RCE announced that it will launch futures contracts for natural gas on 16 November 2020. This is an important step towards a powerful natural gas market. Main advantages of futures contracts: standardization, elimination of risks, performance warranties, flexibility, transparency.

 

We have yet to see how the dispute resolution mechanism will look like.

 

The Romanian Energy Regulatory Authority previously refused to approve this type of transactions. The Oil and Gas Employers’ Federation of Romania addressed a letter of concern to the Competition Council of Romania, describing the issue, on 24 August 2020:

 

"Futures contracts are instruments used on absolutely all natural gas markets. These tools are very useful in managing the risk of price volatility, ensuring the hedging function of players on the natural gas markets. This function is necessary especially in the context of cross-border transactions, being useful for insuring price risk on markets with different profits. We also mention the fact that the RCE requested the RERA to approve futures contracts as standard products, according to the Order no. 105/2018, that the RCE should offer on its platforms. Futures contracts are included in the category of standard contracts, according to the Commission Implementing Regulation (EU) No. 1348/2014 on data reporting, for the implementation of Article 8 paragraphs (2) and (6) of the Regulation (EU) no. 1227/2011 of the European Parliament and of the Council on the integrity and transparency of the wholesale energy market (hereinafter referred to as the ”REMIT Implementing Regulation”) and the rules imposed by this Regulation require these contracts to be reported as standard contracts through the specific forms imposed by REMIT. The RERA’s refusal to approve futures contracts as standard contracts is in violation of the provisions of the REMIT Implementing Regulation, which is a directly applicable legal texts, misleads the ACER and distorts the market monitoring function because the data on standard contracts serve, inter alia, as reference prices for energy products. Thus, for example, it is notorious that the Romanian Government considered the price of transactions on the centralized markets in Romania as reference price when establishing the current regulated price of 68 RON/MWh. To the extent that standard contracts would be traded outside the centralized markets that give price references, any kind of price indicators would become erroneous and misleading. As such, we consider it absolutely necessary for the RERA to allow the trading on centralized markets of all standard products recognized by REMIT, in order to allow a commercial uniformity of the natural gas markets in Europe."

 

Read the complete letter addressed by the Oil and Gas Employers’ Federation of Romania here.