The coalition government of Romania agreed on amendments to reactivate Black Sea offshore gas projects to reduce its dependency on Russian gas.
The coalition government of Romania finalized draft amendments to the Offshore Law in order to reactivate gas extraction from the Black Sea and sent it to Parliament on April 15 to be debated as an urgent matter.
And given the current context, the coalition government expects the new Offshore Law to be approved very soon.
According to Energy Minister Virgil Popescu, the Black Sea Oil & Gas company could even start delivering gas extracted from the Black Sea during the second half of 2022.
This would account for 1 billion cubic meters a year, or 9% of Romania’s annual consumption.
Moreover, the government hopes to reactivate gas extraction projects around the Neptune Deep perimeter next year to start delivering gas at the earliest in late 2026 – early 2027. Inland gas reserve in Caragele in eastern Romania could also become operational by 2024.
The Offshore Law passed in 2018 but the conditions imposed by the state made private investors leave. Offshore gas in the Black Sea has been recurrently debated in Romania.
ExxonMobil in 2012 discovered between 42 and 84 billion cubic meters in Romanian Black Sea deep waters, in an area that is now known as the Neptun Deep gas field. Other companies made further discoveries later on.
Romania has now substantial gas reserves as the country uses about 11 billion cubic meters of gas a year and there is an estimated 200 billion cubic meters of gas in the Romanian part of the Black Sea, according to the national agency for mineral resources (ANRM).
In 2014, former Prime Minister Victor Ponta announced plans that Romania would supply gas to Moldova and replace the gas supplied by Gazprom. But up until today, Moldova is still 100% dependent on Russian gas. Meanwhile, Romania increased imports from Russia.
Extraction projects have stalled over the last decade. Geopolitical context didn’t help either as Romanian coasts are only 300 km (186 mi) from Crimea. But with the war in Ukraine and Europe’s dependency on Russian gas, discussions all of a sudden accelerated.
After several years of modifications, the law voted in 2018 included a 80% share of revenue for the state of Romania, leaving 20% to private companies and the obligation to sell at least 50% of the gas in Romania.
The law was criticized by energy companies that considered their investment for extracting gas in deep water areas was not worth it. Petrom and ExxonMobil, which jointly developed the Neptun Deep gas field and invested more than 1 billion dollars, exited the project.
Only the Black Sea Oil & Gas company, owned by the American private equity Carlyle, has kept its operations in shallow waters of the Black Sea. As a consequence, although its relations with the government haven’t been the smoothest, the company could potentially start supplying gas before the end of the year.
With amendments in the Offshore Law, the Romanian state would now only get 60% of the gross revenue. Businesses also received guarantees that revenue distribution and taxation would not change during the license contracts. The bill has defined changes in taxation according to the gas market price.
If all projects are operational, Romania can expect to produce 20 billion cubic meters a year and become a net exporter of gas.
In 2018, Romania imported about 10% of its natural gas, according to the national institute of statistics (INS). In 2021, imported gas grew to 30% of Romania’s consumption. The country bought it to Russia.