OMV Petrom to partner with Romgaz for Neptun Deep project amid NGO criticism

OMV Petrom announced together with Romanian state-owned gas producer Romgaz that it will invest up to €4 billion in the development phase of the Neptun Deep project, which will generate approximately 100 billion cubic metres (bcm) of natural gas – highly criticised by NGOs.

Neptun Deep is the largest natural gas project in the Romanian area of the Black Sea. Now both OMV Petrom and Romgaz will each hold a participating interest of 50% in the project, though OMV Petrom will be the project’s operator.

“Through the final investment decision for the Neptun Deep project, we are opening a new chapter for the Romanian energy sector. Production is equivalent to the current annual demand for natural gas of about 4.3 million households multiplied by almost 30 times. It is also a major step for our 2030 strategy to support the energy transition in Romania and the region”, OMV Petrom CEO Christina Verchere said.

“Neptun Deep is a strategic project for Romania, and the region from the perspective of securing the required natural gas and the country’s energy transition, Romgaz CEO Razvan Popescu added.

The first production is planned for 2027. Production at the plateau will be approximately eight bcm annually for almost 10 years. “Starting with 2027, we will have a new natural gas source with the potential to significantly increase the country’s natural gas production, thus securing the safety of supply”, Popescu stated.

Romania’s domestic production will then double compared to current levels, making Romania the largest gas producer in the European Union, said former Prime Minister Nicolae Ciuca, who said Romania would soon become energy independent.

By allowing for the state to exploit the state budget gains from royalties, from the tax on additional income, from the companies’ profit tax and from the number of jobs created, which will generate tax, Ciuca added.

Final nail

However, the NGOs are not so happy with this announcement.

This massive offshore development could be “the final nail in the coffin for Romania’ – and the EU’s – commitments to stem the climate crisis”, said Bankwatch Romania and CEE Bankwatch Network, urging the Romanian government to suspend this “reckless” development.

Although the parent company OMV Group has previously stated its support for the Paris Agreement, the strategy of OMV Petrom is actually designed to significantly increase gas exploitation, “well beyond the time Europe’s energy system should be free of fossil fuels”.

Bankwatch Romania and CEE Bankwatch Network emphasised that this project would never have happened without EU-funded pipelines.

The Tuzla-Podișor pipeline, which is set to connect the Neptun Deep fossil gas field with Romania’s gas network, was awarded a €150 million loan from the European Investment Bank in 2018 and recently received an additional €80 million via the EU’s Modernisation Fund.

“If the EU is truly committed to climate neutrality, there can be no new investments in new oil and gas extraction backed by public funding”. Instead, EU member states should focus on replacing fossil fuels with renewable energy, according to Bankwatch.

A recentanalysis by green campaign group Bankwatch shows that with the EU’s blessing, Romania aims to use at least €1.7 billion in EU funding by 2027 for new fossil gas projects. EU countries should rather focus their efforts on replacing fossil fuels with renewable energy, stepping up energy efficiency and supplying households with sustainable, clean heating.

Greenpeace Romania claims that offshore gas exploitation is “a new threat” to the Black Sea and its shores”.

“Life in the Black Sea is in danger! The decision is a catastrophic one for biodiversity, the environment and the Romanian Black Sea coast, as shown by dozens of similar exploitations”, according to a press statement released by the organisation on Wednesday.

The development area of the Neptun Deep block is located in the western Black Sea, in the exclusive economic zone of Romania, 160 kilometres from the facilities on land.

The sea infrastructure crosses several different and unique geomorphological units, including the Black Sea coast, platform and continental slope.

“The project intersects two Natura 2000 protected areas located on the Black Sea coast: the Natura Site 2000 Black Sea (ROSPA 0076), which will be under-crossed by the pipeline route on almost 2.5 km, and the Natura 2000 Marine Area Site at Capul Tuzla (ROSCI 0273), also under-crossed by the pipeline route on about 600 m”, the organisation explained.

Legal issues

OMV Petrom filed a complaint this year at the International Court of Arbitration in Paris against the Romanian state – through the National Agency for Mineral Resources (ANRM) – related to the regime for the sale of gas from the Black Sea, government sources told G4Media.

OMV Petrom, however, did not announce publicly or on the Bucharest Stock Exchange the dispute against the Romanian state.

The complaint filed at the International Court of Arbitration in Paris is also directed against Romgaz Black Sea Limited, the Romgaz subsidiary bought from ExxonMobil and operating the Black Sea field together with OMV Petrom.

OMV Petrom’s complaint aims to change the offshore law on how the company can dispose of gas produced from the Black Sea.

The Energy Ministry sent G4Media a point of view stating that OMV’s decision “was not encouraged by the Romanian state”.

“The Ministry of Energy awaits with great interest the final investment decision for the Neptun Deep project, one of the largest projects since the Revolution. We are convinced that OMV’s decision will not delay the project”, the institution said, adding that the Offshore Law was adopted at the request of investors.

The previous law set export restrictions, price limits, and a tough fiscal regime.

As a result, field development was stalled, and one large investor – US group ExxonMobil – decided to exit, and Romgaz took over the 50% stake of ExxonMobil in the project.

(Cătălina Mihai | EURACTIV.ro)