Comment: In Romania, the Sun Also Rises

By William Stoichevski
Monday, December 9, 2019

Depending on who you talk to, the Romanian offshore either has two projects worthy of mention and an aging supplier base, or it’s the most up-and-coming and accessible oil and gas province in all the world.

The truth, as usual, is somewhere in the middle. The ray of light through the cloud of supermajor withdrawal is a proposed royalty-law amendment that cuts by a third the government’s take on new projects.

The departure, North Sea style, of a supermajor is supposed to entail a lot: a drop in supplier fortunes and interest; weaker field finance and delayed investment decisions, as new buyers organize to have a go. Yet, a withdrawal of oil majors might mean very little to Romania.

For one, ExxonMobil — having invested millions in the Midia Gas Project’s 70 billion cubic meters of recoverable resources — is reportedly wanting out of Romania (should the royalty amendments not go through). After all, Bucharest’s 2018 production rules seem to also forbid more than 40 percent of gas throughput leaving the country directly from new offshore fields like Midia, with its 120-kilometer pipeline.

Now, the government has extended OMV Petrom and ExxonMobil’s XIX Neptune field license by 15 years. Still, Reuters in November still had ExxonMobil looking to sell half of its stake in the Neptune Deep project for $250 million, in-line a company-wide capital shuffle.

Yet, as on the UKCS and the NCS, buyers interested in those supermajor assets abound. Lukoil Overseas is understood to be one. It’s party to Romania’s East Rapsodia and Trident fields while aiming to develop the Trinity 1X well.

Major dance
Apart from Lukoil Overseas, Romanian news reports France’s Total and the Israeli Delek Group may be in-line to buy ExxonMobil’s 50% in the Neptune Deep project offshore Romania.

There’s also reported interest from Poland’s PGNiG, and Romanian published a presentation ExxonMobil sent to potential buyers, including national champion, Romgaz. There’s plenty of interest.

Supplier investments — which the government’s Web page says is Romania’s No. 1 priority — was also helped in November by Lukoil moving forward. London-listed oil-spill tech treatment company, Directa Plus, reports its new subsidiary is a Lukoil hire at the Trident gas field in Block 30, where the Scarbeo 9 is drilling Trinity 1X for Romgaz and Lukoil.

More coming
Then there’s the Carlyle Group-Backed E&P player, Black Sea Oil & Gas. For nearly a year, it’s been planning a build-up of the $400 Million Ana and Dointa gas fields 120 kilometersm offshore as part of the 320 Bcf Midia Gas Project.  The company said its JV with Italian Gas Plus International and investor group, Petro Ventures Resources, would likely complete key production infrastructure early in 2021.

And more is afoot. Apart from ExxonMobil and OMV’s 1.5 Tcf Domino field, OMV Petrom and ExxonMobil have drilled and look intent on drilling two more wells in the shallow water Istria block, including more from the Lebada East field. Lukoil Overseas, too, is sitting on seismic from 2015.

For some suppliers, Black Sea M&A, should it come, could mean delays or work stops. For others, there’s Romania’s burgeoning decommissioning market.

Find a local partner for your local content requirement, and you might also get a leg-up on Bucharest’s 11th Licensing Round, the first acreage awards in a decade.

Categories: Mergers & Acquisitions Europe

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