RBSTA’s comments regarding central market obligation (CMO)

The obligation to trade in a pre-established manner, is a commercially restrictive policy and introduces a discriminatory regime between the natural gas marketing rules for domestic production and the rules applicable to gas imports because foreign producers will have the right to conclude bilateral contracts directly negotiated with large consumers in Romania, while domestic gas producers will not be allowed to conclude such contracts.

Moreover, the projects for the development of natural gas resources involving significant initial financial commitments are also based on the possibility of concluding long-term sales contracts. Such contracts are concluded before the development investment is made and often commit the producers to supply natural gas to buyer(s) at the beginning of production. This type of contracts cannot be traded through centralized platforms.

In summary RBSTA believes that government interventions and obligations for market participants to trade in a prescribed manner such as the central market obligation or other means will have unintended and detrimental consequences for potential new offshore investments in the Black Sea.

Additionally, RBSTA expects that the existing central market obligation (CMO) should be reapealed, because otherwise it will continue to be an ineffective measure to address the stated objectives, namely establishing more economic efficiency and price transparency in the gas market.

Specifically for the gas market, the establishment of a virtual trading point offering appropriate tradable products to further develop market liquidity, and improved cross border interconnections between regional hubs are required to increase the number of potential Buyers and Sellers in Romania and thereby facilitate competition and market depth, along with increasing supply diversity and thereby reducing the dependence on individual suppliers.