Energy Industry Review - May 2018 by Energy Industry Review

Comment Romania keeping up with EU Blockchain initiative BITTWATT

Lavinia Iancu CEO and Publisher

new solution generated by a Romanian initiative, proposes to optimize A electricitywhich transactions, has entered the Romanian market since May, Andreea Paul, President of the INACO think tank Competitiveness Initiative, announced. Bittwatt is a matchmaking platform that connects all market players (from DSOs to consumers) and provides a standardized blockchain protocol for sharing relevant business information, all the while creating a decentralized service for energy supply, billing and balancing. This system streamlines current-day operations by removing operational costs and transfer fees, all this within an automated workflow that also optimizes energy transfers on an hourly basis: it transforms normal consumers into smart consumers. The Bittwatt initiative has already attracted over 25 million dollars and is listed in Japan and Singapore. The platform will be available in Romania through the supplier Eva Energy (the first power supplier on the liberalized market in Romania) and in Bulgaria through Energy Market JSC and will allow its suppliers and consumers to publish their offers and requests for energy supply. “We have reported as early as last year cartel issues, lack of transparency, artificially inflated prices etc., which disturb the procurement system and electricity prices. The situation is also valid for natural gas or fuels. Romania and the other countries of the world now have a solution to such problems, solution generated by a Romanian initiative,” Andreea Paul

mentioned. “Bittwatt is based on the Blockchain system, the Ethereum technology, and Ethereum has a Romanian among its four founding members,” she added. Las month 22 European countries have signed a Declaration on the establishment of a European Blockchain Partnership. The Partnership will be a vehicle for cooperation amongst Member States to exchange experience and expertise in technical and regulatory fields and prepare for the launch of EU-wide blockchain applications across the Digital Single Market for the benefit of the public and private sectors. This should ensure that Europe continues to play a leading role in the development and roll-out of blockchain technologies. The European Commission also launched the EU Blockchain Observatory and Forum in February and has already invested more than EUR 80 million in projects supporting the use of blockchain in technical and societal areas. Around EUR 300 million more are to be allocated to blockchain by 2020. The list of countries that are signatories of the Declaration includes Austria, Belgium, Bulgaria, Czech Republic, Estonia, Finland, France, Germany, Ireland, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, UK. Other countries, Members of the EU and of the European Economic Area are invited to join the European Blockchain Partnership. A small amendment: Romania is not (yet?) on this list... 3

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contri bÂu tors Dumitru Chisalita Judicial Technical Expert in Oil & Gas

Content 32

Oil companies operating in European waters have to comply with a 19 July deadline to implement new EU safety rules on offshore drilling.

First TAR NC monitoring report ENTSOG published its first report on Implementation and Baseline for Effect Monitoring of the Tariff Network Code for 2017.

page 16

Adelina Dabu

EU Regulations

Vice President Future Energy Leaders Romania

Fuel market developments Although Romania has the third lowest wage in the European Union, prices at which fuels are sold are among the highest in the Union. It is followed by Bulgaria and Poland, the latter being a special case, which could represent a model for the Government in Bucharest.

page 18

Ioan-Corneliu Dinu Scientific Counsellor at World Energy Council Romanian National Committee

The turnaround will consist of maintenance works, inspections and verifications of facilities as well as modernization investments for a series of the main units of the refinery.

page 20

Prof. Gheorghe Ivanus PhD Member of the Romanian Academy for Technical Sciences page 76

Over EUR 45mn investment in Petrobrazi Refinery turnaround

Romanian specialists courted abroad Our country has a rich tradition and an international reputation given by Romanian or foreign graduates who have built high-performance oil industries, even from scratch in some cases, in many countries of the globe. energyindustryreview.com

TAP job story A year into the project, 52 new Doosan excavators are now working on a section of one of Europeâ&#x20AC;&#x2122;s biggest pipeline projects, involving the construction of about 360 km of pipeline in Greece.

Carbon Capture and Storage (CCS) Dr. Constantin-Stefan Sava, Senior Geoscientist at GeoEcoMar, reveals the impact, benefits and current challenges in this domain.

86 Energy Charter Conference 2018 SEE Upstream Annual Conference The event brought together managers from Romania and South-Eastern Europe, experts, officials from regulatory bodies, who discussed hot topics and presented modern technical and scientific solutions applicable for the exploration and production sector of the oil and gas industry.

The Energy Charter Conference, organized in December 2015 in Tbilisi, formally approved the takeover of the Presidency of the Energy Charter Conference by Romania in 2018, our country being the first EU Member State to take this position since the establishment of the rotating presidency principle at the level of the Charter Conference (2014). 5

NEWS

BLOCKCHAIN POWER TO INVEST IN NEW BITCOIN MINING EQUIPMENT IN ROMANIA

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Join us on Linkedin Petroleum Review Publisher: Lavinia Iancu Business Development Manager: Marius Vladareanu Sales Manager: Valentin Matei Scientific Board: President: Prof. Niculae Napoleon Antonescu PhD Members: Prof. Lazar Avram PhD; Assoc. Prof. Marius Stan; Prof. Ionut Purica PhD; Alexandru Patruti PhD

anadian Blockchain Power Trust recently announced that it has acquired 1,550 cryptocurrency mining units (for Dorobantu wind farm) from a major cryptocurrency chip manufacturer, representing an aggregate of 21.7 petahash per second (PH/s) of combined hashing power at a net purchase price of USD 81,000 per petahash. The equipment has arrived in Romania and is expected to be commissioned at the beginning of May 2018. In addition, the previously acquired Hashtank H40 is currently undergoing testing by the manufacturer and is expected to be delivered to Romania and fully commissioned by the end of the second quarter of 2018, bringing the Trustâ&#x20AC;&#x2122;s aggregate installed petahash to 27.8 PH/s. Blockchain Power also reported that production of its renewable energy projects for the year ended December 31, 2017 was an aggregate 71,849 MWh,

representing an increase of 61% and 146%, respectively, over the 44,560 MWh produced in the year ended December 31, 2016 and 29,178 MWh produced in the year ended December 31, 2015. Production for the first quarter of 2018 was 45,353 MWh compared to 19,570 MWh in the same period of 2017, an increase of 132%. The company, through its direct and indirect subsidiaries in Canada, the Netherlands and Romania, has been formed to acquire interests in renewable energy assets in Romania, other countries in Europe and abroad that can provide stable cash flow and a suitable risk-adjusted return on investment. It seeks to provide investors with long-term, stable distributions, while preserving the capital value of its investment portfolio through investment, principally in a range of operational assets, which generate electricity from renewable energy sources, with a particular focus on solar and hydro power.

Journalists: Adrian Stoica, Vlad-Adrian Iancu, Daniel Lazar Art Director: Justin Iancu

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NEWS

GAZPROM SIGNS NEW CONTRACT FOR GAS SUPPLY TO SLOVENIA

n April 13, Alexander Medvedev - Deputy Chairman of the Gazprom Management Committee, Elena Burmistrova - Director General of Gazprom Export, and Bostjan Napast Chairman of the Management Board of Geoplin Ljubljana, took part in Ljubljana in the ceremony marking the conclusion of a medium-term contract for natural gas supply to Slovenia. The new contract provides for annual supplies of 600 million cubic meters of gas from January 1, 2018 to January 1, 2023. “This year marks 40 years since the start of Russian gas deliveries to Slovenia in 1978. Geoplin d.o.o. Ljubljana is our long-standing

partner. I am confident that the new contract for natural gas supplies will reinforce the relations between our companies and open a new page in the history of energy cooperation between the two countries,” said Alexander Medvedev. Russian gas supplies to Slovenia began in 1978. Between 1978 and 2017, more than 14 billion cubic meters of gas was delivered to Slovenia, including 607.2 million cubic meters in 2017. The previous contract between Gazprom Export and Geoplin Ljubljana expired on December 31, 2017. In 2017, Gazprom Group supplied a total of 194.4 billion cubic meters of gas to European countries, 192.2 billion cubic meters being supplied under Gazprom

Export contracts. Western European countries accounted for approximately 81% of the company’s exports from Russia, while Central European states took 19%. The Western European market (including Turkey) consumes the bulk of Russian exports. In 2017, Gazprom Export delivered 155.96 billion cubic meters of gas to markets in the region. The Eastern and Central European natural gas market is particularly important because of its geographical proximity to Russia. The Russian ‘blue fuel’ accounts for more than a half of gas consumption in the region. In 2017, Gazprom Export sold 36.3 billion cubic meters of gas in this market.

SOCAR AND BP SIGN NEW PRODUCTION SHARING AGREEMENT

OCAR and BP signed on April 26 a new production sharing agreement (PSA) for the joint exploration and development of Block D230 in the North Absheron basin in the Azerbaijan sector of the Caspian Sea. Block D230 lies some 135 kilometres (84 miles) north-east of Baku in the Caspian Sea. It covers an area of some 3,200 square kilometres and has not previously been explored. It has water depths of 400-600 metres and anticipated reservoir depths of about 3,500 metres. Under the PSA, which is for 25 years, BP will be the operator during 8

the exploration phase holding a 50 per cent interest while SOCAR will hold the remaining 50 per cent interest. The signing of the PSA follows the Memorandum of Understanding for exploration of Block D230, which was agreed in May 2016. BP and partners signed their first PSA in Azerbaijan with SOCAR, covering the development of the Azeri, Chirag and Deepwater Gunashli (ACG) field, in 1994. Production from ACG began in 1997 and the field has since produced over 3.3 billion barrels of oil. In 2017, SOCAR and the ACG partners signed an amended and restated

PSA that extends to the end of 2049. BP and partners signed a PSA for the development of the Shah Deniz gas condensate field in the Caspian in 1996 and production began in 2006. The major second stage of the development of the field, Shah Deniz 2, is scheduled to start production later this year. BP has also signed earlier two exploration PSAs with SOCAR: a PSA for the Shafag-Asiman offshore block was signed in 2010, and a PSA for the shallow water area around the Absheron Peninsula in 2014. Under both PSAs, seismic programmes have been completed and work continues for drilling plans. energyindustryreview.com

NEWS

APPLE POWERED BY 100 PERCENT RENEWABLE ENERGY

Apple’s new headquarters in Cupertino is powered by 100 percent renewable energy, in part from a 17-megawatt onsite rooftop solar installation. Photo source: Apple

s part of its commitment to combat climate change and create a healthier environment, Apple announced on April 9 its global facilities are powered with 100 percent clean energy. This achievement includes retail stores, offices, data centres and co-located facilities in 43 countries — including the United States, the United Kingdom, China and India. The company also announced nine additional manufacturing partners have committed to power all of their Apple production with 100 percent clean energy, bringing the total number of supplier commitments to 23. “We’re committed to leaving the world better than we found it. After years of hard work, we’re proud to have reached this significant milestone,” said Tim Cook,

Apple’s CEO. “We’re going to keep pushing the boundaries of what is possible with the materials in our products, the way we recycle them, our facilities and our work with suppliers to establish new creative and forward-looking sources of renewable energy because we know the future depends on it.” Apple and its partners are building new renewable energy projects around the world, improving the energy options for local communities, states and even entire countries. Apple creates or develops, with utilities, new regional renewable energy projects that would not otherwise exist. These projects represent a diverse range of energy sources, including solar arrays and wind farms as well as emerging technologies like biogas fuel cells, microhydro generation systems and energy storage technologies. 9

NEWS

ADNOC AWARDS OMV 20% STAKE IN OFFSHORE CONCESSION

MV, the international integrated oil and gas company based in Vienna, signed on April 29 an agreement for the award of a 20% stake in the offshore concession Abu Dhabi – SARB (with the satellite fields Bin Nasher and Al Bateel) and Umm Lulu as well as the associated infrastructure. The agreed participation fee amounts to USD 1.5 bn and the duration of the contract is 40 years. The concession will be retroactively effective as of March 9, 2018. “OMV is establishing a material position as an oil producer in the UAE and is delighted to further build on its existing partnership with ADNOC and Abu Dhabi. The offshore concession award is an important milestone in OMV’s delivery on strategy 2025, as we expand our footprint in one of the world’s leading oil and gas hubs. We are confident that our technological expertise will contribute to value creation and profitable growth, for all

partners involved,” stated Dr. Rainer Seele, Chairman of the OMV Executive Board and CEO. According to Johann Pleininger, OMV Board Member Upstream and Deputy Chairman of the Executive Board, the acquisition is a step towards the strategic goal to double group’s reserves. It will substantially increase OMV’s reserve base by approximately 450 million barrels, representing the share over the concession period. OMV’s position in Abu Dhabi is balancing the Upstream

production portfolio and increases its long-term cash generation. OMV’s share of the reserves, for the period of the concession agreement, would amount to approximately 450mn barrels oil for the two main fields, with upside potentials from the satellite fields Bin Nasher and Al Bateel. OMV’s capital expenditures over the contract term are estimated to amount to approximately USD 2bn, thereof approximately USD 150mn will be spent per annum during the first five years.

ENERGY COMMUNITY PUTS SPOTLIGHT ON RENEWABLES

t its meeting in Brussels, held on April 25, at the seat of the European Parliament, the Energy Community Parliamentary Plenum underlined that the uptake of renewable energy constitutes a critical aspect of the clean energy transition. Members of the European Parliament and national parliaments of the Contracting Parties shared their experiences in addressing the challenges of increasing the share of renewables in the energy mix. The 10

Plenum also expressed support for the ongoing work of the Energy Community to establish clean energy and climate targets until 2030. Stimulating the uptake of renewable energy sources is the focus of the next Energy Community Parliamentary Plenum Report to be voted on 17 October 2018 in Skopje under the chairmanship of former Yugoslav Republic of Macedonia as Energy Community Presidency in Office. “The Energy Community is the waiting

room for EU membership. We were bigger in the past (Romania, Bulgaria and Croatia were also Contracting Parties), but after they became EU members, they seized to be individual Parties of the Energy Community, because the EU is an integrated unit. The main purpose of the organization is to bring EU energy rules into the wider European neighbourhood, to create an internal energy market that is transparent, competitive, environmentally sustainable and secure,” states Director of the Energy Community Secretariat Janez Kopač. energyindustryreview.com

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NEWS

ENI ACHIEVES BREAKTHROUGH IN OIL & GAS RESERVOIR NUMERICAL MODELLING

ni’s industry-leading HPC4 supercomputer, recently deployed in Eni’s Green Data Centre facility, performed a breakthrough calculation, opening the path to a new era for reservoir engineering numerical modelling. HPC4 executed 100,000 highresolution reservoir model simulation runs, taking into account geological uncertainties, in a record time of 15 hours. In comparison, most reservoir engineers in the industry can run just one single simulation run in a few hours with CPUbased hardware and software. The calculation was performed using the full capacity of the new hybrid HPC

cluster equipped with 3200 Graphical Processing Units (GPUs) and Stone Ridge Technology’s ECHELON reservoir simulation software. A high-resolution model of a deep-water reservoir, with 5.7 million active cells, was executed with 100,000 different geological realizations, each one running on a single GPU in an average time of 28 minutes to simulate 15 years of production. The path opened by this technology is a key and integral part of Eni’s digital strategy and transformation. This run is not only proof of computing power, but also the first practical step to provide all of Eni’s reservoir engineers access to a powerful processing tool for more

accurately quantifying subsurface uncertainty and continually incorporating data into ‘live’ models on operating assets. It will further enhance Eni’s capability to accelerate the time-to-market of projects and deliver outstanding reservoir management strategies for all producing fields. Eni’s Green data Center’s hybrid supercomputers (HPC 3 and HPC4) have a peak performance capacity of 22.4 PetaFlop/s and provide strategic support to the company’s digital transformation process across the entire value chain, from the exploration and development of oil and gas reservoirs, to the management of the big data generated in the operational phase by all of the company’s assets.

ROMANIA, A FAVOURITE DESTINATION FOR BILATERAL ENERGY PROJECTS WITH THE US?

omania could become a favourite destination for the opportunity of developing joint energy projects - this was the conclusion of the first meeting of the Inter-Ministerial Committee for the implementation of the objectives resulting from the Strategic Partnership with the US and other bilateral RomaniaUS projects chaired by Deputy Prime Minister Ana Birchall, held at the Victoria Palace in early May. The meeting was attended by representatives of the ministries within the Inter-Ministerial Committee. 12

The agenda of the first meeting included topics such as the preparation of the Romania-US Strategic Dialogue, the Three Seas Initiative Summit (I3M), information on the latest developments in the bilateral political-diplomatic dialogue, US support for Romania’s candidacy to the Organization for Economic Cooperation and Development (OECD), as well as the status of the projects and consultations on the sectoral working groups provided in the Strategic Partnership. As for the Romania-US Strategic Dialogue, which according to the

provisions of the Strategic Partnership must take place annually, Deputy Prime Minister Ana Birchall said that the highlevel meeting would take place in the near future. At the first meeting of the InterMinisterial Committee, a number of concrete projects and opportunities were identified in the Romania-US relationship, especially in the economic sphere. For example, the opportunity for Romania to become a favourite destination for co-productions in the film industry, as well as the opportunity to develop joint energy projects. energyindustryreview.com

NEWS

CHRYSAOR AND BHGE START A NEW DRILLING CAMPAIGN IN THE UK NORTH SEA

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hrysaor, the UK oil & gas independent, recently announced the start of a new drilling campaign in its UK portfolio and a new Service Partnership Contract with Baker Hughes, a GE company. The contract, expected to run for approximately three years, covers the drilling, completion and subsea tie‐in of development wells on Chrysaor’s operated assets, with BHGE supplying well services and equipment from its fullstream portfolio. As part of the deal Chrysaor as Operator and BHGE as the Service Partner will share in the risks and rewards associated with both the operations and reservoir outcomes. BHGE will contribute to the costs of the work programme by funding a portion of

the capital expenditure in exchange for a higher potential return should certain targets and success criteria, both operational and geological, be met. This innovative approach, which includes the setting up of an integrated team operating under Chrysaor, will ensure complete alignment between the two companies on the outcome of each well. As a result, overall delivery costs are expected to be reduced, improving the commercial attractiveness to Chrysaor of future projects in the sector. Separately Chrysaor has contracted the Rowan Gorilla VII ultra‐harsh environment jack‐up rig for the drilling campaign with an initial contract term of up to 18 months and an option to extend by a further two years. The first well of the programme, a side‐track at the Maria field, is expected to start in May.

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NEWS

INVESTMENTS IN THE ROMANIAN OFFSHORE OIL AND GAS SECTOR TO BRING REVENUES OF OVER USD 26 BN

ccording to the recently released report by Deloitte Central Europe, investments in the Black Sea oil and gas sector will generate revenues of over 26 billion USD to the state budget by 2040, representing an additional 40 billion USD to the country’s GDP. Moreover, the impact on the labour market translates into creating and annually maintaining an average of over 30,000 jobs. The study, entitled ‘The contribution of Black Sea oil and gas projects to the development of the Romanian economy’, was performed at the request of the Romanian Black Sea Titleholders Association (RBSTA) and covers a period of 40 years, starting with 2000. The data used for the analysis was

collected from publicly available sources (European Commission, ENTSO-G, ANRM, ANRE, etc.) and Deloitte’s own data and panel of experts. The forecast is based on Deloitte Central Europe assumptions regarding the evolution of the Romanian economy, in general, and of the offshore industry, in particular. The report also presents the strategic value of the Black Sea projects; these will enhance Romania’s position in ensuring the regional energy security, after firstly securing the domestic natural gas consumption (35% of the production from the analysed period could be exported, while the difference would cover the decline in the onshore production, in the context of increasing domestic consumption). The impact

of the offshore production on the Romanian economy was assessed using the Input-Output model conceived by US Nobel Prize winner Wassily Leontief. “This new Deloitte impact report offers a radiography of the economic activities at the Black Sea, which we hope to contribute to the understanding of the importance of developing such investments,” said Dinu Bumbacea, Partner-in-Charge Deloitte Consulting. The Deloitte team involved in the project who was selected based on a competitive process, included Romanian and Polish experts with a vast experience in using this model, and was coordinated by Dinu Bumbacea and Irena Pichola - Leader of Deloitte Central Europe Sustainability Practice.

SIEMENS TO REHABILITATE POWER TRANSFORMATION STATIONS IN THE REPUBLIC OF MOLDOVA

ccording to a press release issued by the company Siemens will rehabilitate power transformation stations in the Republic of Moldova. State Enterprise ‘Moldelectrica’ has selected Siemens SRL for the rehabilitation of 14 medium voltage transformation stations located throughout the Republic of Moldova. The project is funded by the European Bank for Reconstruction and Development (EBRD). This contract is insofar, the largest rehabilitation project for medium voltage transformer stations implemented by Siemens SRL and has 14

an implementation term of 2 years. The works are scheduled to start in the second quarter of 2018. “State Enterprise ‘Moldelectrica’ through the implementation of this contract will increase the reliability of the supply of energy of the reconstructed stations for its consumers, which is why we have the certainty that a company like Siemens with a long-standing history in the Energy field will meet the challenges of this project and will implement high-end technologies in the Republic of Moldova,” Ghennadi Dimov, CEO of State Enerprise ‘Moldelectrica’ stated. “The partnership with State Enterprise

‘Moldelectrica’ and the fact that we can contribute to the rehabilitation of the Moldovan energy system, honours us. We are confident that this project is only the first step for the Moldovan energy industry,” Petru Ruset, Country Division Lead Energy Management Siemens Romania and Republic of Moldova added. State Enterprise Moldelectrica is a company specialized in the centralization of transport and operative dispatching services of the Moldovan energy system. Its mission is to contribute to the stable development of the Moldovan Power Industry. energyindustryreview.com

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OPINION

UNDERSTANDING THE NATURAL GAS MARKET There are many discussions on the gas market in Romania, many opinions, criticism, desires etc., but few analyse objectively what the gas market means to understand it and only then discuss about it or use it. The gas market involves complex trade, physical and financial flows, in terms of number of participants, added to which is the specificity of such a commodity as natural gas. Dumitru Chisalita â&#x20AC;&#x201C; Judicial Technical Expert in Oil & Gas

he market is based on selling gas by producers/ T importers to suppliers based on one or several gas acquisitions and/or import contracts. The supplier then concludes a contract with a transmission network user (or it can become itself transmission user, but undertakes the role of balancing party for the own customer portfolio) and a contract with all distribution operators in the networks of which are connected the consumers in its portfolio. In Romania there are 38 distribution operators, so there is a possibility to have 38 distribution contracts, to which, if we consider that in each network there are up to 6 categories of customers, in fact it is necessary that these 38 contracts face combinations of up to the sixth order. The transmission system user concludes a transmission service contract with the operator of the transmission service (if it operates only in Romania - with Transgaz). According to the legislation in force, suppliers have the obligation to conclude underground gas storage contracts with 16

the two licensed operators in Romania. Finally, the supplier concludes a sale-purchase contract with the gas consumer. Considering that a consumer may have up to 500 points of consumption, in fact it must conclude a number of combinations of x points of consumption, with y distribution operators, with z consumption categories, which are found in q exit points from the transmission system and for which the supplier takes over gas from k points of the w producers and from e points of consumption of the r importers, respectively of the t points of the u storage operators. After the conclusion of the contract, it is necessary to ensure the daily gas flow. Thus, the supplier requests the producer/importer/transmission operator to deliver daily the amounts requested by it, the producer divides them into delivery points stipulated by the contract and confirms them to the supplier. It sends daily to the transmission network user, which reports to the transmission operator the amounts to be taken over daily by the supplier and energyindustryreview.com

OPINION

specifies the delivery points in the NTS (the national transmission system). The transmission operator takes them over from the producer, based on the mandate given by the supplier, carries them to the exit point from the transmission system, where it re-sends them to the network user, which makes them available for the supplier. The supplier tells each distribution operator that it will have to take over in point q from the interface between the transmission system and the distribution system an amount that must be carried to the point of consumption x of consumer X. In point of consumption x, the distribution operator hand it over to the supplier, which delivers it to the consumer X. At the entry points in the transmission system, the supplier, after it buys the gas from the producer/importer/storage operator, empowers the producer/importer/storage operator to hand it over to the network user, from which it receives it at the exit point, point in which it empowers it to hand it over to the distribution operator. Last but not least, the supplier empowers the distribution operator to deliver

the gas to consumer X for the point of consumption x. This gas flow may be influenced daily and hourly by various factors and require re-nominations, makings, ante and post balancing or payment of imbalance between the amounts entering/exiting the transmission system or in the event of exceeding the transmission capacity booked. The activity must be covered 24 hours a day, on Saturday, Sunday and during legal holidays. The physical flow must be followed by the financial flow, the supplier pays for the purchased gas, transmission, distribution and storage services (usually before obtaining the money from the consumer) and waits to receive payment from the consumer. The full gas flow cannot be properly monitored without clear, transparent and non-discriminatory rules throughout the flow (Codes), without prepared, watchful and active arbitrators, without observers, without institutions that protect the weaker parties in this market (gas consumers) and especially without access to information platforms allowing to track the multitude of such complex information.

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OPINION

Energy is for everyone Adelina Dabu, Vice President Future Energy Leaders Romania

e often speak about energy in small circles confined to experts and engineers forgetting this is not only a sector but it is what powers up our laptops, warms up our house, turns on the factories and lights up our cities. We rely on energy for all our needs, everywhere we go. But while we seem aware that renewables are becoming mainstream and we talk about them a lot, we have left many actors out of this conversation. Sustainable energy is not only about classical energy resources and produces & distribute them. A couple of other actors should be taken on board if we want inclusive solutions: • Actor 1: Citizens. Their role is not only to vote and pay taxes. They own garbage and roofs. They are prosumers. • Actor 2: Businesses other than energy producers. About half of the world demand is coming from industrial processes. Beyond being an input, energy could also be an industrial output. • Actor 3: Cities. Home for more than half of world’s population; they are increasingly becoming outstanding political voices (only remember when New York City pledged to keep the Paris Climate Agreement). Just like any state, they compete for 18

inhabitants (read ‘taxes’) and have to offer a good life in exchange. Smog is not part of their future plans but better transportation and public lightning policies could be. Imagine for instance all these actors will take energy efficiency seriously. And that can actually make good business sense as well. Turning waste into energy is a low hanging fruit that can be picked from citizens, businesses and cities alike. Closer to home there are no prosumers but many depend on wood for cooking and heating. Energy intensity has decreased altogether with deindustrialization. Cities are still runaways for latest car models. There is plenty of waste dumped around. Meanwhile Romania is enjoying its recently reconfirmed favourable energy independence position within the EU. A media headline to be proud of. Actors 1, 2, 3 are not mentioned. While it now keeps us in a comfort zone, it could actually give us the leverage to get everyone in the game, start the conversation on how to build a sustainable energy future together and innovate; because we can actually afford to fail from this position. We are all in this now, and by ‘all’ I mean all citizens not all experts. Let’s get energy mainstream if we want a truthful engaging process of transformation and a sustainable future. energyindustryreview.com

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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

OPINION

Europe without coal OPTIONS AND STRATEGIES Ioan-Corneliu Dinu – Scientific Counsellor at Romanian National Committee of the World Energy Council

conomic diplomacy in general, with the main E branch of energy diplomacy, has to resolve by 2030 or 2035, according to some industry specialists, the issue of Europe’s decarbonization. About this aspect, we recall two complex themes that prevail in most of the conferences on energy, fossil and renewable sources etc., and also in articles with an economic tendency in general, especially energy, namely: 1. Energy dependence on Russia; 2. Diversification of energy sources and resources, as well as technologies. According to statements of specialists in geostrategy, in energy, geopoliticians and not only there is an idea shaping up that an agreement between Russia and the European Union (EU) under the all-encompassing keystone of Energy could become an axiomatic issue right against the backdrop of the two sides of the pointbased approach. While Russia has on its side the quasienergy dependence of the EU, on the other hand Europe has on its side an equally important instrument, which should be taken into account, that of diversification of supply sources. Statistics seem to put Europe ‘in the corner’, and the European Commission forecasts that the mix of its imports will not change substantially for the next 40 years, given the Member States’ depletion of resources. In other words, increasing production of energy from renewable sources, increase which must 20

be sustained, including biomass, approximately 50% from Europe’s energy demand by 2050, will manage to offset the decline of energy production from fossil sources, especially considering the complete abandonment of coal. Obviously, all these in favour of Russia, which dominates not only the European natural gas market, but also the oil market, knowing that 35% of Europe’s imports come from Moscow. We should not forget that Europe currently imports 85% of its crude oil demand, 15% being ensured by resources of Member States. Looking at these figures carefully, it is easy to realize that Europe’s energy situation is not at all favourable in terms of energy resources. A number of analysts, including those from CEPS (the Centre for European Policy Studies) Brussels, agreed on the common idea that Russia is more dependent on the 17 billion euros from natural gas exports to Europe than the European Union on those supplies. Which means, in other words, that Russia has no other customer to take over its entire amount of gas bound for Europe, lacking the energy infrastructure to access the Asian markets. The 30-year agreement between China and Russia for gas supply is based on the construction of Power of Siberia gas pipeline, through which about 38 billion cubic meters of gas would be supplied to China annually, gas pipeline which cannot be used before 2019. Brussels already has an important portfolio of potential gas suppliers that could replace imports coming from Russia. And it wouldn’t be energyindustryreview.com

OPINION

the first time when an energy importer is replaced with a certain swiftness; an example is Libyan oil, which covers 10% of the European demand, given up in the shortest time. Looking further, contrary to the known philosophical concept, the capacity of influence of the European Union is seen clearly, influence based on energy diplomacy, proper geopolitics, both related to Russia in terms of import of energy resources and, hence, the necessity of cultivation of the commercial ideal of diversifying these sources. In fact, analysing with technical determination and not only the development of the current energy infrastructure, the potential of known suppliers and their political stability, as well as competition between producer countries, competition between countries thirsty for energy, the following question arises: why would Europe need Russia’s resources? Because the question should have a solid foundation, we can refer to countries such as Qatar, ranking the first in the world in terms of LPG exports, Saudi Arabia - with one fifth of global oil reserves, and the list can continue with other real competitors of Russia. It is known that the EU develops stable and safe political relationships with the two countries, constantly importing approximately the same amount of gas, 7-8% of the entire demand. The same happens for a large part of oil used over the past few years. An increase in oil and gas imports from the Gulf countries could put pressure on Gazprom to reduce prices, prices which the Russian energy giant holds with great meanness. It is worth mentioning here, as an example, the reduction of Gazprom’s price for the oil sold to Greece. Let’s not forget the new player on the resource market, Iran, country that could significantly influence the economic and commercial framework - and not only - of European energy imports. As a possible apparent conclusion, the EU must finally understand and accept that its own energy policy can no longer be built as a complementary item for other objectives or subordinated to other singular interests of the various Member States. A while ago, when while still in England there was no question of the referendum, the UK argued that the European Union should have a pragmatic energy policy, a policy able to address immediately the two approaches in the title of this article. With regard to the decarbonization of Europe, coming to my mind is the thermal power plant fired by ‘clean coal’ from Civitavecchia, a city near Rome, which uses anthracite from southern Africa. I add the fact that the production of electricity in such a facility complies scrupulously with all the environmental parameters imposed by Europe, and also with those adopted at the UN Conference on Climate Change in Paris. 21

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INTERVIEW

Carbon Capture and Storage Impact, benefits and challenges In an in-depth discussion on Carbon Capture and Storage (CCS) method, Dr. Constantin-Stefan Sava, Senior Geoscientist at GeoEcoMar, reveals its impact, benefits for the energy industry and, last but not least, the current challenges in this domain.

Dr. Constantin-Stefan Sava holds a Degree in Geophysical Prospecting, the Institute of Oil, Gas and Geology, Bucharest, and a PhD Engineer Degree in Geology - Geophysical Branch, the University of Bucharest. Dr. Sava is Senior Geoscientist at the National Institute for Research and Development of Marine Geology and Geoecology - GeoEcoMar. He was awarded with the prize ‘Gheorghe Murgoci’ of the Romanian Academy. Dr. Sava has been national representative of ENeRG (European Network for Research in Geo-Energy) since 2002 (President during 2014-2015), representative for Romania of CO2 NET since 2006, member of ZEP (Zero emissions platform) Government Group since 2007 as well as member of ZEP Advisory Council since 2017 and representative for GeoEcoMar of CO2GeoNet Association since 2013. Dr. Sava represented GeoEcoMar as subcontractor in ‘CASTOR’ project, financed by FP 6, as partner, in ‘GeoCapacity’ and ‘CO2 Net East’ projects, also financed by FP 6, as well as in the ‘lmpact of communication’ project, financed by the Romanian National Center for Programs Management, in the frame of the FENCO-ERA. Dr. Sava represented GeoEcoMar as partner in the CGS Europe – ‘Pan-European coordination action on CO2 Geological Storage’ and CO2 Stop – ‘Assessment of the CO2 Storage Potential in

Europe’, financed by FP 7. Dr. Sava coordinated GeoEcoMar’s participation in ‘The National Program of Carbon Capture and Storage for 2011-2020 period’ project, consisting of complex studies for the harmonization of the Romanian legal framework with the European directives on the issue of CO2 geological storage and for the elaboration of a storage roadmap at national level. Dr. Sava coordinated the ‘Geological storage’ section of the Feasibility Study for the ‘Getica CCS’ Demonstrative Project, submitted by the Romanian Government, through the Ministry of Economy, Trade and Business Environment to the European Commission in the NER 300 competition. During 2016-2020, Dr. Sava represents GeoEcoMar as partner in ENOS - Enabling Onshore CO2 Storage in Europe, HORIZON 2020 project. During 2017-2020, Dr. Sava represents GeoEcoMar as partner in ALIGN CCUS (Accelerating Low Carbon Industrial Growth through CCUS) and ECO-BASE (Establishing CO2 enhanced Oil recovery Business Advantages in South Eastern Europe) projects, both financed jointly by EU Framework Program HORIZON 2020 and Romania’s UEFISCDI (Executive Agency for Higher Education, Research, Development and Innovation Funding). Since 2007 Dr. Sava has been President of the Romanian ‘CO2 Club’ Association. 23

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Europe, like the whole world, is currently facing a growing demand for energy, but at the same time there are more and more discussions about reducing the environmental impact of the energy sector. European strategies focus in particular on balancing the two major trends - reducing carbon emissions while creating a competitive energy market. As a coordinator of the CCUS projects at the National Institute of Marine Geology and Geoecology, what can you tell us about the solutions envisaged? Just before the 21st yearly session of the Conference of the Parties (COP 21), organized by the United Nations Framework Convention on Climate Change (UNFCCC) on December 2015 in Paris, representatives from well-known organizations: CO2GeoNet Association, the European Energy Research Alliance (EERA), the Global CCS Institute (GCCSI) and the International Energy Agency Greenhouse Gas R&D Programme (IEA GHG), convinced that CCS is a key decarbonisation wedge for reaching the goal of keeping the increment of global

average temperature below 2 degrees, proposed positive action by the UNFCCC on the inclusion, where appropriate, of the development and deployment of the Carbon Capture and Storage (CCS) in their Intended Nationally Determined Contributions (INDCs) noting that it is already recognised as an environmentally sound technology by the Convention. Therefore, it is critical that CCS development maintains momentum and support at the highest levels including within the UNFCCC. In order to achieve widespread deployment of CCS, the mentioned organisations would hope that the following positive actions could be enacted: Firmer inclusion of CCS in national and international climate and energy policy development, and where appropriate, within Intended Nationally Determined Contributions (INDCs); Equal inclusion of CCS as a mitigation option alongside other low carbon technologies; A global effort in strategic storage characterisation to ensure availability of fully developed storage opportunities; The development of CCS hubs and clusters in industrialised areas to

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CCS is a key decarbonisation wedge for reaching the goal of keeping the increment of global average temperature below 2 degrees, proposed positive action by the United Nations Framework Convention on Climate Change (UNFCCC) on the inclusion of the development and deployment of the method in their Intended Nationally Determined Contributions (INDCs).

allow the technology to be deployed at least cost across sectors; Combining the production of renewable energy from biomass with CO2 storage (BECCS) to enable negative CO2 emissions. There are considered the following with very high confidence: • Natural CO2 reservoirs have securely held billions of tonnes of CO2 for millions of years. These provide an understanding of CO2 storage processes and inform the selection of rock formations for secure storage as part of full-chain CCS; • Stored CO2 is securely contained by physical and chemical processes that increase storage security with time. Injected CO2, held within the storage site by multiple layers of impermeable rocks, is trapped in isolated pockets, dissolves in fluids in the rock and may eventually react with the rock to make new minerals; • Millions of tonnes of CO2 have been injected and stored since 1972 in storage pilots and demonstrations, enhanced oil recovery and other industry practices. Accumulated experience of CO2 injection worldwide has led to the development of routine best practices for the operation and closure of CO2 storage sites, and provides direct evidence of engineered storage security; • CO2 injected into underground rocks can be monitored to confirm its containment. A variety of monitoring methods has been developed and demonstrated. In the very unlikely event of poor site selection, these techniques are able to identify unexpected CO2 migration before leakage to the surface can occur; • Leakage of CO2 from geological storage presents a very low risk to climate, environment and human health. Research results show that the impacts of any CO2 leakage on land or at the seabed will be localised and very unlikely to cause significant harm to ecosystems and communities. Should CO2 move towards the surface, interventions can be made to control, minimise and prevent leakage. The language of the Paris climate agreement was negotiated by representatives of 196 parties at the 21st Conference of the Parties of the UNFCCC in Paris and adopted by consensus on 12 December 2015. As of May 2018, 195

UNFCCC members have signed the agreement, and 176 have become party to it. The Agreement aims to respond to the global climate change threat by keeping a global temperature rise this century well below 2 degrees Celsius above preindustrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. In the Paris climate agreement, each country determines, plans and regularly reports its own contribution it should make in order to mitigate global warming. There is no mechanism to force a country to set a specific target by a specific date, but each target should go beyond previously set targets. In a 1.5°C scenario, CCS needs to shoulder an even greater burden, and here’s why: • Current projections indicate more than 2,400 new coal-fired power stations are already planned for construction by the year 2030, to say nothing of the hundreds of existing facilities that will still be in operation for the coming decades; • Even if we replaced unabated coal power with unabated gas, the world is still nowhere near a chance to limit greenhouse gas emissions sufficiently to meet its own nominated targets; • Fully one quarter (25 percent) of the world’s CO2 emissions result from industrial sectors such as iron and steel, cement, chemicals and petrochemicals and fertiliser manufacture. Global forecasts show that the energy mix with the prospect of 2050 and even 2100 will continue to be made up of fossil resources, including coal. How do they reconcile with EU regulations and Romania’s promise to fulfil its commitments within the set deadlines? As any prediction on world energy mix for 2050 and even for 2100 mentions important usage of the fossil resources, including coal, taking into consideration, apart the numerous scientific and technical studies, the exceptional important Paris climate agreement, it is obvious that CCS technology have to be developed and applied worldwide, including Europe. The European Strategic Energy Technology Plan (SET-Plan) aims to accelerate the development and deployment of lowcarbon technologies. It seeks to improve new technologies and bring down costs by coordinating national research efforts and helping 25

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to finance projects. The SET-Plan promotes research and innovation efforts across Europe by supporting the most impactful technologies in the EU’s transformation to a low-carbon energy system. It promotes cooperation amongst EU countries, companies, research institutions, and the EU itself. By the end 2013 the Directive of the European Parliament on the geological storage of carbon dioxide has been fully transposed into national law in 20, out of 28 EU Member States. In Romania, the National Agency for Mineral Resources is the Competent Authority for applying of this law. After accession to the CO2GeoNet Association on 2013, GeoEcoMar is participating in the ‘ENOS’ HORIZON 2020 project for 2016-2020 period. Since 2017 GeoEcoMar is partner in two ACT projects: ‘ALIGN CCUS’ and ‘ECO-BASE’. ACT ERA-NET Cofund Action is a transnational collaboration on CO2 Capture and Storage (CCS) technology. CCS is regarded as one of the main routes for Europe to mitigate climate change. The initiative ‘Accelerating CCS technology as a new low-carbon energy vector’ (ACT) targets mainly the energy sector, but will also have benefits for energy intensive industries. The vision of ACT is to ensure that the energy sector makes a better contribution to climate protection by developing a collection of different CCS technologies ready for commercialisation. What projects is GeoEcoMar currently carrying out and how can they contribute to the above-mentioned problem? Work related to the CO2 geological storage began in Romania with the affiliation of the GeoEcoMar to ENeRG in 2002 and continued with participation of the institute in international projects related to CCS: as subcontractor in ‘CASTOR’ project, as partner in ‘EU GeoCapacity’, ‘CO2 Net East’, ‘lmpact of communication’, ‘CGS Europe’, ‘CO2 Stop’ projects as well as in similar national projects: ‘The National Program of Carbon Capture and Storage for 2011-2020 period’ and ‘Geological storage’ section of the Feasibility Study for the ‘Getica CCS’ Demonstration Project. A new project - named ENOS (ENabling ONshore CO2 storage in Europe) - that unites almost 30 research institutes, including GeoEcoMar as partner, through CO2 GeoNet 26

Association, was launched in September 2016. The main objectives of the European Horizon 2020 project are to increase field experience relevant to geological storage of CO2, refine techniques and tools used for site selection and monitoring and to advance communication between science and society on the geological storage of CO2. The project will run until August 2020. ENOS strives to enhance the development of CO2 storage onshore, close to CO2 emission points. Several field pilots in various geological settings will be studied in detail and best practices that stakeholders can rely on will be produced. In this way, ENOS will help demonstrate that CO2 storage is safe and environmentally sound and increase the confidence of stakeholders and the public in CCS as a viable mitigation option. As I have already said, since 2017 GeoEcoMar is partner in two ACT projects: ALIGN CCUS (Accelerating Low Carbon INdustrial Growth through CCUS) and ECO-BASE (Establishing CO2 enhanced Oil recovery Business Advantages in South Eastern Europe). The ALIGN-CCUS project aims to accelerate the transition of current industry and power sectors into a future of continued economic activity and low-carbon emissions, in which carbon capture, utilisation and storage (CCUS) plays an essential role. ALIGN addresses specific issues across the CCUS chain for industrial regions in ERA-NET ACT countries, enabling large scale, cost effective implementation of CCUS by 2025. ALIGN – CCUS Project objectives are: • Capture: Enable near-term deployment of CO2 capture by improving performance and reducing costs. • Transport: Optimising large-scale CO2 transport. • Storage: Reduce uncertainty in the provision of large-scale storage networks. • Utilisation: Establish the contribution of CCUS as an element for large-scale energy storage and conversion. • Social acceptance: Implementing CCUS in society. ALIGN’s objectives are designed to enable the acceleration of CCUS in specific industrial regions in ERA- NET ACT countries: Teesside and Grangemouth (UK), Rotterdam (NL), North Rhine-Westphalia (DE), Greenland (NO) and Oltenia (RO). ALIGN will combine

Work related to the CO2 geological storage began in Romania with the affiliation of the GeoEcoMar to ENeRG in 2002 and continued with participation of the institute in international projects related to CCS: as subcontractor in ‘CASTOR’ project, as partner in ‘EU GeoCapacity’, ‘CO2 Net East’, ‘lmpact of communication’, ‘CGS Europe’, ‘CO2 Stop’ projects as well as in similar national projects: ‘The National Program of Carbon Capture and Storage for 2011-2020 period’ and ‘Geological storage’ section of the Feasibility Study for the ‘Getica CCS’ Project.

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INTERVIEW

the results from each of these objectives to deliver actionable blueprints in each region, in which CCUS enables low-emission industries, through geological storage or through utilization of CO2. The project contributes to advancing the TRL levels of CCUS technologies through long-term CO2 capture testing campaigns at leading EU research facilities, and the design, construction, operation and testing a first-of-a-kind full-chain CO2 capture and conversion project in an industrial environment. A unique CO2 storage readiness assessment protocol shall be established to accelerate the definition of CO2 storage capacity, and potential storage locations in the North Sea will be better characterized. ALIGN also contributes to societal acceptance issues of CCUS. For the first time, leading social scientists will conduct quantitative research to understand how public perception of CCUS varies depending upon the source of CO2. The scientific outcomes of ALIGN will contribute directly to the acceleration of CCUS deployment in EU industrial regions, overcoming cluster specific technical challenges. The participants of ALIGN represent the ERA-NET ACT countries of the Netherlands, Germany, Norway, Romania and the United Kingdom. The ALIGN consortium is characterised by

considerable involvement of industrial companies, which are not only guiding the research, but have committed to directly investing in the R&D and demonstration activities in the project, boosting the credibility of the project’s potential for accelerating and maturing CCUS technologies, as the end-users themselves are driving the project forward. ECO-BASE aims to develop prospective revenue streams and business models for CO2-EOR in South-Eastern Europe and, therefore, to support large scale CCUS deployment in the region. The project is carried out locally in three SEE countries: Turkey, Romania and Greece with support from TNO, the Netherlands and IRIS, Norway. ECO-BASE will access EORStore potential through the following activities: • For Romania, Turkey and Greece, create an inventory of CO2 sources (potential capture projects) and sinks (potential sites for geological storage and for CO2 utilization through enhanced oil production with permanent storage); • Perform EORStore case studies as a reference for countrywide EOR potential assessment, identify and prepare solid business cases and CCUS revenue streams;

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•

Set up country-based roadmaps for CCS, with a key accelerator role for CO2-EOR; • Organize knowledge transfer workshops for local CCS stakeholders. The project firmly relies on existing experience of the project partners, their long-term collaboration through CO2GeoNet, bilateral agreements (Greece-Turkey) and on-going projects (e.g. H2020 ENOS). The objective of ECO-BASE is to develop detailed and integrated roadmaps for CCUS, including EORStore, in SouthEast Europe. The roadmaps will be based on available data on sources and sinks and supported by state of the art optimization engineering and economic/tax modelling. The project will analyse several emitters to end-user value chains and prospective revenue streams in Southern-East Europe by providing roadmaps as preparation for pilot applications, thereby lifting the storage and utilization components of the CCUS value chain in SEE to

TRL 4-5. The resulting roadmaps will include the way forward on technical, legal, economic and public levels for CCUS in general and EORStore specifically. The cases will also serve as an example for Europe-wide application of CCUS. At the SEE Upstream 2018 conference, you referred to the combination of geological storage with the increase of the hydrocarbon recovery factor (EOR) and the importance of applying these methods to the oil and gas industry in particular and to the entire energy sector in general, in Romania. What results did this approach have at international level? What are the most important benefits of this solution? The U.S. Department of Energy’s (DOE) National Energy Technology Laboratory (NETL) has already released the fifth edition of the Carbon Storage Atlas. Production of each atlas is the result of collaboration among carbon storage experts

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INTERVIEW

Most successful projects to date, and many in development planning, have strong links to the oil and gas industry, either as a source of CO2 or through the use of CO2 for Enhanced oil recovery (EOR).

from local, State, and Federal agencies, as well as industry and academia. The primary purpose of the atlas is to provide an update on the CO2 storage potential in the United States and to showcase updated information about the partnershipsâ&#x20AC;&#x2122; field activities and new information from the site characterization projects. The atlas outlines DOEâ&#x20AC;&#x2122;s Carbon Storage Program and its carbon capture, utilization, and storage (CCUS) collaborations, along with worldwide CCUS projects and CCUS regulatory issues. The atlas also presents updated information on the location of CO2 stationary source emissions and the locations and storage potential of various geologic storage sites, and it provides information about the commercialization opportunities for CCUS technologies from the regional partnerships. The United States has at least 2,400 billion metric tons of possible carbon dioxide (CO2) storage resource in saline formations, oil and gas reservoirs, and unmineable coal seams. Of particular importance is that over 225 billion metric tons of storage capacity has been identified in depleted oil and gas fields which could accommodate storage of several decades of emission from stationary sources while simultaneously improving the energy security of the United States by enhancing oil and gas recovery. Most successful projects to date (and many in development planning) have strong links to the oil and gas industry, either as a source of CO2 or through the use of CO2 for EOR. For widespread deployment of CCS to occur, in line with global mitigation ambitions, access to storage opportunities must ultimately move beyond EOR. In China, for example, where many CCS projects in development planning are linked to EOR, major progress in bringing these projects into construction is still awaited; the business case having been adversely influenced by the reduced oil prices of recent years. What is the current situation in Romania and Europe regarding the use of the presented methods? What are the chances that these methods will become commercial and can be widely used? Do economic policies help to evolve in this direction? Romania has a large potential for using the CO2 captured from industrial sources for injection in oil fields to simultaneously increase the oil recovery and store CO2 for the long-term.

The geological formations which are suitable for safe storage and are marked with a high degree of geological and physical knowledge, are widely distributed in the country. To date CO2 injection experiments were designed for the Romanian oil fields Bradu Albota â&#x20AC;&#x201C; Meotian, Silistea - Sarmatian, Satchinez Pannonian, Calacea - Miocene, Bradesti - Triassic, Turnu - Pannonian, Moreni - Meotian and Cerdac - Oligocene and operations to stimulate the production of oil were carried out. From this wide range of deposits that Romania offers to inject CO2 for the purpose of increasing oil recovery or long-term storage, we were able to achieve a plan in which we grouped these deposits with the closest sources. All these have been designed to achieve a complete CCUS chain that involves the capture, transport, usage and storage of CO2. The last years have heralded positive developments for many CCS projects globally. From 2010 to the end of 2017, the number of operational large-scale projects was set to rise from fewer than 10 to just over 20, with the CO2 capture capacity of operational projects more than doubling to 40 Mtpa. Many key projects that entered (or are soon expected to enter) operations in this period benefited from government policy initiatives developed towards the end of the last decade. However, funding for large-scale projects has tightened in a number of key jurisdictions. In Europe, the pace of CCS project development has suffered from a sharp reduction in the carbon price since the European Energy Programme for Recovery (EEPR) was established in 2009 and policy uncertainties in some countries. Can you give us more details about the Getica CCS project? Getica CCS is a demonstration governmental project, supported by the Global CCS Institute. The project aims at capturing about 1.5 million tons of CO2/year at the Turceni Energy Complex, transporting CO2, captured and liquefied, through pipelines, over a distance of about 40 km, and injecting the respective amount of CO2 into saline aquifers, highlighted in that area based on existing seismometric and drilling data. With over 150 years of experience in the oil and gas industry and an estimated CO2 storage capacity of about 22.6 Gt, by implementing the projects undertaken, on the one hand Romania can maintain operational its energy generation capacities, based on fossil 29

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fuels; as well as the related mining exploitations, of course with considerable economic and social impact, and on the other hand it can contribute to the European Commission’s objective of making CCS a commercially competitive method.

GETICA CCS – KEY FACTS Location: Oltenia region - the most energy intensive region at national level, responsible for about 40% of the total amount of CO emissions at national level (24.5 Mt/y CO2); Turceni Energy Complex - existing power plant, local lignitefuelled, 4x330 MW. Technical features • Integrated CCS Demonstration Project; • 1.5 Mt/y CO captured, transported and safely stored 2; • 85% minimum removal efficiency from the flue gases capture - 330 MW power unit, in Turceni Power Plant - Unit no.6, under retrofitting and operation lifetime extension; • Transport - onshore underground pipelines, with about 40m total length; • Storage - deep saline aquifers geological formations (more than 800 m) within a radius of 50 km from Turceni; Feasibility study donor: The Global CCS Institute, Australia offers a 2.55 mil. EUR grant for GETICA CCS Demo Project FS; GETICA CCS project company: Turceni Energy Complex - future CO2 Capture Plant operator; Transgaz, National Company for Natural Gas Transport - future CO2 Transport Infrastructure operator; Romgaz, National Company for Natural Gas Exploitation - future CO2 Storage Facility operator. Feasibility study technical consortium and support: Romania - ISPE (Institute for Studies and Power Engineering) - Project Management and Technical & Financial Consultant for capture plants integration and transportation pipelines; Germany - Alstom Carbon Capture GmbH - Capture Plant Technology; Romania - GeoEcoMar - CO2 Geological Storage Technological Consultant; France Schlumberger Carbon Services - CO2 Geological Storage Technology; UK - INTETECH - CO2 transportation pipelines corrosion and materials; France - OXAND – Risk assessment; Development stage: On-going feasibility study; NER300 application form was submitted on February 9, 2011 to the Romanian 30

Government – METBE. Environmental impact • Climate change mitigation measure, as a complementary solution within Renewable Energy Sources and Energy Efficiency portfolio; • Contribute to outcome climate change consequences, thus Romania meeting its national CO emissions 2 mitigation targets; • Romania will transpose the EU directives, especially Energy-Climate Change Package. Economic impact • Opportunity to develop new climate neutral coal-fired PPs and maintain operational the existing retrofitted fossil PPs, including the mining exploitation sites; • Increasing geopolitical security by consumption of coal versus gas suppliers dependency; • Extension of the CCS technology for all the power producers in the region (over 4,000 MW) and other energy intensive industries (metallurgical, chemical etc.); • Potential to develop the CCS transport & storage infrastructure for the industrial CO emitters in the 2 region, at country and cross-border levels, by extending the CO storage capacity in deep saline aquifers 2 geological formations and depleted oil and gas reservoirs from Oltenia region; • PPs with CCS are a stable addition to the fluctuating energy supply from solar and wind power plants.

Getica CCS is a demonstration governmental project, supported by the Global CCS Institute. The project aims at capturing about 1.5 million tons of CO2/year at the Turceni Energy Complex, transporting CO2, captured and liquefied, through pipelines, over a distance of about 40 km, and injecting the respective amount of CO2 into saline aquifers.

What are the lessons arising from international and national experience in your field? Even on 2013 the World Energy Issues Monitor stated: • Even with improvements in energy efficiency, World Energy Council expect global energy demand to double by 2050; • This is the inevitable consequence of global population growth, global economic growth, continued urbanization, as well as the resulting increased demand on mobility and other energy dependent services; • During the same period, we will need to reduce global greenhouse gas emissions by half if we want to keep a global temperature increase below two degrees Celsius. More than this, CO2 Capture and Storage (CCS) is also identified by the IPCC energyindustryreview.com

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(Intergovernmental Panel on Climate Change) as a key climatechange mitigation technology, as detailed in its 2005 Special Report. CCS offers a solution to bridge the gap to a low carbon future in scenarios until the use of fossil fuels is discontinued. It can even generate negative carbon emissions by removing CO2 from the atmosphere, for example when coupled with bioenergy. Today, after more than 25 years of CCS research, 15 industrialscale projects are in operation worldwide, with a further six scheduled to join these in 2017, and 17 new projects currently in preparation. It has thus become a reality to capture CO2 (coalfired power plants, natural gas processing factories, cement and steel manufacturing plants, etc.) and store it in deep saline aquifers or depleted hydrocarbon reservoirs. To date, some 50 Mt of CO2 has been safely stored underground. However, this represents only a small step (0.06%) towards international 2050 targets. The International Energy Agency (IEA) recommends increasing this volume to 90 Gt of

CO2 stored by 2050, in addition to using all other low-carbon options, in order to keep global warming to the 2Â°C maximum defined by the Paris climate agreement. In conclusion, the captured CO2 must be transported from the emission source to a suitable storage location. This transport takes place in pipelines, or by ship. CO2 will be stored in geological formations deep below the earth surface or the seabed. Multimodal transport of CO2 consists in a smart usage of pipelines and ships. At the scale of South East Europe and, why not, for a large part of Europe, promoting the multimodal transport of CO2 could surpass the difficulties of building pipelines everywhere as well as, for example, those of public acceptance and transboundary cooperation, apart others. Instead of a unique network of pipelines, multimodal transport of CO2 means a large usage of specialized ships on the inland waterways, and short pipelines between the emission sources as well as suitable storage locations with the closest harbours.

OIL & GAS

Oil companies to comply with new EU safety rules Oil companies operating in European waters have to comply with a 19 July deadline to implement new EU safety rules on offshore drilling, adopted in the aftermath of the disastrous BP oil slick in the Gulf of Mexico. Thus, by this deadline, governments must ensure that all existing oil rigs and other production installations comply with the directive. 32

he majority of oil and gas T production in Europe takes place offshore and there are currently over 1000 operations in European waters. Given the EU’s growing energy demand, these operations are crucial for helping ensure a secure supply of energy. At the same time, accidents such as the 2010 Deepwater Horizon disaster in the Gulf of Mexico illustrate the need for comprehensive safety measures. While safety is the primary responsibility of operators and individual countries, EU rules are important because an accident in one country can cause environmental and economic damage to its neighbours as well. On June 28, 2013, the European Commission published the Offshore

Directive. The aim of this Directive was to reduce as far as possible the occurrence of major accidents related to offshore oil and gas operations and to limit their consequences. The Directive also required the creation of an offshore competent authority. The EU Directive on safety and environment of offshore oil and gas operations was adopted in July 2013. In 2015, the European Commission published a Report and Staff Working Document on liability and compensation in the case of offshore accidents in Europe. These documents look at how bodily injury, property damage and economic losses are handled, as well as the financial security instruments that energyindustryreview.com

OIL & GAS

would cover such damage. They build on the findings of a study done for the Commission that was published in 2014. To further promote offshore safety, the European Commission works with its international partners on the implementation of the highest safety standards worldwide. The offshore inspectors of EU countries also work together through the European Union Offshore Oil and Gas Authorities Group (EUOAG) to share best practices and improve standards.

EU WIDE SAFETY STANDARDS Under the Safety of Offshore Oil and Gas Operations Directive, the EU has put in place a set of rules to help prevent accidents, as well as respond promptly

and efficiency should one occur: • Before exploration or production begins, companies must prepare a Major Hazard Report for their offshore installation. This report must contain a risk assessment and an emergency response plan • Companies must keep resources at hand in order to put them into operation when necessary • When granting licenses, EU countries must ensure that companies are well financed and have the necessary technical expertise • Technical solutions which are critical for the safety of operators’ installations must be independently verified. This must be done prior to the installation going into operation

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• •

National authorities must verify safety provisions, environmental protection measures, and the emergency preparedness of rigs and platforms. If companies do not respect the minimum standards, EU countries can impose sanctions, including halting production Information on how companies and EU countries keep installations safe must be made available for citizens Companies will be fully liable for environmental damages caused to protected marine species and natural habitats. For damage to marine habitats, the geographical zone will cover all EU marine waters including exclusive economic zones and continental shelves.

Steder Group in Romania is Your link to the world of Energy sector in the Black Sea Region for Transport, Logistics & Storage

OIL & GAS

ÂŠTGIF

ENTSOG first TAR NC monitoring report n April 3, ENTSOG O published its first report on Implementation and Baseline for Effect Monitoring of the Tariff Network Code for 2017. The Network Code on Harmonised Transmission Tariff Structures for Gas (TAR NC) was published in the Official Journal on 17 March 2017 and it entered into force on 6 April 2017. TAR NC was developed as per the process set out in Article 6 of Regulation (EC) No 715/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No 1775/2005, which involved the European Network of Transmission System Operators for Gas (ENTSOG), the Agency for the Cooperation of Energy Regulators (ACER), the European Commission (EC) and other market participants. The TAR NC monitoring report was developed by ENTSOG to monitor the status of the implementation of the TAR NC by European TSOs as of 31 December 2017, and to set a baseline 34

for future TAR NC effect monitoring reports. On 2 October 2017, ENTSOG contacted TSOs from 26 out of the 28 EU Member States (MS), to collect the required information for this report: (1) from 23 MS where the TAR NC applies as of 6 April 2017 (Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom); and (2) from three MS where a derogation is in place (Estonia, Finland, and Luxembourg). While the application of the TAR NC is mandatory in the 23MSs above, it is only optional in the 3MSs with a derogation. The remaining 2MSs (Cyprus and Malta) do not have TSOs, therefore they were not contacted to take part in this report. In total 51 European TSOs from the above mentioned 26MSs were contacted: the 45 ENTSOG Members, the 2 Associated Partners, and 4 other European TSOs.

The report confirms that the majority of TSOs have implemented the necessary provisions from the TAR NC for 2017 â&#x20AC;&#x201C; most of the workload comprises implementation of the publication requirements, followed by the preparation activities for future public consultations. A number of key challenges associated with the implementation of the TAR NC have also been identified in the report. In the effect monitoring sections of the report, five indicators were used: revenue recovery for TSOs, tariff changes, the profile of capacity bookings, publication in English, and the level of short-term multipliers. This being the baseline report, it will be possible to comparatively measure the future effects of the TAR NC. The report is available on the ENTSOG website. The role of ENTSOG (the European Network of Transmission System Operators for Gas) is to facilitate and enhance cooperation between national gas transmission system operators (TSOs) across Europe in order to ensure the development of a pan-European transmission system in line with European Union energy goals. energyindustryreview.com

IFAT 2018: Innovative Low-Pressure Solutions Extremely efficient and future-oriented – Kaeser blowers for water treatment applications in the era of Industrie 4.0. At this year’s IFAT, renowned compressed air specialist provider Kaeser Kompressoren will showcase innovative solutions for the low-pressure range. These include two new models in the company’s successful screw blower series: one large and one small machine for the scope of application previously covered by turbo compressors. And to round out the showcase, a versatile master controller that harnesses the power of multiple blowers into an easy to control and highly effective team.

or municipal or industrial wastewater treatment plants requiring compressed air with differential pressures up to 1100 mbar and flow rates from 2.3 to 12.2 m³/ min, the CBS screw blower is the perfect solution – with power from 7.5 to 22 kW. It’s up to 35 percent more efficient than conventional rotary blowers and even offers significant energy advantages in the two-digit range compared to other screw blowers on the market. The advantages of the CBS series shine especially in continuous operation, making it ideal for applications such as production of aeration air in water treatment and for bioreactors, flotation and fluidisation. On the high-power end, the HBS screw blower sets a new benchmark for compressor technology in the 132 to 250 kW power range, with flow rates from 60 to 160 m³/min. With exceptional controllability, whisper-quiet operation,

Rotary screw technology for blowers from Kaeser: the powerful CBS series delivers quiet operation and saves energy costs.

low maintenance requirement – and an optimised footprint – the HBS delivers consistent high efficiency across virtually the entire control range, rather than just small part of it. This feature makes the HBS an attractive alternative to turbo compressors in particular. Of course, both blowers, the CBS and HBS, are complete machines ready for connection, equipped with the Sigma Control 2 smart controller and independent monitoring. Although the Sigma Air Manager 4.0 master controller does ensure efficient operation of the individual blowers, its primary advantage is to optimally coordinate all of them together in simultaneous operation to achieve the highest possible efficiency. This master controller is therefore the solution for optimal automation of blower stations. Simply input the desired target value for flow rate or working pressure into the

process control system and the Sigma Air Manager 4.0 immediately calculates how to achieve optimal operation of each individual blower. Simultaneous operation of multiple blowers is therefore not only efficient in the partial load range, but is now even easier thanks to clear interfaces and is more effective due to equal machine loading. Kaeser Kompressoren will be present at the IFAT (held from May 14 to May 18, 2018 in München) in Hall A1, Stand 143/242 (main booth) and in Hall C3, Booth 133 (portable compressors). 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 35

OIL & GAS

Fuel market

developments

Romania vs. the EU Although Romania has the third lowest wage in the European Union (EU), according to data published by Eurostat in February, prices at which fuels are sold are among the highest in the Union. It is followed by Bulgaria and Poland, the latter being a special case, which could represent a model for the Government in Bucharest. Adrian Stoica

t the end of March, the average A price, at EU level, was EUR 1.35/liter for gasoline (Euro 95) and EUR 1.25/liter for diesel. In Romania, they were around EUR 1.13/ liter and EUR 1.15/liter respectively. The European statistics show that we have prices below the European average, but relative to the minimum wage things appear in a different light. At the European Union level, of the 28 Member States (including the UK), in 22 countries the minimum wage is regulated. In Romania, this net salary is EUR 251, thus holding the penultimate position and surpassing only Bulgaria, where the minimum wage is EUR 202. Related to the number of full tanks of gasoline (40 liters) that a Romanian 36

can make compared to the inhabitants of other EU countries, we notice that our situation is not good at all.

THE LARGEST NUMBER OF FULL TANKS In Ireland, country that has a minimum net wage of EUR 1,509, the largest in the EU, gasoline price at the end of March was EUR 1.36/liter, and for diesel - EUR 1.28/liter. Thus, from the minimum wage in Ireland one can monthly get 27.7 full tanks of gasoline and 26.5 full tanks of diesel. In turn, a Romanian can only afford from the minimum wage approximately 5.5 full tanks of gasoline and 5.45 full tanks of diesel. The largest number of full tanks from

the minimum net wage can be bought in Luxembourg, country with the largest GDP per capita in Europe. Here, the minimum net wage is EUR 1,162, and a liter of gasoline costs almost as much as in Romania, and diesel is even slightly cheaper. Thus, at EUR 1.16/liter of gasoline, 25.5 full tanks can be bought in Luxembourg, and at a price of EUR 1.03/liter of diesel - 28 full tanks.

COMPARISON WITH FORMER COMMUNIST COUNTRIES If we relate to the states of the former communist bloc, we notice that relative to the minimum net income the inhabitants of these countries can afford more full tanks of fuel than Romanians, energyindustryreview.com

OIL & GAS

TOP 10 COUNTRIES THAT CAN AFFORD THE LARGEST NUMBER OF FULL TANKS OF GASOLINE FROM THE MINIMUM NET WAGE Country

Minimum wage (EUR)

Price

Number of full tanks

Ireland

1,509

1.36

27.7

Luxembourg

1,162

1.14

25.48

France

1,401

1.46

The UK

1,261

1.36

23.2

The Netherlands

1,430

1.55

Belgium

1,216

1.33

22.8

Germany

1,102

1.31

Spain

733

1.23

14.9

Malta

673

1.31

12.8

Slovenia

642

1.28

12.5

In Romania, with a minimum wage of EUR 251, one can only afford approximately 5.5 full tanks of gasoline and 5.45 full tanks of diesel.

even if a liter of gasoline and diesel is slightly more expensive. In Estonia for example, at a minimum wage of EUR 482, one can make approximately 9.5 full tanks of gasoline and as many of diesel, in conditions in which gasoline costs at the pump EUR 1.28/liter and diesel - EUR 1.26/liter. In Croatia, with a minimum wage of EUR 370, one can buy about seven full tanks of gasoline and almost eight of diesel at a price of EUR 1.27/liter of gasoline and EUR 1.21/liter of diesel.

TAXES, LOWER THAN EU AVERAGE At the end of March, the European average of Euro 95 gasoline price without taxes was EUR 0.50/liter, while in Romania the price was EUR 0.53/liter. The fact that the price without taxes in Romania is higher than that of the

EU average and the price with taxes is lower, according to the same European statistics from the end of March, shows that the level of taxation is relatively low in Romania compared to other countries. Thus, the price of gasoline at the pump with taxes included was EUR 1.13/liter, and without taxes - EUR 0.53/liter, which means that the Romanian state charges EUR 0.6/liter sold. In percentages, taxes account for 46.9% of the price displayed at the pump, a percentage lower than the European average. In Luxembourg, the price of gasoline including taxes is EUR 1.14/liter and EUR 0.51/liter without taxes, which means that the state charges 55.26%. In Ireland, at a price including taxes of EUR 1.37/liter of gasoline, without taxes the price is EUR 0.505/liter, the state thus withholding 63.5%. The same

situation is recorded in the Netherlands, where the stateâ&#x20AC;&#x2122;s share of the price per liter of gasoline is 68.38%.

POLAND, A GOOD EXAMPLE A special situation, which should be food for thought for authorities in Bucharest, is recorded in Poland. Although the country has no oil reserves, unlike Romania, and with a minimum net wage of EUR 352, Poles can afford eight full tanks of gasoline per month and as many of diesel. Moreover, in this country fuels at the pump are cheaper than in Romania, EUR 1.11/liter of gasoline and EUR 1.09/liter of diesel, and the state withholds in the form of taxes and duties almost 55% of the price of gasoline and just over 41% of the price of diesel.

HOW DID THE FUEL MARKET EVOLVE IN 2017 The price without taxes of fuels in Romania was higher last year than the average at EU level, while taxes applied by the state were among the lowest in the Community area, according to data from the European Commission. At the end of December, the price per liter of gasoline, without taxes, was in Romania EUR 0.511, while the EU average was EUR 0.508. The same happened with diesel, where the price excluding taxes is EUR 0.560/liter and the EU average is EUR 0.542/liter. Compared to the beginning of 2017, the price excluding taxes of fuels increased more in Romania than the EU average. Thus, in the case of gasoline, prices excluding taxes in Romania were higher by 1.1%, while the EU average fell by 1%. At the same time, for diesel prices excluding taxes in Romania increased by 5% and the EU average by only 1.1%. If we add the taxes, the final price at the pump was EUR 1.117/liter for gasoline and EUR 1.140/liter for diesel. Reported to these final prices, Romania was below the European average, which was EUR 1.363/liter for gasoline and EUR 1.249/liter for diesel. 37

OIL & GAS

Over EUR 45mn investment in Petrobrazi Refinery turnaround On April 13, OMV Petrom will start works for the periodical turnaround of Petrobrazi Refinery. The production in the refinery will be shut down for six weeks during the full-site turnaround. The turnaround will consist of maintenance works, inspections and verifications of facilities as well as modernization investments for a series of the main units of the refinery.

Petrobrazi turnaround in figures 5,000 workers involved, 4,000 more than during normal operation Eight main contractors and 33 subcontractors, 80 percent of them Romanian companies Verifications of 3,720 pipelines and 9,300 pieces of electronic and automation equipment. 38

ollowing completion of the F modernization works planned for this year, the mean time between turnarounds will increase to four years, with the next turnaround scheduled for 2022. Before 2014, turnarounds of this type were performed annually and, after the finalization of Petrobrazi modernization program, the mean time between turnarounds was extended to two years. “We have been planning this turnaround for two years. We want to reassure you that, although the refinery will be shut down for six weeks, we have taken measures to ensure that this

will not impact the fuel distribution network. What’s more, tens of thousands of interventions are planned for the turnaround. The upcoming maintenance and modernization works give us the confidence that the refinery will function safely for the next four years and the environmental impact will be further reduced. Also, we estimate that the Petrobrazi turnaround will be beneficial to the local economy, as approximately 80 percent of the involved companies are local,” said Neil Anthony Morgan, member of OMV Petrom Executive Board, responsible for Downstream Oil. energyindustryreview.com

OIL & GAS

The budget for this project exceeds EUR 45mn, adding to the over EUR 1.5bn already invested in the modernization of Petrobrazi between 2005 and 2017.

ABOUT PETROBRAZI Petrobrazi refinery, with an annual refining capacity of 4.5mn tons of crude oil, is one of the most important units of this profile in the country. The Petrobrazi output can cover the necessary fuel for 3mn cars/year. Between 2005 and 2017, Petrobrazi refinery benefitted from over EUR 1.5bn investments in modernization projects, construction of new installations and environmental projects. Currently, Petrobrazi functions

at the highest environmental and performance standards.

ABOUT OMV PETROM OMV Petrom is the largest integrated oil and gas group in South-Eastern Europe, with an annual oil and gas production of approximately 61mn boe in 2017. The Group has a refining capacity of 4.5mn tons/year and operates an 860 MW high efficiency power plant. The group is present on the oil products retail markets in Romania and neighbouring countries through 786 filling stations, as of end 2017, under two brands â&#x20AC;&#x201C; Petrom and OMV. OMV, one of Austriaâ&#x20AC;&#x2122;s largest listed industrial companies, holds a 51.01% stake in OMV Petrom. The Romanian

state, via the Ministry of Energy, holds 20.64% of OMV Petrom shares, Fondul Proprietatea holds 9.9985%, and 18.35% is free float on the Bucharest Stock Exchange and London Stock Exchange. OMV Petrom is the largest contributor to the state budget, with approximately EUR 25.5 bn paid in taxes, contributions and dividends between 2005 and 2017. Starting 2007, OMV Petrom has integrated the principles of corporate responsibility into its business strategy. In this period, the company has allocated approx. EUR 50 mn for the development of communities in Romania, focusing on environmental protection, education, health and local development.

OIL & GAS

Romanian specialists courted abroad

Even before 1990, many oil and gas industry specialists trained in Romania at the Petroleum-Gas University of Ploiesti (UPG) - which is one of Romaniaâ&#x20AC;&#x2122;s ambassadors in the world, have come to work for top companies on all over the globe. Our country has a rich tradition and an international reputation given by Romanian or foreign graduates who have built high-performance oil industries, even from scratch in some cases (Syria, Iraq, Vietnam) in many countries of the globe. Now, however, linking labour market demand with educational offer is a challenge, and large companies in the field are fighting fiercely to attract well-trained specialists. Daniel Lazar

energyindustryreview.com

OIL & GAS

“Correlating skills gained by UPG Ploiesti graduates with the needs of employers’ requirements” has been the topic of a workshop organized by the Petroleum-Gas University of Ploiesti and the Oil and Gas Employers’ Federation, which brought together representatives of companies for which graduates of the technical faculties of UPG Ploiesti are working or will work, companies operating in the oil and gas industry (drilling-extraction, transmission and storage, refining, petrochemistry) and for the oil and gas industry (manufacture of petroleum and petrochemical equipment, machine building, automation and information technology). Representatives of over 70 companies responded to organizers’ invitation, the purpose of the action being to correlate the training of University students with employers’ requirements, given the unprecedented technological progress we are witnessing. Knowledge of English, drawing up a CV with impact, personal skills presentation, own marketing, teamwork, knowing to professionally present their professional achievements and leadership training have been some of the requirements that employers have from graduates who want to work for them. Certainly, many of the Romanian graduates will want to work in other countries, not to mention the foreign ones, considering that more than 300 students from 28 countries are studying or have studied at UPG Ploiesti. This was a first meeting of this type; the initiative being intended to become permanent. For this purpose, thematic working groups will be set up to produce facts, initiatives, deadlines and responsibilities. It was also proposed that students should be co-opted in the research groups and that companies donate to laboratories equipment or

installations that are out of use in order to improve the students’ practical skills.

DIPLOMACY IS ALSO INVOLVED Diplomatic missions accredited in Bucharest also help companies in their countries, especially as more emphasis is now placed on the economic representation of a state to the detriment of the political one. In this context, the Ambassador of the Republic of Cuba in Bucharest, E.S. Roberto Cesar Hamilton Magana, and two managers of Cuba Petroleo, the oil industry being a strategic sector of the South American country’s economy, were present in Ploiesti just to take the pulse of the specialists trained in the city of ‘black gold.’ “For Cuba, for the Embassy, for our delegation, is an honour to be here, in Ploiesti, in the homeland of crude oil. It is my first visit as an ambassador and, although I have heard many beautiful things about this city, I have to admit that I am more than pleasantly surprised. I have a mandate from the Cuban Chamber of Commerce and Industry to stimulate the bilateral agreement signed in 2001, so that it does not just remain a paper signature, to give it life,” the Ambassador of the Republic of Cuba in Bucharest said. In turn, Tania Perez Delgado, representative of Cuba Petroleo company - the largest oil company in this country - said that “It is an honour to have come to this city where 4 Cuban students are also learning. We are glad that in the strategic sector of the petroleum industry we have specialists who have studied in Ploiesti. When they learned that we were coming to Ploiesti, they gave us pictures and sent heartfelt greetings to teachers and former colleagues. The oil sector is vital in Cuba and as long as we develop these relationships, it will be 41

OIL & GAS

beneficial to both sides.” Ambassador of Turkmenistan to Bucharest, E.S. Sorhat Jumayev, was also present at the Petroleum and Gas University of Ploiesti, attending the Symposium entitled “Energy and Transport Strategy in Turkmenistan.” The event was attended by representatives of the Ministry of Energy, the Ministry of Foreign Affairs, the Oil and Gas Employers’ Federation, the Prahova Chamber of Commerce and Industry, as well as representatives of some natural gas companies, teachers and students from Turkmenistan at UPG Ploiesti. So far, 37 students from this country have graduated from UPG Ploie;ti, another 22 students currently studying at UPG, the institution having a collaboration protocol with the University of Ashgabat. Moreover, teachers trained in Ploiesti even came to teach at the mentioned higher education institution. “We are always in contact with the University of Ploiesti and we are linked by many actions we have jointly carried out so far. I am convinced that we will work together in the future in the field of oil and natural gas. Our country is an important player in the region, being the fourth largest gas producer in the world. We are interested in cooperating with companies from Romania, especially as our route is one that is oriented towards the European Union,” the Ambassador of Turkmenistan to Romania has mentioned.

GUESTS FROM LEBANON, CHINA, THE RUSSIAN FEDERATION AND SERBIA Moreover, teachers and students from 4 universities in Russia, China, Lebanon and Serbia took part in the event called “Erasmus+ Week” during 23-27 April 2018 at Petroleum-Gas University of Ploiesti. They came from the Lebanese University, the 42

Beirut Arab University, the University of Balamand and the University of Notre Dame (all from Lebanon), the Saint Petersburg Mining University (Russian Federation), the Northeast Petroleum University (China) and the Singidunum University (Serbia). The action itself aimed to enhance collaboration between partner institutions in the program, facilitate networking and establish new partnerships. “This year we celebrate 104 years of higher education in the petroleum field in Romania. Until 1948 we have worked within the University of Bucharest, then we became the Oil and Gas Institute and later the Petroleum-Gas University of Ploiesti. In November this year we celebrate the 70th anniversary since the establishment of the University of Ploiesti and we would be glad to have guests at the events that will be organized on this occasion,” UPG Ploiesti Rector, Prof. Eng. Mihai Pascu Coloja, PhD, said. The international relations of UPG Ploiesti, especially within Erasmus+, take place in the technical area, having partnerships signed with 44 universities from 25 countries. “Over time, we have developed relationships of collaboration with universities from other countries, especially from Russia, Kazakhstan, Azerbaijan and Turkmenistan, and more recently we are collaborating with two Chinese universities. For example, we have a program with 6 universities, where UPG Ploiesti is a coordinator, building a Master’s program in the field of oil engineering with Lebanese universities. This project has also opened other programs, such as the Summer School, whereby part of the Lebanese students benefits from the over 160-year experience of the petroleum industry in Romania, and especially in Prahova,” the ViceRector of UPG Ploiesti, Prof. Eng. Mihail Minescu, PhD, said.

EXCHANGE OF EXPERIENCE WITH THE REPUBLIC OF GHANA Even for countries that have bypassed Romania for years, the training provided by the graduates of the oil and gas university has become attractive. Thus, a delegation from the Republic of Ghana, consisting of Virginia Hesse - Ambassador Extraordinary and Plenipotentiary of the Republic of Ghana to Prague, Worwornyo Agyeman - Consul of the same Embassy, and Marin Stancu - Honorary Consul of the Republic of Ghana in Bucharest, carried out at the end of March a visit to UPG. The visit came as a memorandum of understanding between Romania and Ghana was signed in Bucharest by the foreign ministers of the two states. “We are trying to train students so that their training matches the requirements of the labour market. My government is trying to prepare as many children as possible to join high school and then attend the courses of a faculty,” Virginia Hesse said. Worwornyo Agyeman added: “We have many universities in Ghana and I think it would be a good opportunity to start an exchange of experience, to visit our universities.” The event was part of the official visit of Ghana’s Foreign and Regional Integration Minister, Shirley Ayorkor Botchway, to Romania, the first visit of a senior African official in the last three decades. On this occasion, Romanian Foreign Affairs Minister Teodor Melescanu said that the signed memorandum is “a useful document of constant coordination and evaluation of the forms of development of bilateral cooperation in various fields including possibilities to stipulate the economic and sectoral cooperation in different areas of common interest such as energy, oil industry, agriculture, IT.” Therefore, Romania becomes an exporter of intelligence not only in IT or medicine, but also in the oil and gas industry. energyindustryreview.com

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OIL AND GAS • • • • •

Oil and Gas Exploration Aand Production Refineries Onshore/Offshore Power and Desalination Retail

Cutting-edge consultancy and engineering, teaming-up and making ideas work – worldwide Bilfinger Tebodin is a multidisciplinary consultancy and engineering company. Since 2012 it is a part of Bilfinger SE – an international industrial services provider with revenue of €4.044 billion in financial year 2017. The company is active in various markets: food & beverage, oil & gas, (petro) chemicals, infrastructure, (bio)pharma, property and energy & utilities. It has 35 offices all over Europe, the Middle East and North America. With the knowledge of your market, client ambitions and vision on current developments, Bilfinger Tebodin is your independent partner on every level. Expertise, experience, and passion for technology, of 3,200 professional consultants and engineers is combined with a global competence network of 37,000 industry-focused Bilfinger specialists around the world.

Bilfinger Tebodin in Romania

Expertise

In Romania, the Bilfinger Tebodin team consists of approximately 75 experts, ready to support clients with a wide range of services, including: • Consultancy (technical support for subsidy stage, technical due diligence, technical expertise for structures, site selection, environment, energy audits, HAZID/HAZOP, QRA) • Design and Engineering for industrial processes and Oil & Gas (process, mechanical/piping, pipelines, instrumentation and process control, water and sewage, electrical, firefighting and detection, civil, roads) • Permitting services (including urban certificate permits, environmental permit, building permit, operational permit) • Procurement assistance • Project management, planning and cost control • Construction management and supervision

Bilfinger Tebodin has an extensive track record in the Oil & Gas and Process Industry; offering concept, FEED and detailed design services to international clients: A small selection of the work we executed in the Oil & Gas market: • Design of process piping systems • Design of utility systems • Well equipment • Pipelines, oil, gas, water, steam, onshore • Separation facilities • Storage facilities • As building of existing facilities • Modifications of existing facilities • Standardization of documents

BILFINGER TEBODIN 44

energyindustryreview.com

Other services are: • Process studies • Energy optimization • 3D modelling assistance to the Tebodin network • Drafting services for offshore projects

Work location in Romania

Certifications All services will be offered based on various certifications, such as ISO 9001/14001/27001, OSHAS 18001 • ANRE electrical authorization up to 20 kVA • ANRE gas authorization (PP, PCTRI, PDS, PDI) • Insemex (design for potentially explosive areas) • Environmental studies (RIM (EIA), BM, RA, RS)

Software •

• • • • • • • • •

By using BIM as the basis for the design and engineering projects, stakeholders can easily be involved early in the design process. Next to BIM, various state-of-the art engineering software will be used, such as: Phast Caesar II MS Project CADWorx Plant Professional CADWorx P&ID Professional PDMS Graitec AutoCAD Primavera

Size of Projects

Bilfinger Tebodin delivers in Romania, Bucharest, since 1998 multidisciplinary consultancy and engineering services. 75 experts support clients with a wide range of services, and can count on 600 other expers in the region.

Contact Commercial Director Claudiu Gavrila E-mail: claudiu.gavrila@bilfinger.com Telephone: +40 745 027 220 Division Director Florin Prunaru E-mail: florin.prunaru@bilfinger.com Telephone: +40 722 686 391

20-20,000 man-hours

E-mail: tebodin.ro@bilfinger.com www.tebodin.bilfinger.com

BILFINGER TEBODIN

MAY’S READING

Hazards ahead for battery electric vehicles? ith the electric vehicle and battery W markets on the brink of explosive growth, governments must proceed with caution as they manage these fast-moving industries, warns A.T. Kearney Energy Transition Institute in a recent study entitled ‘Natural Resources and CO2: Hazards Ahead for Battery Electric Vehicles?’ The global energy transition is fasttracking electric vehicle production worldwide. The deployment of electric vehicles is a key energy transition mega trend with direct impact on major business transformations not only in the car industry but also across the conventional oil and gas, utilities, and even mining sectors. Many leaders are intensively focused on understanding those changes and elaborating new business models to design our futures economies. Electric vehicles just exceeded 2 million globally, about 0.2 percent of the more than 1 billion vehicles on highways worldwide. Some say the market is ‘much ado about nothing,’ while others forecast explosive growth ahead. What many may not be aware of is that the market is disproportionate across countries and might already deeply impact local markets. In Norway, for example, 30 percent of all new cars sold are electric, making it difficult for refuelling station owners to keep up with demand. 46

Besides direct consequences for the carmakers and refuelling stations, it is important to understand the upcoming battery electric vehicle (BEV) revolution. As the white paper mentions, there are underappreciated growth risks: the scarcity of natural resources, the need for effective systems and processes for battery recycling, and the possibility of insufficient CO2 emissions reductions. A.T. Kearney Energy Transition Institute anticipates the need to develop new battery technologies and a substantial batteryrecycling industry. As illustrated by the BEV example, the

energy transition brings new technology solutions that will impact most industries. It’s important to explore and anticipate the economic implications of those new technologies. The success of the new business models will largely depend on the degree of foresight and investment returns sought. Founded in the Netherlands as a nonprofit organization, the A.T. Kearney Energy Transition Institute provides leading insights on global trends in energy transition, technologies, and strategic implications for private sector businesses and public-sector institutions. energyindustryreview.com

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Benefits of BlueBiz at a glance • Earn Blue Credits on all flights with Air France, KLM and Delta Air Lines. • Award your company with free tickets fully covered by BlueCredits. • Use your BlueCredits for upgrades and enjoy more comfort. • On one and the same ticket a company can save Blue Credits and travelers can save Flying Blue Miles. Enroll your Romanian company online at www.bluebiz.com and take advantage of your first benefit: a welcome bonus of 50 Blue Credits (1 Blue Credit = 1 Euro) after the first registered flight.To obtain your welcome bonus use PETROLEUM 2018 promotional code at registration. For more information please contact us at rmradut@airfrance.fr.

CONSTRUCTION

TAP job story 52 Doosan Excavators on one of Europe’s Biggest Pipeline Projects A year into the project, 52 new Doosan excavators are now working on a section of the Trans Adriatic Pipeline (TAP), involving the construction of about 360 km of pipeline in Greece. n March 2016, a new company formed I by Bonatti S.p.A. and J&P-Avax Group was awarded the EPC (Engineering, Procurement, Construction) contract for this section of the TAP Project. Following a competitive analysis of eight leading excavator manufacturers, Bonatti-J&P Avax s.r.l. has chosen the Doosan brand to provide the power and reliability required for the contract, purchasing 52 new Doosan crawler excavators for the excavation work and for the laying of the 1.2 m (48 inch) diameter pipes in the project. The Trans Adriatic Pipeline is the European leg of the Southern Gas Corridor, which aims to connect European markets to new gas sources in the Caspian basin. TAP is a joint venture of several energy companies and is one of the most strategic energy infrastructure projects in Europe. Involving an investment of 4.5 billion Euro and employing over 5,500 people, the TAP project will cross Greece and Albania from the Greece-Turkey border to the province of Lecce in Italy. TAP facilitates the transport of Caspian Sea area (Azerbaijan) natural gas to some of the largest European markets such as Germany, France, the UK, Switzerland and Austria. The construction work required in the TAP 48

project presents many challenges and to help in its execution, the joint venture has purchased 52 new Doosan crawler excavators from 30 to 55 tonnes (comprising 10 DX300LC-5, 20 DX340LC-5, 10 DX380LC-5 and 12 DX530LC-5 models), based primarily on the productivity, ease of use and reliability that characterises the Doosan construction equipment range. “This important order is further confirmation of the quality of Doosan products and the support offered by our dealer network such as that available from Ergon Tzanidakis Ltd, our Greek dealer, which is responsible for servicing all the Doosan machines on the project,” said Franck Adam, Key Accounts Director at Doosan Bobcat EMEA.

Main strengths of Doosan excavators

For several years now, Doosan has been one of the top five largest excavator manufacturers in the world. With the best price per tonne on the market, Doosan is today one of the world’s leading players, with a range that offers high productivity, performance and comfort. “The decision behind which brand of excavator we would choose started with an

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For details on Doosan Equipment ( Wheel Loaders , Excavators , Articulated Dumpers , Portable Compressors & Generators ) you can contact the distributor IRCAT-CO

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

analysis of eight leading manufacturers and we selected Doosan after careful evaluation of the technical features and the aftersales package,” said John Joannou, Corporate Procurement Manager at Bonatti-J&P Avax s.r.l. “Doosan machines offer great value for money, especially when analysing performances and fuel consumption, which, after several months using the excavators, we can confirm are in line with the impressive values given in the technical data sheets. For example, for pipe handling with vacuum lifters, Doosan excavators were the only 53-tonne machines to meet the necessary requirements when compared with the 60/70-tonne models from the competitors, thus allowing us to save first on the price of purchase and now on fuel consumption,” he added. The Doosan DX530LC-5 53-tonne model has the widest undercarriage for this size of machine on the market. Thanks to the 3.9 m width of the undercarriage in the extended position, the DX530LC-5 has the best lifting capacity in its class. The largest excavators purchased by the Bonatti-J&P Avax joint venture, the 12 DX530LC-5 excavators have been equipped with a ‘mass excavation front’ short arm (2.4 m) and boom (6.3 m) providing an enhanced hydraulic performance for handling, with the vacuum lifters, the 14

tonne/18 m long steel pipes at full reach through 360° at the required heights and distances. “Comparing manufacturers by the weight of the models was not the way to go; for example, we found that Doosan DX340LC-5 34-tonne excavators are equivalent to the 38-tonne models from the competitors,” John Joannou mentioned. “Also, the availability of a range of excavators from Doosan with six different models from 30 to 55 tonnes has been helpful, enabling us not to oversize in the machinery fleet. Doosan was also able to meet our needs for urgent delivery of the machines. Once the agreement was confirmed, the excavators arrived within a month, between October and November last year.” Doosan excavators are working hard in a range of different applications from preparatory work including grading, removing trees and site clearance, lifting gas pipes to lay them out or ‘string’ them, digging trenches using hydraulic breakers or buckets and loading crushing and screening equipment to create backfill for the trenches that does not damage the pipes. Three Doosan excavators in one of the TAP jobsites with operators and managers of Doosan, Ergon Tzanidakis and Bonatti-J&P Avax s.r.l. 49

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Final vote on energy performance of buildings 50

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n April 17, the European O Parliament gave its final approval on the revised Energy Performance of Buildings Directive. The vote signals the closure of the first of 8 legislative proposals part of the Clean Energy for All Europeans package brought forward by the European Commission on 30 November 2016. This package is a key element of one of the Juncker Commission’s priorities, “a resilient Energy Union and a forward-looking climate change policy”. The changes agreed tap into the huge potential for efficiency gains in the building sector, the largest single energy consumer in Europe. They include measures that will accelerate the rate of building renovation towards more energy efficient systems and strengthen the energy performance of new buildings, making them smarter. “By renovating and making our buildings in Europe smarter, we are attaining several simultaneous objectives: lower energy bills, better health, protection of the environment and reduction of our emissions in the EU, given that over a third of these are produced by buildings. And as technology has blurred the distinction between sectors, we are also establishing a link between buildings and e-mobility infrastructure, and helping stabilize the electricity grid. Another building block of the Energy Union has been laid today, let us continue ahead,” VicePresident responsible for the Energy Union Maroš Šefčovič stated. “This is the first final agreement on a proposal of the Clean Energy for All Europeans Package, a signal that we are on the right track and we will deliver on our pledge made at the beginning of the mandate. Our ambitious commitment to clean energy in Europe and the Paris Agreement will be made a reality by laws like the one voted today: the revised buildings directive will help create local jobs, save consumers money and improve Europeans’ quality of life. It will also help combat energy poverty by reducing the energy bills of older buildings which will be renovated. I now call on the European Parliament and the Council to show leadership and complete the rest of the proposals of the Clean Energy for All Europeans Package,” Commissioner for Climate Action and Energy Miguel Arias Cañete added.

MAIN ACHIEVEMENTS • Creates a clear path towards a low and zero-emission building stock in the EU by 2050 underpinned by national roadmaps to decarbonise buildings. • Encourages the use of information and communication technology (ICT) and smart technologies to ensure buildings operate efficiently for example by introducing automation and control systems. • Supports the rollout of the infrastructure for e-mobility in all buildings (although to a lesser extent than in the Commission’s proposal). • Introduces a ‘smart readiness indicator’ which will measure the buildings’ capacity to use new technologies and electronic systems to adapt to the needs of the consumer, optimise its operation and interact with the grid. • Integrates and substantially strengthens long term building renovation strategies. • Mobilises public and private financing and investment. • Helps combatting energy poverty and reducing the household energy bill by renovating older buildings. Following this approval by the European Parliament of the revised directive on Energy Performance of Buildings, the Council of Ministers will now have to finalise its formal agreement in an upcoming Council meeting in the coming weeks. This endorsement will be followed shortly by the publication of the text in the Official Journal of the Union, which will enter into force 20 days after publication. Member States will then have to transpose the new elements of the Directive into national law within 20 months. Having an agreement on the revision of the Energy Performance of Buildings Directive is an important and concrete delivery of the Clean Energy for All Europeans package and it sends a strong signal as the building sector has a vast potential to contribute to a carbon-neutral and competitive economy.

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CONSTRUCTION

UBC 0, the tallest office building in Romania he IULIUS Company T commences the construction works for the fourth office building of the total six to be included in the Openville Timisoara mixed-use development. Spanning on a 155 m height and 27 floors, United Business Center 0 (UBC 0) will be the tallest office building in Romania. The Openville project is currently under construction in the proximity of Iulius Mall Timisoara and, owing to the 130,000 sqm of office premises it will create, it will become the main business hub in the west of Romania. The construction works for UBC 0 started with the site organization process, and the first construction phase will comprise the land consolidation using more than 280 bored piles. The estimated term for market delivery for UBC 0 is the fourth quarter of 2019 (Q4/2019). UBC 0 will comprise a built area upwards of 74,900 sqm; just like the other buildings in the mixed-use project, it will combine modern office spaces with 52

retail premises. Thus, the semi-basement and ground floor will be designed for stores and themed restaurants, and the first floor will comprise conference and event halls. The office premises will have a total leasable area of 52,000 sqm. Generous premises adding up to 2,200 sqm on each floor, column-free spaces, enhanced levels of natural lighting, state of the art amenities and technologies, and energy effective solutions are just a few of the features of the new office building. UBC 0 will provide a spectacular panoramic view of the city from any angle owing to the full glass faรงade it will be fitted with. Concurrently, the people working here will also have direct access to the stores and services in Iulius Mall Timisoara and in the new retail areas, as well as to the relaxation spaces created in the upcoming park of the urban development. Concurrently, on the work site of the project, constructions works are underway for the third office building (19,000 sqm leasable area), as well as for

additional retail premises adding up to approximately 47,000 sqm. Two office buildings with a 31,000 sqm total leasable area, as well as the first multilevel parking facility in Timisoara with 910 parking spaces were completed to this date in the Openville project. The largest business, retail and entertainment hub in the west of Romania will open in the fourth quarter of this year, upon completion of the first phase of development. This will include: the new retail premises, 50,000 sqm of class A office premises in operation and another 52,000 sqm pending construction, a park, a traffic underpass and new parking spaces. Construction works are also due to commence over the upcoming period for a new underground parking lot and a traffic underpass that will streamline the traffic in the entire area. The Openville mixed-use project is developed by the IULIUS and Atterbury Europe companies, adding up to an estimated investment upwards of EUR 220 million. energyindustryreview.com

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Energy Charter Conference 2018 Romania, the first EU Member State to assume the Chairmanship The Energy Charter Conference, organized in December 2015 in Tbilisi, formally approved the takeover of the Presidency of the Energy Charter Conference by Romania in 2018, our country being the first EU Member State to take this position since the establishment of the rotating presidency principle at the level of the Charter Conference (2014). IulianRobert Tudorache, State Secretary within the Ministry of Energy, was designated President of the Energy Charter Conference last year. 54

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The main topics that the Romanian Presidency of the Energy Charter will address during 2018 are: • Eradicating energy poverty by implementing energy efficiency solutions; • Strengthen the cooperation framework to cover technological differences between countries and regions; • Improve the security and safety of cross-border energy flows - the transit of energy is regarded as a critical energy security issue. The priorities that the Romanian Presidency of the Energy Charter will promote during 2018 are: • Strengthening and concentrating Charter structures and activities and promoting an agenda focused on streamlining Charter activities; • Consolidating the capacity of the Secretariat to develop analytical resources and expertise for the contracting parties, so they can be used in the decision-making process in the energy sector; In order to achieve the objectives, Romania will organize a Conference and two related events during the Presidency of the Energy Charter Conference, namely a Forum and a Seminar, which will debate the above-mentioned priorities in the following chronological order. 6-7 June 2018 • Bucharest International Energy Charter Forum ‘Energy efficiency - a priority in combating energy poverty and providing access to energy for all’; the event will take place over two days, will be organized in discussion panels, and will involve the participation of an estimated number of 100 people. 12 September 2018 • Seminar/reunion Industry Advisory Panel on ‘Security of cross-border energy flows and intelligent technologies’; the event will last one day, will be organized in two parallel sessions, and will involve the participation of an estimated number of 100 people. 27-28 November 2018 • The 29th Meeting of the Energy Charter Conference (Bucharest, Romania) The theme of the Energy Charter Conference will be ‘Towards increased energy security and prosperity through a stronger cooperation on innovative technologies’; the conference will be held over two days: the first day (November 27th) will be dedicated to statutory debates, and the second day (November 28th) will be dedicated to ministerial debates. The event will involve the participation of approximately 300 delegates from 70 countries. Romania, as the first EU Member State to undertake the Presidency of the Energy Charter Conference in 2018, will continue to promote a global vision on the role that the

Between the 28th-29th of November 2017, the Romanian delegation led by the Secretary of State in the Ministry of Energy, Robert Tudorache, attended the 28th Energy Charter Conference, organized by the Turkmen Ministry of Foreign Affairs and the Energy Charter Secretariat in Ashgabat, Turkmenistan. Charter can play on progress towards a secure, accessible, and sustainable energy future. Romania is convinced that the international energy architecture requires the convergent approach offered by the Energy Charter process, with interests and rules based on the contribution of all stakeholders and a common understanding and observance of laws. In view of the above-mentioned priorities, Romania will promote, during its Presidency of the Energy Charter Conference, meetings of working groups and other organized events. Additionally, Romania will promote a structured and strategic discussions within the Energy Charter format to improve the adequacy of the Charter’s objectives in relation to unprecedented changes in the energy market and technological progress (modernization of the Energy Charter process). Another important process that will take place during the Romanian Presidency will be the Modernization Process of the Energy Charter Treaty. The Energy Charter Treaty (ECT) has become an important instrument that can provide a solid legal basis for ensuring and promoting stable and sustained investments in the energy sector. As the International Energy Charter process demonstrates, a modernization process may be needed to contribute to a broader and more coherent understanding of the global energy security challenges, as they are manifested today. As Energy Charter debates should focus on the key aspects of the Energy Charter Treaty, the modernization process will first have to address the issues of energy investment, investment protection, trade and transit, and the settlement of disputes. Also, an updated interpretation and application of the Treaty will be needed to meet the expectations of the energy industry and contracting parties, and encourage the participation of observers in a more active way in the process so that they eventually become contracting parties. 55

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Romania and the challenges of the energy transition In late March, World Economic Forum published the report â&#x20AC;&#x2DC;Fostering Effective Energy Transition - A Fact-Based Framework to Support DecisionMakingâ&#x20AC;&#x2122;, through which a new indicator is introduced: Energy Transition Index (ETI). The first edition of the Fostering Effective Energy Transition report, prepared with analytical support from McKinsey & Company, is part of the World Economic Forum System Initiative on Shaping the Future of Energy. 56

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he report introduces ETI, which T builds upon the previous series of ‘Global Energy Architecture Performance Index’ by adding a forward-looking element of country readiness for energy transition. The index benchmarks 114 countries on the current level of their energy system performance, and the readiness of their macro environment for transition to a secure, sustainable, affordable and inclusive future energy system. The fact-based framework and rankings are intended to enable policy makers and businesses to identify the destination for energy transition, identify imperatives, and align policy and market enablers accordingly. ETI allows evaluation of the 114 countries taken into account in view of criteria grouped into two categories: • System performance – evaluates

the current system performance based on energy trilemma, analysing the promotion of an energy system that allows economic development, secure and solid access to energy and sustainability in terms of environmental impact. • Transition readiness – evaluates the readiness of national systems using 6 categories: availability of investments and capital, effective regulatory framework and political commitment, stability of governance and institutions, infrastructure development and an innovative business environment, human capital and the capacity of the current energy system to allow changes. Romania is in the category of ‘Countries that can meet challenges’ in energy transition, defined by the following particularities: • The country has a relatively

performing energy system, which scores well in terms of security, access to energy and development and economic growth, but with major challenges related to sustainability in terms of environmental impact. For the latter, improvements during 2013-2018 have not been convincing compared to the other categories. • Compared with countries in the top group, defined by a high ETI, Romania and the countries in its category face significant challenges in terms of readiness of institutions and governance, infrastructure and innovative business environment, as well as those related to capital and investments. However, when they dedicate to the process, these countries will have the advantage of a solid energy system and can learn from the countries that will already have experience in energy transition.

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Latest trends in energy and emissions 58

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According to the IEA’s first Global Energy & CO2 Status Report, released in March this year, world electricity demand increased by 3.1%, or 780 TWh, significantly higher than the overall increase in energy demand. Together, China and India accounted for 70% of this growth. Output from nuclear plants rose by 26 TWh in 2017, as a significant amount of new nuclear capacity saw its first full year of operation.

YEAR OF ELECTRICITY AT THE IEA Advanced economies accounted for 10% of electricity demand growth, with average demand rising by less than 1%. In the United States, electricity demand fell by almost 80 TWh compared with 2016. In the European Union, electricity demand growth of 2.3% (or 75 TWh) matched the estimated 2.3% growth in economic output. Electricity demand in Japan also increased by around 15 TWh. Renewables accounted for nearly half of the global additional generation (at

380 TWh) required to meet increasing demand, bringing their share in global generation to a record high of 25%. Generation from renewables was second only to coal in 2017, and ahead of gas for the third year in a row. Despite strong increases in wind and solar PV generation, hydropower remains the largest source by far of renewables-based electricity generation, with a major share of 65% in overall renewables output. A strong year for hydropower in the United States and Canada more than offset a drop in hydropower generation in the European Union. Among other low-carbon technologies, nuclear generation increased by 26 TWh in 2017, as a significant amount of the new nuclear capacity commissioned in 2016 saw its first full year of operation last year. Nuclear generation accounts for 10% of global power generation and grew by 3%, relative to 2016, with Japan contributing to 40% of this growth. Nonetheless nuclear capacity additions globally only just exceeded retirements in 2017. Coal generation increased by 3% (280 TWh) in 2017 at a global scale, accounting for a third of the total growth and more than cancelling a 250 TWh

decline seen in 2016. The growth of coal-fired generation was mostly in Asia, with an increase of 365 TWh. Although China and India dominated the increase, Korea, Japan and Indonesia also contributed significantly. Growth in Asia was only partially offset by declining coal use for electricity generation in the United States, the European Union, Russia, Brazil and South Africa. Gas-fired generation increased by 1.6% (95 TWh) accounting for almost 15% of the total growth. This results from a decline of 7.6% (110 TWh) in the United States and a growth of 4.6% (or 205 TWh) in the rest of the world, with the most important contributions coming from the European Union, China and Southeast Asia. 2018 is the year of electricity at the IEA, in recognition of the rapid growth of electricity demand and the global transformation of electricity systems. For the first time, electricity will be the focus fuel of the forthcoming World Energy Outlook, shedding light on the key uncertainties of the ongoing transition – including the impact of digitalization and the integration of renewables – and analysing the implications for energy security, investment and environmental concerns. 59

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Energy Policy Group’s Energy Summer School The first edition of Energy Policy Group’s Energy Summer School will be held between 23 – 27 July 2018, in Bucharest, with a focus on ‘Smart Transformation in the Energy Sector’.

he energy sector is undergoing T deep changes. These days, maybe more than ever, young professionals that are studying, working or that are just being interested in the energy field for its interconnections with the economy, society and environment, need a broader grasp of the sector. To this purpose, the global trends on the energy markets and in policy making have to be well understood, in their mutually influencing dynamics and against the background of the energy sector’s greatest externality: global warming. A through discussion of the oil and gas sector, with its challenges and prospects, as well as of alternative fuels (electricity, biofuels, natural gas, and hydrogen) will take place in order to put the future of transportation in the right perspective. Then, the risks and opportunities of the nuclear sector will be highlighted, but also the transition 60

elements to a clean and safe power generation system. Special attention will be given to digitalization, smart technologies, energy efficiency and emerging products and services (demandresponse and storage, just to name a few), while also considering requirements of sustainability and affordability. The EPG Summer School will draw a balance between interactive seminars and debates led by international and Romanian experts, field trips to the Cernavoda Nuclear Power Plant and the EFdeN house, and also activities that include a Design Thinking Workshop and a World Energy Simulation Game (a role-playing exercise that enables people to try out the policies and investments that will allow them to reach their goals on climate change). The EPG Summer School has targeted master and PhD students, as

well as young professionals interested in studying and working in the energy sector or from related disciplines. More than 60 applications have been received, from all over the world, in the Open Call period. The Summer School has an international dimension, both in terms of attendees and speakers/lecturers. More than 20 speakers will attend the Summer School – reputed national representatives of the energy sector, along with speakers from abroad, who will present different regional perspectives. They are representatives of energy utility companies, energy consultants, diplomats, policy makers, association members or NGO representatives. The Summer School is also a platform and will be a great opportunity from people all over the world to interact, debate and connect, forming what will soon become a stand-alone community of alumni and lecturers. energyindustryreview.com

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ITER FUSION PROJECT Mastering the power of the sun and the stars 62

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Aerial shot of construction of the experimental reactor at ITER’s southern France location. ©ITER/EJFRiche

he EU is a strong advocate for sustainability. For years it has been taking action to cut down the emission of greenhouse gases, fighting climate change and trying to make Europe more selfsufficient in the field of energy, given the fact that its import dependency is particularly high for crude oil (90%) and natural gas (69%). Half of EU’s energy consumption is imported at a cost of 1

billion EUR per day. The answer to reconcile EU’s potential to grow without putting at risk the planet’s well-being lies in the energy mix of the future. And fusion can be part of it. The power of the sun and stars has several merits worth considering. Its fuel- isotopes of hydrogen- is abundant and with just small amounts we can release a lot of energy. Hydrogen the size of a pineapple can offer as much fusion energy as 10000 tonnes of coal. The fusion reaction is inherently safe and poses no risk of a meltdown. There are no greenhouse gases and no long-lasting waste for the future generations. For this reason, the EU has invested in ITER, the biggest scientific collaboration that will test the feasibility of fusion power. ITER brings together the countries of EURATOM (EU-28 plus Switzerland), China, Japan, India, the Republic of Korea, Russia and the US. The Parties represent 80% of the global GDP and half of the world’s population. Scientists all over the world are involved in R&D activities linked to the project and companies are manufacturing millions of components that will be assembled in Cadarache, south of France, where the project is located. Europe, being the host of the biggest fusion experiment, is financing nearly half of it. Fusion for Energy (F4E), the EU body which was set up ten years ago to manage the European contribution to ITER, counts with approximately 450 members of staff working in Barcelona (Spain), Cadarache (France) and Garching (Germany). Since its establishment, F4E has invested in Europe’s economy 4 billion EUR by awarding more than 900 contracts to 440 companies, research organisations, and to 1500 of their subcontractors, working for the ITER project. Its impact in making Europe more competitive can be widely felt in the socio-economic fabric of our continent. Think of the creation of new jobs and skills, partnerships between big and smaller companies, and the transfer of know-how to develop new applications which could enter into new markets.

In December 2017, ITER celebrated an important milestone having reached 50% completion of the total construction work needed for the first operation stage – so called First Plasma. The progress on the ITER construction site, which consists of 39 buildings and infrastructures under Europe’s responsibility, has been impressive. Nearly 2000 people are working daily on a platform that is nearly 42 hectares. The main building (Tokamak Complex) where the ITER machine will be installed is reaching its final level (fourth floor), and the progress of various auxiliary buildings such as the Cryoplant, which will generate the cold temperatures needed, and the Magnets Power Coversion building, which will energise the powerful magnets that will confine the super-hot plasma, are advancing. More equipment has started arriving on-site. For example, the first tooling has been delivered to the Assembly Hall, and the first Cryoplant tank has been installed. In terms of manufacturing, Europe has celebrated a fair share of achievements. In the Spring of 2017, the most hightech magnet in history was unveiled before going through the final stages of production. ITER will require powerful magnets to confine the hot plasma and control its shape and stability. Europe will have to deliver ten Toroidal Field coils and five Poloidal field coils. Works have also been advancing with the production of the vacuum vessel, the ‘metallic shell’ which will host the fusion reaction. Europe is responsible for the fabrication of five sectors entrusted to a consortium of companies. Last but not least, in collaboration with the ITER Organization and Consortium RFX, F4E has invested in a Neutral Beam Test Facility to develop powerful heating systems that will eventually be used to raise the temperature of ITER’s plasma. The most powerful negative ion beam source to date has already been installed in its vacuum vessel and first operations are expected to start in summer. 63

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“Italy is the country in which we are planning to invest the most: EUR 7 billion over the next 4 years, of which EUR 1 billion has been earmarked for green activities, including research and development expenditure for the decarbonisation process,” said Claudio Descalzi.

Eni to invest EUR 1 billion in green activities Eni CEO Claudio Descalzi revealed the company’s Strategic Plan for the fouryear period 2018-2021 to the Italian financial community, also providing an update on the company’s results regarding safety, its green activities in Italy and ongoing progress in research and development. 64

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laudio Descalzi started C by addressing the issue of safety across the company’s activities, as well as their environmental compatibility: “In 2017 we confirmed our record performance in terms of safety with 0.33 cases per million hours worked (Total Recordable Injury Rate), a 7% improvement compared with 2016. In terms of our environmental performance, we reduced the emissions intensity of our upstream activities by 3% compared with 2016 and by 15% compared with 2014, making significant progress towards the target of a 43% reduction by 2025 compared with 2014.” Eni’s CEO also talked about current green activities under development in Italy, for which the company has already earmarked significant investments: “We operate in tens of countries around the world and in every country, we integrate our skills and passion with those of the local populations that host us with extraordinary results. But our roots are here in Italy and it is here that we see the potential for investing more. In fact, Italy is the country in which we are planning to invest the most: EUR 7 billion over the next 4 years, of which EUR 1 billion has been earmarked for green activities, including research and development expenditure for the decarbonisation process.” Eni’s CEO also discussed the socalled Progetto Italia, an industrial requalification initiative that envisages the creation of facilities for the production of renewable energy on some of Eni’s reclaimed industrial sites, for which Syndial (the Eni company that manages reclamation activities) has made available some 2,000 hectares out of a total of 3,000. The renewable energy produced will mainly be used by Eni’s industrial assets, enabling the company to reduce its overall energy consumption. So far, Eni has identified 25 projects in this area with a total potential capacity of 220 megawatts, which is equal to 0.4 terawatt/hours per year of electricity, which will come online in 2021.

FIRST COMPANY TO CONVERT A TRADITIONAL OIL REFINERY INTO A BIO-REFINERY Additionally, Eni’s CEO underlined the company’s commitment to the creation of bio-products in the downstream sector: Eni is the first company to have converted a traditional oil refinery into a biorefinery, in Venice, and by the end of the year will complete the conversion of a plant in Gela; these plants will produce 1 million tons of green diesel per year by 2021, making Eni one of Europe’s leading producers. Meanwhile, the company has also launched a series of projects related to green chemicals, such as intermediate products from vegetable oil and experimental plantations of Guayule for the production of natural rubber. Claudio Descalzi went on to highlight the fundamental role played by research in Eni’s development strategy: “Thanks to extensive research we have been able to consolidate and enhance our technical know-how, giving us new and important internal skills. We work with more than 50 leading institutions, from universities to research centres, over half of which are in Italy, more than 220 projects, promoting a profound exchange of knowledge between Eni and the rest of the country. From 2009 to 2017, we spent EUR 1.7 billion on research and development, building a portfolio of technologies in a wide range of areas, in the upstream and downstream sectors, as well as in renewables, environmental protection and safety, with a total of over 6,000 patents. Over the course of the next Plan we will spend more than EUR 750 million.” In the field of renewables, Eni’s CEO explained how the company will concentrate its research mainly in solar power, energy storage, advanced biofuels, biomass and wind power, and in the development of technologies for the production of energy from nuclear fusion, a joint project with MIT. In the downstream sector, Eni’s focus is on the research into products and processes with a low

environmental impact, also through the use of technologies linked to the circular economy (waste to fuel and lignocellulosic biomass). To contribute to sustainable mobility, in addition to the company’s Ecofining technology for the production of green diesel, the company is also working on the development of processes for the conversion of natural gas into methanol, a project related to the memorandum signed at the end of 2017 with FCA that aims to develop a series of research projects and technological applications for the reduction of CO2 emissions from road traffic. Among the areas of cooperation is the use of methanol among the new technologies for the use of gas in road transport, which will make it possible to achieve a significant reduction in emissions. To this end, Eni has already developed a new type of petrol, 20% of which is composed of alternative fuels (15% methanol and 5% bioethanol).

INNOVATION FOR A SUSTAINABLE FUTURE Eni is a Platinum Sponsor of the Postgraduate Summer School on Green Chemistry, organised by the International Union of Pure and Applied Chemistry (IUPAC), an NGO. The event, to be held between 7 and 14 July 2018, in Venice, aims to update Italian and foreign postgraduate students and post-doctoral researchers on innovation in the green chemistry sector, considered by the United Nations to be one of the most important and sustainable fields of the future. The first summer school organised by IUPAC will provide participants with an overview of the achievements obtained in the field of green chemistry so far and the development of energy from renewable and sustainable sources. 65

RENEWABLES

Green certificates have turned into a virtual subsidy ANRE is preparing a feed-in tariff for renewable energy 66

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The National Regulatory Authority for Energy (ANRE) plans to replace the support scheme for renewable energy through green certificates with a new system of fixed tariffs, but without changing their impact on the final price of electricity paid by consumers. One of the solutions considered by ANRE is the feed-in tariff scheme. Adrian Stoica

he current scheme for financing T renewable energy producers through green certificates has been in place since 2005, but it is no longer in line with the current market conditions. This year, excess of green certificates in the market is around 11 million, in conditions in which the amount necessary annually is 14.9 million. Moreover, for 2017 and 2018, of the total green certificates in the market, only half are covered by the quota and have buyers. It is estimated however that this imbalance will accentuate in the coming years, reaching the situation in which out of five valid certificates in the market only one will be purchased. Under these circumstances, the support scheme has become rather virtual, and without changing the legislation bankruptcies will multiply in this sector. On the other hand, the large surplus of certificates in the market will finally create chaos in the energy system. Currently, renewable energy producers receive for free a number of green certificates, which they can sell on a specialized market, for gains additional to the actual energy. Energy suppliers are required to buy these green certificates, which in the end are paid by all consumers, including population, according to the current scheme.

and a number of amendments have been formulated recently to support the renewable energy sector. One of the amendments aims at switching to the fixed tariffs system, the so-called feed-in tariff system, proposal agreed by everyone consulted by ANRE. “Among the proposals, one was agreed by most producers, as this green certificates system has some uncertainties; not all producers manage to sell their green certificates and revenues from green certificates are not evenly distributed among the 800 producers. One of the solutions is to change this support scheme through green certificates with a feed-in tariff scheme. We will find a body to manage the scheme, such as Transelectrica for the cogeneration support scheme, which raises money from suppliers for the cogeneration bonuses,” ANRE Vice-President Zoltan Nagy-Bege has recently stated. Specifically, ANRE will establish for each renewable technology and source a fixed price, which will be ensured and paid periodically. “Therefore, there will no longer be a market of green certificates. But we need to make some serious calculations on this fixed price,” the representative of the regulatory authority has mentioned.

GREEN CERTIFICATES, ON THE FINAL PATH

While ANRE is considering options to support renewable energy, the Government wants to include wind towers in the category of buildings. The change would allow local authorities competent in the area where the wind

At the end of last year, ANRE started discussions with renewable energy producers to amend GEO 24/2017,

TOWERS BECOME BUILDINGS AGAIN

power plants operate to impose taxes and duties. These changes are provided in a draft law recently adopted by the Senate and supported by the Ministry of Finance. For their application, the draft also stipulates that the Tax Code will be amended. In its point of view on this draft, the Ministry of Finance shows that such a tax is justified following the elimination of the tax on special constructions, known as the ‘pole tax’, which has affected energy companies in particular. Currently, the Tax Code establishes, in the local taxes and duties chapter, that building is defined as “any construction situated above and/or below the ground, whatever its name or use, and which has one or more rooms which may serve to accommodate people, animals, objects, products, materials, installations, equipment and other such and its basic structural elements are the walls and the roof, regardless of the materials they are built from.” Authors of the draft law propose the supplementation of the article with the following provision: “the category of buildings includes towers supporting wind turbines.” The initiators show that the new Tax Code, approved in 2015, has created ambiguities in the field, being necessary to return to the provision of the old code, which classified towers supporting wind turbines in the category of buildings on which the authorities of the local public administration were able to impose local taxes and duties. The Chamber of Deputies is the decision-making body for this draft law. 67

METALS & MINING

Mining, a new chance Global oil prices have been at low values for a long period of time, which determined the large companies in the field to cancel or postpone, at best, the expected investments. Many industries have also suffered horizontally, which contributed to deepening the economic crisis, in many parts of the globe. This is precisely why a focus is put, still shy, on electric or hybrid vehicles, and the mining industry seems to have a chance unexpected a few years ago. Daniel Lazar 68

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il surplus on the global market is near exhaustion, according to OPEC’s monthly report, citing high demand for energy and the organization’s measures to cut supplies. Shale oil production from the United States increased in 2017, period when OPEC reduced its output, in collaboration with Russia, to sustain prices. Production in Venezuela collapsed, Libya and Angola continue to have problems and OPEC still produces below its own targets, which means growing demand must be covered by stocks. According to OPEC’s monthly report, stocks in developed countries fell in February 2018 to 2.854 billion barrels, level by approximately 43 million barrels higher than the average of the past five years. “We have achieved an over 150% conformity level. We have seen an accelerated shrinkage of stocks in storage from unparalleled highs of about 400mn barrels to about 43mn above the five-year average,” OPEC Secretary General Mohammad Barkindo stated in New Delhi, referring to commitments under the supplycutting pact. He showed that the surplus of stocks had been declining since the beginning of last year. Stock levels are now 207mn barrels below their level in February 2017, with crude stocks in a surplus of 55mn barrels and product stocks in a deficit of 12mn. “Looking forward, a healthy global economic forecast for 2018, positive car sales data in recent months, stronger 2018 yearon-year US product consumption in January and potentially tighter global product markets are expected to boost gasoline and distillates demand,” OPEC estimates. The production of the 14 OPEC members fell 201,000 bpd to 31.96mn bpd in March 2018 from February, driven by declines in Angola, Algeria, Venezuela, Saudi Arabia and Libya. The production level is below the 32.6mn bpd that OPEC sees as demand for crude produced by the Member States for the whole of 2018.

NAMR PUTS UP FOR AUCTION 19 PERIMETERS In this context, mining may have an opportunity. This is precisely why the National Agency for Mineral Resources (NAMR) auctioned, for concession, 19 perimeters for exploitation, of which 7 for coal and 5 for mineral or geothermal waters. The concession option chosen by NAMR is that through public bidding contest. In addition to the letter of credit (which must include several indicators such as global liquidity, patrimonial solvency, gross profit rate or financial return), domestic firms wishing to submit bids are required to provide “proof of financial and fiscal discipline by enclosing, in the original or a certified copy of the confirmation of company details/ certificates issued by the public authorities/ institutions administering the state budget, the state social security budget, the budget of the Sole National Fund for Health Insurance, the unemployment insurance budget, the insurance budget for work accidents and occupational diseases and local budgets.” Regarding coal, 4 of the 7 perimeters are with lignite (Curatura - Bihor County, Golasa - Mehedinti County, Valea Coandei and Miculesti IV - both in Gorj County) and 3 with hard coal (Hablau, Zanoaga and Dosul Galbenului, all in Hunedoara County). The other perimeters put up for auction by NAMR have as resources sand and gravel, granite, dacite and rock salt. To prepare the bids, NAMR makes available for the interested legal entities geological data and information existing in the national geologic fund and/or in the national fund of mineral resources/ reserves. THE PROS AND CONS OF COAL The existence of qualified staff with rich experience and tradition in mining, long-term exploitation, reserves of over 500 million tons of lignite, contribution to national energy security if the crisis affects other resources, and adequate infrastructure for both actual extraction as well as transport to power plants, are as

many advantages of coal mining. It is no less true that the development of mining could have positive (especially from a social point of view) consequences on the local community, the existence of a stable outlet, especially in the context of increasing the share of coal in global thermo-energy production, taking into account the high costs of producing electricity from renewable sources and the prospect of coal being repositioned as a primary source are all arguments in favour of the mining industry. Of course, there are also inconveniences related to the calorific value of coal, which is inferior to other raw materials, the physically and morally aging machinery, the high impact of mining on the environment and the costs of greening, not to mention the migration of a large mass of specialists from the field to other areas or even their professional reconversion. All these are true even though, since 1998, more than 500 mines have been closed in Romania, while some of the deposits have not been fully exploited. One solution would be to develop clean technologies for both extraction and recovery of coal in order not to conflict with environmental activists or the legislation in force.

WHAT HAPPENS IN EUROPE Since 2008, the European Union (EU) has started implementing the directive called the Raw Materials Initiative, launching similar measures in an attempt to formulate a unified policy on minerals at European level. Every year, the EU needs over 100 million tons of ore, but Member States produce less than onethird of this amount. Therefore, the difference is imported year after year at prices sometimes exaggerated, although in many countries (including Romania) there are appreciable deposits that are not yet exploited. So, imports (at high prices), as unemployment increases, and the economy suffers. Do you think it is not worth giving a chance to mining? 69

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Eldorado Gold posts USD 8.7 million quarterly profit rofit attributable to shareholders P of the Eldorado Gold Company in the first quarter of 2018 was USD 8.7 million compared to USD 6.8 million from continued operations for the first quarter of 2017. Gross profit from gold mining operations was USD 34.7 million compared to USD 37.0 million for the first quarter of 2017. Higher sales volumes and prices were offset by higher operating costs and depreciation, depletion and amortization (DD&A) expense. Higher sales volumes were driven by sales from the newly commissioned Olympias mine as well as higher sales at Efemcukuru and Kisladag as compared to 2017. Total cash costs per ounce increased year over year at both Efemcukuru and Kisladag with the increase at Kisladag being driven by the decrease in leach pad ounces as a result of an adjustment made in October 2017 as well as higher cyanide and lime costs. Olympias total cash costs were USD 734 per ounce and trending down over the quarter as issues encountered during commissioning in 2017 were resolved. DD&A expense was higher due to the start of commercial production at Olympias as well as an increase at Kisladag related to the leach pad adjustment. Stratoni gross profit fell USD 4.2 million year over year as a result of 70

lower ore throughput. General and administrative expenses were USD 3.4 million lower year over year mainly due to lower employee payroll costs. Share based compensation expense was USD 3.6 million lower due to a postponement of the grant of options to employees as the Company was in blackout. Interest expense was USD 2.5 million higher as the Company is no longer capitalizing bond interest related to Olympias now that it is in commercial production. Stratoni (Greece) and Certej (Romania) were impaired in previous years. Under IFRS any expenditures on these projects are capitalized and subsequently written-off in the same period. The Company recorded USD 4.0 million in asset write-downs related to these two projects. “We had a very successful first quarter maintaining operational momentum and laying a clear path forward for long-term growth,” said George Burns, Eldorado’s President and Chief Executive Officer. “The filing of the technical reports was a crucial first step towards delivering on our prioritized development projects, Lamaque and the Kisladag mill. Given our current liquidity and anticipated capital deployment for 2018 and 2019, we have time to evaluate and implement an appropriate long-term financing plan to deliver these investments,” he added.

OPERATIONS REVIEW TURKEY Production at Kisladag in the first quarter was 53,814 ounces of gold which was within guidance. This was higher than the previous year (52,644 ounces in the first quarter 2017) as adjusted cyanide concentrations coupled with increased irrigation volumes resulted in increased amounts of gold extracted from the pad. Kisladag reported a reduction in ore tonnes to the leach pad in the quarter (2.8 million tonnes in the first quarter 2018 versus 3.2 million tonnes in the first quarter 2017), due to the elimination of run of mine (ROM) ore. The average ore grade in the quarter was 1.14 grams per tonne versus 1.13 grams per tonne in the first quarter 2017. Moving forward the company expects gold production to decrease as no new material will be placed on the pad over the remainder of 2018 while the company continues to evaluate feasibility of mill construction. Including the production reported in this quarter, the company expects to recover 160,000-180,000 ounces for 2018-2019 from continued leaching of previously stacked ore. Cash operating costs were within guidance at USD 576 per ounce (USD 446 per ounce in the first quarter 2017), but were higher year over year, due to increased lime and cyanide costs as well as the impact on average inventory unit energyindustryreview.com

METALS & MINING

carrying costs of a 40,000-ounce negative adjustment to estimated recoverable ounces remaining in the leach pad, which was recognized in October 2017. Sustaining capital spending during the quarter of USD 7.5 million was related to waste stripping and site construction projects. During the quarter, the Company filed a pre-feasibility study on the mill project at Kisladag. The report outlined Proven and Probable reserves of 3.1 million contained ounces at 0.82 grams per tonne of gold to support a nine-year mine life with average annual production of 270,000 ounces of gold at an all-in sustaining cost (AISC) of USD 778 per ounce. At an assumed gold price of USD 1,300 per ounce the project is expected to generate an estimated after-tax project net present value of USD 434 million at a 5% discount rate, an internal rate of return of 22.1%, and a payback period of 3.7 years. During the quarter, gold production at Efemcukuru of 22,855 ounces of gold (22,528 ounces in the first quarter 2017) was higher year on year with slightly higher processed tonnage (124,300 tonnes in the first quarter 2018 versus 115,800 tonnes in the first quarter 2017). Gold ounces sold were higher due to some carry over of 2017 gold production sold in 2018. The average ore grade in the quarter was 6.47 grams per tonne versus 6.77 grams per tonne in the first quarter 2017. Cash operating costs of USD 532 per ounce increased slightly (USD 515 per ounce in the first quarter 2017). Sustaining capital spending in the quarter of USD 3.7 million included underground development, mine equipment overhauls, an upgrade to the water treatment plant and construction projects. GREECE On September 14, 2017, Hellas Gold received formal notice from the Greek Ministry of Finance and the Ministry of the Environment and Energy initiating Greek domestic arbitration proceedings. The arbitration proceedings concluded on April 4, 2018 with a positive ruling

for the Company. The Panel’s ruling rejected the Greek State’s motion that the technical study for the Madem Lakkos metallurgy plant for treating Olympias and Skouries concentrates, as submitted by the Company’s Greek subsidiary Hellas Gold S.A. in December 2014, was in breach of the provisions of the Transfer Contract. The Company and Hellas Gold are continuing to engage with the Greek government in order to find a mutuallyagreeable path forward with respect to its Kassandra investments. In the first quarter 2018, Olympias produced 9,965 ounces of gold at cash operating costs of USD 699 per ounce of gold, costs were higher than guidance. Olympias began plant commissioning during the second quarter of 2017 and declared commercial production at the end of 2017. The plant was restricted to two-thirds of design throughput due to tailings filtration capacity constraints. This resulted in lower tonnage processed for much of the first quarter and higher per ounce costs. During the quarter, the second filter press was successfully installed and commissioned, which will allow the plant to reach its design throughput of 1,250 tonnes per day. Due to timing of concentrate shipments, gold sales for the quarter totalled 5,748 ounces of commercial production (versus 9,965 produced) and cash operating costs are calculated based on these ounces only. The Company expects costs to come down as mill throughput increases. Capital expenditures of USD 11.7 million included USD 2.6 million of sustaining capital on underground development, mine equipment overhauls and waste rock/tailings facilities construction projects. The remaining USD 9.1 million was related to mine construction costs including the completion of the paste plant and installation of the new tailings filter press as well as capitalized operating costs related to the concentrate attributable to the pre-commercial period of production. Concentrate production at Stratoni was lower year on year (8,565 tonnes in

2018 vs 11,599 tonnes in 2017). This was due to decreased mill throughput (38,000 thousand tonnes in the first quarter 2018 vs 44,600 thousand tonnes in the first quarter 2017), lower zinc grades (8.8% in the first quarter 2018 versus 10.5% in the first quarter 2017) and lower lead grades (5.4% in the first quarter 2018 versus 5.6% in the first quarter 2017). The expected reduced grade and tonnage reflects the continued depletion of the current mineable ore reserves remaining at the Mavres Petres ore body. Development during the quarter provided access to the lower sections of the mine for exploration drilling which continues to identify additional resources. These have the potential to extend the mine’s life while allowing production rates to return to the historic levels of approximately 225,000 tonnes per annum. Average realized price2 for concentrate increased year on year (USD 1,423 per tonne in the first quarter 2018 vs USD 1,197 per tonne in the first quarter 2017) due to an increase in both lead and zinc prices. Total cash operating costs increased over the comparative quarter (USD 1,277 per tonne in the first quarter 2018 vs USD 811 per tonne in the first quarter 2017) due to reduced tonnes sold. Sustaining capital spending in the quarter of USD 1.6 million related to underground development.

DEVELOPMENT PROJECT IN ROMANIA During the quarter work at Certej continued to focus on tailings impoundment and waste rock storage engineering and studies required for the permitting process. Work also continued on the evaluation of the limestone quarry and facilities required for the pressure oxidation process as well as providing engineering support for the permitting effort. Offsite infrastructure construction work continued including water tank installation, water supply pipeline installation and power line construction. Spending in the quarter totalled USD 2.2 million. 71

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Resource upgrade for Manaila polymetallic mine Vast Resources, the AIM-listed mining company with mining operations in Romania and Zimbabwe, has announced an update to the previously published JORC Compliant Mineral Resource Estimate for its 100% owned producing Manaila Polymetallic Mine (MPM) in Romania following the completion of 19 surface diamond drill holes in 2017.

his has been undertaken by Craig Harvey, Chief T Operating Officer and newly appointed Director and is based upon the inclusion of the 19 surface diamond drill holes and the validation and subsequent inclusion of historical data. • Total open pit Mineral Resource (Indicated & Inferred) is now 4.6Mt (representing an overall increase of 78% to the July 2016 estimate) at a grade of 0.97% Cu, 0.32% Pb, 0.68% Zn, 25.8g/t Ag and 0.23g/t gold Au at a 0.25% Cu cut-off. The open pit mineral resources in the Measured and Indicated category (all Indicated) of 3.589Mt represent an increase of 209%. • Total underground Mineral Resource (Indicated & Inferred) is now 1.1Mt (representing an overall increase of 249% to the July 2016 estimate) at a grade of 1.58% Cu, 0.82% Pb, 0.88% Zn, 14.6g/t Ag and 0.15 Au at a 1.00% Cu cut-off. The underground mineral resources in the Measured and Indicated category (all Indicated) of 0.399Mt represent an increase of 299%. • The Implied Mine Life is in excess of 11 years based on open pit and underground Measured & Indicated Mineral Resources mined at a rate of 30,000 tonnes per month. • Exploration Target defined for: Open pit of 1.1Mt72

3.2Mt with grades ranging between 0.4-1.1% Cu, 0.10.4% Pb and 0.2-1.1% Zn; Underground of 7.9Mt23.6Mt with grades ranging between 0.4-1.3% Cu, 0.20.7% Pb and 0.3-1.0% Zn. There is further potential upside to the Exploration Target, which does not include estimates for gold and silver mineralisation. “Today’s significant upgrade to our internal JORC Compliant Mineral Resource statement further reinforces our confidence in the MPM operation. The increased Mineral Resource (particularly in the Indicated Resource category) will support technical studies going forward and will allow for the expansion at the Carlibaba Extension area at MPM, which will include the installation of a metallurgical processing facility planned to be funded by Tranche B of the Mercuria Pre-Payment Offtake Agreement, which was announced on 21 March 2018,” Andrew Prelea, Chief Executive of Vast, commented. “When Vast acquired MPM in 2015 there was less than 400,000 metric tonnes (0.4Mt) of mineral resources left in the operating pit. Through the hard work and dedication of our executive and Romanian management teams we have built a mine that is now proving to be a significant asset for the Company and an integral asset that assisted in securing the recent USD 9.5 million financing Pre-Payment Offtake Agreement. With a life of mine exceeding original expectations and continuing improvements being made, we energyindustryreview.com

METALS & MINING

are confident that Manaila will be the basis for significant returns to shareholders for many years to come,â&#x20AC;? he added.

JORC MINERAL RESOURCE ESTIMATE

â&#x20AC;&#x153;When Vast acquired MPM in 2015 there was less than 400,000 metric tonnes (0.4Mt) of mineral resources left in the operating pit. Through the hard work and dedication of our executive and Romanian management teams we have built a mine that is now proving to be a significant asset for the Company and an integral asset that assisted in securing the recent USD 9.5 million financing Pre-Payment Offtake Agreement. With a life of mine exceeding original expectations and continuing improvements being made, we are confident that Manaila will be the basis for significant returns to shareholders for many years to come,â&#x20AC;? Andrew Prelea, Vast Resources

A JORC Compliant Mineral Resource estimate has been compiled for the area delineated by the 138.6 ha exploration perimeter of MPM. Within this exploration licence perimeter, the current mining licence boundary is 27.2 ha in extent. A full geological model has been constructed, constraining the mineralised zone to widths and extents as defined by surface drilling, underground drilling and underground development. The mineral resource has been updated based upon the inclusion of 19 recently completed surface diamond drill holes. These holes were drilled to validate portions of the extensive historical data set at MPM and have confirmed similar grades, widths, geological continuity and spatial correlation between the new and historic data. As such portions of the historic data set were included for the new mineral resource estimate. A combination of Ordinary Kriging (OK) and Inverse Distance Squared (ID2) was carried out, interpolating values for copper, lead, zinc, sulphur, gold and silver into a threedimensional constrained geological block model. Density values from historical density measurements undertaken in Romania and from density measurements in use at the operating MPM mine were assigned to the block model for heavy and moderate weathering profiles and fresh material. Mineral resource categorisation was undertaken whereby modelled mineralised zones, which could be defined from historical drilling but lacking sufficient assay data, were assigned to the Exploration Target category and these are reported separately. These zones were interpolated utilising ID2. Mineralised zones, which contained sufficient data from surface drilling, underground drilling and underground channel sampling, were typically modelled with OK. The mineral resources within these mineralised zones were categorised based on the number of samples within various search volumes, statistical measures such as slope of regression and kriging efficiency, together with a geological confidence applied to each mineralised zone. The mineral resource estimate has been subdivided into an open pit mineral resource and an underground mineral resource classification. The cut-off point between open pit and underground mining was determined by running a LerchGrossman (LG) pit optimisation based on the prevailing metal prices and the current operational efficiencies being achieved at MPM. The depth of LG pit shells extended to 125 metres below the topographic surface. Open pit mineral resources were subsequently defined down to a depth of 125 metres below surface and are reported at an in-situ mining grade cut-off of 0.25% Cu. Copper is deemed the main mineral of interest and all mineral resources are based on cut-off grades applied to copper only. 73

ANALYSIS

Energy investments, in failure mode According to the new energy strategy, the National Energy System (NES) would require investments estimated between 7 and 14 billion euros by 2030, depending on the scenario used. The amounts would be necessary only to replace the production capacities nearing the end of lifetime, but energy companies in which the Romanian state is the majority shareholder or has a heavy word to say, such as Electrica, are not rushing to make these investments. Financial data of these strategic companies related to last year show that none of them has fully observed the investment plan undertaken.

Adrian Stoica

TRANSGAZ, MINIMUM ACHIEVEMENTS Transgaz, operator of the national gas transmission system, in the portfolio of the Ministry of Economy, last year failed to comply with the investment program established under the revenue and expenditure budget. In 2017 the companyâ&#x20AC;&#x2122;s management recorded an absolute negative record, achieving only 13.9% of this plan, after in 2016 it had achieved 16.6%. The value of the investment program for 2017 was RON 505.3mln, but investments of only RON 70.2mln were made. Transgaz representatives say the investment program included funds to the develop BRUA corridor in the north-east of Romania and to ensure the transmission capacity to the Republic of Moldova. In total, itâ&#x20AC;&#x2122;s about RON 206.610mln, which 74

accounted for 39.7% of the total program, but these projects will actually start this year. Even so, achievements remain low and this situation has attracted the attention of the Ministry of Energy. The repair and rehabilitation program has not been observed either. From the work plan of RON 49.285 million, RON 8.841 million were invested, which means 18%. We could also add that the maintenance service has not been observed either, of the RON 28.573mln allocated spending only RON 11.271mln, i.e. 39.5% of the program.

TRANSELECTRICA, ACHIEVEMENTS BELOW 22% OF THE PROGRAM During 2017, Transelectrica signed new investment contracts worth RON 252mln and investment expenses

amounted to RON 179mln. According to the revenue and expenditure budget, they should have been RON 824mln, which means that it achieved slightly less than 22% of the program. Moreover, the company was fined early this year by the National Regulatory Authority for Energy (ANRE) due to the lack of investments. Transelectrica representatives claim they are facing difficulties in carrying out the investment projects due to cumbersome tender procedures, delay in issuing government decisions for expropriations or because the state took too much money as dividends. Of total overhead power lines, 83.6% were commissioned during 1960-1979, 14.07% between 1980 and 1999 and only 2.31% after 2000, an ANRE report shows. energyindustryreview.com

ANALYSIS

ROMGAZ, ALMOST 70% OF THE PLAN ACHIEVED Romgaz last year had a much better situation in the investment chapter. Thus, the largest gas producer and supplier in the country managed to invest RON 781.8mln at a program of RON 1,143mln, which means a realization at a rate of 68.4% of the plan. In terms of new investments that were to be started in 2017, they had to total RON 365.884mln, but they amounted to only 230.409mln. Regarding investments in progress, they totaled RON 446.692mln, according to the program, but in the end they amounted to RON 320.056mln.

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HIDROELECTRICA COMPLETED ONLY 62% OF THE PROGRAM For 2017, Hidroelectrica has established an investment volume of RON 472.392mln, fully funded from own sources, but in the end it achieved only 62% of this plan. Company’s management has repeatedly accused that Hidroelectrica faced a blocking of processes of getting the land necessary for the investment objectives by declaring certain Natura 2000 sites as protected areas, after these investments had already been started. This is the case of hydropower plants Rastolita, Racovita, Bistra - Poiana Marului, Cerna - Belareca, Râul Mare Retezat, as well as the hydropower development of Jiu river, on the Livezeni - Bumbesti sector. Hidroelectrica ended 2017 with a gross gain of RON 1.6bn, the highest in company’s history.

ELECTRICA, THE PERFORMER OF 2017 One of the companies that managed to get close last year to the investment target proposed was Electrica, including here all the companies that operate under Electrica Group umbrella. Investments scheduled under the revenue and expenditure budget for 2017 amounted to RON 904mln and at the end of the year investments of RON 742mln were made. In percentages, this means that Electrica achieved 82% of the program undertaken. In turn, in terms of profit, things are not looking very well. Electrica reported a net profit of only RON 172mln, in conditions in which in 2016 it stood at RON 469mln and in 2015 - RON 482mln.

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ANALYSIS

Petrochemical industry in Romania THE NEED FOR REINDUSTRIALISATION Professor Gheorghe Ivanus PhD, Member of the Romanian Academy for Technical Sciences (ASTR)

Romania ranks 11th in the world hierarchy of regional oil producers with proven reserves of 200 million tons of oil, without taking into consideration the oil potential of the Romanian Black Sea plateau area, under current exploration. Pessimistic forecasts of the depletion of oil reserves are numerous, of which we mention only a few, pertaining to important personalities of the time. 76

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ANALYSIS

tarting with oil, the main raw S material and essential energy resource of world economic development since 1850, let us see the world’s reserves and how much we can count on oil, but also how much time we have to develop alternative resources. When it comes to oil resources, three main oil categories must be taken into account: oil in operation, proven oil reserves and oil still undiscovered (see Table World oil reserves). In 1923, Svante Arrhenius, a Swedishborn geophysicist and chemist who received the Nobel Prize in Chemistry (1903), said that world oil resources would be exhausted in 1943. In 1939, Edgar Faure, Prime Minister of France, estimated the end of oil reserves in 16 years, i.e., in 1955. In 1973, the French economist Jean Marie Chevalier predicted the end of the oil era in 2000. After 2000, the energy experts predicted a decline in oil production in 2010s and in gas in 2020s, based upon the consistent mathematical theory of geophysicist Marion King Hubbert (1956). According to him the amount of oil extracted from a deposit, region or even whole Earth follows a bell curve that reaches a maximum, after which it starts to go down to depletion. As late as 2018, such predictions have not yet been fulfilled, confirming the saying: “Toujour malade, jamais mourir”! Latest estimates warn that after 2040 there will be a decline in oil extraction, anticipating a higher upstream investment and a volatility of the oil barrel prices that will drive alternative research into renewable, less polluting resources. In February 2017, world oil production amounted to 80.58 million barrels per day (bpd) after a peak of 82.50 million bpd extracted at the end of 2016, according to data released by the US Energy Information Administration. With a production of about 78,000 bpd, Romania is ranked 44th in the world on the list of the 116 oil producing countries, and 4th at European level, after Russia, UK and Norway, but well ahead of some

WORLD OIL RESERVES The world oil reserves to cover needs until the 2030s Geographic Area

Billion tons

Middle East

92.5

65.10

Southern America & the Caribbean

13.6

9.57

Africa

10.0

7.04

Russia

9.0

6.35

Asia Pacific

6.0

4.22

Mexico

4.0

2.81

USA

3.7

2.60

Norway

1.2

0.84

Canada

0.8

0.56

0.7

0.49

Romania

0.2

0.14

Other European Countries

0.2

0.14

Denmark

0.1

0.07

Italy

0.1

0.07

142.1

100.00

Total

other countries like Italy, Germany, France, Austria, Ukraine, Poland, Hungary, etc. The world’s proven oil reserves are those in already discovered oilfields that have not yet been exploited and are part of the inventory of large private companies such as ExxonMobil, Shell, BP or petrostates such as Saudi Arabia and the Gulf States, Norway, Venezuela, etc. These reserves amount to 1.7 trillion barrels, of which over half are in the Middle East. Oil still undiscovered, estimated at 900 billion barrels, is suggested by geological indicators, but not yet confirmed by drilling oil wells, or - what constitutes the captive oil - spread across many geographical areas more difficult to access or present in deeper depths such as Siberia, North Pole Cap, West Africa,

South America, the Black Sea, the Caspian Sea, etc. Consolidating the proven and undiscovered reserves, one gets a total of 2.6 trillion barrels. Assuming that the current world oil consumption of about 80 million bpd will increase by about 2% per year, the above-mentioned reserves would cover world needs until the 2030s.

UPCOMING GAS PROJECTS IN THE REGION As far as natural gas is concerned, world reserves are higher than oil reserves, especially after the discoveries of shale deposits and their exploitation in the USA. European Union (EU) yearly natural gas consumption is 465 billion cubic 77

ANALYSIS

meters from which 35% from Russia (via Gazprom), 35% from Norway and 12% from Libya and Algeria, for a total price of EUR 20 billion. Romania has a natural gas reserve of about 100 billion cubic meters (bcm) with high methane content (without taking into account explorations in progress on the Romanian Black Sea continental plateau), a production of 11 bcm/year (Romgaz and OMV Petrom) and a domestic consumption of about 13 bcm/year. Therefore, an import of 2 bcm/year is required in order to cover the current domestic energy portfolio demand. Due to the opposition of BP, the 2002 Nabucco Pipeline Project (based on Iraq fields) failed. The 2012 Nabucco West Project, also called Nabucchino (based on Azerbaijan’s gas fields) was backed by the European Union and aimed at reducing gas imports from Russia supplied by Gazprom. Since 2013, the status of the Nabucco Project became unclear so another opportunity emerged for a new BRUA Project (Bulgaria-Romania-HungaryAustria) with a total length of 1,318 km from Bulgaria to the Baumgarten terminal connector in Austria. One of the priority energy projects for the EU is the Southern Gas Corridor (SGC). The strategic importance of this project has been underscored in the European Energy Security and Energy Union Strategies. The SGC is about to offer a new source of competitively priced gas for the European Union market, as well as increasing diversity and security of supply. This is necessary in an environment where the EU’s dependence on gas imports is growing, in particular in Central and South East Europe, a region over-dependent on a single supply of gas. On the occasion of the 4th Ministerial Meeting of the Southern Gas Corridor Advisory Council (February 15th, Baku) Romania has proposed the BRUA project, together with the interconnector between Romania and Bulgaria, to be included in the SGC. Also, the Romanian gas carrier 78

Transgaz and the Slovak natural gas transmission system operator Eustream signed (February 9th) a Memorandum of Understanding (MoU) on the Eastring pipeline project. Thus, the parties agreed to cooperate with other TSOs from the Czech Republic, Ukraine, Hungary and Bulgaria to develop this project through the territories of Romania and Slovakia. Eastring is a new pipeline corridor ready for future gas imports to Europe from well-established and also alternative sources – the Black Sea area, the Caspian region, the Middle East, potential Turkish hub, etc. It allows additional utilization for existing transit and storage assets in Central and Eastern Europe (Czech Republic, Slovakia, Poland, United Arab Emirates, Romania, Bulgaria). The project is currently considered in more variants, deviating in routing options and level of usage of existing infrastructure.

DEINDUSTRIALISATION In recent decades, on the background of globalization, intense development of transport, communication and information technology, actions like foreign direct investment, capital mobility and labour migration have been encouraged, as well as the

deindustrialisation of regions and even entire countries, as a result of the relocation of factories in more costeffective areas for energy and labour. Unlike other Eastern European, formerly socialist countries (19451990), Romania has experienced an accelerated and uncontrolled process of deindustrialisation in the last 27 years, determined, in particular, by a profound political and systemic crisis. Since 1990, Romanian politicians seem terrified to talk about industrial policy, following the ostrich-like behaviour. With reference only to the oil and chemical industry, the industrial dismantling disaster led to the demolition of 102 large units out of the 132 existing in 1990 and to the reduction of the oil processing capacity to 13.7 Mt/year as compared to 35 Mt/year in 1990. Two major oil refineries were shut down: Arpechim Pitesti, closed by the Austrian company OMV Petrom in 2011, and RAFO Onesti, closed by Petrochemical Holding, also from Austria, in 2008. One of the largest oil refineries in Romania and Eastern Europe – Rafo Onesti, was put up for sale this year. The buyer will be obliged to keep the refinery running for at least five years. This is an important measure, because several plants energyindustryreview.com

ANALYSIS

in Romania have been bought only to be fully dismantled, especially in the ‘90s. Three other smaller refineries: AstraPloiesti, Steaua Romana-Campina and Darmanesti have been also closed. Quoting the late Professor Constantin Ciutacu PhD, former Secretary of state and Director of the Institute of Economics of the Romanian Academy, “Romania produced before 1989: 14 million tons of steel (today 3 million), 400,000 tons of aluminium (today 200,000 tons), 1,600 excavators (today none), 71,000 tractors (today none), 600 passenger railway cars and 14,000 freight wagons (today 800), 144 different tonnage ships, etc. According to official statistics, 50 million tons of scrap metal have been exported after 2000, i.e., the equivalent of about 1,000 oil refineries with a processing capacity of 3.5 million tons per year (using approximately 35,000 tons of equipment according to the IPIP Ploiesti demolition project commissioned by OMV in 2015)”. In 2016, Romania exported chemicals worth EUR 1.6 billion, while the imports reached EUR 5.6 billion, which led to a deficit of EUR 4 billion in external payments, mainly to Romania’s neighbours, former communist countries that have not destroyed their petroleum industry, petrochemical product facilities for polyolefins, synthetic rubber and fibres, paints, dyes, drugs, etc. The biggest problem that Romania’s foreign trade is currently facing is linked to petrochemistry, a sector contributing to 86% of the trade deficit, due to the massive imports from the riparian Mediterranean Sea countries of basic chemicals like phenol, acetone, styrene, acrylonitrile, sodium cyanide, polyolefins, polyvinylchloride, polystyrene, styrene copolymers, synthetic rubber, latex, polyurethane foams, etc. All these chemicals were produced in Romania before 1990 and Romania exported a large share of them. In 2007, 12,000 employees were working in the chemical industry. In 2016, their number was reduced to 3,800, the rest had added to the number of unemployed or currently work abroad,

mainly in Italy, Spain, England and Germany, as fruit pickers, elderly carers, waiters, vehicle drivers, in positions rarely equivalent to their background training, in the case of those with higher education: engineers, programmers, doctors, etc. The largest producer of chemicals in Romania, and one of the most important in Central and Eastern Europe, Oltchim Ramnicu Valcea, had 4,800 employees in 2007, of which only 1,900 employees were employed in 2016 following insolvency. In the last 27 years, Romania has given up its industrial policy although the European Union, of which we are part of, promotes it through the Europe 2020 Strategy. An industrial policy dedicated to the reindustrialization is absolutely necessary for Romania, especially since, with the accession to the EU, our country has abandoned a number of macroeconomic policy levers, for example: single-tax fiscal policy, trade policy and is preparing to give up currency and monetary policy by entering the Euro area. It must be emphasized that the reindustrialisation that we try to promote in Romania does not mean an excess of production, commodity stock, renationalization, as it have been wrongfully done after 1945 and before 1989, but the capitalization of production potential based on country’s raw material resources, of the energy available to us and of the imported goods currently marketed on the free market (as is the case with large amounts of oil available on the market), policies similar to our neighbour countries after 1990, also socialist before 1990. The economic development model of Romania, based essentially on the consumption of imported goods that has led to the major economic crisis of the previous years, and the increase in productivity based mainly on staff reduction is not sustainable. Four out of ten able-bodied Romanians do not work in a fiscalized area, which makes the budget unsustainable until some of them find work.

Small Romanian businesses cannot survive without integration with the big companies they should serve, especially since the foreign investors active in our country since 1990 prefer to collaborate with the small enterprises in their home country, even if this alternative is more expensive. Public services and small businesses, in particular, cannot hire all of the mass of layoffs because banks usually offer only consumer credit loans and not investment loans, while the retail sector mainly sells import goods. As a preliminary conclusion, it must be emphasized that the Romanian services are complementary to the import industry, and the indigenous industry, with some notable exceptions, is not competitive. The issue of Romania’s reindustrialisation is an urgent one, important not only for the long term economic development, but also for the very existence of the state, despite the fact that the state itself has little leverage because state aid is limited, trade policies come from the EU’s competence, the monetary and the foreign currency policies are restrictive, and the fiscal and budgetary policies must obey IMF constraints. In addition, after 2010, Romania faces a budget deficit and an increase in the public debt that has reached astronomical sums relative to the reimbursement potential. Economic growth, the reduction of unemployment and the increase in labour productivity are contradictory to the objective of reducing the budget deficit. Reduced R&D spending at a level of mere survival led to a lack of innovation, and competition is centred on price and not on product quality and performance. Considering a consolidated reindustrialisation of Romania, one cannot ignore that over 80% of the manufacturing industry is dominated by foreign capital and therefore this should be made a partner of the reindustrialisation strategy. Another drawback of the Romanian economy is the precarious state of 79

ANALYSIS

the road, rail, river and air transport infrastructure, areas that have not experienced a significant progress after 1990. Investment targeting these modes of transport are vital for the planned reindustrialisation of Romania. At national level, the role of central governments should be limited to predictable and stable fiscal policies, improving the business environment by linking SMEs with large industrial facilities owned over 80% by foreign investors and with Romanian investors that still exist and were able to survive to the unpredictable and ever-changing economic and especially fiscal policies practiced by all post-1990 governments in Romania. Also, the government should develop the transport networks, support innovative projects, reduce bureaucracy and improve the legislation on mineral resources, royalties and their valorisation, revitalize vocational education, the harmonization of the funding of vocational and university education, with the objective of employing graduates in the fields in which they have been trained.

NEXT STEPS The volume ‘Restructuring and reindustrialisation of the petroleum, petrochemistry and chemistry sector’, published by AGIR Publishing House and the Romanian Academy of Technical Sciences (ASTR) in November 2016, contains suggestions for new industrial developments in organic chemistry, inorganic chemistry, chemical fertilizers, natural and synthetic fibres, elastomers, drugs, coal chemistry, elastomer processing and plastics, biotechnologies, catalysts, research and development, topics summarized in the subsequent paragraphs. The volume deals with 10 main subdomains of the chemical industry, starting from petroleum refineries, petrochemical and chemical plants that were in operation before 1990, units that were demolished after 1990 and units that survived demolition and which can be restarted and modernized. 80

PETROLEUM REFINING UNITS IN ROMANIA AND THEIR CORRESPONDING PROCESSING CAPACITIES Platform and Ownership Status

1990-Mt/yr

2017-Mt/yr

Petrobrazi (OMV Petrom)

7.50

5.0

Petrotel-Lukoil (Lukoil)

4.70

2.5

Petromidia (KMG International)

3.50

5.0

Arpechim (OMV Petrom)

6.50

Rafo Onesti (Put up for sale)

5.25

Astra Romana (Interagro)

1.80

Vega Ploiesti (KMG International)

0.80

Steaua Romana (Omnimpex Chemicals)

0.40

Darmanesti (Petrochemical Holding)

1.50

Petrolsub Suplacu de Barcau (Ecodiesel)

0.40

Total, Mt/yr

32.35

13.7

100%

42%

REFINING CAPACITIES IN OTHER FORMER SOCIALIST COUNTRIES Country

1990-Mt/yr

2017-Mt/yr

Hungary

Czech Republic

10.5

Bulgaria

Slovakia

5.50

Albania

Poland

PETROLEUM REFINING Table Petroleum refining units in Romania and their corresponding processing capacities’ and table ‘Refining capacities in other former socialist countries’ depict the situation in the field of petroleum refining. The refineries in Romania have

reduced their processing capacity by 58% after the closure of the two large refineries, Arpechim Pitesti and Rafo Onesti and the two smaller refineries, Steaua Romana and Darmanesti, while Hungary, Poland, Czechia, Bulgaria and Slovakia doubled their petroleum and petrochemical processing capacity in integrated systems. energyindustryreview.com

ANALYSIS

PETROCHEMISTRY The table ‘Former integrated petrochemical processing platforms Present status of their components’ shows the situation of the demolished, closed and still in operation petrochemical facilities units in Romania after privatization between 1990-2016. Of the 6 integrated petrochemical platforms in 1990 with the abovementioned petroleum refineries and presented in the chronological order of their construction and start-up: Rafo Onesti-Carom, Petrobrazi, Arpechim, Oltchim, Lukoil-Petrotel, Petromidia and Timisoara (Solventul) – Pancevo, only one alone fulfils the restart conditions: the complex Arpechim (Pitesti) – Oltchim (Ramnicu Valcea). The Petromidia (Navodari) refinery is semi-integrated because it imports ethylene from the Mediterranean countries using 5,000 t ships and processes it in the HDPE-LDPE Plant. Propene may come from its own refinery, it can be concentrated in the propylene column in the pyrolysis plant but the unit

was stopped since the 1990s. In the short term, the reindustrialization of the petrochemical sector in Romania means the restarting of the Pitesti Petrochemistry Platform in an integrated system including: the Arpechim Refinery, the Bradu Petrochemical Division (DPB), Oltchim Ramnicu Valcea. In order to achieve this, Romania should buy back the Arpechim Refinery from OMV Petrom, shut down by the Austrian Company since 2011. OMV has explicitly stated in the very Contract of buying Petrom in 2004 that it does not want to keep the Romanian petrochemistry facilities at Brazi, Pitesti and Doljchim. At that time, OMV divided the capacities in two categories: basic and eligible. The above assertion was again strengthened as early as 2012 when the OMV CEO at that time, Gherhard Roiss, said: “The European petrochemical market has growth potential over the current decade. That’s why we want to improve our good position with our integrated refineries in Schwechat and Burghausen. In Romania, we focus only

on refining oil produced internally.” So, ab initio, OMV did not intend at all to preserve and develop integrated petrochemical and petroleum refineries in Romania and Romanian politicians tell us that this was a condition to enter the European Union. But how did Poland, Hungary, Czechia manage to preserve and not demolish their petrochemical industry?! Putting Oltchim into operation in the integrated system, as it has been operating for more than 50 years, will make it more attractive for privatization, when compared to the Oltchim’s current sale of assets. The closure of the Arpechim petrochemical plant in Pitesti by OMV Petrom in 2008 has led to the demolition of the all installation producing acrylonitrile, dimethyl terephthalate, ethylene (Pyrolysis 1), nitrobenzene, styrene, polystyrene, sodium cyanide, industrial ethyl alcohol, carbon black. Only 4 installations have survived: Pyrolysis 2, LDPE, HDPE and ethylene oxide, purchased by the Romanian

FORMER INTEGRATED PETROCHEMICAL PROCESSING PLATFORMS - PRESENT STATUS OF THEIR COMPONENTS Company

Demolished units

Closed down

In operation

Total

–

Lukoil: Petrotel-Lukoil

–

KazMunayGas: Petromidia

Energy Bio Chemicals: Carom Onesti

Chimcomplex

–

Solventul Timisoara

–

Carbosin Copsa Mica

–

102

114

–

102

132

77,27

9,86

12,87

100

OMV Petrom: Petrobrazi, Arpechim, Doljchim

TOTAL Oltchim (State-owned) GENERAL TOTAL %

ANALYSIS

State through Oltchim and forming the current Petrochemical Direction Bradu (subsequently PDB).

SYNTHETIC FIBRES In the field of synthetic fibres, the production of polyester, polyamide and polyacrylic fibres is unlikely to be restarted in the medium term due to the demolition of their basic raw material manufacturing units by OMV Petrom on the Petrobrazi platform (phenol and dimethyl terephthalate) and Arpechim Pitesti (acrylonitrile), respectively. Any attempt to revive the textile industry in Romania implies the restarting of the petrochemical units that have survived the irrational demolitions of previous years and their development with modern technologies. In the short term, it is only possible to invest in the recycling of polyester waste (PET) waste by increasing its collection.

ORGANIC CHEMISTRY The organic chemistry sector was totally dismantled in Romania after 1990, especially by OMV Petrom, by demolishing Doljchim, Arpechim and Petrobrazi Chemical platforms, so that the Romanian State should offer attractive conditions for domestic and foreign investors interested in the construction of greenfield state-of-the-art units and capacities, to cover Romaniaâ&#x20AC;&#x2122;s domestic consumption and generate availability for export.

FERTILIZERS The chemical fertilizer industry only counts through the Azomures plant in Targu Mures, after 10 units of the Interagro Group have been deliberately become bankrupted and closed to make way for the import of fertilizers from the neighbouring countries. In the short run, Romgaz should take over these units, in association with the current owner and restart them with the methane gas at their disposal, 82

instead of burning the gas at OMV Petrom Brazi Co-generation Power Plant, commissioned on the basis of Government Decision no. 870/2012, facility that exports Romanian produced power to Austria and Germany, where OMV developed the petrochemistry after destroying it in Romania. In the long run, investment in a modern chemical fertilizer production by Romgaz can be considered in a publicprivate partnership system in Dobrogea, close to the Danube-Black Sea Canal, given the already identified, significant natural gas deposits in the Romanian Black Sea plateau.

ELASTOMERS Unfortunately, in the field of elastomers, Romania lost all its advance it had in Central and Eastern Europe before 1990, because of the privatization of Carom in 2003, bankrupted in 2005 and subsequently by Energy Biochemicals in 2008, leading to a second insolvency in 2016. The Carom demolition led to the disappearance of the Romanian production of SBR (styrene butadiene rubber), NR (nitrile rubber), phenol and acetone, bisphenol, ethyl benzene, methyl styrene, styrene, polystyrene and latex, leaving active only the poor manâ&#x20AC;&#x2122;s solution: recycling of waste for the recovery of monomers.

SILICATES AND OXIDES In the field of construction materials (silicates and oxides), only units for the production of concrete and plaster prefabricates can be considered, since the cement and derivatives sector is owned in a proportion of more than 90% by foreign companies which transfer the generated profit to their countries of origin.

COAL CHEMISTRY In the field of coal chemistry, after a long period of domination of oil, there is a tendency for some companies in the US, China, India, and other countries

to generate chemical products by chemical conversion of coal using less polluting, more selective Fischer-Tropsch technologies. In Romania, although there are significant reserves of bituminous coal and lignite, there are no attempts to chemically valuing them, their only use being burning in thermal power stations for the production of thermal and electric energy, despite the fact that the Ministry of Economy ordered a study in 2014 for the valuing of the coal in Oltenia and the Jiu Valley by industrial processes of gasification and production of fertilizers, methanol and chemicals.

CATALYSTS The indigenous production of catalysts for chemistry was completely stopped after 1989 (Vega Ploiesti, Onesti and Doljchim units, now shut down), following the same pattern of the entire chemical industry itself. Along with it, the research and development in a top field, where Romania also had notable experience and achievements also stopped. Reprofiling involves institutional, academic and financial measures to reinvigorate the research and production of catalysts.

BIOTECHNOLOGIES In the area of biotechnologies, European researches are concentrated especially in the field of waste use as a source of raw materials for chemical industry. No remarkable research can be mentioned in this field in Romania.

R&D AND EDUCATION The field of R&D and education in chemistry has experienced a marked decline in Romania since 1990, because of the lack of financing even at the level of the basic necessities of science and technology progress in our country. Due to the demolition of the industrial base, there are no real possibilities for educating, training and hiring graduates, who are forced to emigrate or reprofile. energyindustryreview.com

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UPSTREAM Organizers: Industry Media Vector & Petroleum Club of Romania Co-organizer: Romanian National Committee of the World Energy Council Under the patronage: ANRE, NAMR With the support of: Ministry of Energy Official partners: ROPEPCA, UPG Ploiesti, AGIR, ACFR, Bucharest Chamber of Commerce and Industry Partners: INCDT Comoti, Jereh Exhibitors: INCDT Comoti, Jereh, Modular Plus, Roxtec, Lubbers, Conpet, Klingspor, Steder Group, Eneria, Algeco, Dosco Petroservices Media partners: Energy Industry Review, Mesagerul Energetic, Univers Ingineresc, Masini si utilaje pentru constructii, Trenchless Romania, The Diplomat 86

energyindustryreview.com

The tenth edition of the annual conference dedicated to the Upstream segment took place in Bucharest on 24 April. The event brought together once again managers from Romania and South-Eastern Europe, Romanian and international experts, officials from regulatory bodies, consultants

and specialists in the field, who discussed hot topics for the energy industry and presented modern technical and scientific solutions applicable for the exploration and production sector of the oil and gas industry.

MAJOR THEMES • Towards a competitive upstream through innovation • State-of-the-art solutions, breakthrough technologies and equipment • Current challenges of the legislative and regulatory framework for upstream companies • Permitting for construction/land related works. Legal amendments • Enhanced Oil Recovery (EOR) activities, onshore & offshore operations • Managing risk in oil & gas operations 87

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tructured in the form of four technical sessions and a S keynote speech, the conference provided participants with the latest information and the occasion of an open and transparent dialogue on geopolitical, economic, legislative, technical and scientific issues. The important topics of the conference included the new legislative changes in the field of construction, the current challenges of the fiscal and regulatory framework, implications for the Upstream companies, programs for the efficient use of resources and cost reduction and, not least, innovative solutions for a sustainable development of the industry.

OFFICIALS AND EXPERTS ON HOT TOPICS IN THE OIL & GAS INDUSTRY In the introduction to the Panel dedicated to officials and experts, Andrew Costin - President of Petroleum

WHAT HAS HAPPENED IN THE LAST YEAR INDUSTRY HIGHLIGHTS Latest estimates by experts worldwide predict stronger oil prices in 2018 that will create more stability, supporting rebalancing in the market and new investment. Interesting developments last year in the Black Sea Region include EBRD becoming a minority share-holder in Black Sea Oil & Gas (BSOG), that holds a 65% operating interest in the XV Midia Shallow block and XIII Pelican block in the Romanian sector of the Black Sea. BSOG also aims to develop the Ana and Doina discoveries in the Black Sea, as well as carry out further exploration and appraisal work, but recently has been locked in talks with Romania’s government about the regulations and fiscal terms that would underpin the company’s offshore Ana-Doina gas project. Meanwhile US giant ExxonMobil issued bid documents for a USD 1 billion contract to engineer, procure, construct and install a 154-kilometre gas export line and 10,000-tonne platform for its major Neptun Deep project in Romania’s Black Sea. The contract is expected to be worth between USD 975 million and almost USD 1.3 billion, and represents the biggest Neptun Deep package on offer to the industry. A final investment decision is planned for the second half of 2018 with first gas due to flow in 2021 - and possibly 2020, with production rates for Neptun Deep unclear but may be 600 million to 800 million cubic feet per day. On the other hand, OMV Petrom started drilling in the shallow waters of the Romanian Black Sea, where it was aiming to redevelop its Lebada Vest field, boosting production in the process. In analysing the fiscal and legal framework, successive Romanian governments have planned to amend the Petroleum Law including the new royalties scheme, long overdue. It is expected that the National Agency for Mineral Resources (NAMR) would initiate the new bidding round (the 11th) in 2018, including 6 offshore and 22 onshore blocks.

Club of Romania, highlighted some of the most important developments and challenges of the oil and gas industry globally and nationally.

ROMANIA TO REGAIN ITS STATUS IN THE REGIONAL ENERGY EQUATION Iulian-Robert Tudorache - State Secretary within the Ministry of Energy, opened the conference, highlighting that Romania has committed to implement strategic projects that will increase supply security at national and regional level. He mentioned in this regard BRUA project, one of the most important strategic projects of Romania, which recorded significant progress. This new corridor will ensure not only a new gas transmission route at regional level but will be able to have access in the future to natural gas coming from various supply sources, including gas to be carried through the infrastructure of the Southern Corridor, as well as gas coming from the Black Sea. As part of the Vertical Gas Corridor, BRUA project, together with Bulgaria-Romania interconnector, will be able energyindustryreview.com

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Gal mentioned, as a commercial decision to invest in the exploitation of Black Sea gas fields is expected. Recalling the discovery of the field in Caragele, the largest hydrocarbon discovery of the Romanian state in the past 30 years, NAMR representative highlighted that “the potential

to represent an important link between the Southern Gas Corridor and Central Europe. The importance of the Black Sea was mentioned, where there are large volumes of gas, and the possibility that exploitation of these resources could lead to the reconfiguration of energy security of Romania and of the entire region. “Romania must regain its status in the regional energy equation, have a serious and consistent strategy bringing concrete results, beneficial for the country. Romania has a privileged position at the Black Sea and is open to working with the riparian states in competition for regional energy resources, to turn this region into a strategic energy area,” the State Secretary highlighted.

ONSHORE RESERVES POTENTIAL EXCEEDS THE POTENTIAL OF BLACK SEA RESERVES The favourable situation in the oil market, namely the increase in oil prices (the highest in the past three years), will contribute to the revival of the service market to the level in 2014-2015, NAMR representative, Sorin Gal - General Director - believes. Despite the often changes at the helms of the agency (4 presidents during several months) and blockage in the regulatory activity, projects have continued. 2018 represents the phase of confirmations, Sorin

of Romania’s onshore hydrocarbon reserves exceeds the potential of hydrocarbon reserves in the Black Sea”. In 2018, a new law on royalties will be drawn up, which will boost petroleum operations, a new mining law and potentially a new petroleum law, he added. A heavily debated topic, the reference price of natural gas extracted in Romania, was clarified, Sorin Gal mentioning that it will be based on the Romanian gas market. Also, we will have a new reference price for crude oil and stability will be reached in terms of taxation. Massive changes will follow in terms of regulation in the petroleum industry (reserves plus resources), well abandonment and access to land on which petroleum operations are executed.

ANRE, AN EXTENSIVE PROCESS OF ALIGNMENT TO THE EUROPEAN REGULATIONS ANRE is currently in an extensive process of legislative changes to apply the European regulations, Otilia Marin, General Director, mentioned. Thus, the institution will 89

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review procedures and rules established under the Electricity and Natural Gas Law no. 123/2012, as well as some existing regulations, from several points of view, including technical. Provisions related to the own technical and commercial rules of operators in the sector will also be reviewed. Changes target inclusively the Upstream supply pipelines (connection to the transmission and distribution system), conditions of validity of licenses and operating permits, development of the natural gas market, the segment of compressed natural gas for vehicles, liquefied natural gas etc.

SAFETY OF OFFSHORE OIL AND GAS OPERATIONS In his presentation, Constantin Gheorghe - President of the Competent Regulatory Authority for Black Sea Offshore Petroleum Operations (ACROPO) referred especially to Directive no. 2013/30/EU on safety of offshore oil and gas operations and amending Directive 2004/35/EC. The objective of this Directive is “to reduce as far as possible the occurrence of major accidents relating to offshore oil and gas operations and to limit their consequences, thus increasing the protection of the marine environment and coastal economies against pollution, establishing minimum conditions for safe offshore exploration and exploitation of oil and gas and limiting possible disruptions to Union indigenous energy production, and to improve 90

the response mechanisms in case of an accident.” ACROPO’s establishment is a consequence of the mentioned document, the institution subordinated to the Government of Romania exercising the responsibilities provided by Law no. 165/2016 on the safety of offshore petroleum operations.

CREATING VALUE THROUGH INTEGRATED PRODUCT-SERVICE SOLUTIONS The new strategy of the international group Jereh, specializing in oil & gas, power and environmental management, has as a central goal generating added value by understanding customer needs and personalizing the product-service package, says Leo Liu - Director Central & Eastern Europe. Jereh focuses on delivering integrated, flexible and efficient solutions for companies active in the energy, oil and gas industry and environmental management. With 15 subsidiaries and more than 5,000 employees, the group operates in various areas of activity: oil & gas exploration and development, oil & gas processing and treatment, oil & gas storage and transportation, LNG, CNG, refining and petrochemicals, power, environmental management. The range of customer services extends to areas such as investment & operation, equipment manufacturing, technology service, energyindustryreview.com

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turnkey engineering. The company’s products and services reach 60 countries and regions in more than 50 cities around the world. The group’s strategy also seeks to optimize costs while respecting environmental regulations and achieving economic efficiency targets.

PUMPING UP THE INDUSTRY - DEDICATED SOLUTIONS The National Research & Development Institute for Gas Turbines - COMOTI, specializing in aerospace, energy and environment, prides itself with notable achievements in terms of energy and energy saving. Company representative Leonard Trifu - Marketing Manager, has highlighted the most performing solutions dedicated to the oil and gas industry, including gas compression equipment with screw compression units (CU 64, CU 90, CU 128, CU 200, CU 220), centrifugal gas electro-compressor (EGC), centrifugal air compressor (CCAE), expander group - electric generator, skid packages. The mentioned examples included: • The turbocharger set GTC-1000 installed in Ticleni Tg. Jiu unit, which compresses natural gas resulting from crude oil extraction from oilfields. Compressed gas is either supplied to skimming plants and/or highpressure compressor facilities for the gas lift process, used in extraction wells, or delivered to the national trunkline;

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GTE 1800 SB cogeneration unit with two groups consisting of turbo-generator with PRATT & WHITNEY ST 18 engine, electric generator and postcombustion recovery boiler; • GTE 2000 BT cogeneration unit from CET Botosani electrical system integrator etc. For the energy sector, COMOTI provides services such as design, 3D modelling, numerical simulations, power group automation, general overhauls, dynamic balancing, inspections, compressor and sub-assemblies functional tests etc.

VOICE OF THE OILFIELD - SUBSURFACE AND SURFACE DIGITALIZATION The oil and gas industry, the basis of global energy supply, keeps pace with new automated technologies, aiming to stimulate the development and adoption of computerization and digitization in production processes. Halliburton, one of the world’s largest oil companies introduces a revolutionary concept - Voice of the Oilfield™, a Landmark solution, to enable smart, connected well and completions for optimized production and reservoir management. Voice of the Oilfield™ helps maximize production rate, improve reserves recovery, and reduce risk by tactically applying technology innovations into core production workflows, states Sebastian Kroczka 91

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Industry Solutions Advisor EESSA, Halliburton. According to company’s representative the digital evolution means: optimized and harmonized data management; delivery of the sensor data and reporting in real time through digital platform; optimization and automation of processes for faster and more efficient decision making process; easier accessibility for users thanks to cloud solutions; utilization of artificial intelligence and analytics; maximizing of asset value through engineered solution; greater control on each project OPEX and maximizing returns. “A single digital platform is key to integrate the elements into a single solution to connect the Oilfield,” Sebastian Kroczka concludes.

SUBMARINE CABLE SYSTEMS FOR POWER, CONTROL AND COMMUNICATIONS As a worldwide leading expert in the cable industry, Nexans brings energy to life through an extensive range of best-inclass products and innovative services. For over 120 years, innovation has been the company’s hallmark, enabling Nexans to drive a safer, smarter and more efficient future together with its customers. The company focuses on four main business activities - Grid interconnection, Offshore Wind, Oil & Gas, and Telecom, Jørgen Blystad - Sales Manager, Nexans Norway, mentioned. As a turn-key supplier, Nexans provides 92

project management and engineering, installation and subsea cable protection, hook-up on substations at cable ends. The company ordered a new vesel with a 10,000t split turntable capacity, for delivery in 2020. Innovative cable systems from Nexans allow to apply new state-of-the-art solutions, as well as increasing reliability, while cutting costs and reducing maintenance.

THE IMPORTANCE OF THE BLACK SEA REGION FOR THE ENERGY SECTOR The importance of the Black Sea for the energy industry and in particular the importance of cooperation between companies in this region has been underlined by Kees Cramer - Business Development Manager Black Sea Region, Steder Group. Acting as a global freight forwarder, Steder Group organizes the transport of all kinds of goods using all modalities: road, rail, air, inland waterways and sea. The company avails of all relevant certifications, licenses and memberships. Steder Group also provides multi-modal transport solutions, customs brokerage, logistics, crosstrades worldwide. The company representative reviewed the opportunities of the Romanian offshore oil and gas market, as well as the most relevant projects in this area. By anticipating the increasing demanding for an alternative shore base to those already existing, Steder Group has established a energyindustryreview.com

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partnership with DP World especially to assist customers like ExxonMobil, OMV Petrom, Lukoil Overseas Atash and Black Sea Oil & Gas, and their general contractors to run the daily operations on non-stop activity basis. Therefore, by offering a suitable space for a new shore base with a concrete terminal space, suitable berth(s), best water draft, and free available land to be developed accordingly, Steder Group together with his partner is willing and ready to cooperate with specialized providers for developing such ‘shore base concept’. “Work together in the Black Sea basin or risk that others will supply the world with energy resources,” concluded Kees Cramer.

RESEARCH ON CO2 USAGE, INCLUDING EOR, IN ROMANIA CCS or carbon capture and storage is a way of preventing the accumulation of large amounts of carbon dioxide released by large industrial plants into the atmosphere. The geological storage of CO2, the areas of use, the state of implementation at global and national level, as well as the advantages of the method were presented by Constantin-Stefan Sava - Senior Geoscientist at GeoEcoMar. An enlightening example of use for the benefit of the oil and gas industry is that of the United

States, where CO2 storage is combined with Enhanced Oil Recovery (EOR). At international level, although there is progress, the widespread implementation of this process still suffers from economic impediments, mainly due to decrease in the emission allowances trading price. CO2-EOR has the most significant commercial potential among utilisation methods leading to permanent storage. The objective of ECO-BASE (Enhanced oil recovery with storage) is to develop detailed and integrated roadmaps for CCUS (Carbon Capture, Utilisation and Storage), including EORStore, in South-East Europe. GeoEcoMar supports the transposition of the provisions of the CCS Directive into Romanian legislation by granting regular consultations to the NAMR, Constantin-Stefan Sava mentioned.

DRILL STRING COST ANALYSIS – WAYS TO REDUCE OPERATING COSTS Increasing profitability and reducing operational expenses remain a priority in the business strategies of companies in the oil and gas industry. Mihai Filipas, General Manager at 93

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Alfa Drill Consulting, a privately-owned company, providing professional consulting services for the oil and gas industry since 2008, talked about ways and methods to cut costs. Thus, the Drill string cost analysis shows that by reducing the numbers of repairs it can be saved 157,680 EUR/year – for API connection string that means 35 wells rental, and 394,200 EUR/year – for premium connection string that means 87 wells rental. This way, the company could offer wages and bonuses for the people or modern equipment that will help to not happen again. Expenses may also be diminished by simple preventive measures applicable during the handling, loading, offloading, transportation, pipes running activities.

TYPES OF DEFECTS IN NATURAL GAS PIPELINES AND METHODS FOR THEIR EVALUATION AND REPAIR Most pipelines used for the transport of hydrocarbons have been built many years ago, which is why the most important studies currently concern the level of safety, especially with regard to the technical capacity to further operate these pipelines. The paper delivered by the representative of the Petroleum-Gas University of Ploiesti - Prof. Andrei Dumitrescu, aimed at identifying, evaluating and repairing 94

defects of natural gas transmission pipelines. Starting from the classification of anomalies (imperfections and defects), the peculiarities of the technological repair processes were highlighted, as well as the main types of additional elements that can be applied to the maintenance works and the types of welded joints that are used for their application. Repair with coatings made from composite materials is a class of modern technological processes that enables repair of pipelines without stopping the operation of the pipelines and without applying welding operations on their tubing, Prof. Andrei Dumitrescu pointed out.

CAMIRO LONG LIFE HYDRAULIC EQUIPMENT TECHNOLOGY Camiro Engineering is a company established in 2001 by a top manager in the maintenance of marine drilling platforms Gloria, Jupiter and Saturn, with activity and expertise within companies with a strong tradition like Petromar, Rig Service, GSP Offshore and OMV Petrom. The company’s competencies include: research-experimental development in natural sciences and engineering; engineering and technical consultancy; machine design; industrial processes energyindustryreview.com

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and tribology. Continuous tribological research of stateof-the-art composite materials is the basis of Camiro long life technology, says Miron Procop - Director General. He delivered a presentation on the methodology that started to improve the hydraulic equipment of the duplex and triplex drilling mud pumps used in the drilling of oil wells on the Black Sea platforms. According to Miron Procop, the new unitary technology guarantees: drilling programs management and salt water injection of triplex and duplex pumps; well drilling will be executed over a given range, with a single set of hydraulic equipment. The methodology is subject to the Camiro Engineeringâ&#x20AC;&#x2122;s request for the Romanian State Office for Inventions and Trade Marks (OSIM).

MANAGING RISK IN OIL & GAS OPERATIONS Risk management is a priority chapter for companies in the industry, as there are significant risks of accidents during oil and gas operations. Pandele Neculae - Romania Representative, the WPC Programme Committee, has assessed the most important risks that may arise during exploration and production activities, in different stages of

projects. Methods and solutions to minimize risks associated with production activity and economic risk have been identified. The conclusions prove that the integrate risk management is an essential key for achieving the projects targets. Thus, the integrate approach of uncertainty and risk application for E&R business improves the portfolio management. The basic risk workflow must be applied for exploration, drilling, reservoir, production, and economic activities. The optimum solution for the overall portfolio takes into account all the data and the associated risks. So, in other words, risk management leads to E&P success, underlined Pandele Neculae.

CURRENT CHALLENGES OF THE LEGISLATIVE AND REGULATORY FRAMEWORK FOR UPSTREAM COMPANIES The legislative and regulatory framework for Upstream activities has lately been the target of debates, most often contradictory, the reason being that the Romanian legislation does not provide a stable framework for the optimal and competitive development of operations. For example, the 95

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their production on the centralized markets - BRM and OPCOM; transposing the OUG into law, with a minimum of 70% obligation, to trade on one single centralized market – OPCOM (the obligation might be extended up to 100%). ROPEPCA advocates for a voluntary quota and for the use of both exchanges. According to Harald Kraft, ROPEPCA’s priorities for 2018 are: amending the Petroleum Law no. 238/2004; streamlining the bureaucratic procedures specific to Romanian institutions; the 11th licensing round organized by NAMR; educating the general public and the political class on the benefits having a performing petroleum industry. The new amendments to Law 50/1991, updated in 2018, on the authorization of construction works, were extensively

comparison between the level of taxation in Europe and the level in Romania (according to the Deloitte study from March 2018 – ‘An overview on royalties and similar taxes. Oil and gas upstream sector across Europe’) proves that compared to the rest of Europe, where the level of taxation has decreased steadily between 2014 and 2017, in our country it’s the opposite. Thus, in Romania, during 20142016, taxation increased, the exception being 2017, when a decline was recorded due to elimination of the tax on special constructions. ROPEPCA President, Harald Kraft, commented on this subject, also expressing the point of view of the association on the determination of the reference price of natural gas. The Romanian Petroleum Exploration and Production Companies Association (ROPEPCA) stands against the NAMR order approving the methodology for establishing the reference price for natural gas extracted in Romania. According to this order, the reference price for natural gas extracted in Romania will be calculated according to the trading prices of the hub from CEGH Vienna, well above the weighted average price of gas traded on the Romanian Commodities Exchange (BRM). Thus, gas market liberalization brings new challenges: OUG 64/2016 provides for the obligation of producers to trade 30% of 96

explained by Daniel Vlasceanu - Partner, Vlasceanu, Ene & Partners. He insisted on the implications of legal provisions on the Upstream sector. Given the recent evolutions on both the projects in progress and those to be implemented (BRUA, capitalization on gas reserves in the Black Sea) and oil price increase, it is necessary to have a clear legal framework, consistent practice and accountable authorities, the expert pointed out. energyindustryreview.com

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