Black Sea Oil & Gas announces USD 400m investment in Midia block, expects removal of all new taxes and fees

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Black Sea Oil & Gas SRL (“BSOG”) together with its co-venture partners, Petro Ventures Resources SRL (“Petro Ventures”) and Gas Plus International B.V. (“Gas Plus”) are pleased to announce that they have approved the Final Investment Decision (“FID”), to proceed with the $400 million Midia Gas Development Project (“MGD Project”), offshore Black Sea.

FID has been taken in good faith and on the assumption that BSOG and its joint venture partners will successfully be able to restore all of their rights with respect to the removal of any newly imposed supplemental taxes and fees as well as removing any restrictions, in accordance with EU Directives, on the free movement of gas on a fully liberalized market in order to not only make MGD Project a viable investment but also to encourage further gas developments in the Black Sea, a release posted on the company’s website reads.

The MGD Project, which is the 1st new offshore gas development project in the Romanian Black Sea to be built after 1989, consists of 5 offshore production wells (1 subsea well at Doina field and 4 platform wells at Ana field) a subsea gas production system over the Doina well which will be connected through an 18 km pipeline with a new unmanned production platform located over Ana field. A 126 km gas pipeline will link the Ana platform to the shore and to a new onshore gas treatment plant (“GTP”) in Corbu commune, Constanta cCounty, with a capacity of 1 BCM per year representing 10% of Romania’s consumption. The processed gas will be delivered into the NTS at the gas metering station to be found within the GTP.

BSOG has secured a long-term gas sales agreement with a Romanian subsidiary of ENGIE. The contracted volumes refer to all MGD Project gas production, reduced by the volumes that the producers are currently obliged to sell on the centralized market. BSOG has also secured a gas transmission contract with Transgaz S.A. (“Transgaz”) for the transport of the MGD Project production into the National Transmission System (“NTS”) for a contractual period of 15 years.

The entire project infrastructure, including all offshore and onshore facilities, has been contracted to be built, installed and commissioned under an EPCIC Contract with GSP Offshore SRL, with a contracted delivery date Q1 2021. The development drilling of the five production wells will also be performed by GSP for which GSP Uranus jack-up rig will deployed.

BSOG is pleased to confirm that all the contracting activities for this project will, in total, have Romanian content of roughly 70%.

In 2019, BSOG anticipates having completed the detailed engineering for the MGD Project, commenced the fabrication of the Ana Wellhead Platform at the shipyard in Agigea, commenced the civil constructions at the GTP site in Corbu and have purchased a number of long lead company items.

Mark Beacom, BSOG CEO commented: “This project is very much a pioneering project with many firsts having been successfully achieved in Romania. Together with our joint venture partners we very much appreciate all the help we have received along the way from the many Romanian institutions, contractors, Transgaz and our community of Corbu which were vital for reaching this critical milestone of FID and we look forward to build and operate this game changing project for Romania’s energy industry.”

The Romanian company, controlled by private equity firm Carlyle Group, discovered two wells holding an estimated 10 billion cubic metres of gas in 2008 some 120 kilometres offshore, where it has rights over the XIII Pelican and XV Midia Shallow blocks.

In April 2017, BSOG together with its co-venture partners announced the awarding of a contract for the drilling of two offshore exploration wells located in the XV Midia Shallow Block, Romanian Black Sea continental shelf, to the local offshore drilling services provider GSP Offshore SRL (“GSP”).

BSOG, owned by Carlyle International Energy Partners and the European Bank for Reconstruction and Development, is a Romanian based independent oil and gas company, targeting exploration and development of conventional oil & gas resources.

 

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