Interview | Horatiu Sebastian Calugăr, General Manager, CIS GAZAdmin_CisGaz
CIS GAZ is a 100% privately owned energy company founded in 1990 as a gas infrastructure construction services. It currently operates as one of the key EPCC contractor for the Oil and Gas industry, full circle service provider and also as independent energy producer and supplier in Romania.
How has CIS GAZ evolved in the Romanian market since inception and what are the key sectors driving demand nowadays?
We have managed to succeed the test of time and the transition between generations. I believe it was a key factor in the evolution of the company. Along 28 years of activity the company was facing with lots of challenges in the very dynamic sector in which we are acting. However, overall the company evolution was good one, especially in the last 10 years where we had successful consolidated the business growth.
Today, CIS GAZ offers services to the energy industry through four separate business units. Our core capabilities, accounting for about 60% of our business, consist in construction and installation of pipelines and surface installations facilities for the oil and gas industry. The other units are split between our power and gas trading and supply entities, maintenance and pipeline integrity services and, respectively, the distribution of a large range of equipment’s and solutions for oil and gas industry.
Demand is driven by both the ongoing need for the maintenance of existing infrastructure and the emergence of new projects. The past few years have seen important projects taking shape, such as BRUA, and the industry is at a very exciting tipping point, more so than we have witnessed for the past two decades. This demand came naturally as a results of Romanians strategic new projects developed at the regional level. In fact, the region’s needs to diversify the exploitation of natural resources and make them widely available. Actually, Romania could play a very important regional role to become an energy exporter to the EU market and in the near future a key player in the diversification of energy supply.
Following market liberalization, CIS GAZ expanded into the retail business. How has this sector progressed?
We obtained our first license as gas supplier in 2005, amongst the first companies taking advantage after 2004 market liberalization. We started by supplying to industrial users, followed by diversification through the trading activities and then supply to retail users starting from 2015.
Romania’s market liberalization was not always predictable and it was quite challenging one for the private sector. We are keeping careful watch over near future developments. There is a real need from the authorities to start educate and inform end users on their options. At CIS GAZ we have also taken this responsibility and wish to proactively educate and inform.
What was the rationale behind venturing into renewables in 2012?
Starting in 2010 there was an overwhelming national and regional trend in the development of renewables, coupled with strong regulatory support. It became a natural avenue for CIS GAZ to follow in order to offer a full-fledged portfolio, complementing our existing services in natural gas. What unraveled afterwards affected the market at large and led to a rather non-predictable environment in renewables in Romania. Not only were green certificates cut, the real challenge we encountered for our photovoltaic park was the lack of the opportunities to sell our certificates into the market. It led to a few difficult years not only for us, but also for all players operating in the renewables segment.
Nevertheless, things have started picking back up again of late and reaching steady ground, and CIS GAZ together with our partners are considering once more further investments in this side of the business. One positive example of improvement is in the cost of technology, much more accessible than it used to be in 2012 for instance, and a game changer for the industry at large regardless the diminution of the green certificate scheme.
What are the key challenges about operating in Romania’s current business climate and what can be done to overcome them?
Challenges are varied and fluctuating – the legislative instability is a very challenging matter for example, that one way or another the industry needs to adapt to. But the most notable is the deficit in the specialized human resources in our market and becoming ever more prevalent, particularly in construction industry. This is a result of Romania functioning as an exporter of human resources and the solution is creating an appealing enough local work climate to encourage people to stay. CIS GAZ for instance is in a position where we need to recruit resources from places such as India, Turkey or Vietnam in addition to our local employees to compensate for the dwindling local supply. We actively believe that the industry will start working together to form technical centers to help train future employees and aim to lead by example.
What are CIS GAZ’ priorities for the next two to three years?
We are focused to complete our current pipeline construction projects and we are working continuously to deliver services at the highest standards. Another priority is to bring our retail project to his full potential and make our online platform “CIS Eficient” successful and beneficial to the all our clients. Another priority is to strengthen our partnerships with local and foreign companies, that have proven very successful so far. However, we are keeping an open mind towards international expansion ourselves in order to export the knowhow and experience we inherent in the last 28 years.