Romania’s Romgaz reportedly rejected long-term US LNG contract on economic grounds

According to the document cited by E-nergia.ro, Romgaz was offered gas delivered to the terminal in Alexandroupolis, Greece, under a 20-year contract, with the price calculated based on the US Henry Hub benchmark.

Romgaz estimated the resulting cost at EUR 33-42 per MWh. The company noted that, for 2030-2040, the forward curve for TTF, the virtual European gas hub in the Netherlands, was in the EUR30-40 per MWh range, which “would position Romgaz above the European market level in the base scenarios”.

“Depending on the Henry Hub/TTF combination, Romgaz may record structural losses of EUR50 to 310 million/year, with profit only in very favourable scenarios (high TTF, low Henry Hub),” Romgaz said.

“In this context, Heads of Agreement (20-year LNG Henry Hub) would link ROMGAZ to a relatively expensive source, in a market where Romania becomes a net exporter (Neptun Deep plus other domestic projects),” the company added.

The Romgaz assessment is relevant in the context of the Wall Street Journal report alleging US involvement in the fall of the government of prime minister Ilie Bolojan on May 5, amid a broader dispute over US LNG supplies to Romania.

The WSJ reported that US Ambassador to Greece Kimberly Guilfoyle allegedly suggested at a March dinner in Athens that the US had been involved in the impending fall of the Bolojan government and that it could do the same in Greece. Guilfoyle’s lawyer has disputed the newspaper’s account.

The WSJ report came against the backdrop of efforts to promote US LNG deliveries through the Vertical Gas Corridor, which runs through Greece, Bulgaria and Romania towards Central Europe and Ukraine. US officials have publicly promoted the corridor as a route for American LNG into the region.

Romgaz has separately rejected public rumours of pressure from Romanian state officials to make the company conclude a gas purchase or sale contract, regardless of the source, including LNG.

“Any decision regarding the performance of a commercial transaction is based on criteria of economic, commercial, and strategic feasibility, considering market conditions, the associated risks, the company’s needs and its development objectives, whilst complying with the applicable corporate governance mechanisms and approval procedures,” the company said.