Romania: OMV Petrom, Romgaz Step Closer to Black Sea Gas Extraction

©MoiraM/AdobeStock
©MoiraM/AdobeStock

Romanian gas producers OMV Petrom and state-owned Romgaz filed paperwork on Tuesday that edged them closer to the extraction of a long-awaited deepwater gas field in the Black Sea, Petrom said.

The two companies jointly own the Neptun Deep offshore project, which holds an estimated 42-84 billion cubic meters of gas.

On Tuesday, they filed a commercial viability statement with the European Union state's mineral resources agency, the official demarcation line between exploration and development.

However, OMV Petrom, which is the project's operator, has said it will not make a final investment decision until mid-2023, pending government clarification on an offshore gas law.

"The commercial discovery declaration is an intermediary step in the process of making a final investment decision and starting development," said Petrom.

"The total investment for the project's development has been estimated at up to 4 billion euros ($4.26 billion). Once all procedural steps are met, a final investment decision is estimated for mid-2023 and first gas for early 2027."

The introduction of a tax on offshore gas income in 2018 prompted OMV Petrom to put the project on hold and contributed to Exxon's exit from the European Union state.

Romanian lawmakers amended the law earlier this year, reducing the tax and removing export restrictions in a bid to unlock investment in the Black Sea where the country has an estimated 200 billion cubic meters of gas.

The potential for further gas discoveries in Romania's Black Sea is huge, but the government needs to improve regulation to speed up development, the country's top gas producers have said.

Black Sea Oil & Gas, controlled by U.S. private equity firm Carlyle Group LP (CG.O), launched Romania's first offshore development in three decades in June. It said it planned to extract 1 billion cubic metres of gas per year, or roughly 10% of Romania's consumption. 

($1 = 0.9390 euros)

(Reuters - Reporting by Luiza Ilie; Editing by Crispian Balmer)


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