The European gas market is once again going through a period of extreme volatility and Romania is at a critical moment for its energy security. Recent surges on the European hub Title Transfer Facility (TTF) in Amsterdam have shown how vulnerable Eastern European economies remain to external shocks, according to an analysis by consultancy Frames.
In just a few days, TTF quotations have risen by more than 70%, and in a single trading session on March 2, the price of gas rose by almost 40% to around €44-46/MWh. For the European market, the FTT is the absolute benchmark: any major move there spreads quickly across the continent.
For Romania, the effect is immediate. Even though it has significant domestic production, the economy is not isolated from the European market. During peak consumption periods - especially in winter - the necessary imports are made at exactly these high prices dictated by the Dutch hub.
,This is putting enormous pressure on energy suppliers and, inevitably, on the economy. The Romanian market, while benefiting from valuable domestic production, is not completely insulated from these external shocks’’, the Frames analysis shows.
Market liberalization: protection for people, pressure on the economy
The context is all the more sensitive as the gas market enters a new phase of liberalization for the business environment as of April 1.
At present, Romania basically operates with two parallel markets. For the population, the state maintains price cap and protection mechanisms to avoid a social crisis. For companies, the reality is much harsher: they are directly exposed to stock market fluctuations.
Factories, food producers or companies in energy-intensive industries buy gas at prices directly linked to European benchmarks. When these rise sharply, production costs explode.
,"The economic impact is inevitable: higher prices are passed on in the prices of final products, fueling inflation. At the same time, the state cannot sustain compensation schemes indefinitely, especially in a year in which the major objective is to reduce the budget deficit’’, says Adrian Negrescu, Frames manager.
Why buying gas „overnight” has become financial roulette
For Romanian industry, spot market volatility has become almost unmanageable.
Chemical plants, building material manufacturers or the metal industry use natural gas not only as an energy source but also as an essential raw material. In these circumstances, buying gas on the day-to-day market is like financial roulette.
A factory can't plan its budget, investments or product prices if it doesn't know how much energy will cost in a few months' time.
This is why energy experts believe that the realistic solution is to move towards medium- and long-term contracts, over periods of three to ten years, which offer predictability.
,’’These contracts usually use hybrid price formulas: part of the volume is securitized at a fixed rate negotiated directly with the producers, while the rest can be indexed to local references, such as the quotations on the Romanian Commodities Exchange'', say Frames experts.
The Vertical Corridor: infrastructure that can change the regional market
But for these stable contracts to be possible, Romania needs real access to diversified sources of gas. In this context, the Vertical Gas Corridor project becomes essential.
According to the Frames analysis, the Vertical Corridor is a gas transportation network connecting liquefied natural gas (LNG) terminals in Greece with markets in Bulgaria, Romania and Hungary.
With this infrastructure, gas imported in the form of liquefied natural gas from the United States, Qatar or the Caspian Sea region could flow directly to south-eastern Europe, without reliance on traditional routes.
Liquefied natural gas is cooled methane gas, a process that transforms it into a much smaller-volume liquid. In this form, the gas can be transported over very long distances in special ships and then regasified in port terminals and fed into pipeline networks.
For Romania, the benefit would be double: access to a global gas market and more competition between suppliers, which would stabilize prices.
The Vertical Corridor initiative is supported by the gas transmission operators of Greece, Bulgaria and Romania, as well as their energy authorities. The project has been discussed at EU level for several years and is included in the energy diversification strategy for South-East Europe.
,Romania has a strategic position in this system. Through its extensive pipeline network and large underground storage capacities, the country can become a regional transit and distribution hub, transporting gas further to Central and South-Eastern Europe’’, says Adrian Negrescu, Frames manager.
Romania's strategic role in the new energy map
Romania's geographical location and existing infrastructure offer the chance to become a regional gas hub.
The transportation network, large storage capacities and domestic production create the conditions for gas imported through the vertical corridor to be redistributed to the entire region.
Plus, The development of deposits in the Black Sea could turn Romania into a major energy player in Central and South-Eastern Europe.
Combining gas from the Black Sea with liquefied natural gas brought in through Greece could create a much more stable and competitive regional market, reducing dependence on scarce sources and the volatility of European exchanges.
Energy security can no longer depend on stock market volatility
The spectacular price increases in Amsterdam clearly show that the European gas market remains highly sensitive to geopolitical events and supply disruptions.
,For Romania, the lesson is simple: dependence on daily market fluctuations cannot be an energy strategy’’, says Negrescu.
Securing some gas volumes through long-term contracts, diversifying sources and connecting to global flows through the Vertical Corridor is the most feasible solution at this time to stabilize the market and ensure a fair gas price for the economy.
Without this infrastructure, Romania risks being trapped in a volatile regional market, where every international crisis immediately turns into a new domestic economic shock.