share away from coal, as Romania moves to phase out coal by 2032. However, it is increasingly coming into competition with renewables, which our analysts expect will grow to account for 25.3% of total generation by the end of our forecast period, up from 16.7% last year.

Gas Consumption (Romania 2020-2025)

Indicator	2020e	2021e	2022f	2023f	2024f	2025f
Dry natural gas consumption, bcm	11.6	11.9	11.3	12.1	12.5	12.9
Dry natural gas consumption, % y-o-y	-8.0	2.0	-5.0	7.0	4.0	2.5
e/f = Fitch Solutions estimate/forecast. Source: EIA, JODI, Fitch Solutions

Gas Consumption (Romania 2026-2031)

Indicator	2026f	2027f	2028f	2029f	2030f	2031f
Dry natural gas consumption, bcm	13.2	13.4	13.7	14.0	14.2	14.4
Dry natural gas consumption, % y-o-y	2.5	2.0	2.0	2.0	1.5	1.5
f = Fitch Solutions forecast. Source: EIA, JODI, Fitch Solutions

This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.