Romania's Mature Fields Opportunity
Romania is a rich oil and gas resources country. It has EU’s 2nd largest crude oil and 3rd largest natural gas reserves. Also, it is EU’s 3rd largest natural gas and the 4th largest crude oil producer. Yet, the country's oil and gas production has been in continuous decline since its peak in 1978 and 1982 respectively despite the incremental production added from new oil and gas projects, as these projects were not sufficient to offset production decline from existing oil and gas fields.
Romania and the European Union
In 2007, Romania became a member of the EU, which required the alignment of all of its regulations with EU standards. Alignment included both, the petroleum law and the law for electricity and natural gas.
As the European Union thrives to reduce its dependence on Russian gas supplies, it has approved in 2017 the funding of a regional gas pipeline connecting Bulgaria, Romania, Hungary and Austria (named BRUA - the initial letter of each participating country). The pipeline will connect Romania’s Black Sea to a gas compression facility in Austria. Given Romania's favorable geographic location, it has the potential to become a regional energy hub in Europe for the years to come.
Romania's Oil & Gas Trade Deficit
As stated earlier, Romania's oil and gas production is in constant decline, which led the country to becoming increasingly dependent on imports to satisfy its local market demand. In recent year, the trade deficit worsened, as it had more than doubled during the period 2015-2018. Currently, Romania imports 86% and 14% of its oil and gas demands respectively as per EMIS.
Furthermore, a recent parliamentary legislation imposed on natural gas producers has obliged them to sell first to the household market at a regulated price of RON 65/MWh (~ EUR 15/MWh) prior to selling to the industrial market at an unregulated price (~ EUR 24 MWh). This has resulted in an increase in imported gas volumes to satisfy the industrial sector.
Romania's Mature Fields Opportunity
Romania has the largest number of active wells in Europe (13,000 wells), yet the lowest productivity per well. This comes as no surprise, given that the country has more than 400 oil and gas deposits which most of them are in a mature stage.
The Romanian government is committed to boost its oil and gas production and put a halt to production decline. Therefore, production increment from mature fields represents a short to mid term solution that can be realized through:
Enhanced Oil Recovery (EOR) ,Field Rehabilitation, andField Re-development.
While mature field management requires a specialized set of expertise and services, this model has become more popular in recent years, as large E&Ps are divesting their mature assets to invest in exploration and green fields. This allow for smaller E&Ps to benefit from mature fields existing production, and enhance it through the implementation of EOR methods.
Romania's 11th Licensing Round
Romania's 11th licensing round is anticipated in 2020. The round will offer a total area of 25,125 km2 for exploration, development and exploitation, representing almost 11% of Romania’s sovereign territory (land and water included). This upcoming licensing round offers an entry-to-market opportunity for foreign entities who wish to invest in Romania's mature field market.
Furthermore, according to Romania’s Energy Strategy 2016-2030 with perspectives until 2050, the overall energy sector (upstream, midstream, and downstream) will require around EUR 100 billion (~ USD 111 billion) worth of investments by 2035 to fund the construction of new onshore and offshore production and distribution networks. This might include interconnecting Romania's national transmission system (NTS) with the European Central Transport System (ECTS), as well as with other natural gas pipelines, such as the pipeline from Caspian Basin, east of the Mediterranean Sea, and the Middle East through the Southern Corridor, thus offering greater export opportunities for E&Ps active in Romania.
Romania has a great potential for becoming an energy hub in Europe once the BRUA pipeline construction is complete. Also, if Romania's NTS becomes connected to other natural gas networks, export opportunities will significantly increase. The 11th licensing round offers the opportunity for E&Ps to take advantage of existing oil and gas fields, and boost their production through enhanced oil recovery, field rehabilitation, and field redevelopment methods.