Romania does not have the administrative capacity to manage offshore gas reserves as it need to build up institutional, administrative and know how capacities in order to benefit from its large newly-discovered resources, according to a report consulted by Business Review.
The report “Risks, taxation, investment decisions in the offshore oil and gas sector. The Black Sea and Romania”, written by energy experts Vasile Iuga and Radu Dudău, indicates that “the development of the offshore gas sector is a historic opportunity for our country and can bring benefits to the energy, economic and social security.”
Romania is the only Black Sea country where important gas reserves have been discovered.
“Many analysts believe it has the potential to become a new North Sea, from the point of view of hydrocarbon resources. This potential has not yet been confirmed, with geological exploration being at the beginning. More important discoveries have been made so far only in the Romanian area; in Turkey and Bulgaria, significant efforts have not been successful,” the report says.
Given the high level of risk in the Black Sea region, Romania needs to act to increase its attractiveness and competitiveness as a destination of offshore capital, technology and know-how, always considering best practices in the world, as well as international and regional trends, according to the experts.
“The Government of Romania needs to develop institutional, administrative and know-how to properly manage the peculiarities of the offshore oil industry. It would have been desirable that the institutional capacity and specialized human resources needed to define an optimal oil tax framework in accordance with the best practices and the recent international trends would have been established in recent years,” the report points out.
However, even after the anticipated start of development and production works in the deep waters of the Black Sea, it will be necessary to develop a smart and competitive regulatory framework and create an institutional environment capable of managing the development of a new and extensive field of activity in the energy sector, aligned with the country’s fundamental strategic objectives, the experts warn.
According to a recent Deloitte report, investments in the Romania’s Black Sea oil and gas sector will generate revenues of over USD 26 billion to the public budget and an additional USD 40 billion to the country’s GDP until 2040, as a result of total investments of USD 22.2 billion.