In 2018, the Romanian Parliament set the scene for future offshore investments in the Black Sea by passing a bill to regulate the offshore legislative framework. The legislative process is not completed due to the fact the Romanian President requested the Parliament to reevaluate some provisions. The bill addresses technical and fiscal provisions for offshore oil exploration activities, including exploration permits, transportation conditions and the availability of data. In addition, the bill includes a set of provisions related to royalties and additional taxes.
Reduced Royalties, New Tax Structure
Parliament proposed a reduced royalty and additional tax structure for offshore investments, allowing a larger proportion of capital investments to be deducted for tax purposes. Parliament also proposed that half of the offshore production be traded on the Romanian market, allowing Romania to establish a trading hub in Eastern Europe for natural gas.
Currently, several companies operate in the Black Sea, and seven interconnected platforms extract gas and oil from offshore perimeters. According to publicly available data, 8 percent of Romania’s oil production is from Black Sea platforms. In addition to current production, the resources discovered and waiting for development could double Romania’s gas production.
BRUA Natural Gas Pipeline
Romania is working with Bulgaria, Hungary and Austria on the BRUA natural gas pipeline, which will create a new export route for future natural gas in the Black Sea. The Romanian section will include 550 kilometers of pipeline, allowing Romania to transport natural gas to Eastern and Western Europe. The project is co-financed by European funds and is meant to provide energy security for Romania.
The combined development of offshore gas and the BRUA pipeline will make Romania one of the few energy-independent countries in the world, transforming the country into a net natural gas exporter and providing diversity of supply for Eastern Europe.
10-Year Energy Strategy
By the end of this year, Romania will release its 10-year energy strategy, aiming to maintain a balanced, technologically neutral energy mix, based on the efficient use of internal energy resources. Renewable energy—including large hydroelectric power plants, nuclear power and clean coal technologies—will play an important role in Romania’s energy mix.
As a member of the European Union and NATO, and strategically located at the Black Sea, Romania offers abundant international business prospects—especially related to energy—that continue to grow. McGuireWoods Consulting’s Bucharest office brings the consulting firm’s government relations, public affairs, strategic communications and business development services to the international marketplace. Consulting professionals in Bucharest understand the changing energy landscape in Romania, especially when it comes to offshore investments, natural gas pipelines and overall energy strategy in the country.
By Nadia Crisan and Daniela Serban