Romania: Carlyle-backed Black Sea Oil & Gas Says Taxes Hinder Higher Gas Output

Credit: BSOG (File photo)
Credit: BSOG (File photo)

Black Sea Oil & Gas (BSOG), controlled by private equity firm Carlyle Group is prevented from increasing gas production at its offshore project due to higher taxes and regulation, its chief executive said on Tuesday. 

BSOG launched Romania's first offshore Black Sea development in three decades in June of last year, extracting around 1 billion cubic meters (bcm) of gas per year. 

"Right now we produce about 12% of Romania's consumption, and that displaced basically Russian imports in our view, perfect timing," Mark Beacom told an energy seminar organized by financial daily Ziarul Financiar. 

"We believe we can go from 12% to 15%, but we can't."

 Beacom said Romania has enforced a European Union solidarity tax on top of an already existing tax on windfall profits. 

"We've got the solidarity tax that really makes no sense from an incentive point of view to increase production, but we also have some other regulatory issues that we raised with officials," he said without elaborating. Romania is less reliant on Russian gas than its neighbors, producing around 90% of its needs locally through OMV Petrom ROSNP.BX, state producer Romgaz and BSOG.

 It also holds an estimated 200 billion cubic meters of gas in the Black Sea. 

OMV Petrom and Romgaz are expected to make a final investment decision on their joint Neptun Deep project in mid-2023.

Beacom said BSOG still had exploration potential in its own perimeter of the Black Sea. 

"We still have near-term exploration potential around our fields, the idea was to wait until the fields were declining somewhat and then we would drill them and just bring them onstream right away." "It is kind of low-hanging fruit, easy exploration, so we have that opportunity." 

Beacom also said that plans by BSOG's investor Carlyle to potentially sell the company were "normal" for an equity firm after it has finished building the project. 

(Reuters - Reporting by Luiza Ilie, Editing by Jason Hovet and Louise Heavens)

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