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Romgaz: Romania's Century-Old Gas Champion and Europe's Energy Security Play
I. Introduction & Episode Roadmap
Picture the rolling hills of Transylvania in 1909. Workers drilling for potassium salts near the small village of SÄrmÄČel suddenly hear a thunderous roar as natural gas bursts from a depth of 300 meters. They have accidentally struck what would become one of Europe's first commercial gas reservoirs. This phenomenon marked the beginning of an industry that is now age-oldâthe idea was accepted that gas emissions reported in diverse areas of the Transylvanian Basin proved the existence of large-scale natural gas accumulations.
Fast forward 116 years, and the successor to those pioneersâSocietatea NaČionalÄ de Gaze Naturale Romgaz S.A.âsits at the center of one of the most consequential energy stories in modern Europe. Romgaz is the largest natural gas producer in Romania and one of the largest producers in Eastern Europe. The company is the country's main supplier and responsible for producing around 40% of the total natural gas consumption in Romania.
The big question hanging over this analysis: How does a 115-year-old state-controlled company become central to Europe's energy security after Russia's invasion of Ukraine?
The answer lies in a remarkable confluence of factors. Romgaz reported its Q3 2025 earnings with a net profit of RON 755 million, marking a 73% year-over-year increaseâthe highest ever for the first nine months. Total revenue reached RON 6.05 billion, up 7% from the previous year. As the company's CFO noted during the Q3 2025 earnings call, "Our share price surged over 90% this year."
This isn't just another energy company riding the commodity cycle. Romgaz represents something far more interesting: a state-controlled enterprise that has navigated communism, post-communist chaos, EU integration, and now geopolitical upheavalâemerging each time as a stronger, more strategically valuable asset.
The narrative arc of this deep-dive will take us from those accidental gas discoveries in Transylvania, through the complexities of post-communist restructuring, to the landmark 2013 IPO that brought international governance standards, and ultimately to the transformative acquisition of ExxonMobil's Black Sea assets that positions Romgaz at the heart of Europe's energy independence strategy.
The key themes are energy independence, post-communist transformation, strategic acquisitions, and the tension between Europe's Green Deal ambitions and energy security reality. As Romgaz CEO RÄzvan Popescu stated in November 2025, "Romgaz currently accounts for over 53% of all gas produced in Romania, and this is reflected both in our financial results and in the investments we executed during these nine monthsâinvestments approaching 3 billion RON."
II. The Birth of Romanian Gas: Origins & Early History (1909â1989)
To understand Romgaz's enduring competitive position, we must start in the Austro-Hungarian Empire, where Romania's Transylvanian basin held secrets that would shape the nation's energy destiny for over a century.
In Transylvania, in 1909, drillings targeting sodium and potassium deposits highlighted the presence of natural gas as high pressure accumulations in the earth's crust. Rated at that time as the fourth gas well in the world based on its gas flow rate, the well 2 SÄrmÄČel is considered to be the first natural gas well on the current territory of Romania.
What happened next demonstrates how quickly commercial opportunity can transform accident into industry. In 1914, after assessing the advantages of exploiting such a reservoir, the well 2 SÄrmÄČel was connected to the first steel pipe for the transportation of natural gasâthe SÄrmÄČel-Turda pipelineâin order to ensure gas supply to industrial consumers in Turda, including supply of gas for the street lighting system, a première in Europe. During a period of about seven decades, well 2 SÄrmÄČel provided a volume of 1.4 billion cubic meters, equivalent to 10% of Romania's current production.
Within 1917-1925, for the first time, the Transylvanian towns of Turda, TârnÄveni and MediaČ were supplied with methane gas. The necessity to regulate gas pressure upon delivery determined the mounting of the first natural gas regulating-metering-delivery station in MediaČ in 1925.
The technological firsts kept coming. The dropping of natural gas pressure in the SÄrmÄČel reservoir led to a necessity for compression. Thus, in 1927, the first compressor station in Europe was mounted at SÄrmÄČel. Romania was establishing itself as a pioneer in European gas technology, a tradition that would persist through political upheavals.
After the unification of Transylvania and Romania in 1919, the DirecČia gazului natural company was established at Cluj, affiliated to the Ministry of Industry and Commerce in Bucharest, which later in 1925 was renamed to Societatea NaČionalÄ de Gaz Metan SONAMETAN (National Methane Company). This organizational evolution marked the birth of a nationally coordinated gas industry.
The Second World War catalyzed a shift from local to regional gas usage. The war led to an increase in primary energy demands. This moment triggered the shift from local usage of natural gas to regional useâthe gas supply to Bucharest and to the towns on the Prahova Valley from the Transylvanian Basin reservoirs. The gas supply to Bucharest started in 1943 from the MÄneČti and VlÄdeni reservoirs. In 1947, Bucharest was supplied with natural gas from reservoirs in the Transylvanian Basin via the 295 km Botorca-Bucharest pipeline.
In 1958, the first Romanian and European natural gas storage facility was built in Ilimbav, Sibiu County, which allowed the taking over of seasonal and hourly consumption peaks. This was considered a milestone in Europe. In 1959, Romania became the first natural gas exporter in Europe, with the destination being Hungary.
The first underground storage facility was operated in 1961, and in 1976 the company's largest natural gas output was realizedâ29.8 cubic kilometers. This peak output during the communist era represented a remarkable achievement of state planning, even as the broader economy struggled.
1979 represents the beginning of natural gas imports in Romania from Russia, then part of the Soviet Union. This single sentence captures a turning pointâthe moment Romania's energy independence began to erode under Soviet influence, a pattern that would only be fully reversed decades later.
What's remarkable about this early history is how it established patterns that persist today: Romania's unique position as one of Europe's pioneer gas producers, the concentration of resources in Transylvania (particularly MureČ and Sibiu counties), and the infrastructure backbone that still forms the basis of Romgaz's operations. The communist nationalization disrupted ownership but preserved technical competenceâa crucial distinction that would prove valuable when markets opened.
III. Post-Communist Restructuring & Modern Romgaz Formation (1989â2012)
The fall of the CeauČescu regime in December 1989 triggered one of the most complex corporate restructurings in European energy history. What emerged from the chaos would ultimately become the modern Romgazâbut the path was neither linear nor predetermined.
In 1991, the company was renamed Regia AutonomÄ Romgaz RA, and in 1998 it was renamed Societatea NaČionalÄ de Gaze Naturale Romgaz SA. These name changes reflected deeper transformationsâthe awkward evolution from socialist enterprise to something resembling a Western corporation.
According to Governmental Decision No. 334 / April 28, 2000, the Natural Gas National Company Romgaz S.A. MediaČ was restructured and reorganized, by totally unbundling the main 'gas chain' activities into separate entities: two national companiesâTransgaz S.A. MediaČ (for natural gas transmission) and Depogaz S.A. PloieČti (for natural gas storage); two natural gas distribution trading companiesâDistrigaz Nord S.A. Târgu MureČ and Distrigaz Sud S.A. Bucharest; an exploitation-production trading companyâExprogaz S.A. MediaČ.
This unbundling followed EU requirements for separating network activities from production and supplyâa pattern seen across European energy markets. But the immediate effect was organizational chaos. Romgaz has had the current structure since 2001 and is headquartered in MediaČ, Sibiu county, Romania.
Why did Romgaz remain state-controlled while its peer, Petrom (the national oil company), was privatized in 2004 to Austrian group OMV? The answer lies in the politics of energy security. Romania's political establishment viewed gasâdomestically produced and serving primarily residential heatingâas more politically sensitive than oil, which was increasingly integrated into international markets. This decision would prove prescient decades later when energy security became Europe's paramount concern.
In 2007, Romgaz was granted eight concessions by the Romanian National Agency for Mineral Resources (ANRM) and announced to invest âŹ220 million annually into exploration in the concession areas over the next three or four years (2007-2010). This investment program represented Romgaz's first major post-privatization-era expansion effort, aimed at reversing the decline in domestic production.
The period also saw attempts at international partnerships. Gazprom negotiated with Romgaz in 2007 to build and operate storage facilities for up to two billion cubic meters of gas. The company signed a memorandum with Russian company Gazprom for the development of ten underground storage facilities with a maximum capacity of 5 billion cubic meters. With hindsight, the potential deepening of Russian ties during this period represents a road not fully traveledâone that events of 2022 would definitively foreclose.
The last decade did not bring major opportunities for new country entrants, since 2010 when the last bid round for petroleum exploration rights was organized by the state. The market is dominated by the largest producers, Romgaz and OMV Petrom, followed by a number of small-medium independents.
What emerged from the post-communist restructuring period was a duopolyâRomgaz and OMV Petrom dominating domestic productionâthat persists today. The local natural gas production is dominated by two very large companies: Romgaz with a market share of 51.25% and Petrom with a market share of 46.33%.
The 2008-2012 period proved transformative for another reason: Romania's EU accession in 2007 required comprehensive alignment with European energy market rules. This regulatory harmonization, while burdensome, established the corporate governance standards that would make the 2013 IPO possible. The state-owned enterprise was being groomedâperhaps unintentionallyâfor capital markets.
IV. Inflection Point #1: The Historic IPO of 2013
November 12, 2013. The trading floor of the Bucharest Stock Exchange buzzes with unusual energy as Romania's largest natural gas producer prepares for its capital markets debut. The shares of Romanian gas producer Romgaz began trading at a price of RON 35.84, about 19 percent above the price in the Initial Public Offering earlier in October. Small investors who had a 5 percent discount on IPO prices and chose to sell in the beginning of trading marked a 22 percent profit.
The Long Road to Listing
Until 2004, the government of Romania held 100% of shares in Romgaz, and in 2005, first announced plans of privatizing the company. Discussions over possible investors were held until 2006 and then further delayed several times and eventually pushed back until 2009. In 2010, plans to sell 15% of the company resurfaced but another two years went by before details of the deal became more specific. The government then decided to sell 15% of different energy companies via initial and secondary public offerings.
The tortuous eight-year journey from announcement to execution reflects the political complexity of privatizing state assets in Romania. Multiple governments, shifting priorities, and domestic opposition to "selling national assets" all contributed to delays.
The IPO was part of a wider privatization agreement between Romania and the International Monetary Fund. This context matters enormouslyâthe IPO wasn't merely a Romanian government decision but part of broader conditionality attached to IMF support during and after the global financial crisis.
The IPO Execution
SNG shares entered into trading on the Main Market of the BVB on November 12, 2013, following the successful completion of an initial secondary public offering of up to RON 1.7 billion, both on the Bucharest Stock Exchange and on the London Stock Exchange. Listing of the National Natural Gas Company Romgaz SA was one of the biggest deals for the sale of shares by the Romanian state through the Bucharest Stock Exchange. For Romania, it was the largest offer of the Romanian state through the BVB until that date and the second largest after the listing of Electrica a year later.
The IPO raised $520 million. Following the initial offering, the company's shares rose and Romgaz was valued at around $4.0 billion.
The dual-listing structureâshares in Bucharest, GDRs in Londonâwas itself significant. More than half of the offerâ64 percentâwas made of shares listed on the Bucharest Stock Exchange, while the rest was made of Global Depositary Receipts (GDRs) listed on the London Stock Exchange. Trading on LSE started on the same day as in Bucharest. The demand from institutional investors, such as investment funds, during the IPO was higher for GDRs than for shares, as funds prefer to sell GDRs on the LSE.
EBRD's Strategic Role
Romania's largest natural gas producer, Romgaz, began trading on the Bucharest Stock Exchange and London Stock Exchange after an initial public offering attracted a host of international investors, including the EBRD. The Bank acquired a 1.9 per cent stake in the company after Romania's Ministry of Economy reduced its holding to 70 from 85 per cent. By taking a stake, the EBRD is aiming to assist Romgaz in its efforts to improve corporate governance, internal control systems and environmental management practices. The stake will also support increased private sector participation in Romania's energy sector and the development of the local capital market. "The IPO of Romgaz is a landmark transaction on many accounts: the largest ever listing to take place on the Bucharest Stock Exchange, the first dual listing and a test case for other announced IPOs of comparable size, such as Electrica and Hidroelectrica."
The EBRD's involvement served as a "seal of approval" for institutional investors, signaling that governance reforms were credible and that minority shareholder interests would be protected. This proved crucial in attracting the international capital that made the IPO a success.
The 10-Year Report Card
In the 10 years of listing, investors performed over 549 thousand transactions with over 326 million shares, amounting to more than RON 10 billion. At the end of the trading session of Friday, November 10, the capitalization of Romgaz amounted to RON 17.9 billionâover 50% increase compared to the capitalization from the IPO. Also taking into account the dividends distributed by the company over these years, the investment made in SNG shares has brought a yield of 171% since listing to date. In the 10 years since listing, the company has distributed dividends worth RON 13.4 billion.
The IPO represented far more than capital raising. It established accountability mechanisms, transparency requirements, and governance standards that transformed Romgaz from a typical post-communist state enterprise into something approaching a professionally managed company. This institutional transformation would prove essential when navigating the complexities of the ExxonMobil acquisition and Neptun Deep development.
V. Inflection Point #2: Gas Market Liberalization (2012â2020)
The period between Romgaz's IPO and full market liberalization represents a gradual awakeningâas Romania moved from administered prices to market-based mechanisms, Romgaz evolved from a protected monopolist to a competitive market participant.
The Deregulation Journey
Based on the legal framework established by adopting the Electricity and Natural Gas Law 123 in 2012 and the Memorandum of Romania's Government with the IMF, World Bank and the EU, a buffer period for gas market liberalization was established. The Memorandum contained a timetable for the elimination of regulated prices, which started on 1 July 2013 and ended in 2015 for non-household consumers and in 2018 for household consumers.
The timeline, as so often happens in Romanian policy, proved optimistic. The GOR set July 1, 2020 as the deadline for natural gas market liberalization and January 1, 2021 as the deadline for electricity market liberalization. The process ultimately completed only in July 2020 when household consumers began paying fully liberalized prices.
As of 1 January 2015, the gas price for industrial consumers was liberalized, being maintained on the regulated market only for the household category and heating producers for required quantity of gas needed to produce thermal energy for population consumption.
The impact on Romgaz was profound. Under regulated pricing, the company operated with guaranteed margins but limited upside. Liberalization introduced price volatility but also the opportunity to capture higher market pricesâa double-edged sword that would become relevant during the energy price spikes of 2021-2022.
Regulatory Turbulence: OUG 114/2018
Just as the market was approaching full liberalization, the Romanian government threw a curveball. Prices were re-regulated in 2018 through OUG 114/2018, which imposed a special tax of 2 percent on turnover, capped the final gas price at RON 68/MWh and limited electricity producers' profit margin at 5 percent for energy supplied to households. On the electricity market, the measure mainly hit the most stable and profitable energy producers in Romania, Hidroelectrica and Nuclearelectrica, which produce the cheapest electricity in the system.
Russian gas accounted for 2% of Romanian consumption in 2015; that multiplied by thirteenfold to 26% in 2021. Critics pointâamong other thingsâto the government's emergency ordinance 114/2018, which created a market in which Russian imported gas was unregulated while domestic suppliers had their prices capped even as the government imposed additional taxes.
This regulatory intervention had the perverse effect of favoring imports over domestic productionâa fact that would become strategically significant when Russian gas supplies became politically and ethically unacceptable after February 2022.
The Fondul Proprietatea Tension
The relationship between state-controlled companies and minority shareholders remains fraught in Romania. The Fondul Proprietatea drama illustrates these tensions. In 2010, Templeton, which managed the Romanian national compensation fund Fondul Proprietatea since 2009, threatened legal action against the Romanian government, which attempted to use shareholder superiority to channel money from the company to compensate for a national budget deficit.
In 2015-2016, Fondul Proprietatea reduced its Romgaz holdings significantly, selling stakes worth over $132 million. The sales reflected both strategic rebalancing and frustration with state interference in corporate governance.
The tension between state interests and minority shareholder rights remains unresolved. With the Romanian state holding 70% of Romgaz, the potential for politically motivated decisionsâwhether dividend policy, investment priorities, or pricingârepresents an ongoing governance challenge.
VI. Inflection Point #3: The Transformative ExxonMobil Acquisition (2019â2022)
In July 2019, energy supermajor ExxonMobil announced its intention to exit Romania's Black Sea. The decision sent shockwaves through Romania's energy establishment. But what looked like abandonment would become opportunityâRomgaz's most consequential strategic move in its century-long history.
ExxonMobil's Exit & the Offshore Opportunity
The backstory matters: ExxonMobil and OMV Petrom had been equal partners in the Neptun Deep block since 2008, exploring one of Europe's most promising offshore gas provinces. Since 2008, exploration activities in the Neptun Deep block included two 3D seismic acquisition campaigns and two exploratory drilling programs, with eight exploration and appraisal wells drilled. The first gas discovery was made in 2012, when Domino-1 well, the first deep water exploratory well in Romania, confirmed natural gas.
ExxonMobil's decision to exit reflected global portfolio repositioning and frustration with Romania's uncertain regulatory environmentâparticularly the controversial Offshore Law of 2018. But where ExxonMobil saw risk, Romgaz saw strategic imperative.
ExxonMobil and Romgaz officials signed on May 3, 2022, at the headquarters of the Romanian Government, the contract by which state-controlled company Romgaz buys 50% of the rights over the Neptun Deep perimeter in the Black Sea. The purchase price to be paid by Romgaz for the value of all issued shares will be USD 1.060 billion. According to the contract, the acquisition will take place upon fulfilling the suspensive conditions, but not later than 12 months from signing. ExxonMobil and OMV Petrom were equal partners in the Neptun Deep project, where exploration revealed deposits estimated at 42-84 billion cubic meters.
"The successful completion of the transaction is a special accomplishment for Romgaz's business portfolio," said Romgaz CEO Aristotel Jude. "The Neptun Deep Project has important and strategic significance for Romania for ensuring our country's energy security, especially in the current geopolitical context. We are determined to proceed to the development-production phase in the shortest time, together with our partner."
On August 1, 2022, Romgaz became sole shareholder of ROMGAZ BLACK SEA LIMITED (established ExxonMobil Exploration and Production Romania Limited), following the completion of the sale transaction, and the transfer of all issued shares representing 100% of the share capital of ExxonMobil Exploration and Production Romania Limited.
The Offshore Law Amendments
The acquisition was only possible because of hard-fought regulatory changes. After several years of dithering, in full energy crisis triggered by the military conflict between the Russian Federation and Ukraine, the Romanian Parliament finally managed to unlock Black Sea investments by amending the Offshore Law. The Romanian Parliament adopted the Offshore Law, the text of the document being amended so that the Romanian state has the right of first refusal in relation to the fields to be exploited.
Parliamentarians decided to keep the initial provisions of the draft assumed by the ruling coalition, including an almost doubling of the threshold of the selling price above which Black Sea gas producers will be overcharged, increasing the maximum limit for the deduction of their investment in exploration and production, and eliminating the obligation to sell a minimum percentage of production on the centralized markets in Romania. The old law on the exploitation of offshore oil and gas fields, adopted in 2018, was harshly criticized by investors, especially due to the high taxation it imposed.
Prior to the amendment of the Offshore Law in 2022, Romania was charging a 51% levy on offshore gas production, which was ten times the European average, according to PwC.
The timing proved crucial: Ukraine's invasion created political will for energy security measures that had been debated inconclusively for years. Geopolitics accomplished what economics alone could not.
VII. Inflection Point #4: The Neptun Deep Final Investment Decision (2023â2027)
June 2023. In a conference room in Bucharest, executives from Romgaz and OMV Petrom announce what Wood Mackenzie would call the EU's largest upstream final investment decision of the year. After more than a decade of exploration, regulatory battles, and ownership changes, Neptun Deep is finally moving forward.
The Landmark FID
The Neptun Deep project is developed by OMV Petrom and Romgaz (through its subsidiary Romgaz Black Sea Limited), with each company having a 50% participating interest in the project. The investments necessary for the development phase are overall up to 4 billion euro. The total production is estimated at around 100 billion cubic meters of natural gas. First gas is expected in 2027.
Neptun Deep is the largest natural gas project and the first deep offshore project in Romania, with a significant contribution to the country's economic development and security of energy supply. With estimated recoverable volumes of approximately 100 billion cubic meters of natural gas, Neptun Deep will position Romania as the largest gas producer in the European Union. To illustrate the scale of the project: the estimated natural gas production is equivalent to roughly 30 times the current annual demand of around 4.3 million households in Romania.
Neptun Deep is poised to transform Romania's energy landscape. Once operational, the project is expected to yield around 8 billion cubic metres of gas annually, positioning Romania to become the European Union's largest gas producer and a net gas exporter for the first time in its history.
Project Details & Timeline
The development phase of the natural gas reservoirs Domino and Pelican Sud is ongoing, and the required infrastructure includes ten wells, three subsea production systems and associated flow lines, an offshore platform, the main gas pipeline to Tuzla, and a gas metering station. The production platform generates its own electric power, and it operates at the highest safety and environmental protection standards. The investment value required for the development phase amounts up to EUR 4 billion, cumulated for ROMGAZ BLACK SEA LIMITED and OMV Petrom S.A.
The development concept of Neptun Deep includes ten production wells: four in the Pelican South field and six in the Domino field. First gas is estimated for 2027. The first well will be drilled in the Pelican South field, located in waters approximately 120 meters deep, with the gas reservoir situated about 2,000 meters below the seabed. Drilling operations for the ten wells are estimated to extend into Q4 2026.
On March 25, 2025, OMV Petrom, the largest integrated energy producer in Southeast Europe, and ROMGAZ, the largest producer and main supplier of natural gas in Romania, announced the spud of the first well for development and production of the Pelican South and Domino natural gas fields in the Neptun Deep block, located 160 km offshore in the Black Sea. The project is progressing according to plan, with first gas estimated for 2027. Neptun Deep will contribute approximately 8 billion cubic meters annually to Romania's gas production once plateau production is reached.
International Contractor Mobilization
Following the investment decision in June 2023, execution agreements were signed with major international companies: the drilling rig, Transocean Barents, was contracted for a minimum period of one and a half years with integrated drilling services to be provided by Halliburton Romania. The infrastructure required for the development of the Domino and Pelican South commercial fields includes 10 wells, 3 subsea production systems and associated flow lines, one offshore platform, the main gas pipeline to Tuzla and a gas measurement station.
The innovative design and process technologies deliver gas with significantly lower direct carbon emissions than industry averages. At plateau production, the carbon footprint of Neptun Deep operations is expected to be around 2.2 kilograms of CO2 per barrel of oil equivalent, almost 8 times lower than the industry average.
European Energy Security Context
"By developing this project, Romania can secure its natural gas needs from domestic sources and become an important player in the European market. In addition, the project contributes to the Romanian economyâit is estimated to bring revenues of around 20 billion euro to the state budget over the project's lifetime. We are making every effort to implement the Neptun Deep project safely and efficiently, to have the first gas deliveries in 2027," says Christina Verchere, CEO of OMV Petrom.
More gas volume will become available in the coming years in central and south-eastern Europe: as of 2027, the Neptun Deep offshore gas field in Romania is expected to produce 8 bcm of natural gas per year in the first 10 years of its operation.
The EUR 4 billion investment represents not just Romgaz's transformation but Romania's emergence as a linchpin of European energy security.
VIII. The Electricity Pivot: Iernut Power Plant Story
Romgaz's expansion into electricity generation represents both strategic diversification and a cautionary tale about project execution risk.
Strategic Diversification into Power Generation
In 2013, Romgaz expanded its main scope of activity by taking over Iernut power plant, thereby becoming an electricity producer and supplier. Romgaz took over in 2013 the current Iernut power plant from the electricity and heat producer ELCEN Bucharest to settle a debt of RON 653 million.
The acquisition logic was sound: vertical integration into power generation would allow Romgaz to capture more value from its gas production, hedge against price volatility, and establish presence in the growing electricity market.
Iernut power station is an operating power station of at least 200-megawatts in Iernut, MureČ, Romania with multiple units, some of which are not currently operating. The existing plant's inefficiency and environmental non-compliance necessitated a major upgradeâhence the combined cycle gas turbine (CCGT) project.
The New CCGT Project
A Tender Specification was drawn up concerning Iernut CTE development by building a new combined cycle gas turbine power plant (CCGT) with a 380-430 MW installed power and gross electrical efficiency at nominal load of more than 55%. In the field of electric power generation, Romgaz is attempting to streamline this activity by implementing investments aiming to increase the efficiency of Iernut thermoelectric power plant up to at least 55% while complying with environmental requirements (NOx, CO2 emissions). Combined cycle power plants are estimated to be over 20 percentage points more efficient than traditional power plants.
On October 31, 2016, a works contract was concluded between S.N.G.N. ROMGAZ S.A. and the consortium of Duro Felguera S.A. and S.C. Romelectro S.A. referring to a turn-key contract for a new, combined cycle gas turbine power plant, including engineering, supply of equipment, performance of works and commissioning.
Contractor Difficulties
What should have been a flagship project became a protracted struggle. The insolvency of the contractors, Duro Felguera and Romelectro, with whom Romgaz signed a contract in 2016, led to an extremely complicated legal situation and delays in implementation. The deadline for completion of the new power plant was set at 16 months from the date of the order to restart work, given on August 1, 2023, under a new contract with the Spanish firm Duro Felguera.
The project has reached a total completion rate of 98%. The extremely difficult financial situation of the contractor Duro Felgueraâinsolventâcontinues to affect the pace of works and generates additional risks. The management of Romgaz continues to make efforts to maintain progress on the site.
Another important objective is the combined cycle gas turbine power plant in Iernut, for which the completion rate was 98% for the overall turnkey project. As publicly announced on the Bucharest Stock Exchange, Romgaz sent a termination notice of the design and works contract to the contractor on September 11, 2025, and the contract ceased on October 13. Romgaz has also taken steps to execute the performance guarantees established by the contractor. The reason for the early termination was non-execution of contractual obligations by the contractor, including failure to meet contractual deadlines.
Energy Minister Sebastian Burduja noted: "Since taking office as minister, I have managed, together with the Romgaz team, to unblock the investment, sign a new contract and take the project from 80% to 98%. We are prepared with work options for completing the remaining 2% of the works to put the Iernut thermal power plant into operation at maximum capacity this year, regardless of the fate of the Duro Felguera company."
The Iernut saga illustrates a recurring challenge for state-owned enterprises: ambitious infrastructure projects undertaken with contractors whose financial stability proves inadequate. The project, originally expected to complete in early 2020, remains unfinished as of late 2025âa reminder that execution risk accompanies strategic vision.
IX. Current Operations & Business Model
Understanding Romgaz today requires examining how its historical foundation translates into contemporary competitive advantages.
Operational Structure
The Company's business activities are divided into three segments. The Upstream segment is performed by MediaČ, MureČ and Bratislava branches and includes exploration activities, natural gas production and gas trade. The Storage division is represented by the PloieČti branch and operates through approximately six storages. Additionally, the Storage division is engaged in developing storehouses, managing underground gas storage and increasing gas withdrawal. The Other segment includes technological transport, road transportation of goods, repair services, maintenance works for the gas industry and construction of access roads, as well as operations and corporate activities.
Romgaz's business is diversified across four main segments, with gas exploration, production, and supply generating 89% of revenues and over 100% of EBITDA in 9M 2025. The company also operates in underground gas storage (7% of revenues), electricity production (4% of revenues), and other supporting activities (6% of revenues).
The production and storage of natural gas is realized by around 3,600 rigs and 20 compression stations. Romgaz owns a total of 153 commercial reservoirs located in Transylvania, Moldavia, and Muntenia, with around 75% or 114 being located in Transylvania, especially in MureČ and Sibiu counties. The company operates several large natural gas fields like Bazna, Brodina, Caragele, CopČa MicÄ, Deleni, Filitelnic, GrÄdiČtea, LaslÄu Mare, Mamu, Roman-Secuieni, ČamČud, SÄrmÄČel, SighiČoara, and Zau de Câmpie.
Romgaz operates six underground storage facilities with a combined capacity of 2.92 cubic kilometers. The storage facilities are located in SÄrmÄČel and Cetatea de BaltÄ in Transylvania, and BilciureČti, BÄlÄceanca, Urziceni, and GherceČti in Southern Romania. The company also owns other storage facilities in joint-ventures with other companies. The largest of the six storages is the BilciureČti facility, located 40 km north-northwest of Bucharest, having a storage capacity of 1.3 cubic kilometers and located at a depth of 2,000 meters.
International Expansion
Romgaz has established partnerships with different companies in a total of 15 petroleum concessions based in Romania. The company has joint-ventures with Wintershall in the exploration and development of the RG 03 Transilvania South Block, with Falcon Oil & Gas in the exploitation of other blocks.
The company maintains a limited international presence, with exploration interests in Slovakia and Polandâthough these remain peripheral to the core Romanian business.
Romania's Energy Independence
Romania is the country least dependent on imported gas in the EU. "Analysing the dependence of different countries on energy imports, Romania is the country least dependent on imported gas and the second least dependent on the import of petroleum products."
Romania is currently a net exporter of natural gas, with annual production of 9.9 bcm (approximately 75% of production occurs onshore, with the remainder in coastal waters). Consumption stands at 9.1 bcm per year, resulting in a portion of the produced natural gas being diverted to markets in neighbouring countries.
According to Energy Minister Burduja, through the Neptun Deep project: "we are consolidating domestic and European energy autonomy, protecting Romanian consumers through stability and affordable prices for natural gas and energy, generating substantial revenues of over 20 billion euros to the budget."
X. Strategic Analysis: Porter's Five Forces & Competitive Positioning
1. Threat of New Entrants: LOW
The barriers to entering Romania's gas production market are formidable. Capital requirements for exploration and production run into billions of euros. The concession-based licensing system, administered by the National Agency for Mineral Resources (NAMR), creates regulatory gatekeeping. Most importantly, Romgaz's 115+ years of accumulated geological knowledgeâknowing exactly where gas reservoirs exist across Transylvania and beyondârepresents irreplaceable intellectual capital.
The last bid round for petroleum exploration rights was organized by the state in 2010. The market is dominated by the largest producers, Romgaz and OMV Petrom.
2. Bargaining Power of Suppliers: MODERATE
Equipment and services are sourced from global specialists like Saipem, Halliburton, and Transocean. The Iernut project's contractor troubles demonstrate the risk inherent in supplier dependency. For critical offshore operations, Romgaz and its partner rely on specialized international contractors whose availability commands premium pricing.
3. Bargaining Power of Buyers: MODERATE-HIGH
Regulated gas selling price of RON 120 per megawatt-hour applies for gas sold to households and suppliers of households, heat producers, and to the transmission operator and distributors. This price level is applied until the end of March 2026.
Government price caps on household gas limit Romgaz's ability to capture market prices on a significant portion of production. Large industrial buyers can negotiate, but household prices remain subject to political considerationsâa structural constraint on pricing power that 70% state ownership perpetuates.
4. Threat of Substitutes: MODERATE (rising long-term)
Romgaz's decarbonization strategy targets: 2027âno more coal-based electricity production plus production of at least 48.7 kilotonnes/year of green hydrogen; 2030âreduction of GHG emissions by 78% compared to 1990; 2036âno more natural gas-based energy production, with CCGT and CHP plants to operate 100% with renewable gases and hydrogen.
Natural gas is positioned as a "transition fuel" for the next 15-20 years, but the long-term trajectory points toward renewables and hydrogen. Romgaz's challenge is maximizing value from its gas assets during this window while diversifying into future energy sources.
5. Competitive Rivalry: MODERATE
The local natural gas production is dominated by two very large companies: Romgaz with a market share of 51.25% and Petrom with a market share of 46.33%. There are also several smaller companiesâAurelian Oil & Gas, Amromco, Lotus Petrol, and Wintershallâwith combined market share of approximately 2%.
The effective duopoly with OMV Petrom means limited domestic competition, though both companies compete on the demand side for large industrial customers.
Hamilton Helmer's 7 Powers Assessment
- Scale Economies: Moderateâpipeline infrastructure and storage facilities offer scale advantages, though gas extraction doesn't exhibit classic manufacturing-style scale curves.
- Network Effects: Limitedâgas distribution networks create lock-in but aren't true network effects.
- Counter-Positioning: Strongâthe Neptun Deep acquisition represented classic counter-positioning, acquiring assets that ExxonMobil's strategy deemed non-core.
- Switching Costs: Moderate for infrastructure customers; low for commodity gas sales.
- Branding: Minimal competitive relevance in commodity markets.
- Cornered Resource: StrongâRomania's onshore gas fields and Black Sea concessions represent geological resources unavailable to competitors.
- Process Power: The 115 years of accumulated geological and operational knowledge provides meaningful process advantages.
XI. Bull & Bear Case: Investment Thesis
Bull Case
The optimistic view centers on Neptun Deep transforming Romgaz into a European gas champion. Neptun Deep is estimated to hold around 100 billion cubic meters of natural gas, positioning it as one of the EU's largest gas reserves. Once operational, Neptun Deep will make Romania the EU's largest gas producer and the first to become a net gas exporter.
The company's stock price has surged approximately 90% year-to-date according to company executives. This reflects market recognition of the strategic value embedded in Romgaz's position.
Beyond production volume, there's a premium for energy security. Austria's OMV and Germany's Uniper entered a landmark agreement to supply gas from Romania's Black Sea. The five-year contract will deliver 15 terawatt-hours of natural gas from the Neptun Deep project. This agreement comes in the wake of Russia's recent halt to gas supplies via Ukraine and a broader decline in EU energy imports from Russia.
The financing position supports growth ambitions. Romgaz maintains a strong balance sheet with a total cash position of RON 3,566 million and a net cash position of RON 342 million as of September 30, 2025. The company has successfully implemented an EMTN program with two EUR 500 million bond issuances. Capital expenditures for 9M 2025 reached RON 2.84 billion, with RON 2.07 billion allocated to the strategic Neptun Deep project.
Bear Case
The bearish perspective focuses on structural constraints and long-term secular decline. Government price controls and rising regulation restrict Romgaz's ability to benefit from high European gas prices, limiting near-term profit potential despite market optimism. Long-term growth faces headwinds from renewables expansion, declining fossil fuel demand, maturing fields, and increasing regulatory, taxation, and financing challenges.
Increased competition from imports, which now represent 32% of domestic consumption. The Romanian market is becoming more exposed to international price competition.
Execution risk is real. The Iernut debacle demonstrates that even well-capitalized projects can stumble on contractor performance. Neptun Deep, while progressing on schedule, involves deep-water operations with inherent technical complexity.
There are risks. Russia has previously opposed offshore gas projects in the Black Sea, especially after its annexation of Crimea in 2014, which created a disputed border between Romania's and Russia's exclusive economic zones. This geopolitical tension raises concerns about potential Russian interference.
Myth vs. Reality
Myth: Romgaz is just another commodity producer riding energy prices. Reality: The company's strategic value derives from its role in European energy security, not just commodity exposure. The Neptun Deep acquisition at $1.06 billion was a transformative bet on Romania becoming Europe's gas backstop.
Myth: State ownership means poor governance and capital allocation. Reality: While state ownership introduces political risk, the 2013 IPO imposed governance standards, and EBRD involvement has supported institutional development. The company has distributed RON 13.4 billion in dividends over 10 years while investing in growth.
XII. Key Performance Indicators for Monitoring
For long-term investors tracking Romgaz, three KPIs deserve close attention:
1. Neptun Deep Project Progress & First Gas Timing
The most important near-term variable is whether Neptun Deep delivers first gas in 2027 as planned. The progress recorded in Q3 2025 in relation to the investments of ROMGAZ BLACK SEA LIMITED is in line with work programs, budget and execution calendar related to Neptun Deep project. Complex works were performed in all locations, including continued drilling and well completion in Pelican Sud field. The significant progress confirms the commitment of titleholders to fulfil the development-exploitation work programs.
Any slippage in the 2027 timeline would delay the transformative production growth and associated cash flows.
2. Natural Gas Production Decline Rate
Production in the first 9 months showed +0.1% year-over-year performance, significantly compensating for natural decline. Average annual decline of max 2.5% is a strategic objective.
Romgaz's onshore production from mature fields faces natural decline. The company's ability to maintain production through well reactivations, workovers, and new development will determine cash flow stability until Neptun Deep ramps up.
3. Regulated vs. Liberalized Sales Mix
Gas sales volumes grew by 15% to 1.386 billion cubic meters. However, this volume growth was partially offset by lower average selling prices due to the reduced regulated price regime. Romgaz maintained its dominant position in the Romanian gas market, accounting for 36% of total gas deliveries and approximately 45% of domestically produced gas.
The percentage of gas sold at regulated versus market prices directly affects realized margins. Government policy on price caps remains the primary near-term determinant of profitability.
XIII. Regulatory & Legal Overhangs
Investors must be aware of several material regulatory considerations:
Price Regulation Uncertainty
Regulated gas selling price of RON 120 per megawatt-hour for household-related sales is applied until the end of March 2026. Extension of price caps beyond 2026 would constrain earnings growth during a period of significant capital deployment.
Windfall Tax Framework
Windfall profit tax decreased by 24% year-on-year to RON 597 million in the first nine months of 2025, compared to RON 791 million last year due to higher gas deliveries at a regulated price. The windfall tax framework introduced during the 2022 energy crisis creates ongoing fiscal exposure.
EU Carbon Capture Requirements
Romgaz will not make investments in carbon capture (CCS) capacities until the projects are technically, economically, and commercially feasible. The company announced it has filed a direct action against the European Commission with the Court of Justice of the European Union, requesting annulment of the decision requiring it to ensure a carbon dioxide storage capacity of 4 million tonnes per year by 2030. The company estimates the cost of the necessary storage capacities at several hundred million euros.
The outcome of Romgaz's legal challenge to EU carbon capture mandates could have multi-hundred-million-euro implications.
XIV. Conclusion: The Century-Old Champion at an Inflection Point
Romgaz stands at a remarkable juncture. A company that traces its origins to an accidental gas discovery in 1909 now finds itself central to Europe's most pressing strategic challenge: energy security in a world where Russian supplies are politically unacceptable.
The investment thesis ultimately rests on a view of time horizon and risk tolerance. For those focused on the next 5-10 years, Romgaz offers exposure to what should become the EU's largest gas producer, backed by a strong balance sheet and proven operational capabilities. The Neptun Deep project represents genuine transformative potentialâ100 bcm of recoverable gas, eight years at plateau production, and strategic positioning that European buyers will pay premium prices to secure.
As CEO RÄzvan Popescu stated: "We are now reaping the benefits of the investments made over the past two years, and we have always been a pillar of Romania's energy security. Romgaz has acted as a major player and has fulfilled its mission of ensuring this energy security."
For those with longer horizons, the existential question remains: what happens to a gas company when gas demand peaks and then declines? Romgaz's decarbonization strategy acknowledges this trajectory, but the path from natural gas champion to diversified energy company is neither guaranteed nor straightforward.
The 115-year history teaches one clear lesson: Romgaz has survived empire collapse, world wars, communism, post-communist chaos, and EU integration. The adaptability that enabled such longevity may prove equally valuable navigating the energy transition.
What began with an accidental gas burst in a Transylvanian village has evolved into a EUR 37 billion enterprise poised to reshape European energy markets. The story continues.
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