Next year Americans will give Romania gas from the Black Sea

By | September 21, 2020
Next year Americans will give Romania gas from the Black Sea

Construction of a gas pipeline to new gas fields in the Black Sea began in Romania. They are scheduled to be launched next year. However, Romania still has contractual obligations to purchase Russian gas and current fuel production in the country is decreasing. Therefore, Gazprom’s services will not be able to be abandoned for the time being.

Black Sea Oil & Gas, owned by the American investment fund Carlyle Group, has started construction of a 126-kilometer gas pipeline to the Midia shallow water block at the Black Sea. Anna and Doina fields with reserves of 10 billion cubic meters are located there and next year they are planned to start production.

Romanian Prime Minister Ludovic Orban said that the project would be extremely important for the country as he said production would start at Romania’s first offshore gas field.

It is planned that the production capacity of the project worth $ 400 million will amount to 1 billion cubic meters per year and it will be able to cover 10% of gas consumption in Romania. And this is exactly the amount that the country imports from Russia. Last year Gazprom supplied 994 million cubic meters of gas to the country.

Launching two fields by the end of 2021 will give Romania additional domestic gas production, but it will not be able to abandon Russian gas. First, Gazprom Schweiz AG and Konef Energy, through which the supplies are made, have contracts in force until 2030. Secondly, the production at the existing fields is decreasing year by year. Thus, the main suppliers of OMV Petrom and Romgaz reduced production by 360 million and 55 million cubic meters last year. The decline was also demonstrated by depleting fields in the Black Sea.

The head of the Romanian government, Ludovic Orban, who was present at the ceremony of the beginning of the gas pipeline construction, said that Bucharest mobilized 1 billion euros to continue the gasification of the country and gas consumption will grow.

The development of the Neptune deep-sea block, which is being developed by OMV Petrom and ExxonMobil, looks more attractive for Romania. According to unofficial estimates, the reserves of its fields reach 200 billion cubic meters, and annual production can expect to reach 6 billion cubic meters. However, in the summer OMV Petrom company again announced that it postponed the last investment decision on the project. Investors are waiting for the Romanian authorities to cancel the tax changes that they have adopted in recent years. Thus, energy companies are not satisfied with the fact that they are obliged to sell at least half of the produced gas inside Romania and pay a 2 percent tax on turnover.

“We see that the government is making certain efforts to solve these problems, but without the full cooperation of all political parties, Romania will lose such a huge, but limited in time opportunity (development of the Black Sea fields) for the country,” Mark Bick, CEO of Black Sea Oil & Gas, told the Platts agency. He specified that the company is now developing the Black Sea fields, as the investment decision was made and the project started before the Romanian Parliament made changes in the legislation.