Energy Industry Review - June 2018 by Energy Industry Review

Comment European businesses to become renewable self-consumers

Lavinia Iancu CEO and Publisher

en of Europe’s major energy intensive urged European policy T companies makers to set up the right framework for industrial and commercial selfconsumption of energy, ahead of negotiations on the Renewable Energy Directive on 31st May. Signatories including ArcelorMittal, BayWa r.e., DSM, Dupont, ENI, Novozymes, Total, Shell, Voestalpine and Wacker Chemie have underlined the necessity for the Directive to encourage European businesses to become renewable selfconsumers. Renewable self-consumption enables large energy consumers in the refining, chemicals, steel, biotech and other EU energy intensive industry sectors to secure a supply of clean electricity. It also supports them to increase their competitiveness by reducing energy costs, while contributing towards the achievement of national climate and renewable energy targets. According to a joint declaration issued by the parties, industrial and commercial consumers account for around half of Europe’s electricity consumption today. Renewable self-consumption enables large energy consumers in the IT, chemicals, steel, aluminium, glass, concrete and many other energy intensive industries to secure a supply of clean electricity at a competitive price. Renewable self-consumption can also drive energy cost reduction and support the competitiveness of Europe’s large SME base, improving their profitability and security of energy supply. Renewable self-consumption is an important tool supporting European industries to achieve their carbon reduction commitments,

while supporting Member States to achieve their climate & renewable energy targets. The potential is huge, as alone 67TWh of green electricity supply will have to be developed by 2030, only to satisfy the commitments of the RE100 companies based in Europe. Self-consumption will thus bring forward billions of euros of investment and innovation in clean energy technologies in Europe to the benefit of European industry. To ensure that these benefits occur in Europe, and in the frame of the current negotiations on Art 21 of the Renewable Energy Directive, signatories of this declaration urge policy makers to enable a stable and transparent framework for industrial and commercial self-consumption. “All European industrial and commercial consumers should be enabled to become renewable energy self-consumers, by developing projects which have no negative impact due to indirect land use change. The Renewable Energy Directive should empower European businesses to self-consume by enabling the development of innovative business models such as leasing, third party ownership, collective selfconsumption, renewable Power Purchase Agreements, or the installation of direct lines within industrial and commercial areas.” The renewable energy industry has created over 500,000 new jobs at global level in 2017, which means an increase by 5.3% compared to 2016, according to data published by IRENA. The total number of persons hired in this sector reached at the end of last year 10.3 million globally, exceeding the figure of 10 million for the first time. Yet, in Romania renewable energy projects are blocked for now. 3

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Transgaz has obtained the Construction Permit for the gas transmission pipeline Black Sea Coast – Podisor. Also the incremental capacity booking process in the expected entry point in the NTS from the Black Sea - Tuzla MP - the Binding Stage - has been successfully completed.

Daniel Vlasceanu Partner at Vlasceanu, Ene & Partners page 18

President of the Romanian Civil Society Federation

Judicial Technical Expert in Oil & Gas page 22

Petroleum Engineer at OMV Petrom - ICPT Campina page 34

Into the heart of the Great Silk Road The Turkmenistan International Port was inaugurated on May 2. It will be a substantial asset to the Silk Road by opening new horizons between China and Europe, a rail corridor and Transport Corridor Europe-Caucasus (TRACECA), operating from western China through the Central Asian countries on its way to Europe.

Dumitru Chisalita

Florin Aconstantinesei

Romania’s petrochemical industry comes into sight Romania’s petrochemical industry is preparing to come out of the shadow cone, benefiting from the programs through which Rompetrol Rafinare and OMV Petrom this year made public their intentions to invest or continue investments in this activity segment.

Dipl. Ec. Petre Racanel

page 20

Transgaz getting ready to transport Black Sea gas

Investments of EUR 14.8 billion in new onshore wind energy projects The renewable energy industry has created over 500,000 new jobs at global level in 2017, which means an increase by 5.3% compared to 2016, according to data published by the International Renewable Energy Agency (IRENA).

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The future begins in Magurele Science Park For Romania’s scientific community and, in the recent years, for scientists all over the world, Magurele is one of the most important points in the world. Because the Horia Hulubei National Institute for Physics and Nuclear Engineering in Magurele (IFIN-HH) is carrying out the project Extreme Light Infrastructure – Nuclear Physics (ELI-NP).

Technology, the right way to deal with Climate Change Corneliu Bodea, the President of the Romanian Energy Center (CRE), talks about the association’s ongoing R&D projects and main objectives.

84 New Bosch diesel technology provides solution to NOx problem Refineries and air quality in Romania Are the refineries polluting or not? In order to see what the concrete situation is and what measures have been taken or will be taken by the Ministry of Environment and the largest refineries in Romania, we have collected official information from those involved.

This technology could enable vehicle manufacturers to reduce emissions of nitrogen oxides (NOx) so drastically that they already comply with future limits. Bosch engineers achieved these results simply by refining existing technologies. There is no need for additional components, which would drive up costs. 5

NEWS

COMMISSION COMPLETES ITS AGENDA FOR SAFE, CLEAN AND CONNECTED MOBILITY

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he Juncker Commission is undertaking the third and final set of actions to modernise Europe’s transport system. In his State of the Union address of September 2017, President Juncker set out a goal for the EU and its industries to become a world leader in innovation, digitisation and decarbonisation. On May 17, building on the previous ‘Europe on the Move’ of May and November 2017, the Juncker Commission is putting forward a third and final set of measures to make this a reality in the mobility sector. The objective is to allow all Europeans to benefit from safer traffic, less polluting vehicles and more advanced technological solutions, while supporting the competitiveness of the EU industry. These initiatives include an integrated policy for the future of road safety with measures for vehicles and infrastructure safety; the first ever CO2 standards for heavy-duty vehicles; a strategic Action Plan for the development and manufacturing of batteries in Europe and a forwardlooking strategy on connected and automated mobility. With this third ‘Europe on the Move’, the Commission is completing its ambitious agenda for the modernisation of mobility. “Mobility is crossing a new technological frontier. With this final set of proposals under the Energy Union, we help our industry stay ahead of the curve. By producing key technological solutions at scale, including sustainable batteries, and deploying key infrastructure, we will also get closer to a triple zero: emissions, congestion and accidents,” Vice-President

responsible for Energy Union, Maroš Šefčovič said. “All sectors must contribute to meet our climate commitments under the Paris Agreement. That’s why, for the first time ever, we are proposing EU standards to increase fuel efficiency and reduce emissions from new heavy-duty vehicles. These standards represent an opportunity for European industry to consolidate its current leadership position on innovative technologies,” Commissioner for Climate Action and Energy, Miguel Arias Cañete added. “Over the past year, this Commission has put forward initiatives addressing the challenges of today and paving the way for the mobility of tomorrow. Today’s measures constitute a final and important push so that Europeans can benefit from safe, clean and smart transport. I am inviting the Member States and the Parliament to live up to our level of ambition,” Commissioner for Transport, Violeta Bulc mentioned. “90% of road accidents are due to human error. The new mandatory safety features we propose today will reduce the number of accidents and pave the way for a driverless future of connected and automated driving ,” Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, Elżbieta Bieńkowska underlined. With these initiatives, the Commission aims to ensure a smooth transition towards a mobility system which is safe, clean and connected & automated. Through these measures, the Commission is also shaping an environment allowing EU companies to manufacture the best, cleanest and most competitive products.

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NEWS

ACUE, PARTNER IN EC’S ENERGY EFFICIENCY INFORMATION CAMPAIGN

ccording to ACUE, partner of the European Commission (EC) in the energy efficiency information campaign, Romanians could decrease their utility bills in several simple steps. The EC launched on 26 April, in Romania, a campaign aiming to inform citizens on how they can reduce energy consumption and bills, without affecting their personal comfort. An important part of the campaign was the Exhibition Pavilion ‘Energy savings’, which travelled the route Bucharest (25 April - 1 May), Mioveni (3-6 May) and Craiova (9-13 May), bringing interactive activities for visitors. According to EC, the cost of utilities

is lower in Romania compared to other European states, but Romanians are among the citizens that pay the largest utility bills in Europe in relation to their income. While in Europe the average value of costs does not exceed 6% of a family’s income, in Romania it can reach 9% and for part of the population this percentage can be significantly higher. Eurostat statistics show that approximately 14% of Romanians cannot afford to maintain their homes heated in the cold season, compared to a European average that does not exceed the threshold of 9%. Thus, the European Commission (Directorate-General for Justice and Consumers) has launched a campaign

to promote energy savings in housing and lowering bills by small behavioural changes or minor investments in housing. The main message of the campaign is that, by saving money on invoices, it can be used for other purposes. “Even small changes in daily behaviour can help families make savings. From advices that do not involve any cost or that involve low costs up to investments in improving housing leading to energy efficiency, there is a way for everyone to reduce utility costs and contribute to energy conservation and environmental protection,” the European Commissioner for Justice, Consumers and Gender Equality, Věra Jourová, has stated.

SGC KEY TERMINAL INAUGURATED IN AZERBAIJAN

zerbaijan inaugurated on May 29 a terminal that is planned to be the starting point of the first pipeline to transport gas from the Caspian Sea to Europe, bypassing Russia. “With this project, we are creating a new energy map of Europe,” Azerbaijani President Ilham Aliyev said. He turned on the taps at Sangachal Terminal, located some 55 kilometres southwest of the capital Baku. The terminal will be operated by BP, British multinational oil and gas giant. President Ilham Aliyev praised support from the United States, Britain and the 8

European Union and noted “strong regional cooperation between Azerbaijan, Turkey and Georgia” in implementing the project involving three pipelines. Sangachal oil and gas terminal in Azerbaijan is ready for the first commercial deliveries of gas from the Phase 2 of development of Azerbaijan’s Shah Deniz field, BP representatives affirmed. BP’s Sangachal terminal in Azerbaijan meets world safety standards and is now ready for first commercial deliveries in 2018, the company stated. Within the implementation of Shah Deniz Stage 2, gas production will increase from 9 to 25 billion cubic meters per year. The

produced gas will be exported to Turkey and the European markets through the Southern Gas Corridor (SGC), an initiative supported by the European Commission. SGC consists of three pipelines: the South Caucasus pipeline across Azerbaijan and Georgia, the TANAP pipeline across Turkey, and the TransAdriatic Pipeline (TAP) across Greece and Albania, with an offshore section to southern Italy. A contract for development of the Shah Deniz offshore field was signed on 4 June 1996. The field’s reserves are estimated at 1.2 trillion cubic meters of gas. energyindustryreview.com

NEWS

GAZPROM’S NEW POWER GENERATION STRATEGY

he Gazprom Management Committee recently approved the company’s power generation strategy for 2018–2027. It was noted that by this date Gazprom had successfully created the largest vertically integrated power holding company in Russia. The Gazprom Group is the leader of the Russian power market in terms of aggregate installed electric and thermal capacity. As of early 2017, the group’s generating assets totalled 40,249 MW of installed electric capacity and 68,028 Gcal/h of installed thermal capacity. Gazprom accounts for about 17 per cent of all electric power generated in Russia. The core assets in such areas as power and heat generation, heat transfer and marketing are consolidated in Gazprom Energoholding. The assets have the aggregate installed capacity of 38.8 GW. Gazprom Energoholding is one of Europe’s top ten power producers. In 2016, the Gazprom Group produced 156.8 billion kWh of electricity and 125.6 million Gcal of heat in Russia. Over the course of 2016, the Group generated 0.8 billion kWh of electric power abroad. Thus, Gazprom’s total electricity output in 2016 amounted to 157.6 billion kWh. In 2016, the Gazprom Group sold 170.9 billion kWh of electricity and 99.7 million Gcal of heat, with the overall net revenue (exclusive of VAT) totalling RUB 481.7 billion. The Group’s capital investments in power and heat production and marketing totalled RUB 63.5 billion in 2016.

The Gazprom Group is one of the largest investors in Russia’s power industry. Upon bringing the Grozny TPP into operation in 2018, Gazprom Energoholding will complete the ambitious investment program aimed at building new CSA-based generating capacities. Thus, Russia’s power generating assets will add a total of 8.9 GW as a result of CSA programs implemented by the Group in the period from 2007 through 2018, while the investment program will add up to about RUB 450 billion (including VAT). Gazprom’s investment obligations under capacity supply agreements are nearly fulfilled, with 8.6 GW of new high-performance capacities brought into operation and 3.7 GW of inefficient generating facilities consequently decommissioned. Work is underway on the final CSA-based project – construction of the Grozny TPP. The Gazprom Energoholding Group is financially sustainable: in 2007–2017, its annual revenue growth averaged about 15 per cent. A key strategic goal of the company’s power generation strategy for 2018– 2027 is to achieve sustained profit growth while maintaining the reliability of energy supplies for consumers. The strategy entails, inter alia, building and upgrading generating capacities, as well as decommissioning facilities that are no longer economically viable. Particular attention is paid to further improvements in operational effectiveness, technological de velopment, and the use of importsubstituting equipment. In addition, Gazprom is committed to diversifying its power business by entering pro mising markets in Russia and abroad. 9

NEWS

NEW OPPORTUNITIES FOR ROMANIAN-CHINESE COOPERATION

tate Secretary in the Ministry of Energy IulianRobert Tudorache has recently made a working visit to China. On this occasion, the official attended in Beijing the ‘Belt and Road International Financial Exchange and Cooperation Seminar’, an event dedicated to opportunities for economic cooperation between China and Europe. Iulian-Robert Tudorache was among the 31 participants, mainly government officials from Romania, Serbia, Bulgaria and Montenegro. The event included lectures by international experts on global economic

trends, China’s national development strategies and infrastructure investments. Among the speakers was Zhu Min, head of Tsinghua University’s National Financial Research Institute and former vice president of the International Monetary Fund, and Jin Liqun, president of Asian Investment Bank. Guests from Europe also visited a number of companies and industrial areas in the region. “At present, cooperation between China and the countries of Central and Eastern Europe focuses primarily on the infrastructure and energy sectors. Major investments can be materialized in Romania as well. For

example, negotiations were resumed for the construction of reactors 3 and 4 in Cernavoda. We are currently trying to obtain from the Government a more flexible mandate for negotiations with the Chinese side. Besides the mentioned sectors (infrastructure and energy), where China has indeed shown an obvious willingness for investments, we can broaden our cooperation in various fields, such as tourism and telecommunications. I believe this seminar dedicated to certain economic issues was mutually beneficial for all participants. The Government of Romania continues to be interested in economic exchanges and potential mutual investments with China”, the State Secretary pointed out.

ACER REPORTS ON CONTRACTUAL GAS CONGESTION AT INTERCONNECTION POINTS

he Agency recently published the fifth edition of the Annual Report on Contractual Congestion at Interconnection Points. Contractual congestion occurs when the demand for firm entry or exit capacity services exceeds the offered capacity. In 2017, congestion has been detected at less than 7% of the entry and exit sides of the Interconnection Points (‘IPs’) within the EU Gas Transmission Network. This report includes the list of contractually congested IPs where the Firm Day Ahead Use-It-or-Lose-It (‘FDA UIOLI’) mechanism has to be implemented and applied to address congestion at the relevant IPs. It also reveals to what extent 10

the other Congestion Management Procedures (‘CMP’) have been applied in the European Union and the amount of additional capacity yielded through their use. The findings of this report are based on the analysis of data from ENTSOG’s Transparency Platform (TP) for 2017 – 2019, and data from the three capacity booking platforms (GSA, PRISMA, and RBP), using the auction reports for the calendar year 2017. Contractual congestion was identified at 17 IP sides, out of which 9 had already been found congested in 2016 (in 2015 and 2014 they were 10 and 6 respectively). For 11 IP sides, contractual congestion was triggered by the non-offer

of firm products with the duration of at least one month, whereas the emergence of auction premia and unsuccessful requests indicated contractual congestion for 6 IP sides. 12 out of the 17 contractually congested IP sides are cross-border IPs between Germany and its neighbours and at inland German IP sides. Further 3 IP sides were congested in the South-South East Region. Compared to last year’s Congestion Report, where 23 IP sides out of 247 were detected contractually congested, this year, only 17 out of 262 IP sides were congested. At the congested points, one IP side applied Surrender, and no application of Oversubscription & Buy Back has been identified. energyindustryreview.com

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NEWS

ROMANIA-MOLDOVA ENERGY INTERCONNECTION, TOP PRIORITY

omania’s Economy Minister Danut Andrusca conducted on 15 May a visit in the Republic of Moldova to support energy interconnection projects of the two states. In the context of his visit, Minister Andrusca had a meeting with the Prime Minister of the Republic of Moldova, Pavel Filip, with Economy and Infrastructure Minister Chiril Gaburici, with representatives of the Romanian Investors Association in the Republic of Moldova and attended the ‘Excellency in Business’ Forum, organized by the Moldova-Romania Bilateral Chamber of

Commerce and Industry. Transgaz’s participation in the privatization of Vestmoldtransgaz was the central subject of discussion with both officials of the Republic of Moldova, in conditions in which the authorities in Chisinau are at the eleventh hour regarding the realization of the suspensive conditions under the privatization contract. In this context, Romania’s Economy Minister highlighted the need to comply with the privatization schedule. “It is my soul project and it is an important project for both states from the economic perspective, as well as from the perspective of energy security. Moreover, it is essential to

comply with the established deadlines,” Danut Andrusca said. He also talked, in the context of energy systems interconnection, about boosting collaboration with Romania’s Transelectrica. PM Filip and Minister Andrusca also discussed about other joint economic projects between Romania and the Republic of Moldova, which will be on the agenda of the following joint meeting of Bucharest and Chisinau Governments. In this context, the Economy Minister reiterated the availability of our country to provide support to partners across the Prut.

BLACK SEA PROJECTS UNDER DISCUSSION AT CCIR

he Chamber of Commerce and Industry of Romania (CCIR) organized an information session on topics of interest for the offshore oil and gas industry in Romania. The session was attended by representatives of The Romanian Black Sea Titleholders Association (RBSTA), representatives of the Government and also of the Romanian Parliament. The Romanian Black Sea Titleholders Association (RBSTA) hosts, on the initiative of ExxonMobil Exploration and Production Romania, a platform developed to support potential service providers for the offshore industry in Romania. The Potential Supplier Registration Portal for the Black Sea oil and gas 12

industry is a platform where the companies can register and describe the goods and services they can provide to the industry. The platform is a website that allows suppliers of goods/services to voluntarily express their interest in marketing their products and services to the Romanian oil and gas industry in the Black Sea. The portal is not a complete list of all available providers, but only includes those who took the steps to record their data. Registration in the database will have no impact on any bid, contract, or supplier’s ability to compete for the opportunity to work on any current or potential project. Mihai Daraban, the President of the Chamber of Commerce and Industry of Romania, considers this portal to be “an important signal for the local economy, which

could represent a standard of transparency and cooperation for other industries. Black Sea resources are extremely important for the economic development of the whole region. They have attracted important investments and the key requirement for these economic projects is the predictability of legislation”. According to the independent report by Deloitte Central Europe, at the request of RBSTA, entitled ‘Contribution of Black Sea exploration and production projects to the development of the Romanian economy’, investments in the Black Sea oil sector will generate cumulative revenues by 2040 of over USD 26 billion and will bring an additional USD 40 billion to Romania’s GDP. At the same time, the impact on the labor market will be an average annual number of over 30,000 jobs. energyindustryreview.com

NEWS

TECHANO INKS MULTIPLE OFFSHORE WINCH CONTRACT

echano, part of the Dutch Van Aalst Group, has secured a multiple offshore winch contract for a major upgrade project of a large North Sea rig. “Our offshore winches are designed and built for a highly specified North Sea rig currently undergoing a major upgrade,” says Øystein Bondevik, Sales Director at Techano. “Most of these rigs have enhanced equipment and stringent specifications in response to the increased demands from charterers and oil companies operating in the harsh environment of the North

Sea. Our winches form an important part of these rigs’ advanced capabilities,” underlines Morten Sørensen, Managing Director. The scope of delivery includes design, production of different winch types, Interface customization, DNV approvals and various controls (local, hydraulic remote & radio remote). Delivery is planned for September and installation will take place later this year. Techano has also started a project together with a Dutch pipelay operator. The work includes the design and

building of a unique, modularized subsea crane. Techano strongly believes in products that can be utilized by vessels or systems in order to be more flexible and effective in the sense of high end functionality, mobility & installation. The subsea crane will be provided with several new gamechanging features. The project is financially supported by Innovation Norway, the Norwegian Government’s most important instrument for innovation and development of Norwegian enterprises and industry.

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NEWS

INATECH PICKS ROMANIA TO EXPAND PRODUCT DEVELOPMENT IN OIL TRADING ETRM

natech, the energy trading risk management (ETRM) systems provider owned by Glencore, announces in a press release that it has picked Romania as a new hub for IT development. Inatech has taken on five developers in Bucharest to work on new releases of its key ETRM product for the oil trading industry. The product, named Techoil, enables fully informed and collective decision-making processes by allowing trading firms to see profit and loss in realtime on any given oil trade, and to track the evolution of P&L as variables change such as supply logistics. The development team in Bucharest will complement the work of Inatech’s existing product development unit, headquartered in Chennai, India. “As we grow as an organization, we’re keen

to diversify our pool of talent,” said Inatech’s CEO Jean-Hervé Jenn. “Building R&D in more than one location enables a richer exchange of ideas and cross-pollenates unique best practices from each location.” The choice of Romania reflects the high level of skills available locally in IT, a strong sense of professionalism and good education, as well as a cost base 20-30 percent lower than in Western Europe. In terms of technical prowess, Romania is a global leader: the rate of gifted children is twice the worldwide average and the country has ranked No. 1 in Europe at the International Math Olympics this decade. “We particularly appreciate the way in which our IT specialists in Bucharest like to think long and hard about an assignment at inception,” said Jean-Hervé. “Before coding even begins, you’ll get asked so many

questions, it will drive you crazy – but it’s because they’re thinking through the full concept, and at the end of the process you get the product you truly need.” The new team in Bucharest reports to Satyadip Das, Head of R&D, based in India. Inatech is a leading global provider of intelligent cloud ETRM and fuel management software to the physical oil trading and marine industries. Part of Glencore’s oil division, Inatech combines best-of-breed cloud technologies with in-depth industry expertise to enable companies to integrate, automate and optimize business processes, driving efficiency and revenue growth. Its customers benefit from an international delivery model that provides the competitive edge needed to thrive in today’s dynamic markets.

EU CARBON EMISSIONS ROSE IN 2017

urostat estimates that in 2017 carbon dioxide (CO2) emissions from fossil fuel combustion increased by 1.8% in the European Union (EU), compared with the previous year. CO2 emissions are a major contributor to global warming and account for around 80% of all EU greenhouse gas emissions. They are influenced by factors such as climate conditions, economic growth, size of the population, transport and industrial activities. 14

It should also be noted that imports and exports of energy products have an impact on CO2 emissions in the country where fossil fuels are burned: for example, if coal is imported this leads to an increase in emissions, while if electricity is imported, it has no direct effect on emissions in the importing country, as these would be reported in the exporting country where it is produced. This information on early estimates of CO2 emissions from energy use for 2017 is published by Eurostat, the statistical

office of the European Union. According to Eurostat estimates, CO2 emissions rose in 2017 in a majority of EU Member States, with the highest increase being recorded in Malta (+12.8%), followed by Estonia (+11.3%), Bulgaria (+8.3%) Spain (+7.4%) and Portugal (+7.3%). Decreases were registered in seven Member States: Finland (-5.9%), Denmark (-5.8%), the United Kingdom (-3.2%), Ireland (-2.9%), Belgium (-2.4%), Latvia (-0.7%) and Germany (-0.2%). energyindustryreview.com

NEWS

RUSSIAN GAS TO BULGARIA VIA BULGARIAN STREAM?

meeting between Alexey Miller, Chairman of the Gazprom Management Committee, and Temenuzhka Petkova, Minister of Energy of the Republic of Bulgaria, took place in Moscow on May 15. The meeting addressed, inter alia, the prospects of Russian gas supplies to Europe via TurkStream. Alexey Miller informed Temenuzhka Petkova of the timely completion of pipelaying for the offshore section of the gas pipeline’s first string. It was noted that TurkStream was key to improving the reliability of gas exports to Europe. Temenuzhka Petkova, in turn, spoke about the current state of, and the development plans for, the Bulgarian gas transmission system.

Meeting with Russian Prime Minister Dmitry Medvedev in Moscow, Bulgarian President Rumen Radev stated Russia has always been a strategic energy partner to Bulgaria as a supplier of natural gas, oil and nuclear fuel and as a participant in the maintenance and upgrading of energy facilities. Radev said the security of energy supplies is very important to Bulgaria and the EU. “Therefore, I hope that our governments will consider again the possibility of direct supply of gas from Russia via the Black Sea,” he urged. Noting that discussions on the Belene nuclear power plant project have been resumed in Bulgaria, he said Russia will be kept posted because “the resuscitation of the project implies Russian participation.” Radev praised Russia as ‘a strategic partner’ in the energy sector, highlighting Moscow’s role

in supplying natural gas, oil and nuclear fuel, as well as helping modernise and maintain Bulgaria’s facilities. The president added that “security of energy supply is extremely important for both Bulgaria and the EU. I hope that our governments will also review the possibility of direct supply of gas from Russia through the Black Sea.” Bulgaria hopes that the second pipe of the TurkStream pipeline network, under another name (possibly ‘Balkan’ or ‘Bulgarian Stream’), will reach the Black Sea port of Varna, instead of the European territory of Turkey. Radev also affirmed the Bulgarian request for ‘Bulgarian Stream’ is no different from Germany’s request for ‘Nord Stream 2’, adding that both projects would be compatible with EU legislation.

PRODUCTION IN CONSTRUCTION DOWN BY 0.3% IN EU AREA

n March 2018 compared with February 2018, seasonally adjusted production in the construction sector decreased by 0.3% in the euro area (EA19) and by 0.9% in the EU28, according to first estimates from Eurostat, the statistical office of the European Union. In February 2018, production in construction fell by 0.7% in the euro area and by 0.8% in the EU28. In March 2018 compared with March 2017, production in construction increased by 0.8% in the euro area and decreased by 1.3% in the EU28. 16

The decrease of 0.3% in production in construction in the euro area in March 2018, compared with February 2018, is due to building construction falling by 0.3% and civil engineering by 0.2%. In the EU28, the decrease of 0.9% is due to building construction falling by 1.0% and civil engineering by 0.7%. Among Member States for which data are available, the largest decreases in production in construction were recorded in Hungary (-10.3%), Romania (-9.2%) and France (-2.6%). The highest increases were observed in Spain (+3.1%), Slovakia (+2.3%) and Belgium (+1.1%).

The increase of 0.8% in production in construction in the euro area in March 2018, compared with March 2017, is due to building construction rising by 2.4%, while civil engineering fell by 4.2%. In the EU28, the decrease of 1.3% is due to civil engineering falling by 4.4% and building construction by 0.8%. Among Member States for which data are available, the highest increases in production in construction were recorded in Poland (+18.8%), Spain (+17.1%) and Slovakia (+4.9%). The largest decreases were observed in Romania (-10.8%), the United Kingdom (-8.1%) and France (-2.5%). energyindustryreview.com

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OPINION

Installing/ dismantling of industrial equipment DOES IT REQUIRE A BUILDING/DEMOLITION PERMIT? Daniel Vlasceanu – Partner at Vlasceanu, Ene & Partners Raluca Spinu – Associate Lawyer at Vlasceanu, Ene & Partners

he energy industry is heavily depending on T usually large equipment of various types. Operators and their contractors inevitably perform actions on the installed equipment, either on site or at a different site (e.g. temporary removal for repairs/replacement/temporary usage at another facility etc.). As such, they need to know whether a construction/demolition permit is required for the work they plan to perform on such equipment. Special attention must be granted when intervening on the more complicated equipment qualified under the applicable legislation as ‘industrial installations and technological equipment’ (hereinafter ‘Industrial Equipment’).

GENERAL CONSIDERATIONS An Industrial Equipment can autonomously function on its own at any facility where it is installed (i.e. it is not intrinsically connected to function on a specific location) – e.g. compressors/turbines/pumps/ 18

generators etc. Usually, energy facilities involve several types of such equipment. Judging from the Construction Law no 50/1991 (‘Construction Law’) point of view, one can say that an industrial facility generally includes: –– construction elements (e.g. foundations, walls, floors, ceilings, roof etc); –– utilities related elements (e.g. electrical, sanitary, climatization installations etc); –– Industrial Equipment.

CONSTRUCTION ELEMENTS AND THE UTILITIES RELATED ELEMENTS It is beyond doubt that the construction elements and the utilities related elements must be authorised when constructed as well as when demolished. The ‘symmetry’ rule stating that “the works that need authorisation for building , also need authorisation for demolishing” is applicable. Certain maintenance and repair works of such energyindustryreview.com

OPINION

construction/utilities related elements do not entail a special permit provided that such works do not modify the resistance structure and/or the architectural aspect of the building (as per Art 11 of the Construction Law no 50/1991).

INDUSTRIAL EQUIPMENT When it comes to Industrial Equipment, things get complicated (particularly because it is a thin line of distinction between the construction elements and the equipment itself ). »»

Building works vs installation works for an Industrial Equipment

As per Art 3 of the Construction Law and Art 43 para (6) of the Application Norms of the Construction Law1, only the construction elements, including the structures that support the Industrial Equipment, must be authorised. For example, if an equipment needs a cement foundation, such foundation needs a building/demolition permit when constructed/ demolished. A clear distinction between the building authorisation procedure and the installation procedure must be made. When talking about installing Industrial Equipment another procedure becomes applicable (as per the Government Ordinance no 95/1999 concerning the quality of installation works of the industrial technological equipment). Such latter procedure can be performed at the same time or after the authorised construction works are finalized (and the reception protocol is signed). In addition, depending on the nature of the Industrial Equipment to be installed, other special regulations might become applicable for installing, regular maintenance, repairing or decommissioning of Industrial Equipment (for example, regulations issued by the National Authority for Control and Approval of Boilers Pressure Vessels and Hoisting Equipment – Romanian: ISCIR). »»

Demolition works of Industrial Equipment

Art 8 of the Construction Law provides that for decommissioning (dezafectarea) or dismantling (dezmembrarea) Industrial Equipment one needs a demolition permit. This seems to us a little excessive: first, such procedure appears to exceed the object of the 1 Approved by Order no 839/2009 of the Ministry of Regional Development

Construction Law (as the Industrial Equipment is an autonomous element that does not entail works similar to construction/demolition works; sometimes, it can be removed without any intervention onto the construction itself !). Second, the theory of symmetry should be applied: if the installation of such equipment does not require a building permit, neither should its decommissioning/ dismantling require a demolition permit. Third, (as mentioned above) for Industrial Equipment other specific provisions may be applicable on a case-bycase basis (e.g. ISCIR regulations). We have tried to obtain clarifying answers from the Ministry of Regional Development, but they replied saying that interpretation of the above-mentioned provisions fall under the jurisdiction of local authorities which are to apply them for each particular case. However, based on the supplementary comments received form the Ministry of Regional Development we have drawn several conclusions: • No building permit is required if the intervention on an Industrial Equipment: a. does not modify the construction itself and/or of the utilities related to the building; b. is limited to the replacement of the equipment with another one of the same type/ technical characteristics. • A building permit is required if the relocation of an Industrial Equipment leads to: a. the relocation of the construction itself, its supporting elements and/or of the utilities related to the building; b. interventions upon the existing constructions, including the structures that support the Industrial Equipment and/or the utilities related to the building.

CONCLUSIONS We have noticed steps made towards clarifying the permitting procedure; there are several legal initiatives simultaneously advancing aiming to support al least some of the energy sectors. But such unclarities (as above presented) must be addressed – the legislator could address them either in the draft new construction law2 or in the project of Code of Town and Country Planning, Urbanism and Constructions3. 2 Our opinion on the new draft construction law may be consulted in the Energy Industry Review no 2/2018. 3 Available at: http://www.mdrap.ro/proiect-de-hg-pentru-aprobarea-tezelor-prealabile-ale-proiectului-codului-amenajarii-teritoriului-urbanismului-si-constructiilor - as accessed on 28 May 2018.

OPINION

Romania in view of ensuring energy security The analysis of problems affecting Romania’s energy independence and policy, as well as Romania’s concerns for ensuring its own and regional energy security results in some observations and conclusions.

Dipl. Ec. Petre Racanel - President of the Romanian Civil Society Federation

e can notice serious rearrangements in the W European energy strategy, the main actors changing places, waiving rights or issuing new claims as leader or important market driver, especially in Romania’s region, meaning the Balkan area and South-Eastern Europe. In this regard, we have Hungary’s example, which tends to become a regional energy leader, an energy hub in the area, even without being a gas producer. In this new context, Romania can see its energy and geostrategic interests affected, as conception of certain projects is changed and some hydrocarbon transmission routes are modified, from the Black Sea to Europe and vice versa. We consider both Black Sea resources, known or in exploration stage, and Caspian resources, directed through Russian pipelines to the Black Sea and further to the West, but also through Romania. Unfortunately, Romania is considered a risk area, but let’s not forget that Romania is a gas producer and ensures EU’s border in the geographic proximity of Russia and Ukraine, not at all comfortable. Thus, routes from Romania to Bulgaria and Hungary will have a very large volume of energy 20

transmission, and back to Romania the transmission volume drops dramatically through the pipeline, which makes us think that, in case of crisis/emergency, Romania’s gas demand cannot be met entirely. Romania’s agreement with Bulgaria regarding the interconnector should provide for a bidirectional pipeline on Bulgaria Romania route of approximately equal sizes. The European energy strategy provides for Romania’s connection with Hungary, Bulgaria and Moldova, but Romania is required to export at full capacity, and in case of emergency or crisis it cannot receive from the West the necessary gas volume.

HOW CAN ROMANIA OVERCOME THE PROBLEMS IT IS FACING IN THE ENERGY SECTOR? It is necessary to build in Romania a domestic pipeline infrastructure, with a high energy transmission capacity, with the necessary branches to the West and East, ensuring both the export of the surplus of resources and the necessary reverse flow capacity, which is required in certain urgent moments. At the same time, it is necessary energyindustryreview.com

OPINION

to modernize and expand the existing networks, as well as the gas storage capacities. Part of the funds necessary to build this energy transmission infrastructure can come from the World Bank, EBRD and European funds, as well as from interested countries from the East, if the EU fails to properly support Romania’s effort. If we are talking about South Stream and White Stream, we should admit that Romania has proven a lack of inspiration, showing no interest in these projects and, furthermore, declaring its withdrawal. Although these projects are frozen, Romania should be explained and be ensured of the benefits it could have should these projects be resumed. Not to mention the Nabucco project. But for this a new European energy strategy is required, as well as a new national energy strategy, in which the Romanian authorities should get involved seriously to achieve its objectives. These strategies must be balanced and fair, taking into account the special energy needs, including of Romanian consumers. While the Romanian authorities are in a war of controversies, detrimental to Romania’s energy interests, it seems the Hungarian ones aim to reach agreements, especially with Austria and other interested countries, bypassing Romania, although it’s about Black Sea resources, added to which could be the Caspian resources as well. In this way, we could find ourselves in the paradoxical situation where Hungary, a country with almost no energy resources which is not bordered by the Black Sea, dictates the terms for transmission, export and import for the resources of this area. Maybe in the past the governments of Romania have not acted efficiently to achieve the country’s energy interest, but it is now time to act for the national interest, including of consumers, so that they feel the benefits of their own energy resources. If we also consider the potential Caspian resources transported to the West through the Black Sea region, we can conclude that Hungary definitely wants to become a regional energy leader. Thus, there are three questions that persist. Is it possible for Austria to give up its place in BRUA in Hungary’s favour? How did Hungary manage to book the entire capacity of energy resources from the Black Sea to Austria (through three companies of Hungarian origin), but with Hungary as final destination? Does Hungary need such a large volume of gas or does it want to re-export these resources, at unaffordable prices for Romania and other countries? What is next and how can the EU explain this new energy context dangerous for Romania and detrimental

even for Europe? What can Romania do to avoid this possible trap? What can the EU do to help more Romania, in this undesired situation, what funds can it allocate to develop new energy transmission capacities or for the extension of the existing ones or for new gas storage facilities and, of course, how can the situation created be balanced and Hungary and Austria be obliged to show moderation in terms of BRUA project implementation? Romania’s Government should get involved more and directly in the process of ensuring the country’s energy security, taking into account the Euro-parliamentary experience of the current Prime Minister and especially the lack of reaction and the mistakes of her predecessors on energy issues. It is particularly necessary now, in such an important moment, when Romania prepares to take over the Presidency of the European Union. We believe that the strength of EU leadership by Romania must be its concern to solve the outstanding problems in the energy sector and only afterwards in the agriculture sector. In the new energy strategy, the focus should be on the gas and energy consumers, especially the protected ones. Romania’s natural resources must primarily cover the needs of its own citizens, at affordable prices. Romanian state officials are striving to comply with EU directives in the field, often refer to Romania’s obligations in the energy sector, talk about the pillars that should be observed for the energy sector, about plans, development projects and Romania’s energy independence, but things are stalled, as is the case with the national energy strategy for example. Often political changes, in Government, ministries, competent agencies affect the national energy interests. The civil society questions the place and role given to Romania by the European Union in achieving the European strategy and involvement in the regional energy projects, which is why it requests a potential review and re-discussion thereof at the Union’s level, new European policies. In conclusion, we wish to recall that the new strategy should take into account Romania’s geographical position. Romania could become a regional hub as a gas producer and distributor. It could better ensure the regional and national energy security, with more sustained and mutual European support. Romania could boost competition in the field, in a transparent and nondiscriminatory manner. Romania would also be interested in ensuring new jobs in the field, stimulate the domestic companies, for making constructions and providing services in the energy sector. Romania reiterates its availability to support and develop regional cooperation, integration of the energy market and security of transmission corridors. 21

OPINION

PARADIGM SHIFT Granting the concession for gas distribution networks by local authorities Dumitru Chisalita - Judicial Technical Expert in Oil & Gas

he Senate debated on 15 May the amendments on T the Gas Law, on which occasion it was proposed to eliminate the Ministry of Energy as institution that exercises the capacity of concession provider for the public gas distribution service and the appointment as concession provider authority of the authorities of the local public administration from the administrative territorial units, associations thereof or the County Council. An absolutely natural move. In fact, if we study the history of the gas sector, we discover that in 2004, when this first Gas Law was written in Romania, the draft law included this provision. The normal approach of the team that wrote the draft law was to appoint local authorities as concession provider for the gas distribution networks, including in their entitlement to obtain revenues to the local budgets from royalties. The opposition against the appointment of local authorities as concession provider authority came from the competent Ministry, which invoked: “the lack of specialized staff at the level of administrative territorial units to grant and monitor concession agreements” and “the danger to build distribution networks in a chaotic manner, from reasons other than those related to efficiency and effectiveness” (maybe as electoral bribery). These motivations were the ones that convinced and determined the nomination of the Ministry of Economy (at the time) as the concession provider and the authority to monitor the concession for local gas distribution networks. The question is what changed today compared to 2004, in terms of shortcomings assigned at the time to administrative territorial units. Personally, I believe nothing has changed. The administrative territorial units do not have specialized staff to be able to immediately coordinate this process. I make this statement based on hundreds of actions pending before courts following the authorization by local authorities of constructions in the protection area of gas objectives. In another train of thoughts, during 1993-2003, certain 22

administrative territorial units had an important role in the development of gas distribution networks, much lower than the role that the law is intended to grant today, i.e. of concession provider authority responsible for granting and monitoring the concession. We currently have a concrete result: the gas distribution networks built in that period that haven’t been commissioned to date due to multiple legislative issues, rigged feasibility studies that make that in hundreds gas distribution networks the costs are higher than revenues and which survive due to higher gas tariffs that Romanian consumers must pay etc. Thus, I believe that throwing this law into the market, without a prior preparation, may bring us to a new situation similar to those times. Moreover, I would like to point out (see the history of similar situations in 1924-1939, 1950-1975, 1993-2003) on the fact that such an action, without being thoroughly prepared and supported in practice, without proper support, may have important consequences on gas supply to end-consumers and especially on the increase in gas prices for end-consumers. The right of the local authority to grant the concession for networks laid on their territory is certain, the collection of royalties and benefiting from these revenues is another certainty, but it is necessary to prepare the territorial units in order to ensure the ability to cope with this action. I believe it is necessary to impose the existence of specialized persons within local authorities to carry out this work. It should be considered the limited availability in the market of these persons (in Romania there are over 1,000 administrative units with gas networks and at least as many that could find themselves in the coming period in the situation of managing such a service), ensuring the budgets necessary for carrying out the activity of concession/monitoring/performance of concession agreements for gas networks, defining a supervisory entity and especially consulting, counselling and mediating the problems that will arise in this process etc. energyindustryreview.com

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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

INTERVIEW

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INTERVIEW

Technology, the right way to deal with Climate Change We sat down with Corneliu Bodea, the President of the Romanian Energy Center (CRE), to talk about the associationâ&#x20AC;&#x2122;s ongoing R&D projects and main objectives. We also discussed the role of Romania in the EU energy market and what the future in the energy field prepares for us.

INTERVIEW

The Romanian Energy Center (CRE) is a pole that aggregates energy sector’s companies and institutions whose interests are represented at European and international level. How was this center founded and what are its main objectives? The Romanian Energy Center (CRE) association was founded in 2011 at the initiative of Mr. Stelian Gal along with Mr. Mihai Paun and a number of partners, companies from the energy sector in Romania. From the very beginning CRE’s main objective was representing the interests of the Romanian energy sector towards European Union (EU) relevant institutions. Here we are after 7 years of continuous and fruitful work, with 22 members among which we can find the most important and relevant representatives of the energy industry in Romania, covering the entire energy value chain: generation, production, transport and distribution, supply, service and equipment suppliers, gas, oil, nuclear, electricity, coal and thermal energy. In CRE today there are 7 employees out of which 2 are working in Brussels. Also we employ 5 research specialists, especially for the Horizon 2020 projects. We benefit of the great support of 3 members elected by rotation, for a six-month mandate who are an active part of the Directorate of the association. We are happy to manage an annual budget of approximately euro 150,000 as income from membership contributions and an overall budget of euro 2,500,000 (at this moment) as financing from Horizon 2020 research projects. Since the beginning, CRE works with enthusiasm, diligence and commitment in representing the interests of its members and the energy industry as a whole. As representative of Romania’s energy community in Brussels, how do you act to fulfil these objectives? First of all, we are present! There is a need for continuous presence and diligent work in order to be informed and contribute to the EU daily life. This is the reason why we have an office in Brussels and a permanent staff there. We also organize the annual event entitled Romanian Energy Day the7th edition this year. It is an already well-established conference which engages EU member states experts and policy makers in Brussels usualy benefiting from the participation of the vice-president in charge 26

of Energy Union, energy commissioners and other high ranked officials from the European Commission and European parliament. We are also active in other events organized by our partners. An important role plays the cooperation with the Permanent Representation specialists in order to coordinate and bring the ‘voice’ of the energy industry into their attention. I believe that Romanian representatives need to spend more time meeting and discussing with EU officials, energy industry organizations or NGO’s in Brussels, in order to create more awareness of our objectives and to understand better what the future in the energy field prepares for us all. What domestic/international projects does the association currently carry out and what are the priority areas on which you focus your activity? We are currently involved into several domestic and international projects such as R&D projects on Horizon 2020 program, focusing on several areas from smart metering and electromobility to 100% integration of renewables into the grids. Another very important international project which confirms CRE’s position in the regional energy diplomacy is the coordination of CDCEP (Center for Dialogue and Cooperation on Energy Projects) in the 16+1 format (China and 16 countries from CEE). I would like to emphasize this project as a very important one for Romania, which has the coordination in the format for the energy domain. We are permanently involved in the representation of our members and the energy industry towards EU institutions as well to the Romanian institutions such as: ANRE, Ministry of Energy, The Commission for Industries and Services from the Romanian Parliament, etc. Last but not least, I would like to highlight a project that is particularly close to me namely the National Energy Strategy where CRE is represented and has an active role. So, plenty of projects and work to be done!

We are currently involved into several domestic and international projects such as R&D projects on Horizon 2020 program, focusing on several areas from smart metering to 100% integration of renewables into the grids. Another very important international project is the coordination of CDCEP (Centre for Dialogue and Cooperation on Energy Projects) in the 16+1 format (China and 16 countries from CEE).

As member of international consortia of projects funded by the European Commission within the Horizon 2020 Program, what is the value allocated to CRE? The value is around 2,5 million euros for the projects we are involved in now and we are in competition also for other projects. The value is particularly significant when we consider that energyindustryreview.com

INTERVIEW

the funds cover the activity of Romanian specialists, but this is not all. The main gain for CRE and Romania is that the research results, in very important areas of the energy value chain, are open and prepared to boost the industry and applications in our domain. We are very happy that one of the projects (WiseGrid) has just received â&#x20AC;&#x2DC;The good practice of the year award in the technology and design categoryâ&#x20AC;&#x2122;. The prize was handed by the European Commissioner for Energy and Climate, Miguel Arias CaĂąete, key speaker of the Romanian Energy Day 2018 event. We are members of 6 consortia in which we develop part of our activity and the overall amount of the allocated funds is more than euro 45 million euros. Last year in November, CRE organized under the auspices of the Center for Dialogue and Cooperation on Energy Projects (CDCEP16+1) the first edition of the 16+1 Business Forum , Conference and fair, an important milestone towards better cooperation and dialogue on energy matters between countries in Central and Eastern

Europe and China. How was the event echoed in Romania? The event was a huge challenge for CRE, having attending in Bucharest, Mr. Nur Bekri, Administrator of NEA (National Energy Administration) in China, energy ministries of Romania, Serbia, Slovenia, and deputy Ministers from the other 13 countries, ambassadors, over 50 companies with a turnover of more than 200 billion euros, represented at CEO, President or Executive Vice-president level, an important number of experts and speakers. The echo, both in Romania, China and the rest of participating countries was important and I believe that Romania deserves such a central role in the regional energy industry and policy. I myself and my small but very competent and enthusiastic team are happy for being able to contribute. The meeting in Bucharest was an occasion for new discussions with the Chinese partners on the two strategic projects of major interest - reactors 3 and 4 in Cernavoda and a new lignite-fired group in Rovinari. How do negotiations with China General Nuclear Power

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INTERVIEW

The main gain for CRE and Romania is that the research results, in very important areas of the energy value chain, are open and prepared to boost the industry and applications in our domain. One of our projects (WiseGrid) has just received ‘The good practice of the year award in the technology and design category’.

Corporation take place and to what extent the parties’ requests can be harmonized in accordance with the EU legal provisions, given that the Chinese side requests a minimum guaranteed price for energy to be produced at Cernavoda in order to recover its investment, and this might not be approved by the European Commission? Indeed, discussions have been held both on the Rovinari and Cernavoda projects during the Conference and business meetings, the presence of Mr. Nur Bekri, NEA Administrator was a good opportunity to intensify the cooperation on these topics. Without being able to give more clarification on the exact outcome, I would only mention that in my opinion, the Cernavoda 3&4 reactors project is a very important one for Romania and we should progress rapidly with GCN or with different partners in order to finalize it. The whole energy strategy depends very much on whether this project will be carried out or not. Regarding the Rovinari project, I believe that the Chinese clean coal technology providers could have a special interest for Romania in the light of the newly approved emissions targets. If you had to define the place of Romania on the Europe’s energy map what role should our country play? Due to its geopolitical location, our country must play a very important yet challenging role in the EU energy market and infrastructure. Being at the border of the Energy Union, there are a number of responsibilities that need to be considered together with an important role in securing the capacity of both natural gas and electricity as well as exporting this security to the surrounding countries. This is possible due to the fact that Romania has a diverse mix of resources and a solid, but rather old infrastructure. What I believe should be made clearer for the EU institutions is this important role that should attract more projects of common interest and greater importance in terms of the need to maintain the energy mix and the strong energy competence of the specialists. This is a task to be followed by NGO’s such as CRE and the Romanian government, which, unfortunately, does not seem to be fully aware of this reality. We hear very often terms like energy hub, when talking about Romanian energy infrastructure, but what we see is a slight

divergence from the clear path in the development of the energy industry as a regional energy hub. We need to modernize infrastructure, to secure a diverse mix of energy and maintain a strong energy-related service and equipment industry. In view of the preparations for Romania to take over the Presidency of the Council of the EU in 2019 and the EU Clean Energy Package, what is your opinion on energy produced by coal-fired power plants, which currently covers an important share of the national energy mix? What are the alternative solutions, more efficient, that you encourage? I believe that the Presidency of the council of the EU might be a good chance to promote the important role of the Romanian energy sector for EU and the region, but there is more to be done unrelated to this temporary opportunity. The generation of coal-based energy is indeed under great pressure from two directions: the price of CO2 certificates and the new NOx regulation, especially NOx. As I have already mentioned, we have to secure a diverse mix of generation, the power and the coal-based one is covering for the moment 20-30% of the needs. Moreover, in critical situations (especially severe weather conditions), coal plays a determining role. The introduction of the capacity mechanism which is also adopted in other countries, is, in my view, the solution to maintain sufficient capacity for coal–based fuel, which could, of course, be modernized to meet the BAT (Best Available Techniques) for CO2 and NOx requirements. Over the years (5-7 years), I believe that a transition on gas-fired capacities, based also on the gas resources from the Black Sea, is the right response to electricity generation, along with Hydro, Nuclear, Biomass and also a continuous increase in renewable capacity. What trends are you seeing in energy demand? Nowadays, all energy related strategies have to start from the demand for energy and this is an important shift from the traditional way of designing the energy sector from the production capacity. Due to the technological factors, the way we use or we will use energy has become a completely different game. Just for example I will give you some few insights. 29

INTERVIEW

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INTERVIEW

The Romanian Energy Day is a very important event for Romania because it creates an opportunity for the energy industry to stand in front of the most important representatives of the EU and a large number of experts to clarify the Romanian energy industry’s approach to the current challenges.

The Internet of things (IoT) will enhance the demand-side control capabilities and making the grids smart is a must. Energy efficiency projects will change the distribution map of consumption, the development of electrical vehicles (EVs) will bring more stability in generation and greater flexibility and predictability for the grid operators. Distributed generation, mainly based on renewable energy sources will challenge the transmission and distribution grids in a different way, but major changes will be needed. Offering bundled products/services to the energy consumers will open new way to utility providers to significantly diversify their income streams. Just a few future changes that make the energy sector a very challenging and interesting domain. What are your legal perspective regarding the clean energy transition in the EU to 2050? What challenges and opportunities of implementing energy and climate solutions do you see? I am a strong supporter of climate change limitation initiatives and I must say that COP21 has made a major breakthrough in the right direction but significant results are yet to be seen. What I believe is that we should be strong, clever and committed! This is the only way we can ensure humanity’s bright future. The challenge comes from technology and I will refer to one of the main themes which is energy storage and the opportunities come also from technology and I will refer here to demand control and smart grids. We need to be responsible and the way we express our responsibility is to accept that energy is an expensive resource. It may not be too political for me to say this, and I don’t mean that we should increase the prices for more profits into the energy sector but maintaining an environment that stimulates investment in technology is the right way, even taking into account the fact that we have to pay for it. Energy is the most important gift the Universe and God has given us and we should be more responsible for spending it. Some say we are at a decisive moment to decide the next decade in terms of climate and energy policies. What’s your vision for the next steps? I have already made the main statements on this question and if I can conclude, I would say that Climate Change is a reality and we need to fight against, technology is the right answer, it

doesn’t matter if we talk about more renewables into the grids, demand control, Internet of Things, energy storage and electric vehicles. I think we should continue on the way COP21 has started and we have to take responsibility. As we are close to the 7th edition of the Romanian Energy Day, organized by CRE in Brussels, what messages will Romania send to the European Energy Community? The Romanian Energy Day (RED) is a very important event for Romania, not because it is organized by us, but because it already creates a well-known opportunity for the Romanian energy industry to stand in front of the most important representatives of the EU (Commissioner for Climate Action & Energy - Miguel Arias Cañete, Vice-president Maroš Šefčovič, DG Energy Director General - Dominique Ristori, etc.) and a large number of experts based on a regional approach (representatives of Greece, Bulgaria, Serbia, Hungary are present) to clarify the Romanian energy industry’s approach to the current challenges. Sometimes I feel that the event is more expected by EU and regional actors than by Romanian representatives, but this year we are glad to have a partnership to organize the event with the Ministry of Foreign Affairs Delegate Minister for European Affairs, Mr. Victor Negrescu, the partnership with Mrs. Norica Nicolai, Mr. Dan Nica - MEP and the Permanent Representation of Romania to the EU Mrs. Luminita Odobescu. We will have with us the State Secretary in the Energy Ministry of Romania, Mr. Andrei Maioreanu and the State Secretary Ion Cimpeanu from the Ministry of Environment. RED is at the 7th edition and we have made every effort to keep this event at the highest level of expectations. Our message from the energy industry is firm and strong, Romania needs to introduce just energy capacity mechanism, bilateral contracts are important to ensure stability and long-term financing. Digitization of the energy infrastructure is the key to an efficient energy sector, a diverse energy mix is a critical need for the region. Maintaining predictive energy regulation and a regulatory environment is a key success factor in boosting investment in the sector. 31

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 32

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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.

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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

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OIL & GAS

Improving the efficiency of oil recovery EVALUATION OF WATER INJECTION IN MATURE RESERVOIRS Taking into account that the efficiency of these processes depends on both the quality of the water injected and the compatibility with fluids and rock from formation, the key focus of this project is to make an evaluation of the way in which the water used for these processes responds to the two requirements. Therefore, the chemical water analysis and the compatibility test between the injected water and the rock and the reservoir fluids can be done. Florin Aconstantinesei, OMV Petrom SA - ICPT Campina

he project results can be used both for the design/ T upgrade of the water injection stations and to enhance the efficiency of recovered oil as a result of water injection. This project presents specific laboratory and field data required for waterflood process like: • Fluid properties; • Rock properties; • Flow properties; • Residual oil saturation; • Water quality. A detailed protocol has been developed to guide one through the proper steps and analysis which must be conducted to ensure acceptable injection water quality is present to maintain a long term, economic injection process. There were presented two types of dynamic tests that are necessary to be performed when you want to design or optimize a water injection process. 34

Objectives of this paper are to establish the types of tests and analyses necessary to be performed in applying of water injection processes. Water injection processes are the most common in Romania and in the world. At the moment, an important percentage of the total oil production comes from mature operated fields, through water injection. A water injection process is realized in order to maintain reservoir pressure or to displace oil. Because most of the fields, where these processes are applied, are mature fields some of them having high degree of depletion, the water is injected as an oil displacement process. Waterflood is a widely used commercial recovery process for the following reasons: • Water is generally available and relatively easy to inject; • Water is an efficient agent for displacing light/medium gravity oil; energyindustryreview.com

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•

Flooding involves low capital investment and operating costs and has favourable economics; • Water spreads easily through an oil-formation. The level of effectiveness of a waterflood depends on the mobility ratio between the oil and water, and the geology of the oil reservoir. Waterflooding is effective because almost all reservoir rocks are either water-wet or mixed-wet. Waterflooding is a process that typically takes several decades to complete. Hence, continuous, routine field production and pressure data must be taken for monitoring and analysing waterflood performance. There are opportunities to modify the original waterflood design and operating guidelines on the basis of analysis of the actual field production data. Occasionally, more expensive, special-data acquisition programs (i.e., 3D- or 4D-seismic data) are run to assist the evaluation process. A variety of engineering tools have been developed to analyse waterflood performance, ranging from simple plots of field production data to full-field numericalreservoir-simulation models. Waterflooding successful operations require: • Developing an economically viable plan; • Implementing the plan; • Monitoring and evaluating performance; • Revising plans and strategies.

LABORATORY STATIC TESTS FOR DETERMINING THE WATER QUALITY USED FOR WATERFLOODING PROCESS The objective of any water-injection operation is to inject water into the reservoir rock without plugging or permeability reduction from particulates, dispersed oil, scale formation, bacterial growth, or clay swelling. Ideally, injection water should enter the reservoir free of suspended solids or oil. It should also be compatible with the reservoir rock and fluids and would be sterile and non-scaling. Laboratory tests are designed to determine, understand and quantify the governing processes, their parameters, and dependency on the in situ and various operational conditions, and their effect on formation damage. Laboratory tests help determine the relative contributions of various mechanisms to formation damage. For convenience, the frequently encountered formation damage mechanisms can be classified into two groups: 1. Fluid-fluid interactions include: emulsion blocking, inorganic deposition, organic deposition. 2. Fluid-rock interactions include: mobilization, migration and deposition of in-situ fine particles; invasion, migration and deposition of externally introduced fine particles; alteration of particle and porous media properties by surface processes such as absorption, adsorption, wettability change, swelling; damage by other processes, such as counter-current imbibition, grinding and mashing of solids, and surface glazing that might occur

during drilling of wells. The static analyses that are made in the laboratory to characterize reservoir fluids are: • Reservoir fluids: water/oil: –– pH, density, electrical conductivity, TDS; –– Composition (anions, cations), alkalinity, organic acids; –– Suspended solids (quantity and particle size distribution); –– Dissolved gases (CO2, H2S); –– Bacteria; –– Oil: density, viscosity curve, SARA analysis, TAN. • Water options identification (sources and requirements): –– Analysis for possible water sources: »» pH, density, electrical conductivity, TDS; »» Composition (anions, cations), alkalinity, organic acids; »» Suspended solids (quantity and particle size distribution); »» Dissolved gases (O2, CO2, H2S); »» TPH/Free oil and grease (FOG); »» Filterability test; »» Bacteria. –– Compatibility tests between two or more water sources; –– Compatibility tests between injection and reservoir waters; –– Measurement of interfacial tension. • Water quality requirements – must be correlated with reservoir characteristics: –– Establishing of oil/water separation characteristics; –– Settling time test for suspended solids; –– Suspended solids (content and distribution) for different stages of treatment. • Compatibility tests between treatment chemicals and water • Selection of water treatment options and available technologies In order to obtain accurate results, the water must be carefully sampled and characterized to assess the likely problem areas.

SAMPLING REQUIREMENTS •

Water injection samples shall be taken under normal operating condition of the plant –– The sampling shall be performed according to the current OMV Petrom standards and norms; –– Special connection and recipients shall be used for sampling of each probe; –– The description of each sample is necessary to be done very accurate for easy identification of the location and the condition of the system during sampling. The minimum given information shall be: • A detailed description of the point of sampling, date, time stamp and person; • Specify operating condition (pressure, temperature, etc.); 35

OIL & GAS

TYPES OF SCALING FOUND IN OIL FIELD Mineral

Variables that influence the solubility

Calcium carbonate* CaCO3

CO2 partial pressure, pH, temperature & pressure, TDS

Calcium sulfates: Gypsum* CaSO4 X 2H2O Hemi-hydrate CaSO4 X 1/2 H2O Anhydrite CaSO4

Temperature, TDS, pressure

Barium sulfate BaSO4 (barite)

Temperature, TDS, pressure

Strontium sulfate SrSO4 (celestite)

Temperature, TDS, pressure

Iron compounds: Ferrous carbonate FeCO3 Iron sulfide FeS Ferrous hydroxide/ferric Fe(OH)2/Fe(OH)3 Ferric oxide Fe2O3

Dissolved gases, corrosion, temperature, pressure, pH

Note: *Calcite and gypsum most common forms of minerals

•

Pictures of the sampling location will be required. In case where it is necessary to be performed an analysis of the water reservoir, in terms of similarities/differences depending on certain productive horizons or in terms of their compatibility with water injection, we can use diagrams drawn using chemical composition of water studied. In the literature, there is material in this sense, describing such diagrams, from plotting to interpretation. Examples of charts used: Stiff diagram, Schoeller, Piper, Durov etc. Schoeller diagram, the concentrations of ions in water (SO4, HCO3, Cl, Mg, Ca, Na/K).

SIMULATION WITH MULTISCALE SOFTWARE Scaling deposition can occur in both injection wells, and production wells. To dissolve these scales, depending on the type of mineral deposited, different stimulation solutions should be applied. It is therefore important to know, firstly, the type of crust (see table Types of scaling found in oil field). Multiscale software makes predictions on scaling depositions through mathematical modelling. These estimates are more or less close to reality, depending on the input for modelling. Depending on the input, there are three kinds of software multiscale mathematical modelling, as follows: • Analysis of water (not consider oil analysis); • Water & gas analysis; • Analysis of water & gas & oil (the best prediction for crusts 36

formed, including where these scaling can occur and how severe is this issue). In general, the tendency for scale deposition is analysed for production and injection wells with multiscale software, based on the following data: • Chemical composition of water content in organic acids; • CO2 content in gases produced by the well; • Reservoir conditions (pressure, temperature); • Flow of water produced for the production wells & water flow injected to injection wells.

SETTING WATER QUALITY, LIMITS AND TREATMENTS Once the water and the rock have been characterized, the difficult task of deciding how much water processing is required to create non-plugging water begins. In oilfield water floods, considerable attention is given to the quality of the water injected into the formation to ensure that optimal injectivity is maintained and to prevent the occurrence of formation damage. Formation damage depends on the properties of the fluids and the geological porous media, and their respective interactions. In addition, the injection system must be protected against corrosion to preserve its physical integrity and to prevent the generation of insoluble corrosion products. Any insoluble material in water, either solid or liquid, can contribute to plugging. This includes formation solids (sand, silt, or clay), corrosion products, water-formed scales, bacterial growths and algae, oil (both crude and lubricating), and undissolved treating chemicals. energyindustryreview.com

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The contaminants primarily responsible for plugging fall into three categories: 1. Present at the source. Some of the primary contaminants commonly present at the source include: in produced water oil, corrosion products from the production system, bacteria; in water supply wells - formation solids, corrosion products, bacteria; and in surface waters-dissolved oxygen, bacteria, suspended inorganic solids, marine organisms. 2. Generated within the injection system. Contaminants generated within the system may include corrosion products, bacterial masses, biogenic hydrogen sulphide, and scale. 3. Added to the injection system. Sometimes, intentionally added materials ultimately contribute to plugging. For example, contaminants such as dissolved oxygen, bacteria, suspended solids, and usually oil are the inevitable results of pumping trucked water or pit water into an injection system. Improperly selected corrosion inhibitors that are not sufficiently soluble in the injection water can contribute to plugging. The difficulty of preserving water quality is essentially a direct function of the length and complexity of the injection system. The result is that the quality of the water reaching remote injection wells in long systems is often considerably worse than it was at the source.

DYNAMIC TESTS AND RESULTS INTERPRETATION In order to achieve the pursued objectives, a series of standard methods for fluid, core and device preparation mast be duet. The dynamic tests were run on FRT equipment (see Figure 1). The following procedure has been designed to provide a methodology for assessing formation damage in a variety of testing situations. In these tests it is monitored the behaviour of the flow parameters (permeability and differential pressure) for large volumes of reservoir and injection water through the core sample. The water must be prepared, by filtration and chemical addition established after the static tests.

WATER QUALITY REQUIREMENTS When the quality of the injection water is inadequate, reservoir plugging results. The consequence of plugging is reduced sweep efficiency, which results in decreased recovery and, ultimately, loss of revenue. In addition, operational costs are increased because of workovers and system repairs required to restore injectivity. The quality required for a given reservoir will be primarily a function of reservoir permeability, assuming true matrix injection into the reservoir pore space. Tight, low-permeability zones generally require better-quality water than higherpermeability zones. During water flooding, suspended solids introduced into the formation via the injected water are a major cause of reduction in permeability of the formation rock. Thus, formation damage can be caused by suspended silts, clays, scale, oil, or bacteria, which may be present in the injection water. Most methods attempt to correlate the suspended-solids concentration, particle-size distribution, or water-quality measurements with the formation permeability or pore-size distribution. It is important that, for each chemical added into the injection water, to perform compatibility tests between treatment chemicals and water. When produced water is injected, the water contains both solids and oil. Attempts to estimate acceptable levels of suspended solids and oil with theoretical models have not been successful to date. Empirical correlations currently offer the best hope.

Figure1 Formation Response Tester (FRT) equipment DYNAMIC TESTS FOR DETERMINING COMPATIBILITY BETWEEN INJECTION WATER, RESERVOIR WATER AND ROCK In general, laboratory tests have the role of simulating processes done in the field, under laboratory conditions accordingly with established methodologies for each and every test. This work aimed to determine how the permeability of the analysed rock is changed, in the water injected process. Preparing the core samples for dynamic tests, consisted of their saturation with reservoir water filtered through 0.2 µm, in two stages: initial under vacuum after which the core samples were maintained at a pressure of about 50 bar for 3-4 days, for a 100% saturation with brine. For this kind of tests, we can have four water sources that can be used like injection water: • Reservoir water; • Mix of reservoirs water; • Fresh water; • Mix between reservoir and fresh water. In dynamic tests it is monitored the behaviour of the flow parameters (permeability and differential pressure) for large volumes of injection water fresh water and mixture between them. 37

OIL & GAS

The experimental data acquired by the equipment software are Kw (core permeability to injected water) and DP (differential pressure).

RESULTS INTERPRETATION Calculation of the variation of DP & K, is performed using only value recorded during last 10 PV of injection water, (in addition, these values were taken into account in interpreting rock sensibility to water). In order to make a more accurate analysis of flow parameters variation during increasing the percentage of river water, there were calculated, for each test, the slopes of differential pressure regression line, with a Fit Linear function. The graphical representation of the slopes is shown in Figure 2.

water injected, were calculated as follows: Dpinitially = Dpmixed water @10 VP & Dpfinal = Dpmixed water @ 80 VP. After 24 hours it was noticed that the maximum increase of Dp is for the test Tg (75% vol. river water), when Dpfinal = Dpinitial x 2.7 times (this maximum increase for Test g is confirmed by the slope of differential pressure graph for dynamic tests); • Rocks sensitivity to injected water changes with river water content in the injected • water mixture: –– for mixture with <50% vol. river water, cores are found in low sensitivity to moderate sensitivity area; –– for mixture with ≥ 50% vol. river water, cores are found in moderate sensitivity to the high sensitivity area.

Fig. 2 The slope of differential pressure graph (Fit linear) for dynamic test An empirical classification of the rock in terms of its sensitivity to water is made by the ratio of the sandstone permeability to water and Klinkenberg permeability. According to Muddy, Stevens and Bow Island thus, the rocks can be divided into the following categories: • Rocks with low sensitivity to water (Kwater/KKlinkenberg = 0.7 to 1.0); • Rocks with moderate sensitivity to water (Kwater/ KKlinkenberg = 0.3 - 0.7); • Rocks with high sensitivity to water (Kwater/ KKlinkenberg <0.3). According to the above, in our case it was agreed to investigate the behaviour of sandstones for the injection of the tested water mixtures (river water + injection water), using the type (a) graph and the results are presented in Figure 3. Conclusions after dynamic tests: • The percentages of change for differential pressure for 38

Fig. 3 The rock sensitivity to water

WATER AND CORE ANALYSIS AFTER PERFORMING THE DYNAMIC TESTS In order to investigate phenomena that occur by injecting mixtures of water the following analysis were performed: • Analysis of water effluents from the dynamic tests in order to determine the chemical composition of water before energyindustryreview.com

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•

and after water injection through the core; Analysis of core samples after performing the dynamic tests in order to determine if there are changes of physical properties (porosity/permeability).

DYNAMIC TESTS FOR DETERMINING PARTICLE FINE MIGRATION - CRITICAL FLOW VELOCITY For performing this type of tests, it is necessary to prepare the water samples. The sample it’s prepared in the laboratory following the next steps: • Air bubbling for 24 h, in order to form deposition of the iron oxides, and vacuum filtration of the water, through 3-5 μm filter paper, and filtering membranes from acetate cellulose, of 0.45 μm and 0.2 μm, respectively. Iron compounds formed were removed through filtration; • Inhibiting the water with scale inhibitors biocides; all the water samples were degassed before use; • determination of water density & viscosity, for the temperature used during dynamic tests with DMA Anton Paar density meter respectively Ubbelohde viscometer. Water samples used in the dynamic tests are prepared in this way in order to avoid decreasing of permeability, blockages, due to: iron-based deposition, impurities introduced with the water (solids, oil) and the presence of microorganisms. Test consisted in core flooding with 20 pore volumes of injection water, for each flow rate, at different rates (0.05, 0.10, 0.40, 0.6, 1.0, 2.0…….16 ml/min) with returning back to the initial flow of 0.2 ml/min. after each increasing of the flow rate. The maximum flow rate depends of the obtained results (if the critical flow was reached). Core permeability and differential pressure across the core were monitored, during injection of 20 pore volumes of water at different flow rates. In order to perform the dynamic test for determining the maximum flow rate without affecting the permeability by fine migration particle will account for three stages, as follows:

•

Case 3: Core is flooded with 20 VP of injection water blended with river water (or in ratio of 1:1, at different flow).

3. Third stage also can be different as follows: • Case 1: Core was flooded with 10 VP of fine stabilizer solutions at a flow rate of 0.4 ml/min. After this step, the brine blended with river water from in ratio of 1:1 was injected through the core at different flow rates. • Case 2: Core is treated with 10 VP of fine stabilizer solutions at a lower flow rate than the critical flow rate obtained. After this step, the injection water is injected through the core at different flow rates. After the third stage one will repeat the test with one of the cases from the second stage.

RESULTS AND INTERPRETATION OF DYNAMIC TESTS In order to understand how it is interpreting these results, an example of a test performed in the laboratory for a hypothetical reservoir is presented. The permeability values obtained for these flow rates were ranging between 5.25 – 5.6 mD, except the first two rates (0.2 and 0.4 ml/min) for which core permeability to water are around 6 mD. The values calculated for DP/Q and K/K1 ratios, based on the experimental data obtained during test, are graphically represented in Figures 4 and 5. These figures illustrate the same results obtained for tests C3 and C4. Note that K1 is the value for permeability obtained for the first flow rate, 0.2 ml/min.

1. First stage of the tests is identical for all this type of tests: • saturation of core sample with brine; initially under vacuum and then under pressure, core samples being maintained at a pressure of about 50 bar for 3-4 days, in order to obtain 100% saturation with brine; • introducing of core sample in the Hassler cell of FRT equipment and achieving the reservoir conditions. 2. Second stage can be different as follows: • Case 1: Core is flooded for each flow rate with 20 pore volumes of injection, at different flow rates. • Case 2: Core is flooded, for each flow rate, with 20 pore volumes of injection water, at different flow rates. In this case we have a core sample that we know she hasn’t in his geology description much minerals that can disperse and migrate.

Fig. 4 Differential pressure per flow rate vs. flow rate The critical flow velocity was considered to be the one based on the minimum flow rate where it was noticed the first significant increase of the slope calculated as described above. 39

OIL & GAS

DESCRIPTION OF VARIOUS TEST PROTOCOLS FOR WATER QUALITY EVALUATION Analyzes/tests

Methods/Used technique

Basic reservoir quality

Permeability, porosity, mineralogy via conventional core analysis, pressure transient analysis, drill cuttings analysis and petrographic analysis (thin section, scanning electron microscopy, x-ray diffraction, image analysis)

Water composition

Analysis via standard analytical ICPT techniques

Total suspended solids

Via pressure filtration

Size distribution of suspended solids

Via laser diffraction analysis

Composition of suspended solids

Via x-ray diffraction or elemental analysis (XRF)

Oil and grease content

Via ASTM extraction

Scale analysis

Simulation - Multiscale software

Sulphate reduction Bacteria/other bacteria

HYDA analysis, full culture analysis

Dissolved oxygen content

Via dissolved O2 meter

Dissolved gas content

Via high temperature solubility testing to liberate dissolved gas

Fines migration tests

SCAL (Special Core Analysis) conducted on preserved/restored state core to determine critical injection interstitial velocity at which damaging fines migration may occur

Phase trapping tests

SCAL test conducted to determine the effect of the establishment of a trapped critical gas or oil saturation on water phase injectivity in reservoir matrix typical of the expected injection interval

Critical filtration tests

SCAL test conducted to determine the maximum size of permissible filtration allowed to retain particles large enough to cause plugging and permeability reductions in the matrix

Critical salinity tests

SCAL test conducted to determine the minimum ionic and cationic composition and pH required to reduce or eliminate permeability reductions due to injected fluid - clay interactions - includes he simple salinity shock test (abrupt transition from formation to inject water). If results of this test are unfavourable, more sophisticated gradual staged salinity reduction tests and other tests to investigate the effect of the presence of various cationic stabilizers on system permeability will be needed.

CONVERTING THE CRITICAL FLOW VELOCITY TO WELLBORE INJECTION RATE Based on critical flow velocity values obtained on core flooding tests, performed with and without fines stabilizer, the equivalent of daily volume of water injected for each injection well is calculated. For this purpose, the interstitial flow velocities, expressed in terms of the parameters of the core plug and perforated wellbore interval, are equated as:

Fig. 5 Permeability ratio vs. flow rate 40

The reports also have conclusions of the tests and our recommendation regarding on the optimal flow rate for water injection, so that the damage is minimal or not at all for injection process. All the analysis and tests presented in this project aims to obtain an efficient exploitation of petroleum reservoir after energyindustryreview.com

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applying a waterflooding process. If we succeed to pay the necessary attention on each analyse and test, we will be able to have enough information on issues that may arise in the process of water injection.

FLOW CHART FOR PROJECTING A WATERFLOODING PROCESS Following these tests and analyses, we have developed a work flow chart to assist in designing future waterflooding processes. This diagram aims at summarizing the main steps that should be done for an accuracy analysis of the water which are to be used for injection. Also, the project includes a table with description of various test protocols for water quality evaluation (see Table Description of various test protocols for water quality evaluation).

CONCLUSIONS A detailed protocol has been developed to guide one through the proper steps and analyses, which must be conducted to ensure

that acceptable injection water quality is present to maintain long term, economic injection. Various issues, such as ionic composition of the water, chemical incompatibilities such as scale and precipitates, emulsions, suspended solids content, entrained gas, oil and grease carryover, corrosion and bacterial introduction and propagation have been all described as potential injection water quality issues. Methods that can be used to evaluate the water quality have been described. There were included some examples describing the way water used for waterflooding process should be treated. The importance of water quality in maintaining long-term water injectivity in injection wells was highlighted. Two types of dynamic tests, which should be performed for design or optimize a water injection process, were presented. A flow chart with the most important steps that should be done before start a waterflooding process in the field was developed and included in the project documentation. The project also provides the minimum requirements for laboratory analyses and tests that must be performed for proper functionality of the process.

OIL & GAS

Transgaz getting ready to transport Black Sea gas Adrian Stoica

ransgaz has obtained the T Construction Permit for the gas transmission pipeline Black Sea Coast – Podisor. As Intermediate Body for Energy, the Ministry of Energy issued the Construction Permit through which it authorizes the execution of construction works for the project ‘Gas transmission pipeline Black Sea Coast – Podişor’, 42

including electricity supply, cathodic protection and optical fibre, Transgaz informs in a press release. The project involves the execution of the following investment works: gas transmission pipeline with a total length of approximately 308.16 km, consisting of two sections: section I Black Sea - Amzacea (32.7 km; Dn 1200) and section II Amzacea - Podisor (275.4 km,

Dn 1000); pig launching-trap station Amzacea area; interconnection with T1 transit pipeline; Technological Node for Interconnection to NTS in the area of Vlasin; interconnection with Podisor Gas Compressor Station; site organization and storage of tubular goods. This investment objective will ensure the connection between the gas resources available at the Black Sea energyindustryreview.com

OIL & GAS

coast and BRUA corridor, as well as interconnection with the international gas pipeline T1. The value of works is estimated at RON 1.22 billion (excluding VAT). The validity of the Construction Permit is 36 months from the date of issue, provided that works are executed within 12 months from the date of issue. Transgaz also informs that the incremental capacity booking process in the expected entry point in the NTS from the Black Sea - Tuzla MP - the Binding Stage - has been successfully completed. Transgaz expected binding bids from companies for booking capacity in Tuzla MP, to see whether the interest of companies justifies investment in the future point in Tuzla. The procedure carried out by Transgaz aims at capacity

allocation for 16 years, from 1 July 2021 until 1 October 2036. The companies have submitted firm bids for capacity booking, which validates the fact that operators are preparing to extract gas from the Black Sea. Transgaz estimates that, in the 16 years, it will gain almost RON 3 billion from the tariff charged to companies extracting gas from the Black Sea for gas injection into the network. “Within the analysis carried out by SNTGN Transgaz SA, it was found that the minimum capacity threshold mentioned in the documentation related to the Binding Stage of the incremental capacity process for Tuzla entry point in the NTS has been reached. The total value during the offered period of the allocated capacity is 1,278,084,480 MWh, higher than the

minimum threshold of 1,277,213,582 MWh. The total value of commitments of applicants awarded winner is RON 2,949,358.14 thousand, by RON 2,011.78 thousand higher than the current value of the estimated growth of the allowed revenue, associated to the incremental capacity offered within this procedure (RON 2,947,346.36 thousand),” the quoted document mentions. Up to Tuzla, it is the obligation of companies that will extract gas from the Black Sea to build the transmission infrastructure. From here, onshore, it is Transgaz’s obligation to build the gas transmission infrastructure, in this case the Tuzla-Podisor pipeline (308.16 km). Yet, in order to finance this project, Transgaz had to make sure there was gas for it.

OIL & GAS

Demand for RO-UA gas export capacity double than expected A total of 11 leading European and Ukrainian gas trading companies expressed their interest in natural gas transportation in direction RomaniaUkraine (RO-UA) for the total capacity of up to 10(!) billion cubic meters per year, exceeding the offered capacities two times.

Adrian Stoica

ccording to a company press A release Ukrtransgaz proactively continues integration to the European gas system and creates additional diversified routes of gas supply to Ukraine. The TSO keeps preparation to switching to direct cooperation with adjacent TSOs in accordance with the EU regulations for all cross-border entry/exit points, which will be possible in 2020 after the termination of transit contract with Gazprom. Transit-1 pipeline is one of three main pipelines of Trans-Balkan route, which is currently used for natural gas transportation from Russian Federation to Bulgaria, while Gazpromâ&#x20AC;&#x2122;s long-term 44

booking contract of the pipeline on Romanian territory expired in 2016. This means that the rules of utilization of this infrastructure shall be harmonized with the requirements of the EU legislation, in particular for Third party access to the pipeline. At the same time, Ten Year Network development plan of Transgaz prescribes the project of interconnection of the national gas transmission system and the offshore fields with the Transit-1 natural gas pipeline. The TSOs of Ukraine and Romania have agreed on the reconstruction of gas metering station Isaccea-1, allowing to increase the accuracy of

gas metering and allow bidirectional flow in the interconnection point. Therefore, Trans-Balkan pipeline is a promising alternative route of gas supply to Ukraine, especially if we take into account the commissioning of TANAP, LNG terminals in Greece and Turkey and expected growth of natural gas production in Romanian Black Sea offshore fields. Taking into consideration the abovementioned, Ukrtransgaz from 30 March to 30 April 2018 conducted nonbinding market demand assessment among the participants of Ukrainian and EU market for the firm capacity of Transit-1 pipeline in direction RO-UA. 5 energyindustryreview.com

OIL & GAS

billion cubic meters of annual capacities were offered to market participants. The demand for 2023 gas year exceeded the offered value two times, while in the period from 2020 to 2030 – 1.6 times. Such interest of leading UA and EU market participants is a powerful signal for the TSOs in the region on the strong need to move forward with implementation of the bidirectional Trans-Balkan pipeline project. Taking into account the plans of Gazprom to commission TurkStream, which will lead to significant decrease of transportation via Trans-Balkan pipeline, the European Commission and the TSOs of Greece, Bulgaria, Romania, Ukraine and Moldova created a working group aimed at introducing the possibility of bidirectional natural gas transportation via Trans-Balkan pipeline from Greece to Ukraine (SouthNorth corridor). Implementation of the project will be a huge incentive for facilitation of integration of natural gas markets of Southern Europe and will ensure security of gas supply to the Balkan region countries. It should be noted that the project does not require additional investments from the TSOs, as it is planned to use already existing infrastructure.

PLANS FOR THE FUTURE As the next step, Ukrtransgaz plans to develop required technical measures and conduct binding Open Season procedure. New capacities for this direction shall be available to market participants starting from the beginning of 2020. Ukrtransgaz and Naftogaz Group continue to upgrade Ukrainian gas transportation system (GTS). The 10year modernization plan of Ukrainian GTS in 2018-2027 was developed to bring production capacities including compressor stations and gas transportation system in line with European reliability, safety, and environmental standards. As of today, Urtransgaz continues the

cooperation with National Regulatory Commission of Ukraine on Energy and Utilities on finalizing and approving of the 10-years plan of the gas transmission system and underground gas storages development. It is expected the Regulator will approve the plan as soon as possible. In particular, modernization plan includes reconstruction of four compressor stations: Yogotyn, Dykanka, Romny, and Bylche-Volytsa. The last one is located on the underground gas storage in Lviv region. These objects are the priority and optimal for the investment based on the analysis of the current technical state and workload including the future threat of termination of the Russian gas transit through the territory of Ukraine. Narrow places of the Ukrainian GTS are also under additional consideration to support local gas production in Ukraine. Planned investments in compressor stations reconstruction during 2018-2020 are estimated at 7 billion UAH. Such projects have a significant potential to stimulate the development of related industries through the participation of local manufactures of equipment and construction companies. Shortly Ukrtransgaz are going to begin international tenders through the Prozorro public procurement system, in which both foreign and Ukrainian companies will be able to participate in a transparent and competitive environment. Ukrtransgaz underlined that after the completion of TANAP and TurkStream pipelines construction and expected development of the offshore natural gas production in Romania, the possibility to transport natural gas along the Romania-Ukraine route will have strategic meaning, since it will create a South-North bi-directional corridor and provide security of supply for Balkan countries. Moreover, the existing infrastructure of the Trans-Balkan pipelines will ensure the most costefficient solution for gas transportation in the region.

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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,

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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

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Romania’s petrochemical industry comes into sight Adrian Stoica

Romania’s petrochemical industry is preparing to come out of the shadow cone, benefiting from the programs through which Rompetrol Rafinare and OMV Petrom this year made public their intentions to invest or continue investments in this activity segment. Black Sea gas to be brought to shore, as well as estimates showing that the global market will see an increase in demand for petrochemical products, while fuel demand is expected to drop in the coming years, have determined the two oil companies to rely on this sector. 46

ompetrol Rafinare, the only R company in Romania operating petrochemical facilities, has announced the restart of the high-density polyethylene (HDPE) plant, on the platform of Petromidia refinery. “The company aims to restart in the following period the high-density polyethylene plant, stopped for over four years due to high volatility of raw material (ethylene) and finished products’ quotations. For this purpose, the procedures to overhaul and test the plant (verification/upgrade of equipment, approvals etc.) were started in the first quarter of the year,” a press release of Rompetrol Rafinare issued on the occasion of presenting the balance sheet for the first quarter of this year reads.

THE HDPE PLANT, RECOMMISSIONED The HDPE plant would be restarted by mid this year, according to company’s estimates. The only petrochemical unit in the country operates at Petromidia, the activity being resumed here in 2014. Together with the HDPE plant, which will be restarted, operating on the refinery’s platform and also the polypropylene plant (PP), which works 100% with raw material produced in the refinery, and the low-density polyethylene plant (LDPE), which works with imported ethylene. In the first quarter of this year, total production of polymers on Petromidia platform stood at around 43,000 tons, by 30% higher than in the similar period of 2017, the increase being determined by the continuous operation of polymers plants this year, as the company states. The turnover of the petrochemical division of Petromidia refinery rose last year, amid a slight increase in production, but it still recorded losses. Petromidia refinery recorded, in the petrochemical segment, an increase by 6% in the gross turnover in 2017 compared to 2016, to USD 191.3mln, according to company’s financial data. However, the sector recorded losses, which deepened in 2017, going up 15% compared to the level of the previous year, to USD 13mln. energyindustryreview.com

OIL & GAS

Total sales of petrochemical products increased slightly, by 1%, to 191 million tons, half of the products going in the country and half being exported. Total production of polymers amounted to 147,000 tons in 2017, declining by 1.77% compared to the previous year, when 150,000 tons were produced. However, Rompetrol claims it will continue to invest in the petrochemical sector. Thus, no less than 12% of investments scheduled for this year, of USD 57mln, will go to the petrochemical division in Midia. The petrochemical division has three plants: the polypropylene plant (PP) and two polyethylene plants, low density polyethylene (LDPE) and high-density polyethylene (HDPE). The three facilities have a total capacity of over 220,000 tons/ year. Being in conservation for several years, due to the lack of raw material, the petrochemical sector of Petromidia refinery was restarted in 2006, investments of EUR 100mln being undertaken at the time, to be made by 2017.

UPGRADE AT PETROBRAZI REFINERY OMV Petrom has also announced that it was exploring the possibility to develop petrochemical activities at Petrobrazi refinery, by building a petrochemical plant, according to the strategy of Austria’s OMV for the period 2018-2025. In order to achieve this goal, the refinery will undergo an upgrade process. Production capacity in the petrochemical sector held by OMV Group increased from 1.8 million tons in 2005 to 2.5 million tons in 2017 and will grow even further, to 2.8 million tons, towards 2025. The biggest growth could come from the petrochemical products with high added value - butadiene and aromatic products, while ethylene production would remain at the same level. According to estimates of OMV management, during 20162030, fuel demand will decrease in Europe by 60 million tons, but the demand for petrochemical products will increase by 20 million tons. And Europe means very little compared to the rest of the world: the biggest demand will come from Asia, where the additional 210 million tons of petrochemical products account for 90% of the global increase in demand for this product. The strategy of the Austrian group, which provides for the development of the petrochemical sector, comes in the context in which OMV Petrom and ExxonMobil are expected to start gas production in the Black Sea, and in view of BRUA gas pipeline construction, which would allow the processing of this gas including in OMV’s refinery in Schewchat, in Austria. OMV Group mentions in its 2025 strategy a significant and long-term gas production from the Neptun Block, in the Black Sea, although the final investment decision for this block will be made only in the second half of this year. The group’s strategy indicates a strong focus on petrochemical products, which bring a higher added value. In total, investments in refining will reach EUR 1bn during 2018-2025 and part of the amount will be used to increase the production of petrochemical products. 47

OIL & GAS

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CONSTRUCTION

Into the heart of the Great Silk Road TOWARDS THE NEW FRONTIERS OF DEVELOPMENT Daniel Lazar

The Turkmenistan International Port was inaugurated on May 2, 2018, during a large ceremony, in the presence of Turkmenistan President Gurbanguly Berdimuhamedov. The conference that preceded the official opening ceremony of the port, ‘The Great Silk Road - Towards the New Frontiers of Development’, took place in the Turkish tourist region of Avaza and addressed the prospects of a new Silk Road. The building has entered, since its inauguration, the Guinness Book of Records, with the titles of “the largest port below the sea level” and “the largest artificial island below the sea level”. The Guinness World Records diplomas have been offered to the head of the Turkmen state at the conference in Avaza. efore the official inauguration, a conference with wide international participation took place in the conference room of the ultramodern exhibition centre in the locality. More than 250 delegates from all over the world have debated the need for this investment that will facilitate economic development not just regionally, but even globally. The event ended with a spectacular sound and light show, but also a visit to the port, and President Berdimuhamedov symbolically pushed the button through which the new

investment was officially inaugurated. “We believe that it is time to lean very seriously and with great attention on the revival of the great Silk Road and we need to look at all the possibilities this road offers. The Great Silk Road does not mean just transport between different geographic areas, it also aspires to bring a solution to political, humanitarian issues and tries to change the world vision. The Great Silk Road was created to unite the East and the West, different people from different continents, built on the concept of mutual respect and trust, and to facilitate understanding between our countries, our

opening, and Turkmenistan is at the heart of the Great Silk Road. Our country is based on the principle that Central Asia is a major and intangible part of the Great Silk Road, taking into account various historical, geopolitical and economic factors, and this region continues to play a special role not only at continental level, but also at global level. We are convinced that the revival of the Great Silk Road is not possible without Central Asia. On these lands, centuries ago, the caravans were passing (...). Our goal is to revive this role of Central Asia in new conditions,” President Gurbanguly Berdimuhamedov pointed out. energyindustryreview.com

CONSTRUCTION

TURKMENBASHI INTERNATIONAL SEAPORT DATA & FIGURES Within the scope of the project ‘Turkmenbashi International Seaport’ constructed in Turkmenistan, ship building and ship repairing yard, ferry and passenger terminal, container terminal, general cargo terminal and bulk cargo terminal are built and Ro-Ro and polypropylene terminal is expanded.

The head of the Turkmen state has thus highlighted some of the areas to be connected by the new port to the Caspian Sea. “We are talking about building a complex transport and transit infrastructure with access to the maritime terminals of the Black Sea, the Baltic area, South and South-East Asia and the Near East. (…) This project takes into account that in the future it will be connected with transport infrastructure to the South and to the East, to economic powers such as China, India, Pakistan and the South Pacific countries. This port is included in a broader format of cooperation that will be an example of truly innovative thinking in the global economy, a strategic perspective for development,” the head of state said.

IN THE GUINNESS BOOK SINCE THE INAUGURATION The Turkmenbashi International Port has entered, since its inauguration, the Guinness Book of Records, with the titles of “the largest port below the sea level” and “the largest artificial island below the sea level”.

Implementer: Turkmen State Service of Maritime and River Transport of Turkmenistan Contractor: Gap Insaat company (Turkey) Construction period: 2014-2018 Budget: 1.5 billion USD Total area of the seaport: 1,358,484.31 m2 Reclaimed area: 1,121,263 m2 Quay length: 3,616 meters Steel pipe pile: 109,240 meters Deep foundation pile: 252,566 meters Total indoor area of buildings: 171,085 m2 Cranes & equipment: 1,030 Total area of the artificial island: 1,692,761 m2

The Caspian Sea Port has 1,358,484 square meters, and the artificial island, created from the excavated soil 1,692,761 square meters. The island is a habitat for 300 species of migratory birds. The port was built during 20142018, with a total budget of over USD 1.5 billion. The project is implemented by the Turkmen state and was executed by Turkish company Gap Insaat. The equipment in the port has the capacity to process 12,000 tons of steel per year, the shipyard being able to build four new ships a year and repair up to 20 ships. The capacity of the cargo (general) terminal is 4,000,000 tons per year. The terminal dedicated to passenger transport covers a capacity of 300,000 people and 75,000 vehicles per year. The port is an alternative for freight transport between China and Europe. At present, the authorities involved in the project show, 95% of the freight transport between China and Europe is achieved on average in 45 days. With the opening of the port, shipment between the same regions will be reduced to 15 days.

Turkmenbashi is a locality in Turkmenistan, a port to the Caspian Sea, in the Balcan province. During the Russian Empire and the Soviet Union, the name was Krasnovodsk (Red Water City), translation of the local name Turkmen Kizil Su (Red Water). After the breakup of the Soviet Union and obtaining the independence by Turkmenistan, under the regime of Saparmurat Niyazov, the city received in 1993 a new name: Türkmenbașy (Head of the Turkmen). Here is a museum of history and natural history, and close to the city there is a great natural reserve. Oil processing, food industry (especially fish and fish processing), light industry and shipyards are the economic base of Turkmenbashi. It is linked to the capital of Ashgabat via an airline. The city of Turkmenbashi is at the end of the Trans-Caspian railroad, which connects various cities in Central Asia. The name Turkmenistan derives from Persian, meaning “the land of the Turkmen people”. The capital is the city of Ashgabat, the Persian place-name, translating approximately as “the city of love”. It can be said that Turkmenistan’s 51

CONSTRUCTION

history spans over millennia, as archaeological vestiges of 5,000 years have been discovered in the country. Turkmenistan has a remarkable position, the fifth on the list of the fastest growing gross domestic product in the world. Although rich in natural resources in many of its areas, most of the country is covered by the Karakum desert. The country, which neighbours Iran and Afghanistan, holds the world’s fourthlargest natural gas reserves and possesses vast reserves of oil in the Caspian basin, estimated at 12 billion tonnes. An 800-km (500-mile) pipeline is already being built from the country’s giant Galkynysh gas field, the world’s second-largest natural gas deposit, to Turkmenbashi to lessen dependence on exports to Russia. The new port in Turkmenbashi will be used to export oil products, liquefied gas and textiles. Japan, Russia, Turkey, Iran, Uzbekistan, Azerbaijan and other countries buy polypropylene from Turkmenistan. Gas exports are also Turkmenistan’s main source of hard currency. They took a hit when Russia, once its main customer, stopped all purchases in 2016 after a pricing dispute. The new port will more than triple Turkmenistan’s cargo handling capacity to 25-26 million tons a year, the government said. Although it has no outlets to the world’s oceans, the Caspian Sea is an important thoroughfare for trade and passengers in the region. With the operation of Turkmenbashi port, delayed projects like the TurkmenistanAfghanistan-Pakistan-India (TAPI) gas pipeline will gear up due to an increase in trade activities and the new route functioning in this region. The operation of Turkmenbashi will connect four ports in three countries (Turkmenistan, Azerbaijan and Georgia), exemplifying a wonderful combination of road-to-road, road-to-sea, and sea-to-road cargo transportation. Goods from China reach Turkmenbashi, and from there it will be transported through the Caspian Sea to Baku port in Azerbaijan. Azerbaijan’s Baku-Tbilisi-Kars (BTK) railway has 52

become Central Asia’s gateway to Europe. The line is part of the Trans-Caspian Transit Corridor (TCTC) and was initiated by Azerbaijan’s President Ilham Aliyev and inaugurated in October 2017. Through the Baku-Tbilisi-Kars (BTK) railway, these goods enter Georgia at two main ports – Poti and Batumi – and then onwards to Turkey and Europe. The connection of these four ports with an influx of Chinese trade will help these countries enhance their economies through various means. The Turkmenbashi port will be a substantial asset to the Silk Road by opening new horizons between China and Europe, a rail corridor and Transport Corridor Europe-Caucasus (TRACECA), operating from western China through the Central Asian countries on its way to Europe.

LOT 1: SHIP BUILDING AND SHIP REPAIRING YARD The total area of the project is 166,000 square meters. Having the capacity to process 12,000 tons of steel per year, the yard is able to build 4 new vessels and to repair up to 20 vessels. The yard is equipped with the ship lift with the lifting capacity of 10,000 tons, two rail-based cranes with the capacity of 42 tons and one with the capacity of 84 tons, and 2 wheel-based portal cranes with the capacity of 64 tons. The new ship building and ship repairing yard will make it possible to conduct repair works and satisfy all service needs of the vessels of the national fleet sailing under the state flag of Turkmenistan, recreational vessels and yachts for guests coming to national touristic zone ‘Awaza’, fishing vessels and support vessels of companies of the oil and gas industry operating in the Turkmen sector of the Caspian Sea.

LOT 2-6: FERRY AND PASSENGER TERMINAL The total area of Ro-Ro Ro-Pax Ferry terminal is equal to 230,000 square

meters. The terminal is capable to service about 300,000 passengers and 75,000 vehicles per year. The terminal main infrastructure consists of terminal building with the capacity of 800 passengers, a hotel for 50 guests. The total berth length is equal to 256 meters, one side of the berth is a railroad platform for train and the other side will service vehicles. Together with the renewed ferry berth, the new terminal will be able to service 4 ferries at the same time and provide a high-quality service for the passengers and vehicles travelling among the seaports of the Caspian Sea.

LOT 3: CONTAINER TERMINAL The total area of container terminal is equal to 249,000 square meters. Being capable to handle 400,000 20-feet containers per year, the new container terminal will contribute a lot to the development of the export, import and transit logistics infrastructure of Turkmenistan, connecting the rail, air and sea lines. The total berth length is 480 meters, thus making it possible to carry out cargo handling operations of 3 vessels with the deadweight up to 5000 DWT each at the same time. The terminal has 2 ship-to-shore (STS) cranes with the lifting capacity of 70 tons each, capable to process 30 containers per hour, 2 rail-based cranes with the lifting capacity of 48 tons each, and 6 wheel-based cranes with the lifting capacity of 45 tons each, as well as container moving and stacking vehicles. The terminal has the sheltered storehouse with the total area of 9,984 square meters, sorting storehouse with the total area of 3060 square meters, and other open areas.

LOT 4: GENERAL CARGO TERMINAL The total area of the general cargo terminal is equal to 261,000 square meters. The total handling capacity of energyindustryreview.com

CONSTRUCTION

the terminal is equal to 4,000,000 tons of general cargo per year, and its build with the purpose to handle materials such as steel, wood, equipment, vehicles and heavy cargos. The total berth length of the general cargo terminal is equal to 625 meters and it is to process 4 vessels at the same time with deadweight up to 5,000 DWT each. Terminal will operate 6 portal cranes with the lifting capacity of 42 tons, 2 mobile cranes, and 1 wheel-based crane with the lifting capacity of 84 tons, and the terminal is provided with the vehicles for cargo transportation. The terminal has the open storage area of 75,000 square meters and covered storehouse with the total area of 26,394 square meters.

LOT 5: BULK CARGO TERMINAL With the total handling capacity of 3,000,000 tons of cargo per year, the bulk cargo terminal is built to charge, discharge and store bulk cargos such as iron ore, cement, epoxide, coal, food, grain crops, sugar, salt and others. The total length of the berth is equal to 440 meters. The terminal will be able to process 3 vessels at the same time with deadweight up to 5,000 DWT each. The terminal is equipped with 3 rail-based cranes with the lifting capacity of 42 tons, 2 conveyor belts with the loading/unloading capacity of 650 tons of bulk cargo per hour, 5 wheel-based loaders with the capacity of 20 tons, and 1 mobile crane with the lifting capacity of 20 tons. The terminal has the open storage area of 37,000 square

meters and a covered storehouse with the total area of 8,512 square meters.

LOT 7: POLYPROPYLENE TERMINAL The total area of the polypropylene terminal is equal to 62,000 square meters. The handling capacity of terminal is equal to 120,000 tons of polypropylene per year. Having the total berth length of 750 meters, the terminal will be able to process 3 vessels at the same time with deadweight up to 5,000 DWT each. The terminal is equipped with 2 rail-based cranes with the lifting capacity of 64 tons each. Thanks to the Embassy of Turkmenistan in Romania for helping with this material

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Office Ploiesâ&#x20AC;&#x161; ti Romania ILF Consulting Engineers Romania 16 Negru Voda Str. RO-100149 Ploiesti â&#x20AC;&#x161; Tel.: + 40 (344) 401-333 Fax: + 40 (344) 401-334 romania@ilf.com www.ilf.com 53

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Photo: Eneria

Eneriaâ&#x20AC;&#x2122;s smarter energy solutions THE COGENERATION PLANT IN POENI 54

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neria, as investor and general E contractor, and OMV Petrom, as beneficiary, on May 23rd inaugurated their Cogeneration Plant in Poeni, Teleorman County. The plant has an installed power of 4.3 MWe and 2.6 MWTh and operates with associated gas. It is a turn-key project under BOOT (Build-Own-Operate-Transfer) conditions which includes permitting, engineering, order equipment, construction and erection (civil works, mechanical, electrical and thermal works etc.), commissioning, operating and maintenance for up to 13 years. The solution implemented by Eneria, the exclusive Caterpillar’s dealer for Energy & Transportation in Romania, consists of: • 3 Caterpillar gas generating sets CG170-12 and CG170-16 in fully equipped sound attenuated containers (1-unit CG170-12, of 1,200 MWe and 2 units CG170-16, of 2 x 1,560 MWe); the total installed electric power being 4,320 MWe. • 2 fully equipped CCTS (concrete complete transformer stations) (2 x 0.4 kV/2000 kVA transformers, 1 x 04/20 kV 1600 kVA transformer, transformer/meter/line cells). • Associated gas treatment skid: 24.000 Nm3/day, input pressure 0.6-1 bar, output pressure 0.2 bar, consisting of separator filter, electric heater, measuring system, regulator, mounted in thermally insulated enclosure. The plant includes a triple steam generator that takes up the exhaust gas (~ 430 ºC) from the 3 generator sets and cooled them to 150ºC to produce low pressure dry saturated steam at 3 bar, 2,00 MWth, which is used in the oil heating process of the beneficiary. The steam generator is authorized for nonpermanent surveillance for 72 hours. The steam plant contains the following components: make-up water treatment plant, condensate storage tank, heat exchanger in make-up water heating plates (0,6 MWth), thermal and chemical degasser, pumping groups, oxygen and

The Cogeneration Plant in Poeni - official opening | Photo: Eneria

pH monitoring sensors. The whole cogeneration plant is fully automatic and can be remotely controlled via the phone/laptop, operating without a permanent operator. The command & control room is provided with a common board for the reception of signals from all components of the plant (SCADA system on 17” display). The gas generator sets have an electrical efficiency of 43.2% and an assumed availability of 94% per year, i.e. 8,240 hours/year. This Eneria concept with a triple steam generator is a first in Romania. This is one of the 8 G2P/CHP projects of Eneria in Romania, with associated gas. Eneria portfolio includes 15 MWe installed and 15 gensets under Operation & Maintenance contract.

CG170 gas generator sets family from Caterpillar - high performance with low operating costs Highly efficient With recent improvements of inlet ducting, combustion chamber design and high efficiency spark plugs, the CG170 gas generator set delivers up to 43.7% electrical efficiency and more recoverable heat while reducing carbon emissions. Lower operating costs An optimized lubrication system

making the CG170 consume up to 1,900 litres less lubricating oil each year than competition gas generators, which means more savings during operating and maintenance period. Greater availability The CG170 utilizes soot-free combustion with chamber plugs for extended maintenance intervals up to 4,000 hours. Newly optimized blow-by gas recirculation reduces turbocharger maintenance intervals and boosts efficiency. System control The Cat® Total Electronic Management System controls the entire system, not just the engine. Control or monitoring of ancillary equipment such as heat recovery modules, exhaust aftertreatment and fuel treatment systems becomes seamless. Features like temperature monitoring for each cylinder and anti-knock control allow for maximum power output and the best possible fuel utilization, even with fluctuating gas composition. High transient response When your facility requires operation isolated from the electric utility grid, an optimized CG170 turbocharging system is provided to ensure transient load response that will keep your operation running. 55

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Green light for Transelectricaâ&#x20AC;&#x2122;s LEA 400 kV Oradea-Bekescsaba project 56

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One of the most important projects of Transelectrica, an investment of over RON 83mln, 400 kV OHL Oradea-Bekescsaba, was unlocked after 10 years.

he project of the 400 kV Oradea-Bekescsaba overhead line, blocked since 2008 due to expropriations, is revived, after the Government of Romania on 10 May 2018 adopted a Decision allowing the completion of expropriation procedures, which are in progress for the privately-owned buildings found within the expropriation corridor of the public utility of national interest project of the 400 kV OHL Oradea-Bekescsaba. The same Government Decision approved funds

to install a 100 MVAr shunt reactor in the 400 kV substation Oradea Sud and to procure telecommunication and teletransmission equipment for the 400 kV OHL Oradea-Bekescsaba. “This Government Decision allows the completion of the 400kV OradeaBekescsaba overhead line, project in conservation for ten years. It’s about a large-scale investment, with a value updated in 2014 of over RON 83mln. The completion of this investment is of paramount importance for the safe operation of the National Power System, and the Government has understood this,” the Management Board of the National Power Grid Company Transelectrica SA has stated. The 400 kV OHL Oradea-Bekescsaba was commissioned only partially, namely only the double circuit segment, the 400 kV OHL Nadab (RO)-Bekescsaba (HU): 60 de km, of which 22 on Romania’s territory at the same time with the 400 kV OHL Arad-Nadab. The segment of the 400 kV OHL Oradea Sud-Nadab is 72 km long, simple circuit A and has been partially completed. The Oradea-Nadab segment will be commissioned and thus complete the 400 kV OHL Oradea-Bekescsaba, thus contributing to closing the 400kV ring of the country’s electricity transmission network, a priority objective of Romania. Also, this line leads to avoiding congestion costs in the north-western region, which last year amounted to about 39,000 Lei in March and to about 160,000 Lei in November.

Similarly, the urgent completion of the work to the 400 kV OHL OradeaBekescsaba will remove the risk to impact the safety of the National Power System, an ever-increasing hazard generated by the potential unavailability of the interconnection line between Romania and Ukraine (the 400 kV OHL Rosiori-Mukacevo), circumstance when maintaining the operational safety in the country’s north-western region will become extremely difficult and costly. Line completion can be assimilated to providing a new flux/route of electricity supply in the country’s north-western region, with significant impact over the increased operational safety, the availability of electricity transmission services, the response/re-supply speed, the capacity and resilience in case of malfunctions in the transmission infrastructure caused by major failures, natural calamities, disasters, armed or terrorist attacks etc. The commissioning of the 400 kV OHL Oradea Sud-Nadab will increase by 100 MW the export interconnection transfer capacity and by 300 MW the importer one, depending on the seasonal specific internal and external factors. At present Romania has got only 7% interconnection capacity against the installed capacity of the SEN, compared to the 10% target provided in the European regulations for 2020, an aspect notified by the European Commission. Such commissioning of the 400 kV OHL Oradea Sud-Nadab will contribute to approaching to the European target. 57

18 20

10-14 June 2018

Vox Maris Grand Resort Costineยบti, Romania

14th Edition

5 Scientific Sessions I Regional Energy Day I Keynote Addresses I Round Tables I Workshops I Exhibition

www.cnr-cme.ro/foren2018

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Achema: Compressed Air Masters Energy cost savings, as well as outstanding reliability, efficiency and durability – Kaeser Kompressoren demonstrates innovative compressed air solutions that deliver maximum quality with exceptionally economic performance. Where? At Achema - World Forum and Leading Show for the Process Industries (11 - 15 June 2018, Frankfurt am Main, Germany) – Hall 8.0, Stand A4.

he chemical and process engineering sectors are amongst the largest industrial consumers of compressed air and wherever large volumes of compressed air are used there is usually scope for significant energy and cost savings. Kaeser’s oil-free compression rotary screw compressors were designed specifically with these advantages in mind. When combined with the innovative i.HOC rotation dryer, these innovative systems not only deliver highly efficient and economical performance, but also reliably achieve stable pressure dew points to minus 30 degrees Celsius.

OIL-FREE AND SPACE-SAVING The new Contain-Air product solution from Kaeser also provides an excellent source of oil-free compression

The new Kaeser Contain-Air compressed air station: a compact, powerful and mobile source of oil-free compression compressed air – rapidly deployable and highly reliable

compressed air. Integrated inside a standard shipping container, these powerful yet compact compressed air stations feature a CSG or DSG-series rotary screw compressor equipped with an integrated rotation dryer. Oil-free compression is used to produce quality compressed air. Since the container can be flexibly positioned anywhere on company property (a flat surface is the only requirement), there’s no need for costly investment in a separate compressor room. These compact compressed air stations also reliably and efficiently deliver oil-free compression compressed air with a pressure dew point to minus 30 degrees Celsius.

SIGMA AIR MANAGER 4.0 The Sigma Air Manager 4.0 is a must for any application where optimal

compressed air station control is required. This advanced compressed air management system perfectly coordinates all of the components within a compressed air system whilst also ensuring maximum availability and energy efficiency at all times – thanks to its improved 3D-Advanced Control. Aside from these key functions, it also serves as the central hub and key requirement for enabling Industrie 4.0 services, such as permanent energy management and predictive maintenance. 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 59

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Romania vs. the EU ELECTRICITY TARIFFS Electricity tariffs for household consumers in Romania are some of the lowest in the European Union, according to Eurostat statistics. Last year, with a price of EUR 119.8/MWh, below Romania were Hungary with EUR 112.5/MWh, Croatia with EUR 119.6/MWh, Lithuania with EUR 111.6/MWh and Bulgaria with EUR 95.5/MWh. But if we relate these prices to the minimum net wage, we find that Romania pays the most expensive electricity. Even Bulgarians, who have a minimum net wage of only EUR 202/month, can afford to pay 2.11 MWh, while Romanians, with a minimum net wage of EUR 251/month, can pay only 2 MWh. At the same time, taxes charged by the state are at the European average, which proves that we have an expensive electricity. Adrian Stoica 60

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COUNTRIES WITH THE HIGHEST/LOWEST SHARE OF TAXES IN THE FINAL PRICE Country

Price (EUR/MWh)

Taxes (%)

Hungary

112.5

21.24

Austria

195.5

Sweden

193.6

20.04

Denmark

304.9

Germany

304.8

19.28

Estonia

120.7

10.93

Luxembourg

161.5

7.61

176.6

4.81

SOURCE: EUROSTAT

he Netherlands is the EU T country with the cheapest electricity. At a cost of EUR 156.2/MWh and a minimum net wage of EUR 1,430, the Dutch can afford to pay 9.15 MWh per month. The top of countries with the cheapest energy also includes France, where a minimum net wage of EUR 1,401 can cover 8.3 MWh, the UK where a minimum net income of EUR 1,261 covers 7.14 MWh and Luxembourg, when one can pay 7.2 MWh with EUR 1,162. The first line of the top is completed by the Irish, who can afford to consume 6.5 MWh.

THE EXAMPLE OF EX-COMMUNIST COUNTRIES In 2017, in Romania, the energy price for household consumers was EUR 119.8/MWh. Although this is among the lowest prices compared to the former communist countries, Romanians can afford to pay the lowest amount of energy from the minimum net wage. Estonia and Slovenia are in a favourable situation with 3.99 MWh paid, followed by Croatia with 3.1 MWh, the Czech Republic with 2.8 MWh and Poland with 2.4 MWh. The penultimate position among the excommunist countries is occupied by the Bulgarian neighbours, who can afford to pay 2.11 MWh, while for Romanians the maximum bill they can afford to pay is only 2 MWh. STATE TAXES ARE NOT HIGH While until a few years ago Romania was in a select top of countries with the highest taxes and duties applied to electricity, along with countries like Germany, Sweden or Denmark, at the level of last year they accounted for only 16.02% of the final price. For example, in countries such as Bulgaria and Hungary, which

registered (in 2017) prices for household consumers lower than the price charged in Romania, the stateâ&#x20AC;&#x2122;s share accounts for 16.64% and 21.245% respectively of the final price. Also, in Slovakia taxes account for 16.65%, in the Czech Republic - 17.38%, in Slovenia - 18.02% and in Poland - 18.66%. A different situation is recorded in Estonia, where taxes account for 10.93% and the final price is EUR 120.7/MWh, higher than in our country.

CONSTANT PRICE INCREASES As a characteristic, in Romania the price of energy for household consumers has permanently increased over the past few years, while many EU countries have recorded reductions. In early 2012, the price for household consumers was in our country RON 107.5/MWh, and in early 2017 it reached EUR 119.8/MWh, marking an increase by 10%. While in Bulgaria the tariff remained unchanged in this entire period (EUR 95.5/MWh), in Poland it fell from EUR 152.9 to EUR 145.7/MWh, and in the Czech Republic from EUR 166.8 to EUR 143.8/MWh, in Hungary from EUR 161.8 to EUR 112.5/ MWh and the examples can continue. 61

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Historical record in the EU INVESTMENTS OF EUR 14.8 BILLION IN NEW ONSHORE WIND ENERGY PROJECTS Adrian Stoica

6 EU countries had a record year in wind energy installations 55% of new power capacity in the EU came from wind 85% of new power capacity in the EU came from renewables Wind remains the 2nd largest power generating capacity in the EU

80% of wind power in the eu was installed in just 3 countries: Germany, the UK and France 168.7 GW of wind power are now installed in the EU 62

The renewable energy industry has created over 500,000 new jobs at global level in 2017, which means an increase by 5.3% compared to 2016, according to data published by the International Renewable Energy Agency (IRENA). The total number of persons hired in this sector (including large hydropower plants) reached at the end of last year 10.3 million globally, exceeding the figure of 10 million for the first time. In this entire time, investments in this industry fell due to cost optimization. For now, in Romania projects are blocked in this field. energyindustryreview.com

hina, Brazil, the US, India, Germany and Japan remain the largest employers in the world in the renewable energy sector, accounting for over 70% of total jobs in the industry at global level. Although growing numbers of countries are reaping the socio-economic benefits of renewables, the bulk of manufacturing takes place in relatively few countries and domestic markets vary enormously in size. 70% of all jobs in the renewable energy sector are in Asia. “Renewable energy has become a pillar of low-carbon economic growth for governments all over the world, a fact reflected by the growing number of jobs created in the sector,” said Adnan Z. Amin, director-general of IRENA, quoted by the international press. “Fundamentally, this data supports our analysis that decarbonization of the global energy system can grow the global economy and create up to 28 million jobs in the sector by 2050,” he also mentioned.

ROMANIA, NOT INCLUDED IN EY’S RANKING China remains the first within the renewable energy country attractiveness index for the third time in a row, while the US and Germany overtook India to ensure the second and third place respectively, a recent study by EY shows. In SouthEastern Europe, the index includes Turkey (17th place), Greece (34th) and Poland (country newly included in the index, on the 36th place). As regards Romania, it was not included in this ranking. The renewable energy country attractiveness index (RECAI) is one of the useful tools provided by EY analysts, as it classifies the attractiveness of renewable energy worldwide. THE SHARE OF RENEWABLE ENERGY WILL INCREASE Solar energy costs have fallen over the past decade by more than 60%, making

these investments extremely attractive for companies. In this context, China, which also holds the title as the largest polluter in the world, has proposed that the share of renewable energy in total energy production should reach 20% by 2030. According to the recommendation adopted on 17 January this year by the European Parliament, EU Member States must reach a target of 35% renewable energy by 2030.

EUR 22BN INVESTMENTS IN THE EU Investments in wind energy in the European Union last year reached the lowest level of the past three years. Expenses for new wind energy production capacities in Europe fell by one fifth in 2017, according to the annual report of the profile association WindEurope. The representatives of the association estimate that this reduction is generated by the fact that the wind sector cuts costs and 63

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becomes more efficient as governments reduce subsidies. According to WindEurope’s report, investments in new onshore and offshore wind projects in the European Union dropped 19% last year, to EUR 22.3 billion, from a record high of EUR 27.5 billion in 2016, and also, less than the amount recorded in 2015, of EUR 26.2 billion. However, lower investments made in 2017 have funded the construction of new record capacities of 11.5 Gigawatts (GW), up from 10.3 GW in 2016, which means that last year the cost went down to EUR 1.9 billion for each GW of new capacities, from EUR 2.7 billion per GW in 2016, the WindEurope’s report says. “Cutting costs along the value chain of industry and increasing competition inside the industry have made it possible for investors to finance more capacity for less money,” WindEurope said. Germany was the largest investor in wind energy in 2017, followed by Spain, the United Kingdom and France. Also, investments in new onshore wind projects have reached a historic record of EUR 14.8 billion. Currently, the EU has a total installed capacity in wind power of 169 GW, which is outpaced only by natural gas capacities. Wind power is responsible for 18% of the total installed capacity in the EU.

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TRENDS AND CUMULATIVE INSTALLATIONS • • • •

2017 ANNUAL FIGURES •

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Europe installed 15,638 MW of new wind power capacity during 2017, an increase of 25% compared to 2016 annual installations. 12,484 MW were onshore, and 3,154 MW were offshore. 2017 was a record year for both onshore and offshore installations. Onshore installations grew 14.3% while offshore grew 101% compared to 2016. Wind power installed more than any other form of power generation in Europe in 2017. Wind power accounted for 55% of total power capacity installations.

Renewable energy accounted for 85% of all new EU power installations in 2017: 23.9 GW of a total 28.3 GW of new power capacity. With 336 TWh generated in 2017, wind power covered an average 11.6% of the EU’s electricity demand. 2017 saw EUR 22.3bn in new investments announced in wind energy. This will finance the development of 11.5 GW of new wind farms. EUR 14.8bn of this was for onshore wind, and EUR 7.5bn for offshore. Overall, this was 19% less than the total investment in 2016. Wind energy investments accounted for 52% of the new clean energy finance in 2017, compared to 86% in 2016.

There are now 168.7 GW of installed wind power capacity in the EU: 153 GW onshore and 15.8 GW offshore. Wind energy now accounts for 18% of EU’s total installed power generation capacity. The total net EU-installed power generation capacity increased by 18.8 GW in 2017 to 937 GW. Conventional power sources such as fuel oil and coal continue to decommission more capacity than they install. The amount of decommissioned gas-fired generation capacity was almost equal to the amount of newlycommissioned gas-fired generation capacity.

COUNTRY HIGHLIGHTS Germany installed the most wind power capacity in 2017, with 42% of the total EU new installations. • 16 EU countries have more than 1 GW of wind power installed. Nine of these have more than 5 GW installed. • Six EU countries had a record year in new wind energy installations in 2016: Germany (6.6 GW), the UK (4.3 GW), France (1.7 GW), •

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Belgium (476 MW), Ireland (426 MW) and Croatia (147 MW). Denmark is the country with the largest share of wind energy in its electricity demand with 44%. Germany registered the highest annual increase from 16% to 20% of wind energy in its electricity demand.

PROJECTS BLOCKED IN ROMANIA The success story of wind energy investments started in Romania after the Executive launched the most spectacular subsidy scheme, but it ended abruptly in 2013 after it was decided, through an Emergency Ordinance, to postpone the granting of green certificates, in the attempt to keep price increases under control. This goal has been reached, but banks have stopped funding and projects have been blocked. That’s how no new project has been launched since 2013, investors have begun to report losses and many wind farms have been put on sale. A helping hand was given to this sector in the spring of last year, when the Government issued a GEO that prolongs the validity of green certificates in the market until 2032. For 2017 and 2018, of the total green certificates in the market, only half are covered by the quota and have buyers. The huge surplus of certificates in the market will create chaos in the energy system if the government does not change green energy legislation, said Razvan Nicolescu, a senior consultant at Deloitte and former energy minister. Romania has about 5,000 MW installed in wind and solar power plants, with a total installed capacity in the energy system of 20,000 MW. The energy produced by renewable sources is cheap because it is subsidized by all Romanian energy consumers through the green certificates system. By law, each MWh produced in wind and solar power plants is automatically taken over in the system and receives subsidy. 1 MWh of wind power receives half green certificate, while 1 MWh of solar power receives three certificates. energyindustryreview.com

RENEWABLES

Best-in-class technology for producing green lithium-ion batteries 66

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iemens and Northvolt S announced on May 25 a partnership for the development of best-in-class technology to produce high-quality, green lithium-ion batteries. The partnership, which will be supported by Siemens through an investment of EUR 10 million, also includes the supply of lithium-ion batteries. To mitigate the effects of climate change, Europe is accelerating its transition to renewable energies. Electrification and an increased use of batteries is one of the cornerstones of this transition, enabling the large-scale conversion to sustainable transportation as well as a deep integration of renewable sources in the energy mix. With limited current and planned capacity in place, Europe is now facing a major battery deficit of within the next few years. “We are happy to support Northvolt in building the battery factory of the future. With our Digital Enterprise portfolio, we contribute to a competitive battery cell production in Europe that fully exploits the benefits of software and automation: greater flexibility, efficiency and quality with shorter time to market,” Jan Mrosik, CEO of Siemens Digital Factory Division, affirmed. “Northvolt is driving the battery production to build a battery with very low CO2 footprint. Our Digital Enterprise portfolio will support Northvolt in building a state-of-the-art battery plant. We are excited to go in as a partner in this project,” Ulf Troedsson, President and CEO of Siemens Nordics, underlined. Once completed in 2020, Siemens intends to purchase batteries from the factory, making Northvolt a preferred supplier. Siemens will support the partnership through an investment of EUR 10 million. Siemens sees the Northvolt initiative as a reference project for the battery production of the future, which will rely on the integration and digitization of the entire value chain: from the design of the battery cell through production planning, engineering and production to services. The technology partnership is set up around two main areas of collaboration.

CUTTING EDGE TECHNOLOGY Use of the Siemens’ Digital Enterprise portfolio, encompassing everything from manufacturing planning and design software to automation, including industrial communications networks and cloud solutions, will allow Northvolt to optimize its battery production and sharpen its competitive edge. SUPPLY OF LITHIUM-ION BATTERIES Siemens intends to purchase batteries from Northvolt once its large-scale production facility is up and running. The companies are also exploring potential areas for joint development programs. “The European industry is moving rapidly towards electrification. With its world-class expertise within electrification, automation and digitalization, Siemens will become an important technology partner, supplier and customer to Northvolt in this coming transition. Once we begin largescale production, our aim is to supply the greenest lithium-ion batteries in the world,” Peter Carlsson, Co-Founder and CEO, Northvolt mentioned. Siemens is a global powerhouse focusing on the areas of electrification, automation and digitalization. One of the world’s largest producers of energyefficient, resource-saving technologies, Siemens is a leading supplier of systems for power generation and transmission as well as medical diagnosis. In infrastructure and industry solutions the company plays a pioneering role. Northvolt was founded in 2016 with the mission to build the world’s greenest battery, with a minimal carbon footprint and the highest ambitions for recycling, to enable the European transition to renewable energy. Northvolt’s team of experts is building the next generation battery factory focused on process innovation, scale and vertical integration. Once completed, it will be Europe’s largest battery factory and produce 32 GWh worth of battery capacity annually. 67

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US trade tariffs on EU steel and aluminium imports The US announced that starting on 1 June 2018 it will impose additional duties of 25% and 10% respectively on imports of steel and aluminium from the EU. 68

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“I am concerned by this decision. The EU believes these unilateral US tariffs are unjustified and at odds with World Trade Organisation (WTO) rules. This is protectionism, pure and simple. Over the past months we have continuously engaged with the US at all possible levels to jointly address the problem of overcapacity in the steel sector. Overcapacity remains at the heart of the problem and the EU is not the source of but on the contrary equally hurt by it. That is why we are determined to work towards structural solutions together with our partners. We have also consistently indicated our openness to discussing ways to improve bilateral trade relations with the US but have made it clear that the EU will not negotiate under threat. By targeting those who are not responsible for overcapacities, the US is playing into the hands of those who are responsible for the problem. The US now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties on a number of imports from the US. We will defend the Union’s interests, in full compliance with international trade law,” President of the European Commission, Jean-Claude Juncker has stated. “Today is a bad day for world trade. We did everything to avoid this outcome. Over the last couple of months, I have spoken at numerous occasions with the US Secretary of Commerce. I have argued for the EU and the US to engage in a positive transatlantic trade agenda, and for the EU to be fully, permanently and unconditionally exempted from these tariffs. This is also what EU leaders have asked for. Throughout these talks, the US has sought to use the threat of trade restrictions as leverage to obtain concessions from the EU. This is not the way we do business, and certainly not between longstanding partners, friends and allies. Now that we have clarity, the EU’s response will be proportionate and in accordance with WTO rules. We will now trigger a dispute settlement case at the WTO, since these US measures clearly go against agreed international rules. We will also impose rebalancing measures and take any necessary steps to protect the EU market from trade diversion caused by these US restrictions,” Commissioner for Trade Cecilia Malmström has underlined.

BACKGROUND The US measures affect EU exports worth EUR 6.4 billion in 2017. While striving to avoid today’s situation, the EU has been preparing over the last months and stands now ready to react to the US trade restrictions on steel and aluminium in a swift, firm, proportionate and fully WTO-compatible manner. The EU will launch legal proceedings against the US in the WTO on 1 June. This was decided by the College of Commissioners on 29 May and Member States were consulted on the same day. The US measures are primarily intended to protect the US domestic industry from import competition, clearly at odds with WTO rules. In addition to the WTO dispute settlement against the US measures, the EU has also coordinated action in this field with other affected partners. As regards the US tariff measures, the EU will use the possibility under WTO rules to rebalance the situation by targeting a list of US products with additional duties. The level of tariffs to be applied will reflect the damage caused by the new US trade restrictions on EU products. The list of US products is ready: it was consulted with European stakeholders and supported by Member States. The EU notified its potential rebalancing to the WTO on 18 May and, in line with the Organisation rules, could trigger them 30 days later. The Commission will now in coordination with Member States take a formal decision to proceed with the rebalancing. The Commission is determined to shield the EU steel and aluminium markets from damage caused by additional imports that might be coming into the EU as a result of the closure of the US market. An investigation towards possible imposition of safeguard measures on steel was launched on 26 March. The Commission has nine months to decide whether safeguard measures would be necessary. This decision could also be taken much earlier in the proceedings, if the investigation confirms the necessity for swift action. The Commission has also put in place a surveillance system for

imports of aluminium to be prepared in case action will be required in that sector. At the sidelines of the Ministerial meetings during the Organisation for Economic Co-operation and Development (OECD) Week in Paris, EU Trade Commissioner Cecilia Malmstrom met with Hiroshige Seko, Minister of Economy, Trade and Industry of Japan, and with US Trade Representative Robert Lighthizer. The three met as a continuation of the trilateral talks launched last year, to address issues such as trade-distortive practices that lead to severe global overcapacity in sectors like steel. After their meeting, the three issued a statement. After meeting bilaterally, Minister Seko and Commissioner Malmström also issued a readout, about their concerns on the US tariffs on steel and aluminium, and the announced US investigation into trade in cars and car parts.

EU-JAPAN JOINT STATEMENT Minister Hiroshige Seko Seko and Commissioner Cecilia Malmstrom exchanged views on developments regarding Section 232 of the Trade Expansion Act of 1962. • Both ministers shared their serious concern regarding the additional tariffs or quotas on steel and aluminium, which they consider are not justified under national security grounds. • Moreover, both ministers concurred that the measures under consideration in the investigation on autos and auto parts, if imposed, would have a major restrictive impact affecting a very substantial part of global trade. This would cause serious turmoil in the global market and could lead to the demise of the multilateral trading system based on WTO rules. • Both ministers also confirmed their intention to cooperate closely in discussing these concerns with the United States and call on other like-minded countries to join their efforts. 69

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ArcelorMittal looking for buyers for Galati plant ArcelorMittal received in early May the European Commission’s approval to purchase Italy’s Ilva plant, the largest steel mill in Europe. The approval was given by the Commission based on the commitment of the company led by Indian magnate Lakshmi Mittal to put up for sale units in Italy, Macedonia, the Czech Republic, Luxembourg, Belgium and Romania. With this approval, the plant in Galati (formerly Sidex), will be prepared for a new sale, after ArcelorMittal had purchased it from the Romanian state in 2001 within a transaction worth USD 70mln, and had invested USD 350mln over the past 10 years. Adrian Stoica

fter receiving the green light A from the European Commission to take over Ilva plant, ArcelorMittal hired the US group Bank of America Merrill Lynch to manage the asset sale, thus answering to EU concerns in terms of competition within the transaction through which it will purchase the steel mill in southern Italy, for EUR 1.8bn. 70

ASSURANCES IN A TROUBLED MARKET In the recent years, ArcelorMittal Galati plant has recorded an average production of around two million tons of steel per year, after in 1989 it had reached the production peak, eight million tons. Of the six furnaces existing at the time, today only one is standing. While before privatization there were

27,000 people working on plant’s platform, today there are only around 7,000, of which 5,500 belong to the plant and the rest - to contracting companies. For those whose activity is still related to that of the Galati-based plant, the news of putting up for sale the unit has caused the concern that it could be closed and they would lose their jobs. The authorities in Brussels, as well as those energyindustryreview.com

METALS & MINING

in Bucharest, have given assurances however that it would not happen and the plant would even increase its production after the sale. The European Commission has expressed concern that a transaction on the takeover of the largest steel mill in Europe by the largest steel producer in the world would reduce competition in certain product segments and would generate higher prices for consumers in southern Europe. The industry is experiencing a state of uncertainty amid an extreme global turmoil, with production overcapacity, Chinese dumping and sanctions announced by Donald Trump to protect the US market. In this context, the announcement of India’s ArcelorMittal regarding the intention to sell the steel mill in Galati, one of the largest companies in Romania, sparks even more anxiety.

EC TO OVERSEE THE SALE PROCESS According to the European Commission, ArcelorMittal will be responsible for plant’s sale within an open and non-discriminatory process. The process will be monitored by Brussels and the future owner will need expertise and the desire to ensure a sustainable operation of the unit. Once ArcelorMittal decides on a buyer the company will have the obligation to officially present the respective buyer to the European Commission, which will verify whether the established criteria have been observed. The Commission’s power of decision refers to approval of the buyer, after it is proposed by ArcelorMittal. Before the sale is completed, ArcelorMittal and the potential buyer will need to provide the Commission with all the relevant information to assess the expertise and capacity of the buyer to operate market assets in a sustainable manner, in competition with ArcelorMittal. ArcelorMittal has also committed to boost investments in order to increase the capacity of the

Galati-based plant, which will mean that it will have to provide the buyer with certain funds, and it will have access to this financing only if it uses it as part of an investment to expand the capacities in Galati.

TRANSFER OF SHARES, ONLY WITH STATE APPROVAL Deputy Prime Minister Viorel Stefan has told a press conference that the transfer of shares would be done only with the explicit consent of the Romanian state. “The transfer can only be done with the explicit consent of the Romanian state. There is a right mentioned in the privatization contract, stating that the transfer can only be done with the seller’s consent, i.e. of the Romanian state,” the official has stated, adding that a European Commission official would monitor the situation in the following five-ten years after the transaction. “Precautionary measures will be taken and all the necessary guarantees will be provided for production in Galati to increase after this transaction, not be restricted, and it will be valid for all production units subject to this transaction,” Deputy Prime Minister Viorel Stefan claims. Besides the plant in Romania, ArcelorMittal has offered to sell the units ArcelorMittal Piombino, the only galvanizing line in Italy, ArcelorMittal Skopje (Macedonia), ArcelorMittal Ostrava (Czech Republic), ArcelorMittal Dudelange (Luxembourg) and the galvanizing lines number 4 and 5 of Flemalle; the etching, and the coldrolling and covered metallic packaging lines of Tilleur, all of these from the plant of Liege, Belgium. According to the sources quoted by the international press, the assets package which ArcelorMittal has offered to sell is a lot bigger than the concessions the group was initially willing to make to be able to purchase Ilva plant. In Romania, ArcelorMittal owns production units in Galati, Iasi, Roman and Hunedoara.

40% OF ITALY’S STEEL PRODUCTION With a bid of EUR 1.8 billion (USD 2.2 billion), ArcelorMittal wants to acquire Ilva, the largest European steel maker, which employs over 14,000 people. Ilva, located in Taranto, southern Italy, manufactures annually nine million tons of steel, approximately 40% of Italy’s steel output, and supplies steel for automotive manufacturers, electrical equipment manufacturers and shipbuilders. ArcelorMittal has promised to invest here other EUR 2.4 billion in upgrade. GALATI’S STEEL INDUSTRY, MORE AND MORE RESTRICTED In 1988, Sidex Galati was among top ten steel producers in Europe, with an output of around eight million tons of liquid steel achieved by over 50,000 steelworkers. In 1999, Sidex had halved its staff and production, but was still covering 4% of Romania’s GDP. With Sidex’s takeover by ArcelorMittal, the large investments promised upon takeover translated into the demolition of the coke-chemical plant, cutting five out of six furnaces and two steelworks, resulting in a drop in output of about two million tons per year; plus the layoff of about 20,000 employees.

GROWING PRODUCTION, DECLINING INVESTMENTS Romania’s crude steel production in 2017 stood at 3.37 million tons, up 2.2% compared to the previous year. However, total investment expenses in the steel industry amounted to RON 217.767bn, down 8.5% compared to 2016. Investments decreased in most metallurgical sectors: steel smelters (60%), long products (- 46.7%), rolling mills (- 36.8%), other metallurgical plants (- 31.2%), cold rolling plants (- 27.3%). Gross energy consumption in the steel industry in 2017 stood at 59,143.7 TJ, down 2.8% compared to the previous year. 71

TECH

Extreme Light Infrastructure - Nuclear Physics facility

The future begins in Magurele Science Park ELI-NP BECOMING FUNCTIONAL 72

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TECH

Magurele, Ilfov County, Romania. A town that for most doesn’t say anything, in a county that 30 years ago was known - locally - as some sort of granary of Romania (Ilfov agricultural county), in a country that for many it is still hard to locate on the map. Justin Iancu

till, for Romania’s scientific S community and, in the recent years, for scientists all over the world, Magurele is one of the most important points in the world. Because the Horia Hulubei National Institute for Physics and Nuclear Engineering in Magurele (IFIN-HH) is carrying out the project Extreme Light Infrastructure – Nuclear Physics (ELI-NP). ELI-NP means nothing for most citizens. In the best cause, it can be mistaken for someone’s nickname on messenger or a car registration number in an unknown country. For the scientific community, this sequence of letters has a completely different meaning. Besides the fact that it is the largest research projects in the history of Romania, it is, or better said will be, the most powerful laser in the world. It’s difficult to imagine for someone who is a stranger to research what this means. But translating the technical specifications of this facility, we can get an idea of the role this laser is meant to play in everyday life. The use of very intense laser beams and gamma rays could have significant effects in nuclear physics, but also in related fields. For example, the laser in Magurele will allow the study of physical phenomena that are just theoretical for now. Such a laser could help treat cancer without, however, subjecting patients to the pain of chemotherapy as we know it now. Secondly, at the Horia Hulubei Institute, where this laser is located, there

will be a number of experiments, with applications in the field of space travel, namely, the production of materials resistant to cosmic radiation. Such research could make its own contribution to finding a new home for the human species. If, as Stephen Hawking said, mankind doesn’t have long to stay on Terra, we can only hope that the researchers at ELI-NP will find such materials. For now, 150 specialists are working at ELI-NP, from over 25 countries. Of these, 50 are Romanians who decided to return to the country. In 2020, when it is completely finalized, the laser in Magurele will have a team of 300 researchers. Lust but not least, this high-power laser could be used for the disposal of radioactive waste generated by nuclear power plants, for example. Such an application might have the gift of changing the opinion of a minority on nuclear energy, making its use no longer be seen with skepticism. Trying a bitter sweet joke, this would relieve Nuclearelectrica of a significant investment in the Saligny radioactive waste repository, about which not much is known anyway. What makes ELI-NP unique in the world? The fact that it consists of two components: two high-power lasers (two arms of 10-petawatt each, 10-petawatt meaning 10% of the Sun’s power) and a gamma ray generator with performance characteristics. In fact, an important moment in the existence of this project

occurred in May this year, when the laser in Magurele was subjected to a first test. It will operate at its rated capacity in less than two years from now on, i.e. in 2020.

SHORT HISTORY • April 2006 - Representatives of three European countries, Romania, Hungary and the Czech Republic, signed a memorandum by which they undertook their cooperation within the ELI-NP project. • December 2009 - The Council of the 27 EU Research Ministers approved the declaration by which Romania, the Czech Republic and Hungary have committed to building together the infrastructure for the most powerful laser in history. • December 2010 - The Government of Romania adopted a note on the construction of ELI-NP for laser and nuclear physics research within the European research infrastructure dedicated to extreme light. • January 2011 - The project was sent for evaluation to JASPERS (Joint Assistance to Support Projects in European Regions), an organization within the European Commission. • February 2011 - a first evaluation of the project was received. • March 2011 - JASPERS gave the final ‘very positive’ evaluation. • June 2011 - The Government of Romania approved a memorandum requesting the identification of sources of funding for ELI-NP and the reallocation of European money from other European programs to the Măgurele laser. • December 2011 - The Government of Romania decided to fully include in the budget of the Ministry of Education the sums needed for the financing of ELI-NP. • December 2011 - ELI-NP receives European funding. The investment amounts to EUR 356 million, VAT included. • January 2013 - Project implementation begins. • May 2017 - Preliminary tests begin. • May 2018 - Magurele laser was assembled and tested in the final form. 73

TECH

New Bosch diesel technology provides solution to NOx problem

Bosch actively regulates the exhaust-gas temperature, thereby ensuring that the exhaust system stays hot enough to function within a stable temperature range and that emissions remain at a low level. Photo: BOSCH

• Unprecedented emissions: NOx 10 times lower than limits set for 2020 • New Bosch technology retains advantage with regard to fuel consumption and environmental impact • Internal combustion engines equipped with artificial intelligence have almost zero impact on air quality • Appeal to politicians: fuel consumption should be measured on the road and emissions analysed from well to wheel 74

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ccording to Bosch CEO Dr. A Volkmar Denner “there’s a future for diesel; today, we want to put a stop, once and for all, to the debate about the demise of diesel technology.” It was with these words that he announced a decisive breakthrough in diesel technology. New developments from Bosch could enable vehicle manufacturers to reduce emissions of nitrogen oxides (NOx) so drastically that they already comply with future limits. Even in RDE (real driving emissions) testing, emissions from vehicles equipped with the newly premiered Bosch diesel technology are not only significantly below current

limits but also those scheduled to come into force from 2020. Bosch engineers achieved these results by refining existing technologies. There is no need for additional components, which would drive up costs. “Bosch is pushing the boundaries of what is technically feasible,” Dr. Volkmar Denner said. “Equipped with the latest Bosch technology, diesel vehicles will be classed as low-emission vehicles and yet remain affordable.” The Bosch CEO also called for greater transparency with regard to the CO2 emissions caused by road traffic, and called for fuel consumption and thus CO2 emissions to be also measured under real conditions on the road in the future.

RECORD READINGS UNDER REAL DRIVING CONDITIONS: 13 MG NOX PER KILOMETRE Since 2017, European legislation has required that new passenger car models tested according to an RDE-compliant mix of urban, extra-urban, and freeway cycles emit no more than 168 milligrams of NOx per kilometre. As of 2020, this limit will be cut to 120 milligrams. But even today, vehicles equipped with Bosch diesel technology can achieve as little as 13 milligrams of NOx in standard legally-compliant RDE cycles. That is approximately one-tenth of the prescribed limit that will apply after 2020. And even when

New Bosch technology could enable vehicle manufacturers to reduce emissions of nitrogen oxides (NOx) so drastically that they already comply with future limits. Bosch engineers achieved these results simply by refining existing technologies. There is no need for additional components, which would drive up costs. Photo: BOSCH 75

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Bosch now aims to use artificial intelligence to build on these latest advances. This will mark another step toward a major landmark: the development of a combustion engine that - with the exception of CO2 - has virtually no impact on the ambient air. The ambitious target for Bosch engineers is the development of a new generation of diesel and gasoline engines that produce no significant particulate or NOx emissions. Photo: BOSCH

driving in particularly challenging urban conditions, where test parameters are well in excess of legal requirements, the average emissions of the Bosch test vehicles are as low as 40 milligrams per kilometre. Bosch engineers have achieved this decisive breakthrough over the past few months. A combination of advanced fuelinjection technology, a newly developed air management system, and intelligent temperature management has made such low readings possible. NOx emissions can now remain below the legally permitted level in all driving situations, irrespective of whether the vehicle is driven dynamically or slowly, in freezing conditions or in summer temperatures, 76

on the freeway or in congested city traffic. “Diesel will remain an option in urban traffic, whether drivers are tradespeople or commuters,” Dr. Volkmar Denner highlighted. Bosch delivered proof of this innovative advance at a major press event in Stuttgart. Dozens of journalists had the opportunity to drive test vehicles equipped with mobile measuring equipment in heavy city traffic, under especially challenging conditions. As the measures to reduce NOx emissions do not significantly impact consumption, the diesel retains its comparative advantage in terms of fuel economy, CO2 emissions, and therefore climatefriendliness.

ARTIFICIAL INTELLIGENCE CAN FURTHER BOOST COMBUSTION ENGINES’ PERFORMANCE Even with this technological advance, the diesel engine has not yet reached its full development potential. Bosch now aims to use artificial intelligence to build on these latest advances. This will mark another step toward a major landmark: the development of a combustion engine that – with the exception of CO2 – has virtually no impact on the ambient air. “We firmly believe that the diesel engine will continue to play an important role in the options for future mobility. Until electromobility breaks through to the mass market, we will still need these energyindustryreview.com

TECH

highly efficient combustion engines,” the Bosch CEO mentioned. His ambitious target for Bosch engineers is the development of a new generation of diesel and gasoline engines that produce no significant particulate or NOx emissions. Even at Stuttgart’s Neckartor, a notorious pollution black spot, he wants future combustion engines to be responsible for no more than one microgram of NOx per cubic meter of ambient air – the equivalent of onefortieth, or 2.5 percent, of today’s limit of 40 micrograms per cubic meter.

TRANSPARENCY AND REALISTIC TESTING FOR CONSUMPTION AND CO2 Dr. Volkmar Denner also called for a renewed focus on CO2 emissions, which are directly related to fuel consumption. He said that consumption tests should no longer be conducted in the lab but rather under real driving conditions. This would create a system comparable to the one used for measuring emissions. “That means greater transparency for the consumer and more focused climate action,” Denner said. Moreover, any assessment of CO2 emissions should extend significantly further than the fuel tank or the battery. “We need a transparent assessment of the overall CO2 emissions produced by road traffic, including not only the emissions of the vehicles themselves but also the emissions caused by the production of the fuel or electricity used to power them,” Denner added. He affirmed that a more inclusive CO2 footprint would provide drivers of electric vehicles with a more realistic picture of the impact of this form of mobility on the climate. At the same time, the use of non-fossil fuels could further improve the CO2 footprint of combustion engines. PRODUCT DEVELOPMENT CODE: ETHICAL TECHNOLOGY DESIGN Denner, who also has corporate responsibility for research and advance

engineering, presented Bosch’s product development code to the general public. This lays down the company’s principles for the development of Bosch products. First, the incorporation of functions that automatically detect test cycles is strictly forbidden. Second, Bosch products must not be optimized for test situations. Third, normal, everyday use of Bosch products should safeguard human life as well as conserve resources and protect the environment to the greatest possible extent. “In addition, the principle of legality and our ‘Invented for life’ ethos guide our actions. If in doubt, Bosch values take precedence over customers’ wishes,” Denner said. Since mid-2017, Bosch has no longer been involved in customer projects in Europe for gasoline engines that do not involve the use of a particulate filter. A total of 70,000 associates, mainly from research and development, will receive training in the new principles by the end of 2018, as part of the most extensive training program in the company’s more than 130-year history.

WHAT DISTINGUISHES THE NEW DIESEL TECHNOLOGY To date, two factors have hindered the reduction of NOx emissions in diesel vehicles. The first of these is driving style. The technological solution developed by Bosch is a highly responsive air-flow management system for the engine. A dynamic driving style demands an equally dynamic recirculation of exhaust gases. This can be achieved with the use of an RDE-optimized turbocharger that reacts more quickly than conventional turbochargers. Thanks to a combination of high- and low-pressure exhaust-gas recirculation, the air-flow management system becomes even more flexible. This means drivers can drive off at speed without a spike in emissions. Equally important is the influence of temperature. To ensure optimum NOx conversion, the exhaust gases must be hotter than 200 degrees Celsius.

In urban driving, vehicles frequently fail to reach this temperature. Bosch has therefore opted for a sophisticated thermal management system for the diesel engine. This actively regulates the exhaust-gas temperature, thereby ensuring that the exhaust system stays hot enough to function within a stable temperature range and that emissions remain at a low level.

WHEN WILL THE TECHNOLOGY BE READY FOR PRODUCTION Bosch’s new diesel system is based on components that are already available in the market. It is available to customers effective immediately and can be incorporated into production projects.

WHY IS URBAN DRIVING MORE DEMANDING THAN EXTRAURBAN OR FREEWAY DRIVING To ensure optimum NOx conversion, the exhaust gases must be hotter than 200 degrees Celsius. This temperature is often not reached in urban driving, when cars are stuck in gridlock or stopand-go traffic. As a result, the exhaust system cools down. Bosch’s new thermal management system remedies this problem by actively regulating the exhaust gas temperature. Bosch’s new diesel system is based on components already available in the market and does not require an additional 48-volt on-board electrical system. The Bosch diesel technology is based on components already in use in production vehicles. The decisive advance comes from a new combination of existing technology. It does not require any additional hardware components. So, reducing emissions will not make diesel vehicles any less affordable. Bosch engineers’ goal is clear: to reduce NOx emissions while retaining the diesel’s comparative advantage in terms of CO2 emissions. Diesel will thus remain a climate-friendly option. 77

TOOLS & MACHINES

EU Machine Tool manufacturers to mark a robust recovery of production According to CECIMO (European Association of the Machine Tool Industries) Economic and Statistical Toolbox (March - April 2018), the latest data confirms that Europe concluded the first quarter of 2018 in a continuously expansionary mood, although at a slower pace if compared to the previous quarter.

.P. Morgan and Goldman J Sachs revised the GDP gains downwards, signalling fading optimism for the first quarter. If the projections held, it would be the best quarter since mid-2009. Looking back at 2017, the Eurozone concluded the year with a 0.6% quarterly GDP pick up, supported by recovering investment. Consequently, annual 78

figures show a final 2.4% growth rate in both EU and Euro-area economies. Machine tools (MT) manufacturers used the momentum to rebound trade by strengthening exports, and to mark a robust recovery of production. CECIMObased MT manufacturers, specifically, registered a 6.2% gain in output. Recently, political turbulences have been under the spotlight, but markets

are yet to react to threats of trade protectionism and the failure of the Italian government to comply with its fiscal obligations. Therefore, the economic climate is still hyped up. Oxford Economicsâ&#x20AC;&#x2122; baseline predictions for the Eurozone hint at a 2.3% growth rate in 2018 and 1.8% in 2019, or 1.9% in 2018 and 1.5% in 2019 if taking into account US protectionism. energyindustryreview.com

TOOLS & MACHINES

Analysts from Focus Economics more optimistically forecast robust growth of 2.4% in 2018 and 1.9% in 2019, as it seems that the common currency bloc will sustain recovery. The European Central Bank (ECB) intends to maintain accommodative interest rates, and safeguard a prudent and persistent monetary policy to further foster investment and satisfy demand, with expectations of hard evidence of a sustained recovery. The ECB’s bond-buying programme will last at least until September 2018, with the possibility of extension. Central and Eastern Europe registered an eleven-year high in 2017 – which was pushed along by the Czech Republic, Hungary and Poland – against all odds and political concerns. Hungary and Poland’s outstanding success in the fourth quarter is largely due to EU investment fund inflows and wage increases. Households in both countries benefited from rising incomes. At present, however, Brussels is avoiding the additional friction that would come from suspending EU budgetary funds. Furthermore, the long-term prospects still offset the economic upturn, as private investment tend to avoid faulty rule of law systems. In the short term, however, the expectations are bright. Favourable borrowing conditions, new employment and foreign demand should support the activity. A cloud of uncertainty is hanging over the US and its major trading partners, who face the possibility of a trade war. On 23 March, having gained news of US president Donald Trump’s move towards protectionist measures, the EU published a list of products subject to retaliatory import tariffs. Subsequently, Donald Trump decided to temporarily exempt the EU from tariffs on aluminium and steel. Later, in April, he threatened China with an additional USD 100 billion in import tariffs, which triggered Beijing to release its own list. Although Trump’s protectionist actions could be perceived as wellintentioned, they are unlikely to prompt

any behavioural change in Chinese trade and intellectual property practices. Rather, they are likely to unleash a domino effect of retaliation lists of tariffs from the global trade operators. In addition, 30% of goods value exported from China to the US is added at the level of other smaller open Asian economies, such as Taiwan, Singapore, South Korea, or Japan, which export goods to China that end up in the US. By damaging the two largest economies in a trade war, other economies might suffer what The Economist magazine nicknamed the ‘supply-chain pain’.

DATA SPECIFIC TO THE EUROPEAN MACHINE TOOL MARKET The buoyant economic morale at the end of 2017 marked an extremely good closure of the year for machine tool builders. The total orders skyrocketed to an unprecedented score of 185, well above pre-crisis levels. Therefore, CECIMO 8 orders for the fourth quarter marked a 24% increase quarter-onquarter, and a 16% increase compared to the same quarter in 2016. A solid 38% increase, compared to the previous quarter, was registered in Spain, although it did not reach its 2016 levels. France saw an improvement, yet the order levels were -45% lower than in the same period last year. The UK, on the other hand, saw a -5% decrease in total orders, compared to the third quarter, and a -2% decrease compared to the same quarter of 2016. The Czech Republic registered a mild decrease from quarter three, as imports by machine tool users grew over 2017. The indicator still picked up +6% from the fourth quarter of 2016, which is a more modest rate compared to other positive change rates within CECIMO. Among CECIMO members, the total orders in Italy show the steepest increase, 49%, after the -21% drop previously registered. Austria, Switzerland and Germany improved their orders both quarterly (29%, 20% and 17%, respectively) and yearly (17%, 21%, and 24%, respectively).

Meanwhile, the US reports a 17% stronger demand than in the previous quarter, which is 9% higher than in the fourth quarter of 2016. The Italian increment is driven by a great expansion in domestic orders, which more than tripled from the third to the fourth quarter. These efforts mark a surge of 87% since the fourth quarter of 2016. Austria and Switzerland almost doubled their order levels, registering 97% and 86% increases over the fourth quarter, equivalent to a 46% and 56% increase compared to the end of 2016. The UK scored -4% lower on the domestic demand side compared to the third quarter of 2017, but still 17% above the levels last year. Whereas France, despite a solid 35% increment, has seen a -30% decline in domestic orders since the fourth quarter last year. On the foreign orders front, France and Spain showed predominantly high gains, although these levels are substantially lower (-51% and -33%) compared to the fourth quarter of 2016. The UK scored worse both on a quarterly (-5%) and yearly (-12%) basis. The Czech orders decreased by -10%, also due to a deterioration of exports to Russia. Despite this, the demand was still 11% higher than in the same period last year. Germany and Austria saw an increase of foreign demand by 13% and 12%, since the last quarter, or 13% and 15% since the fourth quarter last year. The EU Asian counterparts, however, have painted a much more varied picture. On one hand, Japan reported an 11% improvement for the metal forming sector and 12% for metal cutting machines over the last quarter of 2017. This accounts for a 15% pickup for machine forming and a substantial 48% increment for metal cutting machines since the same quarter in 2016. On the other hand, Taiwan and South Korea registered a moderation of the total demand, each by -9% and -2% since the third quarter. These levels are still -7% lower than last year for Taiwan, but +11% better for South Korea. The deterioration of demand for Taiwanese machine tools 79

TOOLS & MACHINES

comes from a -8% fall on the domestic side, accentuated by a -10% fall from foreign clients. It might suggest the country’s exposure to negative external developments in economic and trade conditions. In the case of South Korea, the downward pressure on orders is rather due to the deterioration of foreign demand in the fourth quarter, although it has recorded a 24% higher level since the fourth quarter last year. This can probably be explained by a slowdown of Chinese demand and challenges in the external environment, compensated by enduring expectations of business investment.

CECIMO 8 FORECAST In 2018, the demand is foreseen to grow at 10%, but is likely to reach its peak by the end of 2018 to spring 2019. As for the emerging countries, the market picture varies. Chinese consumer sentiment is at its highest point, but consumption growth rates have been falling in real terms over the last decade – indicating around 8% per year. India shows robust production increases, although investments are still lagging behind. The Russian consumption collapse, due to embargoes, hasn’t yet recovered. Brazil, despite its critical economic situation, managed to push industrial production upwards. Altogether, the demand for capital goods in emerging countries appears to be remaining high.

CECIMO TRADE Towards the end of 2017, CECIMO trade saw an astonishing rebound. In the fourth quarter, EU machine tool builders exported more than EUR 5.6 million worth of machine tools, which is 16% higher compared to the third quarter. Although some of the improvement is cyclical, these levels are 9% higher than in the same quarter of the previous year. Based on the latest Eurostat figures, in 2017, CECIMO reached an alltime record-high total export volume of around EUR 20 billion, therefore 80

registering a 9.5% annual growth rate – above the forecasts, but well in line with the euphoric economic sentiment and business indicators towards the end of 2017 - beginning of 2018. There are several positive factors that drove up the yearly growth. Exports to all regions considerably improved during 2017. Intra-European exports (including but not limited to CECIMO countries), which account for 52% of the total exports in 2017, grew by 9% over the year. Exports to the Asian destination markets – with a 24% of market share – also increased by 11%. The Americas imported 12% more of CECIMO-built machine tools than in 2016. Moreover, EU exports to Russia and CIS countries registered a 13% yearly growth rate, which was due, to some extent, to the settlement of a number of market access and trade barriers in Russia during 2017. Similarly, in 2017, CECIMO members imported EUR 10.7 million worth of machine tools, equal to an 8.8% yearly improvement compared to 2016. It seems that this growth was conditioned mainly by a 19% gain in import volume from Asia – an import origin that accounts for 31% of our total import market – and a more moderate improvement of 4% of machines originating from European countries. Curiously, throughout 2017, CECIMO members imported 40% fewer machine tools from Russia and CIS countries, pointing to a further deterioration of European-Russian trade flows. The yearly export volume to China, for instance, increased by 13%. Exports to the US, Mexico and Brazil improved by 10%, 24% and 31% respectively. Exports to the Asian markets showed considerable growth rates, except for South Korea, where it was seen a -14% drop over the year.

CECIMO PRODUCTION The early figures for 2017 point to a strong recovery for European machine

tool production. 2017 has been a great year for EU manufacturers, as well as for the global expansion of the economy. After the mild drop in 2016, CECIMO members saw a +6.3% increase in output last year, thereby registering a turnover of about EUR 25.8 billion. Once again, CECIMO-based machine tool builders did not only show robustness when coping with the feeble international context, but also an aptness to use the momentum of an economy in high spirits. CECIMO remains the leader in global machine tool production, holding about 37% of the market share, which has been confidently recovering since 2015, following a two-year consecutive drop. Based on the most recent data for 2017, China has held its market share at 21% (or 31% according the official Chinese statistics). The US stands at 6.3% of the global market share in the same period. Japan, South Korea and Taiwan have increased their weight in global output by a fraction of a percent since 2016. However, in the bigger picture, the shares of the pie remained relatively equal for global producers from 2016 to 2017. Japanese and South Korean levels of machine tool production are comparable with those of Germany and Italy in Europe. Within CECIMO, in 2017, most of the members enhanced their national production in absolute terms, with Belgium registering the most impressive year-on-year growth rate at 36%. Denmark and the UK recovered by 11% and 10% after the previous year’s shortfall. Germany, Italy and Spain increased their national production by 6.6%. Italy has been doing equally well for two years in a row. The Czech Republic, conversely, has registered a -2% drop in production, possibly due to decreasing foreign orders from Russia and despite the beneficial national economic context in 2017. Switzerland registers a milder +4.3% expansion, recovering after previous year’s drop. Some national activity figures are yet to be adjusted. energyindustryreview.com

TOOLS & MACHINES

Halliburton retrievable bridge plug helps ensure stability and safety Halliburton was working with a major operator in Norway on its drilling operations in a mature field in the North Sea. While discussing upcoming well challenges with the customer, Halliburton recognized an opportunity to introduce the newly released InterceptÂŽ retrievable bridge plug, which would offer the customer a gas-tight V0 barrier during batch drilling and completions.

wo jobs were successfully completed T with no issues or non-productive time (NPT), solving the customerâ&#x20AC;&#x2122;s challenge to have V0 barriers in place while temporarily abandoning the wells.

CHALLENGE This operator needed to rent barrier plugs in order to temporarily abandon its wells to drill and run batch completions. Normally, the operator rented bridge plugs from another service company. Halliburton had to convince the operator that the Intercept retrievable bridge plug would lower risks and save time since it did not require left-hand rotations and hang-weight below to operate down hole. 82

SOLUTION Halliburton provided specific tool data as it related to the well conditions, sizing, and temperatures in order to help ensure that the Intercept retrievable bridge plug would perform well in the environment. Halliburton also explained that the plug is versatile since it does not require hang-weight below to set, which saves rig time. Should well operations require it, however, the plug can handle significant pipe weight below, saving trip time and reducing cost. Since the plug does not require left-hand rotation, it reduces the risk of accidental disconnection of the work-string or work-string components. A Global Critical Well Review for these specific jobs was executed in order to prove Halliburton commitment to the operation. energyindustryreview.com

TOOLS & MACHINES

RESULTS One 9 5/8-in. Intercept bridge plug was installed in Well No. 1 to cover the shallow barrier. Two 9 5/8in. Intercept bridge plugs were installed in Well No. 2 in order to cover the deep and shallow barriers. All three Intercept bridge plugs were installed successfully, incurring zero NPT. The operator was pleased with the service and performance of the Intercept retrievable bride plug and has continued to use these plugs in three other wells.

+ pixel hoto and digital products

INTERCEPT® RETRIEVABLE BRIDGE PLUG - A RELIABLE BARRIER IN THE CASING The Intercept® retrievable bridge plug (RBP) is a gas-tight, well-suspension plug ideal for dual-barrier applications. Wellbores lacking a gas-tight seal can mean loss of control and an undesirable release of hydrocarbons that pose safety and environmental hazards. The Intercept RBP prevents these hazards and complies with ISO 14310 and API 11D1 V0 standards for wellbore isolation. Reliable in environments ranging from inland waters to ultra-deep water, the Intercept RBP sets with simple work-string operation. It consists of packer-type sealing elements, bi-directional mechanical slips, and a ball valve, which can be opened and closed without pipe rotation. It requires no hang weight to set, eliminating the time to deploy drillpipe beforehand, yet it can handle significant pipe weight, reducing trip time and costs while enhancing safety. Additionally, the tool requires no left-hand rotation, thus reducing the risk of unintentionally disconnecting the work-string or bottom-hole assembly.

ENSURING STABILITY AND SAFETY DURING: • • • • •

Test and maintenance of the blowout preventer Maintenance of the wellhead Testing the casing Short- and long-term well suspension Emergency suspension due to weather or adverse conditions

KEY BENEFITS • • • •

Complies with ISO 14310 and API 11D1 V0 standards for wellbore isolation Quick and easy operating procedure Requires no left-hand rotation Requires no tripping tailpipe, reducing rig time and cost

An elite project from Energy Industry Review focused on corporate, industrial and commercial photography

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ANALYSIS

Refineries and air quality in Romania

energyindustryreview.com

ANALYSIS

The European Commission (EC) referred Romania in mid-May, together with other five countries, to the Court of Justice of the European Union (CJEU), for failing to respect agreed air quality limit values. Thus, officials in Brussels sanction the repeated failures of France, Germany, the United Kingdom, Italy, Hungary and Romania â&#x20AC;&#x153;for failing to respect agreed air quality limit values and for failing to take appropriate measures

to keep exceedance periods as short as possibleâ&#x20AC;?. In order to see what the concrete situation is and what measures have been taken or will be taken by the Ministry of Environment and the largest refineries in Romania, we have collected in this analysis official information from those involved. by Daniel Lazar

PETROTEL-LUKOIL 85 REFINERY

ANALYSIS

omania, Hungary and Italy are referred to the Court of Justice over persistently high levels of particulate matter (PM10), the EC claims. The limits, set out under EU legislation on ambient air quality (Directive 2008/50/ EC) had to be met in 2010 and 2005 respectively, EC accuses, which mentions that, in Romania’s case, the worst situation is in the agglomeration of Bucharest, where the daily limit values have been persistently exceeded, ever since the EU law became applicable to Romania, and in 2016 on 38 days. EC’s decision follows an additional reasoned opinion sent to Romania in September 2014, within the infringement procedure. In Italy, in 28 air quality zones, including in the regions of Lombardy, Piedmont, Lazio and Veneto, the daily limit values have been persistently exceeded, in 2016 on up to 89 days. In Hungary, in three air quality zones,

Budapest, Pecs and Sajó valley, the daily limit values have been persistently exceeded, in 2016 on up to 76 days. Also, the EC decided to refer France, Germany, and the United Kingdom to the Court of Justice of the EU for failure to respect limit values for nitrogen dioxide (NO2), and for failing to take appropriate measures to keep exceedance periods as short as possible. In all cases of exceedance of limit values set by EU law on ambient air quality, Member States have to adopt air quality plans and ensure that such plans set appropriate measures so that the exceedance period can be kept as short as possible. Guided by the principle of subsidiarity, EU legislation gives Member States the choice of which means to use to comply with the limit values. Furthermore, the CJEU can acquit or condemn the Member States. In the case of Romania, a possible conviction in the CJEU could cost a penalty of a lump sum plus penalties to

be calculated on the basis of a specific formula, per day of delay, from the date set by the CJEU under its possible decision. In 2014, for example, the lump sum was EUR 1.8 million, with penalties between EUR 2,165 and EUR 130,000 per day of delay. Following the release of the EC press release, the Ministry of Environment made the following remarks: “In our country, it is about the infringement procedure for exceeding the limit values for the particulate matter PM10 in the Bucharest urban agglomeration, triggered in 2009. In all cases of exceedance of limit values set by EU law on ambient air quality, Member States have to adopt air quality plans and ensure that such plans set appropriate measures so that the exceedance period can be kept as short as possible. Aware of the importance of ensuring air quality and the severity of the three existing breaches, Environment Minister Gratiela Gavrilescu considers these issues a priority for her mandate. Thus, direct meetings were held with the mayors of the

energyindustryreview.com PETROBRAZI REFINERY | Photo: OMV Petrom

ANALYSIS

EVOLUTION OF CO2 EMISSIONS FROM REFINERIES DURING 2007-2016 4500000000 4076000000 3840000000

Total annual amount (kg/year)

4000000000 3500000000

3282000000

3000000000

2720000000

2500000000

2264000000 2270000000

2000000000

2200000000 2314000000

2188000000

2440000000

1500000000 1000000000 500000000 0

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Total annual amount SOURCE: MINISTRY OF ENVIRONMENT three urban agglomerations for which the EC had launched infringement procedures, with a view to speeding up the adoption of air quality plans as well as with local authorities and polluters in other agglomerations. There were also three meetings with European Commissioner Karmenu Vella on this issue. In order to reduce the impact of road traffic on air quality, the Ministry of Environment continued the RABLA and RABLA PLUS programs, allocating substantial amounts, especially for RABLA PLUS, following to promote for the same purpose other programs (electric vehicles for public transport and facilitating the transfer of a freight segment from the road to the railways etc.) Regarding the Bucharest urban agglomeration, the local public authority has taken all the necessary steps, in accordance with the schedule agreed with the mayor of Bucharest, and managed to finalize the integrated air quality plan within the announced deadline so that it could be approved by the end July 2018 as the Bucharest Municipality has undertaken

and informed the European Commission. Moreover, the Ministry of Environment has permanently communicated with the EC representatives and informed them about all the steps taken, together with the responsible authorities, to solve all the causes of the infringement, the involvement of the representatives of the Bucharest Municipality and the collaboration of the ministry specialists with them being exemplary. Although the European Commission has launched the referral procedure, we are convinced that with the approval of the Integrated Air Quality Plan by the General Council of the Capital and its immediate implementation, Romania will prevail.â&#x20AC;?

ARE THE REFINERIES IN ROMANIA POLLUTING OR NOT? At national level there are four facilities falling in the category of activities 1.2. Oil and gas refining from Annex no. 1 of Law 278/2013 on industrial emissions, with subsequent amendments and additions.

In Romania, as in the other Member States of the European Union, carrying out in terms of environmental protection an activity subject to Law 278/2013 on industrial emissions, with subsequent amendments and additions, such as the oil and gas refining activity, can only take place if the facility holds an Integrated Environmental Permit. Romania has requested and obtained, following negotiations with the EC, for this category of activities, a transition period starting with 2007, of five to eight years, for compliance with the European legislation in the field of environmental protection and implementing the recommendations of Best Available Techniques Reference Documents (BREFs). The transition periods are presented in Annex VII to the Treaty of Accession of Romania to the European Union (TA), ratified by Law 157/2005. The activity of facilities in terms of environmental protection was regulated during the transition period through 87

ANALYSIS

EVOLUTION OF SOX EMISSIONS FROM REFINERIES DURING 2007-2016 18000000 16000000

16160000 15993000

Total annual amount (kg/year)

14000000 11991000

12000000 10000000

8857000

8000000 5560000

6000000

5764000

4000000

2957000

2000000

2377000

1273000 9555000

0 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Total annual amount SOURCE: MINISTRY OF ENVIRONMENT integrated environmental permits with Action Plans for complying with the requirements of the European environmental protection legislation. After the transition period, as a result of the investments made, these facilities have obtained a new integrated environmental permit, demonstrating through the evaluation studies that they apply the best available techniques (BAT) in the field, presented in the Best Available Techniques Reference Document (BREF) for refining mineral oil and gas. Facilities that have not complied with the provisions of European environmental protection legislation at the end of the transition period and did not put into practice the best available techniques were forced to discontinue their activity. At present, for the oil and gas refining 88

facilities, the competent environmental protection authority responsible for issuing the integrated environmental permit is required to take the necessary measures for the operators to implement by 28 October 2018 the new Decision (EU) 2014/738 on the establishment of the Best Available Techniques (BAT), under Directive 2010/75/EU of the European Parliament and of the Council for the refining of mineral oil and gas. For this purpose, the competent environmental protection authority responsible for issuing the integrated environmental permit is required to make sure that all conditions from the integrated environmental permit are reviewed and, if necessary, updated, in order to ensure compliance with the provisions of Law 278/2013. Quality of life depends on air quality,

but air quality is the responsibility of everyone - authorities, economic agents and citizens.

THREE REFINERIES IN PLOIESTI. WHAT DOES APM PRAHOVA DO? Prahova Environmental Protection Agency (APM) is continuously monitoring air quality through a network consisting of six automatic stations (two traffic stations: PH1 station - APM headquarters and PH5 station - Bucharest Boulevard, two industrial stations: PH4 station - Brazi City Hall and PH6 station - Mihai Bravu Boulevard; one urban background station: PH2 station - Victoriei Square and one suburban background station: PH3 station - Blejoi City Hall) for the indicators provided by Law 104/2011 - sulphur dioxide, energyindustryreview.com

ANALYSIS

EVOLUTION OF NOX EMISSIONS FROM REFINERIES DURING 2007-2016 60000000 5346000

5568000

Total annual amount (kg/year)

50000000 4333000 4000000 3232000

3000000

1969000

2000000 1900000

1744000

1336000

1000000 0

1517000

1448000

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Total annual amount SOURCE: MINISTRY OF ENVIRONMENT

nitrogen oxides, ozone, carbon monoxide, particulate matter - PM10 and PM2.5 fraction, volatile organic compounds (benzene, toluene, o-xylene, ethylene benzene, m, p-xylene). The Ministry of Environment, at the request of APM Prahova, has allocated an analyser of volatile organic compounds (benzene, toluene, o-xylene, ethylbenzene, m, p-xylene) to the PH6 automatic air quality monitoring station in the eastern area of Ploiesti (the only automated station where no such analyser was allocated) and a PAH sampler to determine the benzo (a) pyrene indicator used as a marker for the assessment of the carcinogenicity of polycyclic aromatic hydrocarbons at the PH2 - Victoriei Square automatic monitoring station. Given the sensitive situation in Ploiesti - the existence of the refining industry, the processing of crude oil and

natural gas, the storage of petroleum products at terminals, the storage and processing of waste, APM Prahova carried out indicative measurements with the laboratory on wheels and a portable pollutant analyser not regulated by Law 104/2011 regarding the ambient air quality with subsequent modifications, based on the Supplementary Monitoring Plan, which monitored the evolution of the air quality in the proximity of the major industrial platforms in Ploiesti, respectively the influence area of Vega refinery, the southern area influenced by the activity on Astra industrial platform, the eastern industrial platform area and the Petrobrazi Refineryâ&#x20AC;&#x2122;s influence area. The increased values in relation to the specifics of the areas for the automatic air quality monitoring stations, as well as the overruns registered following the additional monitoring with the laboratory

on wheels are transmitted by APM Prahova, the National Environmental Guard - Prahova County Commissariat, in order to take the necessary measures, in line with its competencies. All reports, information and analysis bulletins are available on the APM Prahova website at: http://apmph.anpm.ro/ web/apm-prahova/calitatea-aerului. Moreover, in the procedures for issuing/ reviewing integrated permits/integrated environmental permits for operators carrying out their activity in Ploiesti, APM Prahova requires additional monitoring of the pollutants specific to each type of activity, as well as self-monitoring of imissions, according to the provisions of Law 104/2011. Romania, as a Member State of the European Union, has implemented at national level the Register of Pollutants Emitted and Transfer, in accordance 89

ANALYSIS

EVOLUTION OF NMVOC EMISSIONS FROM REFINERIES DURING 2007-2016

8000000

Total annual amount (kg/year)

7000000

6676000

6657000

6000000 5000000 4000000

3724000 3135000

3000000 2000000

2047000

2012

2013

2024000 1970000

1921000

1742000

1000000 0

1997000

2007

2008

2009

2010

2011

2014

2015

2016

Total annual amount SOURCE: MINISTRY OF ENVIRONMENT

with the provisions of Regulation (EC) 166/2006 of the European Parliament and of the Council concerning the establishment of a European Pollutant Release and Transfer Register and amending Council Directives 91/689/ EEC and 96/61/EC (EPRTR Regulation). The EPRTR Regulation establishes a Community-wide pollutant release and transfer register (called ‘European PRTR/EPRTR’) in the form of a publicly available electronic database. The PRTR Registry includes specific information on the emissions of pollutants into air, water and soil, as well as shipments of waste and pollutants from off-site waste water, reported by operators of industrial complexes carrying out one or more of the activities listed in Annex I to the EPRTR Regulation, if the applicable capacity threshold(s) (Annex 90

I of the EPRTR Regulation) and the emission threshold(s) (Annex II of the EPRTR Regulation) or waste threshold(s) are exceeded (2 tons for hazardous waste and 2,000 tons for non-hazardous waste). According to the requirements of the EPRTR Regulation, Romania has created the national PRTR Registry website that allows public access both from the country and abroad to environmental information on industrial complexes in Romania by accessing the address http:// prtr.anpm.ro. The European EPRTR website can be accessed at http://prtr. ec.europa.eu. Analysing the national emissions of the main air pollutants emitted from the oil and gas refining activity at the national level during the period 2007-2016, a general trend is observed of the decrease of the pollution indicators (see the

graph ‘Evolution of CO2 emissions from refineries during 2007-2016’).

FIRST REFINERY TO OBTAIN THE ENVIRONMENTAL PERMIT Rompetrol Rafinare, through the Vega Ploiesti Refinery, currently owns and operates the oldest refinery in operation in Romania, and also the only domestic producer of bitumen and hexane. “The Ploiesti unit works in perfect synergy with the Petromidia - Navodari refinery, the largest in the country and one of the most modern in the Black Sea region. Thus, Petromidia provides to the refinery in Ploiesti the raw/semi-finished materials needed to obtain special products with high added value,” says the Department of Communication and Public Relations of the KMG International Group. energyindustryreview.com

ANALYSIS

EVOLUTION OF CADMIUM EMISSIONS FROM REFINERIES DURING 2009-2016 160

152

140 122

Total annual amount (kg/year)

120 100 80 60 40

24 20 0

2009

2010

2011

2012

2013

2014

12 2015

11 2016

Total annual amount SOURCE: MINISTRY OF ENVIRONMENT

On 5 January 1905, the Board of Directors of Vega Societatea Anonima Romana (S.A.R.), chaired by Titu Maiorescu (Foreign Minister between 1910 and 1914 and Prime Minister of Romania from 1912 to 1913) decided to build a refinery in the northern part of Ploiesti near the future Ploiesti-Nord train station of Ploiesti - Valenii de Munte line. The design of the refinery took into account the conformation of the land, and the arrangement of the oil tanks and the processing facilities followed the use of the ‘natural fall’ principle. The construction works started in May 1905 on a land of about 50.4 hectares, and on 18 November of the same year the commissioning of the oil processing plants started. In the first phase, the supply of raw materials was carried out

with carriages, then with tank wagons and finally by the construction and connection of the tanks to three pipelines - one in the Bustenari - Recea area and two in the Moreni region, connected with Baicoi. Among the innovations made within the refinery are the development, in 1908, of Eng. Lazar Edeleanu, PhD, (director of the refinery during 1906-1913), of a unique oil processing method, by selective refining of petroleum fractions on the basis of the specific solubility of various grades of hydrocarbons in liquid sulphur dioxide, which allows selective extraction of aromatic hydrocarbons (benzene, toluene, xylene etc.). The method was patented in Romania (1908), USA (1909) and AustroHungary (1910). In 1960, approximately

80 ‘Edeleanu plants’ were estimated in different countries of the world. Vega Ploiesti Refinery became a joint stock company in 1990, and in 1997 against the background of the difficult economic situation, the company was on the list of the 16 companies proposed for liquidation for eight months. The majority shareholding of the Ploiestibased refinery was taken over in May 1999 by the Rompetrol Group (currently, KMG International), based on a privatization contract concluded with the State Property Fund (FPS). With the acquisition and integration of the Petromidia Navodari refinery in the activities of the Rompetrol Group in October 2000, the development strategy of the Vega Ploiesti Refinery aimed at transforming it from a classic refinery 91

ANALYSIS

EVOLUTION OF PM10 EMISSIONS FROM REFINERIES DURING 2007-2016 1000000 873000

900000

Total annual amount (kg/year)

800000 700000

806000

669000 691000

600000

572000

500000 400000

403000

300000

288000

200000

234400 591000

100000 0

589000 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Total annual amount SOURCE: MINISTRY OF ENVIRONMENT

into a producer and supplier of special products and solutions (organic solvents, special-purpose bitumen, ecological heating fuels, other dedicated products white spirit, n-hexane etc.). The investments made since 1999 to date in order to consolidate and expand the profile activities of the Vega refinery amounted to about USD 61 million and aimed at the modernization of the production units, the development of the product range (a new bitumen plant was built in 2007) reducing and eliminating environmental impact, and also increasing safety in the operation of equipment. “Vega Ploiesti Refinery was the first unit in Romania to receive the integrated environmental permit in 2006, a regulatory act with continuous certification that the Vega refinery’s activities are in line with the European standards for integrated pollution 92

prevention and control. Between 2000 and 2006, an amount of approximately USD 15 million was allocated to comply with environmental compliance and management programs, out of a total investment over the same period exceeding USD 31 million. Another important project for Vega refinery was and continues to be the greening of acidic tars and oil residues pits that were overwhelmingly deposited in the period prior to the privatization of Vega Ploiesti (19051999). According to the documents in the refinery’s privatization dossier, the amount of waste that the future shareholder was going to take for greening was estimated at approx. 62,000 tons. After the completion of the privatization procedure, it was found that the total volume of waste in the pits was at least 4 times higher. In the period 2002-2011, a total quantity of about 80,000 tons of waste from acid tars and

petroleum residues pits was eliminated through authorized economic operators, well above the level brought to the attention of the company in the privatization process. The costs of these operations amounted to about USD 17.4 million. The company currently carries out an extensive process of selection of a company with experience in the field, in order to achieve the decontamination and complete greening of the pits at the Vega Ploiesti Refinery. The implementation of the pits rehabilitation project involves not only the allocation of extraordinary financial resources, but also the careful and responsible selection of the available technologies, the most rigorous safety measures and the permanent cooperation with the competent environmental authorities,” the Department of Communication and Public Relations of the KMG International Group also mentions. energyindustryreview.com

ANALYSIS

PETROMIDIA REFINERY | Photo: Rompetrol

The removal of historical acid tars is not the only environment investment in progress for the Vega refinery. At present, KMG International has in progress investments of over USD 10 million to keep the Vega refinery at the highest quality and environmental standards for the safety of its employees and of the Ploiesti city. One of these investments, worth USD 1.7 million, is the new steam boiler, which will provide the necessary steam for technological operations in the refinery, under the conditions imposed by the legislation in force. Another important project is the recovery of hydrocarbon vapours at petroleum product loading points and the mounting of membranes for tanks storing volatile products. The project will involve replacing the current system and recovering all volatile hydrocarbon

vapours that occur during the load of refinery products in tanker trucks. This will have a strong positive impact on air quality but also on technological loss cuts. Also, an important project in the phase of the technical solution study is the installation of an incinerator for the technological gases from Bitumen, Vacuum Distillation and Dearomatization plants. This equipment will improve the refinery’s technological flow, allowing controlled combustion of noncondensable gases. “Rompetrol Rafinare - Vega Ploiesti Refinery is carrying out its activities in compliance with the national and international environmental standards, and also with the legislation in force. Although it is no longer processing crude oil or obtaining automotive fuel, Vega Refinery recorded a total quantity of 373,000 tons of processed

raw material in 2017, registering record production of bitumen (96,400 tons) and ecological solvents (41,000 tons). The total quantity of raw material processed by Vega Ploiesti Refinery in the period 1906-2017 amounts to about 68 million tons, with a maximum of 1.13 million tons achieved in 1979 - the commissioning of Petromidia Navodari Refinery,” the representatives of Rompetrol also mentioned.

ENVIRONMENTAL PERMIT UNTIL 2023 FOR THE LARGEST REFINERY IN ROMANIA Rompetrol Rafinare - Petromidia Navodari Refinery is currently the largest profile unit in Romania, with a volume of raw materials processed in 2017 of 5.66 million tons (16,800 tons per day), being at the same time one of 93

ANALYSIS

the most modern in the Black Sea region (Nelson complexity index - 10.5). The investments made by the Group since 2000 - the moment of takeover, to date have focused on the development of the activities of the companies present on the Petromidia platform, under conditions of maximum technological efficiency and environmental protection. “It is a responsibility and moral duty for both the companies and Rompetrol employees to protect the Black Sea and Siutghiol Lake, the Danube Delta biosphere and the Midia Channel ecosystem, as well as the Navodari, Corbu and Constanta localities,” Rompetrol representatives also claim. At the end of 2012, the company successfully completed the transition period granted to Petromidia Refinery to align the facilities to the European environmental requirements, i.e. compliance with the BAT/BREF requirements (Best Available Techniques 94

for Refining). Thus, all the projects under the action plan, part of the integrated environmental permit, have been completed. Petromidia became in 2013 the country’s first refinery holding the new integrated environmental permit valid for 10 years, with no compliance program. The document certifies that the operation of facilities on Petromidia platform is in accordance with the highest performance and environmental standards, while setting the conditions and parameters of the activities (air, water and soil emissions, waste management measures).

PETROTEL-LUKOIL, INVESTMENTS IN TWO MAJOR ENVIRONMENTAL PROJECTS The Prahova Chamber of Commerce and Industry hosted on 29 March a public dialogue organized by Petrotel-

Lukoil Ploiesti, through which Gleb Ovsyannikov, the head of the Public Relations Department of the Russian company, presented the actions of social responsibility, and also its plans for the future. The company’s representatives have proposed to have meetings with representatives of public authorities to find out from them what are the projects of major interest in which the refinery might be involved, this meeting being the first of its kind. “We are one of the largest taxpayers in Russia, and in the countries where we operate, we are an important employer and a social partner. Petrotel-Lukoil is one of our best refineries in Europe, if not even the best. Concern for our employees is part of social responsibility, an area in which, in each of the past two years, we have invested USD 177mln,” the Russian official has stated. He proposed that such events take place twice a year in the form of round table energyindustryreview.com

ANALYSIS

VEGA REFINERY | Photo: Rompetrol

meetings, where participants will present the projects they want to develop for the local community. “The Petrotel-Lukoil Ploiesti refinery has proven over time that it is interested in investing in environmental protection and social projects. On this occasion, I welcome the involvement of the refinery’s management in programs like afforestation on the East Ring of Ploiesti, where everyone can see that seedlings planted five years ago have become a young and strong forest, and setting up several playgrounds for children in Ploiesti. At the same time, the support that the refinery constantly gives to the Petroleum-Gas University to carry out its research programs cannot be overlooked,” the Prahova County Prefect, Madalina Lupea, has mentioned. Petrotel S.A. refinery was taken over by Lukoil Group in 1998. At the time, the facilities of the refinery were partially obsolete and did not comply with the environmental legislation. Therefore, an

extensive investment program was started, in both technological and environmental objectives undertaken upon privatization. Since 1998 and until 2005, approximately USD 11 million have been invested in environmental protection works, ending with a reduction of about 35% in sulphur dioxide emissions and about 20% in volatile organic compounds. In 2007, the refinery received the Integrated Environmental Permit and with it the Action Plan for compliance with the national and European requirements. From 2008, a new investment stage started, in order to carry out all measures included in the Action Plan. The investment made by Lukoil in this direction amounted to USD 120 million. Starting with 2011, the ‘LowNox’ combustion system has reduced the emissions of nitrogen oxides in the stacks of technological furnaces by approximately 70% and the powder

concentration has decreased by about 8 times. In 2012, by completing the refinery gas scrubbing plant, the concentration of sulphur dioxide in the gases exhausted in the atmosphere decreased by 90 times! In early 2015, Petrotel-Lukoil completed the last investment project within the Action Plan, commissioning the flue gas scrubber plant (Belco), from the Fluid Catalytic Cracking complex. The performances achieved were remarkable: emissions of sulphur oxides dropped 30 times, and those of powders 15 times. At this time, the refinery meets the requirements of the BREF documents and the Decision 2013/84/EU establishing best available techniques (BAT) conclusions, but according to the Directive 2010/75/EU of the European Parliament environmental investments do not stop here. In addition to the current re-equipment (mounting 95

EVENT

double sealing of dynamic equipment, continuation of double sealing or internal membrane tanks etc.), the refinery aims to invest in two major projects that will have a positive impact on the ambient air: the modernization of the Coking plant - Stage I (USD 7 million), a project that will reduce to zero process emissions (completion deadline: 2020) and the construction of a new sulphur recovery complex (USD 25.9 million) that will substantially reduce accidental emissions of sulphur oxides in the event of technical incidents or damage (deadline for completion: Q1/2020).

INVESTMENTS OF EUR 1.5 BILLION DURING 2005-2017 AT PETROBRAZI Petrobrazi Refinery, with a refining capacity of 4.5 million tons of crude oil per year, is one of the most important units of this type in the country. Petrobrazi’s production can cover the annual demand for fuels for 3 million vehicles. Although it was built more than 80 years ago, Petrobrazi Refinery works in line with the best performance standards, including in the environmental area, thanks to investments in recent years. During 2005-2017, OMV Petrom has invested in Petrobrazi over EUR 1.5 billion. There have been dedicated environmental projects, but also other projects to upgrade or build new facilities that have directly contributed to reducing the environmental impact. “These investments have allowed refinery activities to be more environmentally friendly. Specific CO2 emissions (expressed per ton of processed oil) decreased by 48% in 2017 as compared to 2004, the cumulative reduction being around 580,000 tons of CO2 during 2004-2017. The limit value for sulphur dioxide emissions dropped from 10,000 to 500 mg/Ncm, following modernization works. Also, the limit value for particulate matter emissions from the Fluid Catalytic Cracking Plant (FCC) dropped from 140 to 50 mg/Ncm following upgrading and mounting of electro filters,” says Adrian 96

Mincu, Petrobrazi Managing Director, Downstream Oil Division. The investments dedicated to environmental projects include: • Modernization of the flare system, in order to eliminate the leakage of hydrogen sulphide gas; • Greening work of the pits; more than 180,000 tons of sludge were processed there; • Upgrading the wastewater treatment plant; • Reducing emissions from combustion processes; • Modernization of tanks to reduce leakage risks and reduce emissions of volatile compounds. Other projects to upgrade or build new facilities within the refinery have directly contributed to reducing the environmental impact: • Modernization of the gas desulphurization - sulphur recovery plant, completed in 2013. This plant is needed to produce fuels at European quality standards. But there is also a significant impact on the environment: sulphur emissions have been reduced from 10,000 to less than 500 mg/Ncm. The plant provides 99.99% sulphur recovery; • Upgrading the FCC plant during the 2012 and 2014 overhauls. The plant provides separation of fuels (diesel and gasoline) from other crude oil components. The investments in this unit were mainly aimed at improving the depth of oil refining, but modernization also brought environmental benefits: particle emissions were reduced by the installation of electro filters, hot processing technologies of raw material were implemented, which allow reduction of environmental impact by reducing own consumption; • Upgrading the coking plant during the 2014 and 2016 overhauls. The coking plant is an end point in the refining process. The residue from the other facilities reach here and the latest oil transformation processes

are carried out here in order to obtain products used in the industry, such as coke, heavy oils or naphtha. Investments in the coking plant were aimed at replacing columns, upgrading pressure vessels etc., thus contributing to reducing emissions and improving energy efficiency; • Modernization of the vacuum distillation plant (VDP) in the 2012 and 2014 upgrades. This plant is among the most important in a refinery. This is where the first stage of crude oil refining takes place: heavy compounds (fuel oil, bitumen) are separated from the light ones, from which gasoline, diesel and LPG will subsequently be obtained. Following the modernization process, energy consumption has been reduced and the ability to extract commercially valuable compounds from crude oil has also increased. With regard to future plans, OMV Petrom has stated its commitment to continue investing in Romania. The Group’s strategy provides for investments of EUR 5 billion during 2017-2021, part of which is dedicated to the Downstream segment. “One of the directions is to assess the potential of petrochemistry, but for the moment we are in an early stage of analysing the opportunities. We will come back once we have identified and approved projects in this direction. In the short term, within the Petrobrazi Refinery, we have a project to build a new Polyfuel unit. We remain committed to implementing the projects to the latest international standards, ” Adrian Mincu concluded.

CONCLUSIONS Even if Romania received a serious and concrete warning from Brussels on air quality, it is encouraging that refineries are not primarily responsible for this negative aspect. It remains that the investments planned by them be put into practice to ensure that this vital sector of the national economy will not suffer. energyindustryreview.com

6 BALKANS th

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End Comment Crude oil following a predictable trend THE PRICE INCREASE TO BE SUBJECT TO CORRECTION Marek Paciorkowski - Director of Financial Markets at Aforti Exchange/AFORTI Group

he panic on the oil market, T which has been seemingly triggered by a tense situation between the US and Iran following the Americans denouncing the nuclear contract, has in fact had its source in the situation that started already in autumn 2017. The rise in the price of â&#x20AC;&#x2DC;black goldâ&#x20AC;&#x2122; has been supported by the recent drops in the US reserves. According to the US Department of Energy (DoE), the oil reserves fell between 7 and 11 of May by 2.2 million barrels, or 0.5%, to 433,76 million barrels. As a result, thereof, the European oil was valued at USD 78, while the American reached the level of USD 72. The rising oil price was to be predicted, as it was already indicated by the technical analysis performed as early as in September 2017. At the same time, it can be assumed that the ongoing and already advanced wave of growth will lead to local adjustments, which in the next few months will result in a test of the main downward trend line, which is currently established at around USD 90. 98

CURRENT TREND: CRUDE IS AIMING AT A PRICE LEVEL OF USD 78.80 The global situation on the oil market, even if considered exceptional in recent days, should not be considered surprising. The upward trend, supported by the strong formation of oRGR, began in September 2017, when the price level of 46.15 - 48.80 USD was overpassed. Currently, the market is approaching, in a consistent manner, the closest longterm resistance point, which is USD

78.80. This price is a result of a minimum from September 2011, when we were dealing with the first wave of declines, which eventually led the oil price to reach the low of USD 33.60, at the beginning of 2016. The current upward trend is already very advanced and, despite heading up, local corrections should be expected. If the above-mentioned prediction were to realize 100%, in the next few months the test of the main downward trend line, which is currently at around USD 90, will take place. energyindustryreview.com