Page 5 - EurOil Week 26 2019
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EurOil COMMENTARY EurOil
42-84bcm of gas, more than seven years a er its discovery. e delay makes it increasingly improbable that production will start in 2021 as initially hoped. Output could peak at 6bcm per year.
Meanwhile Black Sea Oil & Gas, run by pri- vate equity fund Carlyle Group, nally signed o in February on developing the 10bcm Midia gas development, slated to produce 1bcm per year of gas starting in 2021. But the company has warned that new restrictions on gas prices are undermining the project.Under measures con rmed in April, Romanian producers will have to sell around a third of their production to households and heating plants. Bucharest has also imposed export restrictions and introduced a new 2% tax on gas companies’ turnover.
Export options
ese setbacks make it uncertain just how much gas will be available for Romania to export. e BRUA project is also encountering di culty as Hungary doubts its economic feasibility. Hun- gary is also involved in Russia’s plan to extend the TurkStream gas pipeline into Central Europe, raising questions over whether it can support both projects.
Besides TurkStream, BRUA will also compete for market share in southeast Europe with Azeri gas arriving from the Southern Gas Corridor (SGC) in the early 2020s, as well as rising LNG imports at new terminals under development in Greece and Croatia.
e deferred launch of the Ungheni-Chis- inau pipeline is also significant, as Moldova’s long-term gas supply contract with Russia’s Gaz- prom expires at the end of this year. Unable to tap Romanian supplies, Moldova risks being forced
into another long-term agreement for Russian gas, potentially limiting how much gas it can take from Romania in the future.
Moldova imported 2.9bn cubic metres of Russian gas last year, with the bulk of supplies being used at a large Russian-owned power plant in the breakaway region of Transnistria. is station provides Moldova with much of its electricity, consolidating Russian control over the country’s energy security. Excluding demand in Transnistria, the government in Chisinau believes it can fully satisfy its gas needs with Romanian volumes.
Moldova can still get some Romanian gas via a pipeline completed in 2014 to Ungheni. But without extending the pipe to Chisinau – where most demand is – volumes will remain small. Ukrainian pipeline operator Ukrtrans- gaz recently o ered to transit gas from the EU to Moldova, but EurOil considers this a hollow gesture, as most of these supplies would be resold Russian gas and therefore signi cantly more costly than shipments directly from Gazprom.
Moscow has other ways of coercing Chis- inau into another long-term supply deal. Hanging over the Moldovan government is a $6.2bn debt to Gazprom relating to years of gas supplies to Transnistria. Politically, Chisinau cannot fully disavow itself of the debt, as this would acknowledge Transnistria as an inde- pendent entity.
In its new strategy, Transgaz said it did not envisage o shore gas production starting until 2021 and only reaching a substantial level by 2023. e risk is that once Romania is ready to become an exporter, market opportunities that exist now will have passed by.
Romanian assets of Black Sea Oil & Gas. Source: www. blackseaog.com
Week 26 04•July•2019 w w w . N E W S B A S E . c o m
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