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Τhe Romanian Magazine for Energy and Environment Black Sea

The Future of Romania

January-February 2014 Nr. 10, price 10 Ron

Russia’s attempt to dominate euRope’s gas maRket

What does Gazprom plan in romania

The impacT of shale gas on The economy

soaring of Global enerGy renewables has demand to increase been sTopped 35% by 2040 Gas from the how we lose deep sea Waters 9 billion euros


Contents

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THE BI-MONTHLY ROMANIAN MAGAZINE FOR ENERGY AND ENVIRONMENT 2nd YEAR, Issue Nr 10 January-February 2014 Publisher TRIM Publications S.R.L. Managing Director Apostolos Κomnos Marketing Director Apostolos Κomnos Art director A.L.L. Designers Issue Price 10 RON Editor in Chief Dragos Zaharia Deputy Editor in Chief Emilia Damian Editors Ada Gavrilescu Diana Medan Simon Done PR & Communications Executive Luminița Nițoiu luminita.nitoiu@trimpublications.com

energyworld Magazine

TRIM Publications S.R.L. Print & Online Publications Sos Nicolae Titulescu nr. 3 Bloc A1, ap. 62, et. 8, Sector 1 București, CP 011131 Τel.: +40 213 110455 www.energyworld.ro www.trimpublications.com E-mail: info.ro@trimpublications.com

01 02 03 04 05 06 07 08 09 10 11

EDITORIAL: ThIS yEAR wILL bE MENTIONED IN hISTORy NEwS RuSSIA’S ATTEMPT TO DOMINATE EuROPE’S gAS MARkET whAT DOES gAzPROM PLAN IN ROMANIA gAS fROM ThE DEEP SEA wATERS SOARINg Of RENEwAbLES hAS bEEN STOPPED ThE IMPACT Of ShALE gAS ON ThE ECONOMy gLObAL ENERgy DEMAND TO INCREASE 35% by 2040 DEPA: ThE gREEk NATuRAL gAS COMPANy bEINg AT ONE wITh NATuRE AND ITS MuTuAL bENEfITS hOw wE LOSE € 9 bILLION EuROS


Editorial

By the publisher

01 2

This year will be menTioned in hisTory This year will be extremely interesting not only for the Romanian energy sector, but it will be also important for the entire region and it will be certainly mentioned in history. The large projects require the final decisions, the Governments get out of crisis and set their strategies for the next 20-30 years, the companies are looking at the regulations of the authorities and begin to shape the strategies that they will follow in the coming decades. Thus, we have prepared for you some of the most important topics that will mark 2014, in this issue of the Energy World magazine. In the first place, we chose to think at the regional level and we start with the South Stream project, the huge pipeline through which Russia will increase the amount of gas that supplies Europe. It is interesting that this pipeline is not seen only as a commercial tool, by means of which the merchandise will be easier transported from the producer to the consumer, but also as a political tool, due to the Russian attempts to gain as much authority as possible on the European market and to dominate strategically the European gas

market, at least in Central and Eastern European region, where our country is also located. Having lost its main competitor over the time, namely the Nabucco project, which lost the competition for Azeri gas in favour of the TAP pipeline, South Stream seemed to go straight to the victory on the markets in South and East Europe, but, lately, the European Commission has announced that the agreements signed by Bulgaria, Croatia, Hungary and Serbia with Gazprom do not comply with the European directives. We will see what it will happen this year. Another hot topic is the gas in the Black Sea, and we will find how big is the deposit explored by Petrom and Exxon in Neptun block, this year. Other companies will drill exploration wells in the Black Sea, also, like Romgaz and Lukoil. Further, you will find in this issue of the magazine how will be the market of renewable energy projects starting with January 1st, 2014, when the number of green certificates granted to the green energy will be drastically reduced.

Correction: In our previous issue (Nr 9 – November-December 2013), on page 8, by error we wrote: “First, the best news come from Petrom, which operates the offshore Neptun deepwater block, in partnership with the American Exxon-Mobil.” In fact, exxon-mobil is the operator of neptun deep-water block. Please, accept our apologies.


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News

02 4

Proprietatea Fund sells all shares held in Transgaz

Reindustrialization is Romania’s second chance

Petrom, the first in Top 100 companies

Proprietatea Fund (FP) sold all its shares held in Transgaz for 303.5 million lei. FP administrator, Franklin Templeton Investment Management Limited United Kingdom, Bucharest Branch, as single administrator and management companies for the Fund’s investments, notifies the investors on the completion of the bookbuilding process for the private placement on the BVB of a number of 1,764,620 ordinary shares. The nominal price for each share stands at 172 lei, the total value of the shares amounting to 303,514,640 lei. The transaction represents the sale of the whole share package of the Fund in Transgaz and was oversubscribed several times. Citigroup Global Markets Limited, Raiffeisen Capital&Investment S.A. and Wood&Company Financial Services a.s. acted as global coordinators and joint bookrunners concerning this sale, according to FP. The National Company for Natural Gas Transport Transgaz S.A. Medias was established through Romania’s Government Resolution No 334/ April 28, 2000, being separated from Romgaz in view to restructuring and separating the extraction, transport, deposit and distribution of natural gas. The Public Finance Ministry (MFP) owns 58.5 percent of Transgaz, Proprietatea Fund, 14.98 percent, and the rest of 26.5 of the shares are owned by other shareholders.

Romania’s reindustrialization is this country’s second chance of developing economically and drawing investments, said Ionel Blanculescu (foto), economic analyst and honorary adviser to Premier Victor Ponta, who attended a relevant conference on Wednesday. ‘Reindustrialization is our country’s second chance and we can see that, little by little, one switches from debates to practical activity,’ he said and added that he would help an industrial company from Turkey to implement a 56 million euro investment in Romania. Blanculescu said that Romania intended to set up a sovereign investment fund, especially in the energy field, where this country planned to become a hub. On this pillar it is to draw other development axes too, especially in the industrial field. ‘The struggle for the national mineral primary resources is obvious, as is the radicalism and extremism of the street, which tends to become dangerous in Romania. We have seen how, after the Ombudsman was besieged, a law was turned down by Parliament although it was expected by the entire industry,’ said Blanculescu referring to the mine law. He said that in Romania 580 mines had been closed down so far and added that, at an international conference where everybody presented strategies for opening mines, the Romanian side had to speak about the management of mine closedowns.

OMV Petrom, Dacia and Rompetrol are the first ranked in the Top 100 of Romanian companies by last year’s turnover, according to this year’s edition of the TOP 100 companies made by FinMedia, based on data obtained from the Ministry of Finance. ‘The Top 100 companies accounts for 26 percent of the business turnover of the entire system of nonfinancial companies in Romania this year. At the same time, the Top focuses on the most powerful and influential branches of multinational companies in Romania. In this respect, we have a first this year, we have 13 billionaires, 13 companies with a turnover that is either bigger or equal to one billion euros. All the 13 companies are running mostly on foreign capital’, said the director of the Institute of Economic Forecasting of the Romanian Academy, Cezar Mereuta, who attended the event occasion by the release of the Top 100. First is ranked OMV Petrom Bucuresti, with business worth 4.3 billion euros last year, followed by another company belonging to the Petrom Group, OMV Marketing (the former OMV Romania), with 3.3 billion euros in 2012 turnover.


World Bank helps Transelectrica and Transgaz

Romania produces 10 MWh in nuclear energy

20 new wind turbines from China

The World Bank will get involved in backing the investment programmes of Romanian natural gas transporter Transgaz and electric power transporter Transelectrica, by a creditrisk insurance instrument. The two Romanian power companies could be supported by the World Group Bank’s Multilateral Investment Guarantee Agency (MIGA), by that insurance instrument covering the risk of failure to pay the financial obligations of the state companies and one that would result both in a significant cut of the funding cost and the extension of the maturities of the loans needed for the investments, the release explained. Public Finances Minister Daniel Chitoiu, also a Vice Prime Minister in the Romanian Government met a MIGA delegation on Dec. 10. “During the meeting, the public finances minister praised the excellent cooperation of Romania and the World Bank and reiterated the intention of maintaining and diversifying the active partnership with the international financial institution. The minister underscored the readiness of the Government and the state companies to pursue with the structural reform in the energy sector, particularly the efforts aimed at making (the companies) profitable and efficient. Furthermore, he said the Government keeps on restructuring the stateowned companies in order to make them profitable on the long-term”, the release said.

The two units of the Nuclear Power Plant at Cernavoda (south-eastern Romania) in the first 11 months of the current year produced over 10.6 million MWh, of which 9.77 million MWh were delivered to the National Grid, according to the data published on the site of Nuclearelectrica. In the first 11 months of 2013 Unit 1 produced 5.594 million MWh and delivered 5.137 million MWh, with a 99.24 percent average capacity factor, and Unit 2 produced 5.019 million MWh and delivered 4.632 million MWh, with an 88.95 percent average capacity factor. The consumption of nuclear power in Romania was 2.6 million tonnes oil equivalent, accounting for 0.5 percent of the world one, according to the statistics of the British Petroleum. The nuclear power consumption decreased in 2012 in Romania by 2.7 percent from the previous year, but it was more than twice as high as the one in 2002, when it totalled 1.2 million toe.

Chinese Group Xinjiang Goldwind Science & Technology will provide 20 wind turbines of 50 megawatts for the Mireasa project in Constanta County (southeast), Bloomberg reports. The first turbine of 2.5 MW has already been installed in the Mireasa wind farm, which is being developed by Monsson Group. The project will be connected to the national power grid by June 2014, Goldwind’s representatives have announced. Romanian Minister-Delegate for Energy Constantin Nita said that the subsidies for the energy producers from renewable sources in the form of green certificates would be significantly reduced from next year. Asked how much the subsidies would decrease, the minister said that “the reduction will be drastic.” He added that the authorities further wish to exempt the big energy consumers from paying 50% of green certificates, but he is not sure that this will be implemented as of 2014, since it requires the go-ahead of the authorities in Brussels.

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Resources

By Energy Digital

03 6

Russia’s attempt to dominate euRope’s gas maRket Russia’s south stream pipeline project – the most controversial in europe – is widely seen as energy giant gazprom’s most ambitious attempt to get direct access to the main european gas markets.

Construction of the pipeline, with a planned capacity of 63 billion cubic metres (bcm) of natural gas, was scheduled to begin in December 2012 but was postponed to December 2013. It is Russia’s most costly pipeline project and has dubious commercial value. Officially, South Stream is a way for Russia to improve the reliability of its gas supplies to Europe, its largest export market. It will achieve this by re-directing Russian gas supplies to Europe and bypassing Ukraine, which was accused of cutting supplies in 2006 and 2009. But, because it targets the same gas markets in Central and South Eastern Europe (CSEE) as the European Union backed Nabuccopipeline – the flagship of the EU’s Southern Gas Corridor project – it is seen in the EU as a Russian rival project. Gazprom hopes to start its annual transport of 15.75 bcm with two pipelines in late 2015, with the third and fourth pipelines completed in 2018.

Conflict with the EU South Stream’s pipeline route is planned to start in Varna, Bulgaria, and go through Serbia, Macedonia, Hungary, Slovenia, Croatia, and Tarvisio in northern Italy. The South Stream project is not seen primarily as a commercial project but a geopolitical way for the Kremlin and Gazprom to dominate Europe’s gas markets in the future and to control Ukraine’s energy, economic and foreign-security policies. It is another bypass pipeline circumventing Ukraine – the most important transit state taking up to 100 bcm per year of Russia’s gas supplies to Europe. This would reduce Russia’s 50 percent dependence on Ukraine as a transit state for Russian gas supplies. It would also deprive Ukraine of its most important leverage in its bilateral gas dependence on Russia and increase pressure on it to give up control of its strategically important pipeline network to Moscow. The pipeline has a total length of up to 3,500 km from Russia’s Black


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This huge platform will be used to build the pipeline through the Black Sea from Russia to Bulgaria.


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The pipeline will start at Russia’s Russkaya compressor station on the coast of the Black Sea.

The project embodies the intention of Russia and the countries of Southern and Central Europe to strengthen the partnership in the energy sector and to create a new reliable system of Russian gas supplies to European consumers. - Alexey Miller, Management Committee chairman, Gazprom Sea coast through its 930 km-long undersea section of the Black Sea with a maximum depth of 2.25 km and 1,455-2,540 km long in Central and South Eastern Europe (CSEE). Its planned capacity of 63 bcm can supply up to 38 million households. Pipeline construction will employ around 8,500 people with 770 at operational level. The overall official cost of the project

was raised in January 2013 to 29 billion euros ($39 billion U.S.). Russia has to expand already existing pipeline capacities and build new gas interconnectors of 2,446 km with 10 compressor stations and a total capacity of 1,473 MW in a project also called “Southern Corridor.” It is part of its unified gas supply system to fill the South Stream pipeline in Russia before transporting the gas through its first deep undersea section in the Black Sea. This will cost at least another 7.4 billion euros ($10 billion U.S.) with completion in two stages by 2019. The entire South Stream project may exceed 50 billion euros ($65 billion U.S.) making it the most expensive pipeline in Europe. Re-directing Russian gas supplies to Europe via a longer route to avoid Ukraine costs more in transport. In the mid- and long-term, the gas will be sent from Russia’s newly, super-expensive megaprojects on the Yamal-peninsula. Gazprom has lost market share and direct influence on the European gas markets during the last few years and its South Stream pipeline is aimed at regaining both.

Without Nabucco-West, the Kremlin now sees a window of opportunity to go ahead with the South Stream project and create a fait accompli before the TAP consortium can negotiate other supply options, such as the Ionian Adriatic Pipeline/ IAP, for Azerbaijan gas supplies to southeastern Europe.

The South Stream project is not seen primarily as a commercial project but a geopolitical way for the Kremlin and Gazprom to dominate Europe’s gas markets in the future and to control Ukraine’s energy, economic and foreign-security policies. - Dr. Frank Umbach


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The entire South Stream project may exceed 50 billion euros ($65 billion U.S.) making it the most expensive pipeline in Europe. - Dr. Frank Umbach

Gazprom has pressured southeastern European countries to sign new long-term contracts by offering gas supplies at temporary discount prices. It is trying to undermine all alternative non-Russian gas supplies to the region such as the LNG terminal on the Croatian coast. under the Black sea Russia’s South Stream project aims to nullify the major objectives of the EU’s Southern Gas Corridor and North-South Gas Corridor projects that enhance Europe’s gas supply security and diversify imports away from Gazprom as a single dominant gas supplier.

Russia’s heavy investment in monopolizing gas supplies as well as super-expensive gas fields and pipeline projects such as South Stream, distracts huge capital from much more important infrastructure projects vital for Russia’s future economic development. © 2013 Geopolitical Information Service


Oil and Gas By Emilia Damian

04 10

Gazprom’s plans in romania include the creation of a network of 120 gas stations, the extraction of crude oil from the west of the country, and the participation in the next auction of concessions, regarding the allocation of new sites in the Black sea, which will be held by the romanian national agency for mineral resources, next year.

What does Gazprom plan in romania


Russian giant Gazprom owns the required technology and expertise in order to concession some oil sites in the Black Sea, and it might attend the new auction of concessions, which will be held by the Romanian National Agency for Mineral Resources next year – stated Vadim Smirnov, the Managing Director for Romania of NIS Petrol, the Serbian division of Gazprom Neft. According to him, NIS is interested in fresh concessions in Romania and it will closely examine the sites that the Romanian National Agency for Mineral Resources (ANRM) will put to auction next year. “We are looking into it with great interest. We will see which blocks will be available and what conditions will be put.”, said Smirnov. The Serbian division is not interested in Black Sea concessions, since it does not own the required technology, but parent company Gazprom has such an expertise available and it might be interested in the new maritime sites, Smirnov also said. “ I speak on behalf of NIS Petrol SRL. Black Sea does not interest us. But this fact does not mean that the big Gazprom would not be interested. Gazprom owns the technologies and it has all the facilities. We do not have technologies, because in Serbia there is no such tradition. But the big Gazprom has them. And... why not?”, added the representative of NIS. anrm prepares a new auction Gazprom currently owns six oil blocks in Romania through the medium of NIS: four of them in partnership with Canadians from East West Petroleum, one of them

in collaboration with the Irish from Moesia Oil, and one of them together with the British from Zeta Petroleum. Irina Zamfir, ANRM counselor, said last week that the institution represented by her has prepared to lease a new batch of oil blocks. Being asked when ANRM will bid the next 36 sites, as the institution has recently announced, Zamfir answered: “ We are preparing now the documentation for the eleventh round of concessions.

„We have never had the intention to explore shale gas, we have never discussed with the Government this possibility, nor it is mentioned such thing in our currently license agreement” – Vadim Smirnov, CEO NIS Romania. 120 gas stations in three years The NIS officials announced that the number of gas stations will reach 120, by the end of 2015, following an investment of € 150 million Euro. The company currently owns 13 gas stations, mostly in the western region, in counties like Oradea, Timiş, Arad, Sibiu, two of them on A1 highway and one in Buzău.

The exact list with the identification numbers and data of the blocks will be published in the Romanian Official Gazette, and then in the Journal of the European Union, in the beginning of 2014, and then we will be able to start the actual discussions about this bidding round. “ Gazprom has found oil in the west of the country Serbian company NIS Petrol, the Serbian division of the Russian giant Gazprom Neft, has discovered crude oil in one of its block from western Romania, in Timiş county, and it could start oil production next year, if it will be established that the deposit has commercial value, stated Vadim Smirnov, the Managing Director for Romania of NIS Petrol, the Serbian division of Gazprom Neft. According to him, a first drilling well has discovered crude oil in Jimbolia block, which is owned by NIS together with the British from Zeta Petroleum, in Timiş county. He explained that the exploration well, drilled there, has found conventional oil reserves, but no hydrocarbon deposits. Gazprom does not want shale gas Smirnov emphasized that NIS is not looking for shale gas, as it has been said in the public lately, because it does not hold licences for such types of activities, nor the technology required for the hydraulic blasts that could establish the existence of possible shale gas in the area.

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Upstream

By Emilia Damian

05 12

we will know the exact dimensions of the gas deposits in the Black sea, by mid-2014. petrom and exxonmobil will dig a second deepwater exploration well in the Neptun block, and both romgaz and Lukoil will drill their own wells, respectively in the rapsodia and trident sea blocks.

Gas from the deep sea waters


OMV Petrom and ExxonMobil will start drilling a second exploration well in the Neptun block, by the middle of next year, and it is expected that the gas production will start at the end of this decade – stated Jaap Huijskes, the company’s Head of Exploration and Production, at the OMV Media Summit, an event which was held in Vienna, in late November 2013. “We shall drill a second exploration well at the end of the second quarter of next year, to confirm the first discoveries of the Domino well, those of 2012. Then we shall drill other wells in the Neptun perimeter”, he said. When he was asked if OMV was convinced that there were commercial gas deposits, the company official replied: “We expect production in the Neptun perimeter to begin at the end of this decade. “ huge investments Petrom and ExxonMobil are exploring the deepwater Neptun block in the Black Sea, where a first exploration well revealed, in 2012, possible deposits of between 42 and 84 billion cubic metres of gas. These deposits could cover the entire gas consumption of Romania for six years, at the current consumption of the country. Romania currently imports 2025% of its gas needs from Russia. The aim of the Austrians from OMV, the majority shareholder of Petrom, is to change Romania from a gas importing country into an exporting one in the region – said, in turn, Gerhard Roiss, General Manager of OMV. “ We must invest in this. The Black Sea gas is European gas for Europe”, Roiss said, at the OMV Media Summit. “The results of 2012 show that there is big potential there”, Roiss added.

wells in others two blocks Other companies in the Black Sea are preparing for the big impact of hydrocarbons. Lukoil and Romgaz will drill two exploration wells in Trident and, respectively, Rapsodia, oil perimeters, in the Black Sea, next year – according to the declaration of Radu Gheorghe, head of the Romgaz Development Department. “The Black

“We shall drill a second exploration well at the end of the second quarter of next year, to confirm the discoveries of the Domino well, of 2012. Then we shall drill other wells in the Neptun perimeter” − Jaap Huijskes, Head of OMV Exploration and Production, said.

Ranking 5th in Europe

Romania is currently ranking 5th in Europe in terms of oil and gas production, with the country’s import dependency rate standing at 25%, below the European average of 50% − Vasile Iuga, managing partner for South-East Europe at the PriceWaterhouse Coopers (PwC),

Sea has great potential resources, mostly gas. Romgaz holds 10% of Rapsodia and Trident blocks (operated by Lukoil – editor’s note) and we will drill one well in each block next year, according to the minimum programs undertaken by Lukoil”, Gheorghe said. Romanian companies will be part of all the energy projects involving local resources – said Constantin Niţă, Delegate Minister for Energy. Investing in a pipeline Transgaz needs € 1 billion Euros until 2019, in order to incorporate the gases drilled by OMV Petrom and ExxonMobil Neptun , in the Black Sea, into the national system. “In order to enclose the gases drilled by OMV Petrom and Exxon, there is need for a pipeline to carry the gas from the Black Sea to the land, and then to carry it across the country, all the way to Hungary. We need € 1 billion Euros, for this pipeline and for the consolidation of the rest of the transport system, so that it should be able to withstand the intake of such huge quantities of gas”, the company representatives said.

said. The main producer of oil and gas in Europe is Norway, with 1.3 billion barrels of oil equivalent (boe) drilled last year. It is followed by the UK, with 583 million boe, Netherlands, with 520 million boe, Denmark, with 114 million boe, and Romania, with a 102 million boe production.

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Electricity

By Ada Gavrilescu

06 14

the romanian national energy regulatory authority (anre) has proposed the government to reduce the compulsory quota on green energy purchase, and Energy Minister Constantin NiĹŁÄƒ has announced that subsidies for renewable energy will be drastically reduced since 2014, after the large energy consumers announced that romania had already reached, earlier this year, the renewable energy target for 2020.

Soaring of renewableS haS been Stopped


The European Commission has planned that 20% of the energy consumption be from renewable sources in 2020. Romania has committed that 24% of consumption will be green energy in 2020. The President of the Association of the Big Industrial Energy Consumers (ABIEC), Marian Năstase, announced in mid-November that Romania had already reached, this year, the renewable energy target assumed for 2020, namely 24% of consumption, so such subsidies in this sector should be reduced. “Romania has completed, in two years, its plan for 10 years. Thus, we will pay the maximum price for subsidies for renewable energy during 2013-2020. The price we pay because we are leaders in Europe in terms of renewable energy is losing competitiveness of Romanian products abroad”, Nastase said. At the same time, the representatives of the Romanian Wind Energy Association (RWEA) believe that the dramatic decrease, with 24%, of

EIB loan for Enel wind farms The European Investment Bank (EIB) and Enel Green Power International BV have signed a financing agreement for € 200 million Euro, which will partially cover the investments in some wind farms in Banat and Dobrogea. According to Italian company, this operation falls within one of the priority areas of intervention in terms of the EIB, such as financing projects in the energy sector which increase the use of renewable sources.

the electricity’s price compensates the excess of green certificates this year. “It is true that the emergence of many renewable energy producers has increased the number of green certificates in 2013 compared to 2012, which has led to additional costs for large consumers of electricity. Big consumers of electricity ignore the fact that the price paid per kWh by industrial consumers is lower this year compared to 2012, taking into account the electricity, the taxes and certificates (green ones, carbon ones)”, Chief Executive of RWEA, Ionel David, stated. anre: we propose the reduction of the compulsory quota on green energy purchase In this context, the representatives of the Romanian National Energy Regulatory Authority announced that they have proposed the Government to reduce the mandatory quota on green energy purchase. “We have found that the support scheme does not correspond to reality. Romania reaches its assumed quota of 24% green energy from the total consumption, on January 1, 2014. So, we inform you that we have announced the specialized committees of Parliament and Government that the mandatory

quotas should be reconsidered. For example, in 2015 the maximum rate should be 13%, compared to 15% as it is provided in the Law no. 220 (Law 220/2008 on support green energy, Ed. n.)”, Emil Calotă, Vice-President of ANRE stated. “The evolution of this market should result in a normal evolution of the price of green certificates, not like before, when the value of the certificates went only to the maximum level”, the ANRE official also explained. According to him, ANRE will consider henceforth the actual and effective costs of producers of green energy, rather then the estimates of International Energy Agency, as before, in order to establish the internal rate of return (IRR) for renewable energy projects. Subsidies for green certificates drastically reduced As for the Government, the Minister for Energy Constantin Niţă has announced that subsidies as green certificates for renewable energy producers will be drastically reduced from next year. “Starting next year, we will reduce subsidies for renewable energy. We have prepared a draft legislation in this regard, which we will approve in the next period”, Niţă said.

20 wind turbines supplied by Goldwind for Mireasa (The Bride) project The Chinese Group Xinjiang Goldwind Science & Technology will supply 20 wind turbines of 50 megawatts for “Mireasa” project, located in Constanţa county. The first 2.5 MW turbine was installed

in “Mireasa” wind farm, which is developed by Monsson Group. The project will be connected to the national electricity grid by June 2014, the Goldwind representatives announced.

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Oil and Gas By Emilia Damian

07 16

The impacT of shale gas on The economy The shale gas drilling will have an economic contribution of 2% to the Romanian gross domestic product (gDp) and will generate a 15-25% reduction of gas prices in the market − this is the conclusion of the first study on the impact of unconventional deposits on the Romanian economy.


The shale gas drilling will have an economic contribution of 2% to the Romanian GDP and will generate a 15-25% reduction of gas prices in the market, according to a survey entitled “Natural Gas Resources from Unconventional Deposits - Potential and Capitalization”, conducted by 43 experts of the Romanian National Committee of the World Energy Council (CNR-CME). If Romania begins extracting shale gas by 2019 2020, it will become a gas exporter by 2025 – according to this study.

We can not hide the Romanian companies. We can not expect other foreign companies to come and invest, while we behave as the poorer relative – Constantin Niţă, Delegate Minister for Energy. “At present, the gas import bill accounts for 1.5% of GDP, which at this moment compares to the defence budget, for example. But if we export, we will actually reach a situation in which we will get another 0.5% in GPD inflow. Therefore, there will be an overall 2% contribution to the GDP” – explained Ionuţ Purica, a Romanian Academy expert and one of the authors of this study. As for the price, the additional gas quantity will prompt a 15 – 25% drop in gas tariffs, he added. “Together with a price drop, we will witness

a re-industrialization, given that the energy-consuming industry still has a large share of the Romanian GDP: I am speaking about the steel industry, aluminium and fertilizers industries, and petro-chemistry. All this, in addition to the residential consumers.”, Purica argued. According to him, 19,000 direct or indirect jobs may be created in sites currently owned by Chevron. The carpathian mountains, rich in gas There is great potential for the discovery of shale gas in Romania’s Eastern Carpathians, in the Moldavian Plateau, the Bârlad Depression, and the Romanian Plain with its expansion in Southern Dobrogea, as is explained in this study. Besides the areas with high potential, there are also areas with possible conditions for the presence of shale gas in the Gaetic Depression, the Pannonia Depression and the Transylvanian Basin. for how long can these gas deposits provide? The authors of this survey point out that Romania has proven natural gas deposits that would be enough for the next 10-15 years. According to the latest report of the US Energy Information Agency (EIA), released in June 2013, shale gas increases by 47% the potential recoverable deposits of natural gas in the world. Shale gas also makes up 32 % of the total natural gas reserves globally. “ Romania is ranked 3rd in Europe, with a recoverable reserve estimated at 1.444 billion cubic metres of shale gas, after Poland (4,190 billion cubic metres) and France (2,879 billion

cubic metres), and ahead of Denmark (906 billion cubic metres) “ − as presented in the CNR-CME study, quoting data of Americans report.

In the USA, for example, when the big projects are discussed, first they take in account the number of jobs, because this brings the highest revenue to the budget – Ionuţ Purica, an energy expert said. Chevron, the second largest American oil company, has concession agreements for three oil blocks in Constanţa county, and for one near Bârlad, in the Vaslui county. The company expressed interest in exploring and extracting shale gas from these blocks. Ministry of Economy supports this initiative “Exploration of shale gas is necessary in Romania, in order to map the resources that are located in Romanian subsoil” − Andrei Gerea, Minister of Economy, stated at the end of October. “ I think that it is necessary to explore these deposits because we must have a clear picture of subsoil resources, because all of us want to have such resources explored. Afterwards, we will know what we can use and how much our earnings will be..., for if we find a large amount, all of us will obviously benefit from this”, Andrei Gerea said.

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Oil & Gas

08 18

Global enerGy demand to increase 35% by 2040 energy sources will continue to evolve and diversify as global energy demand surges. In one of the most significant developments shown over the outlook, advancements in drilling technology will cause natural gas to overtake coal as the no. 2 fuel source by 2040. oil is projected to remain the no. 1 fuel; however, alternative sources such as nuclear, wind, solar and biofuel will take on an increasingly large role in meeting the world’s energy needs in the future.


the global liquid fuel mix will require diverse types of supply Over the Outlook period, the growth in so-called “unconventional” supplies due to technology advancements is critical. ExxonMobil projects total liquids demand to rise to 113 million barrels per day of oil equivalent (MBDOE) in 2040, a 30 percent increase from 2010. About 70 percent of this increase is tied to the transportation sector. Conventional crude production from both OPEC and Non OPEC sources will see a slight decline over time. However, this decline is more than offset by rising production of crude oil from deepwater, oil sands and tight oil resources. The successes of deepwater and oil sands developments are examples of how new technologies are key to delivering additional sources of liquid supplies to meet rising demand. Ten years ago, these supplies were barely on the radar screen. The same is true for tight oil, which is growing as a result of recent advances in technology that have enabled the energy industry to unlock the oil found in “tight” rock formations. The advances are very similar to the ones that have enabled the growth in “unconventional” production of natural gas, which is also producing a rise in natural gas liquids (NGLs). While the composition of the world’s liquid fuels is changing, one fact does not: the world continues to hold significant oil resources. Even by 2040, ExxonMobil estimates that less than half of the world’s recoverable crude and condensate will have been produced. Even with production, the resource base continues to grow due to the ability of the industry to find

and develop new types of resources through improved science and technical innovations. technology-enabled oil and other liquid supplies are vital to meet rising demand By 2040, only about 55 percent of the world’s liquid supply will come from conventional crude oil production. The rest will be provided

by deepwater, tight oil and NGLs, as well as oil sands and biofuels, as technology enables increased development of these resources. North America sees a dramatic rise, with production of technologyenabled supplies representing 75 percent of the region’s total by 2040. The majority of this growth comes from tight oil, like the Bakken formation in North Dakota, deepwater

Technologies in use for decades are integrated to safely tap once hard-to-produce supplies Unconventional resources found in shale and other tight rock formations were once considered uneconomic to produce. Today, technology is helping unlock these resources in North America, with growing opportunities around the world. In recent years, a combination of two technologies in use for decades – horizontal drilling and hydraulic fracturing – has enabled the energy industry to economically access and produce natural gas and oil found in shale and tight rock. Horizontal drilling allows a well to be drilled horizontally underground for thousands of feet, providing greater access to reservoirs to enhance and maximize productivity and economic resource recovery. This drilling practice also reduces the environmental footprint by enabling the drilling of multiple wells from a single location. In hydraulic fracturing, a solution – primarily water and sand, mixed with a small amount of chemicals – is injected into the rock thousands of feet underground to open very thin cracks, allowing trapped natural gas and oil to migrate to the well. This technology has been used

safely in more than one million wells worldwide for the past six decades. Together these two technologies have unlocked vast new supplies of natural gas and oil, which otherwise would not have been commercially viable. The results are changing the landscape of energy supply in North America, particularly in the United States. For example, six years ago, production from North Dakota’s Bakken region registered at a modest 6,000 barrels per day. Thanks to these combined technologies, in July 2012, production exceeded 600,000 barrels of oil per day – a 100-fold increase. Due to the use of technology in places like the Bakken, according to the U.S. Energy Information Administration, for the first time since the mid-1980s, crude production in the United States is increasing. Other technologies are enabling the development of oil sands and heavy oil in North America and Latin America, as well as deepwater reservoirs worldwide. These advancements in technology are enabling energy companies to extend reliable and affordable supplies to meet growing energy demand.

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Global gas supply increases about 65 percent by 2040, with 20 percent of production occurring in North America.

Oil, gas, nuclear and renewables grow, while coal experiences a decline by 2040

developments in the Gulf of Mexico and Canadian oil sands. These supplies enable North American total liquids production to grow about 40 percent. Total Latin American liquids production almost doubles due to developments in Brazil deepwater and Venezuelan oil sands, while in the Middle East, continued growth in conventional liquids along with NGLs and tight oil developments coming later in the Outlook period lead to 45 percent supply growth. Large deepwater developments, primarily in Angola and Nigeria, drive growth in supplies in Africa. As we look to the future, energy sources considered “unconventional� today are rapidly becoming conventional, thanks to the technologies available to produce them, giving them an increasingly significant role in the global energy mix. natural gas is the fastest-growing major fuel Global gas supply increases about 65 percent by 2040, with 20 percent of production occurring in North America. Natural gas plays an increasingly significant role in the energy fuel mix over the next 30 years as technological advancements help develop this abundant, clean energy resource. By 2025, natural gas will have overtaken coal as the second most consumed fuel, after oil. In North America, unconventional gas production is expected to grow substantially to satisfy around 80 percent of gas demand by 2040. The growth in unconventional supplies

is a result of recent improvements in technologies used to tap these resources (see box). This will provide opportunities for North America to become a potential natural gas exporter by about 2020. It is important to put North America’s unconventional gas production in perspective. Globally, about 60 percent of the growth in natural gas comes from unconventional resources, which approach onethird of the global gas supply by 2040. New technologies are enabling economic exploration and development of what once was a hard-to-produce resource. Shale gas comprises the largest component of unconventional resources, but it also includes coal bed methane and tight gas. For the next two decades, over half the growth in unconventional gas supply will be in North America, moving the U.S. energy mix toward a lower-carbon resource. This competitive energy supply provides a strong foundation for increasing economic output in the United States, opening up new and valuable opportunities in many regions and sectors of the U.S. economy, including the energy sector and other industrial sectors such as chemicals, steel and auto manufacturing. The shift toward natural gas will carry tremendous benefits for consumers and the environment. Natural gas is affordable, reliable, efficient and available. It is also the least carbon-intensive of the major energy sources, emitting up to 60 percent less CO2 emissions than coal when used for electricity generation.


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natural gas is an abundant, widespread resource that will be the fastest-growing major fuel to 2040 The International Energy Agency estimates there is about 28,000 trillion cubic feet (TCF) of remaining natural gas resources across the globe. Experts believe this is enough natural gas to meet current demand levels for more than 200 years. Globally, unconventional gas makes up about 40 percent of the estimated remaining resource. In North America, unconventional gas has a higher share – accounting for about two-thirds. Unconventional gas production is increasing rapidly in North America. As for unconventional production in other parts of the world, it will take more time to understand the specific geology and technology required to economically produce the resource and to develop the infrastructure to move the gas to markets. Global energy mix continues to evolve Oil, gas, nuclear and renewables grow, while coal experiences a decline by 2040. With global energy demand

increasing around 35 percent from 2010 to 2040, a diverse, reliable and affordable fuel mix will be needed to provide the energy that enables economic growth and societal advancements. As our world changes – with improved living standards, more fuel-efficient vehicles and modern appliances and buildings, as well as increased limitations on greenhouse gas emissions – some important changes occur in the makeup of our energy supply. Oil will remain the largest single source of energy to 2040, growing around 25 percent. But the most significant shift in the energy mix occurs as natural gas displaces coal as the second-largest fuel by 2025. Gas will grow faster than any other major fuel source, with demand up 65 percent by 2040. An economical and clean fuel source, gas grows in importance as it helps meet rising power generation demand in the future. Because they are abundant in supply and more economical to develop than other fuel sources, oil, natural gas and coal will continue to play a major role in long-term energy supply. Together, these three fuels will

provide approximately 80 percent of total global energy by 2040. The industry has established stringent practices to ensure that producing wells protect groundwater while at the same time minimizing overall environmental impact. Even so, as the world moves to less carbon-intensive fuel sources, coal will peak and begin a gradual decline in 2025 and is predicted to end up at about the same level it was in 2010 by the end of the Outlook period. Nuclear will grow significantly, mainly due to rising electricity demand and a desire to reduce CO2 emissions. From 2010 to 2040, the use of nuclear energy is predicted to double. Another notable shift in the energy mix is the significant growth in wind, solar and biofuels. These three fuels grow rapidly, with demand in 2040 more than five times the 2010 level. Still, by 2040, they will only make up 3 to 4 percent of total world energy, as greater advances in technology are needed to increase the commercial viability and associated economics of developing these resources.


Natural Gas

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DEPA: ThE GrEEk NATurAl GAs ComPANy What is the profile of DEPA, the Greek company that is currently owned 65% by the HRADF (Hellenic Republic Assets Development Fund) and 35% by Hellenic Petroleum (HelPe). The key role in the Greek market, the international strategic activities and the future plan of one of the biggest companies in the wholesale, trading and supply of natural gas to large end-users.

Historically, so to speak, DEPA was the first company in 1988 (as Public Petroleum Corporation of Greece SA, back then) that set in place in the Greek region the necessary infrastructure and established all the components pertaining to a fledging natural gas industry. In 1994, the first agreement for sales of natural gas was signed between DEPA and the Public Power Corporation (PPC – DEH, in Greek), the country’s largest natural gas consumer, which formed the base for developing a natural gas market in Greece. In 1995, the Legal Framework of Gas operations was published, providing for the creation of Gas Distribution Companies in Greece and, in 1996, the basic transmission system was completed and tested with the first gas flow. In November 1996, the first customer (Hellenic Sugar Industry) was supplied by the network. In 2000, the Liquefied Natural Gas facilities were completed in Revithousa island and the first cargo of LNG arrived in Greece from Algeria. In the same year, an international tender was

carried out to select the private investors for the establishment of the two first Gas Supply Companies (EPAs) in Thessaloniki and Thessalia. DEPA holds a 51% stake in the above companies, while the remaining 49% and management rights belong to the private investor. In 2003, a gas supply contract, from Turkey to Greece, through the Turkey - Greece Gas Interconnector was signed between DEPA and BOTAŞ (TGI). Construction works of TGI Gas Pipeline started in 2005 and operation commenced in 2007. Agreement was signed between Greece and Italy regarding the promotion and implementation of the Greece - Italy Interconnector as a continuation of the Turkey - Greece Interconnector. A similar tri-lateral Interstate Agreement was signed in 2007 among Italy-Greece - Turkey. In 2010, agreement was signed between ITGI Poseidon S.A. and Bulgarian Energy Holding (BEH) for the realization of the Greece-Bulgaria Interconnector following the previous signing of an MOU between respective parties.


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Through its longtime history, DEPA Group gas managed to adapt in today’s high competitive business environment creating added value, improving its long term prospects and contributing to the establishment of a comparative advantage. The Group’s structure The DEPA Group activates in the wholesale, trading and supply of natural gas to large companies. First of all, through its whollyowned DESFA, the Group operates, maintains, manages, exploits and develops the National Natural Gas System (ESFA) and its interconnections, ensuring that the system is financially viable and technically reliable to meet customers’ needs in the safest way. Also, DESFA operates Greece’s transmission network, the NNGS, and provides non-discriminatory thirdparty access to the system. Secondly, DEPA owns over 5,600 km of low and medium pressure distribution networks in the regions of Attika, Thessaloniki and Thessalia, and has the right to develop and exploit further distribution networks throughout Greece. In detail, about EPA Attika, is owned by the DEPA group together with Shell Gas B.V., with stakes of 51% and 49% respectively. The management of the EPA is carried by the Investor. Its main scope is to develop and supply with natural gas the broader Athens region through medium and low pressure gas networks. Concerning EPA Thessaloniki, is owned by the DEPA group, and ENI Hellas spa, with

stakes of 51% and 49% respectively. Its main scope is to supply with natural gas the Thessaloniki region through medium and low pressure networks. And, finally, EPA Thessalia is owned by the DEPA group, and ENI Hellas spa, with stakes of 51% and 49% respectively. Its main scope is to supply with natural gas the Thessalia region through medium and low pressure networks.

The DEPA Group, besides the Greek market, is interested in developing and taking part in several important projects for the entire region. Taking advantage of the geographical position of Greece, the Group intends to expand its activities and become an important player in the entire region of Southeastern Europe. Given Greece’s geostrategic position, the Group participates in several international pipelines including, IGB, ITGI, East Med, Tap and South Stream in order to be the protagonist and link major gas exporters of Caspian, Mediterranean and Middle East regions to gas importers in Southeast Europe, Italy and Western Europe.

Strategic interconnectors pipelines The DEPA Group, besides the Greek market, is interested in developing and taking part in several important projects for the entire region. Taking advantage of the geographical position of Greece, the Group intends to expand its activities and become an important player in the entire region of Southeastern Europe. Firstly, the Interconnector GreeceBulgaria (IGB) which has been undertaken by “ICGB” AD, a joint venture by IGI Poseidon S.A. and Bulgarian Energy Holding, will link the Northern Greek natural gas network in Komotini with Bulgarian gas ring in Stara Zagora through a 170km pipeline. IGB being in full compliance with EU’s top priorities, has secured 45 million euros in Community funds through the E.E.P.R. framework (European Energy Programme for Recovery), IGB is expected to meet the increasing energy needs of Southeastern European markets and provide diversification of natural gas supply to the region thusly increasing its energy security. IGB will have a transport capacity of 3 to 5 billion cubic meters per year. Secondly, the interconnector GreeceItaly (IGI) Poseidon includes the installation of a compressor and fiscal metering station in the Greek territory, a fiscal metering station in the Italian territory as well as short onshore pipelines which will connect the Greek and the Italian abovementioned stations to their respective landfalls. IGI Poseidon is designated as an EU priority project and has secured 100 million euros in Community funds through


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the E.E.P.R. (European Energy Programme for Recovery). The pipeline consists of two sections: • IGI Onshore: installations include an onshore pipeline of 600 km, a fiscal metering station and a compressor station that will be installed along the pipeline. • IGI Poseidon: the 200 km offshore pipeline crossing the Ionian Sea, reaches a maximum depth of 1,380m. The Greece-Italy Interconnector will begin from Thesprotia coast in Greece and will make a landfall in Otranto in the Apulia region of Italy. Thirdly, the interconnector GreeceTurkey (ITG) with 300 km long and 36 inches diameter can transport approximately 11,5 billion cubic meters of natural gas annually, shared between Italy and Greece, and could be further expanded. The pipeline required an investment of 118 million euros for the Greek section and 165 million euros for the Turkish section. EU financed 50% of the cost of technical studies and 29% of the construction costs. The Greek state financed 29% of the construction costs. The Turkey-Greece Interconnector originates in Karacabey in Turkey and reaches Komotini in Greece, via Alexandroupolis. Moreover, the newly found sources in the Levantine Basin will allow for the implementation of a pipeline to facilitate the export of natural gas from the Eastern Mediterranean offshore fields to Europe through Cyprus and Greece. DEPA is currently developing

The newly found sources in the Levantine Basin will allow for the implementation of a pipeline to facilitate the export of natural gas from the Eastern Mediterranean offshore fields to Europe through Cyprus and Greece. DEPA is currently developing the “East Med” project in coordination with the Governments and developers of the Leviathan and Block 12 gas fields. the “East Med” project in coordination with the Governments and developers of the Leviathan and Block 12 gas fields. “East Med” has been incorporated in the EU energy strategy and its importance will be reaffirmed by the EU through its inclusion in the European Union Project of Common Interest list. Eastern Mediterranean is the new dimension of the Southern Gas Corridor, further contributing to the rising needs of Europe for natural gas imports, providing natural gas

from an alternative source through an alternative. Supporting the Greek economy As residential users, industry and manufacturing, and certain transport segments increasingly rely on Natural Gas, they are leading the way to a cleaner, more affordable, and more environmentally friendly energy future. That development will play a significant role in the efforts of Greece to enter a new face of growth and restart its economy. The benefits of power generation through natural gas are plenty: its supply is reliable, and its cost is more predictable. In addition to the wide distribution network that will be laid to homes, offices, factories, schools, hospitals and government buildings– requiring workers, technicians, engineers, and other specialists– the Natural Gas industry will generate a wide range of new economic activity. In many countries, the Natural Gas industry has catalyzed research and development laboratories to focus on new technologies, innovative power systems, and more efficient appliances that improve life for everyone. Such win-win relationships have the power to dramatically improve the energy landscape in Greece, leading to a healthier, more robust economy and employing thousands of people in every part of the country.


Interview Bogdan Popa By Ada Gavrilescu

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Being One with nature and its mutual Benefits Once these ecosystems will be depleted by continuing the current practice of over use, they will lose the ability to rebalance, and the flow of ecosystem services will be drastically reduced.

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The general perception that the services provided by the ecosystems in protected areas are constantly coming “from God”, should be replaced by the idea that as soon as these ecosystems will be depleted by continuing the current practice of resource abuse, they will lose the ability to rebalance and the flow of ecosystem services will be drastically reduced – says Bogdan Popa, the consultant to the project “Improving the Financial Sustainability of the Carpathian System of Protected Areas” funded by the Global Environment Facility (GEF) and implemented by United Nations Development Programme (UNPD) – Romania in partnership with the Romanian National Forest Administration – Romsilva and the World Wide Fund for Nature (WWF). The representatives of the private sector, whose activity depends on natural resources or who benefit from the ecosystem services in the protected areas, should establish partnerships that are based on mutual benefit. He talked about all this in an interview with Energy World magazine. ada gavrilescu: what are the services provided by ecosystems in protected areas, and why could romania lose € 9 billion euros in the next 25 years?

Bogdan Popa: The ecosystem (for example: a forest, a wetland, or a marine region) is a natural unit consisting of living creatures (animals, plants and microorganisms) and their environment. The ecosystem services refer to the use of resources or environmental services from which people benefit directly or indirectly. Millenium Ecosystem Assessment, has presented, in a select group of researchers in the field of environment and economy, a framework that helps to identify the ecosystem services, classifying them into the following four categories: Provisioning services, relating to tangible products, such as timber, non-timber forest products, fish and pharmaceuticals products provided by ecosystems; Regulating services, relating to an ecosystem’s natural processes such as carbon sequestration and water regulations that contribute to social wellbeing; Cultural services, relating to the non-material benefits obtained from ecosystems (for example, through tourism and educational use); Supporting services, that are necessary for the production of all other ecosystem services (for example, soil formation or nutrient cycling). They differ from the other services in that their impacts on

people are either indirect (via provisioning, regulating or cultural services) or occur over a very long time. the loss of billions of rOn All these services determine economic effects that are difficult to quantify and reveal, because the general perception is that they are constantly coming “from God”, and the interruption of the flow of the services is perceived as impossible. But society tends to forget that as soon as these ecosystems will be depleted by continuing the current practice of resource over use, they will lose the ability to rebalance and, automatically, the flow of ecosystem services will be drastically reduced. The study conducted within the project shows that there is a difference of € 9 billion Euros, between the values of the ecosystem services, which have been calculated in the scenario of continuation of current practices, and the corresponding values of a scenario in which the ecosystems and the resources are sustainably managed in all natural and national parks in the Romanian Carpathians. The results were obtained by the detailed analysis of five of the most representative parks (Apuseni, Maramureș Mountains, Piatra


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“All these ecosystem services determine economic effects that are difficult to quantify and reveal, because the general perception is that they are constantly coming “from God”, and the interruption of the flow of the services is perceived as impossible.”

Craiului, Retezat și Vânători-Neamț), and then by the expansion to the entire network of Carpathians parks in Romania. a.g.: what are the main tools that we need to use in order to prevent the loss of biodiversity in protected areas, and to benefit by the revenue that these protected areas could provide us? B.P.: The sustainable management of the ecosystems is based on many instruments and principles. There should be funding sources and the ability to meet basic needs and optimal protection. Thus, the management functions of the protected areas should correspond more with the human, financial, institutional and informational resources. The goals regarding the conservation of the protected areas should be connected to the programs of ecosystem conservation, and analysed in a realistic frame according to the financing. Thereupon, the ecosystems will have a better health, and their benefits, in terms of productivity, will expand. The sustainable management of ecosystems is focused on the long term benefits (10-20 years), while the cost impacts are internalized. The

depletion of the ecosystem services is avoided, thereby generating the potential for long-term flows of ecosystem goods and services. successful partnerships in france a.g.: the payment for the services of natural ecosystems is a new concept, at least in our country. there are other states that apply these mechanisms? if so, what are these states, and what would be good examples in this regard? B.P.: There are countless examples around the world (but also in our country) regarding the implementation of the concept of payments for ecosystem services. Here is an already famous example in France: one of the world’s leading companies in the mineral water bottling (Vittel) finances the farmers who own lands near the water collection tanks so that they transform their agricultural practices into ecological occupations, in order to mitigate the risk of the nitrate contamination, determined by the intensification of livestock in the area near the aquifer tank.


Protected areas By Ada Gavrilescu

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How we lose 9 billion euros romania may lose about 9 billion euros in the next 25 years, money that could have gone to the state budget. This is the value of the financial benefits which the country’s budget might have, if the state will stop mismanaging the natural resources of the protected areas.


The protection of natural areas is one of the priorities on the European agenda, and Romania has clear obligations in this regard − taking into consideration just the perspective of the commitments to the European Union. The law for the protection of animal conservation of the species that have been protected by law, the demarcation of the protected areas, the assigning of the legislative regulations, and the measures for a sustainable management of these areas, are some of these obligations. All these responsibilities are seen, mostly, as duties and investment needs, whose purpose is not assessed, or whose purpose can not be assessed. The evaluation of the investments and their benefits for the protected areas should start from the premise that the protected areas represent a capital which ensures a constant flow of goods and services, valuable for the society and the economy, from which people benefit directly or indirectly. There are no clear data showing the value of the flow of resources from protected areas, in our country. This flow of resources represents the services of the ecosystems, which are classified in: supply services, services of regularization or related services. The issue of the underfunding – less than half of what is required Not much data is available concerning the economic value of the natural ecosystems that are included in protected areas. This may be one of the reasons that the economic priority given to the protected areas is very low. “Speaking about the underfunding of the protected areas is not at

all inordinate. We should spend approximately 40 million RON per year, which is necessary for their optimal management. With only 14 million RON annually, which is the amount of the current funding for the protected areas, we have reached a level which endangers the goal of the conservation of the natural heritage represented by these parks”, Florian Popa, Deputy General Director of the Romanian National Forest Administration – Romsilva, stated. Insufficient data Due to the insufficient data, there is a difficulty of establishing a link between the need for biodiverse conservation inside the protected areas and the considerable benefits brought to the community and the economy in general. The economic studies, showing the importance of the services of these natural resources in monetary terms and their contribution to the local, regional and national economies, could be a credible way to demonstrate the importance of protected areas to the decision makers. Such a study is “The Evaluation of the Contribution of Ecosystems in Protected Areas to Sector Growth and Human Well Being in Romania”, which is part of the project “Improving the Financial Sustainability of the Carpathian System of Protected Areas” which is funded by the Global Environment Facility (GEF) and is implemented by United Nations Development Programme (UNPD) – Romania, in partnership with the Romanian National Forest Administration – Romsilva and the World Wide Fund for Nature (WWF). The report presents an analysis of the

services provided by the ecosystems from the protected areas for the key socio-economic sectors related to them, such as: tourism, agriculture, forestry, water management and the management of natural disasters. what is the role of Tourism According to the report mentioned above, the value of the leisure and tourism activities was estimated at a total of € 365 million Euros in 2010 (or 0.3% of the GDP). In addition, this branch of industry provides a total of nearly 40,000 jobs. Moreover, according to the data from the Romanian Ecotourism Association, around 80-90% of the ecotourism revenues remain in the rural areas where they were obtained. However, there are many opportunities to increase the income from tourism in protected areas. Thus, tourists and visitors in the five pilot parks are willing to pay € 42 million Euros per year, more than they are currently being charged, in the hypothetical case of the infrastructure’s development and the increasing quality of tourism services. The collected and analyzed data show that the tourism industry has the potential to generate € 2.6 million Euros in the next 25 years, if it is properly managed.

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