Romania signs short-term gas supply contract with Azerbaijan

LONDON (ICIS)–Romanian gas producer Romgaz has signed a supply contract with Azerbaijan’s state oil and gas company SOCAR for the delivery of spot volumes over the winter months.

The buyer may secure up to 300 million cubic meters (mcm) between 1 January-1 April 2023, with daily deliveries of up to 4.2mcm, according to sources close to discussion.

The volumes are indexed to ICIS day-ahead and weekend TTF price assessments and will be delivered from Turkey to the Greek virtual trading point (VTP). It will be shipped further to Bulgaria via Interconnector Greece-Bulgaria (IGB) and reversed into Romania at the Negru Voda 1-Kardam interconnection point on the Trans-Balkan corridor.

A source said daily volumes may vary and will give Romgaz the possibility to nominate depending on needs.

It is unclear whether the physical molecules will be sourced in Azerbaijan or are of Russian origin purchased in Turkey and delivered forward to Europe.

Meanwhile, Romania has signed a memorandum of understanding with Azerbaijan, Georgia and Hungary for building a 1,100km subsea cable for electricity imports, according to a European Commission statement.

A feasibility study on the project is “currently ongoing”, said the commission’s president Ursula von der Leyen.

But traders active in Romania described the noted the project was highly expensive and unnecessary.

“First, they [Romania] need to finish domestic projects. How can they invest in a such an expensive cable if they can’t even finish local power plants?,” a trader said.