With the energy crunch deepened by the war in Ukraine and the sanctions against Russia, Parliament is looking at a new bill.
This week the Parliament of Romania is set to discuss a new draft Offshore Act, the endorsement of which would allow for investments for offshore drilling for natural gas in the Black Sea and for the development of the country’s petrochemical industry.
The bill has been approved already by the National Liberal Party, the Social Democratic Party and the Democratic Union of Ethnic Hungarians (UDMR), which make up a majority in Parliament at present and are determined to take responsibility for the bill.
According to deputy PM and UDMR president Kelemen Hunor, in 2026-2027 at the soonest Romania will be able to extract natural gas from the Black Sea. He also explained that an economic crisis also brings along opportunities, forcing authorities to attract investors and to see what changes must be made in order for the country to switch from thermal power plants burning coal to ones running on gas.
In turn, PM Nicolae Ciucă, recently elected president of the National Liberal Party, approves of the bill, arguing that it will help Romania reduce its reliance on Russian gas.
The Social Democratic leader and Chamber of Deputies Speaker Marcel Ciolacu also backs the bill, and says there is political determination and legislative, governmental and executive coherence for it to be endorsed.
The Offshore Act has been stuck in Parliament for over 4 years, with several drafts having reached various stages of the regulatory process. The new draft tabled to Parliament has been subject to discussions in the ruling coalition for several months now.
One scenario is for the Romanian government to receive a minimum of 60% of the proceeds from the natural gas, with the balance to be kept by private companies.
The current legislation stipulates a 30% to 70% progressive tax on the additional revenues made from the natural gas price rises, and companies are bound to sell 50% of the output through the Bucharest Commodity Exchange.
The Offshore Act is eagerly awaited by companies interested in drilling for gas in the Black Sea. Several gas producers, including OMV Petrom, an Austrian company in which the Romanian government also holds stock, spent billions of US dollars for a decade on preparations to tap into the estimated 200 billion cubic metres of gas on Romania’s continental shelf.
Since Romania’s domestic demand stands at around 11 billion cubic metres per year, this would turn the country into an exporter of natural gas.
The US company ExxonMobil also announced they would invest in the venture, however in 2019 they decided to sell their stock to the Romanian state-owned company Romgaz.
Over the years, the level of taxes levied on the extraction companies was one of the main barriers to developing the natural gas reserves in the Black Sea, making investors reluctant and getting projects suspended, to the benefit of natural gas imports from Russia.
(Mihai Pelin, Radio Romania International)
