Offshore Drilling Is a Hit, But Romanian Leaders Are Bungling It

Plans for offshore drilling, which can stir up emotions in the public, is proving surprisingly popular in Romania. It’s just the Black Sea nation’s leaders who don’t seem to be in a rush to help the multi-billion dollar project along.

Politicians, who are finding it difficult to agree on a law that would green-light the investment, may find inspiration in a study by the research company Inscop and the Romanian Academy, which found almost 8 in 10 Romanians in favor of the plan. Investors such as Exxon Mobil, OMV Petrom and Carlyle-backed Black Sea Oil and Gas are waiting for more favorable tax legislation.

A large majority of Romanians in a survey released Wednesday support the start of natural gas production and say the government should agree on a taxation level similar to other countries in the European Union. They see the project as the key to reducing a reliance on Russian gas and a way to help the economy recover after the coronavirus crisis.

Offshore Drilling Is a Hit, But Romanian Leaders Are Bungling It

“To me, this talk about the need to find a political consensus on the off-shore law is just an excuse for a delay because no one wants to take responsibility,” said Razvan Nicolescu, an energy expert at Deloitte and former energy minister. “We lost five years already and we might lose this project forever because of the European Union’s Green Deal. We have at least $10 billion buried in the underground and the priority would be for the state to get even a small share of this rather than nothing.”

OMV Petrom SA, Romania’s largest oil company, said in late April that it’s ready to move ahead with the Neptun Deep project in the Black Sea, despite the plunge in oil and gas prices, if the requested legislation is approved. But in the meantime, Petrom’s partner in the project, Exxon Mobil Corp, has to decide on its intention to sell the 50% stake. Several companies, including a consortium formed by Poland’s PGNiG SA, OMV and Romania’s Romgaz SA are vying to purchase Exxon’s stake but Romgaz said the talks have been put on hold by the pandemic.

The Neptun block, discovered eight years ago by Petrom and Exxon, was the largest gas find in the Black Sea in decades. With Romania’s onshore output declining, the new production could ensure its self-sufficiency, even as industrial stagnation has eroded demand. If the fuel is exported, the nation could become a regional supply hub.

Economy Minister Virgil Popescu says he hopes a consensus will be reached soon and the project will go ahead in time to still be profitable for both the companies and the government.

©2020 Bloomberg L.P.

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