Romania May Accelerate Deepwater Gas Drilling

Romania may accelerate its first deepwater natural gas prospect amid a shortage of the fossil fuel in Europe, according to a partner in the Neptun Deep project.

State-controlled Romgaz SA, which is taking over Exxon Mobil Corp.’s 50% stake in the Black Sea project, said operator OMV Petrom SA will likely re-evaluate the development after a surge in energy prices and construction costs. 

The prospect holds an estimated 100 billion cubic meters of gas, roughly equal to Norway’s annual output. European natural gas prices have more than tripled in the past 12 months amid concerns over Russian supplies. 

“Given what’s happening in the European Union, and the necessity to have gas flowing sooner than we expected, we’re trying to look at different approaches,” Romgaz Chief Financial Officer Razvan Popescu said in an interview in Vienna late on Tuesday. “We’re looking at various metrics as the gas price has gone through the roof.”

With Petrom having the final say as the development’s operator, the partners are considering relying more on existing Black Sea infrastructure and dividing the project into two or three stages to bring gas to the market earlier, Popescu said.

“Neptun production should start no later than 2026,” he said. “That was the initial estimation in Exxon’s plans but maybe there will be a way to speed it up because we all know the necessity to have European gas flowing.”

Romania is one of the few EU member countries with significant domestic gas production, but still relies on Russia to cover about a quarter of its needs.

Romgaz, which is awaiting final regulatory approval to complete its takeover of Exxon’s stake, is planning to sell international bonds to help finance the project, Popescu said. The company is considering five- to seven-year bonds, with a first potential tap of 500 million euros ($534 million) seen around mid-2023, followed by another sale of a similar size a year later, according to the CFO.

After a long-delayed change of offshore exploration rules finally passed into law this month, Romgaz and Petrom, the country’s largest oil and gas company, are due to make their final investment decision on Neptun Deep by the end of 2022.

--With assistance from Andra Timu.