Recent discussions, caused by the visit of the head of the Austrian company OMV to Bucharest, related to deposits in the Black Sea, raise the following question: how much gas does Romania need from the Black Sea and in what volume can it afford to export them to Western Europe? Major energy investment projects, the resumption of chemical fertilizer production and the expansion of distribution networks indicate that consumption may double in the next few years. On the other hand, at the EU level, gas is considered a transition fuel to green energy, and in this context, the official consumption targets in Romania and the European Commission estimates are much lower than what is actually projected. , it is necessary

Short:

• In particular, given that gas has been declared a transition fuel, we expect investments in long-term gas-intensive capacities to be more moderate. On the other hand, powerful gas power plants are being built and gas networks are being expanded in Romania.
• Ion Sterian, CEO of Transgaz, believes that from 2027-2028, consumption needs will double to about 20 billion cubic meters, and that there will not be enough gas from the Black Sea to cover it.
• The estimates of the European Commission, used including in the Transgaz Development Plan, show instead the maintenance of the level of consumption

How many large gas plants need to be built

In 4-5 years, even gas from the Black Sea will not satisfy Romania’s needs, Ion Sterian said recently at the “Romanian Energy Symposium – SIREN 2023”. Consumption is approximately 11-12 billion cubic meters per year, but to these volumes will be added those required by gas power plants. Ion Sterian says that 2.5 billion cubic meters will be needed for Mintia, about 1 billion cubic meters for Iernut, and about 1.5 billion cubic meters for Ishalnica and Turcheny.

In addition, the Azomureș chemical plant recently resumed fertilizer production at 50% of its total capacity. In a year, under normal operating conditions, the plant can consume about 1.2 billion cubic meters.

Another 3-4 billion cubic meters will be needed for new gas connections to some localities after the network expansion, especially through the government’s Anghel Saligny program.

It is practically possible to add another 10 billion meters of gas, that is, almost twice as much as now.

The new thermal power plant in Mintia, which will be built by investor Mass Global Energy Rom, will have 1,500 MW. “The first phase of investment will be completed within 24 months and the project will reach full maturity in 36 months,” the government announced in March 2023.

The 430MW Iernut plant is due to be completed by December 2024 by Spain’s Duro Felguera. Work at this plant recently resumed after a two-year hiatus during which the contract with Duro Felguera was terminated due to delays. A new contract was signed in April 2023.

The Turceni and Işalnița stations will have 475 MW and 850 MW respectively, projects included in the restructuring plan of the Oltenia power complex, which is to phase out coal-based energy production.

Oltenia Energy Complex established together with ALRO a special purpose vehicle (SPV) joint-stock company for the construction of a plant in Ishalnica, for which funding from the Modernization Fund will be used. A company called CCGT Power Işalniţa SA was registered a week ago.

The scenarios of the European Commission do not show an increase in gas consumption

The basic scenario of the European Commission, which is also contained in the Transgaz Development Plan, shows that at the level of 2025, gas consumption will be as high as it is now, about 11-12 billion cubic meters. Starting in 2030, it is even projected to decline to around 10 billion cubic meters, a level that will persist until 2040, before falling to 8.5 billion cubic meters in 2050.

It is also estimated that gas-based electricity generation will have an increasingly smaller share of the energy balance, from 19% in 2020 to 14% in 2030. From 3% to 23%, and in the wind – from 10% to 16%.

About 8 billion cubic meters per year will be withdrawn from the Black Sea

OMV Petrom and Romgaz announced in June that they have decided to develop Neptun Deep, the largest gas project in the Romanian part of the Black Sea. Production of about 100 billion cubic meters of natural gas is expected.

The first production is expected in 2027. Production on the plateau will be about 8 billion cubic meters per year for about 10 years.

The Romanian state has a preemptive right to purchase these gases, and under certain conditions, a regulated price may be set, in accordance with the Offshore Law. This means that Romania will be able to use most of the gas from the Black Sea. But, despite this, other volumes of gas will be needed to cover the possible consumption of 20 billion cubic meters.

In addition to production from the Black Sea, Romania will need 4-5 billion cubic meters of gas, says the CEO of Transgaz. This is also happening in conditions where onshore gas production is declining. According to a representative of Transgaz, imported gas will arrive through LNG terminals in Turkey and Greece.

It will be recalled that the officials of the Austrian company OMV came to Bucharest last week to demand changes to the law on offshores and a halving of the solidarity tax, but they did not receive either.

This visit took place in the context of a lawsuit against the Romanian state, claiming that the provisions of the offshore law would not be to the liking of the Austrian company. The Austrians want more freedom in exporting gas from the Black Sea to the West. Currently, the Offshore Law promotes domestic consumption of Black Sea gas.