Comment Looking back to look forward A
lmost ten years ago, the launch of Petroleum Industry Review created a new media mainstay for people directly involved in the oil and gas industry, whether they work in E&P, downstream, transport, or in services. Being exposed to a lot of information, trends, statistics & data allowed us to have a quality toolbox and ability to project an idea or create evolving marketing concepts and events. Today, by including interviews, analyses, editorials, news, various points of view, technical and innovative solutions, the magazine became an important disseminating vector for the oil & gas industry in the region and also one of the most respected platforms of the petroleum sector in Romania and Europe. But the world is changing and so are we. Things are evolving quickly right before our eyes. Since the industrial revolution, the oil and gas industry has played a major role in the economic transformation of the world, fuelling its need for heat, light and mobility. Now it’s time again to redefine the boundaries. One of the four themes of the digital transformation of the oil and gas industry (proposed by the World Economic Forum1) is called ‘Energizing new energies’. The digitalization of energy systems promotes new energy sources and
carriers, and supports innovative models for optimizing and marketing energy. To remain relevant to customers, the oil and gas industry must understand the full impact of these changes on the broader energy system. We believe that if people, companies and businesses are not growing and adapting to the new digital mindset and to the fast pace of an ever-changing market and technology they will become irrelevant. We also believe that a fresh approach is always needed. In line with the global industry transformation process, we are pleased to announce you that we are moving forward and expanding our project to the entire energy system. 2017 has been a trying year for many. Yet there have been encouraging signs that the oil and gas market is rebalancing. According to analysts, 2018 may be far from a fullblown recovery but at least the industry will have more reasons to be optimistic about the future than it has had for some time.
Lavinia Iancu CEO and Publisher
Reference 1 Digital Transformation Initiative Oil and Gas Industry - http://reports.weforum.org/digitaltransformation/wp-content/blogs.dir/94/mp/files/pages/files/dti-oil-and-gas-industry-white-paper.pdf
3
guest
contri bu tors
Content 44
Romanian Government has decided to maintain the supplementary charge applied to energy companies.
Adelina Dabu Future Energy Leaders Romania member page 16
Fiscal predictability versus attracting funds
52
Starting works at BRUA gas pipeline Transgaz signed on 28 November, 2017 the contracts for the execution of BRUA pipeline, Phase I, of 479km, from Podișor to Recaș.
Dumitru Chisăliță Judicial Technical Expert in Oil & Gas
68
Pending stock exchange listing Hidroelectrica has an ambitious investment plan of over EUR 1bn and is preparing to conduct what could be one of the most successful operations carried out by a Romanian company: stock exchange listing.
page 18
Daniel Vlăsceanu Partner at Vlăsceanu, Ene & Partners
72
page 20
Corneliu Dinu Scientific counselour World Energy Council Romanian National Committee page 22 4
Drilling update - Eldorado Gold exploration programs Bolcana project, Romania: Results from the 2017 drilling outline a large gold-rich porphyry system centred on a calc-alkaline intrusive complex.
77
Results and prospects Proving once again one of the pillars of the Romanian capital market, the oil and gas industry had a positive evolution in 2017, despite problems faced in the first two quarters of the year. energyindustryreview.com
24
60 European funds for major projects Transelectrica carries out six projects of common interest worth over RON 1bn that will benefit from non-reimbursable funds being included on the list of priorities approved by the European Commission.
66 Priorities for the future ROPEPCA’s President Harald Kraft explains the important role the upstream industry plays in the Romanian economy.
Largest onshore wind farm in Europe Dutch company NERO Renewables is preparing a giant investment in Romania, in a wind farm, in Dobrogea region.
88 ROGC 2017 In focus: New technologies to reduce costs, improve efficiency and maximize competitiveness; Role and importance of interconnection projects; Unlocking the value of production, gas market liberalization, and certifications 5
NEWS
OMV PETROM INVESTS OVER EUR 130MN IN TWO GAS TREATMENT PLANTS
Contact us Like us on Facebook @petroleumreview
Follow us on Twitter @PetroleumReview
Connect on Google+
PetroleumreviewRomania
Join us on Linkedin Petroleum Review Publisher: Lavinia Iancu Editor: Adrian Stoica Art Director: Justin Iancu Business Development Manager: Marius Vlădăreanu Sales Manager: Valentin Matei
O
MV Petrom completed construction works at two new gas treatment plants located near important production zones. The two projects, which required investment of over EUR 130mn since 2013, will ensure gas deliveries into the national transport system at pressures of up to 40 bar. The new facilities treat approximately 7.5% of OMV Petrom’s gas production in Romania. If used for heating only, the annual gas production processed at Burcioaia and Mădulari could cover the needs of over 330,000 households. “Burcioaia and Mădulari are twin projects implementing standardized solutions and modular design concepts for Upstream facilities. Burcioaia and Mădulari projects allow to treat a capacity of up to 2,000,000 Sm3/day and to deliver gas in the national transport system at high pressure. Additionally, they extend the lifespan of production operations in mature fields, as the new plants can receive incoming gas at low pressure”, said Peter Zeilinger, member
of OMV Petrom executive board responsible for Upstream. The gas projects in Burcioaia and Mădulari consist of construction of infield gas lines and gas processing facilities for dehydration, compression and measurement as well as the necessary infrastructure for connection to the national transport system. Dehydration process uses a Triethylene glycol (TEG) dehydration unit in order to achieve gas specification in terms of water dew point and a propane cooling process for the hydrocarbon dew point. Two highly efficient reciprocating compressors with the nominal power of 1 MW each provide the compression to deliver into the national transport system. Currently a total of 19 production wells have been connected to the facilities with a cumulated gas production of up to 7,000 kboe/d. Construction works for the two projects amounted to approximately 1.3mn man-hours, without incidents.
Scientific Board: President: Prof. Niculae Napoleon Antonescu PhD Members: Prof. Lazăr Avram PhD; Assoc. Prof. Marius Stan; Prof. Ionuț Purica PhD; Alexandru Pătruți PhD
ISSN 2065 - 0396 41 Costache Negruzzi St., Ploiești 100147, RO 38 Dragoș Vodă St., Apt. 1, Bucharest 020747, RO Phone: +40 (0)344-143.530; E-mail: office@energyindustryreview.com © Material in Energy Industry Review may not be reproduced in any form without the written consent of the Industry Media Vector. All rights reserved. All other editorial items are the copyright property of Industry Media Vector.
Subscription Energy Industry Review subscription rates: Annual subscription - 10 print issues per year RON 200 (EUR 45) shipping included - ROMANIA only EUR 180 - EUROPEAN UNION shipping included
7
NEWS
ABB FIRST ROBOTICS CENTRE IN ROMANIA
A
BB inaugurated on 14 December 2017 its robotics training centre recently set up by public-private partnership with the Polytechnic University of Bucharest, within the Faculty of Engineering and Management of Technological Systems, the Machines and Manufacturing Systems Department (MSP), Robotics Specialization. The fully equipped training centre will be used by both customers and partners of ABB and by the university students. The new Training Centre will allow future engineers to benefit from advanced training in the field of robotic production systems and industrial automation. ABB has prepared specific course modules in collaboration with university professors, which are
already integrated into the students’ curriculum. The training modules consist of a thorough study of ABB robots and their complementary systems from all points of view (mechanical, electrical, programming and command). The ABB training centre is equipped with robots and a wide range of complementary industrial equipment with which the robots interact directly, namely: video equipment with 3D artificial cameras, dynamic tracking devices for conveyors with special encoder control, inductive sensors, flow switches for work holders movement and blade indexing, components for pneumatic automation (cylinders, dispensers etc.), grippers mounted on the robot flanges, perimeter protectors, stands for parts and
accessories, a large screen for specialized projections, all ready to develop applications at a real industrial scale. All movements and interactions of the robots are monitored and the components communicate with one another through industrial protocols, such as Profibus, Profinet and through a high-performance PLC, interface modules Input/Output units and the HMI touch screen. ABB has an installed base of more than 300,000 robots worldwide and of over 900 industrial robots in Romania alone. ABB is the market leader in robotics in Romania, the main robotic industrial applications including welding, painting, packaging, palletizing and various handling operations. ABB also provides preventive maintenance for the solutions implemented in Romania.
THE GRAND PRIZE AT THE EUROPEAN DIGITAL SKILLS AWARDS
A
new success for Romania in Brussels. The Opening Opportunities mentoring project, developed by Techsoup in collaboration with Microsoft and the National Association of Librarians and Public Libraries (ANBPR), as part of the global program Microsoft YouthSpark, is the great winner of the Digital Skills in Education category, in the European Digital Skills Awards 2017 competition. Opening Opportunities is a mentor-lead programme, in 8
which IT professionals mentor teams of high school students who discover computer science, product development and team work in poor regions in Romania. The project is carried out in several stages. First Microsoft employees are recruited as mentors and trained in product management, design, the ABC of start-ups, free learning resources, so they have the necessary skills to engage with their students. Then the project team together with the enrolled mentors, travel to cities across Romania (especially poorer regions).
Presentation events are held at public libraries and then the team meets the high school students to understand their reality and inspire them to befriend technology and sign up for the 5 months mentoring programme. At the end of the mentoring period, seven teams are selected by a jury and the finalists pitch their computer science projects in Bucharest. The project is run by Asociația Techsoup with the support of Microsoft YouthSpark and in partnership with Microsoft Romania and the National Association of Librarians and Public Libraries. energyindustryreview.com
NEWS
ROMANIA TO HOLD THE PRESIDENCY OF THE EUROPEAN UNION STRATEGY FOR THE DANUBE REGION
R
omania will be the President of the European Union Strategy for the Danube Region (SUERD), following the decision of the 14 member-states of SUERD, between 1 November 2018 and 1 November 2019. “With the support of Prime Minister Mihai Tudose, Romania has obtained the support of the other member states for taking over this important mandate for our country, which will coincide with taking over the presidency of the Council of the European Union, materializing one of our priorities in European context,” said Minister Delegate for European Affairs, Victor Negrescu. Starting 1 January 2018, Romania will already become a member of the SUERD Presidents’ Trio, alongside Bulgaria, which currently holds the Presidency and Hungary, which has exercised this mandate until 1 November 2017. Within the Trio, Romania can contribute to the drafting and preparation of SUERD documents and meetings. “The European Union Strategy for the Danube Region is a successful initiative of Romania at European level and we want this form of regional collaboration to have a continuous development in the next period. The exercise of the SUERD Presidency presupposes the assumption by the Romanian side of responsibilities, within a process of multilevel involvement and coordination. In particular, it will enable Romania to promote the themes and initiatives of interest to the states in the Danube region at European and regional level as well as chair meetings and gain consensus among
the member states,” Victor Negrescu explained. During the mandate, Romania will organize, in cooperation with the European Commission and the Danube Transnational Program, a meeting of the SUERD Annual Forum with the participation of officials from the Member States and representatives of the Commission, European institutions and civil society. Romania will also host a meeting of Foreign Affairs Ministers dedicated to the governance of SUERD, will organize and lead two meetings of the national coordinators from the Member States of the SUERD, the meetings of the Priority Areas coordinators and the Steering Groups, as well as other thematic events with the participation of the coordinators of the eleven priority areas of SUERD and of the Danube Transnational Program Management Authority. Romania, through its ministries, coordinates three priority areas of SUERD: navigability (together with Austria), tourism and culture (together with Bulgaria) and environmental risks (together with Hungary). Among the main themes that Romania will promote during the SUERD Presidency, are the establishment of the Focal Point for technical assistance/Danube Strategy Point, the creation of synergies between the Danube stakeholders and the European Commission in cluster development and the strengthening of cooperation and interaction between the entities participating in the SUERD and other macro-regional strategies of the European Union. 9
NEWS
AGGREKO TO POWER THE EUROPEAN CHAMPIONSHIPS
A
ggreko has been recently announced as the official temporary power supporter for the Glasgow 2018 European Championships. The global leader in mobile, modular power, heating and cooling will provide both temporary and continuous reliable power across the Championships’ competition and non-competition venues in August. Aggreko will provide around 60 generators supplying more than 10 Mega Volt Amp (MVA) of energy, distributed through more than 240 panels and 26km of cable. This will power the successful delivery of 84 sessions of sport, including Open Water Swimming at Loch Lomond and Mountain Biking at Cathkin
Braes. Aggreko will also help power Festival 2018 – a dynamic cultural programme that will showcase the best in music, visual art, street art, dance, theatre and digital art across the city, with Glasgow’s iconic George Square at its heart. “We’re proud to support the first staging of the prestigious Glasgow 2018 European Championships. We look forward to working with the team and Glasgow city to ensure the faultless delivery of power to the Championships. There is no better place to do this than in Scotland,” said Robert Wells, Managing Director, Aggreko Major Events Services. Glasgow 2018 is a world first. It will bring together some of the continent’s leading sports, including
the existing European Championships for Aquatics, Cycling, Gymnastics, Rowing and Triathlon, with a new Golf Team Championships between 2 – 12 August. Aggreko and its services will be used alongside existing venues to meet all the Championship’s power requirements over the 11-day celebration of sport and culture. The company has a reputation for powering the biggest global sports events, including Glasgow 2014 Commonwealth Games and the London 2012 Olympic and Paralympic Games, among others. In 2018, Aggreko is also supporting PyeongChang Olympic and Paralympic Winter Games and the Gold Coast Commonwealth Games.
EC OLTENIA TO RECEIVE RON 6.2MN FOR MODERNIZATION
T
he Ministry of Energy has authorized the payment of the first reimbursement application through the National Investment Plan (NIP) since its establishment in 2013. The amount, worth 6.2 million lei, will be paid to the Oltenia Energy Complex as beneficiary. This payment will be made on the basis of a financing contract concluded between the two entities in August 2016. The contract aims at awarding a non-reimbursable financing for a project totalling 381.5 million lei for 10
the rehabilitation and modernization of the 330MW block 4 from the Rovinari Power Branch within the CE Oltenia. “It is the first payment through PNI since its establishment in 2013. I think it is an important moment and a strong signal regarding the commitments we have made towards the Romanian electricity producers and, finally, towards of electricity consumers. Upon taking office, PNI was blocked, unfortunately, since its establishment. Here are how our efforts this year have yielded, so today we can announce the first payment to the
EC Oltenia, one of the vital companies for the Romanian energy sector. It is true that the EC producer of Oltenia has filed several requests for reimbursement but, as announced at the end of November, 2017, the EC Oltenia will receive these funds in tranches. Depending on the analysis of documents sent by EC Oltenia, other payments will be made to the company,” Energy Minister Toma Petcu said. The maximum amount of this investment that the Ministry of Energy can grant as a financing authority, according to the legal provisions, is 61.3 million lei. energyindustryreview.com
NEWS
EU-11 DEVELOPS INNOVATIVE SOLUTIONS FOR A SMOOTH ENERGY TRANSITION
E
U-11 region is a growing economy with a growing appetite for energy and to ensure a sustainable energy transition, companies and governments started looking for innovative solutions that will allow the countries to continue their economic growth while ensuring a proper use of the energy resources. Biomass, smart grids, effective refinery, renewables and e-mobility were among the projects showcased during the 2nd edition of the Central European Day of Energy event, in Brussels. Though the European Innovation Scoreboard shows that all EU-11 countries perform below EU average in terms of innovation systems, it is worth mentioning that the region is starting its energy innovation journey from a much more difficult position than Western Europe. From companies’ perspectives, investments in energy innovation are highly risky endeavours and without public support (political and financial), no one will take the lead.
This is particularly the case where high infrastructure expenditures are needed. CEEP members and other companies from the EU-11 present at the event manifested their readiness to contribute to the achievements of all targets established by the EU in terms of climate and energy, as long as this will not hamper the economic development of the region. The event was co-organised by Central Europe Energy Partners and the European Commission (DG Energy), with the support of International Visegrad Fund and under the auspices of the Hungarian Presidency of the Visegrad Group, on the 11th of December, 2017 in Brussels. This second edition was prepared in cooperation with partners from the Czech Republic (Masaryk University), Hungary (REKK), Lithuania (Kaunas University of Technology), Poland (Sobieski Institute), Romania (Romanian Energy Center) and Slovakia (SFPA) as well as Electric Vehicle Promotion Foundation from Poland.
TRANSPORT WITHOUT LIMITS
Services Road Transport Offshore Containers & Baskets Rigmoves Storage & Handling Projects Resources
www.lubbers.net ploiesti@lubbers.net
T +40 0244 408 040 11 408 049 F +40 0244
NEWS
FIRST OIL FROM CATCHER FIELD
F
irst oil was produced from the Premier Oil-operated Catcher field offshore UK, on December 23, 2017. The Catcher field partnership is made up of Premier Oil (50%), Cairn Energy (20%), MOL Group (20%) and Dyas (10%). “MOL Group would like to congratulate the Catcher Area Development Project team for achieving this significant milestone. This has been a real team effort with challenging wells, a state of the art subsea systems and a new built FPSO all delivered safely,” Berislav Gašo, MOL Group’s Executive Vice President for Upstream commented. The Catcher Development lies in the UK Central North Sea approximately 180 km off the North-East coast of Scotland. The development comprises three separate fields which are Catcher, Burgman and Varadero. The reservoirs lie in a water depth of around 93 metres. It is intended that the fields will be produced from 19 subsea wells. In Phase 1 a total of 12 wells have already 12
been drilled, completed and tied back via subsea infrastructure to a new build FPSO (Floating Production Storage and Offloading). Phase 2 drilling is ongoing with well number 14 being completed. The build of the FPSO commenced in Japan with first steel for the hull being cut in January 2015. In August 2016 the hull was towed to Singapore to Keppel’s Benoi shipyard for mating with the topsides equipment. On mechanical completion in August 2017 the vessel was towed to the North Sea and installed on location in October. The FPSO, which is owned by BW Offshore, is 240m long X 50m wide X 27m deep and is approximately as long as 2 football pitches. It weighs over 56,000 tonnes, has a storage capacity of 650,000 barrels of oil and is home to a workforce of around 120 workers. The oil will be offloaded by tankers from the FPSO while the gas will be exported through the Shell-Esso Gas and Liquids (SEGAL) facilities. energyindustryreview.com
NEWS
ROMANIA’S TEREMIA 1000 WELL, A POTENTIAL OIL PRODUCER
E
ast West Petroleum’s joint venture partner and operator, Naftna Industrija Srbije (NIS), has informed East West about the following test results from the first well, Teremia 1000, in the EX-7 Periam block located in the Pannonian Basin of Western Romania. Light oil was tested from two intervals within metamorphic basement with gross rates up to 363 bbls/day of fluid with water cuts up to 49% (maximum gross oil rate 177 bbls/day). In addition, a total of five intervals were individually tested in Miocene sandstones, four of which flowed gas at gross rates in the range 0.74 to 4.27 MMscfg/d. The fifth interval flowed minor quantities of gas and condensate. The Teremia 1000 well has been completed as a potential future oil producer. A decision regarding the commerciality of the oil accumulation is expected to be taken when the results of future appraisal wells are known. In addition, as flaring of gas in Romania is forbidden, any oil production will require a technical solution for the use of associated gas together with acquiring the necessary permits and approvals for the infrastructure and facilities. The operator, NIS, has proposed and is actively progressing comprehensive exploration programs in the EX-2, EX-3, EX-7 and EX-8 exploration blocks in Romania. Whilst all activities comprise part of the commitment work programs they are nevertheless dependent on securing all the necessary government and local approvals. It is hoped that 2018 activities in EX-7 will include
the acquisition of infill 2D seismic over the Teremia 1000 discovery, an appraisal well and the drilling of another exploration well on a separate feature. In both EX-2 and EX-3, permitting is underway for a total of around 400km2 of 3D seismic surveying. In Ex-8, another exploration well is planned which is hoped to be spudded in late 2018. As the Teremia structure extends into block EX-8 future plans involve another appraisal well to be spudded although timing is currently uncertain. NIS will be funding 100% and fully carrying East West through the commitment work programs in each of the blocks in return for earning an 85% interest. “We are very pleased with the progress NIS is making with respect to actively undertaking exploration activities in Romania and encouraged by the results of the first exploration well, Teremia 1000. NIS have conducted all operations to a very high standard and are developing positive and strong relations with the local communities in which they operate. We look forward to an active forward program in 2018 and beyond”, David Sidoo, East West Petroleum President and CEO, commented. East West Petroleum is a TSX Venture Exchange listed company established in 2010 to invest in international oil & gas opportunities. The Company has its primary focus on two key areas: New Zealand, where it has established production and cash flow and is evaluating a low risk exploration play, and Romania where it is fully carried on a seismic surveying and 12 well exploration program.
step into the future with us, once again
Reliable heat-tracing systems designed to meet the highest expectations for safety, optimised energy efficiency and comfort for industrial applications.
learn all about our solutions and new products at www.pentairthermal.com 13
NEWS
ARSCM TO REPRESENT ROMANIA AT THE TRANSPORT & TICKETING AWARDS 2018
T
he Romanian Association for Smart City and Mobility (ARSCM) was short-listed among the finalists at the international event Transport & Ticketing Awards 2018, in the Smart City 2018 category. In this category, projects with impact on intelligent transport were nominated. ARSCM has been selected for the Smart City Caravan Program, where the intelligent transport component has a very important weight. The Smart City Caravan is a national promotion and education program initiated by ARSCM and carried out
in partnership with the Ministry of Energy, which takes place during 12 months, at national level, in 12 regions of Romania, starting with September 2017; from 2018, it will be expanded to a European level, where it will be run by the Worlds Smart Cities Organization. “We are extremely honoured by this nomination. We compete with three major projects, including the winners of the 2017 edition. We are pleased that the results of the program are appreciated by an impartial international jury made up of professionals in the field, and we hope that the next stages of the Caravan will be at
least as relevant and have impact on local authorities but especially on communities, as the Caravan motto says, Together We Build Communities”, ARSCM President Eduard Dumitraşcu said. Transport & Ticketing Awards 2018 is carried out within the Transport Ticketing Global and is at its tenth edition. The event takes place during 23-24 January 2018 in London, at the Old Billingsgate Market. It is the largest and most attractive public transport exhibition in the world and brings together all the key players in all the smart ticketing areas and smart city industry.
EBRD AND UNICREDIT TO FINANCE ENERGY EFFICIENCY IN ROMANIA’S RESIDENTIAL SECTOR
T
he EBRD is extending its support for energy efficiency investments in Romania’s residential sector through a loan of up to RON 206 million (EUR 45 million equivalent) to UniCredit Bank Romania SA and UniCredit Consumer Financing IFN SA. The funds will be on-lent to households seeking to invest in energy efficiency improvements (such as heating, water and electricity, as well as additional building enclosures such as walls, windows 14
and roofs) for their homes, and expanding the availability of green solutions for the residential sector. Technical assistance is provided through grants by the Global Environment Facility and the EBRD Shareholder Special Fund. “We are pleased to join forces with UniCredit and are confident that we can leverage our partner’s extensive branch network and expertise in energy efficiency financing to reach households throughout Romania. In the residential sector, there is significant room for improvement and we are proud to offer
the market this unique combination of financial and technical tools to achieve green goals,” Matteo Patrone, EBRD Regional Director for Romania and Bulgaria, stated. This is the second loan under the new EBRD Green Economy Financing Facility (GEFF). Launched earlier in 2017 with a total volume of up to EUR 100 million, it is designed to help Romanian households invest in energy efficiency measures and renewable energy. Loans are provided via local partner financial institutions. energyindustryreview.com
NEWS
FORATOM HAS ELECTED A NEW PRESIDENT
T
he Romanian Atomic Forum (ROMATOM) announced that Teodor Chirică, Honorary President of ROMATOM, was appointed President of the European Atomic Forum (FORATOM), following the decision of the General Assembly of FORATOM on 12 December 2017. Previously, Teodor Chirică held the position of VicePresident of FORATOM, starting with 20 June 2016. Teodor Chirică is expert in the nuclear industry, with an extensive experience in project management,
holding over time executive positions with Romanian and foreign companies in charge with the implementation of nuclear projects. Since October 2017, Teodor Chirică has held the position of nuclear energy expert/advisor to the CEO of SN Nuclearelectrica SA. “Teodor Chirică’s election as President of the European Atomic Forum is a recognition of Romanian experts in the nuclear industry, of professionalism and dedication that are rewarded to the extent of the contribution made. Romania is on the nuclear map of Europe, both in terms of the strategic nuclear projects
absolutely necessary for our country, but also through the Romanian specialists, a result of a long process of training , improvement and daily involvement. I am convinced that Teodor Chirică will represent a strong voice, given the recognition of the status of expert at European level, in the dialogue with the European institutions, a promoter of nuclear energy and investment projects and a link between Central and South-Eastern Europe and Brussels, by correlating the energy policies in order to ensure energy independence and supply security”, Cosmin Ghiţă, CEO of SN Nuclearelectrica, has stated.
Mobility. Safety. Quality. www.alpaccess.com
15
OPINION
DIGITALIZATION
BUSINESS AS USUAL Adelina Dabu, Future Energy Leaders Romania
A new year is always an opportunity to look at trends for the years and decades to come and evaluate how our businesses fit into.
D
igitalization is certainly something you have been talking about for a while and now it happens to be changing the landscape for good, at the highest speed ever. More data than ever is being analysed, and the exchange it faster thorough more interconnected networks; energy data included - who is consuming where and what. Efficiency is the obvious gain from its adoption – saving more energy from building and industrial processes, quickly identifying flows in the distribution networks and improving the production of hydrocarbons with the use of fibre optic sensors, automated drilling robots, more sophisticated data algorithms to find new productive fields. This is said to be business as usual: a new technology enables you to do your job with lower costs/ unit. In the energy sector we have long been accustomed to long term perspectives. Decades of planning were needed 16
for investment in hydrocarbons exploitation, pipelines, electricity networks, nuclear power plants. We have been used to demand stability and predictability from the Governments knowing the markets are there to stay and support our business models. But growing deployment of renewables at ever decreasing costs, the spread of internet, and longer life for batteries, all demand a new perspective for the old way of doing business. Digitalization might be the norm, but what comes with it is equally disruption. And to survive we need new business models and a cultural shift to becoming more agile. Because the models of production and consumption are changing altogether, blurring the distinction between the two. This great transformational potential is at the heart of the future of electricity markets. The power systems have increasing capacity to integrate larger shares of variable renewables by enabling grids to better match energy demand to peaks production hours – according to the International Energy Agency, the equivalent of 10% of the electricity consumption worldwide is available for demand response and the amount will double in the coming two decades. This is happening while the decentralized sources of power are growing. Small distributed networks and sharply decreasing costs of renewable power generators and batteries transform consumers into prosumers, block chain enabling peerto-peer electricity trading. The greatest transformation energyindustryreview.com
OPINION
lies with breaking down boundaries with the energy sector, more flexibility and enabling integration across the entire system. The asset-intensive business-models are transforming into zero-ownership platforms that monetize the cross-system linkages. More green energy is on sight and digitalization is making the case for the climate change goals. It could help avoiding 240 million tons of CO2 emissions in the European Union by 2040, according to the IEA. It’s also an answer to growing pressure from investors to take more responsibility over the sustainability of the business model. Rent-to-own and solar-as-a-service are digital solutions to give access to green energy to everyone. It is not to say there are only great opportunities ahead. While safety can be greatly improved, resilience and security become critical. Energy assets have always been a strategic target but the interconnectedness makes now the network more vulnerable to cyber-attacks. Once there is in place what we believe to be a future oriented business
model, are the networks ready to face related risks? Do we have the right available skills to implement it? Policy is key to the pace and success of this transformation and the framework is out there already with European Union’s Clean Energy for all Europeans, the Digital Agenda and other initiatives. But is down to Romania how it will put them at work and figure out how to distribute the costs and benefits adequately through incentives for both the operator and consumers, while ensuring the cybersecurity of the grid. As complex as it seems, one could be happy with no more than the Government levelling the playing field and forgetting the bedtime coal stories. Companies themselves will find a fix or fail. As the world looks at the beginning of 2018, when digitalization is business as usual, it can bring more sustainable energy to more people in a more efficient manner with one click. Are your new business model and advocacy plan ready?
Proiecte la cheie în Industria de Petrol şi Gaze Indiferent că aveţi nevoie de energie temporară pentru operaţiunile de exploatare de pe câmpurile petroliere, pentru construirea platformelor, întreţinere planificată sau de urgenţă sau testarea sarcinii sistemelor energetice principale, Aggreko vă vine în ajutor. Vă oferim planificarea întregului proiect, montarea şi punerea în funcţiune cu suport tehnic 24 de ore din 24, 7 zile pe săptămână, pentru a vă asigura buna funcţionare a producţiei dumneavoastră.
Aggreko, specialişti în Europa de Est Aggreko Eastern Europe Şoseaua de Centură 7A, Tunari, Ilfov 077180, România T: +4 0743 15 15 16 E: office.romania@aggreko.ae Aggreko operează din cadrul a 200 de unităţi din întreaga lume. Pentru a afla care este unitatea cea mai aproape de dumneavoastră, vizitaţi www.aggreko.com/contact
17
OPINION
One or two gas exchanges? This is not the question Dumitru Chisăliță, Judicial Technical Expert in Oil & Gas
A
scandal on the gas market regarding the legislative initiative that seeks to impose a single gas exchange on the gas market. The idea is not bad in essence, even if the issue of serious failures on this market is not due to exchanges and it should have been started with the mechanisms of market functioning and not with the (trading) instruments. In absence of mechanisms of market functioning, with one or two exchanges, we will continue to have slippages on the gas market. The gas trading system consists in Romania, since 2013, of two platforms, both fully operational: OPCOM and BRM. Analysing how these platforms have worked in the recent years, we believe that: • OPCOM has proven its lack of capacity, in these years, to offer products and a platform to attract customers. As most of the ‘state-owned companies’, it is necessary to create a monopolistic situation to prove its capability on the market. The typical Romanian behaviour, through which one proves the management ability on the market only when ‘helped’ by regulations, laws etc. does not recommend today in any way choosing OPCOM as the gas exchange that should remain in Romania, as single exchange. The simple analysis of activity reports on the gas market in the past 3 years disqualifies it. • Although it behaved well under the aspect of products and steps taken in the recent period, I believe that BRM has not provided sufficient elements of transparency, competition and non-discrimination. The analysis of the few public data, which are found on the BRM website, determines many question marks on how certain transactions have been carried out and on the games made on the market, using BRM platforms with or without their knowledge. It is true that these elements should have been supervised by the relevant institutions and they should have intervened whenever there were suspicions on how certain transactions have been carried out, with the application of the 18
legal provisions in force, including the possibility to suspend/withdraw the operating license. In absence of investigations and decisions of the competent institutions supervising compliance with legislation and/or competition, any intention to remove BRM from the market is abusive. In this context of experiences on the gas market, determined by the functioning of the two exchanges, but considering the normality of having a single exchange on the Romanian market, we believe that the following democratic approaches are theoretically possible: Ensuring a competitive framework for carrying out the activity for a period of 2 years and selecting the entity that reaches the best performance. • Requesting the competent institutions to submit reports on the functioning and performance of the two exchanges, in order to eliminate any suspicion on their activity. • Eliminating all the institutional obstacles, which may flaw the real competition between them. • Setting the performance criteria that will delimit the two entities in the following 2 years and which will lead to choosing the unique entity to remain on the gas market. Removal by law of the license for the administration of the centralized markets, withdrawal of licenses of the two entities and the establishment of the gas market while setting transparent, unitary and fair selection criteria, and organizing a tender for the gas market administration license. Clarifying this uncertainty that has been surrounding the gas market for almost 1 year has to be achieved as soon as possible, in order to move quickly to solving the real and many problems of the gas sector, which must be reset. We should Start Over the construction on appropriate principles of the Romanian gas market. The fact is that things have to change, not by abusively using the law, but through democratic and professional approaches. energyindustryreview.com
Achieving Operational Excellence NA Solid Petroserve Ltd. is a Canadian oilfield services company specialized in wireline and well testing services for oil and gas industry. Originally registered in Alberta Canada, Solid has been an active service provider, for over 15 years in Tunisia and Romania providing our customers with quality wireline and well testing services at competitive prices. NA Solid Petroserve Ltd. has made a commitment towards achieving operational excellence. Our goal is to deliver the highest possible value to our customers by providing the highest quality services and technical support. NA Solid Petroserve Ltd. provides full service capability for all types of slickline-conveyed BHP and downhole flow-control equipment. Our wireline service fleet includes fully-equipped wireline service trucks, along with truck-mounted cranes. We are committed to Health, Safety and Environmental concerns of our employees, contractors, clients and surrounding communities. Our goal is to build and maintain long-term service relationships with our customers.
NA Solid Petroserve Ltd. offers a variety of well testing equipment packages and services to meet virtually any well production testing program requirement.
Well Testing Services Early Production Facilities Wireline Services Downhole Measurements
EPF solutions provided by NA Solid Petroserve Ltd. enable our customers to generate early cash flow while continuing to evaluate reservoir potential. Real time data acquisition of well production parameters (pressure, temperature, flow rates etc.), combined with analysis of produced fluids enable real-time monitoring and appraisal of reservoir performance. Downhole Measurements include QuartzElectronic Memory and Surface Read-Out Gauges and also a downhole shut in tool, to allow for a quicker well build up and better pressure data quality.
Canada : (+1) 587-316-6877 Romania : (+40) 724 854 094 info@nasolid.com www.nasolid.com 19
OPINION
CONSIDERATIONS UPON THE NEW DRAFT OFFSHORE LAW Daniel Vlăsceanu, Partner at Vlăsceanu, Ene & Partners
GENERAL CONSIDERATIONS Several titleholders are preparing to take final investment decisions (‘FIDs’) to develop discoveries both in the shallow and in the deep Black Sea waters; substantial (drilling and re-organizational) efforts have been announced by the only existing Black Sea petroleum producer; in this context, the Romanian legislator initiated a public consultation on a draft law to regulate the petroleum operations of the offshore titleholders (the ‘Draft Law’). The Draft Law intends to regulate a number of aspects that have raised in the last years sensitive legal discussions (e.g. the competent authority to issue the offshore construction permit, easement rights over the adjacent perimeters/state property, crossing the public beach etc). APPLICABILITY
As per the general principles, if adopted, the Draft Law will not apply retroactively: Article 26 para 1 expressly mentions that urbanism permits already obtained will remain in force. Following the same reasoning line, the Well related works, consolidation, maintenance, capital or minor repairs to the offshore platforms that have been already 20
tendered as per the public procurement rules, have been already authorized by the National Agency for Mineral Resources (‘NAMR’) or are under execution stage upon the enactment of the Draft Law will also fall outside the scope of the Draft Law. WORKS AND OFFSHORE WELL RELATED WORKS
Concept The Draft Law distinguishes between: • Works: a term which encompasses geotechnical drilling as well as construction and decommissioning works related to onshore & offshore communication infrastructure, offshore platforms, plants and other equipment, pipelines and access roads; and • Well related works: a term which is restricted to drilling, testing, commissioning and decommissioning as well as any interventions on offshore wells. Both the Works and the Well related works are expressly declared major objectives of public interest, being essential to the national policies on energy security (such a qualification aims at ‘smoothening’ the investors’ path in obtaining administrative approvals for their offshore activities). energyindustryreview.com
OPINION
Urbanism permits for Works and Well related works Compared to the existing situation, there are no changes proposed with respect to Well related works: NAMR remains the competent regulatory body. The NAMR’s consent replaces the construction permit (as expressly mentioned under Art 3 para 2 of the Draft Law). With respect to the Works, the Draft Law specifies that the authorization issued by the Ministry of Energy replaces the construction permit. It is a welcome clarification to simplifyfy a long-lasting issue derived from the missing proper legal framework. Certain derogations are established from the general regime with respect to the urbanism certificates (‘UC’), the approvals, the consents issued for the execution of the Well related works are valid for 36 months with the possibility to extend them for another 24 months (the existing onshore rule: the UC is valid between 6 to 24 months and possibly extended by 12 months). A special reception procedure is to be adopted by Government Decision (within 90 days). Hopefully it will be issued, despite the numerous negative precedents in other industry fields... SPECIFIC ASPECTS
Easement right On the onshore, the land access has been one of the major hurdles for operators. The situation was improved with the 2016 amendments of the Construction Law no 51/1990; yet, there are still plenty of obstacles delaying/ increasing the cost of operations due to permitting & regulatory aspects. Offshore, there is nothing: no legal framework, no precedents, no experience at the authorities’ level; the only existing offshore platforms/pipelines were built prior to OMV Petrom’s privatization from 2004. As such, uncertainty rules… The Draft Law establishes an underground, surface and air easement right over the (public or private) property of the state or of the territorial administrative units. Such easement right must NOT be registered with the land book and it is valid for the entire duration of the operations; the operator only needs to notify its access intention with 30 days in advance (and pay proper compensations). The provisions of the petroleum law regarding access on properties of private owners remain applicable. Performing operations in adjacent blocks Another uncertainty is related to situations when operations could not be performed unless entering the water surfaces allocated to an adjacent block/titleholder. The Draft Law (Article 14) sets forth that if necessary,
the operator may perform petroleum operations on an adjacent block held by another titleholder provided it notified the rightful titleholder and does not negatively affect its’ neighbour’s operations. Tax allowances The Draft Law releases the offshore titleholders from the tax imposed on the extra revenues obtained following the deregulation of the natural gas prices. Derogatory working time Taking into consideration the specificity of the offshore activity, the Draft Law included special provisions supporting employer’s position (and enabling certain derogations from normal working time). LOCAL CONTENT SUPPORTING MEASURES
In line with an international practice, certain provisions have been included to support local content: • Not just the foreign titleholders (as per the Petroleum Law), but also their non-resident subcontractors will have to set-up a Romanian affiliate; • Titleholders must purchase goods and services (without a minimum threshold or/and reference/ calculation method) from Romanian companies having more than 25% Romanian equity participation (Art. 21 of the Draft Law); yet, given the proposed wording , we believe said obligation may be easily eluded; • The titleholders must have minimum one quarter Romanian employees; no reference/obligation is made to/onto the service suppliers/subcontractors. CONCLUSIONS
Black Sea is coming. Not just the Romanian waters are explored, but also the Bulgarian, Turkish and Ukrainian maritime areas attract investors animated by the discoveries on the Romanian shore. Romania needs the Black Sea projects for its security of energy supply. If played smart, we could develop a hub in the area and significant benefits for the local economy could be harvested for a long time (see North Sea, for example). Yet private investors seek predictability and stability. The NAMR changed its president three times in just two months upon mid-2017. The Offshore Safety Authority has a new president since November 2017. Such changes do not play well; but the Draft Law, if adopted in its current form (even with its provisions that could be well enhanced), may represent one of those important clarifying elements facilitating investors’ trust and providing the so-necessary regulatory framework. 21
OPINION
OIL, GAS AND COAL
NEW SUPPORT SCHEMES? Ioan-Corneliu Dinu - Scientific counselour World Energy Council Romanian National Committee
R
emember that in 2010 the global support scheme for the production of energy from renewable sources was worth around 66 billion dollars. In the same year, fossil sources used in energy production, industry, transport etc. used worldwide subsidies of about 775 thousand billion dollars, which may be a true paradox. The economists of the sector blame either an entirely inattentive political approach, or especially the unpredictable power of what more recently we call generically lobbying. Returning to the 66 billion dollars used in support to produce energy, two thirds, i.e. 44 billion, were allocated to renewable sources, and the remaining of 22 billion dollars, i.e. one third of the total amount of 66 billion, were allocated to obtain biofuels. Regarding the amount of 775 thousand billion dollars, it was consumed for the entire oil and gas production chain, so for the so-called fossil sources used to produce energy and not only. Specialists have assessed no more than 100 billion dollars for energy production, the remaining subsidies being used in the entire oil and gas sector, resources currently used in industry, transport etc. Regarding the developed states, state support to produce energy from renewable sources reached around 45 billion euros per year, and the total amount of subsidies from the emerging countries, as well as those actually underdeveloped, reaches the figure of 409 billion euros per year, the amounts obviously varying year after year 22
and their breakdown on states always being different, depending on many unknown factors. Returning to the further predominant use of fossil hydrocarbons to produce energy, the lobby for the development of fossil sources has had many followers during the US election campaign. The Vice-President of ‘Legambiente’ (Italy’s’ Environmental Professional Association) stated on the side-lines of this support: “There are the so-called analysts who say what they say by forgetting that the energy system is already focusing on fossil sources, this only referring to the oil lobby that directly supported Trump; the explanation of electoral support being also found in billions of dollars from oil activities.” On the same line of approach, we would also recall another supporter of fossil sources - Andrea Boraschi, responsible for Greenpeace’s Energy and Climate campaign. In Europe, there is an intensive debate on engine efficiency, along with emissions reductions, to reach a decision that will lead to soft solutions for such pressing issues. We obviously expect, being even required, political decisions regarding the target for 2020! Defining the complex ideas will consider the various energy strategies in certain states/economies, as well as the use of coal for India and China, oil and gas for the U.S. Moreover, Boraschi recalled specialists in the energy sector that renewable sources attract more capital than fossil sources. According to IEA (International Energy Agency), it is expected that by 2020 oil demand will drop by 3.7 energyindustryreview.com
OPINION
million barrels per day, and gas demand - by around 330 billion cubic meters. As far as coal is concerned, demand for this resource will also plunge by 230 million tons, aggregating these declines leading to a decrease by 3.95% in the use of these sources to produce energy at global level. Obviously, by extrapolation, there will also be a drop in CO2 by more than 4.7%, with obvious benefits in terms of improving health-related issues, taking into account the reduction in emissions. According to U.S. National Academy of Sciences, expenses with decrease by USD 120bn per year in the U.S. given the lower pollution, to support the health system, money coming from the large energy producers. For example, Italy spends every year EUR 63bn for transport, purchasing fossil fuels, thus preferring mainly the conventional transport. CO2 are obviously important as well, Italy issuing for free greenhouse gas emission allowances. There are positive examples, among the first being Germany. Specialists in the field indicate mandatory targets on three industrial and transport areas and not only, supporting energy from renewable
Head Office Leobersdorf Austria Office Vienna Austria Office Riyadh Kingdom of Saudi Arabia
sources with state aids, even this means remodelling the power transmission grids, refurbishments and technical adjustments to absorb the quantities of electricity, in parallel with the insistence on solving the energy efficiency problem by means of conclusive investments, one of the three areas I was talking about earlier. There are undoubtedly obstacles in Germany as well, but the strategic perspectives of the country are mandatory. Analysis regarding the various technological solutions in the emerging countries reveals an undeniable fact, that the good practices applied only in one or two European countries matter a little in the ‘battlefield’ with climate change. Maybe a ‘single voice’, European, should be defined for this complex and far from easy battle, in other words applying the measures, approaches, aids in the majority of Member States, so that the proposals of the Conference in Paris are implemented by technological collaboration between the developed countries and those, let’s say, emerging or less developed.
Office Ploies‚ ti Romania TECON Engineering SRL 16 Negru Voda Str. RO-100149 Ploiesti ‚ Tel.: + 40 (344) 401-333 Fax: + 40 (344) 401-334 romania@tecon.eu
www.tecon.eu 23
24
energyindustryreview.com
INTERVIEW
Harald Kraft Romania benefits from a strong upstream industry Harald Kraft is the President of Romanian Petroleum Exploration and Production Companies Association (ROPEPCA) and has over 38 years’ experience in the petroleum industry, upstream, midstream and downstream. He holds a degree and a PhD in Petroleum Engineering both from the University of Clausthal-Zellerfeld, Germany. After joining Wintershall AG Germany he has worked as reservoir engineer domestic and international operations and as head of the acquisition and new ventures group. At Wingas Germany he held the position of head of the logistic department. Harald Kraft moved to Romania in 1997, where he held management positions in oil and gas companies up to the present date. He was Managing Director of WIROM/Wintershall Romania for 8 years and Director of OMV Petrom’s Natural Gas Division for 10 years. Currently, he is the Country Manager of Stratum Energy Romania.
You have given many years of your life to oil and gas industry and you have probably witnessed many achievements and failures over the past period of time. What’s your view on the upstream sector in Romania and on regional level? What about the oil and gas market? It is crucial to understand the important role the upstream industry plays in the Romanian economy. Not only that it helps Romania be to a large extent self-sufficient in terms of liquid and gaseous hydrocarbons, but upstream companies are also an important contributor to the state budget and are offering more than 15,000 secure and well-paid working places. We also have to acknowledge that Romania is having the longest history of all countries in the commercial production of hydrocarbons. First
official recording of commercial oil in 1857, first highpressure gas pipeline 1914… This long history shows its effects until today. The Romanian subsurface is already extensively explored. The period of easy to find oil and gas accumulations is gone. Despite this, Romania is almost selfsufficient with regard to its gas supply, which not least is the merit of the Romanian gas producers. Last year only 11% of our gas was from imports. With regard to oil, Romania is to 33% independent. How many other European economies benefit from such a favourable situation? I am not that sure that this is duly appreciated by the public, and here I like to explicitly include the politics as well. Unfortunately, the perception of the upstream industry is reduced to the ‘cow one can milk’, not considering the positive impact of this industry on the Romanian economy. 25
INTERVIEW
I think the oil market in Romania is not very different from other countries; however, the internal gas market has its peculiarities. I remember the former gas-basket obligation, a unique system found nowhere else. For years the producers have been forced by law to subsidize the residential and district heating sector and still they are forced selling a substantial quota - the political wish is up to 100% - at the centralized market whether producers like it or not. Such paternalism is poison for any investments and is threatening investors. Recently, ROPEPCA celebrated 5 years of activity. The importance of the upstream segment of oil and gas industry for the national economy is overwhelming, as it is the largest contributor to the state budget and also a significant employer. What are the association’s activity highlights and key figures so far and how do you plan to increase its impact on economy?
26
ROPEPCA’s goal was and is to be a trustworthy partner to its stakeholders, - the Romanian state, the authorities, the institutions we work with and the public. For the last five years, we have tried reaching this goal by facilitating communication and establishing functioning and valuable relationships. Let me focus on some figures: During the last 3 years the upstream industry contributed to the state budget with a total of 5.2bn ₏ of direct taxes. Of course, due to the collapse of the international oil price the 2016 turnover and the profit of the companies, and consequently their contribution to the budget, has dropped significantly. Despite this the number of jobs assured by our industry remained stable, numbering around 15,000 employees each year. The onshore sector of Romania is an interesting target especially for small and medium sized companies. Therefore, we have great expectations in the long waited 11th licensing round for petroleum blocks. Many companies are waiting
energyindustryreview.com
INTERVIEW
Romania is almost selfsufficient with regard to its gas supply, which not least is the merit of the Romanian gas producers. Last year only 11% of our gas was from imports. With regard to oil, Romania is to 33% independent.
to invest; however, some already have left the country, tired of the many delays and the fiscal and regulatory uncertainties. The 11th round will become a success, but only if the legislator is providing the fiscal and legal frame motivating such investment and is not threatening potential investors. One never should forget, there is an international competition for investments and money is shy, going to where it finds the best possible zone for its prosperousness.
but has attenuated during the last years due to huge investments in field rehabilitation and modernization of production technologies. With regard to natural gas, the decline rate during the last few years was close to zero. This was not free of charge considering the investments done by the upstream industry: 2014 – € 1.6bn; 2015 – € 1.03bn; 2016 – € 591mn. Again, the oil price collapse showed its effects in 2016 with regard to investments as well.
ROPEPCA has a considerable role in the dialogue with the authorities. What are the results of the association’ positions, which are the major obstacles you face in this regard? The role of ROPEPCA would not be correctly described as being a lobbying organization. Yes, we are participating in policy making, but more we understand our role in having constructive dialogues with our stakeholders and offering our input as industry professionals, but always aiming to achieve a workable balance between differing interests. It would not help defining a benchmark how many interventions were successful and how many were not. If our arguments motivate the authorities to see a pending topic from another perspective as well and to think it over again, I think we did a good job. I hesitate using the word obstacle, but indeed we face challenges. You know as well as I do, what means bureaucracy in Romania and my impression is that authorities became very restrictive using the wiggle room for their decisions they have.
Exploration and production, particularly deep drilling, imply high investment risks and also specialized expertise and newest technologies. We know that investments in mature fields can be expensive, even the gains can be significant for the investors. Now more than ever, with the current oil price environment, there is urgent need to operate oil and gas reserves in a very efficient way to ensure they stay economical. What should companies do to handle this situation? The human factor plays a considerable role in this. The companies have to motivate and train their employees to fight for any barrel of oil and for any cubic meter of gas at the lowest possible costs. However, this never must bring in danger Health Safety and Environment. The technologies are available, but they need to be applied in a prudent way. There are estimates that more than 1bn €/year of investments are necessary just to maintain the status quo. This money need to be earned first!
The association has drawn attention to the most recent evolutions in the oil and gas market and has called for public policies that encourage maintaining oil and gas production in Romania. What is the current decline rate and what are the next steps to manage the natural decline of onshore production? What will happen to the onshore hydrocarbons output in the future? Natural decline of hydrocarbons is inevitable and we have to get accustomed to decreasing production at higher costs. The decline rate of Romanian oil and gas production was dramatic during the nineties,
The redevelopment projects of mature fields are one of oil and gas companies’ major concerns. What is the current situation with respect to these deposits? What new redevelopment projects will be implemented in the next period? Such redevelopments are interesting especially for smaller, flexible upstream companies. We know that an incumbent oil and gas producer in the past has placed several mature fields on the market to be operated by other companies and probably will continue doing so in order to streamline operations. Further details are not known at the moment. 27
INTERVIEW
What support measures do you think should be adopted in order to counteract the effect of the diminishing production share in the overall hydrocarbon consumption? The strategic value of domestic resources should enter more in the focus of the legislator. Bureaucracy is a major burden as well for doing the necessary investments. As example I can mention the lengthy and cumbersome procedure in getting a construction permit. On the World Bank website, one can find an interesting statistic on how long it takes to get the construction permit even for a simple warehouse. Romania ranks with an average of 260 days on place no. 187 of 207 countries analysed. A useful step would be declaring the upstream operation as being in the general interest of Romania as is the case for example the transportation and distribution of electric energy, gas or crude oil.
28
The new tax regime amendments, long awaited by operators in the oil and gas industry, have given rise to countless contradictory debates. What is your point of view on this issue? What are the most important amendments proposed by ROPEPCA in regard to the new law on royalties which will take effect in 2018? We consider that the current tax regime for the upstream industries does not encourage producers to further invest. The new draft law on royalties should take into account all effective tax paid currently by producers, along with royalties, and result into a royalties system that would lead to a fair and bearable taxation for upstream companies. Worth to keep in mind that the percentage level of royalties is fixed in the concession agreements in place as of now and cannot be changed unilaterally by one partner to this contract, i.e. the Romanian state. In this context, ROPEPCA especially is advocating that the reference price
energyindustryreview.com
INTERVIEW
We have great expectations in the long waited 11th licensing round for petroleum blocks. Many companies are waiting to invest; however, some already have left the country, tired of the many delays and the fiscal and regulatory uncertainties. The 11th round will become a success, but only if the legislator is providing the fiscal and legal frame motivating such investment and is not threatening potential investors.
given by the competent authority and being the floor for calculating royalties should represent the real market environment in Romania and not from somewhere else. According to the Deloitte study developed in the spring of 2017 for ROPEPCA, the effective average rate of royalties and other tax for the upstream industry increased from 14% in 2014, to 16.9% at the end of 2015, reaching 17.5% in 2016! This permanent discussion of supplementary tax on hydrocarbon production is not helpful and creates a lot of uncertainty. The over-taxation of domestic natural gas, which recently was increased up to 80% actually results in a higher income to the state budget than the natural gas royalties, and it is not understandable why only the domestic production is subject to this tax and not imports as well. When we are talking about excessive taxation of the upstream industry in Romania we should also mention the intended introduction of a 1% tax of the investment value for the environmental impact assessment permit. The upstream business is a very capital intensive one and this tax will be a real bombshell for all investments. During the Romania Gas Conference 2017 you referred to the negative effects of OUG 64/2016 and excessive taxation in Romania. What are the major challenges of the Romanian natural gas market liberalization? What solutions do you see for these problems? The obligation to sell a certain fraction of the natural production on the centralized market is one of the peculiarities of the Romanian gas market which will not be found elsewhere. By this measure the producers will be blocked from negotiating custom made supply contracts necessary especially for medium to large commercial and industrial consumers. The experience from Western Europe gas exchanges shows, that such platforms predominantly are the playground for traders and not so much for end-consumers. Do we really think that the insertion of intermediaries, i.e. suppliers, between producer and consumer, - here I am referring to the category mentioned above -, will lead to reduced prices? A basic
element of a free market is the freedom of choice, but having only one state controlled gas exchange as monopoly is not a solution and is in contradiction to a free market. Not to be misunderstood, I do not at all question the justification for and the benefit of a centralized market, but on a voluntary basis only. To enforce participation at the centralized market by imposing severe penalties definitely is the wrong way and is opposite to a functioning market economy. If such a centralized market offers attractive products and liquidity, the problem of its acceptance will immediately be resolved by itself. How do you assess the evolutions in the region regarding the development of the natural gas market, within the context of new priority measures from the European Commission for the EU members, including Romania (securing natural gas supply, interconnections stand, the reverse flow at the cross-border interconnections, transparency regarding reports on gas storage capacity, etc.)? Romania is behind with respect to its interconnectivity with neighbouring markets and hopefully will remedy this in the near future. We know that Transgaz, which definitely is doing an excellent job, - this needs to be said and be appreciated-, is actively working on this. The priority measures given to member countries by the European Commission are justified and at the very end will be to the benefit of Romania. The huge reserves of the Romanian Black Sea cannot be developed if Romania remains isolated from other markets. Initiatives to block or overtax the export of Romanian gas is seen very critical by ROPEPCA and contradicts the idea of the European Union, where we all benefit from. When you are asking me about the transparency on reports on gas storage and gas transportation, I do not see a big deficit. What are ROPEPCA’s priorities for the future? Of course, the eleventh licensing round is one of our highest priorities but I would like to emphasize also some of our other main topics. Among these, the most 29
INTERVIEW
important are the new regulatory framework for the royalties system, here especially the methodology for calculating natural gas and oil reference prices. The legal and regulatory framework surrounding the natural gas market liberalization definitely will keep us busy. We are also interested to bring our expertise in the amendments of the Petroleum Law which are under discussion. Once again, we offer our cooperation in all these matters and focus on being a trustworthy and professional partner to our stakeholders. Oil companies have three ways of remaining profitable: reduce cost; manage portfolio; or go into adjacent markets, such as investing in renewables, stated recently Tassos Vlassopoulos, Global Marketing Director of Baker Hughes, a GE Company. In your opinion, how will the international energy market change, given the high energy demand but also the decrease of the EU hydrocarbons reserves? Is renewable energy a solution for the EU economy during this time of crisis? Is it a solution for the future? The resources of hydrocarbons are not endless; this 30
is a known fact. Renewables will gain importance in the future, but in this context and as example let me refer to the hype with electric cars. Where is the infrastructure for charging millions of electric cars, where does the energy come from? From shut down nuclear power plants, or from blocked projects of coal fired or hydro power plants for environmental reasons? It will take definitely a while until hydrocarbons will lose their incumbent position in the energy mix. Investing in renewable would mean diversification for the upstream industry. Diversification or focusing on core activity in the past always was discussed controversial. Sometimes diversification was en vogue, to be later replaced by focussing on core activity and vice versa. Personally, I am of the opinion that focusing on the core activity is the appropriate solution, by applying strong cost control and optimized portfolio management. Any migration should be handled responsibly: stable growth of the petroleum industry is favourable ground and valuable resource for the technological innovation, which would allow a smooth transition to the non-fossil energy in the future. energyindustryreview.com
Choose the Flowserve SIHI equipment! Customer Trust Remains the Focus of Our Commitment Using our resources and collective experience, we support our customers, at global level, to exceed their business targets. We fulfil this promise by the careful way in which we listen to customer requests and subsequently by delivering the products and services they need. Our strengths • A business model underscoring the advantages for customers, such as: predictable/low maintenance costs and increased reliability. • The large number of customers, proof of increased productivity, optimization of equipment maintenance and repair costs, contributing to obtaining competitive positions in their markets. • We expand technological innovations whenever possible, with the aim to improve our ability to meet the needs of our customers. • We are open to new challenges and potential projects, which we will approach with the particularly successful team of Flowserve SIHI. • Starting on 14th April 2017, the name of our company has changed from Sterling Fluid Systems (Romania) to Flowserve SIHI Romania - the only official entity of Flowserve SIHI Corporation for Romania and Moldova.
Flowserve SIHI România SRL 105-107 Mihai Eminescu RO-020074 Bucharest Tel.: + 40 21 211 76 78 Fax: + 40 21 210 82 87 E-mail: office@sterlingsihi.ro www.flowserve.com WIK Pump - according to API 610 (BB5) Standard
31
OIL & GAS
UNANIMOUS DECISION
OPEC keeps in 2018 the agreement to cut oil output
T
he cartel of the oil exporting countries (OPEC) and other major producers, including Russia, have decided to extend by nine months the agreement to cut oil production, which would have expired in March 2018. According to the international media, the agreement aimed at stabilizing the international price of the oil barrel would remain valid throughout the year 2018. The OPEC meeting, held in late November last year in Vienna, decided at the request of Russia that a cut in production could cease earlier if the oil market is overheating. According to Oman’s Oil Minister Mohammed Bin Hamad Al Rumhy, quoted by the Russian media, the signatories of the agreement decided to meet regularly, every two months, to analyse the effects of the agreement on the oil market. Irrespective of the decision to be made within the future meetings, the 32
decision to cease the agreement will not be a sudden one. “When we reach the conclusion that the agreement is no longer necessary, we will do it gradually (the termination - Ed.) ... to make sure that we do not shock the market”, Saudi Energy Minister Khalid Al-Falih stated, according to the international media.
USD 60/bbl. According to Kiyoshi Homma, director at the Japanese oil refining company Idemitsu Kosan, oil prices are likely to hover around current levels till next June, when stockpiles would be optimized through continued production cuts, but the market will likely tighten after that, the international media quotes.
A POSSIBLE REVIEW NEXT SUMMER
THE ETERNAL RUSSIAN-AMERICAN EQUATION
In turn, the oil ministers of Iraq, Iran and Angola, have declared their preference for a possible review of the agreement within the OPEC meeting in June 2018, but only in the event where the supply is limited in relation to demand. The main parameters that could justify a review of the agreement are either a change in market structure, or a change in prices - Iraqi Oil Minister Jabar Al-Luaibi believes, supported by Iran’s Minister Bijan Zanganeh, who declared himself satisfied with an oil price of
Increase in Brent oil prices to more than USD 60/bbl and extending the output cut period could advantage the private U.S. shale oil producers, according to Russian representatives. Even if including the Russian Federation would gain from higher prices, Russia wouldn’t be interested to the same extent in an increase in oil prices as the OPEC leader Saudi Arabia would be, which plans to list on the stock exchange its national state-owned company Aramco in 2018, international analysts believe. energyindustryreview.com
Honor sAfety responsiBility Achievement qUality 10
20
30
40
50
60
70
80
90
100
110
120
130
130
Plant construction
130
120
Pipeline construction
120
110
Civil works projects
110
100
EPCC projects
100
90
Drilling projects
90
www.habau.com www.pipelinesystems.de
80
70
60
50
40
30
20
80
70
Sinaii Street, â„– 3, Floor 1-3 Ploiesti, Prahova, 100357 ROMANIA
60
50
40
Phone: +40 244 595940 +40 244 406616 +40 244 406621 Fax: +40 244 595942 E-mail: office@habau.ro
30
20
10
10 10
20
30
40
50
60
70
80
90
100
110
120
130 33
OIL & GAS
BSOG to receive additional investment from EBRD
B
lack Sea Oil & Gas SRL (BSOG), currently backed by The Carlyle Group, recently announced that the European Bank for Reconstruction and Development (EBRD) has become a minority shareholder in the company. EBRD will receive one board seat as part of the investment. According to a press release issued by the company, the transaction marks a significant milestone for BSOG as it approaches Final Investment Decision in the Midia Gas Development project (MGD). MGD will consist of five offshore production wells, a subsea gas production system, an offshore production platform, a 126 km offshore and onshore gas transmission pipeline and an onshore gas treatment plant. 34
“We are excited to welcome EBRD as a fellow shareholder and to working together to address the challenges of taking BSOG to first gas in the coming years. With its strong market standing and long experience in the region, we welcome EBRD as a partner who shares our view of the importance of the MGD to the development of the Romanian Black Sea in particular and European energy and infrastructure activities more broadly,” Marcel van Poecke, Head of Carlyle International Energy Partners, said. Matteo Patrone, EBRD Regional Director for Romania and Bulgaria, added: “With this landmark equity transaction, our intention is to support the development of the private upstream oil and gas company in Romania. We are also committed to providing assistance to the Romanian government in further improving the country’s legal and regulatory framework for offshore oil and
gas operations and building regulatory capacity for the whole industry.” BSOG is a Romanian-based independent oil and gas company, targeting exploration and development of conventional oil & gas resources. The company’s current portfolio is made up of XV Midia Shallow Block and XIII Pelican Block concession in the Romanian Black Sea where it is the operator and holds a 65% interest. The company is looking to fulfil its mandate of developing its existing discoveries (Ana and Doina) in the Black Sea, undertaking further exploration and appraisal activities in the Black Sea and pursuing further opportunities in Romania as well as in the region. The EBRD is a multilateral bank that promotes the development of the private sector and entrepreneurial initiative in 37 economies across three continents. The Bank is owned by 66 countries as well as the EU and the EIB. EBRD investments are aimed at making the economies in its regions competitive, inclusive, well-governed, green, resilient and integrated. The Carlyle Group (NASDAQ: CG) is a global alternative asset manager with USD170 billion of assets under management across 299 investment vehicles as of June 30, 2017. Carlyle’s purpose is to invest wisely and create value on behalf of its investors, many of whom are public pensions. Carlyle invests across four segments – Corporate Private Equity, Real Assets, Global Market Strategies and Investment Solutions – in Africa, Asia, Australia, Europe, the Middle East, North America and South America. Carlyle has expertise in various industries, including: aerospace, defence & government services, consumer & retail, energy, financial services, healthcare, industrial, real estate, technology & business services, telecommunications & media and transportation. The Carlyle Group employs more than 1,550 people in 31 offices across six continents. energyindustryreview.com
OIL & GAS
Increasing production rates Our electro-hydraulic drive system for crude oil pumps provide you with an opportunity to improve efficiency and save energy
Oil & Gas Production - energy efficient operations in a compact solution Crude oil and natural gas are the most important energy sources in our modern world. Many oil companies complement their traditional mechanical technology with modern electrohydraulic systems to increase availability as well as production rate. There is a demand for technical solutions that offer reliable, clean, economic and energy-efficient oil production. The electro hydraulic downhole pump drive R7 from Bosch Rexroth meets all these requirements. The R7 design is based on a hydraulic cylinder mounted directly on the well head tubing and a hydraulic power unit. Bosch Rexroth also provides perfectly matched electro-hydraulic drive systems for the complete range of progressing cavity pumps (PCP).
PCP pump head drives – features • • • • •
Reliable motors, with field-proven dependability Compact mounting, with SAE standard mounting flanges and shafts High efficiency, minimizes heat Long field service life Quiet solution – AA2FM motor noise levels consistently rank amongst the lowest
R7 electrohydraulic downhole pump drive – features • • • •
Simple installation thanks to compact design Overload protection Improved efficiency due to potential for energy recovery and energy storage Remote management of parameters via control center for increased crude oil production
Bosch Rexroth Sales 2 Aurel Vlaicu st. 515400 Blaj Romania Tel. 004 0258 807 872 www.boschrexroth.ro 35
IoT-based Well Surveillance solution
S
Photos: Siemens
iemens recently announced a scalable, end-toend IoT solution, designed to help oil and gas companies optimize production and reduce costs through connected systems, automation, and analytics at the edge. Developed in collaboration with Intel’s Industrial IoT Group, Siemens IoT Well Surveillance was showcased at the Abu Dhabi International Petroleum Exhibition & Conference (ADIPEC), from November 13 to 16, in Abu Dhabi. According to Siemens representatives, this innovative solution offers companies across the oil and gas industry a cost-efficient solution to link distributed assets into an integrated network with minimal effort, while simultaneously providing a high level of automation. DECLINING REVENUES DEMAND NEW APPROACHES Customized User Interfaces based on Open Standards enable Efficient Interaction and Maintenance
36
In a sector beleaguered by falling prices, Siemens IoT Well Surveillance will allow energy companies to acquire the cost benefits of Digitization. Oil and gas prices have dropped by 50 percent since 2014 and companies are looking to technology for the business transformation that will increase efficiency and optimize operations. Oil field facilities and assets are typically a significant distance apart and often only partially integrated into automation systems. This makes data capture for central storage and analysis difficult and limits operational visibility. energyindustryreview.com
OIL & GAS
Siemens IoT Well Surveillance lets companies connect and integrate data from previously unconnected assets in a cost-efficient manner - enabling comprehensive condition monitoring, predictive maintenance, and reduced facility downtime.
an industry undertaking enormous efforts to ensure continued profitability in the face of low oil prices. By using Digitalization and innovative technologies already successful in other industries, it’s also possible to improve both economy and reliability,” he added.
SMART DATA, CONDITION MONITORING, AND ANALYTICS AT THE EDGE Siemens IoT Well Surveillance addresses field operation and oilfield artificial lift control. The solution uses existing sensors and Siemens’ Simocode motor management system as key inputs for edge data analytics. The edge computing device, an Intel-powered Siemens Nanobox, performs advanced analytics and soft sensing on this data, calculating pump conditions from it, triggering alerts, and optimizing the production. Performing these calculations at the pump enables independent operation on the well. For further processing and field analytics the information is sent to a central system such as SCADA or an IoT platform. Dynagraph and alert functions with video integration are available for well site personnel via a fully interactive web portal. The solution is tightly integrated with the Siemens MindSphere IoT platform, with a seamless connection between the production facility and applications for advanced analytics of multiple wells. Overall benefits of Siemens IoT Well Surveillance include increased asset awareness, operational efficiency, and increased revenue from production optimization. “Siemens IoT Well Surveillance optimizes oil production and works with the utmost energy efficiency,” says Uwe Tröger, Siemens Head of Global Oil & Gas Onshore and Senior Executive VP of the Process Industries and Drives (PD) and the Digital Factory (DF) Divisions in the Middle East. “This enables costs to be driven down in
INTEL’S TECHNOLOGY COLLABORATION
Intel collaborated with Siemens in the development of Siemens IoT Well Surveillance. Both Intel technologies and hardware are featured in the solution, including an Intel® Atom™ processor-powered Siemens Nanobox gateway and an Intel-based wireless access point. The Intel® Core™ i5 processor-powered ruggedized tablet is used for onsite visualization of up to six months of data and for data capture at the well. Intel also collaborated on the edge software. “Siemens’ innovative IoT solution for artificial lift monitoring, analytics, and control, based on scalable Intel IoT technology, demonstrates the value of edge analytics and soft sensing for well optimization and control, while appreciably lowering the total cost of ownership,” says Christine Boles, General Manager of the Industrial & Energy Solutions Division in Intel’s Internet of Things Group. “Together, Intel and Siemens are helping transform the world of oil field automation and enabling companies to succeed in a challenging market.” OMV PILOT DEPLOYMENT
OMV, a Vienna-based integrated oil and gas company, has been piloting the Siemens IoT Well Surveillance solution at an OMV oil field since April 2017. An operator of several thousand beam pump stripper wells, OMV is highly encouraged by the early pilot results which have enabled production optimization, early production loss identification and deferment, maintenance optimization,
and field personnel relief. “The Siemens solution enables complete asset awareness at reasonable cost for wells with low production, such as stripper wells,” says OMV Saša Blažeković, Team Leader Production Support. The mineral oil corporation OMV operates several hundred horsehead pumps in Austria. The solution presented by Siemens and its development partners enables the complete integration of production systems of this kind into the automation environment. Global commercial release of Siemens IoT Well Surveillance is scheduled for early 2018. Siemens Austria is one of the leading technology companies of the country. In total around 10,200 employees work for Siemens in Austria. Sales in the 2016 fiscal year amounted to 3.3 billion euros. The business activities focus on the areas electrification, automation and digitalization. In essence this includes systems and services for power generation, transmission and distribution as well as energy efficient products and solutions for production, transportation and building technologies and technologies for high-quality and integrated healthcare. Automation technologies, software and data analytics play a major role in these areas. With its six plants, globally active competence centres and regional expertise in every single Federal Province, Siemens Austria significantly contributes to the local value add. With around 10,500 suppliers – roughly 6,700 of these are based in Austria – the purchasing volume of the Siemens AG Österreich from outside suppliers itself amounted to more than 1 billion euros in the past fiscal year. Siemens Austria not only holds the business responsibility for the local market, but also for 18 additional countries in the region Central and Eastern Europe as well as for Israel. 37
OIL & GAS
First national trial of NB-IoT technology on a commercial network
T
he two companies tested NBIoT technology on equipment located in the proximity of producing wells, in isolated areas, without cable internet access and without GSM coverage. “This is an absolute premiere for Romania, both for the telecommunications market and for other industries relevant for the national economy, such as oil and gas, which will find tremendous benefits in using this technology. More efficient costs, permanent and real-time monitoring and control of the activity in full security, lower impact on environment are only several of these benefits for businesses. With the help of NB-IoT, we will be able to connect millions of devices with very small requirements regarding costs and power consumption. It’s a success story for both Vodafone Romania and OMV Petrom”, stated Valeriu Nistor, Director Enterprise Business Unit, Vodafone Romania. “Technology and innovation are important strategic vectors in OMV Petrom’s 2021+ Strategy. As early as 2009, we started projects for automation and digitalization of oil fields. We managed to implement automation technologies at 4,200 wells, out of a 38
total of approximately 8.100 active wells, however for wells located in isolated areas, with no GSM coverage, data communication is a challenge. We continue automation and digitalization of wells and facilities; by 2020 over 70% of our wells will be automated and able to be monitored remotely”, says Peter Zeilinger, member of OMV Petrom Board responsible for Upstream. The trials were conducted both in lab conditions, as well as on the field, and they successfully tested the connectivity of specialized equipment used in the oil and gas industry to OMV Petrom central datacentre through an over-the-air commercial network. NB-IoT is an industrial grade Low Power Wide Area (LPWA) network layer that will connect millions of objects - from sensors, meters, cars and appliances up to oil, gas and water pipes - and will significantly widen the existing range of IoT solutions. This technology has high applicability potential for object to object communication, both smart home related, as well as development of new applications for different industries. NB-IoT is designed to connect devices in locations difficult to reach with the existing radio technologies,
Photo: OMV Petrom
Vodafone Romania and OMV Petrom successfully tested usage of the standardised NarrowBand-Internet of Things (NB-IoT) technology in the oil and gas industry.
which have low power consumption requirements and that have been too expensive to connect previously. Importantly, NB-IoT also offers enterprises the reliability and safeguards they need as it operates in licensed spectrum and provides the same levels of security as 4G. The NB-IoT specification was finalised as a global standard by 3rd Generation Partnership Project (3GPP) in June 2016 and Vodafone Group was the first in the world to launch NB-IoT in January 2017, in Spain. NB-IoT has broad support within the mobile industry globally, including in China and North America, from 44 mobile operators, 28 technology vendors and over 550 mobile IoT innovators. energyindustryreview.com
More than air. Solutions and innovations. - Fixed speed rotary screw compressors - Va Variable speed rotary screw compressors - Fixed speed oil-free compressors - Variable speed oil-free compressors - Centrifugal oil-free compressors - High pressure compressors - Blower Blowers and low pressure compressors - Adsorbtion dryers - Refrigeration dryers - Filters - Receivers - Pneumatical tools - Winches and hoists - Accessories and controls - Turn-key projects - Service and aftermarket
IRCAT- CO Bucharest Air Solutions Ingersoll-Rand Bucharest no. 10 street, Ciorogarla, Ilfov (A1 Highway, km 14) Tel: +40 21 317 01 90 Fax: +40 21 317 01 96 E-mail: office@ircat.ro www.ircat.ro www.compresoare.ro
39
27
YEARS OF CONPET
Over 117 years of transport via pipelines
C
ONPET S.A., the operator of the National Transport System of crude oil via pipelines, is a strategic company for the national energy industry, representative for the Romanian capital market, being included in 7 out of the 9 indices of the Bucharest Stock Exchange. 22nd of January is an anniversary moment for CONPET, marking over 117 years of existence of crude oil transport via pipelines in Romania and 27 years since the company’s setup. After more than one century of activity, CONPET, the continuer of the first crude oil carrier, is now a modern and performant company, a successful player on the capital market, operating in a sector of most importance for the national economy – the energy sector, together with the largest companies in the field of natural gas or electricity, in a 40
competitive business environment where you can reach the top only by strategic vision and professionalism. CONPET is a story of success on the Romanian capital market and in the national energy sector. Therefore, the company’s future major goal is to turn CONPET into a player of regional and European interest. This target falls within the energy strategy line of the European Union and, implicitly, of Romania, focused on developing an energy market completely integrated and competitive, by interconnecting the national transport systems, here included the national oil transport system, with the European networks. There is a viable solution for the interconnection of the crude oil national transport network with the European system, namely the Pan European Oil Pipeline – PEOP project, which aims the construction of an oil pipeline to connect the oil
terminal from Constanța to the one from Trieste – Italy, offering access for the crude oil coming from the Caspian Sea to the European markets. PEOP project is a transport alternative also in case of a blockage of the crude oil supply at the Black Sea. It comes as a response to the need of supporting the strategic objectives of the European Union and NATO, for the security of the energy supply and balanced development of the energy transport routes. The crude oil transport via pipelines stands as a vital resource for the European economy also for the following decades, has a strategic importance and must become an axis on which Romania must enlist with determination and solid arguments. TRADITION, SOUL, ENERGY! These are the three pillars that represent the company’s foundation, the three significant particular values that define CONPET! energyindustryreview.com
41
OIL & GAS
Managing hot surface ignition temperatures for trace heating in explosive atmospheres Designing high temperature electric heat tracing systems in hazardous areas can be a difficult challenge, especially when process temperatures approach the area classification limit. This restricts the allowable temperature differential between what is heated and the surface temperature of the heaters. Mineral Insulated (MI) heat
42
tracing technology has been used for over 100 years. MI cables have proven to be robust and reliable when used to operate as a series electrical heating circuit. Unlike self-regulating or powerlimiting cables, MI heating cables are supplied in fixed lengths, so determining and ordering the correct cable length is critical.
In many cases, designs utilizing Mineral Insulated (MI) trace heaters and conventional temperature controllers use an abundance of heater to the point where it becomes nearly impossible to install. Recent advancements in trace heater designs, engineering design software, and controller technologies have notably improved
energyindustryreview.com
OIL & GAS
the options available to heat tracing designers for these more difficult applications. The resulting benefits include fewer trace heater passes per unit length of pipe, lower installation and maintenance costs, and a better match of power output needs to the system heat loss. In many cases, the reduction in trace heater length can be as much as 50% over traditional design approaches. Lastly, the chances of creating designs that are difficult or nearly impossible to install are greatly reduced. Trace heaters and their related application designs must meet numerous national and international standards, with many of these requirements having been recently harmonized under IEC/IEEE 6007930. When used in hazardous area locations (i.e., areas defined as potentially explosive), electrical trace heating systems must comply with an additional operational constraint. This constraint requires that the maximum surface or sheath temperature of the trace heater does not exceed the local maximum temperature classification rating (often referred to as a T-Rating) that is governed by the Auto Ignition Temperature (AIT) of surrounding flammable liquids, gases, or vapours in the area. Traditional methods have been bound by the attributes of the trace heaters. In many cases, this leads to designs that are difficult to install, maintain, and often increases the cost of the overall solution. Recent developments provide alternative methods using recently improved heater constructions and controller algorithms. Used with engineering design software that can accurately predict heater surface temperatures, these options provide the design engineer with improved flexibility in creating solutions, with lower investment cost and lower operational costs.
New MI heater designs Several manufacturers offer a wide range of resistances, heater diameters and sheath materials to help mitigate sheath temperature issues. This broad offering enables the designer to select a trace heater output that more closely matches the heat losses, minimizing high sheath temperature excursions. Larger diameter trace heaters inherently improve the sheath temperature versus watt density profile. A recent Raychem MI trace
heater is monitored and limited, then the heater sheath temperature can be minimized to closely match the heat loss. The use of solidstate relays and high-performance controllers allows modulation of the control output to be managed many times per second, ensuring that the desired effective (average) power delivered to the heater is precisely controlled. New generation controllers have the necessary measurement and computational performance to implement nested control loops, with the outer loop delivering temperature control and the inner loop managing trace heater power.
Advanced design software
heater development that further improves the sheath temperature profile uses the principle of larger diameter and better emissivity.
New control systems with smart adaptive power control The on/off temperature control algorithm used by thermostats and standard controllers operates on the premise that by monitoring pipe temperature, the heaters can be modulated on and off to supply just enough average energy to match the heat loss. These controllers have no way to adjust for the maximum sheath temperature excursions caused by duty cycling. They monitor temperature, turn on or off based on the temperature set point, and may have long cycle times of several minutes or more depending on the application. If, in addition to temperature control, the power delivered to the
In addition to the standard trace heater and application considerations, engineering design software must also reflect these effects due to duty cycle modulation and controller algorithms to ensure accurate prediction of sheath temperatures. Ultimately, Mineral Insulated (MI) heat tracing systems are the ideal choice for applications involving high temperature output requirements or harsh and hazardous environments. Learn more about Raychem MI heat tracing systems here: www.pentairthermal.ro/products/ heating-cables/series-mineralinsulated or contact us at: Pentair Thermal Management Romania 39A Bvd. Bucuresti, 3rd level 100520 Ploiesti, ROMANIA Tel: +40 344 80 21 44 Mob.: +40 722 63 23 54 Fax: +40 344 80 21 41 e-mail: salesRO@pentair.com 43
OIL & GAS
FISCAL PREDICTABILITY VERSUS ATTRACTING FUNDS
SUPPLEMENTARY CHARGE APPLIED TO ENERGY COMPANIES For energy companies, 2018 does not come with very good news. Government has decided to maintain the supplementary charge applied to these companies, despite promises made every year by all the governments that have succeeded at Victoria Palace. A blow is also received by companies that are preparing to extract natural gas from the Black Sea. For them, the Government has decided to apply a supplementary charge of at least 20%, which could turn as a boomerang against consumers. 44
he Government maintains this year the supplementary charge of at least 20% for natural gas to be extracted in Romania and not consumed in the country, according to the Report on the macroeconomic situation for 2018 and its projection for 2019 - 2021 prepared by the Ministry of Finance. “In the field of corporation tax: setting up a supplementary charge on the profit obtained in the field of natural resources. Thus, in terms of profit taxation, a restoration of fairness is represented by the supplementary charge on profits obtained from the extraction of natural resources unprocessed in Romania, of at least 20%,� the quoted document mentions. This measure could be a major obstacle in the way of gas exploitation in the Black Sea, in conditions in which such natural gas resources cannot be entirely consumed in Romania. This tax increases the costs of companies that will extract gas from the Black Sea, representatives of the profile industry claim. On the other energyindustryreview.com
OIL & GAS
hand, if the tax is included in the final selling price of natural gas, it could become unattractive for customers, due to the price. This measure adds to another, equally challenged, which provides that 70% of the national gas production must be traded in Romania, on the OPCOM market. Companies targeted by this measure claim that it prevents them from concluding long-term contracts ensuring a financial stability to support the investment programs. This percentage would later increase up to 100%, depending on Government’s decision. Also, under the State Budget Law, the Executive has decided that the tax applied to companies that carry out natural monopoly activities in the electricity and natural gas sectors will be maintained at least until the end of 2018. Special taxes for the exploitation of natural resources and windfall gains obtained by energy companies from the deregulation of gas prices will also be extended by one year. The monopoly tax is owed by electricity and natural gas transmission operators (Transelectrica and Transgaz), as well as by certain electricity and gas distributors, holders of concession agreements concluded with the Ministry of Economy or with local authorities. Tax rates range between RON 0.1 and RON 0.85/ MWh and apply to income resulting from electricity and natural gas transmission and distribution. The tax was introduced in 2013 and initially was provided to be withdrawn at the end of 2015. Subsequently, Ponta and Grindeanu governments decided to maintain it. As a spending policy, the medium-term measures outlined in the document are aimed at: • providing a sustainable level for wage and pension expenses in the public sector; • directing the available resources to public investments in the following areas: infrastructure, agriculture and rural development, energy and advanced technology; • re-orienting public investment expenditure to achieve a gradual shift from investments entirely funded from national sources to investments cofinanced by European funds; • accelerating the pace of spending of European funds in order to improve the absorption rate; • continuing the financing of state aid schemes during 2018 - 2021, in order to contribute to the creation of new jobs, making investments that use new technologies, obtaining innovative products, services and technologies, with effects on the economic growth and ensuring the macroeconomic stability. 45
Ingersoll Rand Introduces New Sub-Freezing Air Dryerwith Breakthrough Refrigeration Technology Sub-Freezing Air Dryer delivers Class 3 air previously only achieved by desiccant technologies 46
energyindustryreview.com
Ingersoll Rand®, a global leader in compressed air and gas systems and services, has introduced its new breakthrough dryer technology, the Sub-Freezing Air Dryer. By incorporating its 146 years of engineering expertise and heritage, Ingersoll Rand has designed a dryer that is the first of its kind.
For more information on the Sub-Freezing Air Dryer, contact your local authorized distributor IRCAT-CO SRL.
Bucharest no. 10 street, Ciorogarla, Ilfov (A1 Highway, km 14) Tel: +40 21 317 01 90 Fax: +40 21 317 01 96 E-mail: office@ircat.ro www.ircat.ro www.compresoare.ro
The Sub-Freezing Dryer is the world’s first dryer that provides -20 degrees Celsius (-4 degrees Fahrenheit) pressure dew point at 70 percent lower energy costs and 40 percent smaller footprint than that of traditional desiccant dryers. Ingersoll Rand’s new Sub-Freezing Air Dryer is compatible with oil-flooded rotary compressors, oil-free rotary compressors, centrifugal compressors and reciprocating compressors. “The new Sub-Freezing Air Dryer achieves class leading air quality, previously only attainable with far costlier drum or desiccant dryer technology. We have developed new technology that provides our customers with high quality, -20 degrees Celsius dew point air, from a high performance regenerative refrigerant dryer in an efficient and economical package,” said Rolf Paeper, vice president of product management and marketing for Compression Technologies and Services at Ingersoll Rand. “This breakthrough technology provides very dry air without wasting energy or purging compressed air; customers have the full capacity of their compressor.” The Sub-Freezing Dryer supplies a constant ISO Class 3 -20 degrees Celsius (-4 degrees Fahrenheit) pressure dew point air, regardless of changes in demand or ambient temperatures. This allows customers to dependably meet the compressed air needs of their operation. “Whether customer’s needs are general purpose or they are manufacturing critical products such as pharmaceuticals, the
Sub-Freezing Air Dryer delivers the air quality they need,” Paeper said. “The high-efficiency, superior operating cost alternative – Ingersoll Rand’s groundbreaking Sub-Freezing Dryer – provides real customer value.” The Sub-Freezing Dryer has a lower total cost of ownership than traditional regenerative desiccant dryers and has an 80 percent lower maintenance cost than drum dryers. Unlike drum and desiccant dryers, there is no costly periodic desiccant replacement, and with no desiccant required, downstream particulate filtering is not needed.
About Ingersoll Rand
Ingersoll Rand (NYSE:IR) advances the quality of life by creating comfortable, sustainable and efficient environments. Our people and our family of brands — including Club Car®, Ingersoll Rand®, Thermo King® and Trane® — work together to enhance the quality and comfort of air in homes and buildings; transport and protect food and perishables; and increase industrial productivity and efficiency. We are a USD13 billion global business committed to a world of sustainable progress and enduring results. Ingersoll Rand products range from complete compressed air and gas systems and services, to power tools, material handling and fluid management systems. The diverse and innovative products, services and solutions enhance our customers’ energy efficiency, productivity and operations. For more information, visit www.ingersollrand.com or www. ingersollrandproducts.com. 47
OIL & GAS
Transgaz is bidding for
Vestmoldtransgaz Vestmoldtransgaz was put up for privatization by the Government of the Republic of Moldova, at a price of MDL 180mln (around EUR 8.8mln) and with the condition to invest EUR 93mln in the following two years. The authorities in Chişinău argue their decision by the need to accelerate works at the construction of Ungheni - Chişinău pipeline and to facilitate funding for this purpose.
R
omania’s gas transmission operator Transgaz will establish in the Republic of Moldova a limited liability company, in order to participate in the privatization of the Moldovan state-owned company Vestmoldtransgaz. Previously, the Government had negotiated the allocation by the European Union, the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) of a funding package of EUR 92mln to build the Ungheni - Chișinău pipeline (EIB and EBRD will each lend EUR 41mln, the EU will provide a grant of EUR 10mln and Moldova’s contribution is EUR 1mln). At the same time, the Government approved and the Parliament voted in July 2017 the draft for the ratification of the agreements with EBRD, EIB 48
and EU for these funds, but the money will no longer be received and the investment will be undertaken and implemented by the company that will buy Vestmoldtransgaz - most likely Transgaz. In the Extraordinary General Meeting of Shareholders (EGMS) of 11 December, Transgaz shareholders approved the establishment, on the territory of the Republic of Moldova, of a limited liability company. Also, in the same meeting, it was approved to empower the Board of Directors of Transgaz to increase the share capital of the limited liability company established on the territory of the Republic of Moldova for the successful participation in the privatization procedure of the stateowned company Vestmoldtransgaz. Thus, the intention of Transgaz to participate in the privatization of Vestmoldtransgaz, announced by the Public Property Agency
of the Republic of Moldova for mid-December 2017, is officially confirmed. Vestmoldtransgaz was established in 2014 to manage the Iaşi - Ungheni gas transmission network and to provide gas transmission services on the territory of the Republic of Moldova. In early September 2017, Moldova’s Ministry of Economy and Infrastructure announced that it had issued for Vestmoldtransgaz the urban planning certificate for the design of construction works at the gas transmission pipeline on Ungheni - Chişinău direction. Romania’s Ministry of Economy announced on 13 October that, together with its counterpart in the Republic of Moldova, would act to supplement the European funding for the Iaşi - Ungheni Chişinău gas pipeline, with EUR 10mln. The Ministry stated at the time that Transgaz, company under its subordination, would open a representative office in the Republic of Moldova to facilitate the completion of the pipeline. energyindustryreview.com
49
OIL & GAS
2017 Petroleum Club Award winners
T
he Petroleum Club Christmas Party that took place at Hanu’ lui Manuc in Bucharest on December 13th, 2017, gathered the top representatives from the oil & gas industry in Romania, honouring a tradition dating back to 2002. The theme of the party was “Phanariote & Levantine”. In his introductory speech, Andrew Costin, the Petroleum Club President, mentioned the most significant achievements of the Petroleum Club in 2017, and thanked the members and partners for their active support that helped the Association represent the oil & gas industry in another difficult year. He also nominated the 10 new members that joined the Club in 2017: UPRUC CTR (Horia Enciu), Solvay (Elena Ionescu), Serinus Energy (Alexandra Damascan), Modular Best (Daniel Voiculeț), EuroGasSystems (Roger Wachter), NEEB (Liviu Vecerzan), Vastrum Transcom (Bogdan Mirică), LMR Drilling (Ernst Fengler), Mazarine Energy (Spencer Coca), Stera Chemicals (Laurențiu Ghiță). The contribution of the sponsors of the Christmas Party, Expert Petroleum, HABAU PPS Pipeline Systems, Modular Plus, NEEB, and Air France KLM, was also acknowledged. Following an initiative started in 2008, Andrew Costin, the Petroleum Cub President, and Costin Neagu, the Executive Director, handed out the annual awards to the 2017 worthy winners. The ‘Oil-person of the Year 2017’ (photo 1) was awarded to Alexandra Damascan Armegioiu, Country Manager Serinus Energy Romania, for her personal contribution to the development of the Moftinu gas field, in Satu-Mare, Romania. Mrs. Simona Petre, Lawyer with Serinus Energy, received the distinction on her behalf. Romgaz was presented with the ‘Company of the Year 2017’ award (photo 2), for the Caragele discovery, the largest onshore gas field discovered over the last 30 years in Romania. The trophy was received by Eugen Sorescu, Director of Exploration Department. The ‘Outstanding Achievement in the Oil & Gas Industry’ (photo 3) was awarded to Amuliu Proca, for his four decades of achievements at Prospecțiuni, his arduous activity at AGIR, and his life-long commitment to the energy industry. 50
1
2
3 energyindustryreview.com
JANUARY’S READING
The developing role of blockchain
P
roduced by the World Energy Council in collaboration with PricewaterhouseCoopers (PwC), this White Paper looks at the potential of Blockchain Technology for the energy sector. Although blockchain is gaining wide-spread acknowledgement and use in the sector, there are still a number of uncertainties surrounding the technology and a combination of technological, regulatory and other practical challenges could stall its growth. Key questions addressed: • What are blockchain’s
opportunities and risks in the energy sector? • What are the latest updates on pilots, use cases and scalability? • What are the regulatory obstacles associated with the implementation of blockchain applications and what are the issues to be addressed? • How will blockchain impact company and state value chain infrastructure related to the energy sector? The paper draws from interviews with companies and organisations actively involved in blockchain projects in the energy industry from
the US, Europe, China, Japan and New Zealand. It is designed to start a dialogue on potential obstacles to the uptake of blockchain and where the technology might be headed. The World Energy Council and PwC plan to continue to keep tabs on blockchain developments and are systematically identifying the best innovators in the game and will work with them to understand their perspective on critical success factors. Progress will be updated regularly, with blockchain featuring in the programme at numerous World Energy Council events, including the 2019 World Energy Congress in Abu Dhabi.
Download the paper: www.worldenergy.org/publications/2017/the-developing-role-of-blockchain 51
CONSTRUCTION
T
he national gas transmission company Transgaz signed on 28 November 2017, in Bucharest, within a ceremony at Victoria Palace, the contracts for the execution of BRUA pipeline, Phase I, of 479km, from Podișor to Recaș. Works were split into three lots, thus signing three contracts. For two lots, the tender was won by two consortia led by Habau PPS Pipeline Systems, company executing civil engineering projects, pipeline construction projects and
EPCC projects focused on the oil and gas industry. For a lot, the tender was won by a consortium led by Inspet Ploiești, company specializing in the construction and maintenance of oil and gas equipment. Inspet is also associate in one of the associations led by Habau PPS Pipeline Systems. According to the contract notice on SEAP, the value of the contracts amounts to RON 1.28bn, excluding VAT. The two mentioned companies have executed before important works for Transgaz, one of them being the
Contract signing ceremony for the natural gas pipeline execution works – Phase 1, of the BRUA Project 52
Photo: gov.ro
Transgaz starts works at BRUA gas pipeline
gas interconnector Giurgiu-Ruse. In this case, works were carried out based on the execution contract signed with the association consisting of Inspet Ploiești, as leader, and Habau PPS Pipeline Systems, as associate. In BRUA case, the tender procedure aimed at awarding the contract for the execution of pipeline works at the project ‘Development on Romania’s territory of the National Gas Transmission System on the corridor Bulgaria - Romania - Hungary - Austria, Podișor - Horia GMS and 3 new compressor stations, Phase I: gas pipeline Podișor - Recaș, km 0 - km 479’. BRUA project is developed in the context of the need for diversification of European countries’ gas supply sources, increasing the security of Romania’s natural gas supply through access to new sources of supply, facilitating market access in Central and South-Eastern Europe to the natural gas resources in the Caspian region. The project will ensure: a bidirectional gas transmission capacity of 1.5 bcm/y to Bulgaria and a transmission capacity of 1.75 bcm/y (Phase I) and 4.4 bcm/y (Phase II) to Hungary. Implementing BRUA project on the territory of Romania is structured
energyindustryreview.com
CONSTRUCTION
Lot 1 Pipeline execution The area of Podișor village: km 0 - km 180, the area of Văleni village, the commune of Zătreni, Vâlcea County. Affected counties Giurgiu, Teleorman, Dâmbovița, Argeș, Olt, Vâlcea. Estimated value Lot 1 = RON 413,442,063, of which the contracting entity will make available for the Contractor materials (pipe and curves), machinery and equipment (valves and insulating joints) worth RON 267,756,230. This lot was won by the association led by Inspet Ploiești. The consortium includes other 5 companies as associates.
Lot 2 Pipeline execution The area of Văleni village, the commune of Zătreni, Vâlcea County: km 180 - km 320, the area of Pui village, Hunedoara County. Affected counties Vâlcea, Gorj, Hunedoara. Estimated value Lot 2 = RON 412,081,863, of which the contracting entity will make available for the Contractor materials (pipe and curves), machinery and equipment (valves and insulating joints) worth RON 247,072,919. This lot was won by a consortium led by Habau PPS Pipeline Systems, with 9 associates, including Inspet Ploiești.
Lot 3 Pipeline execution The area of Pui village, Hunedoara County: km 320 - km 479, the area of Recaș town, Timiș County. Affected counties Hunedoara, Caraș-Severin, Timiș. Estimated value Lot 3 = RON 453,091,194, of which the contracting entity will make available for the Contractor materials (pipe and curves), machinery and equipment (valves and insulating joints) worth RON 262,517,361. This lot was won by an association led by Habau PPS Pipeline Systems, with 5 associates.
in two phases, as follows: Phase I: Podișor - Recaș gas transmission pipeline, with a length of approximately 479km, with a diameter of 32” (Dn 800) and design pressure of 63 bar; Podișor GCS, Bibești GCS and Jupa GCS, each station being equipped with two compressor units, with the possibility to ensure bidirectional gas flow. Phase II: Recaș - Horia GCS gas transmission pipeline, with a length of approximately 50km, a diameter of 32” (Dn 800) and design pressure of 63 bar; Podișor GCS upgrade, Bibești GCS upgrade and Jupa GCS upgrade, whereby each station will be equipped with one more compressor unit; Horia GCS upgrade. Transgaz is currently implementing Phase I of the project, benefiting from financial support from the European Union. “The BRUA project has been a priority for Mihai Tudose Cabinet ever since its investiture, as it is of particular importance to Romania’s energy security and independence. As regards the stage of the project, the Energy Ministry issued on 27 February 2017 the construction permit and procedures to award the works were subsequently unfolded, for the design and for the stations equipment. We are witnessing today the signing of contracts for the execution works, for the first phase of the natural gas pipeline of 479 kilometres, between Podişor and Recaş localities, and three compressor stations located in Podişor, Bibeşti and Jupa, Romania. The total investment is estimated at 480 million euros, of which approximately 180 million are non-reimbursable funds” - Deputy Prime Minister Ion-Marcel Ciolacu highlighted on the occasion of signing the documents. Approximately 4,000 new jobs are estimated to be created under this project, while demand for consumer goods will increase following new jobs creation, additional revenues – attracted to state budget, gas resources – diversified and Romania’s energy security will be improved, other investments and related businesses will be boosted, the local economy is stimulated to develop by increasing the value of the land near the new pipeline, and increasing the number of households, economic agents that will connect to the natural gas network. Government has several other energy priorities as set out in the government program and the new energy strategy 2016 - 2030, such as protecting vulnerable household consumers, reducing energy poverty, and fully regulating gas purchase prices. 53
Photo: FCC
CONSTRUCTION
FCC Group to modernise the Glina wastewater treatment plant 54
energyindustryreview.com
CONSTRUCTION
The enlargement and improvement of the WWTP represents a significant technical challenge because it will be carried out while the current installations continue to operate. The work includes reforming the biological reaction lines, adapting 48 secondary clarifiers, building 24 new ones and the reconversion of the sludge line. Suez will build a plant for the re-use of the sludge from the WWTP with a treatment capacity of 173 tonnes of dry material daily. This plant will significantly reduce the total volume of sludge produced in the WWTP, using incineration technology and a process for recovering the energy generated as part of the electricity consumed in the process. UNDERTAKING PROJECTS IN EUROPE
The city of Bucharest has chosen a consortium of Aqualia, FCC Construcción and Suez to modernise and enlarge the Glina wastewater treatment plant (WWTP) for a total value of EUR 113 million. The plant, which will serve 2.4 million inhabitants, represents the largest public-sector water contract awarded in Europe in 2017. Financed by European cohesion funds, the project is scheduled for commissioning at the end of 2019.
As well as holding a leading position in the domestic market, Aqualia is currently working on various projects across the full water cycle in European countries such as Italy, Poland, Portugal and Romania, where it built the WWTPs in Agnita, Dumbrăveni and Zimnicea. These projects are helping the country to reach the environmental objectives set by the Framework Water Directive and to approach the Sustainable Development Goals set by the United Nations for 2030. The projects currently being undertaken by FCC’s infrastructure area in Romania include the building of the superstructure and railway electrification, architecture and installations in tunnels and stations on Line 5 Magistrala of the Bucharest Metro. This project involves a section 6.1 km long with nine stations between Râul Doamnei and Eroilor/ Opera and a section of 0.9 km connecting another station/depot and the line depot. FCC Construcción was recently awarded three new railway sections forming part of the project to
rehabilitate and modernise the railway line in the Pan-European transport corridor which crosses Romania. These sections are the continuation of other sections which FCC Construcción is currently undertaking, Sighișoara - Ațel and Ațel - Micăsasa. FCC Construcción has more than 12 years’ experience in Romania and is one of the most notable actors in the construction of transport infrastructure. AMONG THE WORLD LEADERS
Aqualia is FCC’s water management company, one of the leading public services groups in Europe. The company is the third private water company in Europe and the seventh in the world, according to the latest ranking of the specialised publication Global Water Intelligence (GWI), and it serves 22.5 million users. It currently provides water management services in 1,100 municipalities in 22 countries: Spain, Italy, Portugal, the Czech Republic, Poland, Romania, Montenegro, Serbia, Bosnia, Mexico, Chile, Uruguay, Colombia, Ecuador, Panama, Algeria, Egypt, Tunisia, the United Arab Emirates, Saudi Arabia, Qatar and Oman. In the 2016 financial year, the company had a turnover of EUR 1,010 million with a business portfolio of nearly EUR 15,000 million. FCC Group’s infrastructure area undertakes the engineering and construction of civil engineering work (roads, railways, airports, water works, marine works, tunnels, bridges) and building projects (residential and non-residential - hospitals, football stadiums, museums, offices). It also has proven experience in the develop ment of concession projects, as well as companies dedicated to the industrial and energy sectors, grouped under the single FCC Industrial brand. 55
CONSTRUCTION
Europe’s largest bio waste digestion plant Six new orders for STRABAG in three countries: The recent international success of its patented LARAN plug flow digester has helped the environmental division of STRABAG SE to further expand its good market position in the segment of continuous dry digestion of waste residues. This segment is led by the Dresden-based Plant Engineering Business Unit of STRABAG Umwelttechnik GmbH.
Photo: STRABAG
S
TRABAG was recently hired by Dutch company N.V. HVC (Alkmaar) to expand its bio waste digestion plant in Middenmeer by adding a fourth fermenter. The increased capacity to about 110,000 tons per year will make this Europe’s largest bio waste digestion plant. STRABAG Umwelttechnik had already completed the original dry digestion plant with three digesters that went into operation six years ago. GROWTH IN FRANCE AND ITALY
The bio waste digestion plant in Middenmeer is being expanded with the addition of a fourth LARAN plug flow digester. 56
In France, STRABAG was awarded two contracts for biogas plants with LARAN plug flow digesters in
just a short amount of time. BGB Loiret, operated by ENGIE, awarded STRABAG Umwelttechnik the contract for biogas generation and digestion residue treatment for its biogas plant in Pithiviers. And in Arcis sur Aube, the plant engineering team from Dresden is working on the upstream and downstream peripheral plant technology as well a large LARAN plug flow digester with a reactor volume of 2,500 m3 for the treatment of up to 42,500 tons a year for a project company of local agricultural cooperative SCARA. Together with the two biogas plants already under construction in Pellefigue and Le Neubourg, which are also being realised using energyindustryreview.com
CONSTRUCTION
dry digestion in LARAN digesters, these new orders help to strengthen STRABAG’s position on the French market. In Italy, the patented dry digestion technology is also putting STRABAG Umwelttechnik on a growth path. The company is currently handling three orders under a technology partnership with Bozen-based Atzwanger AG, with STRABAG delivering the full range of technology and equipment for the plug flow digesters. ROBUST AND COMPACT FERMENTER
The dry digestion process of STRABAG Umwelttechnik, with more than 15 years of proven track record, is based on a horizontal plug flow through a horizontal vessel (LARAN® plug flow digester) with exclusively local mixing of the substrate by way of agitators. The digester is characterised by a compact design and robust construction and can either be cast in situ or made from prefabricated concrete elements. In addition to the treatment of richly structured wastes with high dry matter content, such as organic waste, green waste or household waste, this process is above all suitable for the monoor co-digestion of richly structured energy crops or agricultural waste products. STRABAG SE is a European-based technology group for construction services, a leader in innovation and financial strength. Its services span all areas of the construction industry and cover the entire construction value chain. With approximately 74,040 employees, STRABAG posts an output volume of around EUR 14.04 billion in 2012. From its core markets of Austria and Germany, STRABAG, via its numerous subsidiaries, is present in all countries of Eastern and South-East Europe, in selected
markets in Western Europe, on the Arabian Peninsula, as well as in Canada, Chile, China and India. STRABAG generates approximately 80% of its construction output in markets in which it holds one of the top three positions. These include the Czech Republic, Hungary, Slovakia and Poland. STRABAG has been active on the Romanian market since 1991 and established its office in Bucharest in 1992. Meanwhile, the group has subsidiaries in all regions of Romania relevant to the market. The company is operating in all construction sectors, especially in Transportation Infrastructures and Building Construction & Civil Engineering segments as well as in environmental construction projects. In the field of Transportation Infrastructures, especially the rehabilitation of national, regional and local roads is carried out. Due to the experience of STRABAG, motorways, expressways as well as the modernization, expansion and new construction of railway and rail facilities are offered. Furthermore, STRABAG operates successfully in the areas of hydraulic engineering and canal construction as well as redevelopment of supply lines. The construction of outdoor facilities, parking spaces, pavements and sport grounds are also part of the field of activity of STRABAG. The construction of office, residential and shopping facilities as well as the delivery of concrete foundations for wind farms and maintenance work in refinery plants are counted among the projects of the Building Construction segment. The activities of Civil Engineering comprise the construction of waste water treatment systems, refuse sorting plants, composting plants and hydroelectric power plants as well as the development and modernization of urban waste water systems.
TURNKEY SOLUTIONS FOR SITE ORGANISATION
The most cost effective MODULAR SPACE SOLUTIONS - for RENT Complete functional site organisation with shortest delivery time • complete functional office buildings (furniture & accessories) • data-net & utilities (internet -, data -, IT solutions, phone,
fresh & sewage water supply, waste empty, generators) • accommodation on site (sleeping room equipped units) • hygiene & confort ( sanitary units, lockers & eco toilets) • fencing & security ( mobile fence, security hut,
manned security 24/24, alarm systems & video surveillance) • storage solutions (lighted storage units with shelfs
and secure lock) • on site rental services (telehandler, crane, nacelle,
light towers) • EHS solutions ( fire extinguisher, first aid kit, FPE kit,
lighted signs, EHS signs) • design and consulting services
No. 30 Turda Street 550052 Sibiu, Sibiu County Tel: 0269.224.555 Fax: 0269.253.201
No. 4 Bucharest Ring Road 077125 Magurele, Ilfov County Tel: 021.457.44.55 Fax: 021.457.46.53
57
ESD SERIES
Energy-savings as standard
Future-ready and even more efficient: Kaeser’s new ESD series compressors provide higher flow rates and feature IE4 motors for exceptional energy cost savings. 58
energyindustryreview.com
Future-ready with IE4 motors: ESD series rotary screw compressors from Kaeser are now equipped as standard with energy-saving motors and high-efficiency Sigma airends. The prime benefits: even lower energy consumption for significant energy cost savings.
T
he latest generation ESD series rotary screw compressors consume up to 8 percent less energy than previous models, yet deliver 6.5 percent higher flow rates. Numerous optimisation measures, such as further-improved Sigma Profile airends and the use of IE4 motors, significantly improve the overall energy profile. With drive powers of 200 and 250 kW, these highly efficient compressors produce flow rates from 8.6 to 44.5 m³/min and are designed for pressures up to 15 bar. The exceptional performance of ESD series compressors is due in large part to Kaeser’s refined technical concept. At the heart of every ESD system lies a flow-optimised rotary screw airend with energy-saving Sigma Profile rotors that allows ESD compressors to set the new standard when it comes to specific power. The use of IE4 Premium Efficiency motors underlines Kaeser’s continued commitment to providing maximum efficiency, not only to save energy, but also to assure compressor competitiveness well into the future. IE4 motors are the technology of tomorrow, as current regulations introduced in January 2015 simply require the use of IE3 class motors. Moreover, the electronic Thermomanagement system delivers additional energy advantages, as do the environmentally-friendly fluid filter and integrated Sigma Control 2 controller.
Electronic Thermomanagement consistently controls the oil temperature within a constant, safe differential relative to the dew point (condensation temperature) - which also helps avoid unnecessarily high airend discharge temperatures thereby contributing to higher overall energy savings. Kaeser’s engineers have also equipped the new ESD series compressors with another small, but clever, detail to aid heat recovery. Amazingly, a compressor converts 100 percent of its input drive energy into heat, of which 96 percent can be recovered and used for heating purposes – the associated savings benefit is therefore huge. With optional heat recovery equipment, a second electronic Thermomanagement system ensures optimum use of the heat energy that arises from the compression process. For example, when all of the heat energy has been fed into the heat recovery system, the intelligent Sigma Control 2 controller recognises that cooling is no longer required from the system cooler – so it simply deactivates the fan at the fluid cooler, which in turn leads to further energy cost savings.
the environmentally-friendly fluid filter elements now simply sit in an aluminium housing, with no need for a sheet metal enclosure. The filter elements themselves are completely free of metal, making disposal straightforward: at the end of their service life, they can be thermally disposed of without additional pretreatment.
ENERGY-SAVING, ENVIRONMENTALLY-FRIENDLY FLUID FILTER The principles of resource conservation are also consistently applied inside the compressor unit:
KAESER KOMPRESSOREN S.R.L. Address: 179 Ion Mihalache Blvd., 011181 - Bucharest Tel.: +40 21 224 56 81 Fax: +40 21 224 56 02 Web: www.kaeser.com Email: info.romania@kaeser.com
CONTROLLER ENSURES OPTIMISED OPERATION
The advanced ‘Sigma Control 2’ compressor controller provides comprehensive monitoring of the compressor and, if equipped, the frequency converter (SFC variable speed control option). It also enables the compressor to utilise powerful networking solutions and allows straightforward connection to a master control system, such as the Sigma Air Manager 4.0, or to a control centre. Kaeser’s new ESD compressors are therefore perfectly equipped to benefit from all of the advantages that true Industrie 4.0 production environments have to offer.
59
PROJECTS OF COMMON INTEREST
POWER
TRANSELECTRICA TO BENEFIT FROM
NON-REIMBURSABLE
FUNDS
60
energyindustryreview.com
POWER
The National Power Grid Company Transelectrica plans total investments of RON 1.395bn (over EUR 300mln) during 2017 - 2019. Most funds are allocated to finance projects for the retrofitting of the existing power grid, to integrate production from new power plants, to upgrade the IT and telecommunications infrastructure. Also, according to the Power Transmission Grid (PTG) Development Plan for 2016 - 2025, approved by the National Regulatory Authority for Energy, Transelectrica has scheduled investments of RON 5bn.
T
ranselectrica last year commissioned five investment projects, worth a total of RON 97.98mln. The projects aimed at the retrofitting and upgrade of the transformer stations in Câmpia Turzii, Bradu, Cluj Est, Pestiş and Vetiş.
EUROPEAN FUNDS FOR MAJOR PROJECTS
CNTEE Transelectrica SA carries out six projects of common interest (PCI) worth over RON 1bn, part of the ‘Black Sea Corridor’ and ‘Mid Continental East Corridor’ clusters. All these projects were selected to benefit from non-reimbursable funds, being included on the list of priorities approved in November last year by the European Commission. • The ‘Black Sea Corridor’ cluster is part of the priority corridor on electricity: North-south electricity interconnections in Central and SouthEastern Europe (‘NSI East Electricity’), and aims to consolidate the electricity transmission corridor along the Black Sea coast (Romania - Bulgaria) and between the coast and the rest of Europe and Turkey. • The ‘Mid Continental East Corridor’ cluster is part of the priority corridor on electricity: North-south electricity interconnections in Central Europe and South-Eastern Europe (‘NSI East Electricity’) and leads to an increased capacity of exchange on the borders between Romania - Hungary - Serbia; boosts the European North-South Corridor from North-Eastern Europe through Romania, allowing a stronger integration of markets and increased security of supply in the south-eastern part of Europe.
According to company representatives, the projects are adopted by the European Commission and included in the European Plan for the European plan for the development of the electricity transmission network coordinated at ENTSO-E level. These projects were also included on the third list of Projects of Common Interest approved by the European Commission in November last year. All these projects contribute to the realization of the 400kV national power ring, objective included in the government program, which leads to an increase in the operational safety of the National Power System and the achievement of an economic regime for PTG functioning. Projects of common interest are integrated in the joint effort of all Transmission and System Operators in Europe to develop the trans-European networks and ensure their interoperability, Transelectrica CEO Corina Popescu stated in a press release. “Transelectrica’s investments accepted by the European Commission, both at the 2015 call and at the 2017 call, aim primarily at increasing the interconnection capacity on Romania - Bulgaria and Romania - Serbia relations. Being included on the second list, as well as on the third list of projects of common interest, Transelectrica’s investments have proven economic, social and environmental viability, aiming to improve security of supply and to ensure the flexibility of the European energy system”, Corina Popescu also mentioned. The investment objectives on the list of projects of common interest of the European Commission may benefit from funding at a rate of 50% or even 80%. Also, projects of common interest may be subject to a quicker permitting procedure, not exceeding three years on average, and benefit from special treatment by regulatory authorities. PROJECTS INCLUDED ON EC’S LIST
The reviewed list adopted in November last year by the European Commission includes the following projects of Transelectrica: • 400kV overhead line (OHL) Cernavodă - Stâlpu, part of the Cluster Bulgaria — Romania capacity increase (‘Black Sea Corridor’); • 400kV overhead line (OHL) Gutinaș - Smârdan, part of the Cluster Bulgaria — Romania capacity increase (‘Black Sea Corridor’); • Interconnection between Reșița (RO) and Pancevo (RS) - part of the Cluster Romania – Serbia 61
POWER
•
•
•
between Reșița and Pancevo (‘Mid Continental East Corridor’); Internal line between Porțile de Fier and Reșița (RO) - part of the Cluster Romania – Serbia between Reșița and Pancevo (‘Mid Continental East Corridor’); Internal line between Reșița and Timișoara/ Săcălaz (RO) - part of the Cluster Romania – Serbia between Reșița and Pancevo (‘Mid Continental East Corridor’); Internal line between Arad and Timișoara/Săcălaz (RO) - part of the Cluster Romania – Serbia between Reșița and Pancevo (‘Mid Continental East Corridor’).
‘STELIAN GAL’ CENTER OF EXCELLENCE
Transelectrica started in mid-November last year the construction works at the ‘Stelian Gal’ Centre of Energy Excellence, in Sibiu (near the 400kV Sibiu Sud Station), in the memory of the former CEO of the company. The investment, of approximately RON 5mln, is made from own funds, the project being included in the investment plan of the company. The Centre of Energy Excellence will be the first of this type in Romania, in which practical training in terms of work under voltage will be carried out. The Research and Development Centre for Work under Voltage Technologies and Quick Intervention in the National Power System will be built in a first stage, including a training and testing field for work under voltage. The term for completing this stage is 24 months, and works will be executed by SMART SA. In the second stage, laboratories and classrooms will be set up, the term being 18 months. MAJOR PRIORITIES
Also, in November 2017, the company inaugurated the 220/110/20kV Câmpia Turzii Station (Cluj County), refurbished with an investment of around RON 42mln, from own funds. Works were started in 2014 and consisted of the full refurbishment of the station, including primary and secondary equipment, the SCADA system, tele control of the National and Territorial Power Dispatcher, the installation of a 220/110kV autotransformer and the installation of the second transformer of 110/20 kV. “I am honoured to attend the inauguration of a project aimed at increasing the degree of safety in the electricity supply to consumers. The Câmpia Turzii station is a major power transit hub between the areas of Cluj, Alba and Mureș, its role being very important for the safety of electricity supply to the northern part of Transylvania. The refurbishment of this station ensures the operating conditions required by the current 62
international standards, while keeping the operating expenses at a reasonable level, equipment worn out physically and morally being replaced. It is important to mention that in our country electricity production is concentrated in the southern part, while consumption is equally high in the south and the north. Therefore, one of the major priorities of Transelectrica is to close the 400kV ring, project necessary for the operating safety of the National Power System and which will also minimize losses in the power transmission grid. For the following two years, Transelectrica has an ambitious investment plan, totalling around RON 1.4bn, and one of our major concerns is refurbishing and upgrading the electrical sub-stations,” Corina Popescu, CEO of Transelectrica, stated. The 110/20kV Câmpia Turzii station was commissioned in 1954 to supply ISCT, the town of Câmpia Turzii and the Turda and Câmpia Turzii areas. The 220kV station was commissioned in 1978, being an important connection station for Cluj, Alba and Mureş areas. The electric ovens of ISCT used to be supplied from the 220kV station, having no transformer unit between the 220kV and 110kV voltages. The refurbishment process started in 2014 and works were executed by the association of companies Energobit, Siemens, retrofitting and ELM Cluj. The design was awarded, by public tender, to Romproiect Electro, having as sub-designers: MPS Electric Design and KadCons, the documentation being completed in 2011. 1,000 KM OF NEW OVERHEAD LINES
At the end of last year, Transelectrica was in the process of obtaining the necessary approvals and permits to start projects aiming at the construction of new overhead lines totalling 1,000 kilometres, according to a presentation made by Adrian Şuţă, head of the Department for Relations with Regulatory Authorities, during a meeting with investors. These projects include: - Overhead line Porţile de Fier - Anina - Reşiţa Timişoara - Săcălaz - Arad, which will be built in two stages; - OHL Gădălin - Suceava, of 260 kilometres; - OHL Smârdan - Gutinaş, of 140 kilometres; - OHL Cernavodă - Stâlpu - 160 kilometres; - OHL Ostrovu Mare - PTG, of 32 kilometres; - OHL Suceava - Bălţi (Republic of Moldova) - 90 kilometres, objective depending on the signing of a memorandum with the Republic of Moldova, as well as connections OHL Isaccea - Varna and OHL Isaccea Dobrudja in the Medgidia Sud station, of 27 kilometres. Transelectrica manages 81 electrical sub-stations, with a capacity of around 35,000 MVA and over 9,000 kilometres of overhead lines of 110/220kV, 400kV and 750kV. energyindustryreview.com
20 18
10-14 June 2018
R
Vox Maris Grand Resort Costineยบti, Romania
14th Edition
63
POWER
ELECTRIC CAR SALES SURGED IN 2017
Vehicle electrification picks up speed in Romania too In 2011, the first charging station for eco-friendly vehicles was opened in Romania. Meanwhile, electric and hybrid cars have begun to take their place on Romanian roads and, with them, the electric ‘filling stations’ have multiplied. Sales of eco-friendly vehicles grew exponentially in 2017, driven by the ‘Rabla Plus’ government program for both individuals and businesses.
L
ast year, the Ministry of Environment, Water and Forests (MMAP) granted through this program EUR 10,000 for the acquisition of electric vehicles and EUR 4,500 for the acquisition of hybrid vehicles. Compared to the 64
previous year, the value of these subsidies doubled, Romania thus managing to provide the most generous subsidies among Eastern European countries. Of the total 2,074 eco-friendly vehicles sold in the first ten months of 2017, 296 were 100% electric cars,
number more than double compared to the first ten months of 2016, when 103 vehicles had been sold. Also, the sale of hybrid vehicles climbed by 143%, to 1,779 units. Statistics show that a year ago the number of new electric and hybrid vehicles sold in Romania was 1,195 units, by 205% higher compared to 2015. CHANGES FOR 2018
The Ministry of Environment has recently changed the ‘Rabla Plus’ Program Guideline, to become more accessible to those who want to purchase electric cars. Thus, responding to the requests received, a new category of vehicles financed through the Program was introduced, namely the electric quadricycles, which can be purchased from 1 January 2018. Also, in order to ensure an efficient use of the amounts allocated to finance the entire Program, a maximum financing percentage of 50% of the purchase price of electric vehicles was introduced, taking into account the value of the eco-voucher, of approximately EUR 10,000, reported to the existing prices on the market. Another change brought to the ‘Rabla Plus’ Program was the elimination of the term of 31 December until when invoices for the acquisition of new electric vehicles can be issued, taking into account the large periods of time necessary for producers to deliver the respective vehicles. Thus, the invoices can be issued within the 180-day validity period of the notes of registration of individuals and legal entities, without conditioning the delivery of vehicles until the end of the tax year. 252 STATIONS FUNDED BY THE EU
The NEXT-E consortium, which includes E.ON Romania, will receive funding of EUR 18.84mln through the Connecting Europe Facility (CEF) program, to build, by 2020, 252 fast energyindustryreview.com
POWER
and ultra-fast charging stations for electric vehicles in Central and Eastern Europe, including in Romania. The network will include 222 multistandard charging stations (50kW) and 30 ultra-fast charging stations (150-350kW) for electric vehicles along the main European transport corridors and the trans-European transport network (TEN-T) and will connect six countries in Central and Eastern Europe, on the main routes: the Czech Republic, Slovakia, Hungary, Slovenia, Croatia and Romania. The consortium consists of companies within the E.ON Group (Zapadoslovenská energetika in Slovakia, E.ON Czech Republic, E.ON Hungary, E.ON Romania), MOL Group (the subsidiaries in the six participating countries), Hrvatska elektroprivreda from Croatia, PETROL (in Slovenia and Croatia), as well as Nissan and BMW. Installing the fast charging stations will start in 2018, while the installation of ultrafast charging stations is planned for 2019, anticipating the new generation of extended-range electric vehicles. Project completion is estimated for the end of 2020. NEXT-E project was selected by the European Commission, in July 2017, for cofinancing through the Connecting Europe Facility (CEF) program. 40 E-CHARGE STATIONS, BY E.ON AND MOL
According to this program, which benefits from EU funds, companies E.ON and MOL will develop in Romania a national network of 40 charging stations for electric vehicles. 19 stations will be installed by E.ON Energie Romania, which will support this investment through European grants, worth over EUR 1mln. Also, in turn, MOL Romania will install other 21 charging stations, which will be located in the fuel distribution stations operated by MOL. They will cover important points on three road
transport routes: Arad – Bucharest - Constanţa (the VI pan-European corridor), Sebeş - Târgu Mureş - Iaşi and Suceava – Bucharest - Giurgiu (partially the IX pan-European corridor).
charge simultaneously three electric vehicles and will operate free of charge until the summer of 2018. A full charge takes about 3-4 hours, but a fast way is also available, which can charge 80% of the battery in just 30 minutes.
AMBITIOUS PLANS AT ROMPETROL
EV-BOX HAS ENTERED THE ROMANIAN MARKET
Rompetrol Downstream, the retail company of KMG International, also plans to open several charging stations. Thus, the plan for 2017 targeted an investment of EUR 10mln in this objective. As company representatives announced in May last year, when the first charging station for eco-friendly cars was opened, the project aimed at building eight filling stations with 50kW charging stations in Baia Mare, Câmpulung Moldovenesc, Bucharest, Timişoara, Bucharest Ring Road and other areas.
Volt has taken over distribution for Romania of EV-Box products, the global leader in the production of charging stations for electric vehicles, according to a communique of the company. “We have charging stations specialized for public use, for businesses, and also for household use. Either you want to install them in your parking at home or to charge your own fleet of 50 vehicles, or for public places. From simple stations of 3.7 Kw, with a single outlet, up to charging stations with 2 outlets of 22 Kw each, which can be connected to each other and can be managed directly from the computer, on the Internet, to make your work easier and improve your control”, Adrian Săcuiu, managing partner of Volt, has stated. EV-Box is the global leader in the production of charging stations for electric vehicles and of software for them, with over 50,000 stations installed in over 30 countries and 980 cities. Established in 2010, in the Netherlands, EV-Box became the only provider of public charging infrastructure in cities such as Amsterdam, Rotterdam and Monaco. The company was bought in 2017 by the international group Engie.
OMV IS TESTING THE MARKET
Early last year, OMV Petrom also opened its first charging station, in partnership with Electrica. Six outlets were installed within this partnership. Austria’s OMV announced in April last year that it would take over a 40% stake in Smatrics, a provider of charging stations for electric vehicles. Smatrics, company controlled by Verbund and Siemens, manages approximately 40 charging stations in Austria, for which the hydropower producer Verbund supplies energy. Also, Smatrics deals with the construction and management of charging stations in filling stations, for private households and companies, for hotels and transport companies. STATIONS IN AIRPORTS
The one who broke the ice is Timişoara International Airport, which opened in November last year the first e-charge in such a location. The station provides the possibility to
HORIZON FOR 2020
The Executive has requested municipalities across the country to build charging stations for electric and hybrid vehicles. The municipalities will be required to install at least four charging outlets in the localities they manage. Government thus wants to have by 2020 on Romania’s territory at least 20,000 charging points installed within the network. 65
RENEWABLES
THE LARGEST ONSHORE WIND FARM IN EUROPE
66
energyindustryreview.com
RENEWABLES
Dutch company NERO Renewables is preparing a giant investment in Romania, in a wind farm, in Dobrogea region. The wind farm with a capacity of 1GW (the largest onshore wind farm in Europe) will be built in the south of Constanţa County, between the towns of Negru Vodă and Băneasa, where 242 turbines will be installed, each with a height of 100 meters. Through this investment, Dobrogea reaches an almost unbeatable record, two of the largest onshore wind farms in Europe being located in this area.
N
ERO project equals over 20% of the existing Dutch onshore wind fleet and increases the Dutch electricity production by RES with 2.6%. Before 2021 NERO Renewables plans to install 362 wind turbines at 3 different sites in South-East Romania, with a total capacity of approximately 1.000 megawatt, generating up to 3-terawatt hour per annum. The project is directly connected to the high voltage grid and, as a result of the Integrated Single Market for Electricity (starting mid 2018), the generated power can be bought by any company in any European country. NERO Renewables offers the Netherlands an opportunity to benefit from 1 gigawatt of wind power produced in Romania, thereby supporting the country to achieve its national renewable energy target for 2020. By adopting the 1 GW NERO project, the Netherlands could reduce its gap by approximately 30%. The ‘Joint-Project’ mechanism, developed by the European Commission, and part of the ‘Renewable Energy Directives’ is available and applies to the NERO Project. NERO, which stands for ‘Netherlands – Romania’, is in the process of realizing 3 fully permitted
wind farms in Romania. They will be directly connected to the national high voltage grid and will annually inject 3 terawatt hours (TWh) of renewable energy into the European grid, extractable in any of the EU member states. On October 19th, the Dutch government published a review stating that the Netherlands will miss its 2020 target for renewable energy production and greenhouse gas emissions. Based on current projections, green schemes will produce 12.4% of the Dutch energy supply by 2020, significantly below the 14% target agreed with the European Union. By adopting the 1 GW NERO project, the Netherlands can still realize its wind power ambitions and reduce the renewable energy gap by approximately 30%. The legislation to support such an implementation is in place and is part of the ‘Renewable Energy Directives’ (RED 2009/28/ EC). In 2009, when the EU member states agreed on the ‘Renewable Energy Directives’, it was already clear that some member states would face difficulties reaching their quotas. To help member states reaching their 2020 targets, 3 possible cooperation mechanisms were introduced, to enable them entering into mutual
agreements to cover their individual targets: ‘Statistical Transfer’, ‘JointProject’, ‘Joint-Support Scheme’. Luxembourg was recently the first country to make use of the directive’s statistical transfer mechanism, agreeing to buy a minimum of 700,000 MWh of clean power from Lithuania for an estimated cost of 10 million euros (US$11.7 million). The Grand Duchy is obliged to source 11% of its power from renewables by 2020, compared with only 5% in 2015. Lithuania, meanwhile, surpassed its quota of 23% two years ago, with green energy now accounting for 25.75% of the country’s energy mix. Luxembourg is hoping to broker a similar agreement with Estonia, which relies on renewables for 28.6% of its power, higher than its 2020 target of 25%. NERO’s proposal to the Dutch government is based on the ‘Joint Project’ mechanism, which means that the Netherlands and Romania enter into a one-off agreement, and that the 3 TWh of renewable energy will count for the Dutch national renewable energy target during the entire lifetime (25 years or more) of the project. The Joint Project mechanism can be implemented within the existing Dutch renewable support scheme called SDE+, avoiding complex and time consuming political procedures. Besides supporting the Netherlands to reach its 2020 target, there are significant social benefits to adopt a project which will contribute to the welfare of the local Romanian people living in the sparsely populated areas where the wind farms will be built. By co-funding NERO’s project in Romania, the Netherlands would be taking advantage of the directive’s joint project mechanism. Initially, power produced at the planned farms will all be sold domestically, although after Romania joins the EU’s integrated single electricity market (ISEM) in July 2018, the electricity can be traded freely among other member states. 67
RENEWABLES
PENDING STOCK EXCHANGE LISTING
HIDROELECTRICA TO INVEST OVER
BILLION EURO In February 2014, Hidroelectrica became insolvent, being on the brink of bankruptcy. Within three years, it managed to escape the restraining straps of the ‘smart guys’, turning into one of Romania’s leading companies. At the end of 2016, it reported a net profit of RON 1.22bn, amount that placed it second among the most profitable companies in the country. These are only some of the milestones that have marked the trajectory of the electricity producer Hidroelectrica in recent years. 68
energyindustryreview.com
RENEWABLES
C
urrently, the company has an ambitious investment plan, of over EUR 1bn, and is preparing to conduct what could be one of the most successful operations carried out by a Romanian company: stock exchange listing. The Ministry of Energy has already prepared the draft law under which it plans to list a 10% stake in Hidroelectrica. “I believe it is a success of the Ministry of Energy and of the Government of Romania to bring back to discussion Hidroelectrica’s stock exchange listing. It is a signal for investors and for the capital market of Romania that the Government is focused on transparency and performance in relation to state-owned companies”, Energy Minister Toma Petcu says. Thus, an “initial public offering will be launched, which will be carried out by offering for subscription a package of newly issued shares, accounting for 10% of the share capital existing before the capital increase”. Pre-emption right for company’s existing private shareholders, at the selling price of the newly issued shares within the IPO, shall be granted for a package of newly issued shares accounting for 2.49% of the existing share capital, on a pro-rata basis, depending on the stake held before the capital increase, the explanatory memorandum of the draft legislation mentions. In the initial version, the company’s share capital increase was to be carried out with a package of newly issued shares of 18.74% of the share capital. A NEW HYDROPOWER PLANT
Hidroelectrica commissioned in December a new production capacity, Bretea hydropower plant, within the Strei River Hydropower Development. The hydropower plant has an installed power of 12MW and the investment amounted to EUR 58mln. In terms of the retrofitting program, company’s
management says all the important production capacities will start this process in the coming years, so as to secure electricity production. After in 2017 it signed the contract for the upgrade of Group 1 from Călimăneşti hydropower plant worth RON 23.69mln, Group 1 of Slatina hydropower plant will start the retrofitting program in the coming period. THE GIANT CONTRACT FOR VIDRARU, PUT UP FOR TENDER
One of the company’s most important projects, given its size, is retrofitting the Vidraru hydropower plant, an investment worth over EUR 80mln. In late May 2016, the project was put up for tender for the first time, but in April last year the tender was cancelled, Hidroelectrica invoking at the time that it had received only inacceptable bids or bids non-compliant with the specifications of the tender book. The first hydroelectric development of the hydropower plant was commissioned in 1966 and since then no major interventions have been operated at this unit. INVESTMENT PLANS
Specifically, the investment plan of the company for the coming years provides for the allocation of EUR 300mln for upgrades, EUR 300mln for repairs and other EUR 250mln to complete the investments at four new hydropower plants: Bretea (already commissioned), Rastolniţa, Racoviţa and Siriu-Surduc. Also, regarding the development strategy, Hidroelectrica plans to expand abroad, according to Management Board’s Chairman, Bogdan Badea. The procurement plan of the company also includes the purchase of wind and photovoltaic farms, even abroad. Another option considered for the extension of company’s portfolio is
also the takeover of activities from UCM Reşiţa, one of the traditional partners of Hidroelectrica, and which is currently insolvent. HIDROELECTRICA OF THE FUTURE
‘Hidroelectrica of the Future’ is a social responsibility action through which the company aims to make known to young people the reference hydropower objectives, the history of the company, the technological flow, the equipment and the hydrotechnical constructions in administration. Beneficiaries of the project are students from vocational and technical education who are preparing for the specific fields of hydropower developments. The program is organized by Hidroelectrica in partnership with the Ministry of National Education and reached the second edition. Young people who took part in this program in 2017 have received promotional and informative materials and have been backed throughout the program by specialists from Hidroelectrica. The attendants, together with the employees from the visited objectives - heads of departments, heads of power plants, operating personnel, presented the hydropower objectives and answered the questions asked by the students. The ‘Hidroelectrica of the Future’ program is part of company’s effort to train and attract specialists in the energy sector. Amid the acute lack of specialized personnel faced by players in the national energy system, Hidroelectrica acts in a pro-active manner, planning medium and longterm actions to ensure an increased interest in the field, especially among young people. It is thus aimed to widen the recruitment base and organizationally integrate the meritorious young people who can bring added value to the company. 69
METALS & MINING
ALRO TO EXTEND ITS REVOLVING CREDIT FACILITY Alro - the largest aluminium producer in Continental Europe (excluding Russia and Scandinavia), having an installed production capacity of 265,000 tonnes per year - has recently signed a three-year USD 167mln credit facility. The company is part of the 7th largest aluminium producer worldwide, Vimetco NV, a global, vertically-integrated primary and processed aluminium producer, which has operations in Romania, China and Sierra Leone.
T
he deal extends with three years its existing USD 137mln revolving credit facility from December 2015 and adds a new USD 30mln letter of credit line. This revolving facility aims funding the working capital needs of the company, while the additional non-cash facility is intended to be used for issuing LCs and LGs to support both the operating and investing activities. The commercial terms have been enhanced in several directions with a positive impact in the financial costs of the company, as well. The transaction and the club of eight banks have been led by RBI 70
Group (Raiffeisen Bank International and Raiffeisen Bank Romania acting jointly) as the sole Coordinator. The club consists further of OTP Bank Romania, Unicredit Bank, Banca Comercială Intesa Sanpaolo Romania, Banca Transilvania, Banca de ExportImport a României (Eximbank) and Garanti Bank. The main markets for the products manufactured by Alro are within the EU (Germany, Hungary, Poland, Greece and Romania). Alro also exports to the USA and Asia. Alro is ISO 9001 certified for quality management and has NADCAP as well as EN 9100 certificates for aerospace production organizations.
Alro’s products adhere to the quality standards for primary aluminium on the LME, as well as international standards for flat rolled products. Alro is one of Romania’s largest companies with an important contribution to the local and national economic development. Alro’s shares are traded on the Bucharest Stock Exchange. Alro’s primary aluminium facilities are located in Slatina and currently comprise a smelter and processing facilities, including a cast house, hot and cold rolling mills and an extrusion shop. The company is also owner of Alum S.A. an alumina refinery based in Tulcea. Alro’s customers consist of end users and metal traders both within Romania and beyond. More than 80% of Alro’s output is sold on the international market through the London Metal Exchange, and based on direct contracts with long-term customers in 25 countries of the world. In fact, Alro products are sold directly throughout the European Union, in Italy, Greece, Austria and Hungary, as well as in Turkey, in the Balkan countries and in the United States. energyindustryreview.com
METALS & MINING
GOALS AND KEY RESULTS HISTORICAL RECORD FOR CUPRU MIN IN 2017 he company Cupru Min SA Abrud, controlled by the Ministry of Economy, has planned investments worth RON 65mln for 2018, of which almost two thirds are focused on environmental protection. According to a press release published on the website of the Ministry of Economy, the main objective of the company, which holds approximately 60% of Romania’s copper reserve, is to complete the acid water treatment plant. Another objective is a better exploitation of the ore, through
the recovery of rare metals such as molybdenum, as well as iron, the quoted document also shows. It is also estimated for 2017 a gross profit five times higher than that obtained in the previous year, i.e. RON 6.9mln. Moreover, Economy Minister Gheorghe Şimon has met with Cupru Min Abrud management, with which he has discussed about the company’s investment and development strategy for the following period. An aspect highlighted is the improvement of extraction yields and copper concentration in the extracted ore, by 2.7% over the last two years.
Increasing copper content has a direct positive impact in company’s income. It also increased as a result of higher international quotations, as well as due to the more advantageous contracts concluded in 2017, the press release states. “It is very important that the only copper producer in Romania can comply with its investment program, with the rules and laws on procurement and with the environmental rules. Likewise, the company must not forget the importance of human resources and work safety and not forget to reduce accidents and improve conditions and climate at work,” Minister Gheorghe Şimon said at the end of the meeting. Cupru Min estimates for 2017 a record production of copper concentrate, the largest in company’s history, of 39,000 tons. According to the business program for the period 2016 - 2018, Cupru Min plans to reach in 2018 a total value of mining products of RON 133mln (calculated at the quotation of USD 6,200/ton of copper and an exchange rate of RON 4.00/USD). At global level, in 2017, amid economic downturn, a decline in consumption was recorded for most raw materials, thus discouraging significant price increases. However, copper becomes one of the most desired raw materials in the world, and investors’ interest is growing, being tempered only by the fact that the most indebted mining companies are willing however to keep this gem of the metal industry. Experts believe that in 2018 copper price will grow, growth fed by the strong demand in China, expected to increase by approximately 2%. 71
METALS & MINING
DRILLING UPDATE
ELDORADO GOLD EXPLORATION PROGRAMS Completion of the year-one drilling program at Bolcana, Romania: results of over 23,000 metres at the new porphyry project confirm the size and potential of the system, as highlighted by drill hole TRSD013 which featured an intercept of 1,246.0 metres from surface grading 0.94 g/t Au and 0.27% Cu.
Resource conversion drilling at Efemcukuru: infill drilling of inferred resources in the Kestane Beleni vein continues to intersect ore grades and widths, while exploration drilling at the nearby Kokarpinar vein has identified a new high-grade shoot.
Exploration development and underground resource expansion drilling at the Stratoni Mine: development of the hanging wall exploration drift continues, and completion of over 4,500 metres of underground drilling confirms the continuation of the Mavres Petres orebody into previously untested areas. 72
energyindustryreview.com
METALS & MINING
E
ldorado is a leading intermediate gold producer with mining, development and exploration operations in Turkey, Greece, Canada, Romania, Serbia and Brazil. The company’s success to date is based on a highly skilled and dedicated workforce, safe and responsible operations, a portfolio of high-quality assets, and long-term partnerships with the communities where it operates. Eldorado’s common shares trade on the Toronto Stock Exchange (TSX: ELD) and the New York Stock Exchange (NYSE: EGO). According to Peter Lewis, Eldorado’s Vice President, Exploration, the results to date from the 2017 exploration programs reflect the quality of both their brownfields programs and new projects, and bode well for extending the life of the current operations while strengthening the internal growth pipeline. “We are particularly pleased by the strong results from the Lamaque project, where we have identified highgrade vein intercepts outside of the previously defined resources, and we look forward to expanding our exploration programs to new targets on the property,” Lewis stated. Below are presented the project updates for several of the principal 2017 exploration programs.
Fig 1: Map of the Bolcana gold-copper porphyry project area showing reduced-topole magnetic signature overlain by projected traces of 2017 drill holes and mineralized intervals.
BOLCANA PROJECT, ROMANIA
The Company’s new Bolcana project is a large copper gold porphyry system located approximately six kilometres west of its Certej epithermal deposit development project in Romania. The 2017 exploration program at Bolcana totalled over 23,000 metres of drilling in 25 holes, and tested an area measuring 1,200 metres by 900 metres, locally to a depth of more than 1,200 metres (Figure 1 and 2). Results from the 2017 drilling outline a large gold-rich porphyry
Fig 2: Representative cross section through the central zone of the Bolcana gold porphyry project showing 2017 drill holes and mineralized intervals. Section location is indicated on Figure 1; section thickness is 200 metres. 73
METALS & MINING
system centred on a calc-alkaline intrusive complex. Elevated gold and copper values are associated with chalcopyrite and bornite within diorite porphyry intrusions and associated magmatic-hydrothermal breccias. Mineralization is continuous to the depth extent of drilling, with highest grades found in shallow residual potassic zones and in a deeper high-grade potassic core (Figure 4). Drill hole TRSD013, which tested the central core of the system, intersected 1,246 metres from near surface with an average grade of 0.94 g/t Au and 0.27% Cu. This includes a shallow high-grade zone of 200.0 metres grading 1.43 g/t Au and 0.3% Cu and a deeper zone of 206.0 metres grading 1.55 g/t Au and 0.35% Cu. In addition, high grades have been intersected in a second shallow zone referred to as the south zone located approximately 200 metres south of the central zone (Figure 3) where drill hole TRSD017 intersected 132.0 metres grading 1.88 g/t Au and 0.34% Cu. The 2017 program was recently concluded and results are being evaluated to define future exploration plans for the project.
CERTEJ is an intermediate sulphidation epithermal gold deposit associated with a Miocene magmatic complex in the South Apuseni Mountains, Romania. Gold mineralization is hosted within Cretaceous sedimentary rocks (black shales and intercalated siltstones to sandstones) and Neogene conglomerates, grits and volcanic and intrusive units. Three main andesitic intrusive phases are recognised in the deposit; Dealu Grozii, Baiaga and Hondol, with the Baiaga Andesite located in the center of the system and mineralization developed along the intrusive contacts, within the Cretaceous and Neogene sedimentary rocks and in the Hondol
and Dealu Grozii Andesites. Mineralization has a broad E-W orientation with higher grade breccia zones oriented along NW-SE and NE-SW structures. Ore styles include disseminated mineralization in sedimentary units and at the contacts of intrusive rocks, hydrothermal breccias, stockworks and distal veins. The gold occurs with pyrite in arsenic-rich rims together with variable amounts of sphalerite and galena. Native gold is present but restricted to the distal veins. Zonation is observed both in the style of mineralization and alteration patterns with widespread clay-sericite-pyrite-calcite surrounding a core of silica-adularia.
Key facts Location
Apuseni Mountains, Romania
Mine type Metals mined Employees/contractors Expected mine life Deposit type Ownership
Open pit Gold, Silver 254 15 Epithermal gold-silver 80.5%
EFEMCUKURU MINE, TURKEY
At the Efemcukuru epithermal vein deposit, drilling in 2017 included 15,700 metres of resource conversion drilling on the Kestane Beleni vein and an additional 4,000 metres testing exploration targets in the nearby Kokarpinar vein system (Figure 3). Most of the resource conversion drilling at Kestane Beleni has utilized drill stations in the new Kestane Beleni hanging wall exploration drift and has targeted inferred resources downdip from the current production levels in the South Ore Shoot and in the transition zone between South and Middle Ore Shoots. Notable results from this program include high-grade intercepts in the South to Middle Ore Shoots transition zone, with 8.77 g/t 74
Fig 3: Geological map of the Efemcukuru project area showing locations of 2017 drilling programs. energyindustryreview.com
METALS & MINING
Au over 12.65 metres (EF-2703) and 8.19 g/t Au over 8.31 metres true thickness (EF-2614) (Figure 4). Surface drilling at the Kestane Beleni northwest zone has infilled areas previously drilled at a wide spacing, reducing drill hole spacing to approximately 50 metres over most of the mineralized zone. Although the vein is narrower here than in the South and Middle Ore Shoots, intercept grades commonly equal or exceed those in the current resource model (Figure 5). New drilling has defined two distinct trends of high grade ore shoots, with significant intercepts of 19.48 g/t Au over 4.32 metres (EF024) and 173.5 g/t Au over 1.4 metres true thickness (EF-033). At Kokarpinar, exploration drilling in previous year’s program was testing the northern part of the vein system where complex splays and limited drill site availability had hampered previous drill testing. Nineteen holes were completed, three of which define a new high-grade shoot with intercept grades of up to 29.0 g/t Au over 1.2 metres true thickness. Step-out drilling is currently in progress testing the down-plunge extension of this shoot. In addition, a 21.2 kilometre induced polarization survey was completed over the Efemcukuru license area in August 2017, with the objective of identifying blind drill targets in the footwall to the Kestane Beleni vein. Results are currently being evaluated, with drilling of new targets scheduled for 2018.
Fig 4: Longitudinal section of the Kestane Beleni vein at Efemcukuru showing contoured gold grade times true thickness and piercing points for 2017 resource conversion drill holes.
STRATONI MINE, GREECE
Fig 5: Longitudinal section of the Kestane Beleni Northwest vein at Efemcukuru showing contoured gold grade times thickness and piercing points for 2017 exploration drill holes.
The Stratoni deposit is a highgrade carbonate replacement deposit consisting of massive sulphide lenses occurring within and adjacent to the Stratoni fault zone. The Company is currently developing an exploration drift in the hanging wall to the fault zone that provides platforms for drilling untested areas
downdip of and along strike to the west of the known orebody. In the last year, 22 underground drill holes have been completed from the new development, which included seven resource conversion holes targeting existing inferred resources. Most of these holes intersected ore
thicknesses equal to or greater than those predicted by the resource model, with high silver and base metal values. Resource expansion drilling to date has tested an area measuring approximately 100 metres by 100 metres downdip of the deposit. Nine of the 15 holes in this area intersected 75
METALS & MINING
massive sulphide intervals comparable to those in the main orebody. Two drill rigs are currently active at the project testing additional step outs to the deposit. KMC PROJECT, SERBIA
During 2017, at the Karavansalija Mineralized Center (KMC) project, approximately 18,500 metres of diamond drilling have been completed at the Shanac, Copper Canyon, Gradina, and Medenovac prospects. The Shanac prospect is a large magnetite skarn system discovered by Eldorado in 2016. Gold mineralization within the skarn assemblage is hosted by Cretaceous limestone underlying an altered and weakly mineralized Tertiary andesitic volcanic sequence. 12 holes were drilled into the centre of the Shanac system in 2016 and an additional nine drill holes have been completed in 2017 to define the margins of the mineralized body. Gold grades within magnetite skarn at Shanac are typically 0.5 g/t Au to 2.0 g/t Au over vertical intervals of 50 to 200 metres beginning at depths of 150 to 300 metres from surface, with highest grades localized in a gently dipping lens just below the Tertiary volcanic rocks (Figures 6 and 7). At the Gradina and Copper Canyon prospects, 2017 drilling targeted extensions of high-grade intercepts associated with zones of retrograde skarn mineralization identified in previous drill campaigns, and also tested new conceptual targets. Regional exploration crews are currently completing initial stream sediment, soil, and rock chip sampling at recently granted licenses surrounding KMC and elsewhere in Serbia and Kosovo. Initial results have delineated several new target zones to be followed up with geological mapping and ground magnetic surveys. 76
Fig 6: Geological map of the KMC project area showing locations of mineralized zones targeted in 2017 exploration drilling programs.
Fig 7: Representative cross section through the Shanac zone at KMC. energyindustryreview.com
RESULTS AND PROSPECTS
A GOOD YEAR FOR OIL & GAS SECTOR ON BSE
77
ANALYSIS
P
roving once again one of the pillars of the Romanian capital market, the oil and gas industry had a positive evolution in 2017, despite problems faced in the first two quarters of the year. With financial results growing in the first 9 months compared to the same period of 2016 and with increases in share prices, companies in the oil and gas sector on the Bucharest Stock Exchange (BSE) had, overall, a significantly better evolution (shown by the BETNG stock index) than the general evolution of the profile companies representative at regional, European and international level, as shown by the reference stock indices. In the first half of 2017, the oil and gas sector on BSE was pushed up by the dividend prospects, especially in terms of distribution of additional dividends. The paradigm has changed with the second half of the year, after the reference dates for dividends had passed, when the energy sector as a whole (reflected by BET-NG) corrected accordingly and fell into a downward trend, a trend accentuated towards the end of the year. That despite the relatively good evolutions recorded in the third
quarter of the year, in terms of financial results, by most of the companies included in the index. BET-NG, BENCHMARK FOR OIL & GAS
BET-NG index reflects the overall evolution of energy companies listed on BSE, including both companies in the oil & gas sector and companies from the power sector. The index is dominated however, at a rate of over 75%, by oil and gas companies, the remaining of less than 25% of the share in the total index being electricity companies. Therefore, BETNG can be considered an indicator relevant enough to show the overall evolution on the stock exchange of the oil and gas industry; especially that two of the three companies in the electricity sector in its structure have negatively affected its evolution, in terms of both price (the shares in Electrica and Transelectrica falling by around 15% and 10% respectively in 2017) and fundamental analysis (the same two companies recorded declines more than significant in profits in the first 9 months of 2017 vs. the same period of 2016). Therefore, BET-NG, as a relevant indicator for the overall evolution
STRUCTURE AND EVOLUTION - BET-NG The energy sector has marked an increase by around 10% in 2017.
BET-NG OMV Petrom
Last value
% since the beginning of the year
652.29
10.96%
Share in BET-NG
0.281
7.66%
30.46%
Romgaz
31.6
26.40%
25.11%
Transgaz
385
30.95%
15.85%
Conpet
99.4
26.14%
3.02%
0.053
-7.02%
1.67%
0.4
14.94%
0.23%
0.1555
65.07%
0.19%
4.3
7.50%
0.00%
11.2
-14.89%
13.55%
26.35
-9.76%
6.79%
7.29
51.88%
3.11%
Rompetrol Rafinare Rompetrol Well Services Oil Terminal Petrolexportimport Electrica* Transelectrica* Nuclearelectrica*
The energy index BET-NG consists, at a rate of over 75%, of oil and gas companies, the remaining of less than 25% being companies in the electricity sector. SOURCE: BSE NOTE: Electricity companies included in the BET-NG index are marked with*. 78
energyindustryreview.com
ANALYSIS
of the oil and gas industry listed on the Bucharest Stock Exchange, is, close to the end of 2017, around 650 points, registering an increase just over 10% compared to the value recorded at the end of 2016. The energy index thus marks a better evolution than that of SNP Petrom - company with a share of over 30% in the BET-NG index (influencing its evolution proportionally) and which in the same period recorded an increase by slightly over 7% - but weaker than that of most of the other companies in its structure (see the table ‘Structure and evolution - BET-NG’). Thus, Romgaz, which has a share of over 25% in BETNG, marked close to the end of 2017 an increase in its share prices by over 26% throughout 2017. At the same time, Transgaz, which has a share of almost 16% in the BET-NG index, recorded an increase in the share price by over 30%. And Conpet (COTE), with a share of only 3% in the index, increased by over 26%. However, the leader of growths
is Oil Terminal (OIL), which although accounts for only 0.19% of the BET-NG index, had in mid-December 2017 an increase in its share prices by over 60% compared to the value at the end of the previous year (see the table ‘Structure and evolution - BET-NG’). An increase in the market price that seems to be separated from the fundamentals, in conditions in which the financial results for the first 9 months of the year show a decrease by almost 25% in the net profit reported by the company; from RON 15.3mln (in 9 months/2016) to RON 11.5mln (in 9 months/2017) - a decline that took place despite a slight increase in turnover (from RON 117mln to RON 121mln), amid lower amounts of freight traffic and higher expenditure (see the table ‘OIL, plunging profit, growing share price’). The company recorded in the first 9 months of 2017 an increase in expenses in almost all the budget chapters - from those with the staff (most of the expenses, which increased from RON 47mln to RON 53mln) to expenses with services
OIL, PLUNGING PROFIT, GROWING SHARE PRICE OIL titles went up in 2017 by over 60%, despite a significant decrease in profit. Achieved 30.09.2017
Budget of revenues and expenses 30.09.2017
2017/2016 (%)
1
2
3 = 1/2
4,064
4,309
5.7
Crude oil
2,270
2,149
5.6
Other petroleum and petrochemical products
1,794
2,160
16.9
118,782
115,444
2.9
Crude oil
42,446
36,259
17.1
Other products and services
76,336
79,185
3.6
319
333
4.2
1,794
1,059
69.4
120,895
116,836
3.5
187
499
62.5
121,082
117,335
3.2
Indicators
Handled quantities (thousand tons), from which:
Revenues from supplied services (thousand lei), from which:
Revenues from hires (thousand lei) Revenues from different activities (thousand lei) Turnover (thousand lei) Other revenues from operation (thousand lei) Total revenues from operation (thousand lei)
The table includes the evolution of the main categories of income recorded by OIL in the first 9 months of 2017 compared to the same period of the previous year. SOURCE: BSE 79
ANALYSIS
executed by third parties (from RON 8.8mln to RON 12.3mln) or other operating expenses (from RON 25.9mln to RON 33.5mln). GROWTH LEADER
Oil Terminal Constanţa, with a storage capacity of around 1.5 million cubic meters, is the largest operator in the port of Constanţa, specializing in handling oil, petroleum products, liquid petrochemical products and other finished products or liquid raw material for import, export and transit. The company represents a strategic point in the Black Sea area, the oil terminal in Constanţa being one of the largest of this type in South-Eastern Europe, also being at the crossroads of shipping corridors between Asia, Central and Western Europe and the Middle East. Oil Terminal S.A. is interconnected with the Romanian refineries through the transmission operator Conpet S.A. Ploieşti, for the transport of crude oil from the terminal to refineries, via underground pipelines part of the national transmission system. The oil terminal has links to the national railway network, to the road network and the Danube - Black Sea Canal. However, despite all these strengths, which give it an extraordinary business potential, the company continues to maintain in the lower league of profile players, delaying in producing financial results to the extent of its size and importance.
BIGGEST DECLINE At the opposite side, with a decline by around 7% in the market price in mid-December 2017 compared to the value at the end of the previous year, is Rompetrol Rafinare Constanţa (RRC), company which, paradoxically, unlike Oil Terminal, recorded an increase in both turnover and profits in the first 9 months of 2017 vs. 9 months 2016. Thus, RRC reported for 9m/2017 a turnover of USD 2.8bn (i.e. RON 11.2bn), up 11% compared year-on-year, and a profit of USD 56.1mln (RON 218.7mln), surging by 168% compared to the first 9 months of 2016 (see the chart ‘RRC, growing turnover and profits, declining share prices’). Rompetrol results were boosted especially by the achievements in the last quarter of the reporting period, i.e. Q3/2017, when the company posted a gross turnover in the refining segment of USD 941mln (of the total of USD 2.4bn achieved overall in the 9 reporting months), climbing by 45% compared to the same period of 2016, the turnover being especially influenced by an increase in international quotations for petroleum products. Thus, the oil price in Q3/2017 reached a maximum of USD 59/bbl due to a higher demand on the global market and cutting the output of OPEC member states. Hurricane Harvey in the United States also had a positive effect on the financial results of RRC, also resulting in the interruption of activity of several refineries in the U.S.,
RRC, GROWING TURNOVER AND PROFITS, DECLINING SHARE PRICES Rompetrol reported an increase in profit by 169% in 9M/2017 compared to the same period of the previous year, but the share price fell in 2017 by almost 7%. Q3 2017
Q3 2016
%
9M 2017
9M 2016
%
Financial Gross Revenues
USD
1,157,260,127
867,963,071
33%
2,875,674,702
2,570,588,065
12%
Net Revenues
USD
844,634,091
563,046,766
50%
2,119,057,535
1,716,190,884
23%
EBITDA
USD
95,361,710
30,932,891
208%
152,900,573
121,131,016
26%
EBITDA margin
%
11.3%
5.5%
7.2%
7.1%
EBIT
USD
74,926,214
7,008,234
969%
82,360,901
49,460,295
67%
Net profit / (loss)
USD
63,144,381
(1,155,873)
N/A
56,114,245
20,875,440
169%
margin
%
7.5%
-0.2%
2.6%
1.2%
The table shows the main indicators reported by RRC in 9M/2017 compared to those in 9M/2016. The figures are in USD. SOURCE: BSE 80
energyindustryreview.com
ANALYSIS
leading to an increase in prices for refined products at global level. Overall, the third quarter of the year was characterized by a context that allowed high refining margins; the refining margin improved in Q3/2017, amounting to USD 63.9/ton, with a significant increase from the level of USD 31/ton in Q3/2016. The increase in margins was also doubled by the higher volumes of raw material processed; in August 2017, Petromidia refinery reached historical thresholds from this point of view, reaching the level of 540 thousand tons (the equivalent of 17.4 thousand tons/day). In parallel, Vega refinery processed around 263 thousand tons of raw material in the first 9 months of the year, of which 111.6 thousand tons only in the third quarter - by 31.9% more than it had processed in the same quarter of 2016. SNP, SPECTACULAR GROWTH IN Q3
The financial results of RRC were thus positively influenced especially in Q3, when the cumulative external and internal factors (the latter taking into account the
continuation of the activity efficiency process) led to a spectacular jump in the figures. The same is also visible in the financial reports of OMV Petrom, which posted an EBIT of RON 2.7bn during January - September 2017, and from this amount over RON 1bn was obtained only in Q3 (see the table ‘SNP, positive evolutions on all levels’). As RRC, OMV Petrom also benefited from the higher oil prices in the last quarter of the year and the increased refining margins; a significant contribution was brought, as in RRC case, by the efficiency of activity and a better cost control. On sectors, in the Upstream segment it was managed to decrease the unit costs of production, which offset the decline of production - in conditions in which OMV Petrom reported declines in production on all the categories of products. In Romania, the daily hydrocarbon production was 159.2 thousand boe/day and the total production was 14.65 million boe. Gas production fell by 3%, to 8.41 million boe, due to the natural decline of the main fields - decline partially offset by the execution of workovers. On the other hand, production costs were by 8% lower than in Q3/2016, especially as a result of
SNP, POSITIVE EVOLUTIONS ON ALL LEVELS SNP reported significant growths in income and profit, as well as an increase in the market price of the shares. Q3/17
Q2/17
Q3/16
5,032
4,608
4,571
1,042
892
604
428
447
193
651
431
393
(17)
(8)
(18)
(20)
22
36
16
17
15
778
690
441
778
690
442
0.0137
0.0122
0.0078
Δ% in RON mln
9M/17
9M/16
Δ%
14,294
11,953
20
2,701
1,247
117
1,334
330
305
1,394
830
68
(46)
(37)
(25)
19
124
(85)
17
16
6
76 Clean CCS net income
2,053
895
129
76 Clean CCS net income attributable to stockholders
2,054
899
128
0.0363
0.0159
128
10 Sales 72 Clean CCS Operating Result 122 Clean Operating Result Upstream 66 Clean CCS Operating Result Downstream 2 Clean Operating Result Co&O n.m. Consolidation 8 Clean Group effective tax rate (%)
76 Clean CCS EPS (RON)
The table includes the main financial indicators reported by OMV Petrom in 9M/2017. SOURCE: BSE 81
ANALYSIS
eliminating the tax on special constructions, as well as following the reduction of other cost categories. In parallel, in the Downstream segment, the plus was generated by a significant growth of sales, inter alia also amid higher prices. In the first 9 months of 2017, OMV Petrom reported sales of RON 14.3mln (up 20% vs. 9m/2016) and a net profit of just over RON 2bn (up 128% vs. the amount of RON 899mln reported in 9m/2016) - the refining margin increasing in Q3/2017 to USD 8.75/bbl, especially as a result of higher prices of diesel and kerosene. And total sales of refined products went up 7% versus Q3/2016, also supported by the sales of complementary products.
TGN, GROWING PROFIT Q3/2017 has thus proven to be a ‘saviour’ for the figures reported in the first 9 months for OMV Petrom as well. However, it wasn’t equally good for Transgaz company which in the last three months of the reporting period posted a decline by around 10% in income and 57% in profit. Specifically, Transgaz posted in Q3/2017 a profit of only RON 33mln (compared to RON 76.7mln in Q3/2016), at an income of RON 321.9mln (compared to income of RON 370mln in Q3/2016). It is true however that the poor results in the last reporting quarter were offset by those obtained in the first half of the year, so that, overall for the 9 months, Transgaz reported an income of
TGN, GROWING PROFIT Transgaz reported in 9M/2017 a profit by 21% higher than that achieved in the same period of the previous year; TGN titles marked, at the end of 2017, an increase in the market price by over 30% vs. the value at the end of 2016. Indicators
in RON thousand
Obtained between 01.01-30.09.2016 2
Operating revenue before the balancing and construction activity, according to IFRIC12
Obtained between 01.01-30.09.2017
Increase
3 4=3/2x100-100
1.240.474
1.302.437
5%
Revenue from the balancing activity
23.809
92.299
288%
Revenue from the construction activity according to IFRIC12
49.223
28.067
-43%
Financial revenue
19.837
176.284
789%
822.329
811.971
-1%
Costs from the balancing activity
23.037
87.337
279%
Cost of assets built according to IFRIC12
49.223
28.067
-43%
5.002
147.972
2.858%
433.751
523.742
21%
418.916
495.429
18%
14.835
28.313
91%
75.282
90.190
20%
358.469
433.552
21%
Operating costs before the balancing and construction activity, according to IFRIC12
Financial costs GROSS PROFIT, of which: from operation from the financial activity Income tax NET PROFIT
The table presents the key fundamental indicators reported by TGN in 9M/2017. SOURCE: BSE 82
energyindustryreview.com
ANALYSIS
TGN, GROWING VOLUMES In the first 9 months of 2017, TGN transported significantly higher amounts than those transported in the same period of the previous year.
Quantity transmitted for direct consumers
Quantity transmitted for distribution
Total
MWh thousand m3 MWh thousand m3 MWh thousand m3
9 months 2016
9 months 2017
Differences
39.871.709
45.899.329
6.027.620
3.710.463
4.289.099
578.636
47.305.118
53.106.341
5.801.223
4.400.920
4.929.394
528.474
87.176.827
99.005.670
11.828.843
8.111.383
9.218.493
1.107.110
The table shows the amount of gas transported by TGN in the two reporting periods. SOURCE: BSE
over RON 1.3bn (increasing by 5% compared to those reported in the first 9 months of 2016) and a net profit of RON 433.5mln (by 21% higher than that reported in the first 9 months of 2016) (see the table ‘TGN, growing profit’). Increase in the income from the operating activity was influenced by several factors, but the higher volumes of gas transported is the first of them; in the first 9 months of the year, TGN transported 99 million MWh of natural gas (or 9.22 billion cubic meters), amounts significantly higher than those transported in the same period of 2016 (see the table ‘TGN, growing volumes’). Beyond the positive impact brought by the higher amount of gas transported, the income was directly influenced by the growing income obtained from the reservation of capacity, by RON 56.3mln; this positive effect took place amid a rise in the reservation tariff by RON 0.72/MWh. But on the other hand, TGN reserved lower capacities, which partially offset the positive effect brought by the increase in tariff. Last but not least, a significant contribution also belonged to the higher income from the international gas transmission (plus RON 11.9mln y/y), following the favourable variation of exchange rates (RON depreciation). On the other hand, the company reduced its expenses, diminishing, for example, its consumption and technological losses - activity from which it recorded savings of RON 13.6mln; other RON 24.9mln were saved by cutting costs with risks and expenses and other RON 10.3mln by cutting other operating expenses.
SNG, RELATIVELY BALANCED EVOLUTION SNGN Romgaz (SNG) - company which, in midDecember 2017, before the end of the year, marked an increase in the price by around 26% compared to the value recorded at the end of last year, had a relatively balanced evolution in terms of correlation between the dynamics of the market price of the shares and the dynamics of financial results. In the case of this company, the third quarter of the year also had a major contribution. From a fundamental point of view, the company reported for the first 9 months of the year an income of RON 3.24bn (rising by 35% compared to the income posted in the same period of 2016) and a profit of RON 1.18bn (by 65.9% higher than that reported in the first 9 months of 2016) (see the table ‘Growing turnover and profit for Romgaz’). In Q3/2017 however the company reported a profit of RON 316mln, climbing by 221% compared to Q3/2016, when the reported profit was only RON 98.4mln. In short, after a fall in national gas consumption by about 4.6% in 2015 and a moderate increase of about 1.9% in 2016, in 2017 - especially in the third quarter of the year, there was a revival thereof; consumption has thus soared in the reporting period by about 12%, from 79.5 TWh in the first nine months of 2016 to 89.04 TWh in the first nine months of 2017. Against the backdrop of rising gas consumption at national level, Romgaz was able to increase deliveries by 34.68% over the same period of 2016, from 31.86TWh to 42.91TWh. As a result, Romgaz’s market share in the gas supply market in 83
ANALYSIS
Romania reached 48.19%, being 8.12% higher than the share held in the previous period (40.08%). Romgaz’s natural gas production was 3,751 million cubic meters, by 717 million cubic meters higher than the production achieved in the same period of the previous year (+23.6 percent) and by 263 million cubic meters higher than budgeted (+7.6 percent) (see the table ‘Higher production at Romgaz’). At the same time, electricity production increased by 2.5% compared to the similar period of 2016, from 902.0TWh to 1,465.5TWh, Romgaz thus reaching a market share of 3.14%. It should be noted that Romgaz has positioned itself
well on the upward trend of gas consumption registered at European level. Thus, the latest European statistics, available for the end of the second quarter of 2017, brought for the EU gas market the sixth consecutive quarter of growth in demand (consumption), Eurostat’s preliminary data showing an increase of 11% y/y in Q2 2017 (as compared to Q2 2016). Therefore, according to the ‘Quarterly Report on European Gas Markets (issue 2, second quarter of 2017)’, published at the end of September 2017, added to the 162 billion cubic meters of natural gas consumed in the EU in the first quarter (a new peak in consumption from the first quarter of 2013
GROWING TURNOVER AND PROFIT FOR ROMGAZ Romgaz recorded a very good result in the first 9 months of the year, supported however by a considerable growth of income and profit in the third quarter of the year. Description
January-September 2016 (thousand RON)
January-September 2017 (thousand RON)
Variation (thousand RON)
Variation (%)
2
3
2,401,520
3,241,649
840,129
34.98
(46,326)
(49,518)
3,192
6.89
18,023
15,647
(2,376)
-13.18
(407,588)
(88,630)
(318,958)
-78.26
73,527
(100,642)
n/a
n/a
(41,458)
(48,220)
6,762
16.31
Depreciation, amortization and impairment
(356,424)
(407,701)
51,277
14.39
Employee benefit expenses
(356,383)
(400,235)
43,852
12.30
Financial cost
(13,731)
(13,285)
(446)
-3.25
Operating expenses
(80,502)
(132,576)
52,074
64.69
(605,855)
(700,299)
94,444
15.59
Other income
333,750
84,611
(249,139)
-74.65
Profit before tax
918,553
1,400,801
482,248
52.50
(204,851)
(216,713)
11,862
5.79
713,702
1,184,088
470,386
65.91
Revenue Cost of commodities sold Investment income Other gains or losses Changes in inventory of finished goods and work in progress Raw materials and consumables used
Other expenses
Income tax expense Net profit
4=3-2 5=4/2x100
The table includes the most important financial indicators published by SNG for 9M/2017. SOURCE: BSE 84
energyindustryreview.com
ANALYSIS
HIGHER PRODUCTION AT ROMGAZ Romgaz posted a natural gas production of 3,751 million cubic meters, by 717 million higher than the production recorded in the similar period of the previous year (+23.6%). Q3 2016 Q2 2017
Q3 2017
Δ Q3 (%)
Main Indicators
9M 2016 9M 2017
Δ 9M (%)
836
1,226
1,192
42.58 Gross production (mil m3)
3,034
3,751
23.63
54
87
83
53.70 Petroleum royalty (mil m3)
208
269
29.33
1,201
1,486
1,191
-0.83 Condensate production (tonnes)
4,841
4,349
-10.16
391.5
388.2
465.8
18.98 Electric power production (GWh)
902.0
1,465.5
62.47
0.0
31.3
9.7
931.0
1,208.5
29.79
619.9
99.0
774.3
1,302.4
1,375.8
5.64
UGS gas extraction services invoiced (mil m3) 24.91 UGS gas injection services invoiced (mil m3)
The table includes the main technical indicators of Romgaz’s activity. SOURCE: BSE
LOWER ACTIVITY, BUT HIGHER PROFIT AT COTE The total quantity transported during January - September 2017 was by 225,000 tons lower than in the same period of 2016, as a result of lower demand for the service of transport to refineries. Achieved JanSep 2017
9 months Budget Jan-Sep 2017
Variance Actual vs Plan [%]
Indicators Thousand RON
Achieved JanSep 2017
Achieved JanSep 2016
Variance 2017 vs 2016 [%]
Revenues – transporation services Domestic Subsystem 2,669,75
2,644.17
0.2% Thousand tons
2,669.75
2,783.29
4.1%
214,276
212,106
1.0% Thousand RON
214,276
223,753
4.2%
Revenues – transportation services Import Subsystem 2,340.16
2,095.14
11.7% Thousand tons
2,340.16
2,451.43
4.5%
64,655
59,372
8.9% Thousand RON
64,655
57,697
12.1%
Total revenues – transportation services 5,009,91
4,739.31
5.7% Thousand tons
5,009.91
5,234.72
4.3%
278,931
271,478
2.8% Thousand RON
278,931
281,450
0.9%
The table includes the key production indicators reported by Conpet in 9M/2017. SOURCE: BSE 85
ANALYSIS
to date) are about 100 billion cubic meters consumed in the second quarter, resulting in a consumption of about 260 billion cubic meters over the first six months of 2017. Confirmation of provisional figures for the second quarter would make the first half of 2017 to mark an increase in consumption of about 8% over the same period of 2016. By demonstrating that it has the ability to use this trend (as the 9m financial results show), Romgaz seems to have positioned itself appropriately, creating the premises for achieving good results for the full year, and growth for 2018. DECLINING INCOME, GROWING PROFIT
This is how one can characterize, very briefly, the evolution of Conpet (COTE) - the national crude oil and derivates carrier via pipelines. In the 9-month period ending 30 September 2017, the company posted a turnover of RON 282.51mln, down 0.1% compared to the turnover achieved in the first 9 months of 2016 (RON 282.84mln) (see the table ‘Financial results COTE’); the operating income recorded a slight increase (0.9%), from RON 305.43mln in 2016 to RON 308.14mln in 2017,
and the EBIT increased by 10.9%, from a value of RON 65.21mln in the first 9 months of 2016 to RON 72.31mln in 2017. Therefore, in the 9-month period ending 30 September 2017, Conpet reported a net profit of RON 63.11mln, higher by RON 6.37mln (11%) than in the first 9 months of 2016 (RON 56.74mln). The total quantity transported during January September 2017 was by 225,000 tons lower than in the same period of 2016, as a result of lower demand for the service of transport to refineries. On the country transmission subsystem, the transported quantity decreased by 113 thousand tons (4.1%) and on the import transmission subsystem there was a decrease by 112 thousand tons (see the table ‘Lower activity, but higher profit at COTE’). The decrease in the total income from transmission, related to the period January - September 2017, with the amount of RON 2.52mln (0.9%), compared to the same period of 2016, was mainly generated by the closure of Lukoil Ploieşti refinery for 40 days for technological overhaul. The transmission activity accounts for 99% of total turnover, and income from oil, gasoline and condensate transmission services hold a share of 90.5% in total operating income.
COTE FINANCIAL RESULTS In the 9-month period ending 30 September 2017, Conpet reported a net profit of RON 63.11mln, higher by RON 6.37mln (11%) than in the first 9 months of 2016. Actual JanSep 2017
Plan JanSep 2017
Variance Actual vs Plan [%]
Indicators Total operating revenues (RON million)
308.14
300.70
2.5%
235.83
240.30
1.9% Operating expense (RON million)
23.47%
20.09%
3.4 p.p.
20.31%
17.42%
2.9 p.p. Net Profit Margin (% total revenues)
72.31
60.40
63.11
52.72
Actual JanSep 2017
Actual JanSep 2016
Variance 2017 vs 2016 [%]
308.14
305.43
0.9%
235.83
240.22
1.8%
23.47%
21.35%
2.1 p.p.
20.31%
18.41%
1.9 p.p.
19.7% EBIT (RON million)
72.31
65.21
10.9%
19.7% Net Profit (RON million)
63.11
56.73
11.2%
Operating profit margin (% operating revenues)
The table includes the key financial indicators reported by Conpet in 9M/2017. SOURCE: BSE 86
energyindustryreview.com
ANALYSIS
GROWING RESULTS The oil and gas industry on BSE overall recorded growing turnovers and profits in the first 9 months of 2017 compared to the same period of 2016. Company (mln RON) OMV Petrom
Period Jan-Sep 2017 Sales
% Sales
% Profit
Profit
Period Jan-Sep 2016 Sales
Profit
14,294.0
1,849.0
19.6%
109.6%
11,953.0
882.0
Transgaz
1,394.7
433.6
10.3%
20.9%
1,264.3
358.5
Romgaz
3,241.6
1,184.1
35.0%
65.9%
2,401.5
713.7
11,208.5
218.7
11.9%
168.8%
10,019.4
81.4
Oil Terminal
121.1
11.5
3.2%
-24.9%
117.3
15.3
Conpet Ploiesti
282.5
63.1
-0.1%
11.2%
282.8
56.7
26.1
0.7
26.3%
-117.3%
20.7
(4.1)
0.5
(0.6)
1207.5%
-51.3%
0.0
(1.1)
30,569.1
3,760.1
26,059.1
2,102.4
Rompetrol Rafinare
Rompetrol Well Services Petrolexportimport TOTAL
The table shows the results reported by the oil and gas companies in the first 9 months of 2017. SOURCE: BSE PERFORMANCE IN ROMANIA Therefore, despite serious difficulties faced in the first half of the year, the oil and gas industry managed however to perform better than last year; both in terms of market price evolution and as far as the financial results are concerned. Thus, for the overall industry, the sum of income recorded in the first 9 months by the oil and gas companies listed on the Bucharest Stock Exchange (and which are included in the BET-NG index) was RON 30.5bn, while the sum of profits was RON 3.76bn (see the table ‘Growing results’), the values being significantly higher than those achieved in the same interval of 2016, when the sales totalled only RON 26bn and the profits barely exceeded the level of RON 2.1bn. These are the elements that have boosted the good evolution of the BET-NG index; it was pulled up by the oil and gas companies, which over-compensated the negative influence of electricity companies, so that throughout the year 2017 it posted a better dynamic than the indices of the oil and gas sector at regional (CEE), European and international level. Thus, while the BET-NG index managed an increase by about 10% in 2017, the STOXX Eastern Europe 300 Oil & Gas index (which tracks the overall evolution of the most representative companies in Central and Eastern Europe)
marked, at the same date, a minus of about 5%. At the same time, STOXX Global 1800 Oil & Gas (which tracks the overall evolution of the most important Western oil and gas companies) was in mid-December on a slight decline (about 1%) and the STOXX Europe 600 Oil & Gas index had a plus, also very small (about 1%). OUTLOOK
The end of the year thus came as an additional confirmation of the fact that, despite an extremely difficult environment, the oil and gas industry in Romania is in full process of recovery, being supported on the one hand by the recovery of oil prices in the international market and on the other hand by an increasingly solid domestic demand. And this determines us to assume, in a relatively neutral scenario - which excludes the occurrence of exceptional events - that there are prerequisites for the continuation of the trend throughout 2018. And if fundamentally things already show that the industry has been firmly on the upward trend, it is likely that the share prices of the companies involved will have a relatively similar course. At least at a general level, because each of the monitored companies is very likely to evolve according to their individual differences. 87
ROGC 2017
Organizers: Industry Media Vector & Petroleum Club of Romania Co-organizer: World Energy Council – Romanian National Committee Under the patronage: ANRE, NAMR With the support of: Ministry of Energy Official partners: UPG, AGIR, ACFR, Bucharest Chamber of Commerce and Industry, ROPEPCA, AmCham Romania, U.S. Commercial Service Partners: INCDT Comoti, Siemens Sponsors: Jereh, Dosco Petroservices, Mazarine Energy, IPM-Partners, Santbau Con Exhibitors: INCDT Comoti, Siemens, Jereh, Dosco Petroservices, Dynoteq Dynamic Technology, CDI Oilfield Services, Roxtec, Conpet, Mainfreight, Lubbers, Modular Plus, Rig Service, Industrial MD Trading, Upruc-CTR, AlpAccess Media partners: Petroleum Industry Review, Mesagerul Energetic, Univers Ingineresc, The Diplomat 88
energyindustryreview.com
F
ollowing a certain stabilization of the oil price lately, a recovery of exploration and production activities has been noticed in the Balkan and the Black Sea regions. More than seventy onshore and offshore blocks are to be explored and then exploited in the Balkans, with the most promising being in Greece, Montenegro, Bulgaria and Croatia. In turn, Romania provides a number of significant opportunities, having the chance of becoming a natural gas hub by 2020, when it is expected to complete the gas pipeline that will interconnect the national networks of Bulgaria, Romania, Hungary and Austria (BRUA). Thus, the contracts for the execution works related to the gas transmission pipeline, Phase I, were signed in Bucharest at the end of November 2017. The pipeline would be completed by December 2019, as ExxonMobil and OMV Petrom are expected to begin extraction of natural gas from the Black Sea in 2020. In this context, within the event ROMANIA OIL & GAS Conference & Exhibition (ROGC),
carried out in Bucharest on 21 November 2017, major topics of the national and regional energy situation have been discussed, providing the participants - government officials, directors of companies, Romanian and international experts, academicians, consultants and other businessmen within the sector - with a platform to debate ideas and find innovating technological solutions to support the sustainable development of the oil and gas industry. The debates were mainly focused on the current situation in the energy industry, priorities of the National Energy Strategy, legislative measures, implications, challenges for the oil and gas industry, programs for the efficient use of resources and cutting costs, safety and security at work, strategies and plans for the future of companies in the energy sector. Structured in four sessions, of which three exclusively technical and two keynote speeches, the conference has occasioned interactive discussions between speakers and audience, to better understand the topics presented. 89
EVENT
SETTING THE SCENE In the opening of the conference, Andrew Costin President of the Petroleum Club of Romania (PCOR), has noted some of the most important challenges currently faced by the industry at global level, either geopolitical and/or geo-economic challenges or of other nature,
also mentioned however some shortcomings of the sector, requiring improvement. “The Romanian energy sector has been deprived of major investments over the past 10 years, many of the energy transmission and distribution facilities being obsolete and technologically outdated. We have an exceeded lifetime for a large percentage of the gas transmission pipelines and a low level of funding sources compared to the investment requirements for the NTS structure, a non-homogeneous structure of pressures that cause us problems in ensuring the necessary pressures at the extremities of the system.”
Andrew Costin
such as increasing the demand, increasing the energy efficiency, energy security, technological evolutions, respectively environmental regulations - decarbonization, competitiveness etc. The President of the Petroleum Club has addressed companies in the field with the urge to embrace change and find together solutions to the problems they face. A STABLE ENERGY SECTOR, WITH A BALANCED MIX OF RESOURCES AND HUGE OPPORTUNITIES FOR INVESTORS The Romanian energy sector is currently stable, with a balanced mix of resources, estimates Iulian-Robert Tudorache - State Secretary within the MINISTRY OF ENERGY, coordinator of the oil and gas sector, who has 90
Iulian-Robert Tudorache
According to the official from the Ministry of Energy, investment in the exploitation and production system and transmission infrastructure is urgently needed, in order to avoid major problems in terms of Romania’s future reliance on imports. He has highlighted that, besides stability and predictability, rightly requested by investors, the energy system in Romania may provide huge opportunities to those interested in doing business in our country. “When you discover the opportunity, and see that it is significant, you take the risk. Maybe we manage to balance a little our lack of stability and predictability, showing the Romanian and foreign partners with investment appetite that the energy system energyindustryreview.com
EVENT
in Romania has huge opportunities for development and investments�. The State Secretary has also mentioned that important steps have been taken to correlate the domestic infrastructure with the international corridors, the most significant example being the BRUA project. Other major examples, regarding the potential of onshore and offshore resources, are the Caragele project - the largest onshore gas field discovered by the Romanian state over the past 30 years, and the development of resources in the Black Sea by attracting companies that hold performing technologies and know-how. Last but not least, the official has added, it is necessary to adopt as urgent as possible the National Energy Strategy, document with decisive implications in the energy sector and in the economy of the country. Equally important is also the development of energy partnerships with foreign partners and involvement in regional cooperation programs, contributing to the promotion of Romanian companies abroad. Iulian-Robert Tudorache has also made special references to the Romanian high-class school in the oil and gas sector, appreciated at global level, given that in 2017 we celebrated 50 years of specialized university education. In light of the latest developments in the energy sector, Romania, the fifth largest producer of oil and gas in Europe, can become a stability factor in the region, says Florina Sora - Senior Advisor, National Agency for Mineral Resources
(NAMR). This, despite the fact that hydrocarbon production has experienced a sharp decline over the peak period of the industry, with over 70% of production being lost. Moreover, after 10 licensing rounds, organized in the period from the establishment of the agency (in 1993), the major objective of NAMR continues to be stopping the production decline, by using advanced technologies and know-how, contributing to an increased recovery rate in the fields, both onshore and offshore. However, in order to attract investors, it is necessary to have an attractive framework, the NAMR official has also pointed out, adding that currently there are good premises, new laws being in debate - the law on royalties and the law on the safety of offshore petroleum operations - which supplement the Petroleum Law. As expected, the 160th anniversary of the Romanian oil industry was also marked by the ROGC 2017. The series of events dedicated to this anniversary, presented extensively
Mihail Minescu
Florina Sora
in the previous editions of the Petroleum Industry Review, was remembered by Mihail Minescu - Vice-Rector, Petroleum-Gas University (UPG), who thanked everyone who contributed to the celebration and the album ‘Romanian Oil - 160 Years of Illustrated History’. 91
EVENT
EU R&I ENERGY POLICY - TRANSFORMING THE FUTURE EUROPEAN ENERGY SYSTEM Reiterating the five dimensions of the energy unions, Andreea Străchinescu - Head of Unit - New energy technologies and innovation, DG ENERGY, has brought to the audience’s attention the provisions of the Clean Energy for All Europeans package, focused on efficiency and consumers first and Strategic Energy Technology (SET) Plan, which has as a general objective to accelerate the development and implementation of low-carbon technologies, through cooperation between EU states, companies and research institutes, based on common priorities, targets and actions. The theme ‘Smart Cities and
Andreea Străchinescu
Communities’ was also mentioned within the ‘Horizon 2020’ program, which has so far benefited from a total co-financing of EUR 270 million. The representative of the European Commission has also mentioned that financing granted by the European Investment Bank in the energy sector amounts to about EUR 10 billion per year. The Connecting Europe Facility program (2014 2020) is yet another instrument dedicated to supporting infrastructure projects in areas such as transport, energy and telecommunications, benefiting from a total funding of EUR 30.4 billion, of which EUR 5.35 billion in the energy sector. Also, within the ‘Horizon 2020’ program, funds 92
allocated to research and innovation reach a value of EUR 80 billion, of which EUR 5.9 billion are intended for the energy sector. NEW TECHNOLOGIES TO REDUCE COSTS, IMPROVE EFFICIENCY AND MAXIMIZE COMPETITIVENESS
‘Pumping up the oil & gas industry - dedicated solutions’ was the theme of the presentation of INCDT COMOTI representative, Leonard Trifu - Marketing Manager. It marked important milestones of the institute between 1985 and 2015, highlighting the main features, applications
Leonard Trifu
and beneficiaries of gas compressor equipment and the expander group - electrical generator executed by the company. The National Research & Development Institute for Gas Turbines - COMOTI - is the only specialized unit in Romania which integrates scientific research, design, manufacturing, experimentation, testing, technology transfer and innovation of aircraft turbo-engines, industrial gas turbine engines and high speed blade machines. The experience gathered in the field of high speed blade machines allowed the development, in own conception, of series of electrical centrifugal natural gas or air compressors and electrical centrifugal air blowers in a large variety of energyindustryreview.com
EVENT
flows and pressures, making COMOTI the only national producer for such complex equipment. A reference name of the energy industry in Romania and beyond, SIEMENS proposes an advanced solution for well monitoring, based on IoT and reservoir analytics, which contributes to optimizing production and reducing costs. Helmut Schnabl - Business Development, has extensively presented the implementation, as well as the benefits of this technology: production optimization, early production losses identification; minimized well interventions/workovers; maintenance optimization. According to Siemens representative, the next S-Curve in O&G competitiveness and efficient operation will come from digital and advanced analytics. Siemens IoT well
Leo Liu
Helmut Schnabl
surveillance addresses field operation and oilfield artificial lift control. This innovative solution offers companies across the oil and gas industry a cost-efficient solution to link distributed assets into an integrated network with minimal effort, while simultaneously providing a high level of automation. Leveraging the resources & creating value through integrated product-service solutions are major concerns of the Chinese provider of integrated solutions at global level JEREH GROUP, whose main areas of activity are oil & gas,
power and environment. The company has representative offices in over 50 cities, providing products and services in over 60 countries. Leo Liu - Director, Central & Eastern Europe - has reported about the capabilities, investment policy, products and services offered, as well as about the HSE policy. Otherwise, this is the first company in China to pass API QHSE and Q2 certification. Every year, Jereh spends 5% of the annual sales revenue on the in-house R&D activities and collaborative technology development with external research institutions, the manager underlined. The Group’s most important strengths are efficiency and flexibility, since an integrated solution offers more choices from investing, financing to contracting, he believes. Also, another benefit is given by the one-stop service concept, which promotes execution efficiency and cost effectiveness. Also, the global best practices improve the efficiency of transfer of technology, know-how and experience. In conclusion, the mechanism of Chinese private enterprises enables quick decision and flexible implementation. The paper presented by Prof. Andrei Dumitrescu Ph.D. Eng., PETROLEUM-GAS UNIVERSITY (UPG) – ‘Investigations regarding the construction, exploitation and maintenance of natural gas transmission pipelines systems’ - was based on the work carried out by a group of professors from the Mechanical Engineering Department, made up of Prof. Gheorghe Zecheru Ph.D. Eng., Prof. Andrei Dumitrescu Ph.D. Eng., Assoc. Prof. Gheorghe Drăghici 93
EVENT
the government’s agenda for more than three years. In late October 2017, the Ministry of Economy finally launched for public debate the new draft law on the subject. The latest legislative evolutions in the Upstream segment - the new legal framework proposed and the offshore law - were commented by Cătălin Barb - Senior Associate, LEROY
Andrei Dumitrescu
Ph.D. Eng. and Assist. Prof. Alin Diniță Ph.D. Eng., within the project INNOPIPES (Innovative nondestructive testing and advanced composite repair of pipelines with volumetric surface defects). The strategic objective of the INNOPIPES project is the improvement of infrastructure in the EU and third countries by increasing the reliability of existing transmission pipeline systems from the petroleum industry. Advanced solutions have been analysed and proposed regarding the main issues related to the creation, design, execution and verification of maintenance works for gas transmission pipelines. The evaluation included technological particularities in the case of using welding for the repair of pipelines (decommissioned or during operation) and the repair with composite coatings. The results of the researches included in the paper were and will continue to be applied to the activities of repair, rehabilitation, refurbishment and upgrade of the pipelines that make up the National Gas Transmission System, the academic specified. RECENT LEGAL DEVELOPMENTS IN THE ROMANIAN UPSTREAM SECTOR - NEW ROYALTIES SCHEME AND OFFSHORE LAW The law regulating the royalty system for concessions of mineral, petroleum and hydro-mineral resources, a hot topic of broad interest and strongly publicized, has been on 94
Cătălin Barb
ȘI ASOCIAȚII. He pointed out the context in which the respective changes were made, the calculation of the new royalties for both onshore and offshore, the most important changes, the main provisions of the offshore law. Regarding the reference price, considered to determine the royalty, it will no longer be reported to the Suez Blend oil, but to Brent oil, and for natural gas the new reference price will no longer be set by the National Agency for Mineral Resources, following to be given by gas prices on the centralized wholesale market - OPCOM. New developments have also been mentioned, such as the transmission surcharge, whose quota hasn’t been determined yet, applied on the gross income obtained from petroleum transmission operations through transmission systems, other than the National Petroleum Transmission System, and from petroleum operations carried out through the petroleum terminals, other than those in state ownership. energyindustryreview.com
EVENT
ROLE AND IMPORTANCE OF INTERCONNECTION PROJECTS Through its geographic position and potential, Romania may play an important role in the regional energy equation, not only by capitalizing on its own resources, but also through involvement in the redistribution of energy resources in the region. Thus, implementing the strategic interconnection projects becomes a priority. For CONPET, the national oil and petroleum products transmission operator, the strategic priority within the company’s development strategy is to interconnect the national oil transmission network at regional and European level, Mircea Aurel Niță - Head of Communication, Public Relations and Administrative Management Department, informs. This strategic country objective includes securing
alternative to supply its domestic refineries, in the event of blockage at the Black Sea, from Trieste and Omišalj to Romania, through the systems operated by Janaf Croatia, Transnafta Serbia and Conpet. Also, PEOP project provides a number of opportunities, from both a domestic and foreign perspective, especially in view of the fact that Romania will hold the presidency of the EU Council in 2019. Another project particularly important at regional level, as after commissioning it will ensure the integration of gas sources from the Southern Corridor with the Central and Western European markets, is the Bulgaria - Romania Hungary - Austria (BRUA) project. It is part of Transgaz’s Development Plan for 2014 - 2023 and is included on the list of projects of common interest adopted by the European Commission. Within this project, which will connect the gas networks of the four states and facilitate gas export from the Black Sea, a premiere has been recorded at European level. It’s about the Danube undercrossing by a pipeline that will ensure gas transmission between Romania and Bulgaria, with a volume of approximately 1.5 bcm/year. Companies involved in this strategic project are, together with Transgaz, Inspet Ploiești and Habau PPS Pipeline Systems, the latter executing the drilling works. The actual length of the undercrossing is 2,100 meters, from the Comasca valve assembly (Romania) to the similar
Mircea Aurel Niță
the supply of crude oil to the European Union and diversification of supply sources and transmission routes. The solution for security energy supply to the European Union is, in Conpet’s vision, the Pan European Oil Pipeline (PEOP) project, ensuring the interconnection with bidirectional flow with the transmission systems of Serbia and Croatia to Italy, in Trieste. Besides the possibility of interconnection with the oil transmission systems of the neighbouring countries, Romania would thus have an
Karl Leidenfrost 95
EVENT
group in Marten (Bulgaria). How did this extensive work take place, as well as the biggest challenges faced by the operators, we learned through the video presented by Karl Leidenfrost - Managing Director, HABAU PPS PIPELINE SYSTEMS. Projects of such complexity would not be possible without the consistent support from international financial institutions. One of them is the European Bank for Reconstruction and Development (EBRD), owned by 66 states and two intergovernmental institutions - the European Union (EU) and the European Investment Bank (EIB), benefiting from a capital of EUR 30 billion. EBRD’s financing list includes a number of energy interconnection projects, including BRUA project, but not only, Mihnea Crăciun - Deputy Head of Romania, detailed. In Romania, the European institution invests, together with Carlyle Group, in offshore exploration projects in the Black Sea, supports the modernization of the national gas transmission system, promotes gas market liberalization and interconnection projects, for Romania to become a regional gas hub, supports the offshore directive concerning the safety of petroleum operations, by providing a grant of EUR 285 thousand (technical
assistance) to the Competent Authority for the Regulation of Offshore Petroleum Operations (ACROPO). EBRD also provides support for the construction of the Ungheni - Chișinău gas interconnector, by providing a grant of EUR 41 million, plus another EUR 41 million from the EIB and EUR 10 million from the EU. The main European hubs and energy exchanges providing natural gas trading services include the panEuropean platform PEGAS and the Austrian hub CENTRAL EUROPEAN GAS HUB (CEGH), operating in Central and Eastern Europe. Details about the characteristics, products and services, trading mechanisms used, basic principles, annual trading volumes, including members registered were provided by Attila Török - Head of Gas Exchange Services, CEGH. He mentioned that as of 1 December 2016, CEGH joined the PEGAS platform, created by Germany’s EEX Group and operated by France’s Powernext. The criteria determining the success of a hub, presented by Attila Török together with a best practice model, include infrastructure - pipelines and storage capacities, diversification of supply sources, market liberalization, confidence of market participants, and so on. In October 2017, the mentioned European operators
Mihnea Crăciun
Attila Török
96
energyindustryreview.com
EVENT
warned that Romania was subject to infringement, due to amendments brought to the law approving GEO 64 on the gas market, which impose the obligation to trade 70% of production through OPCOM exchange.
With a history starting more than 100 years ago, ROMGAZ is the largest owner of reserves, producer and supplier of natural gas in Romania. Due to investments made, the company managed to slow down natural decline of production and the largest gas discovery of the last 30 years, totaling 30 billion cubic meters, was announced in May 2017, in Caragele (Buzău County). But assuming the decision to develop a new gas discovery involves a complex process of assessment and analysis, taking into account a number of indicators and impact factors. The stages of this process that ends with making the exploitation decision were explained by Alexandru Popa - Drilling Engineer, in a paper coordinated by Eugen Sorescu Director Exploration Department. The combined appraisal strategy, which includes exploration, evaluation and development of resources, finally leads to the preparation
of the development plan for the field. Following the analysis conducted, based on field’s characteristic data and with analytical simulation models, the success rate and profitability of the respective project can be estimated. Case studies on technologies intended to reduce the decline of hydrocarbon production were also presented by the representative of SCHLUMBERGER, the largest global supplier of technologies and solutions for oil and gas companies. Jonathan Abbott, Stimulation Technical Manager (Europe), presented the most relevant examples regarding the use of new technologies applied for mature fields in order to maximize production and reservoir drainage. Among them, a stranded oil case study from Romania (channel fracturing). The results show a significant improvement of the performance index (PI), while cutting costs compared to the conventional fracturing methods. The HiWAY flow-channel fracturing technique from Schlumberger significantly increases fracture conductivity while reducing water and proppant consumption. This means higher short- and long-term production, simpler logistics, and a smaller operational footprint. In conclusion, the responsible development of hydrocarbon resources in mature fields involves the application and adaptation of technology, investments in
Alexandru Popa
Jonathan Abbott
UNLOCKING THE VALUE OF PRODUCTION, GAS MARKET LIBERALIZATION, AND CERTIFICATIONS
97
EVENT
the development of new technologies, a good planning and close collaboration with partners in the industry. The gas market liberalization process in Romania, which has sparked a number of controversies, is still in debate, and stakeholders are far from an agreement. The main challenges of this process were highlighted by Harald Kraft - President, Romanian Petroleum Exploration and Production Companies Association (ROPEPCA). The association, which currently includes 17 members and provides more than 15,000 jobs, has invested around 1.3 billion euros annually in the recent years, and contribution to the state budget has reached about 2.5 billion euros/year. With an undeniable positive impact on Romania’s trade balance, ROPEPCA has a trenchant view on legislative changes in the oil and gas sector. The Association believes that the liberalization process does not justify the supplementary charge applied to oil and gas companies, especially since Romania has one of the highest taxation levels for the oil and gas sector. ROPEPCA has identified a number of adverse effects in terms of the obligation proposed for gas producers to trade the entire amount of gas produced domestically exclusively on the Romanian gas trading platform for an unlimited period of time. This would involve restrictions on bilateral contracts
agreed through direct negotiation, on cross-border supplies of natural gas agreed through direct negotiation, representing in fact a prohibition of direct bilateral trading of natural gas with suppliers, traders and consumers in other Member States. Gas exports will also be affected, as well as producers’ right to dispose freely of the natural gas produced, as stipulated in the concession agreements concluded with the Government of Romania. “In order to maintain a constant level of oil and gas production, there is a need for significant investment and a stable, balance and predictable fiscal framework, as well as a free marketplace that allows the setting of fair prices, reflecting the realities that determine the evolution of the industry”, the President of the Association concluded. Last but not least, the most important provisions regarding certifications in the oil and gas industry were emphasized. Cantemir Mambet - Risk & QHSE Expert,
Cantemir Mambet
listed a number of major challenges and opportunities regarding ISO 45001, the first international OH&S standard, currently under development, which will help organizations implement a health and safety management system. It is expected to be published in March 2018. Harald Kraft 98
The event presentations and the photo gallery are available in full at www.blackseaevents.com energyindustryreview.com
Organized by:
Under the patronage of:
24 APRIL 2018
Co-organizer:
RAMADA PARC HOTEL BUCHAREST, ROMANIA
With the support of: MINISTERUL ENERGIEI
10th
Annual Conference & Exhibition Offshore and Onshore Technology in the Black Sea Region
SEEUPSTREAM 2018 Book your stand now! blackseaevents.com Previous Partners & Sponsors
Official Partners 6
energyindustryreview.com