Romania has power to attract oil & gas investment

Representatives of the oil & gas sector in Romania voiced a lot of optimism at the BR event organized last week, mostly on account of their industry’s openness towards investment. Alternative fuels, although a viable option in the future, cannot currently replace traditional sources of power, agreed the specialists at the event. Moreover, they emphasized, there is plenty of room for development in this sector, in spite of the pessimistic predictions.  

Corina Dumitrescu

Investment opportunities on the local market were on everyone’s lips at the Energy Series BR event held on June 21. There are two main arguments in support of Romania’s investment potential: “Romania is in a really privileged position: it is a growing market with both natural and human resources. There are definitely opportunities for investment here,” said Tudor Gafton, general manager of Petrofac. Romania’s 150-year tradition in the oil & gas industry is another one of its competitive advantages, attendees also heard.

Investment will also be encouraged through a new strategy that will be considered by the Ministry of Economy this autumn, announced Corneliu Condrea, general manager at AGRI Romania (the Azerbaijan-Georgia-Romania Interconnector gas transportation project), which as Anca Ionita, Business Review business development director and the event moderator, pointed out, will provide a suitable context for organizing a new Oil & Gas event. “The new strategy that will be adopted by the ministry will be an incentive for Business Review to organize a new roundtable to discuss it and try to understand where we are heading next year,” she stated.

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Black Sea developments make waves

Romania currently has a stable position on the oil market, producing 4 million tons of oil per year, noted Condrea. However, new developments on the continental shelf of the Black Sea will have a substantial impact on local oil production, he added. “Romania is a Black Sea paradox because it is the only country that is producing oil in the Black Sea so far,” added Bogdan Popescu, managing director at Zeta Petroleum Romania, as well as president of the Petroleum Exploration & Production Managers Forum in Romania.

It will also be an important source of natural gas for Romania. The country’s involvement in the Nabucco project also came under discussion, as did its inclusion in AGRI, the Azerbaijan-Georgi Romania Interconnector gas transportation project.

Offering a wider perspective on the investment issue, Popescu commented on the higher prices charged by the industry in Europe, about 50 percent higher than outside the continent. “Getting back to the deeper prospects of Romania, I think we should look at the neighboring country, Ukraine, which although it does not have the most up-to-date technology, is drilling consistently below 5,000 meters and finding and producing gas,” he stated, comparing this to the depth of around 3000 meters reached in Romania so far. He added that Romania has been making progress in this area, however, since Petrom and Hunt joined forces in exploring onshore in Romania.

Another topic discussed at the event was the mooted “end of the global financial crisis”, which, however, seems to be continuing in the energy field on account of the energy mix and its reconsideration, said Condrea. Other discussions drew attention to natural gas in Romania, the price of which depends on that of oil. However, as the extracted and marketable natural shale gas has developed significantly in the last five years, observed Condrea, the next five to ten years will bring major changes on the natural gas market. Condrea predicted that, on an international level, this will generate gas versus gas competition, rather than gas versus other fuels.

Nuclear power and alternative fuels prove hot topics

Germany’s decision to renounce nuclear energy provoked reaction from the audience, after a show of hands requested by Richard Zulauf, consultant at Accenture. Of the 70 attendees present at the BR event held at Ramada Plaza Bucharest, none were in favor of the move, several were against and the majority were neutral. “This decision will surely cause serious changes not just in the strategy of European Union countries, but in countries in the vicinity of the EU, as well,” commented Condrea on the subject. He also stated that there is currently sufficient nuclear fuel for reactors 3 and 4 to be started up at the local Cernavoda Nuclear Power Plant, as well as the necessary coal to run them.

Zulauf continued to fuel a heated discussion by raising an unexpected perspective on alternative energy sources. He argued that there is currently no natural advantage in biofuels or electrification. Moreover, “plug-in electric vehicles have the potential to cause significant market disruption, but have a number of critical challenges. For example, lithium is very expensive and scarce.”

The consultant pointed out that the larger economies of the world are investing in battery development (he mentioned that the US has invested USD 2.4 billion in this area). Zulauf then told Business Review that electric car infrastructure will fully develop in Western countries in about five years, and about ten in Romania. Therefore, until the technology advances, natural gas and oil remain the main fuels to meet current needs.