Romania: Will there be a U-turn on shale?

U-turn sign
Source: DollarPhotoClub

Romanian prime minister Victor Ponta indicated that the country might alter its legislative structures to promote future gas exploration.

Until now Romania didn’t seem interested in unconventional gas exploration, with Mr Ponta announcing in April that Romania is not likely to exploit shale gas in the next five years.

“For the time being and in the next five years, not a single cubic metre of shale gas will be exploited in Romania,” said the Prime Minister at the time.

Now it seems that his interests have shifted towards developing shale resources. Speaking on a TV show, Mr Ponta suggested that in order to increase the acceptance of shale exploration among Romanian people the government may decide to give some of the royalties paid by companies to local communities.

He argued that this would keep local communities interested in having such activities in their areas, rather than oppose them, as has happened so far. “But – he added – we still have to see if there is shale gas there”. This attitude is symptomatic of Romanian politicians who are reluctant to take any action on shale without knowing the extent of the reserves. This seems to be a Catch 22 situation, since exploration needs to take place in order to fully assess the economic viability of the resources.

According to a recent EIA study, Romania holds 51 Tcf of technically recoverable shale gas resources. These are estimates and the true potential of Romanian shale is still unknown.

So far Chevron and Repsol are the only major oil and gas companies attempting to explore shale in Romania, with the state-owned giant Romgaz openly stating that they are not interested in unconventional resources.

Chevron owns and operates the 1.6 million-acre Barlad Shale in northeast Romania as well as three concessions covering 670,000 acres in southeast Romania, where it’s begun collecting seismic data. The Spanish firm Repsol has a joint exploration venture with the Romanian energy company OMV Petrom.

There are signs that the developments of recent months have changed Romania’s attitude towards shale. The recent annexation of Crimea by Russia moved the Russian border closer to Romania and it is putting the Romanians ill at ease.

Speaking in the U.S., where he went to drum up interest in Romanian hydrocarbon deposits, Mr Ponta remarked: “A year ago a big neighbour, Russia, was about 500 miles from Romania; this year they’re about 200 miles from Romania. I hope they’re not coming closer.”

Mr Ponta also said that it will be important for Romania to take advantage of technology developed by U.S. companies to tap its unconventional resources, as well as burgeoning deep-water operations in the Black Sea.

But will the prime minister’s eagerness to tap the country’s hydrocarbon reserves strike a note among the Romanian people? So far any attempts at shale exploration have been met with violent protests.

In a recent TV interview, the prime minister blamed the ferocity of the protests and the low acceptance of shale development among the Romanians on Russian propaganda. “Should we trust the stories saying our fountains will be poisoned, which represent propaganda taken on by good-faith and ill-faith people, who never knew to tell me what the solution is. Taking gas from Russia?“ he said.

“If we have these resources, we will put everything we know and we have on the table, including environment conditions that have to be met. The future Government and the future Parliament will make a decision,” he concluded.

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