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Romania's OMV Petrom 'ready' to become Neptun gas field operator: official

Highlights

ExxonMobil signaled intention to quit Black Sea project

Black Sea gas could promote Romania to no. 1 EU producer

Energy ministry pledges legal 'predictability, stability'

London — Romania's OMV Petrom is "ready" to take over as the operator of the major Neptun gas field project in the Black Sea if current operator ExxonMobil goes through with its intention to quit the project, a senior OMV Petrom official said Nov. 25.

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The development of Neptun -- which was discovered in 2012 and is estimated to hold up to 84 Bcm of gas -- has been put on hold due to concerns over the regulatory environment in Romania.

Speculation about ExxonMobil looking to exit Neptun began to circulate in July 2019, with the US major finally confirming it was ready to sell its 50% stake in November last year.

Asked during an industry conference Nov. 25 about OMV Petrom's position regarding operatorship, board member Franck Neel said: "What we have said is that -- as OMV Petrom -- we would be ready to be the operator if ExxonMobil decides to leave."

"But as long as Exxon is still in the project, I'm not going to say anything else," Neel said.

There have been reports in recent weeks that the situation was close to being resolved, with state-controlled Romgaz rumored to be set to buy out ExxonMobil's stake in Neptun, which could lead to a final investment decision in 2021.

Romgaz -- which could not be reached for comment Nov. 25 -- had previously said it was interested in joining the project.

Neptun had been expected to start producing in 2021 at a rate of some 6 Bcm/year if the FID had been taken as planned in the second half of 2018.

But a controversial offshore law enacted that year prompted ExxonMobil and OMV Petrom -- which also holds a 50% stake in the project -- to delay the FID.

Romania is currently in the process of amending the offshore law, with Dan Dragan, state secretary at the Romanian economy ministry, saying Nov. 23 that Bucharest planned to present its new offshore gas legislative proposals for public consultation in the first quarter of 2021.

OMV Petrom CEO Christina Verchere said Nov. 24 that legislative changes were needed in Romania to ensure the economic viability of Black Sea gas developments.

Top EU producer?

Romania is currently the EU's second-largest gas producer after the Netherlands with output last year totaling 108 TWh (10.2 Bcm), according to data from the Romanian energy regulator ANRE.

Neel said the country could overtake the Netherlands and become the EU's number one gas producer if Black Sea gas was exploited.

"We expect that Romania -- with the Black Sea -- could be the [number one] gas producer in the EU," he said, adding that Romania would then have an important role to play for the security of supply of the region, not just of Romania.

But he warned that Romania might not be able to fulfil its potential without legislative change.

He said the gas release program implemented in May that replaced the unpopular centralized market obligation regime imposed in 2018 was a positive development, but one that could have unintended consequences.

Neel said that between June -- when the program started -- and September this year, domestic gas production in Romania had fallen by 19%.

"We need to be careful -- the winter is coming -- and we have to import gas and the price of gas will be fixed by import price," he said, adding that it was important for Romania to be less exposed to international market prices.

Legislative landscape

Also speaking at the event Nov. 25, Niculae Havrilet, state secretary at the Romanian energy ministry, said it was important to encourage new investments in the Black Sea.

"We need predictability and stability in the legislation and we are acting strongly in this respect to encourage investors," he said.

The new offshore law, he said, would include provisions to promote interest in Black Sea gas fields.

Dragan said on Nov. 23 that he was optimistic that other developers would be found and that he was confident that a "proper equilibrium" could be found to develop the resources.