Romania: BSOG to Start Gas Production from $600M Black Sea Project in November

Luiza Ilie
Wednesday, February 24, 2021

Romania-based Black Sea Oil & Gas (BSOG) will begin extracting natural gas from its $600 million offshore Romanian project in November, its chief executive said on Tuesday, but added further progress hinged on scrapping a disputed tax.

The additional tax on offshore projects is the last remnant of a series of price caps, taxes and export restrictions introduced two years ago by a previous center-left government.

The changes, most of which have since been reversed, blindsided gas producers, which have spend over a decade and billions of dollars preparing to tap Romania's Black Sea gas.

Critics warn Romania's window to tap its offshore reserves - which could diversify gas supplies in the region and help Romania phase out coal in line with EU targets - is narrowing.

BSOG, controlled by private equity firm Carlyle Group LP, has pressed ahead with its project to extract an estimated 10 billion cubic meters of gas, believing the new center-right government will scrap the tax before November.

"We’ve got this perfect project, very well behaved as far as the EU is concerned," CEO Mark Beacom told an energy seminar, adding BSOG's project had a 10-15 year lifespan and that renewable projects could be developed around its infrastructure.

Meanwhile, OMV Petrom, majority-controlled by Austria's OMV, has delayed a final investment decision on its much larger Neptun Deep offshore project.

Energy Minister Virgil Popescu said on Tuesday he was confident parliament would amend the offshore law and remove the additional tax before the summer recess. He also said OMV Petrom could start extracting gas from Neptun Deep by 2025.

OMV Petrom chief executive Christina Verchere agreed it would take around four years after a final investment decision.

"So I think it is really important that we get going," she told the seminar.

Speaking at the same event, European Commission Executive Vice President Frans Timmermans urged Romania to use its part of the EU's 750 billion euro economic recovery fund to invest heavily in renewable energy.

"It's important to advance to that and really see natural gas as a transition energy carrier and not as the end situation," he said. 

(Reporting by Luiza Ilie; Editing by Mark Potter)

Categories: Energy Industry News Activity Europe Production Gas Black Sea

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