Romania is proud of the history of its petroleum industry. The country is officially recognized as the first to produce oil in the world in 1857—two years before the Drake well was drilled in Pennsylvania. Bucharest was the first capital in the world to be lit by kerosene. There was a connection at that time between Romania and the U.S.—the first refinery was built in 1857 with American financial investment.

Now Romania is once again seeking U.S. investment to achieve its goal of being energy independent. “I think this is the right place to come with this realistic goal,” said Victor Ponta, Romanian prime minister, during a visit to Houston in 2014. “I can only imagine that a lot of people have come here with speeches asking for both money and votes. I’m not asking for votes.”

The government recognizes the need for both investment and technology as it seeks new avenues of exploration to reverse declining oil and gas production. According to the U.S. Energy Information Administration, oil production in Romania has declined from 134,000 bbl/d in 2003 to 104,000 bbl/d in 2013. Dry natural gas production also has fallen from a peak of 39.7 Bcm (1.4 Tcf) in 1983 to 10.6 Bcm (375 Bcf) in 2012.

In terms of natural gas Romania is only importing 15% of its needs, which is very good in comparison to other countries, said Razvan-Eugen Nicolescu, former delegate minister of energy. (In February 2015, he left his ministerial post in a cabinet reshuffle and joined Deloitte Romania as executive lead adviser.) “We are among the countries in the European Union that are the most independent of energy imports,” he said. “The future is very promising.”

Ponta’s sense of humor was showing when he talked about Russia. “A year ago big neighbor Russia was 500 miles [805 km] from Romania. This year they are 200 miles [320 km] away, and I hope they don’t come any closer.”

Not having to rely on Russia for energy is one of the country’s main goals. “We cannot be energy independent without all kinds of exploration and new technology,” he added.

On Dec. 5, 2014, the Energy Department of the Ministry of Economic Affairs published a draft of its national energy strategy for 2015-35. According to the document, Romania will need to invest $111.8 billion during that period. The government estimated that current oil reserves could be consumed in 23 years (by 2038) and gas reserves in 14 years (by 2029).

“In order to ensure a mid- and long-term stability and predictability of the energy sector, we need the consent of the political class, especially of the parliamentary political parties,” stated Nicolescu in December. The deadline for completion of the Energy Strategy of Romania is May 2015. The country’s current national energy strategy is from 2007 to 2020.

Fiscal regimes

Romania is ready to follow in the footsteps of the U.S., which is now the largest natural gas producer in the world. “We can learn much from the U.S. Romania is ready to learn from the U.S. example and enter the 21st century in energy technology and opportunities. My message to you is that Romania has healthy relations and is eager to promote those relations in the conventional and unconventional resources in onshore and offshore exploration. It is about having the investment and technology,” Ponta said.

The government is providing legislation and incentives to convince companies to invest. “We will assure a predictable fiscal system. The expectation of heavy royalties is not going to happen. The idea is not to take 100% of something, but it is to take 1% from a lot of investments,” he emphasized.

One change made by the government involves a special construction tax that impacted companies in the energy sector. The tax rate was decreased from 1.5% to 1%. A way also was found to exclude the construction tax on most equipment used for offshore drilling.

Focus on deepwater

Romanian and American companies have been working together in offshore exploration in the Black Sea. “What I think is important to Romania is to have resources from the Black Sea and use technology to develop even more offshore resources. This is going to be a successful program for the country,” Ponta said.

OMV Petrom Group and Exxon Mobil are in a joint venture on the Neptun Deep concession. According to OMV Petrom’s 2014 financial results press release Feb. 19, 2015, operations on the Pelican South-1 exploration well are ongoing, and the well is expected to be completed in first-quarter 2015. The Domino-2 step-out well was completed. The well was drilled to assess the size and commercial viability of the 2012 Domino gas discovery.

Results from the three wells “together with data from additional exploration wells will be used for the evaluation of the consolidated block potential,” OMV Petrom noted. Further exploration and appraisal well drilling is expected in 2015.

“In light of the volatile and potentially prolonged weaker market fundamentals, we are scaling back our investment plans for 2015 and have intensified cost optimization programs while maintaining our potential growth projects in the Black Sea,” the company stated.

Shale exploration falters

Romania has placed a lot of emphasis on developing its shale resources; however, protests in the country against hydraulic fracturing have slowed progress. Several protests have prevented wells from being drilled.

“I would say the most difficult time in my career was when we issued the first permits for unconventional leases for exploration of gas. I discovered that environmental activists from Russia were interested in the environment in Romania, and they were very scary about it. People who are against it were accusing me of selling out to American companies,” Ponta said.

Chevron was the major shale player in Romania. The company had the 6,350-sq-km (2,452-sq-mile) Barlad Shale concession in northeast Romania. The company also had blocks 17, 18 and 19 in the Dobrogea area in southeast Romania covering 2,711 sq km (1,047 sq miles).

In 2014, Chevron completed the first exploration well in the Barlad Shale concession along with a 2-D seismic survey across two of the three concessions in southeast Romania. However, Chevron intends to pursue relinquishment of its interest in these concessions in 2015, according to its 10-K report for fiscal year ended Dec. 31, 2014.

Carl Surran, Seeking Alpha news editor, said Feb. 23, 2015, that Chevron was leaving Romania’s shale play in the face of current oil prices. The Romanian leases were not competitive with other investment opportunities. Chevron will continue to evaluate the results of the first well to determine the resource potential of the shale.

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