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Work begins to lay gas pipeline to link Romanian Black Sea fields to shore: BSOG

Highlights

Romanian PM Orban attends ceremony to mark start of work

Project 'fundamental' for Romanian economy

First gas achievable from 10 Bcm field in 2021

  • Author
  • Stuart Elliott
  • Editor
  • Jonathan Dart
  • Commodity
  • Natural Gas

London — Construction work is underway on a subsea pipeline to link the Midia gas development in Romania's sector of the Black Sea to shore, operator Black Sea Oil & Gas said Sept. 18.

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Romanian Prime Minister Ludovic Orban attended a ceremony Sept. 17 to mark the start of work on the pipeline.

Private equity-backed BSOG hopes to produce first gas from the project before the end of 2021.

"We launched the works at the offshore pipelaying yesterday [Sept. 17]," a company spokeswoman said.

Orban, in comments posted on the Romanian government website, said the start of work on the pipeline was a "symbolic moment" for the project, which he described as "fundamental" for Romania's economic development.

"It shows the clear will to complete an extremely important project for Romania, namely, the start of the exploitation of our first gas deposit offshore," Orban said.

BSOG and Romanian gas grid operator Transgaz in September last year signed the order to begin development work to bring gas from the $400-million Midia project into the national grid.

Gas from Midia -- which is estimated to hold some 10 Bcm of gas -- is expected to boost Romanian gas production, along with other major projects in the Black Sea including the ExxonMobil-operated Neptun project, in the next decade.

Midia -- which comprises the Doina and Ana offshore fields -- will consist of five offshore production wells, one subsea well at Doina and four platform wells at Ana.

The 126-km (98-mile) gas pipeline will link the Ana platform to a new onshore gas treatment plant with a capacity of 1 Bcm/year, which represents around 10% of Romania's gas consumption.

In August, BSOG CEO Mark Beacom told S&P Global Platts in an interview that he expected the pipelaying work to take around two months.

Offshore 'support'

BSOG -- majority-owned by the Carlyle Group -- is among a number of Romanian offshore companies looking to develop gas projects, but some developments, including Neptun, have been delayed due to what is perceived as an unfavorable regulatory environment in the country.

BSOG took the final investment decision on Midia in February 2019 on the assumption that the situation would improve.

BSOG is operator of Midia with a 70% share. Its partners are privately owned investment company Petro Ventures Resources (20%) and Italian gas producer Gas Plus International (10%).

There have been criticisms of the investment climate after the government implemented legislation in late 2018 imposing a gas price cap, a new 2% turnover tax on energy companies and a new offshore law that requires operators to sell 50% of their offshore gas output in a centralized marketplace.

Orban sought Sept. 17 to attempt to allay concerns over the regulatory environment.

"As a government, we encourage the development of other projects as well, because, from our point of view, all resources must be capitalized on in a way that generates economic development potential," he said.

"We support all investments through which natural gas can be capitalized on," he said, adding that his government had "mobilized" Eur1 billion ($1.18 billion) for a project to gasify parts of Romania that are not connected to the national grid.

Romania is the second-biggest gas producing country in the EU after the Netherlands.