H. Cigdem Yorgancioglu: In Romania, the government, through the Ministry of Energy, has engaged in the drafting of a long-term National Energy Strategy which is supposed to be released by the end of 2016. What is the current situation of the strategy?
Iulian-Robert Tudorache: First of all, I want to say that it was a great honor for me to be present here in Istanbul, to this new edition of the World Petroleum Council, one of the most representative event of the oil and gas industry and a very important debate forum from the global perspective. In the name of the Romanian delegation, I like to address our thanks to our hosts for their warm welcome and for the very good organization of the works of this Congress. Romania is one of the founding countries of the World Petroleum Council and the contribution of the Romanian National Committee for the World Petroleum Council is very appreciated at the level of the Council’s members.
Coming back to your question, Romania is in full process to approve a new Energy Strategy for 2016-2030 with the perspective of the year 2050, which traces the directions of development of the national energy sector for the next decades, providing public authorities and investors with the necessary benchmarks in setting strategic decisions. The Energy Strategy of Romania 2016-2030, with the perspective of 2050, is the result of a comprehensive consultative and analytical approach of the Ministry of Energy, carried out during the year 2016. The Energy Strategy of Romania is currently in the process of being endorsed by the Ministry of Environment, and for the next period we plan to raise this document, to the rank of law, to create stability and predictability in the energy field.
It is important to mention that the new Energy Strategy of Romania has as its central concern the final consumer. It responds to the need for it to benefit in the future from high-quality products and services, from a less polluting energy production, ensuring optimal parameters for continuity in energy supply. Romania proposes a mix of energy sources that guarantee energy security, a security built as a balance between the energy independence provided by the efficient use of national resources and interconnectivity with neighboring countries and energy markets in the region as an alternative, including in situations of crisis. Therefore, Romania aims to represent, from an energy point of view, a stability and security factor, first of all for its own citizens, but also in the Central and Eastern Europe region.
H. Cigdem Yorgancioglu: Romania is the largest oil and gas producer in Central and Eastern Europe, nevertheless a net importer on both counts. According to BP’s Statistical Review of World Energy (2016), Romania’s evidenced reserves at the end of 2015 were 100 million tons of oil. What is the present and future “Oil Vision” of the Country in terms of investments and regulations?
Iulian-Robert Tudorache: Oil industry specialists from all over the world are confronted with the drop in existing commercially available hydrocarbon reserves, so that international collaboration initiatives are essential to ensure energy security. Romania celebrates almost 160 years of oil industry, being the country with one of the most important petroleum industry in Europe and with a highly specialized education, appreciated all over the world. Over 50 years of existence, the Romanian Petroleum and Gas University has trained more than 15000 engineers, not only Romanian, but also many foreign specialists. They are the ones who have designed and modernized the Romanian oil and gas industry over the last 60 years. It is also very well-known and appreciated the activity carried out by Romanian oil specialists abroad: in Algeria, Iraq, Jordan, India, Ecuador, Greece, Syria and Libya, as well as in other countries. The Government of Romania attaches great importance to encourage investments in order to find new hydrocarbon reserves and increase the replacement rate; diversification of supply sources; development of storage capacities and completion the interconnection projects with the neighboring countries.
In crude oil and natural gas production, the challenge lies in the insufficiency of investments in increasing the level of recovery from deposits and in the development of new deposits. The low oil price on the international market has drastically reduced the investments over the past two years in the exploration and development of new deposits. The effect is full felt also in Romania. Due to the persistence of low oil prices on international markets, investment in the exploration and production sector must be stimulated by a flexible mechanism that also takes into account a possible return of prices and the potential of each type of deposit. In this way, the long-term socio-economic benefits associated with the oil industry can be maximized. In the short and medium term, Romania intends to take as a priority the investments in increasing the recovery rate from the existing fields and in the long term the development of deep-sea exploration projects, complicated geological onshore fields and offshore fields in the Black Sea. The legislative and regulatory framework, especially the fiscal one, must also take into account the indirect effects of the investments made in the development of support industries and in the creation of new jobs. Investment cycles in the exploration and production of crude oil and natural gas are long-lasting and the regulatory framework must provide a long-term perspective. For this reason, to maintain the competitiveness of the national oil industry, it is of strategic importance to develop a predictable, stable and internationally adapted regulatory framework, well correlated with the potential of development of different types of field.
H. Cigdem Yorgancioglu: The Ministry of Energy has been designated as National Competent Authority responsible for facilitating and coordinating the permit granting process for projects of common interest in accordance with the provisions of the TEN-E Regulation (“one-stop shop”). Would you please give us insight about the activities and infrastructure of the Ministry of Energy in this regard?
Iulian-Robert Tudorache: Romania supports and is actively involved in the efforts of the European Commission, both specific to the Projects of Common Interest and also those of the initiative of CESEC (Central and South Eastern Europe Gas Connectivity) by assuming the implementation of strategic projects that will contribute to reach the energy objectives of EU in order to increase the security of gas supply at the national and regional level : development on the territory of Romania of the National Gas Transmission System on Transport Corridor Bulgaria-Romania-Hungary-Austria (BRUA), development on the territory of Romania of the necessary infrastructure for taking gas volumes from the Black Sea (Black Sea – Podişor), development of the Central Corridor, depending on the increase of the Black Sea off-shore production, development of the Romanian Natural Gas Transmission System in the North-East area in order to assure the necessary transport capacity to Republic of Moldova, AGRI Project and others.
CESEC aims to coordinate trans-European gas interconnections and projects, which contribute to the diversification of regional supply. Its technical subgroups, which include also Romanian specialists from the Ministry of Energy, Romanian companies from the oil and gas sector and others relevant institutions, have the task of harmonizing the technical, administrative, legal and financial aspects that underlie the rapid development of infrastructure projects of common interest. The principles underlying the joint activities of the European Commission’s initiative for connecting gas networks in Central and South-Eastern Europe focus not only on the construction of new gas pipelines but also on the optimal use of existing infrastructure.
Romania’s desire to promote and accelerate projects in the natural gas sector, including projects of common interest is reflected in the recently promulgated Law no. 185/2016 which addresses the necessary measures for implementing national interest projects in the natural gas sector. PCIs approved by the Romanian Government are considered necessary for national security and safety and are of practical importance. The main issues addressed in this law relate to the rights granted to promoters of projects in the natural gas sector: access, use and exercise of property rights over land necessary for carrying out the construction projects, development, modernization, operation, repairs, and maintenance of the natural gas infrastructure. The law also establishes significant exceptions to special regulations governing certain types of land protected with a designated scope (agricultural, forestry, natural habitats, etc.), with a view to accelerate the implementation and development of PCIs.
H.Cigdem Yorgancioglu: What are the policies of your Energy Ministry pursues to ensure Romania energy independence?
Iulian-Robert Tudorache: First, the concept of energy independence must be distinguished from that of energy security, with which it is often confused. Energy independence, which refers to the national energy self-sufficiency and insularity, is a political and economically ineffective counterproductive aspiration. At a time of globalized energy markets and interconnections between electricity and natural gas networks, energy security is particularly important, being advanced through international trade, competitive market mechanisms and energy diplomacy.
Therefore, Energy Union places energy security in a prime position among its priority objectives. Energy security is also one of the fundamental objectives of Romania’s energy strategy, together with the economic competitiveness of the energy sector and the protection of the environment and the mitigation of climate change. In the EU, Romania is the Member State with the lowest energy imports per capita. Romania aims to use its European regional energy security exporter status more effectively at European level. For developing and modernizing its energy infrastructure, both for natural gas and for electricity, much more substantial access to European funds is needed. Energy efficiency is also one of the important factors for increasing energy security. The efficiency of the energy system involves ensuring a high level of investment in the energy sector and improving its governance. On the external side, energy security means reducing the risk of dependence on a single external supplier or a single transit route by diversifying energy sources and transport routes. The main external energy security risk in terms of natural gas supply is dependence on a single natural gas supplier. The interconnection of NTS to natural gas transmission networks in neighboring countries is an essential factor in diminishing security threats to supply.
There are many things to mention in this chapter of energy security, but I want to emphasize on this occasion the essential contribution of the regional cooperation formats to strengthening the energy security of the region and the EU and the positive impact that joint infrastructure projects have, as is the case with the “Vertical Corridor” which will interconnect the National Gas Transmission Systems of Bulgaria, Romania, Greece and Austria. Romania supports and is actively involved in the efforts of the European Commission, by assuming the implementation of strategic projects that will contribute to reach the energy objectives of EU in order to increase the security of supply at the national and regional level, like BRUA project.
Romania is a European border country, located at the European Union’s interface with the Black Sea Basin. Therefore, we must not forget the importance of the Black Sea region, an area of production and distribution of strategic importance for EU energy security, with significant natural resources and having a strategic position at the junction of Europe, Central Asia and Middle East, with a significant potential for energy supply diversification. The discovery of important hydrocarbon reserves in the Black Sea can give to this region a central role in strengthening the energy security of both Romania and the entire region. Romania has by its geographical position, its tradition and experience in the oil and natural gas field, the existent infrastructure, its availability and interests the potential to become a major actor on regional energy market, a country of redistribution of the Caspian resources to Europe, over the Black Sea and not only. As an EU Member State, Romania has taken the priority action lines to achieve the objectives of the Energy Union and the EU Energy Security Strategy.
Romania aims to diversify its sources of natural gas supply, to try to become an important geopolitical vector as a result of the energy routes that run through the extended Black Sea region, aiming to create an interconnection system that will lead to mutual support of the distribution of resources between the Member States.
H. Cigdem Yorgancioglu: Do you think that Romania may encounter any struggle in LNG market due to Qatar crise?
Iulian-Robert Tudorache: Romania underlines the importance of the contribution of LNG to the energy security of the European Union through the diversification of gas sources and sustains the opportunities for development of LNG terminals projects in Europe, which is a goal of the European Commission Strategy in the LNG field. The Black Sea’s energy potential gives it a significant geostrategic role for the European Union, both due to the estimated oil reserves and the Caspian oil and gas reserves that could transit through the Black Sea basin in order to capitalize on the market Europe.
Romania is partner in an LNG project – AGRI, which is a Romanian initiative in the Black Sea region. The project covers both the energy security component, the diversification of energy routes and sources and the regional cooperation. The feasibility study of the AGRI project is finalized with favorable conclusions for natural gas transport capacities ranging from 5 to 8 bcm. It is awaiting the decision of the shareholders of this project regarding the participation in the second stage of development of the AGRI project. The project’s shareholders are currently taking steps to include the AGRI project on the third list of projects of common interest and have also proposed to make updates to the feasibility study, finalized in December 2014, taking into account the actual regional energy context. The main natural gas source has been identified as a number of Azerbaijan offshore deposits, but there is also interest from other Caspian and Middle East countries that hold significant gas reserves and which the project offers the opportunity to analyze strategic options on their potential as potential gas suppliers for Europe.
Qatar is no doubt one of the biggest exporters of natural gas and the biggest exporter of LNG in the world. We have had in the past discussions with the Qatar side about the construction of a LNG terminal on the Black Sea coast, which unfortunately have not materialized. Importing LNG from Qatar is pretty difficult at least in terms of identifying a viable transport route to Romania.
As for the tense situation between Qatar and neighboring countries, since all of these countries are heavily dependent on oil and gas exports, the trade and investments links between them are fairly low, so that the negative effects of the dispute may be limited. Anyway, we hope that the tensions between Qatar and its neighbors will be solved as soon as possible, without consequences for the peoples in the region and not be transformed in a battle for regional dominance. Romania has supported and will continue to support the peaceful resolution of all international conflicts.
H. Cigdem Yorgancioglu: I wish to express my sincere thankfullness for your valuable time and kind cooperative approach you rendered during our interview.
Interview: H. Çiğdem YORGANCIOĞLU