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Investments in the Black Sea oil sector to bring USD 26 bn to the state budget

OMV promises EUR 1 bln investment in Romania. What’s the condition?

OMV announced that EUR 1 billion investment is in store in Romania if the country sets up an acceptable regulatory framework for the company’s exploitation project on the Black Sea.

Soon after this framework is adopted, the Austria-based gas company will be able to give its green light for the investment, the OMV upstream chief, Johann Pleininger told a Reuters interview.

The exploration of the Black Sea Neptun block is a joint venture between OMV’s Romanian subsidiary Petrom and U.S. major ExxonMobil and includes the first deep-water exploration well in Romanian waters.

Johann Pleininger stated that OMV needs reliable framework conditions on taxes and royalties before it can approve such a major investment, while adding that OMV also needs the guarantee that it can export surplus gas.

The Austria-based oil giant announced six years ago it had had discovered 1.5-3 trillion cubic feet (42-84 billion cubic meters (bcm) of gas reserves at the ExxonMobil operated Domino-1 well, located around 170 km offshore in the Black Sea.

After in early July the Chamber of Deputies adopted, as the decision-making body, the draft bill establishing measures for the exploitation of Black Sea energy resource, OMV Petrom, alongside other oil companies operating in the Black Sea voiced their reluctance to the law. CEO OMV Petrom, Cristina Verchere, said back then that the decisions made on Monday in Parliament make us drive away from a final decision favourable to investments.

Among the companies operating in the Black Sea are OMV Petrom, ExxonMobil, Lukoil, Romgaz and Black Sea Oil and Gas. Seven interconnected rigs extract gas and oil from the offshore blocks. 7% of Romania’s oil production, and 13% of natural gas come from the Black Sea rigs.

Sorin Gal, Director General with the National Agency for Mineral Resources (ANRM) announced in February this year that ExxonMobil and OMV Petrom will extract 6 billion cubic meters of gas from the Neptun block in the Black Sea as of 2020-2021 and Romania will produce a total of 18-20 billion cubic meters of gas if all the projects are developed in the Black Sea.

Unlike other countries in the region, Romania is almost entirely energy independent, importing less than 10 percent of its gas needs from Russia, and producing the rest locally, mainly by state producer Romgaz and Petrom.

About Alina Grigoras Butu