The country may have to import additional gas to meet rising demand as domestic resource development fails to keep pace Romania is the EU’s third-largest gas producer and—unlike its neighbors—has very little dependence on Russian imports.
Production from its Black Sea fields has been stable at c.10bn m³/yr in recent years, which roughly matches its consumption. But this equilibrium may be set to change.
There is, ironically, no shortage of potential for more gas production. But development has historically been retarded by regulatory uncertainty and lack of investor confidence.
A licensing round for onshore and offshore blocks was launched by the Romanian government last year, ten years after the previous round. But investor appetite appears muted; domestic gas prices are low and frequent changes to Romania’s petroleum law and tax regime create unwanted uncertainty.
ExxonMobil, which has a 50pc stake in the Neptun gas project in the Black Sea, says it is evaluating the commercial viability of the project. But, in February, the government passed a law that enables it to refuse to grant new exploration and production licenses to non-EU companies, and even terminate existing ones. ROPEPCA, the Romanian oil and gas association, has asked for the law to be revised.
The EU-backed Bulgaria-Romania-Hungary-Austria (Brua) pipeline could support new exploration in Romania by offering additional access to neighboring markets, rather than just domestic demand. The first leg of the pipeline, with a capacity of 1.75bn m³/yr, is expected to become operational later this year. But a second phase will not be built unless new gas fields are developed.
“We have to take into consideration the […] fact that 25pc of our energy mix now is coal and we cannot just take out coal and put nothing in [its] place” Popescu, energy minister
Romania has also built a new 1.5bn m³/yr pipeline with Moldova and plans a further 1.6bn m³/yr interconnector with Serbia. But these pipelines may be filled not with more Romanian production, but with Caspian gas from the Trans-Adriatic Pipeline (Tap).
Tap will become operational in November and its deliveries will be able to reach Romania as soon as the EU-backed Interconnector Greece-Bulgaria is up and running next year. Caspian gas could also travel to Romania and beyond via Brua.
LNG regasification terminals are also at the planning stage. This could take the form of a small-scale terminal at Galati on the Danube river or a large-scale 8bn m³/yr terminal at Constanta on the Black Sea’s western coast.
Romania, like many of its neighbors, wants to replace coal in its power generation mix with a combination of gas and renewables. Specifically, the country wants to replace 1.3GW of uneconomic coal-fired capacity with several gas-fired and solar power projects. It also wants to use more gas in heating, replacing traditional biomass.
The EU’s 2030 targets for greenhouse gas emissions reductions are expected to be increased from 40pc to c.55pc later this year, which means coal-dependent nations such as Romania need to accelerate the energy transition.
“From a Romanian point of view, we strongly support the Green Deal and we will do everything we can to reach our targets. But we have to take into consideration the… fact that 25pc of our energy mix now is coal and we cannot just take out coal and put nothing in [its] place,” says Romania’s energy minister, Virgil-Daniel Popescu. “For us, gas is a transition fuel, it is very important, and it is necessary.”
c.10bn m³/yr – Production from Black Sea fields
Romania is lobbying to be allowed to access EU funds to help fund its move away from coal—not via renewables, but also through gas projects. Resources include the Just Transition Fund, the Modernisation fund, and the Covid-related Resilience and Recovery Facility.
The Black Sea nation is eyeing further diversification in its generation mix: it is looking to build at least one new unit at its Cernavoda nuclear power plant by 2030. The development of offshore wind in the Black Sea is also an objective. “Renewables, energy efficiency, gas and nuclear will continue to play an important role in the reduction of emissions,” says Popescu.