This report analyzes the current natural gas sector from the point of view of reserves, infrastructure and market setup. The report also addresses the prospects for the evolution of different segments of natural gas consumption by 2030 and provides appropriate policy and regulation recommendations which would lead to the value-added capitalization, on the Romanian Market, of the expected Black Sea natural gas production but also of onshore deposits.
The current state of the Romanian natural gas system
With an annual production of nearly 11 bcm in 2016, Romania is the most important natural gas producer in Eastern Europe. Annual imports in the past years amounted to around 10% of consumption, necessary to cover the increased demand of winter months. Proven natural reserves were around 101 bcm in 2015 which means that they will be exhausted in the next 15 to 20 years at current consumption and replacement rates. Developing new natural gas resources and increasing the rate of recovery from existing deposits requires substantial investment.
The BRUA gas pipeline will be an essential development of the national gas transmission system (NTS). The pipeline aims at increasing the security of Romania‘ s natural gas supply through access to new sources and will allow transit to the Central European markets for the natural gas production from the Caspian Basin (via the Romania-Bulgaria interconnector and the future interconnector Bulgaria-Greece, Romania will have access to the Southern Gas Corridor). At the same time, BRUA can represent an access corridor to the European markets of part of the potential natural gas production from the Black Sea.
During 2008-2016, the ExxonMobil-OMV Petrom joint venture carried out the exploration and evaluation of the Neptun Deep block which led in 2012 to the discovery by the Domino-1 deep water exploration well of the largest natural gas field in the Black Sea, with estimated reserves between 48-84 bcm. Then, in 2015, the companies Lukoil, PanAtlantic and Romgaz announced the discovery of an important offshore natural gas field, for which preliminary assessments indicate reserves of more than 30 billion cubic meters. The development of these reserves in order to start production requires billions of dollars in investments, in addition to the few billions invested in exploration so far.
Hungary announced in July 2017 proposed changes to BRUA‘s initial configuration, which include the possibility of ensuring the link with the Central European Hub in Vienna (CEGH) via the Hungarian-Slovak interconnector and then through the Slovak gas transport system. Under these circumstances, Romania must continue the diplomatic efforts to restore the initial configuration of the project; Romania‘s national interest is to have a direct, bidirectional link with a liquid hub on which natural gas prices are formed in a transparent way.