Tag: drilling

  • Parliament discusses draft Offshore Act

    Parliament discusses draft Offshore Act

    This
    week the Parliament of Romania is set to discuss a new draft Offshore Act, the
    endorsement of which would allow for investments for offshore drilling for
    natural gas in the Black Sea and for the development of the country’s petrochemical
    industry.


    The
    bill has been approved already by the National Liberal Party, the Social
    Democratic Party and the Democratic Union of Ethnic Hungarians (UDMR), which
    make up a majority in Parliament at present and are determined to take
    responsibility for the bill.


    According
    to deputy PM and UDMR president Kelemen Hunor, in 2026-2027 at the soonest
    Romania will be able to extract natural gas from the Black Sea. He also
    explained that an economic crisis also brings along opportunities, forcing
    authorities to attract investors and to see what changes must be made in order for
    the country to switch from thermal power plants burning coal to ones running on
    gas.


    In
    turn, PM Nicolae Ciucă, recently elected president of the National Liberal
    Party, approves of the bill, arguing that it will help Romania reduce its
    reliance on Russian gas.


    The
    Social Democratic leader and Chamber of Deputies Speaker Marcel Ciolacu also
    backs the bill, and says there is political determination and legislative,
    governmental and executive coherence for it to be endorsed.


    The
    Offshore Act has been stuck in Parliament for over 4 years, with several drafts
    having reached various stages of the regulatory process. The new draft tabled
    to Parliament has been subject to discussions in the ruling coalition for
    several months now.


    One
    scenario is for the Romanian government to receive a minimum of 60% of the
    proceeds from the natural gas, with the balance to be kept by private companies.


    The
    current legislation stipulates a 30% to 70% progressive tax on the additional
    revenues made from the natural gas price rises, and companies are bound to sell
    50% of the output through the Bucharest Commodity Exchange.


    The
    Offshore Act is eagerly awaited by companies
    interested in drilling for gas in the Black Sea. Several gas producers,
    including OMV Petrom, an Austrian company in which the Romanian
    government also holds stock, spent billions of US dollars for a decade on preparations
    to tap into the estimated 200 billion cubic metres of gas on Romania’s
    continental shelf.


    Since Romania’s domestic demand stands at around 11
    billion cubic metres per year, this would turn the country into an exporter of
    natural gas.


    The
    US company ExxonMobil also announced they would invest in the venture, however
    in 2019 they decided to sell their stock to the Romanian state-owned company
    Romgaz.


    Over
    the years, the level of taxes levied on the extraction companies was one of the
    main barriers to developing the natural gas reserves in the Black Sea, making investors
    reluctant and getting projects suspended, to the benefit of natural gas imports
    from Russia. (A.M.P.)