Romania’s oil and gas reserves and processing capacity

Romania faces onto the Black Sea, where oil and gas reserves have proved lucrative for other countries; it also controls the second smallest portion of the inland sea, with access to slightly under 30,000 square kilometres. Romania has proven access to 200 billion cubic metres of gas in its offshore reserves, the fifth-largest gas reserves in Europe.

Neptun Deep holds Romania’s largest reserve, significantly larger than the next 2 largest fields. Between them, these 3 form the majority of the Romanian offshore industry. Behind Neptun Deep and Trident, the Midia Development is the only one of the 3 to have its final investment decision made. Operated by Black Sea Oil and Gas, construction work began in 2019.

The government promised to facilitate the first gas deliveries from the Neptun Deep field before 2025.

Romania also has one of the largest processing capacities in Eastern Europe. Its 9 refineries operate below their capacity of 450,000 barrels per day, giving room for expansion in its domestic industry.

Natural gas in Romania

Romania was the first nation to employ natural gas for industrial purposes and has the largest natural gas market in Central Europe. As the second-largest gas producer in the European Union with sizable reserves, including those recently found in the Black Sea, Romania is the nation in the region with the lowest reliance on imported natural gas.

Romania is strategically placed between well-developed Central European markets and Southeast European supply sources. Romania has warehouses and connections with Bulgaria, Ukraine, Hungary, and Moldova.

Romania supports a long-term perspective of natural gas in the European Green Pact because it forecasts that this resource will remain an important tool in changing the energy sector and transitioning to a more sustainable and carbon-free economy.

In addition to the Neptune Deep, Romania can diversify its energy supplies with the Midia Natural Gas Development Project of Black Sea Oil & Gas. Over 14,200 kilometres of pipes and gas connections transport natural gas. Romania’s natural gas distribution network has increased 4 times in the last 3 decades, from 10,772 kilometres in 1990 to 43,563 kilometres in 2020, according to data synthesized by the National Institute of Statistics (INS). The average annual growth rate is 4.8%, with the highest advances over the previous year recorded in 1995 (11.58%) and 1994 (11.19%). The pace has slowed since 2005, with an average annual growth rate of 3.32%, with the best performance in 2007 (6.14%). The length of the natural gas distribution network increased by 3% in 2020, compared to 2019, and reached 43,563 kilometres, for about 6.5 million customers, with an average annual consumption of about 9 billion cubic metres.

Ensuring as many players as possible, suppliers, and end customers have access to the competitive market eventually increases its share. Customers can choose their supplier and arrange direct sales-purchase agreements. Main offshore titleholders in the Black Sea are Black Sea Oil & Gas (BSOG), whose first molecule of Romanian natural gas from the Black Sea will be extracted from the Aurora field in 2022-2023. Also, Romania stands to become a regional gas provider should its total extracted gas exceed domestic needs.

Other title holders are ExxonMobil, Lukoil, OMV Petrom, Petromar Resources, Petro Ventures, Gas Plus Dacia, and Romgaz SA.

Since 2001, 10% of Romania’s natural gas market has been open to industrial consumers, reaching 100% in January 2007. The natural gas market was liberalized for residential consumers in July 2007. According to Directive 2009/73 / EC, the national natural gas market is now 100% open.

Onshore natural oil & gas production in Romania is provided by traditional producers such as Romgaz SA, OMV Petrom SA, Amromco Energy SRL, Mazarine Energy Romania, Raffles Energy SRL, and Stratum Energy Romania.

As of July 2022, Romania’s Ministry of Energy supports a strategic partnership to acquire LNG energy from Azerbaijan, through a Southern Corridor pipeline known as BRUA (Bulgaria-Romania-Ukraine-Austria). The European Commission agreed with the government of Azerbaijan to double imports of its natural gas by 2027, as part of the European Union’s push to increase non-Russian energy supplies.

LNG at the Black Sea

The Black Sea has no LNG terminal; the position held by Turkey on allowing LNG tankers to pass through Istanbul and the Bosphorus Strait plays a large part. Romania had planned to build a terminal onshore at Port of Constanta. Indeed, since Romania’s priority was to have completed the BRUA pipeline in 2020 and to start gas production in the Black Sea, the Constanta LNG project could come online in 2026, yet is still awaiting private investment.

This is also based on the Development Plan of the Gas National Transport System SNT for 2020-2029, drawn up by the system operator, Transgaz, a state-owned company.

Natural gas is seen as an important resource in the process of transition to clean energy, and Romania has large potential for LNG developments in its Black Sea territories. With infrastructure investments and the development of competitive market mechanisms, Romania can succeed in becoming a major European LNG supplier and transport hub.

The Romanian government plans reductions in Offshore Law and taxes

In 2018, Romania introduced offshore laws including a ‘windfall tax’. This means operators pay tax based on the revenue gained above benchmark prices set in 2012. This tax increases gradually between 15% and 70%.

The country relies on oil and gas for approximately 18% of its power generation, but much of this comes from abroad; imported gas costs approximately USD $600 per 1,000 cubic metres, compared to USD $150 for domestic production.

Despite this, former Prime Minister, Ludovic Orban, defended the need for imports, and the installation of new pipelines. In September 2020, he stated that “Romania has a higher extraction capacity than it has consumption. The only period when consumption can rise above production is in winter, but even then the country has solutions. Romania has underground storage, but not enough time has been spent on increasing its extraction capacity during the winter. Because of this, the country needs imports”.

Orban also highlighted the benefits of increasing access to gas imports. He stated this would mean “Romanian producers must become more efficient to meet the competition”.

Since then, the government has started reassessing the Offshore Law. It has proposed raising the threshold for the windfall tax, meaning a lower overall tax rate. The new level remains unclear, but the government hopes the move will be enough to lure investment back to the area.

OMV CEO, Rainer Seele, announced the company would likely make a favourable final investment decision if oil and gas taxation laws became more favourable to operators.

Romania’s traditional nuclear sector

Nuclear energy will continue to play an important role in Romania’s energy mix for years to come.

Romania has a long tradition and rich nuclear expertise gained through the construction, commissioning, and safe operation of Cernavoda NPP Units 1 and 2 and other nuclear facilities such as the heavy water plant, the nuclear fuel plant, research institutes, engineering and advanced physics centers, and education.

Romania currently has one nuclear power plant, Cernavodă, with 2 operational reactors; and 2 more under construction (pressurized heavy water reactors of CANDU 6 design (CANadian Deuterium Uranium), each with a gross output of 706.5MWe. The 2 reactors in operation supply approximately 20% of total energy production.

Small Modular Reactor technology will help Romania and other European Union member nations achieve national decarbonization goals by promoting a fair transition to carbon neutrality. Romania is involved in SMR deployment in Europe, drawing on the expertise of Romanian experts while ensuring that the move away from coal is accompanied by new jobs, commercial possibilities, and local development.

Romania has expedited its decarbonization goals to 2030 from 2050. Renewable energy sources, nuclear power (via completion of Cernavoda NPP Units 3 and 4, refurbishment of Unit 1 – projects valued at USD $8.5-9.5 billion – and deployment of SMRs), and natural gas, as a transitional source, form the backbone of Romania’s energy transformation.

Romania’s booming renewable energy market

Romania’s energy sector is key to its evolving economy and security policy. The country finds itself having a diverse energy mix based on natural resources such as gas, nuclear power, and renewable energy.

The National Recovery and Resilience Plan calls for phasing out coal and lignite by 2032 and replacing them with renewable and low-carbon energy sources, including clean hydrogen. According to the plan, in order to reach its 2030 renewables target of 30.7%, Romania plans to add around 7GW of new capacity, of which around 3.7GW is intended to be solar projects. In terms of energy consumption, in 2019, little over 24% of energy consumption originated from renewable energy sources, placing the country in 10th place in the European Union, and above the union’s average level.

The Romanian Ministry of Energy has launched a tender for the deployment of 950MW of renewable energy capacity. The government has allocated a budget of €457.7 million (approximately USD $500 million) for the procurement exercise, which will be open to solar and wind projects, with the possibility of links to storage. Around €372.7 million of the total will be devoted to projects exceeding 1MW in size and €75 million to wind and solar plants with a capacity between 200kW and 1MW.

Romanian authorities will grant a rebate of €750,000 per MW installed to PV projects with a power of 200kW to 1MW and of €425,000 per MW installed to solar arrays over 1MW. For wind power, rebates are €1.3 million and €650,000 for the 2 project typologies, respectively. Selected projects must begin commercial operations in June 2024.

Romania is also supporting rooftop photovoltaic deployment via its program called Casa Verde Fotovoltaice (green PV home) for residential solar installations, under the national net metering regime. According to the International Renewable Energy Agency, Romania had 1.39GW of solar installed by the end of 2020.

In 2020, electricity production in Romania was: 12.4% from wind power, 3.4% from solar panels, while 27.6% of the electricity production was coming from hydropower. In total, renewable energy production (solar, wind, and biomass) amounted to 16%.

According to the country’s National Institute of Statistics, energy output in Romania climbed by 5.3% in 2021 to 59TWh, with 38% thermal, 29% hydro, 19% nuclear, 11% wind, and 3% solar, while imports increased by 6.7%to 8.1TWh. Electricity consumption climbed by 4.2% to 55.7TWh, while exports increased by 23% to 5.9TWh.

Romania seeks to derive more of its energy needs from renewable sources. The country is seen as a fast-growing market for wind energy in the Southeast European region, with installed wind generation capacity skyrocketing from as little as 7MW in 2007 to 3,029MW in 2019.

In July 2021, approximately 50% of generated power had renewable resources: hydro power at above 34%, wind above 15%, photo-voltaic above 7%, and biomass above 0.5%.

In March 2021, OMV Petrom announced that they will invest €250 million. in a new bioethanol plant in Romania. OMV Petrom, Southeastern Europe’s largest integrated energy firm, also reports it will generate sustainable aviation fuel (SAF) at the Petrobrazi refinery, by coprocessing locally produced rapeseed oil; in June 2022, they announced the first test-run volumes. The company’s stated goal is that by 2030 they will have an annual combined production of SAF and HVO (hydrotreated vegetable oil) of about 450,000 tons.

Romanian Association for Wind Energy (RWEA) launched RESInvest, a program dedicated to localization of a value chain for renewable energy by encouraging local production of renewables technology and creation of investment opportunities based on European Union funded capacity of 3,000MW. RWEA foresees relocation of important sector companies to Romania, manufacturing equipment for renewable energy installations, training of qualified personnel for the operation, and maintenance and repair centers.

RWEA states that Romania could become a know-how hub based on national research and innovation plans and on adjacent technological concepts such as storage, hydrogen, transport and digitization.

In recent years, Romania increased its production of liquid biofuels, mostly on the account of biogas, conventional biofuel and biodiesel, with installed capacities for approx. 80 Mt/y.

Displaying Romania’s potential

In March 2023, IN-VR hosted the eighth version of the Balkans Energy Summit in Athens, where the aforementioned topics were discussed; the event had a special focus on hydrocarbons exploration, securing investments, clean project development, and overcoming energy poverty. Furthermore, participants had the chance to display the country’s role in the Balkans region, and the steps needed in order to become one of Europe’s strategic powerhouses and important transportation corridors. This event will be hosted once again in 2024.

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