Geopolitics of energy
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ROMANIA: FRONT RUNNER ADVANTAGE IN BLACK SEA UNDER THREAT President Erdogan’s announcement of a potential 14Tcf discovery in Turkey’s Back Sea plus his insistence that Turkey will aggressively appraise and develop this massive discovery highlights the differences in Turkey’s positive and proactive approach to offshore gas development versus Romania’s long history of investment adverse blockages. It’s not just Turkey that is seeing investment growth, the exploration and appraisal enthusiasm has also moved from Romania to other countries in the Black Sea including Bulgaria, Ukraine and even Georgia.
Romania still has the pole position on developing its Black Sea resources and is well ahead of the rest of the pack in the Black Sea. Even Turkey’s announcement, as impressive as it is, confirms that further appraisal and engineering efforts are in front of it whereas Romania has up to 5Tcf of gas ready for development. Considering that gas, particularly in the EU, is considered a transition fuel to a zero carbon target these Black Sea countries will be in direct competition to see who will supply gas to this narrowing market. To further support Romania as a country that has all the front runner advantages, in addition to the resources being investment ready offshore, Romania has 13,000 kms of NTS pipelines that can provide gas throughout the country and even has the BRUA pipeline plus the Transits lines that can accommodate gas hungry export markets for any oversupply of gas for Romania. Furthermore, Romania should be highly motivated to move these developments forward as it has, similar to many countries around the world, been severely hit by the Covid Pandemic and cannot afford the luxury 16
of leaving these highly economically impactful resources in the ground. However, Romania’s lead position is not guaranteed. It’s likely that Turkey will be able to realise a 4-year discoveryto-first gas time frame (or even less) whereas these time frames have not been possible, and are still not possible, in Romania. Discoveries in Romania such as the MGD project are looking to achieve discovery to First Gas in a 14year time frame. In addition, Neptun and Lira discoveries appear to be on hold and furthermore it appears that the operators of these discoveries (Xom and Lukoil respectively) are looking to sell and exit Romania’s Black Sea even though they sit on sizeable gas finds. Even the 11th licensing Round that was originally targeted for 2013 is nowhere in sight. Such prolonged time frames discourage investment and could delegate discoveries to remain stranded. The main obstacles plaguing developing Romania’s offshore are many and varied but all have in common a lack of stability and predictability coupled with, or perhaps because of, a political and