Energy Industry Review - October 2018 by Energy Industry Review

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Switching from oil to gas

Lavinia Iancu CEO and Publisher

atural gas projects will receive a N significant investment boost over the coming years according to experts. This will enable gas to overtake oil as the world’s primary energy source in 2026, and account for a quarter of the world’s energy by mid-century. DNV GL’s 2018 Energy Transition Outlook, an independent forecast of the world energy mix in the lead-up to 2050, predicts global upstream gas capital expenditure to grow from USD 960 billion (bn) in 2015, to a peak of USD 1.13 trillion in 2025. Upstream gas operating expenditure is set to rise from USD 448 bn in 2015 to USD 582 bn in 2035, when operational spending will be at its highest. While DNV GL’s model predicts global oil demand to peak in 2023, demand for gas will continue to rise until 2034. New resources will be required long after these dates to continue replacing depleting reserves. “The energy transition will be made up of many sub-transitions. Our Outlook affirms that the switch in demand from oil to gas has already begun. Significant levels of investment will be needed in the coming decades to support the transition to the least carbonintensive of the fossil fuels,” said Liv Hovem, CEO, DNV GL – Oil & Gas. “Gas will fuel the energy transition in the lead-up to mid-century. It sets a pathway for the increasing uptake of renewable energy, while safeguarding the secure supply of affordable energy that the world will need during the energy transition,” Hovem added. Rising global demand for gas will impact activity across the oil and gas value chain, according to DNV GL’s Outlook. Conventional onshore and offshore gas production is forecast to decline from about 2030, while unconventional onshore gas is expected to rise to a peak in 2040. DNV GL expects this trend to lead to leaner, more agile gas developments with shorter lifespans. North East Eurasia (including Russia) and

the Middle East and North Africa will account for most onshore conventional gas production in the lead-up to 2050, while North America will continue to dominate unconventional gas production. In the offshore sector, the Middle East and North Africa will see the highest annual rate of new gas production capacity from now until at least 2050. Liquefied natural gas capacity will increase as production rises. DNV GL expects it to double by the late 2040s, as the midstream sector connects shifting sources of gas with changing demand centres. Seaborne gas trade is forecast to treble from North America to China by 2050. An increase in trade from Sub-Saharan Africa to India and South East Asia is also expected. DNV GL forecasts further transition for the sector in the lead-up to 2050, as greener gases — including biogas, syngas and hydrogen — enter transmission and distribution systems. The outlook points to a faster, leaner and cleaner oil and gas industry in the future. The sector needs to enhance focus on developing the digital technologies that will enable quicker and more agile exploration and production, and the smooth integration of less carbon-intensive gases into the energy system, experts underline. In a few words… • The world will need less energy from the 2030s onwards owing to rapid energy efficiency gains. • The world’s energy system will decarbonize, with the 2050 primary energy mix split equally between fossil and non-fossil sources. • Oil demand will peak in the 2020s and natural gas will take over as the biggest energy source in 2026. • Electricity consumption will more than double by mid-century to meet 45% of world energy demand, and solar PV and wind energy will supply more than two thirds of that electricity. • The energy transition is affordable! 3

Content Public-Private Partnerships: A viable solution?

The Romanian Government intends to initiate public investment projects with a significant impact on the economy through PPPs. The initial list was supplemented on 27 August 2018 by adding several projects (Tarnita – Lapustesti hydropower plant and the hydrotechnical complex Turnu Magurele – Nicopole along the Danube river, both being considered as key strategic investments under the draft 2018 – 2030 Energy Strategy released for public consultation on 20 September 2018).

56 Years of renewable energy progress in Italy

In Italy energy production from renewables was adopted as early as 1962. In the National Energy Balance Sheet of that period 2/3 of the energy produced was already based on these sources in the generic version of the ‘renewable’ concept. Later, over the next 30-40 years, the relaunching of energy production methods and of renewable sources has focused producers’ attention on the sources used for obtaining electricity rather than thermal energy.

Industrial Internet of Things: What, how and why?

There’s a rather new concept floating around and if you had a tough time understanding the Internet, then the Internet of Things might pose an even bigger challenge. Also, no final definition of the concept has seen the light of day yet, even though people have been talking about it for quite some time. Having access to the world through a device is yesterday’s news, but what if this device could connect to another device and ‘talk’ back and forth? That is gathering, working with and finally exchanging information even without active human intervention. 4

Pumping up the industry: Energy-efficient compressed air solutions from Atlas Copco CT SEE Regional General Manager Thanasis Markakis discusses about the company’s drivers for success and its strategy to safeguard the future.

32 Clearing up energy war in Europe The energy war triggered by Russia has brought on Europe’s map new gas pipeline projects, initiated by Russia, but also by the EU. On the one hand, Russia is trying to keep the EU captive, and on the other hand the EU counteracts, through its projects, trying to reduce this reliance and diversify its supply sources. energyindustryreview.com

77 Romania asks for a new respite from the EC on coal-fired power plants

Romania, gateway for Kazakh energy resources to the EU market A number of events took place during 24-28 September in Kazakhstan, in Astana and Almaty, such as the RomaniaKazakhstan Joint Commission for Economic and TechnicalScientific Cooperation, the Kazakhstan-Romania Business Forum, the International Oil and Gas Conference and Exhibition KIOGE 2018 and the Business Forum dedicated to the oil and gas sector. Romania has reiterated on this occasion its interest in capitalizing on the cooperation opportunities in the energy field between the two states.

New draft Energy Strategy of Romania for 2018-2030

The Government of Romania has recently published a new draft Energy Strategy of Romania for 2018-2030, towards 2050, which estimates the total investments necessary in the national energy sector over the next 15 years at minimum EUR 15bn. The document includes a list with 4 projects of new production capacities considered of national strategic importance.

Hydrogen-based technologies for sustainable energy supply

In the second half of September, several EU Member States signed an important document regarding environmental protection. It’s about the hydrogen initiative, a proposal of Austria, also signed by Romania, through Energy Minister Anton Anton, at the Informal Energy Council and the High-Level Conference ‘Charge for Change: Innovative Technologies for Energy-Intensive Industries’, carried out during 17-19 September in Linz, Austria.

Attending the Informal Energy Council in Linz, Austria, during 17-19 September, Energy Minister Anton Anton has requested an exemption for power plants used as backup units from European requirements regarding the amount of pollutant emissions released into the atmosphere.

Romanian young scientists won the 2nd prize at EUCYS

450 Million 1TB hard disks, stored in 1g of DNA, all at a maintenance rate of around EUR 10 a year - is the digital storage proposal by Alexandru Liviu Bratosin, Petru Molla, and Mihnea Vlad Bojian, students at Lycée Français Anna de Noailles, Bucharest.

Limiting emissions: Carbon tax or cap and trade? The two methods of pricing carbon have been the subject of debate for a couple of years as they also aim at promoting low-carbon fuels, energy efficiency and renewables. Which is the best solution? 5

NEWS

WORLD’S FIRST HYDROGEN-POWERED TRAIN READY FOR SERIAL PRODUCTION

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t was a world premiere being celebrated by Alstom, one of Europe’s largest railway manufacturers, the Minister of Economy and Transport of Lower Saxony, the Federal Ministry of Transport and the transport authorities of Landesnahverkehrsgesellschaft Niedersachsen (LNVG) and Eisenbahnen und Verkehrsbetriebe ElbeWeser (EVB) in Bremervörde on Sunday 16 September. Before the many guests and members of the press from Germany and abroad, the world’s first hydrogen fuel cell train rolled into the station. The Coradia iLint, built by Alstom in Salzgitter, Germany, is equipped with fuel cells which convert hydrogen and oxygen into electricity, thus eliminating pollutant emissions related to propulsion. From 17 September onwards, two such trains will enter commercial service according to a fixed timetable in Lower Saxony. For the time being, it is travellers in EVB’s Elbe-Weser network who can look forward to a world-first journey on the low-noise, zero-emission trains that reach up to 140 km/h. On behalf of LNVG, the

Coradia iLint trains will be operated on nearly 100km of line running between Cuxhaven, Bremerhaven, Bremervörde and Buxtehude, replacing EVB’s existing diesel fleet. The new trains will be fuelled at a mobile hydrogen filling station. The gaseous hydrogen will be pumped into the trains from a 40-foothigh steel container next to the tracks at Bremervörde station. With one tank, they can run throughout the network the whole day, thanks to a total autonomy of 1000 km. A stationary filling station on EVB premises is scheduled to go into operation in 2021, when Alstom will deliver a further 14 Coradia iLint trains to LNVG. “This is a revolution for Alstom and for the future of mobility. The world’s first hydrogen fuel cell train is entering passenger service and is ready for serial production,” emphasises Henri Poupart-Lafarge, Chairman and CEO of Alstom. “The Coradia iLint heralds a new era in emissionfree rail transport. It is an innovation that results from French-German teamwork and exemplifies successful cross-border cooperation.”

Scientific Board: President: Prof. Niculae Napoleon Antonescu PhD Members: Prof. Lazar Avram PhD; Assoc. Prof. Marius Stan; Prof. Ionut Purica PhD; Alexandru Patruti PhD Journalists: Adrian Stoica, Vlad-Adrian Iancu, Daniel Lazar Digital Manager: Justin Iancu

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NEWS

ARKONA OFFSHORE WINDFARM IS ONLINE

he Arkona offshore wind farm in the German part of the Baltic Sea has supplied the first electricity into the German electricity grid. The 385 MW project, operated by E.ON in partnership with Equinor, can when completed, deliver power to approximately 400.000 German households. After the first of 60 turbines now being online, further wind turbines will be launched into operation. “First power in the Arkona wind project

represents a milestone in the market of renewable energy and we are proud to participate together with E.ON and the transmission system operator 50Hertz. Arkona is Equinor’s fourth wind farm coming online in Europe since 2012 and supplements the delivery of energy to Germany. It is yet another important contribution to Equinor’s ambitious strategy, where the company is developing from a focused oil and gas company to a broad energy major, building on our extensive offshore experience and more than 40 years as one of the largest energy

providers in Europe,” says Equinor’s head of New Energy Development and chairman of the Arkona steering committee, Pål Coldevin. The Arkona project is located 35 kilometers northeast of the island of Rügen, Germany. The wind farm will have an output of 385 megawatts (MW) and supply around 400,000 households with renewable energy. The investment is 1.2 billion euros. Arkona saves up to 1.2 million tons of CO2 annually compared to conventionally generated electricity.

CONTRACTS WORTH APPROX. EUR 1.5BN FOR ROMANIAN SERVICE PROVIDERS RELATED TO CERNAVODA UNITS 3 AND 4

he potential participation of Romania’s nuclear industry to the completion of Cernavoda Units 3 and 4 project, with goods and services, is valued at around EUR 1-1.6bn, which would account for 25-40% of the total value of the Engineering, Procurement, Construction and Commissioning (EPCC) contract, according to the results of a specialized study conducted by the Romanian Atomic Forum (ROMATOM). Also, the study on the Capability of the Romanian Nuclear Industry to participate in the Project of Units 3 and 4 from Cernavoda NPP estimates that the domestic industry can ensure a maximum number of 19,000 jobs dedicated to the completion of the Project of Units 3 and 4 (11,000 existing jobs plus 8,000 potential jobs that can be created, subject 8

to receiving orders). The study was conducted during April-August 2018, on a number of 42 companies, with a total turnover of RON 2.73bn (around EUR 590mln) and around 11,000 employees: 11 companies specializing in the provision of project management, engineering, design, research, consultancy services; 21 companies specializing in the manufacturing of equipment and components, as well as other activities; 10 companies specializing in construction and assembly, commissioning activities and other related activities. In accordance with the Strategy for continuing the project of Units 3 and 4 at Cernavoda NPP, approved by the Government of Romania, it is considered to promote the Romanian nuclear industry with an indicative volume of 30%, but no less than 20% of the value

of works, procurement of equipment, materials and engineering. Maintenance and development of a strong horizontal industry, a concern that other Member States of the European Union also have, is a guarantee for national security and reconnection of an important part of the national industry to the cutting edge of the production of equipment and the delivery of services intended for nuclear power plants, which will lead to the raising and strengthening of the technical level of the Romanian industry, while contributing to an increased competitiveness on foreign markets. ROMATOM believes that the implementation of the Project of Units 3 and 4 will lead to a revival of direct investments in Romanian companies interested to participate in its completion, for the upgrade and/or renewal of production equipment. energyindustryreview.com

NEWS

CLIMEWORKS LAUNCHES NEW DAC-3 PLANT IN ITALY

wiss-based company Climeworks has launched a further Direct Air Capture plant (DAC-3), this time in Italy. Every year the DAC-3 facility will filter up to 150 tons of CO2 directly from ambient air. The new plant is part of the Horizon 2020 research project STORE&GO, which demonstrates that Power-to-Gas technologies can be used for large-volume energy storage. In addition to the demonstration plant in Italy, further STORE&GO pilots are being realized in Germany and Switzerland. The DAC plant using CO2 from ambient air for methanation as part of the STORE&GO project was installed in July and now starts operation. It consists of three DAC collectors using the latest Climeworks’ technology and requires less energy than the DAC-18 plant in Hinwil, Switzerland. Making use of excess on-site photovoltaic energy, an

alkaline electrolizer (200 kilowatt) locally generates 240 cubic meters of renewable hydrogen per hour. The captured CO2 and renewable hydrogen generated on-site are catalytically methanated (Power-to-Gas) in modular reactors by French company ATMOSTAT. Waste heat retrieved from the reactors’ cooling circuits is extracted for the operation of Climeworks’ DAC-3 facility. The methane is then liquefied and used to fuel natural gas lorries. The primary objective of the STORE&GO research project is to demonstrate the viability of large-volume energy storage through Power-to-Gas technology in real-life applications. To this end the technology will be operated for 4,000 hours in the next 17 months. So far, large-volume energy storage is scarce in Europe. But the European Union plans to use 43% renewable energy by 2030 and 50% by 2050. 9

NEWS

HUNEDOARA ENERGY COMPLEX TO PROVIDE SYSTEM SERVICES AT A POWER OF 400MW UNTIL 2020

n 19 September, the Chamber of Deputies of Romania adopted an Emergency Ordinance under which Hunedoara Energy Complex will provide system services at a power of 400MW, until 2020. The draft legislative act proposes the approval of the following measures: the obligation for the energy company Hunedoara to provide technological system services to the Transmission and System Operator at an electrical power of at least 400MW, subject to regulations issued by the National Regulatory

Authority for Energy (ANRE), in order to maintain the safety of the National Power System. According to the Government, the Emergency Ordinance is necessary to ensure the stability of the National Power System (NPS) and safety of energy supply to population and industrial consumers. The adopted legislation also provides that Transelectrica will establish on a monthly basis the capacity required for these services. “Hunedoara Energy Complex is one of the economic operators in the utility sector in the portfolio of the Ministry of Energy and

one of the electricity producers that, with an installed capacity of 1,225MW, ensures around 5% of total national electricity production, being the largest electricity producer in the north-west of Romania. The necessity to ensure the security of electricity supply produced by using energy coal in Jiu Valley and from other sources in the country, as well as to increase the adequacy of the National Power System (NPS) resulted from the study conducted by the transmission and system operator CNTEE Transelectrica SA, study named Operational planning of NPS functioning in the winter of 2016-2017,” the Government also mentions.

ENERGY CHARTER LAUNCHES ITS FIRST ENERGY INVESTMENT RISK ASSESSMENT

n 3 October Energy Charter Secretariat launched, in Brussels, the Energy Investment Risk Assessment publication - EIRA 2018. The main goal of EIRA publication is to help Governments improve investment conditions for foreign investors in the energy sector. It examines and addresses risks related to unpredictable changes, discrimination between foreign and domestic investors and breach of State obligations. EIRA aims to assist governments in recognizing potential gaps and to provide opportunities to learn and stimulate reforms that could mitigate these risks and consolidate investor confidence. 10

Together with the Energy Charter Secretary-General Dr. Urban Rusnak and EC Vice-President for Energy Maroš Šefčovič, the launch of EIRA 2018 publication was also attended by IulianRobert Tudorache, State Secretary in the Ministry of Energy and President of Energy Charter Conference. “EIRA publication was a priority of the Chairmanship of Romania of the Energy Charter Conference and we are proud that the first public edition is launched during the Chairmanship of our country. 30 countries participated in the preparation of this edition, including Romania, and we want an increasing number of countries to participate in this assessment process in the future. As President of the Energy Conference Charter,

I hope that the Energy Charter Secretariat will continue to develop this publication, to reach the goals of the Energy Charter Treaty of ensuring energy supply security, access to energy for all, increasing consumption of clean energy and further promoting energy efficiency,” State Secretary Iulian-Robert Tudorache stated during his intervention. Maroš Šefčovič welcomed, during his intervention, particularly the joint efforts of the Energy Charter Secretariat with the current Chairmanship of Romania to modernize the Energy Charter Treaty: “I encourage you to continue and complete this very important process, with implications on energy investments in Europe and around the world! This should remain your no. 1 priority!” energyindustryreview.com

NEWS

GAZPROM AND SERBIA DEVELOPING EFFECTIVE COOPERATION IN GAS INDUSTRY

orking meetings of Alexey Miller, Chairman of the Gazprom Management Committee, with Ivica Dacic, First Deputy Prime Minister and Minister of Foreign Affairs of the Republic of Serbia, and Aleksandar Antic, Minister of Mining and Energy of the Republic of Serbia, took place on October 3 in Moscow as part of the International Forum ‘Russian Energy Week.’ The parties pointed to the high efficiency of the bilateral cooperation in the gas industry, emphasizing, inter alia, the reliability of gas supplies, the amount of which had increased by 41 per cent from 2014 to 2017. In the first nine months of 2018, Gazprom had exported

1.5 billion cubic meters of gas to Serbia, a 2.9 per cent rise against the same period of 2017. Special attention was paid to the expansion of the Serbian gas transmission system for further strengthening the reliability of gas deliveries in the region. The parties also addressed the current and future cooperation in underground gas storage, power generation, science and technology. Gazprom’s main partner in Serbia is Srbijagas, a state-owned company focused on gas transportation, storage and distribution in Serbia. In 2017, Gazprom supplied Serbia with 2.1 billion cubic meters of gas, a 21.2 per cent rise from 2016 (1.75 billion cubic meters). On December 19, 2017,

the Addendum was signed to the longterm contract between Gazprom Export, Yugorosgaz and Srbijagas for natural gas deliveries to Serbia. In accordance with the document, the annual amount of supplies was increased from 1.5 billion cubic meters to 2 billion cubic meters starting from 2018. On June 27, 2017, Gazprom and the Serbian Ministry of Mining and Energy signed the roadmap providing for a number of measures to implement a plan aimed at expanding the Serbian gas transmission system. On June 3, 2017, Gazprom and Srbijagas inked the Memorandum of Understanding for the expansion of the Banatski Dvor UGS facility.

NUCLEAR POWER’S ROLE IN MITIGATING CLIMATE CHANGE

uclear power can make a vital contribution to meeting climate change targets while delivering the increasingly large quantities of electricity needed for global economic development, according to a new International Atomic Energy Agency (IAEA) report. Climate Change and Nuclear Power 2018, recently published, has been updated from the last report released in 2016 to include the latest scientific information and analyses on the link between energy production and climate change. With the report, the IAEA hopes to make a useful contribution to the deliberations of policy makers participating in the activities of forums 12

including the United Nations Framework Convention on Climate Change, which provides the international legal framework for addressing climate change. The Paris Agreement to the Convention seeks to limit the increase in global average temperatures to well below 2°C relative to preindustrial levels by encouraging the use of low-carbon energy sources to reduce GHG emissions. Some 70% of the world’s electricity currently comes from burning fossil fuels, but to meet climate goals by 2050, 80% of electricity will need to be low carbon, according to the International Energy Agency. “This scenario requires a significant scaling up of all clean, low-carbon technologies such

as nuclear power, with electricity demand expected to rise sharply in the coming years as countries need more power for development,” said IAEA Deputy Director General Mikhail Chudakov, Head of the Department of Nuclear Energy. Nuclear power currently generates almost 11% of the world’s electricity, which amounts to one-third of the globe’s low-carbon electricity. However, according to the new IAEA report, global electricity demand is expected to almost double by 2050. Yet the future contribution of nuclear power and other low-carbon sources to the world’s energy mix will depend on a variety of factors and drivers, including yet to be defined rules for implementing the Paris Agreement. energyindustryreview.com

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President, NAMR

President, ANRE

Secretary of State, ROMANIAN MINISTRY OF ENERGY

ADRIAN CONSTANTIN VOLINTIRU

VALENTIN

COSMIN GHITA

SORIN BOZA

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Director General, ROMGAZ

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President & General Executive Manager, COMPLEXUL ENERGETIC OLTENIA

SORIN ELISEI

SANIYA MELNICENCO

NICUSOR NACU

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NEWS

FIRST PUBLIC CNG POWER STATION IN BUCHAREST

enisson Energy, company member of Antares Group, and NGVA Romania Association officially announce the start of works to build the first public CNG (Compressed Natural Gas) power station, within the series of the 9 stations to be built within the CNG Romania Project. The station will be built in Kika Militari area, near A1 Motorway, on Pitesti-Bucharest direction, 700m from the Hornbach Militari roundabout, with an easy access from both ways of the Capital Ring Road and A1 Motorway, as

well as from the Bucharest entrance/exit direction. The location of the station is in line with the project’s strategy to serve both transit on pan-European corridors and the adjacent urban agglomerations. The station will be the first of the 9 of CNG Romania project planned to be built in Bucharest, Arad, Timisoara, Deva, Pitesti, Constanta, Craiova, DrobetaTurnu Severin and Sibiu, estimating that they will be fully operational by the end of 2019. The project carried out by Denisson Energy and Natural Gas for Vehicles Association - NGVA Romania within the

Connecting Europe Facility (CEF) aims at the implementation of the first network of CNG filling stations in Romania along pan-European corridors. Worth EUR 5.2mln, the project benefits from co-financing of 85% from the European Union and aims, inter alia, at decarbonization and improvement of mobility in Europe, by building the first network of CNG stations in Romania, on the central axis the main TEN-T road transport corridors linking the Center and the Western European Union to the South West and the Black Sea, Constanta being the end point of the corridor.

ENSCO AND ROWAN TO COMBINE IN DEAL WITH ENTERPRISE VALUE OF USD 12BN

nsco and Rowan Companies announced they have agreed to combine in an all-stock deal with an enterprise value of USD 12 billion. The combined company expects to realize annual pretax expense synergies of approximately USD 150 million, with more than 75% of targeted synergies expected to be realized within one year of closing. As a result, the transaction is projected to be accretive to cash flow per share in 2020 following an anticipated closing in the first half of 2019. “We are excited to reach an agreement to combine our well-respected organizations, enabling both Rowan and Ensco shareholders to participate in the substantial value creation opportunities of a larger, more technologically-advanced and diverse offshore 16

drilling company. By merging our highquality rig fleets and infrastructure covering the world’s most prolific offshore basins, we increase our scale while maintaining a shared focus on high-specification assets that will include ultra-deepwater drillships and versatile semisubmersibles, as well as harsh environment and modern jack-ups. Rowan shareholders also benefit from the addition of significant backlog and substantial scale in ultra-deepwater operations,” Rowan President and Chief Executive Officer Tom Burke, who will serve as President and Chief Executive Officer of the combined company, said. “The combination of Ensco and Rowan will create an industry leader in offshore drilling across all water depths, with significant advantages to capitalize on future

opportunities and better serve our customers. Ensco and Rowan share a common culture built around safety and operational excellence, innovation, technical expertise and customer satisfaction. Through this combination, Ensco shareholders will uniquely benefit from Rowan’s strategic joint venture with Saudi Aramco, ARO Drilling, while all stakeholders will share in meaningful cost savings and even greater upside to improving market conditions as the industry recovery continues gaining momentum,” Ensco President and Chief Executive Officer Carl Trowell, who will serve as Executive Chairman of the combined company, mentioned. Based on the closing price of each company’s shares on 5 October 2018, the estimated enterprise value of the combined company is USD 12.0 billion. energyindustryreview.com

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OPINION

Public-Private Partnerships

A viable solution? Daniel Vlasceanu – Partner & Raluca Teodorescu – Associate Lawyer, Vlasceanu, Ene & Partners

ince one year ago, there was S an obvious intention to revive the concept of public private partnership (‘PPP’); as such, the Romanian Government adopted on 18 May 2018 the Emergency Ordinance no 39 on Public-Private Partnership (‘GEO 39/2018’). Romania is acquainted with the PPP concept for more than 15 years: the first normative act expressly regulating PPPs was the Emergency Ordinance no 16/2002. Subsequently, within the context of Romania’s integration in the EU, PPPs were replaced by the public procurement and concession framework when the first normative act (i.e. GEO no 34/2006) setting the foundation of the Romanian legislation on public procurement was enacted. In 2010, an attempt to bring back PPPs was made when Law no 178/2010 was approved, but no PPP was developed under said law and, after several observations from the European Commission, it was repealed by Law no 100/2016 on concessions (which forms part of the larger package of normative acts currently governing the public procurement). Soon afterwards, 18

Law no 233/2016 on PPP followed, but it was highly criticized and as such, repealed by the recent GEO 39/2018. The Romanian Government intends to initiate public investment projects with a significant impact on the economy through PPPs: ambitious projects (e.g. three highways, several hospitals, a national blood bank etc.) have been included on the list of strategic investment projects to be developed as PPPs (and approved under Government Decision no 357 dated 24 May 2018). The initial list was supplemented on 27 August 2018 by adding several projects out of which we highlight the Tarnita – Lapustesti hydropower plant and the hydrotechnical complex Turnu Magurele – Nicopole along the Danube river (both being considered as key strategic investments under the draft 2018 – 2030 Energy Strategy released for public consultation on 20 September 2018).

PPPS UNDER THE NEW ENACTMENT The concept of a PPP envisages projects of such a large magnitude that

neither of the partners can achieve on their own or they could, but with disproportionate effort. Under a PPP, the partners aim to achieve or rehabilitate an asset belonging to the public partner and/or the operation of a public service. The PPPs are a form of a joint venture where always one of the partners is a public entity that seeks to attract one/ more private entity/ies to invest its/ their resources (i.e. funds, know-how/ expertise, human resources etc.) into a long-term project that will ultimately create a benefit to the large public.

Types of PPPs A PPP involves three parties: the public entity, the private entity and a ‘project company’. Depending on how the control is exercised over said project company, there are two types of PPPs: • contractual PPPs, where the project company is owned entirely by the private partner; • institutional PPPs, where the project company is owned by both the private partner and the public partner. energyindustryreview.com

OPINION

Depending on who exercises the control over the project company, a number of implications arise on the decision making mechanism, the set-up and the overall functioning of the project company. As such, we salute the revival of the contractual PPP as we see it as one of the benefits brought by the new GEO 38/2018.

The ‘making’ and functioning of a PPP PPP projects are initiated by the public partner: a feasibility study is prepared and approved by the Government or county/ local councils. Then, a public tendering process (under the public procurement legal framework) is performed; at the end of such process, a contract is awarded to the selected private investor(s). As per Article 17 para 3 of GEO 39/2018, following execution, any subsequent amendment to the awarded contract must be performed only by approval of the Government or of the Local/County Council (i.e. ultimate beneficiary of the project). Given the long duration of the project, it is normal that the legislator referred to subsequent contractual changes; however, even if not expressly provided for, we believe that strict observance of the public procurement rules (applicable to contract changes) must be considered (in other words this provision is not to be considered as a unilateral right of amendment in favour of the public beneficiary). A PPP is financed entirely/mostly by private funding; the public partner may participate with public funds, but only up to a maximum threshold of 25%. The private investor recovers its investment through a tariff (e.g. road usage tariff, in case of a highway) and/or payment obligations of the public partner.

Duration A PPP’s duration is linked to the depreciation period of the investment. The minimum duration is of 5 years, but in any case, it must cover an amount

of time allowing the private partner to recover its investments and register a reasonable profit [Article 3 letter a) under GEO 39/2018].

FINAL REMARKS Given their very essence, the PPPs entail high risks and important resources. Only private companies of reasonably substantial size participate in PPPs, but even so the stronger contractual partner remains the public one. As such, the PPP interested investors will always seek stability under their contractual arrangements and predictable environments. A fundamental importance resides with the preliminary due diligence as several ‘sensitive’ questions must be clearly answered before going public with a PPP project: - who is going to ultimately bear the cost and where will such cost be reflected (i.e. on final consumer/subsidies/ additional tax etc)? - is such cost affordable? - what are the main risks and who will bear them? - is the project economic; does it allow within a given time period for a reasonable return on investment? Etc.1 The Romanian economy witnessed in the last almost three decades a severe lack of infrastructure projects. As such, any type of concept allowing for private partners to come in and facilitate such infrastructure projects is welcomed. If Romania manages to create a climate of confidence (especially considering the geo-political environment in the region) and proper incentives are offered for each project, PPPs may be a feasible solution for implementing costly projects so long-awaited. From a different angle, it’s worth noting that the Romanian administrative and business environment is not (anymore) familiar with PPPs and, as such, it remains to be seen how effective the practical implementation will turn out.

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1 An excellent analysis on PPPs (financed with EU support) was released (Q1 2018) by the European Court of Auditors, available at https://www.eca.europa.eu/Lists/ECADocuments/SR18_09/SR_PPP_EN.pdf Str. Morii, Nr. 7A, Mogosoaia, Jud. Ilfov | Tel.: +40 31 8244 600 | 19 Fax: +40 31 8244 690 | office@eneria.ro | www.eneria.ro

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56 Years of renewable energy progress in Italy Ioan-Corneliu Dinu – Scientific Counsellor at Romanian National Committee of the World Energy Council

lectricity generation from renewable sources is E known and has a long tradition. In Italy for example energy production from such sources was adopted as early as 1962. Thus, we can find in the National Energy Balance Sheet (NEBS) of that period that 2/3 of the energy produced was already based on renewable sources in the generic version of the ‘renewable’ concept. Later, over the next 30-40 years, the relaunching of energy production methods and of renewable sources has focused producers’ attention on the sources used for obtaining electricity rather than thermal energy. Scientific research has been channelled in this direction, and investment activity has developed on the same economic and industrial level. The main motivation may be related to tradition, past, knowing that in Italy there is a so-called structural shortage of electricity production. We recall that in Italy electricity was understood as a versatile, noble form - we could say - of energy in general. Its production from renewable sources, mainly solar and wind power, has been permanently encouraged and supported. Since the ‘80s, in Italy, the electricity generation procedure, through the photovoltaic method, but also by transforming the wind power, has had a strong industrial resonance, being even a necessity of national representation. Starting with the ‘90s, the abundance of oil on 20

international markets and its very affordable price could have hampered the investment development in the field of energy production from renewable sources. This anomaly, to say so, has not happened, the energy production at industrial level in each branch has continued its development, without interfering with the global economic-mercantile structural aspects. State aids, contributions through support schemes received by entrepreneurs that became electricity producers, generous aids at certain times have had a powerful effect in building and commissioning installations based on important components, such as photovoltaic panels. Photovoltaic installations of different installed powers have been built throughout Italy with a total of 16.5 GW, action which lasted until the end of 2012. To these were added the wind farms built in the windy areas, the areas from the Southern Apennines, with a total installed power of 8.0 GW. Aid schemes for the recovery of investments were covered by invoices to the common consumers, the economic policy component of the support measures being continuously present on the agenda of the political parties’ talks, both from the ruling and the opposition parties. The inability to monitor the investment dynamics in these types of photovoltaic and wind power plants has led to the need to slow down and even break the expansion of energy production by using renewable resources by drastically reducing the amount of state aids. In some energyindustryreview.com

OPINION

situations, even the formulation of tax penalties appeared. In Italy, in 2012, year considered the peak of energy production, renewable sources generated 92 TWh, practically 1/3 of the total national energy output. Also, in 2012, the Government of Italy made the decision to cease state aids and hence the lack of financial coverage of the investor support schemes. Next, there was a fall in the price of electricity, due to the global economic crisis, the stagnation of energy consumption in industry, the excess of thermal power plants, the relocation of various industries, heavy and not only etc. On the other hand, the evolution of programmatic mechanisms and instruments in order to obtain a maximum yield with minimal losses has even determined the definition of the new economic concept - energy efficiency. It has also led to integration into the territory of multi-choice local sources, some concentrated on self-consumption within the limits of smart grids with distributed accumulation. All this, starting from the

European principles relating to surfaces that transfer at large distances the energy produced at high consumption times using the useful parameters of distribution concentrated for long periods. As manoeuvring technologies, we could mention as predominant the installation of photovoltaic panels as a method of direct transformation of solar energy into electricity without the use of any form of fuel. We take into account the three well-known technological degrees: stand-alone installations not connected to distribution networks, producing locally; grid connected installations; hybrid (storage) installations arising from the use of two of the technologies previously mentioned. Panels are of the known types, with mono-crystalline silicon, polycrystalline silicon, thin film and concentrated. Obviously, we also recall the technology of organic cell panels where the photovoltaic part is based on organic carbon compounds, panels without any environmental impact, and industrial and economic goal customary in current approaches.

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

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Industrial Internet of Things what, how and why? There’s a rather new concept floating around and if you had a tough time understanding the Internet, then the Internet of Things might pose an even bigger challenge. Also, no final definition of the concept has seen the light of day yet, even though people have been talking about it for quite some time. Having access to the world through a device is yesterday’s news, but what if this device could connect to another device and ‘talk’ back and forth? That is gathering, working with and finally exchanging information even without active human intervention. Does this sound like a good idea for industry or/ and everyday life? Connectivity, all around connectivity that is, seems to be what the future has in store for us. Vlad-Adrian Iancu

he final definition of IoT will not be given by T what it can do, but by what it can be made to do. Namely, connecting a couple of machines in a network to the internet is no big deal with today’s technology; the goal is to have them achieve something as a result of this interconnectivity. Anything or indeed everything could be sent through this channel, what matters is what we receive back. From tracking the whereabouts of your cat to automatizing complex industrial processes, all could be done from this platform. As long as your device is connected to the internet and its configuration permits it to gather, send and process data, we could say that it is a part of the IoT. All of this leads of course to a digital transformation. The field of interest for us is, as always, the industrial one. Bosch and SAS for example describe the IoT as more or less a system based on devices (be they wearable 22

or big production machines) that are fitted with sensors that can gather data and intelligently act on it in order to produce new business models, new knowledge and finally as a result: new services. Think about the Industrial IoT as something less personal, more like large scale implications. The sectors that it usually covers are manufacturing, transportation, oil and gas, energy/utilities and many others which deal with big business solutions. It all started with the focus on optimization and automation and it’s expected that the whole of the Industrial IoT market will reach USD 123.89 billion by 2021. Imagine this is a mix of machines, computers and human operators all working together with data in order to transform their business into something better. The biggest industry to be impacted by this trend is manufacturing, also the biggest spender on software, energyindustryreview.com

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hardware, services and connectivity. On second place we have the transportation sector, largely investing in advanced communication and monitoring systems. Last but not least, the energy and utilities sector focuses on oil and gas exploration and smart grid which is the key in supply and network transmission/ distribution. Apart from the big three, it’s worth noting the application of Industrial IoT in healthcare, robotics and mining. Since we’re talking about internet and industry, another concept that hits home is Industry 4.0. Regarded as the 4th major industrial revolution it really is about the aforementioned digital transformation, a decided shift towards cyber-physical systems. The real goal of this new concept is finally

customization, presenting every industry with means to personalize production, servicing and producer/ consumer interaction, apart from the already mentioned cost efficiency and innovative services. In this aspect the IoT serves as the binding interface between all these systems: cloud computing, big data, artificial intelligence, data communication, programmable logic controllers and many others. But is everybody on board with this new era, or an even better question: why wouldn’t they be? Apparently, the reason is a lack of skills. Seeing as the digital revolution is already here, maybe it’s time to invest in better training strategies or even look outside the box, as strategic partnerships could provide access to all necessary know how. Another concern is that of security. In a free for all network you should be right to worry about who may have access to your data.

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Pumping up the industry Energy-efficient compressed air solutions from Atlas Copco Atlas Copco Group is a world-leading provider of sustainable productivity solutions - innovative compressors, vacuum solutions and air treatment systems, construction equipment, power tools and assembly systems. We sat down with Thanasis Markakis, CT SEE Regional General Manager Atlas Copco, to discuss the companyâ&#x20AC;&#x2122;s drivers for success and its strategy to safeguard the future. He talks about main challenges of running a large service organization, innovative products launched this year, solutions for energy savings & recovery and reduction of CO2 emissions.

INTERVIEW

Dear Mr. Thanasis Markakis, would you be so kind as to introduce yourself to our readers? Tell us a bit about your career… how did you first start working in your field? When did you join Atlas Copco? To start with I want to thank you for giving me the opportunity to present Atlas Copco and what we do worldwide as well as in South East Europe and Romania to your readers. I have studied Mechanical Engineering in the National Technical University of Athens and Later on as Marketing and Finance came stronger in my professional life I followed a postgraduate course in Decision Sciences in Athens University of Economics and Business. My first professional steps were in Construction and Mining. The 90s was a period with lots of construction in Greece, main highways, the Athens Metro, the Athens new airport Eleftherios Venizelos and lot of other projects were transforming the country. In 2002 I started to work in Atlas Copco Hellas as Business Line Manager for Compressor Technique responsible for Greece, Israel, Cyprus and Albania. In 2011 I moved in the Aftermarket part of the business working for Compressor Technique Service and in 2013 I took under my responsibility all the countries of South East Europe region including Romania, Serbia and Bulgaria. Running a large Service organization present a lot of challenges with most important to maintain high customer satisfaction and operation excellence. The job is not easy but the results are rewarding. From May 2018 I have a new role as Regional General Manager South East Europe Customer Center for Compressor Technique taking over from John Hort who was the architect of the Regional structure of Atlas Copco in South East Europe. My mission now is to continue offering top class products and services to our customers using in the best way 26

the synergies that a strong regional structure is offering. Atlas Copco’s global expertise is in compressors, vacuum solutions and air treatment systems, construction equipment, power tools and assembly systems. What is your primary business focus? Atlas Copco was founded in 1873 in Stockholm Sweden as a manufacturer of products for railways. Today our company is an industry benchmark with world leading positions in compressors, tools and many other product areas. Atlas Copco recently split in two separate companies. Epiroc that took over the mining equipment and operates in the Mining Sector and the other is Atlas Copco that undertook the industrial equipment and focus of course in the Industrial sector. Therefore, we could say that this split was to increase customer focus. Atlas Copco today contains four business areas, Compressor Technique, Industrial Technique, Vacuum Technique and Power Technique. The company has a turnover that reaches EUR 9bn with 34,000 employees in 90 different countries while the products are present in 180 countries around the world. The South East Europe Compressor Technique Customer Center employs 140 people in 5 countries including Romania, Greece, Serbia, Bulgaria and Cyprus. Our people together with a network of distributors are mainly working in the industrial sector offering Atlas Copco products of both Compressor and Vacuum Technique.

Compressor Technique provides market-leading, highly energyefficient industrial compressors, gas and process compressors and expanders, air and gas treatment equipment and air management systems. Also, Nitrogen and Oxygen generators. Customer segments that benefit from our innovative solutions include the manufacturing, oil and gas and process industries.

What does Atlas Copco’s Compressor Technique business area include? Compressor Technique provides market-leading, highly energy-efficient industrial compressors, gas and process compressors and expanders, air and gas treatment equipment and air management systems. Also, Nitrogen energyindustryreview.com

INTERVIEW

and Oxygen generators. Customer segments that benefit from our innovative solutions include the manufacturing, oil and gas and process industries. Vacuum Technique started rather more recently, around 5 years ago with the acquisition of Edwards from Atlas Copco Group. VT provides vacuum products, exhaust management systems, valves and related products in Semiconductor industry, scientific applications, chemical process industry, food packaging, paper handling etc. You lead the Marketing, Sales and Operation teams of Atlas Copco Compressor Technique Service in Greece,

Romania, Serbia, Bulgaria, Cyprus and Israel. Whatâ&#x20AC;&#x2122;s your view on the energy market in Romania and on regional level? Energy sector has a leading role in all the countries of South East Europe. Romania is the larger oil and gas producer in the region for many years and its position is getting stronger as new oil and gas deposits are discovered in Black Sea. Israel and Cyprus have entered dynamically the last ten years in the natural gas production world map with promising prospective. In all we also see an effort to switch towards renewable energies and natural gas.

INTERVIEW

energyindustryreview.com

INTERVIEW

Atlas Copco today contains four business areas, Compressor Technique, Industrial Technique, Vacuum Technique and Power Technique. The company has a turnover that reaches EUR 9bn with 34,000 employees in 90 different countries while the products are present in 180 countries around the world. The South East Europe Compressor Technique Customer Center employs 140 people in 5 countries including Romania, Greece, Serbia, Bulgaria and Cyprus.

Atlas Copco is present in all the different industries of the Energy Sector wherever compressed air is need from offshore platforms, to refineries, thermo, hydro or nuclear power plants providing products and services that meet the high standards of safety and reliability that Energy sector requires. The Energy Sector offers to Atlas Copco challenges that helps us to improve our processes and services every day. It helps us to maintain our leading role in the industry. What factors do you consider to have a major contribution in increasing the efficiency and productivity of the activity in the area that you coordinate? Before anything else our people, the Atlas Copco employees with their professionalism and commitment give us the privilege to be considered first in mind and first in choice suppliers for our customers. We operate in the field with 49 mobile service units and more than 40 sales engineers, product specialists and energy consultants. All these people are on the road every day and caring about these people on their training and daily support is the main driver of our company’s efficiency and success. At the same time our group is offering us a large variety of tools and systems that help us to work in the most efficient and productive way. Especially in service where the product that we offer to our customers is not just a state-of-the-art machine manufactured in Belgium but the skills, the knowledge and the effort of our people working in the same country with our customers. Atlas Copco reported record-high order volumes, revenues and operating profit for Q2. What were the innovative products dedicated to the energy sector launched in this period of time? What are their benefits? After the split Atlas Copco is growing in an accelerating paste. Innovative products launched this year include: • A new oil-free rotary screw compressor that delivers up to 35% energy savings compared to similar products; • A new range of dry screw vacuum pumps with excellent contaminant

• •

handling capabilities; A test bench with new joint simulating technology for best possible torque and angle testing accuracy; A lightweight and efficient combined mobile compressor and generator minimizing the amount of equipment needed at customers’ site.

With a continued focus on energy efficiency on the market, what is Atlas Copco’s CT proposal in this regard? What are your solutions for energy savings & recovery and reduction of CO2 emissions? Compressed air is needed in almost every production site, same like electric power and it is expensive to produce. The air compressors are considered as part of the major energy consumers of a factory and therefore most of the efficiency gain exercises start often from the compressor room. At this point Atlas Copco support to obtain energy efficiency is very important and starts from the initial sales phase when we advise our customer in the selection of the proper type and size of compressor. To obtain maximum energy efficiency in compressed air production we have to optimize four compressed air production parameters that is the losses in unload operation, the pressure drop, the air leakages and the heat recovery. For all these four parameters Atlas Copco has specific products and services to offer. The unload operation is a result of the mismatch between compressor output and factory demand. The Variable Speed Drive compressor (VSD) is a product introduced in the market several years ago and is capable to follow compressed air demand fluctuations resulting in energy savings up to 35%. In many industrial sites there is a number of compressors operating in parallel. Compressor rooms with 3 or more compressors are very common. In such cases Atlas Copco provides central controllers that monitor control and optimize the operation of the compressors. Both VSD compressors and central controllers help the compressors to operate close to the pressure that is required in the production process. Just 1 bar of unnecessary over pressurization is causing 7% of energy waste. 29

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Atlas Copco is also offering Airscan audits that measure the efficiency of the compressed air production and help to determine the correct way to improve it. Finally, with our Energy Recovery units we can retrieve the heat produced during the compression process in order to use it in other applications saving fuel or electricity consumption. As a straight conclusion we can say that in almost every factory there is room for improvement in the efficiency of the compressed air production and Atlas Copco has the knowledge to assist our customers achieve their energy saving target.

What major trends do you see on the CT market evolution and what is Atlas Copcoâ&#x20AC;&#x2122;s position and strategy in this respect? Current market trends focus intensely on finding new energy efficiency solutions, energy recovery and reduction of CO2 emissions. Also, we have registered a high demand for service and monitoring of compressed air installations, as customers are more aware of the benefits these audits bring to their equipment lifecycle costs and thus, to their business in general. With the SMARTLINK platform introduced in 2013 that

energyindustryreview.com

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Our sustainable strategy together with the priorities that we set not only guarantee our company’s future but also safeguard the future for our children.

today includes more than 100,000 compressors we offer the possibility to our customers to monitor on a real time basis the operation of their equipment. As a result, we not only have the possibility to offer on time preventive maintenance but also provides a consistent follow up of the energy consumption and eventually the cost of every m3 of compressed air produced. Another strong trend that we see in the market is service outsourcing. Our customers prefere to concentrate their efforts and resources in their core business as the best way to be competitive and efficient. In this direction we engage in service contracts that allow our customers not only to focus on their business but also to put their utility room cost under control. Finally, we strive to continuously develop new sustainable products and solutions, offering better value and improved energy efficiency to our customers, keeping in mind that there are new applications for compressed air emerging on the market. What are the new steps in the product development process for Atlas Copco CT? Where are your investments heading? Do you consider acquiring complementary businesses? The Compressor Technique business area continues to invest in innovation and market presence by adding resources in research and development, marketing and sales, as well as in service. Several new products are introduced, like: a silent and performance enhancing oil-injected screw compressor range, a new range of air dryers that provide minimized pressure drop, low energy cost and low noise level, also a lowenergy consuming dryer designed to maximize operational reliability and a new large oil-free centrifugal compressor offering premium energy efficiency and easy preventive maintenance. And these are just examples of the interest Atlas Copco is showing in the product development process that is of course

continuing on a constant basis. Since the company early years, during First World War, the company was engaged in a developing strategy based on acquisitions, initially in Sweden and then, after war, internationally. The international expansion of Atlas Copco started in 1950s and continues in our days, as well. Through selected acquisitions, the business area increases its presence in targeted markets and customer segments. As an example, the acquisition of Pressure Compressores in Brazil added important piston compressor technology and strengthened the business area’s market position in South America. So yes, we are considering acquiring complementary businesses, as this is part of our strategy to keep Atlas Copco as an industry leader in energy-efficient compressed air solutions. How do you see the new energy era? How is Atlas Copco preparing for a green future? This is all part of our sustainability strategy. We approach sustainability in three ways: • We are constantly delivering innovative products and services that revolutionize the industrial landscape and set new environmental standards. • We are continually looking for ways to make our operations more sustainable. For example, how we consume natural resources or uphold strong business ethics. • We are actively working to improve social conditions in the communities we operate in through volunteer programs, partnering non-governmental organizations and financial support. Our strategy together with the priorities that we set not only guarantee our company’s future but also safeguard the future for our children. 31

OIL & GAS

Moscowâ&#x20AC;&#x2122;s iron claw and Southern Gas Corridor CLEARING UP ENERGY WAR IN EUROPE Adrian Stoica

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OIL & GAS

Russian gas consumption in Europe continues to grow year after year, the market share of giant Gazprom last year reaching 35% in the European Union (EU). In Germany, Russian gas covered even 60% of national consumption. The energy war triggered by Russia, as a counterweight of sanctions imposed by the US and the West after occupying Crimea, has brought on Europe’s map new gas pipeline projects, initiated by Russia, but also by the EU. On the one hand, Russia - by extending its energy networks, is trying to keep the EU captive, and on the other hand the EU counteracts, through its projects, trying to reduce this reliance and diversify its supply sources. POLITICAL STAKES In this energy war, the iron embrace of Moscow translates for the EU into the new Nord Stream 2 project and TurkStream gas pipeline. The political stakes of the two gas pipelines for Moscow are obvious. In the North it is intended to remove Ukraine from the gas transit route to Europe and achieve a better interconnection with Germany, the main political and economic force in the EU space. In the South, it is intended to consolidate links with Turkey and expand to the Balkan states. HOW MUCH AND FROM WHERE DOES EUROPE IMPORT GAS In 2017, Europe imported 423.4bcm, of which 189.3bcm from the Russian Federation (45%), 109.2bcm from Norway (25%), 43.3bcm from the Netherlands (just over 10%), 33bcm from Algeria (almost 8%), 10.8bcm from the UK (2.5%) and smaller quantities came from Azerbaijan, Libya and Iran. Almost a quarter of imports (95bcm) went to Germany, which imports 48.5bcm from Russia and 20bcm from the Netherlands. The second place was held by Italy (53.8bcm, 12.7%), which brought half of the amount from Russia and the rest from Algeria and Libya; the third place was held by the Netherlands, which imported 40.9bcm, of which half from Norway. In Romania’s area, the largest importers are: Poland (14.7bcm - 11.1bcm from

Russia and 3.5bcm from the rest of Europe), Slovakia (13.7bcm, entirely brought from Russia), Austria (8.6bcm, the entire amount coming from Russia), the Czech Republic (8.6bcm - 5.4bcm from Russia and the rest from Norway) and Hungary (8.6bcm, entirely brought from Russia). An amount of 65.7bcm was imported in Europe in the form of LNG, of which the largest amount came from Qatar (23.7bcm), Algeria (14.1bcm) and Nigeria (12.2bcm), Norway (4.8bcm) and the US (2.6bcm).

NORD STREAM 2 IS ADVANCING Despite the obvious opposition of the US administration against the Nord Stream 2 project, as well as of other European states, headed by Poland, this project (whose foundation was laid in 2015, when Gazprom and a group of European companies, i.e. E.ON, Wintershall, Shell, OMV and Engie, signed an agreement for its implementation) goes further. In May this year, preparatory works started in Germany for the construction of the offshore section of the gas pipeline. With a length of over 1,200 kilometres, Nord Stream 2 will double the transmission capacity of Nord Stream 1, as of next year, to 110 billion cubic meters per year, so a larger amount of Russian gas will reach Germany directly via the Baltic Sea, without transiting Ukraine. OMV, Engie, Shell, Uniper and Wintershall,

Gazprom’s partners in the construction of Nord Stream 2 gas pipeline, signed in April last year the project financing agreements. The five West-European companies have committed to grant a long-term financing of EUR 4.75bn, accounting for half of the project’s cost, each company following to contribute with an amount of up to EUR 950mln to pipeline construction. Gazprom, the sole shareholder of the project company, Nord Stream 2 AG, will cover the difference up to EUR 9.5 billion. The European Commission requested, last summer, a mandate from the EU Member States to negotiate with Russia on the Nord Stream 2 gas pipeline, to make sure that the future pipelines for Russian gas transmission to Europe complies with EU regulations. Washington has repeatedly warned that Nord Stream 2 would only increase EU’s energy reliance on Russia, although at declarative level the EU claims it wants to diminish it.

COMPANIES INVOLVED IN THE PROJECT WILL NOT BE SANCTIONED BY THE US Although it opposes this project, the US Administration will not sanction the European energy companies involved in Nord Stream 2 for their participation in the construction of the gas pipeline, US President Donald Trump has announced. US officials have repeatedly threatened, the last time as recently 33

OIL & GAS

as a month ago, the five European companies, OMV (Austria), Wintershall and Uniper (Germany), Shell (UK and the Netherlands) and Engie (France) with the imposition of sanctions if they continued to cooperate with Gazprom in the construction of the gas pipeline aimed to diversify Russian gas transit to Europe, currently dependent on the Ukrainian route. The officials of Trump Administration believe that this pipeline would undermine the energy security and general stability of Europe, providing Russia with another tool for the political constraint of European countries and of Ukraine in particular. In an interview with Russian press at the end of July, OMV CEO Rainer Seele commented on US threats regarding Nord Stream 2, saying that all arguments against it were irrational, being mainly emotional political statements. He believes that the project has many opponents who accuse the pursuit of political objectives by building this pipeline. In reality, politicians who criticize this project are those who pursue their economic objectives, OMV CEO says. “Ukraine just does not want to lose profit from gas transit and is trying to use European politicians for its own aims. Ukraine wants that Gazprom continues to use their gas transportation capacities and facilities. All those who criticize it are fearing competition, while this pipeline supports it. There is no reason for us to fear competition. Someone (Ukraine - Ed.) wants to keep these transit revenues because tariffs are not competitive. There are also those (US - Ed.) who want to sell their expensive LNG in our market, because of non-competitive prices. But our consumers in Europe need competitive gas. Because they compete with other market players who have access to cheaper gas. In order for Europe and European industry to stay competitive, and for the region itself to remain attractive for investments, we need to supply competitive, cheaper gas. Therefore, all these arguments against the pipeline construction are merely to distract attention. In reality, it is all about competitiveness,” Rainer Seele pointed out. In his opinion, on the European gas market prices will 34

continue to be determined in accordance with the principles of free market economy. “The market will decide what gas, which volumes and from where it should be imported. If gas is offered at competitive price, then LNG import is possible.”

MOSCOW RAISES THE BET WITH NORD STREAM 3 On the other hand, the implementation of this gas pipeline, whose construction is estimated at around USD 12bn, will generate for Ukraine losses estimated at approximately USD 2bn per year, representing transit taxes for gas supplied by Russia to Europe, analysts estimate. Moreover, Gazprom does not rule out the construction in the future of Nord Stream 3 gas pipeline, if Europe requests a higher gas volume, according to company’s Deputy Chairman, Alexander Medvedev. “We have proven reserves, we have transport, we are building new transport routes. If Europe expresses its needs and is ready to sign the necessary contracts, I won’t rule out the need for more new gas transportation projects such as Nord Stream 3,” Medvedev said in April this year in an interview with Rossiya 24.

TURKSTREAM INTERCONNECTOR ALMOST READY As far as the TurkStream gas pipeline is concerned, intended to supply Turkey with Russian gas via the Black Sea, it was 80% completed in late August, as Alexey Miller, Chairman of the Management Committee, Deputy Chairman of the Board of Directors - Gazprom, has stated. Worth USD 7bn, TurkStream pipeline will have a length of over 1,800km. The first line of the gas pipeline will provide the Turkish market with Russian gas, the second being intended for gas supply to countries in South and South-East Europe. The capacity of each segment is 15.75bcm of gas per year. The first gas deliveries are planned for the end of 2019. According to information provided in late August by project representatives, the route from Turkey to Europe will

be implemented by a company to be established by Botas and Gazprom. Gazprom’s investments in the construction of this gas pipeline for 2018 are planned at around RUB 182.4bn (USD 2.9bn), compared to almost RUB 93bn (USD 1.49bn) in 2017.

THE SOUTHERN GAS CORRIDOR PROJECT BYPASSES RUSSIA The Southern Gas Corridor (SGC) consists of four major projects: the development of Shah Deniz-2 field, whose reserves are estimated at 1.2 trillion cubic meters, the South Caucasus Pipeline (SCPX), which crosses Azerbaijan and Georgia, Trans Anatolian Natural Gas Pipeline (TANAP), which crosses Turkey, and Trans Adriatic Pipeline (TAP), which goes through Greece and Albania to reach southern Italy, via the Adriatic Sea. The Southern Gas Corridor, with a length of 3,500km, will deliver annually 6bcm of gas to Turkey and 10bcm to Europe. Having an estimated cost of EUR 45bn, SGC will be the first source of gas outside the Russian Federation. SGC is arguably the global oil and gas industry’s most significant and ambitious undertaking yet. And it is a complex challenge involving many different stakeholders – including seven governments and 11 companies. The Southern Gas Corridor is set to change the energy map of an entire region – connecting gas supplies in the Caspian to markets in Europe for the very first time. The pipeline system has been designed to be scalable to twice its initial capacity to accommodate potential additional gas supplies in the future.

ITALY PUTS THE BRAKES ON TAP GAS PIPELINE TAP gas pipeline construction is currently facing problems, after the Environment Minister in Italy, country which would be the end of line for the gas pipeline route, has stated that TAP project was pointless. energyindustryreview.com

OIL & GAS

With a length of 870km, Trans Adriatic Gas Pipeline (TAP) project will be the last section of the Southern Gas Corridor and will allow gas transmission from Turkey to Italy via Greece and Albania. Italy’s Environment Minister Sergio Costa has stated that Italy’s involvement in TAP project would be reviewed, together with other major projects. “TAP is on the table and we are looking at it as a priority. Given (our) energy policy, given falling gas demand, that project today looks pointless,” Sergio Costa said. The review procedure could create tensions between the Italian authorities and the other shareholders of TAP project, assessed at EUR 4.5bn. They include the British oil group BP, Italy’s Snam and Spain’s Enagas. TAP consortium has announced that changing the pipeline route outside Italy wasn’t an option, while changing the route

on Italy’s territory could delay project completion by four to five years. The final section in Italy was to be completed in early 2020 and has already received all approvals from the Italian Government, including the environmental permit, in 2014. Over the past few years, gas demand in Italy has increased, but it is still below the peak level recorded a decade ago. Italy, country which imports over 90% of its gas demand, has major gas supply contracts signed with Russia, Libya, Algeria and the Netherlands, and the previous Government in Rome has announced its intention to create a European gas hub in Italy.

TANAP WAS COMMISSIONED In June this year, Turkey’s President Recep Tayyip Erdoğan, Azerbaijan’s President Ilham Aliyev and Georgia’s

President Giorgi Margvelashvili have inaugurated the Trans Anatolian Natural Gas Pipeline (TANAP), an essential part of the future Southern Gas Corridor, which will diversify Europe’s gas supply sources and play an important part in ensuring Europe’s energy security. The pipeline, with a length of 1,850km, will carry gas produced at Azerbaijan’s Shah Deniz-2 field and other fields from the Caspian region, first to Turkey and then to Europe. The gas pipeline starts at the Georgia-Turkey border and runs to Greece; it will carry 6 billion cubic meters of gas to Turkey and 10 billion cubic meters to Europe. The total investment was USD 7.2bn, project partners being the Azerbaijani state-owned company SOCAR (51%), Turkey’s Botas (30%), UK’s BP (12%) and SOCAR Turkey (7%). Another section of the project, the Trans Adriatic 35

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Pipeline, will carry gas from Turkey through Greece and Albania to Italy, as of 2020.

POLISH-LITHUANIAN INTERCONNECTION PROJECT The operator of the gas transmission system in Poland, Gaz-System, and its Lithuanian counterpart, Amber Grid, have signed this spring an agreement to build a gas pipeline between the two countries, in the idea to integrate the gas markets of the Baltic countries with those from the European Union, diversify supply sources and enhance security. The investment aims at the construction of a pipeline with a length of 357km on Polandâ&#x20AC;&#x2122;s territory, plus a section with a length of 165km on Lithuaniaâ&#x20AC;&#x2122;s territory. The two sections would become operational before 31 December 2021. The European Union, which has already granted financing of EUR 10mln for this project, which was classified as a project of common interest (PCI), would contribute with financing of EUR 266mln to gas pipeline construction, EUR 58mln 36

for Amber Grid and EUR 208mln for Gaz-System. These funds would come from the Connecting Europe Facility (CEF).

THE ROUTE OF THE BALTIC PIPE GAS LINK TO NORWAY HAS BEEN DECIDED On the other hand, the operator of the Polish gas transmission system GazSystem in June this year selected the preferred route for the future Baltic Pipe interconnector, a gas pipeline which would connect Poland to Norway via Denmark, amid efforts to diversify gas supplies. Gaz-System has accepted the route proposed by the contractor - Ramboll. The route will cover 275 km in total and will cross the territorial waters of Denmark and Poland, as well as the exclusive economic zone of Sweden. The route has two sites for landfall, Faxe South in Denmark and Niechorze-Pogorzelica in north-west Poland. Construction work on the pipe is planned to start in April 2020 and will last around two years, the gas pipeline

following to be officially launched in October 2022. Once completed, Baltic Pipe will allow the transfer to Poland of 10 billion cubic meters of gas per year. Thus, for the first time, gas transmission from the Norwegian fields to the Danish and Polish markets, as well as to customers in the neighbouring countries, will be possible. The gas pipeline will also promote the objectives of the North-South corridor concept and the Baltic Energy Market Interconnection Plan (BEMIP), important priorities for the European Union in the field of energy infrastructure development.

PREPARATIONS FOR TVRDONICELIBHOST PIPELINE Poland and the Czech Republic are implementing a project consisting of increasing the transmission capacity of interconnection between the two states. The project is an intermediary stage that will later allow interconnection on Tvrdonice (Poland) - Libhost (Czech Republic) route. energyindustryreview.com

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POLAND-SLOVAKIA GAS PIPELINE WILL BE READY IN 2021 Poland-Slovakia gas pipeline, which will have a length of 160km, will provide interconnection between the two states. The constructor of the gas pipeline is PGNiG Gazoprojekt and works are scheduled for completion in 2021. Construction of this gas interconnection between Poland and Slovakia will be an important part of the North-South gas corridor and will bring the following benefits: • Increasing the capability to meet the gas demand of Polish customers by creating a new transport route and new gas source; • Securing gas supply in case of a crisis and diminishing capabilities of supply from the direction of Ukraine; • Supplying gas to the south-eastern part of Poland, which has an extensive transmission system and storage infrastructure; • Exporting gas from Poland using supply from the Świnoujście LNG Terminal and, in the future, also the gas mined from unconventional sources.

BACI INTERCONNECTOR WILL BECOME OPERATIONAL IN 2020 Building an Austrian-Czech reverse flow interconnection on Baumgarten (AT) - Reintal (CZ/AT) - Břeclav (CZ) route is another project that was included in the list of Projects of Common Interest (PCI) of the European Commission. The Austrian and the Czech Transmission System Operators Gas Connect Austria and NET4GAS (project sponsors) plan to connect their pipeline systems and create additional transportation possibilities. The length of the planned pipeline is approximately 61 km (49 km on Austrian and 12 km on Czech territory) and is planned to cross the border nearby the village Reintal. Current planning foresees start of transport beginning in 2020. BULGARIA, INTERESTED IN TURKSTREAM Bulgaria is also interested in the extension of TurkStream, the country launching a tender for a connecting pipeline with Turkey, thus trying to force

Moscow’s decision to deviate the route to it and not to Greece. Also, Sofia would want to develop Balkan Gas Hub in the port of Varna, also being interested in purchasing gas from two Israeli sources, Tamar and Leviathan fields. The final decision depends on the completion of Interconnector Greece-Bulgaria (IGB), a pipeline worth EUR 220mln and with a length of 182km, between Komotini and Stara Zagora. Bulgaria and Greece have recently agreed to start the construction of IGB this year.

BRUA GAS PIPELINE IMPLEMENTATION, THREATENED BY HUNGARY Black Sea gas would reach Europe through BRUA gas pipeline. The project is financially supported by the EU and EBRD and would become operational next year. However, a dispute broke out between Romania and Hungary, on rights for Romania’s offshore gas and the volume of fuel to be delivered to Hungary via BUA. Hungary claims Romania endangers the energy independence of 37

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the entire region as it stalls gas extraction and, moreover, has decided to stop the construction of BRUA section leading to the Baumgarten gas hub in Austria. Budapest justifies its decision by the fact that the current interconnector with Slovenia is sufficient for gas transmission.

another gas deposit southwest of Cyprus, but its size hasn’t been determined yet. ExxonMobil will begin a hydrocarbon search off Cyprus later this year. France’s Total is also licensed to search for gas.

EGYPTIAN GAS FOR EUROPE

Currently, there are 28 large and eight smaller LNG terminals operational in Europe, in conditions in which last year alone three terminals were commissioned, two in Turkey and one in Malta. Regasification terminals in Europe show a balanced distribution along coastal Europe, most of which are located in the northwest and southwest. LNG terminals are installed in Belgium, France, Greece, Italy, Lithuania, Malta, the Netherlands, Poland, Portugal, Spain, Turkey and the United Kingdom. In 2017 the total regasification capacity of the 28 LNG terminals was 227bcm of gas, quantity ensuring approximately 40% of the European gas demand, according to an analysis of King & Spalding. In 2017 Spain’s LNG terminals accounted for the highest regasification capacity in Europe (6 operational terminals with a total combined capacity of 61.9 bcm/year, and a further terminal in hibernation with a capacity of 7 bcm/year), followed by the UK (3 operational terminals with a total combined capacity of 42.7 bcm/ year) and France (4 operational terminals with a total combined capacity of 34.65 bcm/year). Two new European LNG import terminals are currently under construction in Spain (Tenerife and Gran Canaria) and with their commissioning the total regasification capacity of Europe will reach 230bcm of gas. It will grow significantly by 2021 as a result of commissioning of new terminals currently under construction.

Cyprus and Egypt have concluded an agreement allowing the construction of the first Cypriot subsea gas transmission pipeline, through the Mediterranean Sea, to Egypt, to be re-exported to Europe. “Today’s signing (19 September - Ed.) is an important milestone, not only for Cyprus but also the entire eastern Mediterranean region,” said Energy Minister Georgios Lakkotrypis after he signed alongside visiting Egyptian Oil Minister Tarek elMolla. The pipeline will carry gas from the Cypriot offshore field Aphrodite (estimated to contain around 130 billion cubic meters of gas) to Egypt, which will transform it into liquefied natural gas (LNG). “We are essentially talking about a European pipeline, intended to transport Cypriot natural gas to Egypt for re-export to Europe in the form of liquefied natural gas (LNG),” said Lakkotrypis. US company Noble Energy in 2011 made the first discovery off Cyprus in the Aphrodite field (block 12). Block 12 is declared commercially viable, but its exploitation has not started yet. The Aphrodite consortium, which also includes Netherland’s Shell and Israel’s Delek together with Noble Energy, seeks to renegotiate the terms of the contract with the Cypriot Government before it taps the gas. According to the Cypriot Minister, this contract, the first of this type, will allow attracting investments worth several billion dollars in infrastructure construction. A joint committee will be established in the following days, in order to supervise this project, supported by the European Union. Italian company Eni has discovered 38

LNG GAINS GROUND

THE CONSTRUCTION OF NEW TERMINALS IS BEING PREPARED Many countries take into account or have already planned the construction of LNG terminals. Many of these

import terminals planned are in the countries that already have functional regasification capacities. We are talking here about Greece, which has planned the construction of an LNG terminal in Alexandroupolis. Italy plans to build two additional terminals in Porto Empedocle, Sicily, and Gioia Tauro, Calabria. Poland wants to commission a terminal on the Baltic Sea coast. The UK has planned the construction of a terminal in Port Meridian and one in Trafigura Teesside. Also, Croatia will build one on the Krk Island, Cyprus in Vassiliko, Estonia in Tallinn and Padalski, Germany in Brunsbüttel, Ireland in Shannon and Cork, Latvia in Riga, and Romania in Constanta. Germany, Europe’s largest energy consumer, postponed plans for an LNG terminal of its own a few years ago, with major operators participating in foreign projects. A consortium comprising Dutch gas network operator Gasunie, German tank storage provider Oiltanking and Dutch oil and chemical storage company Vopak, is trying to get such a project off the ground. A funding decision by the consortium German LNG Terminal is expected by the end of 2019. Currently, Qatar Petroleum, the world’s top supplier of liquefied natural gas (LNG), is talking to German energy firms Uniper and RWE about cooperating on a potential local LNG terminal. “We have a serious interest in participating in a German LNG terminal and are talking to Uniper and RWE,” Saad Sherida Al-Kaabi – President & CEO Qatar Petroleum and Qatargas Chairman recently afirmed. Al-Kaabi mentioned there were two ways of participating in an LNG terminal, either by securing capacity to open up supply, or by taking a stake in the terminal infrastructure. Added to these are the LNG terminals planned for construction by countries outside the EU space such as Ukraine (in Odessa), Russia (in Kaliningrad), Albania (in Eagle) and Turkey (in Iskenderun and Saros). energyindustryreview.com

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AGRI PROJECT COMES WITH A NEW FEASIBILITY STUDY AGRI Interconnector project (Azerbaijan - Georgia - Romania Interconnector) was started in 2010 and aimed at the time to carry natural gas from the Caspian region, on the territories of Azerbaijan and Georgia, and crossing the Black Sea with LNG ships. The cost of AGRI project was estimated between EUR 1.2bn and EUR 4.5bn, depending on the capacity of terminals between 2 and 8 bcm per year. The project involved the construction, on Romania’s territory, of a liquefaction terminal in Constanta. Once it reached Romania, LNG was to be regasified and carried further via pipelines to the rest of Europe. At full capacity, AGRI would have allowed the transfer of around

AMROMCO

8 billion cubic meters of gas per year from the Caspian region to Europe, significantly reducing the continent’s reliance on Russian gas. Although eight years have passed since the launch of the project, so far it has remained only on paper. The project was proposed for financing to the European Commission but was not accepted, and now the shareholders have updated the feasibility study, trying to put it back on the agenda to obtain financing through one of the European facilities.

THE US WANTS TO INCREASE ITS LNG EXPORTS US President Donald Trump in July this year told EC President Jean-Claude Juncker that US LNG supplies to the Old

Continent would grow, in conditions in which it was intended to diversify supply sources. Given that at European level gas consumption has increased amid a reduction of production, imports went up and the US has become an option. But one quite expensive compared to gas supplied to Europe by Moscow. Americans are not competitive in this chapter: the price of LNG transported from the US to Europe would be twice higher than the price of Russian gas, according to Jonathan Stern, founder of the Natural Gas Research Programme at Oxford Institute for Energy Studies, and the US wouldn’t want to lower the price, as it would register losses. For now, the fact is that last year Russian gas supplies to Europe reached a record level.

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EC examines Transgaz commitments concerning natural gas exports he European Commission T (EC) invites comments on commitments submitted by Transgaz to address competition concerns regarding the free flow of natural gas from Romania. The commitments would aim to enable natural gas exports from Romania to other Member States, in particular Hungary and Bulgaria. “Natural gas consumers across the EU should enjoy the benefits of an integrated and competitive single European energy market. We are assessing whether the commitments proposed by Transgaz would promote the free flow of natural gas in South Eastern European markets at competitive prices, in particular by connecting Romania with its neighbours Hungary and Bulgaria. We want to hear stakeholders’ views before taking any decision,” Commissioner Margrethe Vestager, in charge of competition policy, affirmed. Following a formal investigation opened in June 2017, the Commission has concerns that Transgaz, the statecontrolled gas transport infrastructure operator in Romania, may have breached 40

EU competition rules by restricting exports of natural gas from Romania. Such restrictions may have taken place by delaying construction of infrastructure required for gas exports and by making gas exports commercially unviable through increases in interconnection tariffs. In doing so, Transgaz may have sought to create or maintain barriers to cross-border flows of natural gas from Romania to other Member States, contrary to the Energy Union’s objective of a European internal natural gas market. Such behaviour, if established, would breach EU competition rules that prohibit the abuse of a dominant market position. To address the Commission’s competition concerns, Transgaz has offered commitments that would allow commercially meaningful export capacities from Romania to be made available for the first time. In particular, Transgaz proposes: • to increase the export capacities from 0.1 billion cubic metres to 4 billion cubic metres per year at the interconnection points with

Hungary and Bulgaria and guarantee these as minimum firm capacities (i.e., capacity that cannot be interrupted); • to ensure that its tariff proposal to the Romanian national energy regulator (ANRE) will not discriminate between export and domestic tariffs; • to refrain from using any other means for hampering exports. These commitments would remain in force until the end of 2025 and a trustee would be in charge of monitoring Transgaz’ compliance with them. The Commission invites all stakeholders to submit their views on the commitments within four weeks of their publication in the EU’s Official Journal. Taking into account all comments received, the Commission will then take a final view on whether the commitments address its competition concerns. If this is the case, the Commission may adopt a decision making the commitments legally binding on Transgaz (under Article 9 of the EU’s antitrust Regulation 1/2003). Such a decision would not conclude whether there was energyindustryreview.com

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an infringement of EU antitrust rules but would legally bind Transgaz to respect the commitments it has offered. If a company breaks such commitments, the Commission can impose a fine of up to 10% of the company’s worldwide turnover, without having to prove an infringement of the EU antitrust rules. Romania is the third largest natural gas producer in the EU (after the Netherlands and the United Kingdom) and has significant gas reserves, including recent discoveries in the Black Sea. Currently only very limited export capacities are made available to market participants. Societatea Nationala de Transport Gaze Naturale Transgaz S.A. (Transgaz) is the sole manager and operator of the natural gas transmission network

in Romania, which includes all interconnectors with neighbouring countries. The Commission opened a formal investigation into Transgaz’ behaviour in June 2017 and informed the company about its preliminary concerns in September 2018. The opening of the formal investigation follows inspections carried out in June 2016 in Romania. Article 102 of the Treaty on the Functioning of the European Union (TFEU) and Article 54 of the EEA Agreement, prohibit the abuse of a dominant position which may affect trade and prevent or restrict competition. Article 9(1) of the Antitrust Regulation 1/2003 enables companies under investigation by the Commission to offer commitments in order to meet the

Commission’s concerns. This case complements Commission efforts to enable the free flow of gas at competitive prices in Central and Eastern European gas markets. It fits into the EU energy strategy objectives as competitive energy markets foster security of supply. The Commission already adopted a decision in May 2018 imposing binding obligations on Gazprom to that end. Limiting export capacities by transmission system operators seriously hampers the Commission’s efforts to create integrated and competitive energy markets in the EU. The Commission is also currently tackling such behaviour in electricity markets, for example by investigating possible capacity limits at the electricity interconnector between Western Denmark and Germany.

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Bainet rig mobilisation, November 2017 | Credit: Prospex

Prospex and Raffles announce first gas production in Romania 42

energyindustryreview.com

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• The Bainet gas field on the EIV-1 Suceava Concession, Romania commenced the experimental production at an initial rate of c.0.7mmscf/day • Bainet gas production is sold to the local market at current prices of approximately €6 per mcf • Represents Prospex’s first production revenues from its portfolio of licences focused on the European Foredeep play, which includes a further gas discovery onshore Italy that is being advanced towards production • Similar gas prospective areas/potential drilling targets on the licence currently being evaluated as part of forward development plan to scale up revenues rospex Oil and Gas Plc, the T AIM quoted investment company, announced that it has been advised by the operator, Raffles Energy S.R.L. (‘Raffles’), that first gas production has commenced from the Bainet gas field (‘Bainet’ or ‘the Field’) in the Exploration Area of the EIV-1 Suceava Concession (the ‘Concession’ or ‘Suceava’), North East Romania. Prospex’s wholly-owned subsidiary PXOG Massey Limited holds a 50% non-operated interest in the 980 sq km Concession. Gas from the Field is sold into the national grid run by Transgaz at the Romanian market prices of circa EUR 6 per mcf. The buyer of gas is a wellestablished Romanian gas trading business. Gas delivered in one month is paid for in the following month. The operator has elected to target an initial flow rate of c.0.7mmscf/day (approximately equivalent to 20,000 scm/day). Production rates may be adjusted up or down according to the well performance and the market demand. Bainet, which was drilled in November 2017 and completed as a producer, has been connected to the

Raffles operated Bilca gas processing plant via a 2.2km flowline tie back to the existing production infrastructure. The Well was drilled to a total depth of 600m and encountered 9m of reservoir with 8m of net gas pay consisting of a good quality Sarmatian sandstone reservoir, similar to that found in fields producing in and around the Concession. Bainet was the first ready-todrill prospect out of the multiple prospects and leads identified on the Concession. The remaining prospects continue to represent relatively lowcost opportunities to further increase production at Suceava and are currently being evaluated for exploration and potential development. Bainet came on stream within the original drilling and development estimate, Prospex has paid its share, totalling EUR 400,000. “The commencement of first gas production in Romania is a milestone event, which transforms Prospex into a revenue generative investment company. With multiple similar prospects already identified on the licence, each of which can be explored and developed at relatively low cost, Suceava represents an excellent, low risk opportunity to scale up our revenues,” Prospex non-

executive Chairman, Bill Smith, stated. “Prospex first announced the acquisition of a 50% interest in Suceava in August 2017 and in the intervening period not only has the joint venture made a commercial gas discovery but we have completed planning , permitting and development work and now brought the Bainet well into production. To have successfully put Bainet into production in such an incredibly short time frame, congratulations must first go to Raffles, the operator, whose professional approach and proven experience have enabled us to reach this very significant step on budget. I would also however like to take this opportunity to congratulate our own first-rate team, who not only identified Suceava as a suitable project but their contribution along the way. This is an incredible achievement for any oil and gas company, let alone a junior such as Prospex,” Bill Smith added. “We intend to replicate this success elsewhere on our other licences, including the Podere Maiar gas discovery onshore Italy which is being advanced towards production, and Tesorillo in Spain where work is underway to de-risk up to 2TCF of gross prospective resources. With activity ongoing across our asset base, I look forward to providing further updates on our progress,” he concluded. 43

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Memorandum of Cooperation between Romania and Algeria Minister for Relations with Parliament Viorel Ilie and his counterpart from the People’s Democratic Republic of Algeria, Mahdjoub Bedda, signed on 6 September a Memorandum of Cooperation to promote the development of bilateral relations and facilitate the exchange of experiences, benefits and best practices in the field of relations with Parliament. lgeria is one of the traditional A partners of Romania, and through this Memorandum we will consolidate bilateral cooperation and in the field of relations with Parliament. The desire of both parties is that this Memorandum also encourages, besides the effects on the specific relations of the two ministries, areas in which the two countries already have a tradition, such as economy, education, health, culture. Through dialogue and political will we will manage to fulfil all the objectives proposed,” Minister Viorel Ilie mentioned. In order to achieve the purposes of the Memorandum, the two states must encourage cooperation in fields such as parliamentary studies, the elaboration of procedures for the preparation of law foundations, coordination of relations between the executive and parliamentary authorities in the monitoring of 44

legislative authorities and parliamentary control. The parties will also prepare an annual program that will include development instruments for the implementation of this Memorandum, in close relation to the existing cooperation mechanisms. The Memorandum of Cooperation between Romania and Algeria, effective as of the date of its signature, remains valid for an indefinite period. Moreover, Romania’s Minister of Foreign Affairs Teodor Melescanu had on 1 April a meeting with Ahmed Ouyahia, Algeria’s Prime Minister, within the official visit of the head of Romanian diplomacy to Algeria. During the discussions, Minister Teodor Melescanu showed that Romania and Algeria were in an important stage of consolidation of bilateral cooperation, reflected by the

openness and firm political will of the leadership of the two states to establish a roadmap on all levels of interest. The head of Romanian diplomacy reiterated interest for the extension of bilateral cooperation at the level of the real potential provided by the two states, highlighting the common interest for the diversification of economic relations. In this regard, he emphasized the importance to consolidate dialogue at governmental and business environment level, resulting in the implementation of common cooperation projects. He showed that Romania was interested to identify new cooperation opportunities with Algeria in sectors such as hydrocarbon transmission and storage, agriculture, automotive industry, agrofood industry, communications and information technology, mining industry. energyindustryreview.com

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Fire protection service Explosion hazard WE DON’T KNOW WHO COULD BE NEXT

CEO of Conpet Silviu Baciu (left), accompanied by State Secretary Iulian-Robert Tudorache and the Prefect of Prahova County Madalina Lupea, chaired the meeting between the official delegation of Algeria and representatives of business environment in Romania.

IDENTIFYING BILATERAL BUSINESS OPPORTUNITIES On 7 September, national transporter of crude oil and petroleum products Conpet was the host of the meeting between the official delegation of Algeria, led by Mahdjoub Bedda, Algeria’s Minister for Relations with Parliament, and representatives of authorities and business environment in Romania. The event aimed to identify business opportunities with national companies and companies from Prahova County. The meeting was chaired by State Secretary within the Ministry of Energy Iulian-Robert Tudorache and the Prefect of Prahova County Madalina Lupea. The Algerian delegation was represented by Their Excellencies, Taous Djellouli - Ambassador of Algeria to Romania and Marcel Alexandru Ambassador of Romania to Algeria, Saliha Yousri - Chair of the Department for Cooperation and Studies and Ilyes Berzan - principal administrator in charge with Protocol. The reunion was also attended by Vasile Patrascu - Vice-President of Prahova County Council, Ph.D. Prof. Eng. Mihai Albulescu - member of the Board of Directors of Conpet, Dan-Silviu Baciu - CEO of Conpet, together with the

executive management of the company, represented by deputy general managers - Anamaria Dumitrache and Ioan Voicu, Sanda Toader - Director of the Economic Division, Toma Pintoiu - Head of Department, Corporate Governance, Communication and Public Relations, and Bianca Patrichi - head of the Communication and Public Relations Service. “Our company supports the consolidation of bilateral relations and the development of new projects beneficial for Prahova County; therefore, we are honoured that you have chosen today’s meeting to take place at Conpet’s headquarters, a benchmark of Prahova business environment and a strategic company for the Romanian economy,” the CEO of Conpet said. The meeting enjoyed a broad presence from the business environment, bringing together representatives of top companies from various business sectors at the table: Romgaz - Prahova Branch Director Vasile Carstea, Societatea de Distributie a Energiei Electrice Muntenia Nord Electrica – CEO Corina Popescu, Prahova Employers’ Association of Small and Medium Private Enterprises - VicePresident Gabriela Elena Baciu, Inspet CEO Petre Mustatea, Upetrom - HSEQ Director Dana Istratescu and others.

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Romania, gateway for Kazakh energy resources to the EU market

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A number of events took place during 24-28 September in Kazakhstan, in Astana and Almaty, such as the Romania-Kazakhstan Joint Commission for Economic and Technical-Scientific Cooperation, the Kazakhstan-Romania Business Forum, the International Oil and Gas Conference and Exhibition KIOGE 2018 and the Business Forum dedicated to the oil and gas sector. Romania has reiterated on this occasion its interest in capitalizing on the cooperation opportunities in the energy field between the two states. he Republic of Kazakhstan T is an energy player with a significant potential at global level, including in terms of securing energy supply to Europe, crude oil and natural gas in particular. Romania positively notices the increasingly active participation of Kazakhstan in the international dialogue on energy security. Our country shows openness in order to capitalize on cooperation opportunities in the energy sector, amid the interest of Romania and EU states in the energy potential of Central Asia in general and especially in Kazakhstan’s potential in this field. Commercial relations between the two states are based on the Partnership and Collaboration Agreement between the EU and EU Member States, on the one hand, and the Republic of Kazakhstan, on the other hand. A series of bilateral meetings of the Romanian delegation, led by IulianRobert Tudorache, Secretary of State in the Ministry of Energy, with senior Kazakh officials, took place in the margins of the joint work of the RomaniaKazakhstan Joint Commission for Economic and Technical-Scientific Cooperation. The Kazakh side was represented by Energy Minister Kanat Bozumbayev, Energy Vice-Minister Magzum Mirzagaliev, Deputy Minister on Foreign Affairs Roman Vasilenko, Minister of National Economy Timur Suleimenov, Minister of Investment and Development Zhenis Kassymbek. The Romanian delegation also attended the official opening of the 26th International Oil and Gas Exhibition KIOGE 2018, as well as the Plenary

Session of the International Oil and Gas Conference. “Romania is a main partner for Kazakhstan in Eastern Europe; the Romanian side appreciates the good relations in the energy field between the two countries, the proof being the latest bilateral contacts, as well as Romania’s participation in the International Exhibition Energy of the Future 2017, which was a very good opportunity for oil and gas companies to open up new opportunities of collaboration between the two countries,” Iulian-Robert Tudorache has pointed out. Romania can represent a gateway for the significant energy resources of the Republic of Kazakhstan, the largest oil producer in Central Asia, to the European Union market and Balkan region. Over 80% of Romania’s oil import comes from Kazakhstan and the Russian Federation. Iulian-Robert Tudorache has also reminded the long tradition, of over one century and a half, in the oil industry, and over one century in the natural gas industry. Romania is currently the only significant hydrocarbon producer in South-Eastern Europe. Continuing the tradition of some many generations of specialists in the field, Romania aims to be an important participant on a European market that becomes increasingly competitive. The effects of the economic crisis were felt at the level of the oil and gas industry in Romania, as in most countries, through a decrease in consumption, in the financial liquidity level, as well as through difficulties in attracting the funds necessary for new investment objectives. “The gradual stabilization of oil prices has started to contribute to the revival of

investments and we hope this upward trend will be maintained. The oil & gas production sector undoubtedly needs to benefit from investments in modern equipment and technologies, in order to increase the degree of recovery of fields and for the development of new fields,” the Romanian official has added. He also says that at this point, according to European statistics, Romania is the country with the largest oil production in the region, last year producing 3.6 million tons of crude oil. Romania is one of the founders of the World Petroleum Council, the contribution of our country being highly appreciated by all the members of the council. The Romanian Committee for the World Petroleum Council includes representatives of the largest petroleum companies in Romania, higher education institutions and research institutes, as well as experts from the Ministry of Energy. Romania also holds an honourable position in terms of gas extraction, with a very low dependence on imports. For example, last year imports accounted for around 10.6%, consumption being covered by domestic production at a rate of 89.4%. The recent developments also indicate a recovery of interest in LNG, and Europe has chances to become a major player in this market segment. Romania also has in this field of activity significant opportunities, being a shareholder in AGRI project, a pioneering project for the transport of liquefied natural gas through the Black Sea. Iulian-Robert Tudorache has expressed the interest of Romanian companies to participate in licensing rounds organized in the Republic 47

OIL & GAS

of Kazakhstan for petroleum fields exploration/exploitation activities. At the same time, he has expressed the interest of Romanian companies in the petroleum industry and the industry of related services to export specific equipment for activities in this sector, as well as to develop partnerships with Kazakh companies. In turn, the Kazakh side has noted the quality of equipment and machinery produced by Romanian companies and has expressed its interest in collaborating with equipment and machinery manufacturers in Romania. The discovery in the Black Sea of important hydrocarbon reserves may give this region a central role in the consolidation of energy security of both Romania and the entire region. The energy potential of the Black Sea gives it a significant geostrategic role for the European Union due to the estimated hydrocarbon reserves, but also in terms of oil and gas reserves in the Caspian Sea region, which could transit the Black Sea basin, to be capitalized on the European market. An important objective of Romania mentioned by the State Secretary is the interconnection of the national oil transmission system to the regional and European networks. According to NSI (National Institute of Statistics), last year our country processed 11.2 million tons, of which 7.6 million tons of crude oil from import. Most oil comes from the Russian Federation, Kazakhstan and Azerbaijan, but also from other countries (approximately 2.8 million tons were imported from the Russian Federation, from Kazakhstan - around 3 million tons, and from Azerbaijan - 0.65 million tons). State Secretary Tudorache has insisted on the importance of activities of Conpet and Oil Terminal, with the latter having a strategic position, being the largest operator by sea, specializing in handling crude oil, petroleum products, liquid petrochemical products and other liquid products and raw materials, for import, export and transit. Oil Terminal Constanta holds one of the largest terminals in South-Eastern 48

Europe. The advantages of the location which gives its strategic position are: terminal to the Black Sea, access to roads and railways, the existence of three large storage facilities equipped with tanks with a total storage capacity of 1,700,000 cubic meters, loading/unloading capacities of petroleum and chemical products at rail ramps with a total length of 30 km and transport pipelines for loading/ unloading petroleum and chemical products. The Romanian side has stressed that, considering that the Romanian state is investing significant amounts in Constanta port infrastructure (breakwater extensions, dredging in the port), it is important to involve the KazMunayGas Group in supporting the oil terminal’s activity for both crude oil imports and exports of finished products.

KAZAKH-ROMANIAN JOINT ENERGY INVESTMENT FUND KMG International (KMGI), part of KazMunayGas, and the Government of Romania plan to complete the necessary procedures to create a joint investment fund in the near future aiming at activating cooperation between the two sides. The fund will be established as part of the implementation of the provisions of the Memorandum of Mutual Understanding signed by the parties in 2013 and that provides for the attraction of extra finances in the KMGI’s projects within Romania. The document also includes a mechanism to private Rompetrol Rafinare’s shares owned by Romania and the order to found a joint investment fund in energy. “The parties - the Romanian Energy Minster and KMGI - closely cooperate on this matter and significantly moved forward in terms of the implementation of the Memorandum’s first stage, namely the creation of the Kazakhstan-Romania investment fund. We hope we will declare its establishment in the near future,” the State Secretary Tudorache stated. He also noted that the projects planned to implement under the auspice of the fund would be considered in accordance with the investment transparency principles

and picked up taking into accounting clear and precise assessment criteria and mechanisms. “During the discussions we had with KMGI representatives, two projects that could be developed under the Romanian-Kazakh Fund have been addressed. They relate to the development of a cogeneration plant on the Petromidia platform, as well as expanding the Rompetrol filling station network on the Romanian market by greenfield investment, with investment in the two projects amounting to approximately USD 220 million,” IulianRobert Tudorache added.

COLLABORATION IN THE NUCLEAR FIELD The Kazakh side has also expressed its intention to develop a collaboration in the nuclear field, mainly in the field of supply of uranium and nuclear fuel components. It has highlighted the interest of JSC NAC Kazatomprom for direct negotiations with SNN and CNU in order to diversify directions of cooperation and carry out an exchange of information in the mentioned field. The Romanian side has expressed its availability to carry out talks on this subject in the near future.

EXCHANGE OF EXPERIENCE BETWEEN SPECIALISTS Last but not least, Iulian-Robert Tudorache has mentioned the importance of achieving an exchange of experience between the specialists of the two countries; the Romanian side believes that it can consolidate bilateral relations in the oil and gas sector. At the same time, the exchange of best practices between businessmen can open up new opportunities of collaboration between the two countries. At the same time, he has highlighted the importance of making academic exchanges and establishing study programs that Romania can ensure for Kazakh students in the oil and gas field, within the Oil and Gas University in Ploiesti, an educational institution that has won a well-deserved place in the elite of profile universities around the world. energyindustryreview.com

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OIL & GAS

Schwechat Refinery | Photo: OMV

There and back again: Turning plastic back into oil Vlad-Adrian Iancu

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OIL & GAS

his was of course an T oversimplification. Things are more complicated but there are people willing to have them make sense. One such company is OMV and they are coming forward with their ReOil solution. Basically, what they are about is drawing attention that every day we ignore useful sources of fuel just by throwing it away! According to their estimations, every EU citizen uses about 200 plastic bags per year and 700 kg of plastic waste ends up in our oceans every second. Crunch these numbers with the fact that it takes between ten to 20 years for a small plastic wrapping to biodegrade and you have a recipe for disaster. But OMV, or to be more precise Wolfgang Hofer, who is Senior Expert New Technology, explains that there are ways to recycle and turn that bothersome wrapper back into oil. Their ReOil technology presupposes that plastic is

heated to over 400°C, a process which breaks down the long-chain molecules thus producing synthetic crude oil, but heating the plastic that much is a lot more difficult than it may sound. This tough nut was finally cracked by Hofer as he had a revelation in 2010. According to him “It would be better if we could convert old plastic into synthetic oil and use this resource either for producing new plastics or as energy for mobility. That would give us a circular economy for plastics, similar to paper.” The solution was actually a solvent which was introduced in the first test facility in the technology centre set up in the Schwechat Refinery. This solvent tackled two issues at the same time as the engineer explains: “This solvent is part of a cycle in the unit, meaning that it’s already hot. It is mixed with the plastic right at the start of the process, supporting the heating stage and reducing the energy needed thanks to better heat conductivity. What’s more, pure plastic

What is one of the things that the world never seems to run out of? Just take a look around the house, or sadly around our oceans and you’ll find it pretty quickly: it’s plastic. We have plastic and the resulting plastic waste and residue in abundance, all around us. But did you know that it’s made from oil? Why wouldn’t we take that oil back once we are done with the plastic? It may sound silly but it definitely isn’t. And, wouldn’t you know it, there are actually solutions. The answer to our problems may lie in that bin down the road. would be too tough to transport through pipes. Adding the solvent also enables us to address this problem.” The next step simply implies that the melted mass is transformed into gas, as the long chains of molecules are broken down. The crude oil is then recovered with the help of subsequent chemical processes which reassemble the aforementioned molecules into smaller chains. The method was so fruitful that it begged for more investments. A bigger and better ReOil plant went online at the start of 2018 with 20 times the capacity of the previous one. Michael Fadler, Department Manager ReOil 100, responsible for the operations had this to say about the process: “The quality of the products from the ReOil process was already outstanding with the unit in the technology center and that’s something that hasn’t changed. At the end of this we get such a pure, high-quality product that it can hold its own 51

OIL & GAS

against the best crude. That’s why the new, larger unit is also directly incorporated into the refinery. What we produce here will be used in the production of fuels and other refinery products.” This new unit can process up to 100 kg of plastic per hour and yields 100 liters of crude from 100 kg of waste. However, it does not stop here, as Michael Fadler’s task comprises that the new ReOil unit be available for production 24/7, a development which is currently stunted by interaction between individual aggregates. Once this will be overcome, and Fadler assures us it will, the next step envisions the next unit being capable of processing 2000 kg of used plastic per hour. China is also involved with this technology as the Niutech Environment Technology Corporation (Jinan EcoEnergy Technology Co., Ltd) have developed two ways of handling waste: Industrial Continuous Scrap Tyre Pyrolysis Production Line which of course handles the transformation of tires into oil and the Industrial Continuous Waste Plastic Pyrolysis Production Line which as the name implies, handles plastic. This process is operated through low temperature catalytic pyrolysis in safe, environmentally friendly and highly efficient preconditions. This concept plant has already been commercialized in Germany, Estonia, Thailand, Taiwan, Malaysia and other countries. According to the Niutech Environment Technology Corporation, their patented technology improves the oil yield rate and quality as well as the operating conditions which in turn prolongs the life time of the equipment. What’s more, the technology is pretty self-sufficient as the resulting combustible gas can be used as the fuel for the heating system. Furthermore, all the indexes of the emission conform to the EEA standard of the EU and APA standard in the US. Please find the complete specifics of the operation as follows: www.niutechenergy. com/featured-products/recycled-plasticindustrial-continuous-pyrolysis-machine. html Canadian company Plastic2Oil also 52

Plastic2Oil Processor No. 3 at P2O’s Niagara Falls, NY facility | Photo: Plastic2Oil

comes with some interesting additions in the field. Self-described as a clean energy company, their goal is to offer technology that converts plastic waste into liquid fuels and dirty fuel into clean diesel. Regarding their pending patent Plastic2Oil® (P2O), they claim to completely change the landscape in what pertains to waste management and also creation of green employment opportunities. According to them: “Plastic2Oil’s patent pending P2O process transforms unsorted, unwashed waste plastic into ultra-clean, ultra-low sulphur fuel without the need for refinement.” Having received validation from IsleChem (process engineering) and Conestoga-Rovers & Associates (emissions stack test) and permits to operate by the New York State Department of Environmental Conservation (NYSDEC) and others they are just about ready to go. Boasting interesting figures like a conversation rate of 86% of waste plastic into fuel, approximately 1 gallon of fuel is extracted from 8.3 lbs. of plastic. Minimal energy is required to run the machine as the processor uses its own off-gases as fuel. As water is used for cooling only, it is in no way contaminated. No. 2 Fuel (Diesel, Petroleum Distillate), No. 6 Fuel, Naphtha, Petcoke (Carbon Black), and Off-Gases are all produced from a single processor.

Evidence that this trend has been on the upturn for quite a while is the England based company Recycling Technologies. The company has produced the RT7000, a refinery machine able to produce three types of oil and wax, with the process based on a variation of thermal cracking. They clean the plastic first and then familiarly heat it up using what they call ‘hot sand-like particles’. The resulting oil is called ‘Plaxx’ and the output is 5200 tons per 7000 tons of plastic. The product could be used by petrochemical companies, ship engines or as a wax. Measuring a tennis court, the machine costs USD 3.8 million to install and then a further USD 647,000 a year to run. However, RT claims each machine pays for itself within three years as it produces revenue of USD 2.2 million. Based on these numbers, CEO Adrian Griffiths envisions 100 machines operational under lease by 2025. As you can see, the business of converting plastic into oil is not really a new concept. What would be new is us finally embracing the ever-present concept of recycling and its inherent importance. Next time you throw something in the garbage pile think about what could be produced from it. This might not change the world in the blink of an eye but it may very well change our perspective on it. And that for now should be enough. energyindustryreview.com

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TeraPlast Group to implement 3 investment projects totalling EUR 15 million he TeraPlast Group intends to T implement 3 investment projects totalling EUR 15 million with government grant funding. Having a tradition of over 120 years, the company is one of the most important manufacturers of building materials and also the largest PVC processor in Romania. “We believe this Government Grant Scheme is better suited to the size of the TeraPlast Group companies. We also want to see how authorities’ public statements, as this scheme aims to support Romanian companies, will turn into reality, as long as foreign companies benefited from these state aids so far,” said Dorel Goia, TeraPlast Group’s Chairman of the Board of Directors. TeraPlast proposed an investment of EUR 6.2 million, of which EUR 3.1 million would be state grant to invest in equipment for the group’s plastic division. Implementing this project, the company will come up with innovation in the PVC granule market: TeraPlast will be the first halogen-free fire-resistant granules producer in Romania which are used to insulate electric cables. From the leading position on the external sewerage market, TeraPlast plans to expand the production capacity of internal polypropylene sewage systems 54

that are a superior quality alternative to PVC systems. The recent trend indicates an increasing demand for the higherend quality products. Due to the fact that TeraPlast aims to deliver efficient solutions for humans and the environment, the waste resulting from the polypropylene technological process will be recycled and reprocessed. Depaco (subsidiary of TeraPlast) will launch a production facility of 38,000 square meters in a new location in Baicoi (Prahova County). The factory along with the new production lines will ensure optimal logistics and storage flows and an annual production capacity of over 10 million square meters of tile. In the first phase, Depaco will build 10,000 square meters. The budget for the construction and expansion of the production capacity is EUR 5.2 million, out of which EUR 1.9 million would be financed through the State Grant Scheme. TeraGlass will apply for the State Grant with an investment project of EUR 3.5 million. The objective of the project is a new, fully automated production stream of windows and doors, which will increase both the production capacity and labour productivity. This investment comes as a result of the growing demand for

TeraGlass products. The cumulative amount of the State Grant does not exceed EUR 6.8 million, the amount by which the beneficiary companies are committed to contribute to the state budget by additional taxes and salary contributions until 2024. The State Grant Scheme TeraPlast Group applied for aims to boost investments that have a significant impact on the economy and regional development. In the context of funding approval, all three projects will be launched immediately. In 2017, the TeraPlast Group has submitted a project worth EUR 13 million. For this investment, the government contribution would have been EUR 6.5million, but the project has not been approved, hence the company financed the first phase of the project with its own resources worth EUR 3.5 million. The Group’s product portfolio is structured into six business lines: Installations & Decorations, Joinery Profiles, Granules, Thermal Insulation Panels, Windows & Doors, and also Metal Tile (Wetterbest Brand). In October 2017, TeraPlast Group launched TeraSteel Serbia, the first factory fully owned by a Romanian company established after 1990. energyindustryreview.com

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CONSTRUCTION

Buoyancy bags were strapped around the ship to ensure the bow and stern were level before floating out. (Photo: Michiel Jordaan)

Icebreaker RSV Nuyina in the wet dock in the Damen Shipyards. (Photo: Damen/AAD)

Damen performs float-out of Australian icebreaker Damen has carried out the successful floating of the Antarctic Supply Research Vessel (ASRV) RSV Nuyina currently under construction at Damen Shipyards Galati. The carefully executed procedure was achieved by raising the water level in the yardâ&#x20AC;&#x2122;s dry dock by six metres; a process taking two days to complete. nce afloat, the vessel was O manoeuvred 250 metres to a quayside berth where the ongoing construction and outfitting process will take place. Damen is building the 160-metre long ASRV for Serco subsidiary DMS Maritime on behalf of the Australian Department of the Environment and Energy. The vessel has been designed with a multi-mission role in mind. It will keep Australiaâ&#x20AC;&#x2122;s three permanent research 56

stations on the Antarctic continent and its research station on Macquarie Island supplied with cargo, equipment and personnel. Additionally, it will serve as a fully equipped research laboratory facility for up to 116 scientific staff.

COLLABORATIVE PROCESS Construction of the vessel began in August 2017. Building from the keel up, the build process has reached the fourth

deck level in that time. Now that the vessel is afloat, construction will continue with the positioning of pre-fabricated superstructure blocks, bringing the finished vessel to its full 10-deck height of just over 50 metres. The construction process is calling on input from two different Damen yards: Damen Schelde Naval Shipbuilding in the Netherlands is providing engineering and project management services, and Damen Shipyards Galati is carrying out vessel energyindustryreview.com

CONSTRUCTION

The Nuyina in her final position in the wet dock. (Photo: Michiel Jordaan)

construction and outfitting tasks. Talking about the cooperation between the two yards, Damen Project Director Joop Noordijk says: “This project is benefiting from the great collaborative relationship between these two sister companies – one that has been built up during the building of seven previous vessels for the Royal Netherlands Navy.”

COMPLEX CONTRACTS “This is a great achievement for all involved,” concurs Rino Brugge, Managing Director Damen Shipyards Galati. “We still have a long way to go until final delivery, but this float-out once again highlights the extraordinary capability we have for building extremely complex high-end vessels for the broadest range of maritime clients – including commercial operators as well as government and naval contracts.”

RSV NUYINA AFLOAT Australia’s new Antarctic icebreaker, RSV Nuyina, is now floating, after more than 50 Olympic swimming pools of water were pumped into the docks where the ship is being built. It took two days to pump enough water

The RSV Nuyina floating in the dry dock with strops attached to buoyancy bags running down the ship’s sides. (Photo: Damen/AAD)

from the nearby river into the dry and wet docks, raising the water level six metres and floating the 10,751-tonne ship about 30 centimetres above the dock floor. Australian Antarctic Division Icebreaker Project Manager Nick Browne, said it was a precision operation to then manoeuvre the ship about 250 metres into the adjacent wet dock. “We had 34 buoyancy bags tethered in strategic places around the ship to ensure the bow and stern were level for floating out,” Nick Browne explained. “Then we used a series of controlled lines to pull the ship into position in the wet dock. The ship is 25.6 metres wide and the dry dock is 35 metres wide, so we had less than five metres either side. There’s about 10 metres of water in the wet dock, which will be enough to support the 16,000-tonne weight of the ship when she’s completed,” he pointed out. Construction on the ship has reached deck four (the science deck), and the engines, generators, shaft lines, propellers and rudders are all in place. A number of steel blocks that will form the ‘superstructure’ (decks above the hull) have already been constructed and are ready to be lifted onto the ship in the wet dock. When complete the ship will rise

to 10 decks, at navigation bridge level, measuring 50.2 metres from the keel to the top of the weather radar on the main mast. Australian Antarctic Division Modernisation Program Manager Rob Bryson, said it’s an exciting milestone in the build. “After six years of planning and more than two years of construction, it’s a real thrill to see it all come together today, with the ship actually floating in the water,” Bryson added. “We’ll see the Nuyina rapidly taking shape over the next few months; it won’t be long now before she’ll be sailing into her home port of Hobart in 2020.” RSV Nuyina will be the main lifeline to Australia’s Antarctic and sub-Antarctic research stations and the central platform of the Antarctic and Southern Ocean scientific research. Construction commenced in May 2017, with a steel cutting ceremony, while a keel laying ceremony in August saw the first buildingblock of the ship consolidated in the drydock. In September 2018 the ship was floated from the dry dock to the wet dock, for the next phase of construction. Construction is expected to be completed at the end of 2019. 57

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Groundbreaking for Clariant’s cellulosic ethanol plant in Craiova

Groundbreaking ceremony for the new sunliquid® plant in Craiova/Romania (from left to right): Urs Herren, Ambassador of Swiss Confederation, Claudiu Mares, State Secretary at the Ministry of Agriculture, Anton Anton, Minister of Energy, Paula Pîrvănescu, State Secretary at the Ministry of Business Environment, Commerce and Entrepreneurship, Christian Kohlpaintner, Member of the Executive Committee Clariant, Ion Prioteasa, Dolj County Council President, Philippe Mengal, Executive Director BBI JU, Constantin Gheorghita, Mayor of Podari, Oliver Kinkel, Head of Region Europe Clariant, Dragos Gavriluta, Clariant Project Director sunliquid Romania, Markus Rarbach, Head of Business Line Biofuels & Derivatives, Clariant, Martin Vollmer, Chief Technology Officer Clariant (Photo: Clariant)

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CONSTRUCTION

• Investment represents biggest industrial commitment by an international corporation in the region of Craiova • Location chosen for combination of feedstock supply and infrastructure • Annual production capacity of 50,000 tons of cellulosic ethanol lariant, a world leader in specialty C chemicals, officially started construction of the first largescale commercial sunliquid plant for the production of cellulosic ethanol made from agricultural residues. At the flagship facility, the sunliquid technology developed by the company is being used on an industrial scale for the first time. The occasion was marked with a traditional groundbreaking ceremony in Podari near Craiova in southwestern Romania, which was attended by official representatives of the Romanian government, the Swiss Ambassador Urs Herren, and a Clariant representation headed by Christian Kohlpaintner, Member of the Executive Committee. “After more than a decade of research and development, Clariant is investing more than EUR 100 million in its first sunliquid plant. This technology is pioneering not only in Europe but also globally. Furthermore, in cooperation with European and national institutions, Clariant supports the industrial conversion of a region with this significant investment,” Clariant Executive Committee Member Christian Kohlpaintner stated. The realization of the plant represents the biggest industrial commitment by an international corporation in this region1. At full capacity, the plant will process around 250,000 tons of wheat and other cereal straw sourced from local farmers to 50,000 tons of cellulosic ethanol annually. By-products from the process will be used for the generation of renewable energy with the goal of making the plant independent from fossil energy sources. The resulting cellulosic ethanol is therefore an advanced biofuel that is practically carbon-neutral. The flagship plant testifies to the

competitive viability and sustainability of the sunliquid technology on an industrial scale, and at the same time fulfils an important function as a reference facility for the worldwide marketing of sunliquid licenses. The decision in favour of Craiova was due partly to the existence of a secure regional supply of feedstock and partly to the region’s existing logistic and industrial infrastructure. Construction of the plant will provide a whole range of benefits for the surrounding region of Craiova. It will allow local farmers to industrially market straw for the first time, which was previously practically unutilized agricultural residue. During the construction phase of the new plant, several hundred construction workers will be employed from locally based companies wherever possible. After completion, the plant is expected to provide around 300 permanent jobs in supporting industries serving the site, and in the transportation and storage of the feedstock. The plant itself will employ a workforce of between 100 and 120. Clariant plans to recruit its workforce locally, and provide training both in its own laboratories in Planegg near Munich and at the pre-commercial sunliquid plant in Straubing, Bavaria.

SUNLIQUID – A SUSTAINABLE AND ADVANCED BIOFUEL Cellulosic ethanol is an advanced, sustainable and practically carbon-neutral biofuel. It is produced from agricultural residue such as wheat straw and corn stover which is supplied by farmers. The straw is converted into cellulosic sugars. This is followed by fermentation to

produce cellulosic ethanol. By using plant residues, cellulosic ethanol can extend the current production of biofuels to new feedstock and contributes to optimizing the efficiency and sustainability of biofuels. Cellulosic sugars also have the potential to serve as a building block for future production of bio-based chemicals. The sunliquid technology offers a fully integrated process design built on established process technology. Innovative technology features such as chemical-free pre-treatment, the integrated production of feedstockand process-specific enzymes, and simultaneous C5 and C6 sugar fermentation ensure optimum costeffectiveness. Sunliquid® is a trademark of Clariant registered in many countries. The sunliquid® process developed by Clariant meets all the requirements of a technically and economically efficient, innovative process for converting agricultural residues into climatefriendly biofuel. Using process-integrated enzyme production, optimized enzymes, simultaneous conversion of cellulose and hemicellulose into ethanol and an energy-efficient process design, it has been possible to overcome technological challenges and sufficiently reduce production costs in order to arrive at a commercially viable basis. Since 2009, Clariant has been successfully operating a first pilot plant at its research facility in Munich. This pilot plant is capable of producing up to two tons of ethanol per year. In July 2012, Germany’s largest plant to date started into operation in Straubing – a demonstration project with an annual capacity of up to 1,000 tons of ethanol. 59

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SM rotary screw compressors: Compact and powerful Equipped with the advanced Sigma Control 2 compressor controller as standard and featuring flow-optimised Sigma Profile airends, SM series rotary screw compressors not only fulfil user’s expectations with regards to compressed air availability and efficiency, but they also deliver high flow rates with minimal energy consumption. SM series rotary screw compressors are the ideal choice for efficient compressed air generation in the 0.95 m³ to 1.61 m³/ min flow range at 8 bar and are available with various drive powers from 5.5 to 9 kW. Amongst other design aspects, they achieve their exceptional performance through a high efficiency compressor air end featuring a flow-optimised inlet valve and through the minimisation of internal pressure losses. Further energy savings are achieved by the use of Super Premium Efficiency IE4 motors (7.5 and 9 kW), which are currently the most efficient electric motors available. Moreover, Kaeser is the only compressor provider on the market to equip its machines with these motors. Additional advantages include the internal Sigma Control 2 compressor controller, a compact footprint and, needless to say, super-quiet operation. All of these benefits help save energy costs and increase availability. In Germany, investment in these compressors is even eligible for incentives offered by the Federal Office for Economic Affairs and Export Control.

EFFICIENT CONTROL WITH COMPRESSED AIR CONSUMPTION IN MIND The Sigma Control 2 internal controller plays a key role in ensuring

energy efficient compressor operation and performance. It not only enables efficient control based on respective compressed air consumption and reliable operation monitoring, but also allows connection to higher-level control systems such as the Sigma Network via the standard Ethernet interface. A large display and an integrated RFID reader in the control panel simplify communication with the system at the place of use and ensure secure log-on to the controller. The RFID reader also makes it possible to standardise service, to significantly increase service quality and to provide professional-grade security via SD card. Since infinite speed control is advantageous in certain instances, a version with built-in frequency converter (Sigma Frequency Control) is also available with 7.5 kW drive power.

MODULAR, QUIET AND MAINTENANCE-FRIENDLY The modular package concept of SM series compressors also offers significant advantages: in addition to the standard version with a footprint of just 0.5 m², three models - the SM 10, SM 13 and SM 16 - are available as so-called ‘T versions’ which feature an add-on, thermally shielded refrigeration dryer.

The space-saving, compact design also makes these compressors perfect for use even in confined spaces. When closed, the enclosure with its soundproof lining keeps operating noise to an absolute minimum and therefore helps maintain a pleasant and quiet working environment. The coolers are positioned on the outside of the unit and are easily accessible for quick and costeffective service. The cooler and motor are cooled with fresh air, which consequently results in low motor temperatures and long service life, as well as low compressed air discharge temperature. The cooling system uses a patented, highly efficient twin-flow fan with separate cooling air streams for the motor and compressor. This achieves optimum cooling performance, low compressed air discharge temperatures, reduced noise emission and, last but not least, overall efficient air compression.

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 61

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New draft Energy Strategy of Romania for 2018-2030 MINIMUM INVESTMENTS OF EUR 15BN OVER THE NEXT 15 YEARS The Government of Romania has recently published a new draft Energy Strategy of Romania for 2018-2030, towards 2050, which estimates the total investments necessary in the national energy sector over the next 15 years at minimum EUR 15bn. The document includes a list with 4 projects of new production capacities considered of national strategic importance. Adrian Stoica

he main novelty is inclusion T in this list of the project for the construction of Turnu Magurele - Nikopol (Bulgaria) hydropower plant, with an installed power of 500MW, which would be part of a hydrotechnical complex with the same name. The complex was included last month by the Executive on a list of 16 strategic objectives that the Government plans to achieve in publicprivate partnership. “The project will be implemented by setting up the Danube River downstream of the Iron Gates I and II, to immediately downstream of the confluence with the Olt River, within the cooperation between the Governments of Romania, Bulgaria and Serbia. The complex will produce on average energy of approximately 2,200 GWh/year, 62

significantly contributing to an increase in Romania’s role as supplier of energy security in the region,” the document shows. Also, the project includes the construction of a new road and rail link between Romania and Bulgaria, over the dam providing a road with four lanes and a double track railway. Another novelty compared to the last version, from last year, of the draft Energy Strategy, is inclusion in the list of objectives of national interest of the project for the construction of a new generation group, of at least 600MW, in Rovinari, within Oltenia Energy Complex, an investment estimated at EUR 1bn. The group would be provided with installations for the capture, transport and geological storage of carbon dioxide, for compliance with the European environmental rules.

“The results of modelling indicate feasibility, as of 2020, of projects for new lignite-fired thermal power plants with supercritical parameters, and as of 2035 provided that they are equipped with CO2 capture, transport and geological storage technology (CSC). Modelling shows that a lignite-based capacity could be built, provided with CSC, between 600MW and 1000MW. Thus, the construction of a supercritical capacity based on lignite of 600MW, due to come onstream after 2020, to which a CO2 capture and storage capacity can be added as of 2035, is not only necessary, but also mandatory to ensure the composition of the energy mix with an optimal cost at systemic level,” the draft strategy shows. The list of strategic objectives of national interest is completed by energyindustryreview.com

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the project of reactors 3 and 4 from Cernavoda nuclear power plant and that of Tarnita-Lapustesti pumped-storage hydropower plant. Other investment projects considered important and included in the strategy are a new group of 400MW in Turceni, one of 400MW, gas-fired, in Mintia, one of 200MW, gas-fired, in Craiova, as well as Rastolita hydropower plants (35MW), those on Jiu river (90MW) and those on Olt Gorge (145MW). “The strategy identifies substantial investments necessary for the upgrade and retrofitting of the Romanian energy system over the next 15 years. The analysis of alternative development scenarios estimates total investments in the energy sector (exclusively what is related to energy consumption) at EUR 15-30bn for the period 2018-2030, with a central estimate of approximately EUR 20bn,” the document mentions.

INVESTMENT BUDGET OF EUR 800MLN FOR HIDROELECTRICA Hidroelectrica will have an investment budget of over EUR 800mln until 2020 for works to upgrade and retrofit power plants that are currently in operation, according to the new draft Energy Strategy of Romania. Also, investments necessary for the completion until 2030 of hydropower developments with complex use, optimized according to the current requirements, amount to around EUR 2.5bn. They will be provided by both Hidroelectrica and other companies and authorities beneficiary of these complex uses. Thus, in 2030, the total installed power in hydropower plants in Romania will reach 7,490MW, compared to 6,741MW in 2018. Following this increase in the installed capacity, in 2030 electricity production in hydropower plants will increase from 16.55TWh in 2018 to 17.60TWh.

NEW SCHEMES FOR SUPPORTING RENEWABLE ENERGY Compared to total capacities installed in 2018 for electricity production, in 2030

there will be an increase in wind power capacities to a power of 4,300MW and in solar power capacities up to 3,100MW, the draft strategy also shows. In relation to these installed capacities, in 2030 average annual energy supplied in the national energy system from wind sources will be around 11TWh, and that from solar sources - approximately 5TWh/ year. In 2030, of the total installed power of photovoltaic systems, 750Mw will be in the form of distributed capacities held by energy prosumers. Increasing the participation of renewable sources to the level expected to be reached in 2030 can only be achieved in conditions in which, simultaneously, there will be a development of energy storage solutions ensuring loading/unloading cycles with durations higher than 6-8 hours and a total power of 1,000MW, according to the quoted document. Taking into account the technological realities of 2018, the strategy provides that the Tarnita-Lapustesti pumpedstorage hydropower plant should be assumed as strategic investment of national interest. To be able to create the prerequisites of increasing energy production capacities from wind and solar sources, this project must start before 2025, and the entire capacity must become operational in 2030. In order to increase the participation of Romanian energy producers to European regional markets, it is provided that, by 2025, the closure of the main transmission ring must be achieved, through lines of 400kW, as well as by developing new interconnection points with grids in the adjacent area of Romania. New support schemes for boosting investments in the field of renewable energy will emerge after 2020 only for electricity generation capacities developed by consumers that, within the bidirectional electricity exchange with distribution networks, will be considered prosumers. The strategy establishes the maximum limit of installed power in solar systems of prosumers at 750MW, power to be reached by 2030. Also, by this year, consumption of firewood will register a reduction by around 20% compared

to the level of 2018. As firewood has the highest share in the declining biomass, following the reduction of firewood consumption, in 2030 total consumption of energy resources coming from biomass will drop to the value of 39TWh. Biofuels consumption will register an increase to 4.1TWh/year. Biogas will witness a quick growth, to a production of 3,500GWh in 2030, amid the development of the agricultural sector and, to a lesser extent, the modernization of wastewater treatment plants. At the same time, small power stations exclusively supplied with biomass, biofuels, biogas, waste and landfill gas will be developed, these power stations following to reach a total installed power of 139MW, the draft energy strategy also shows.

THE BLACK SEA BET Romania’s gas reserves will be exhausted over the next 14 years, and the exploitation of Black Sea fields has a special importance, the new draft Energy Strategy of Romania shows. “In order to avoid a significant increase in dependence on imports, even if they will be available from alternative sources and routes, it is necessary to develop the offshore fields discovered over the past few years in the Black Sea. This is a sine-qua-non condition to be able to rely on natural gas in the energy mix.” Data provided by the National Agency for Mineral Resources (NAMR) shows that the gas reserves of the country, without those in the Black Sea, amount to 153 billion cubic meters, which, at an annual production of 10.5 billion cubic meters, would be enough for 14.6 years. Black Sea gas production will reach its peak in 2025: “Gas production will drop, after reaching a new peak of 132TWh in 2025, as a result of production in the Black Sea, to 96TWh in 2030 and 65TWh in 2050.” Thus, exploitation of Black Sea hydrocarbon resources will significantly contribute to Romania’s energy security, according to the draft energy strategy for 2018-2030, in conditions in which gas accounts for 25-30% of the electricity 63

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mix and the domestic supply could be in surplus. Last year, total gas consumption was 129.7TWh, of which the domestic production covered 89.4% and import 10.6%, according to the quoted document. The structure of this consumption looked as follows: household consumption around 33.4TWh (25.73%), electricity and heat producers - about 35.4TWh (27.27%), chemical industry - about 12.9TWh (9.93%) and the commercial sector - around 8.5TWh (6.59%). “Gas production has stabilized over the past few years, following investments in the extension of lifetime of existing fields and the development of new ones.” Romania’s gas resources amount to 726.8 billion cubic meters, and the period when they are assured is 69.2 years, in conditions in which the annual production amounts to 10.5 billion cubic meters, according to data presented in the quoted document. “Additional gas resources from onshore and offshore fields are provided for in the energy mix of Romania in all scenarios, except the unlikely scenario of long-term maintenance of low prices, which do not justify further investments. The total quantitative levels from conventional onshore and offshore production have the potential to be in surplus compared to the level currently estimated demand in the domestic market, relatively linear. Romania plans to increase gas consumption in the domestic industry and export of finished products using natural gas as raw material.”

THE SHARE OF NATURAL GAS IN THE PRIMARY ENERGY MIX Natural gas has a share of approximately 30% of domestic consumption of primary energy, according to the quoted document. “Its share is explained by the relatively high availability of domestic resources, by the low environmental impact and the capacity to balance electricity produced from intermittent RES (renewable energy sourcesEd.). The existing extraction, transmission, underground storage and distribution infrastructure is extended throughout the country.” 64

Specifically, natural gas last year accounted for 27% of the mix of primary energy resources, i.e. 9.28 million toe (8.337 domestic production and 0.94 import), according to the National Institute of Statistics (NIS). In total, the main primary energy resources last year stood at 34.29 million toe, according to NIS, of which 21.3 million toe from domestic production and 12.98 million toe from import. Besides natural gas, these resources included: crude oil of 11.17 million toe (3.42 domestic production and 7.75 import) - 32.6% of the mix; coal of 5.16 million toe (4.65 domestic production and 0.51 import) - 15% of the mix; hydropower, nuclear power, solar power and imported electricity of 5.16 million toe (4.89 domestic production and 0.31 import) - 15.2% of the mix; imported petroleum products of 2.98 million toe - 8.7% of the mix. “Final gas consumption remains constant between 2030 and 2050, at the level of 68TWh. The maximum demand is estimated around 73TWh, and the minimum demand - from 63TWh in 2030 to 47TWh in 2050. In terms of share of electricity in final energy consumption, modelling indicates a clear and solid growth trend, from 19% in 2030 to 25% in 2050. The gas share in final energy consumption in the long term presents an almost constant share, at a level of around 25%.”

THE DILEMMA OF EMISSION ALLOWANCE PRICES ON ETS The relative role of natural gas and coal in the electricity mix after 2025 will depend on the price of emission allowances on ETS (Emission Trading System, the trading system for emissions of greenhouse gases in the European Union), according to the draft law. “Current projections show a sustained increase in the cost of emissions to EUR 40/ ton of CO2 equivalent in 2030, to help achieve decarbonization targets. At this price of emission allowances, natural gas is competitive in the mix compared to lignite at a price level of EUR 19/MWh. If the price of emission allowances remains lower than currently

estimated, it is possible to keep coal longer in the electricity mix, as it is unlikely to keep gas prices in the long term below EUR 15/MWh. Without doubling the production of nuclear energy, the electricity mix will include higher natural gas and coal quantities,” the Energy Strategy explains.

400 HYDROCARBON FIELDS EXPLOITED Currently, around 400 oil and gas fields are exploited in Romania. Thus, OMV Petrom operates more than 200 commercial oil and gas fields in Romania and, in the Black Sea, OMV Petrom operates on seven fixed rigs. Moreover, Romgaz is carrying out its activity, as single titleholder of petroleum agreement, on eight exploration, development and exploitation blocks. Petroleum agreements for development - exploration and exploitation have been concluded for other 39 fields, having as titleholder various companies. Most of these fields are mature, with a duration of exploitation of over 25-30 years. “In the short and medium term, certain oil and gas reserves can be increased by implementing new technologies leading to a higher degree of recovery in fields and by implementing projects for exploration at great depths and in the offshore area of the continental shelf of the Black Sea,” the quoted strategy mentions. In turn, gas production will drop, after reaching a new peak of 132TWh in 2025, as a result of production in the Black Sea, to 96TWh in 2030 and 65TWh in 2050, according to the draft. Moreover, the total production of primary energy will register a slight decline, from 304TWh (the equivalent of 26.2 million toe) in 2030 to 287TWh in 2050. “The gas market is advantaged by Romania’s favourable position compared to transmission capacities in the region and the possibility to interconnect the NTS with the Central-European transmission systems and with gas resources in the Caspian basin, in Eastern Mediterranean and the Middle East, through the Southern Corridor,” the quoted strategy points out. energyindustryreview.com

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EU to invest nearly EUR 700mn in sustainable and innovative transport The European Commission has proposed to invest EUR 695.1 million in 49 key projects to develop sustainable and innovative transport infrastructure in Europe across all transport modes. Selected projects will provide infrastructure enabling greater use of alternative fuels and electric cars, modernise Europe’s air traffic management, and further develop waterborne and rail transport.

ur investment plan for Europe is O delivering: today we are proposing to invest EUR 700 million in 49 key transport projects through the Connecting Europe Facility (CEF). These projects are concentrated on the strategic sections of Europe’s transport network to ensure the highest EU added-value and impact. This will allow us to further accelerate our transition to low-emission mobility across Europe, and firmly deliver on the EU’s agenda for jobs and growth. We expect it to unlock a total of EUR 2.4 billion of public and private co-financing ,” EU Commissioner for Transport Violeta Bulc said. The largest part of the funding will be devoted to modernising European air traffic management (ATM – EUR 290.3 million), developing innovative projects and new technologies for transport (EUR 209.5 million), as well as upgrading the railway network, maritime connections, 66

and ports and inland waterways (EUR 103.6 million). In supporting the selected projects, the Commission is firmly delivering on the objectives outlined in its Clean Mobility package. Over EUR 250 million of CEF funding will be invested in 26 projects dedicated to developing new technologies in transport notably promoting alternative fuels, such as: • Greening the maritime transport link between Swinoujscie port in Poland and Ystad port in Sweden; • Deploying hydrogen public transport infrastructure in Denmark, the UK and Latvia; • Building a network of bio-liquefied natural gas stations on roads connecting southern Spain and eastern Poland, via France, Belgium, the Netherlands and Germany; • Developing zero-emission public transport services for Amsterdam

airport, as well as electrifying urban and regional bus routes in Croatia, Italy, Slovenia and Slovakia. The selected projects will also contribute to the establishment of a Single European Sky via modernising European air traffic management in 23 EU Member States and Serbia, the upgrading of the Ampsin-Neuville lock complex on the Middle Meuse river in Belgium, and the upgrading of the maritime ports of HaminaKotka and Leixões. An additional EUR 450 million is made available to finance alternative fuel infrastructure through the InnovFin Energy Demo Projects (EDP) and CEF Debt Instrument. They are managed by the European Investment Bank. All proposed projects were selected for funding via two competitive calls for proposals, open to projects in all EU Member States: energyindustryreview.com

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The 2017 CEF Transport Blending call launched on 8 February 2017, takes an innovative approach, making available an indicative budget of EUR 1.35 billion of EU grants, to be combined with financing from the European Fund for Strategic Investments (EFSI), the European Investment Bank (EIB), National Promotional Banks or private sector investors. Some 69 applications, requesting a total of EUR 1 billion in co-funding, were received by the second deadline. Of these, 35 projects were selected, totalling EUR 404,8 million. Previously, 39 projects had been selected for funding, totalling EUR 1 billion in CEF Blending funding. The CEF Transport SESAR call

launched on 6 October 2017 aims to modernise ATM in Europe and provide a high performing ATM infrastructure that will enable the safe, efficient and environmentally friendly operation and development of air transport. The CEF Transport SESAR call was open for project proposals on the deployment of new and mature technologies and practices that support harmonised ATM systems and standards in Europe. Some 33 applications requesting EUR 406.9 million were received, out of which 14 projects were selected, totalling EUR 290.3 million. The EU’s financial contribution comes in the form of grants, with different co-financing rates depending

on the project type. Under the CEF programme, EUR 23.2 billion is available for grants from the EU’s 2014-2020 budget to co-fund TEN-T projects in EU Member States. Since 2014, the first CEF programming year, there have been four yearly waves of calls. In total, CEF has so far supported 641 projects with a total amount of EUR 22.3 billion.

NEXT STEPS Following EU Member States approval of the proposal, the Commission will adopt a formal decision in the coming weeks. The Commission’s Innovation and Networks Executive Agency (INEA) will then sign the grants with the project beneficiaries by January 2019.

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Lighting the way efficiently across the EU Vlad-Adrian Iancu

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Starting with 1 September, LED lights have taken the place of traditional halogen light bulbs

“Overall, in the last 5 years the EU has saved €100 billion thanks to energy efficient products used by European consumers.”

he fact that the EU is the torch T bearer for innovation is no secret anymore. Granted, the members of said Union may be moving at different speeds, due to so many political, economic and finally cultural differences but the end goal is within reach, for small and big nations alike. The latest effort comes, and it is no surprise, in the ever-changing field of energy efficiency. September 1st saw us embracing LED lights in the detriment of the traditional halogen light bulbs. Apparently, it will be a cold turkey type of change as traditional ‘pear’ shaped light bulbs will no longer be marketed across the European Union. The end game here is supposed to bring money back in the pockets of household

energy users and at the same time cut back on greenhouse gas emissions. Products already present on the market will not be affected by the change, only new entries on the shelf being the subject of this new enterprise. The changes are part of a bigger project, the EU’s Ecodesign Work Programme which was launched on the 1st of January 2015 and postulated that households will save 45€ a year via measures like updated energy labels and automatic stand by requirements. But how does this actively benefit the final consumer? Updated specifications will mean shoppers will be able to better compare products efficiency wise and when they actually use them, save 30% of the electricity consumed. Not only customers are on board, producers and retailers will also benefit, their competitiveness being actively improved by this new law. Of course, the biggest stake is still the impact on the environment and as soon as 2020 we should be seeing a drop of CO2 emissions of about 15 million tonnes per year, mixed with reducing energy consumption by approximately 75TWh. The latest political agreement on the topic of energy efficiency was reached on the 19th of June in Brussels reconfirming the work done by the Juncker Commission. This new law deals with an updated energy efficiency target: 32.5% by 2030. Considering this, things are looking up for the Paris agreement. Miguel Arias Cañete, Commissioner for Climate Action and Energy stated: “Europe is by far the largest importer of fossil fuel in the world. Today we put an end to this. This deal is a major push for

Europe’s energy independence. Much of what we spend on imported fossil fuels will now be invested at home in more efficient buildings, industries and transport. The new target of 32.5% will boost our industrial competitiveness, create jobs, reduce energy bills, help tackle energy poverty and improve air quality. Our path to real energy security and climate protection begins here at home, and this deal shows Europe’s determination to build a modern economy that is less dependent on imported energy and with more domestically produced clean energy”. The fact that LED bulbs last on average 5 to 10 times longer than the halogen counterparts and usually use less than one tenth of the halogen equivalent sounds like a meagre accomplishment compared to the above numbers but this should not discourage us. Every small contribution counts and thus the calculations attest to the fact that switching from a halogen lamp to an LED would save approximately 115 € in the bulb lifetime and recover its cost in about 12 to 18 months. Small numbers lead to big numbers: the study envisions annual savings of 9.4TWh which corresponds to a reduction of 3.4 million tonnes of CO2 emissions per year. Not to mention the LED bulbs are recyclable as opposed to their predecessors. As the Commissioner for Climate and Energy succinctly demonstrated, the race for energy independency hinges on energy efficiency. Seeing as today the EU imports 53% of the required energy, it’s high time we started investing in the future. We should count ourselves lucky to be part of this endeavour, rather than think this to be an outside imposition. The change will happen, independently of our views. 69

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ENABLING THE SUPERGRID Renewable energy is a vital component to saving our planet; however, it poses a real challenge for traditional power grids. The best locations for renewable energy sources aren’t necessarily near the end consumer, so the power generated needs to travel long distances or perhaps be pooled from different sources to offer a steady supply. Therefore, the current electrical grid is not optimum to accommodate these factors. Most importantly, bringing all these long-distance connections together, usually via cables (as with offshore wind farms) requires protection from faults and short circuits to protect valuable equipment and offer reliability.

HYBRID CIRCUIT BREAKER As energy distribution evolves to accommodate the ever-growing renewable energy sources added to the mix, a new transmission system is needed. Fortunately, one very driven team is well on their way to enabling this ‘Supergrid’. SCiBreak, an InnoEnergy supported start-up, has created a hybrid circuit breaker – a key technology for power grids to radically increase the share of renewables in the energy system. The small team from KTH - Sweden’s largest and most prestigious technical university, has achieved tremendous results in a short period of time, from developing the device to their recent successful test of the circuit breaker prototype. SCiBreak co-founder and KTH associate professor, Staffan Norrga, reveals the journey to this point and what lies ahead. 70

FAST-TRACK TO SUCCESS Staffan shares, “I’m proud that we’ve managed to set up a team in such short time, to design a complex system with all that entails – such as mechanical design, electronics, software, etc.” He has worked with technology development in the electric power industry during most of his career and knows it’s crucial to have a really strong technical team with complementary knowledge and skills. “I have experience with similar development work in much larger organisations, with more internal support functions. Trying to do everything , including running the company, with 5-6 people definitely was a challenge. That we have managed to do this shows that the members of the team are very capable and versatile, and that teamwork has been excellent. We have succeeded in finding just the right people! And the support we have received from InnoEnergy in terms of

network and advisors, with many decades of experience, has been extremely valuable.”

AFFORDABLE TECHNOLOGY SCiBreak develops ultra-fast circuit breakers for medium to high voltage based on an innovative concept that enables the interruption of fault currents in both AC and DC grids in a few milliseconds and limits them before dangerous levels are reached. This limits the disturbances and equipment damage associated with today’s slow AC breakers, or the high cost of existing DC breakers. By employing a combination of power electronics and mechanical interrupting elements, the use of expensive power semiconductors (the costliest part of a hybrid breaker) can be reduced tenfold. HVDC (high-voltage direct current) is a key enabler for a future energy system based on renewables since it’s a highly energyindustryreview.com

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efficient alternative for transmitting large amounts of electricity over long distances. This is what makes HVDC breakers and HVDC technology so important and why there is a need for reliable power transmission grids with more capacity and a wider reach. “HVDC power transmission technology is generally very costly, compared to the prevailing AC transmission. This has severely hampered its deployment. Our technology allows for radically reducing costs of HVDC equipment while keeping function and performance,” Staffan explains. Since they make this pivotal technology affordable to enable such grids, SCiBreak is going to be a major player in this field!

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SUCCESSFUL TESTING The recent testing was made within the criterion of the PROMOTioN Horizon 2020 project, which seeks to develop meshed HVDC offshore grids and testing methodology for HVDC breakers. SCiBreak AB tested a DC circuit breaker module prototype at KEMA laboratories, a highly respected institute run by DNV GL. Extensive tests were performed and the results – interruption of fault current in less than 3.5 milliseconds – establish a proof-of-concept for SCiBreak’s technology and constitute a significant milestone!

THE FUTURE With this fresh success under their belt, the question is: What’s next? “We aim to further develop our technology and gradually bring it to market. For some applications we will license our IP to other manufacturers. For others, such as equipment for railway feeding systems, we can go to market ourselves – possibly together with a partner.” Both funding and engagement with potential partners are imperative for the next step. “Since we are talking about infrastructure and a heavily regulated industry, we are going to need more resources to verify our technology to create trust – that this technology will work and be reliable. In the HVDC market, we are up against very large corporations… so we will need partners to help us compete. We also need to work with the TSOs and the end customers to promote the idea of using HVDC grids.” The energy system is changing towards renewables, to decarbonise it– yet it’s clear that the solution is not merely the creation of renewable energy… you need to transfer and distribute it, as well. SCiBreak is creating a critical piece of the Supergrid puzzle to achieve this goal.

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

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RENEWABLES

Hydrogen-based technologies for sustainable energy supply n the second half of September, several EU Member States signed an important document regarding environmental protection. It’s about the hydrogen initiative, a proposal of Austria, also signed by Romania, through Energy Minister Anton Anton, at the Informal Energy Council and the High-Level Conference ‘Charge for Change: Innovative Technologies for Energy-Intensive Industries’, carried out during 17-19 September in Linz, Austria. By signing this proposal, Romania commits to continue its involvement in the research and innovation sector regarding the use of hydrogen - one of the most abundant elements in the world and the lightest chemical element - as a future energy source. Given the professional experience of Minister Anton (among others, State Secretary in the Ministry of Education and Research during 2005-2006 and, two years later, Minister of Education, Research and Youth, even if for a brief period), signing this initiative makes perfect sense. But if we relate to the speed with which Romania adopts and uses, in general, the new technologies irrespective of the field, it could have remained only a symbolic gesture. Romania is one of the European countries that granted substantial subsidies for the development of

renewable energy. It is an indisputable merit, but investments in this green energy have been made mostly by private investors, not by the Romanian state. Developing the technology allowing the use of hydrogen in the transport sector - a field responsible for much of the pollution across the planet - will, more than likely, require investments from the state. But in terms of investments in technology, Romania does not have a history to be very proud of. Romania is only at the beginning of electricity use for transport and, even if electric or hybrid car sales increase year after year, there is yet a long way until the presence of these vehicles on roads and motorways is something normal. According to the Automotive Manufacturers and Importers Association, in the first eight months of the year, sales of green cars grew by 73.3% y/y, to 2,635 units. Of course, the problem of building those motorways and creating a truly functional charging infrastructure for electric car batteries needs to be addressed. These are details, but significant ones, no matter how we look at them. Returning to the signing of Austria’s initiative, Minister Anton has highlighted the importance of using new technologies, but he has also expressed hope that this event would have concrete

effects in terms of involvement of research institutes. “Europe needs new technologies and methods to store electricity, an important condition for the energy security of the continent. The development of the European energy market is harder to achieve without a market for its storage. Hydrogen is one of the promising solutions, while it is also a nonpolluting energy storage method. I wish this initiative to become much clearer as regards the opportunities it opens up for academia and research institutes for the development of hydrogen-based technologies,” Minister Anton has stated on the occasion of signing the hydrogen initiative. Renewable hydrogen use technologies can be used in the field of electricity storage, transport fuels, industrial applications, hydrogen injection into natural gas networks etc. Hydrogen does not emit CO2 at all when it is used as a clean energy source or clean fuel, and it can play an important role in the transition to a clean, low-carbon energy system. With these characteristics, it fits perfectly into the European desideratum of decarbonization of the energy industry and beyond. However, the use of hydrogen as an alternative to conventional fuels is still in its infancy and its imposition on international markets could be done with the support energyindustryreview.com

RENEWABLES

ADVANTAGES OF HYDROGEN FUEL CELLS

DISADVANTAGES OF HYDROGEN FUEL CELLS

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Carbon-emission free Hydrogen fuel cells do not emit harmful carbon emissions in the air. Accessible and clean Its supply in the atmosphere is abundant. Importance in science and technology Hydrogen fuel cells have many applications and are being used by industries, machinery, motorcycles, automobiles and NASA. Renewable energy source Hydrogen is the most abundant element in the universe. Fuel efficiency Due to the fact that hydrogen is capable of producing more energy per pound of fuel as compared to gas and diesel, it becomes more fuel efficient.

of governments, given the high costs of manufacturing and fuelling motor vehicles with this new type of fuel. Moreover, large corporations in the world have shown their preoccupation for hydrogen technologies for many years. For example, car manufacturer Hyundai has already opened hydrogen stations in countries like Germany. Hydrogen is seen as a perfect replacement for gasoline or diesel at least for cars in major cities, thereby reducing metropolitan pollution. Instead of emitting gas, these cars will only release small doses of water vapor into the atmosphere. Hydrogen can be produced from renewable energy sources, stored and used in transport or in gas networks, which can absorb up to 10% hydrogen as a fuel complementary to natural gas. However, implementation of this new technology is taking place slowly. But not everywhere. Hydrogen use as fuel is not a novelty. This technology is already used especially for buses and freight trucks. Toyota has been investing in hydrogen since the 1990s and introduced its first hydrogen fuel cell vehicle in 2014. That vehicle runs on compressed hydrogen gas and emits water. Hydrogen vehicles are fuelled faster than electric vehicles,

• • • •

Nitrogen dioxide emission Hydrogen fuel cells do not emit carbon after burning, but they give out nitrogen dioxide and other emissions. Storage issues Transporting hydrogen can be expensive. High cost Aside from having to spend a lot of money to transport hydrogen, the time it takes to break down its elements makes the process expensive as well. Highly flammable In case of fire, hydrogen flame is not seen in daylight. Climate change aggravation Hydrogen as energy source also comes from fossil fuels, particularly in industrial applications.

but they are expensive, and recharging stations are rare. Another example, Germany this year inaugurated the world’s first hydrogen-fuelled passenger trains on a nearly 100-km route in Lower Saxony. Hydrogen trains are equipped with fuel cells that produce electricity through a combination of hydrogen and oxygen, a process by which the only emissions are water and steam. The surplus of energy is stored in lithium-ion batteries on board the train. In 2016, South Korean car manufacturer Hyundai has inaugurated the first public hydrogen refuelling station in Germany. The station has been built and operated by Air Liquide in Hyundai’s European headquarters in the German city of Offenbach. The station’s daily capability of 200 kilograms of hydrogen can power more than 30 vehicles a day and refuel a Hyundai ix35 Fuel Cell car in three to five minutes. The same company (Hyundai Motor) has entered into a MoU with Swiss hydrogen company H2 Energy (H2E) to introduce the world’s first fleet of fuel cell electric truck into commercial operation. In addition to the manufacturing of the vehicles, an adequate supply chain

for renewable hydrogen will also be developed. The fuel cell electric truck features a new 190kW hydrogen fuel cell system with two fuel cell systems connected in parallel. It is expected to deliver a single-fuelling travel range of approximately 400 km. In 2015, China had introduced a hydrogen-powered tram, and two years later, in 2017, the Asian country made more of a mark on the hydrogen transport market after CRRC Qingdao Sifang, a unit of CRRC, the nation’s leading maker of high-speed rail, said it has embarked on a 760 million yuan (USD 109.0 million), 20-station programme that will include eight hydrogen fuel cell trams. Originally planned for completion in 2018, the project is part of the Guangdong province in which it will operate to make 75% of public services powered by green energy over the next four years. Of course, there are other companies and governments that have begun to engage in this technology for several years. For now, things are not clear about the pros and cons of using this technology. But just as with other industries, only time, investments and efforts of scientists and technicians will bring light in this field. 73

RENEWABLES

EDPR opens pioneering battery-based energy storage facility in Romania

DP Renewables (EDPR), leader in the renewable energy sector and one of the largest wind energy producers in the world, has opened a pioneering facility for the battery-based storage of wind energy amassed from the Cobadin wind farm in Romania. The ‘Stocare Project’, as this EDPR venture has been named, represents a key technological development in the storage of energy. When there is excess production, the system will charge the batteries, and when production is lower than expected, the energy stored in the batteries will be provided to consumers.

This type of energy storage facility could provide a breakthrough in the energy market over the coming years by turning renewable energies such as wind and photovoltaic solar power into consistently available energy sources, as well as making them more efficient and reliable. EDPR’s project represents the first energy storage activity in Romania, where the company has been present since 2008. The company currently has a total installed capacity of 521 MW in Romania, comprised mainly of wind energy and, to a lesser extent, solar power. EDPR’s production facilities in

the country are located in Dobrogea and Moldavia (wind energy), and Oltenia (solar power). Technical innovation to improve production and the better use of resources are the hallmarks of EDPR, which works and invests through projects like this one and other pioneering initiatives to globally secure the company’s position at the forefront of clean energy production. With a sound development pipeline, first class assets and market-leading operating capacity, EDPR has undergone exceptional development in recent years and is currently present in 13 markets. energyindustryreview.com

ORGANIZE

ENERGY TRANSITION 2018 MAIN TOPICS:

LIVING THE ENERGY TRANSITION

RENEWABLES – PILLARS OF SUSTAINABLE GROWTH

WORKSHOPS: RES INTEGRATION RES FINANCING INSTRUMENTS

RENEWABLES IN ROMANIA 2030 – EXPECTATIONS AND CHALLENGES

www.energytransition.ro TO REGISTER: events@rwea.ro / mihai.balan@rwea.ro / 0742.066.570

30 & 31 Octombrie JW Marriott Bucharest Grand Hotel | 09:00 AM

SAVE THE DATE 75

METALS & MINING

Blueberry Project gaining speed he Golden Quadrilateral T in Romania seems to be a pretty big deal. This is why Vast Resources recently announced the acquisition of 29.41% interest in the Blueberry Project. Located in the aforementioned area, the project holds highly prospective polymetallic mineralization. Also part of The Golden Quadrilateral is the Baia de Aries gold mine, Rosia Montana mine (17.1Moz) and the Rovina Valley Project (7.2Moz). This specific investment concerns a brown field perimeter covering a grand total of 7.285 km, with a prospective value of around 22.4g/t obtained from historic soil sampling. Andrew Prelea, Chief Executive of Vast, had the following statement concerning the acquisition: “As shareholders will be aware, my enthusiasm for and confidence in the reinvigoration of the Romanian mining industry remains a central pillar of Vasts future growth strategy and I am delighted to present this acquisition to shareholders. Due to the structure of this transaction, Vast would benefit from the significant upside potential of developing the Blueberry Project whilst safeguarding investors from significant dilution. Work has already started at Blueberry and we look forward to reporting the results of drilling in the coming weeks in order to begin to give the market a tangible sense of the size and quality of this significant mineralised system in addition to our path to developing the project and ultimately crystallising value for Vast shareholders through a proposed IPO” Also according to Vast, their newly 76

formed subsidiary known as EMA Resources Ltd has contracted to acquire the whole share capital of the Romanian Company Blueberry Ridge SRL. This was done in order for EMA to issue the vendors new shares constituting 70.59% of the enlarged ordinary share capital of EMA. In consequence, Vast will retain 29.41% of the enlarged capital which is subject to a possible reduction to 26.41% on account of the entitlement by Andrew Prelea to 10% of Vasts share. As BRL is the holder of the Blueberry Project and based on exploration programs already completed they could convert their exploration license into an exploitation one as long as they comply with requirements within the Romanian mining law. Based on known geology of the Blueberry Perimeter, extensive historical mining activities and expected results of the current exploration drillings, Vast believes that EMA may justify an IPO as a standalone enterprise. The agreement with the vendors shows that the end goal is that Vast will have management and control of future mining operations to be carried out through a gravity process for the free gold and otherwise by floatation process in order to separate the polymetallic minerals. As of now, cyanide is not intended to be used for the gold extraction and metallurgic test work will be undertaken to determine the best extraction method. Previous work on the Blueberry perimeter includes 159 soil samples, 98 rock samples and 25 drill holes and the compiled information shows that the area is open

to mineralization. BRL would be granted an exploitation license depending on the result of the final exploration report given on 3 October 2018. Regarding the findings, Andrew Prelea had the following statement: “Having acquired a strategic interest in Blueberry less than a week ago, we are delighted to be able to share with investors the first set of drill results from the active exploration programme currently underway which we believe support the expedited development approach that we have implemented to realise the value potential of this asset. We look forward to sharing the assay results from the drill programme on a regular basis in the coming weeks as we continue to explore the potential size and quality of this significant mineralised system at Blueberry with the objective of ultimately crystallising value for Vast shareholders through a proposed IPO.” Following these results it appears that the vendors of the Blueberry project have agreed to an extension for the procurement of funds by EMA. Also, the annual drilling results have been submitted to ANRM on schedule as they are vital for the final exploration report due by 3 October 2018 on which the exploitation license hinges on. The subsequent application has to be submitted by 31 December 2018 also including a feasibility study, development plan and rehabilitation study as well as a social impact assessment. Andrew Prelea stated that he is pleased with the strong support shown by Vast Shareholders and the funding intention shown by the new institutional investor. energyindustryreview.com

METALS & MINING

Romania asks for a new respite from the EC on coal-fired power plants ttending the Informal Energy Council in Linz, Austria, A during 17-19 September, Energy Minister Anton Anton has requested an exemption for power plants used as backup units from European requirements regarding the amount of pollutant emissions released into the atmosphere. Within the European Commission (EC) there are discussions on the introduction of so-called capacity mechanisms in all EU’s Member States. These mechanisms would apply to the energy generation units that will be used only in critical situations, such as the unexpected exit from the system of certain producers or failure of some units. The purpose of this measure is to avoid situations where, due to a lack of available capacity, population and companies in a certain region would run out of electricity. The power plants selected to provide energy production in critical situations would receive such an incentive, named capacity mechanism. But this would become complicated if these power plants had to comply with the pollution level requested by the European Commission, i.e. 550 grams of CO2/ kWh. This would be even more difficult in Romania, country which, even if it depends to a quite great extent on coal to ensure its own consumption, hasn’t invested enough in the upgrade of old power plants and it hasn’t built new coal-fired units. For this purpose, during the informal meeting in Linz, Minister Anton supported the establishment of general common principles with applicability for all types of capacity mechanisms, but with the possibility for each Member State to choose the type

“For Romania, the prospect of excluding from the market the production capacities based on domestic coal, by increasing the price of carbon allowances, is worrying. We believe that such an approach, in the medium and long term, could create big adequacy problems for the national energy system and will thus call energy security into question. Electricity supply security is and must remain a responsibility of Member States’ governments.” Energy Minister Anton Anton

of mechanism depending on the specificities and needs of the national energy system. From minister’s perspective, the limit of 550g CO2/KWh for energy capacities that can enter the capacities market would eliminate the possibility for coal-based capacities subject to upgrade and new units to benefit from the capacity mechanisms. This very strict limit affects precisely the energy capacities that have a significant contribution to ensuring energy security. Moreover, during the same meeting, Minister Anton has requested an extension at least until 2030 of the operating period for the existing coal-fired power plants, invoking that transition to a less polluting national and European energy sector would thus be endangered, especially in countries such as Romania, which depend on coal. 77

METALS & MINING

Government seeks solutions to cover the costs with the CO2 allowances of Oltenia Energy Complex n the Government meeting of 13 September, a I Memorandum was approved on Financial mechanisms necessary to cover the costs with CO2 allowances of Oltenia Energy Complex, in order to ensure electricity supply security and maintain energy capacities in the short and medium term, in the process of transition to decarbonization in the energy sector. The document, prepared based on the request of Oltenia Energy Complex (CEO), has two components, Doru Visan, State Secretary within the Ministry of Energy, mentioned. • Long-term measures: empowerment of the Ministry of Energy by the Government to start negotiations with the European Commission on the national energy security that is affected, the problem being common for other states as well; • Short-term measures: starting negotiations between Oltenia Energy Complex and Eximbank, for a loan to cover the cost of CO2 allowances, to avoid incurring penalties. “The Memorandum submitted to the Government represents the document under which it takes note of the problem of increase in the price of CO2 allowances and their impact in the activity of Oltenia Energy Complex, and also on the national energy security,” Sorin Boza, President of Directorate of Oltenia Energy Complex, commented. Discussions with the European Commission will be carried out according to community practices, at the level of Government representatives. The discussions will also be attended by representatives of CEO. As Vice-President of the Euracoal association (The voice of coal in Europe), Sorin Boza has recently attended a meeting for informing the European public opinion on the high costs of emission allowances that coal-fired energy producers must pay, organized by Poland’s Energy Minister. In late August, the price of CO2 allowances had exceeded EUR 20/unit, reaching a value over three times higher than last year. The President of CEO Management Board has repeatedly warned in the past on the negative effect of the cost of these allowances on company’s revenues. He has also talked about the lack of mechanism through which CEO would get back some of this money, to emit less in the future and invest in retrofitting. 78

“Government supports and agrees with the establishment of financial mechanisms to compensate the deficit of CO2 allowances of Oltenia Energy Complex. Currently, several financial mechanisms are identified, but before being approved and applied they must be agreed with the European Commission, the Memorandum being the formal document through which these discussions and negotiations can start.” Sorin Boza, President of Directorate of Oltenia Energy Complex

For the energy sector, especially for CEO, it is very important to find solutions in order to ensure the financing of acquisition of CO2 allowances, whose prices have exploded lately, endangering the activity of the company. energyindustryreview.com

METALS & MINING

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continuous casting machines, vertical casting machines for aluminium slabs and roll adjustment in cold and hot-rolling mills. In many countries, new steelworks and rolling mills are being built, and existing facilities are being renovated. The productivity of these facilities can be increased most effectively with the help of cross-technology solutions from one source such as Bosch Rexroth. Customers can even opt to have our experts look after the entire project from the initial planning through to turnkey delivery. Our automation solutions are offered around the globe and guarantee precision and reliability throughout the entire life span of your facility. Drive and control solutions developed by Bosch Rexroth increase the productivity of steelworks significantly. Highly precise gauge control systems with powerful hydraulic or electric drives guarantee high quality and excellent surface finish. Servo cylinders with control system ensure an optimized mold oscillation process. Our customers can rely on our associatesâ&#x20AC;&#x2122; application knowhow rooted in decades of experience. Moreover, our global presence guarantees customers service and support around the world.

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TECH

Volkswagen Group focuses on innovative mobility solutions

Volkswagen and Microsoft will co-develop the Volkswagen Automotive Cloud. | Photo: Volkswagen

ntering into a strategic E partnership, Volkswagen and Microsoft will collaborate to develop the ‘Volkswagen Automotive Cloud’, one of the largest dedicated automotive industry clouds for all future Volkswagen digital services and mobility offerings. The Supervisory Board of Volkswagen approved the conclusion of an agreement to this effect between Volkswagen and Microsoft on September 80

28. Volkswagen therefore continues to forge ahead with its digital transformation at full speed. With Microsoft as its strategic partner, the company is taking a decisive step in its digital transformation into a mobility provider with a fully connected vehicle fleet and the digital ecosystem ‘Volkswagen We’. “The strategic partnership with Microsoft will turbocharge our digital transformation,” said Dr. Herbert Diess, CEO of Volkswagen

AG. “Volkswagen, as one of the world’s largest automakers, and Microsoft, with its unique technological expertise, are outstandingly wellmatched. Together, we will play a key role in shaping the future of auto-mobility.” “Volkswagen is harnessing technology to digitally transform and deliver innovative new connected car services to its customers,” said Satya Nadella, CEO of Microsoft. “The world’s leading companies run on Azure, and we are thrilled that Volkswagen has chosen energyindustryreview.com

TECH

Microsoft. Together we will reimagine the driving experience for people everywhere.”

IN-CAR SERVICES AND PLATFORM BASED ON MICROSOFT TECHNOLOGY From 2020 onwards, more than 5 million new Volkswagen brand vehicles per year will be fully connected and will be part of the Internet of Things (IoT) in the cloud. The profound partnership between the two companies will lay the foundation for combining the global cloud expertise of Microsoft with the experience of Volkswagen as an automaker with a global market presence. Together, the two companies will develop the technological basis for a comprehensive industrial automotive cloud. In the future, all in-car services for vehicles of the core Volkswagen brand as well as the Group-wide cloudbased platform (also known as One Digital Platform, ODP) will be built on Microsoft’s Azure cloud platform and services as well as Azure IoT Edge. This will dramatically streamline the technical landscape. Via the Volkswagen Automotive Cloud, Volkswagen will considerably optimize the interconnection of vehicle, cloud-based platform and customercentric services for all brands, such as the ‘Volkswagen We’ ecosystem. By building the Volkswagen Automotive Cloud, Volkswagen will be able to leverage consistent mobility services across its entire portfolio and to provide new services and solutions such as in-car consumer experiences, telematics, and securely connect data between the car and the cloud. ESTABLISHMENT OF DIGITAL HEADQUARTERS As part of the new entity, Volkswagen will establish a new automotive cloud development office in North America near Microsoft’s headquarters. To help usher in a new wave of automotive transformation, Microsoft will provide

Volkswagen will build all in-car services for vehicles of the core Volkswagen brand as well as the Group-wide cloud-based platform (also known as One Digital Platform, ODP) on Microsoft technology. | Photo: Volkswagen

Via the Volkswagen Automotive Cloud, Volkswagen will considerably optimize the interconnection of vehicle, cloud-based platform and customer-centric ecosystem. Photo: Volkswagen

hands-on support to Volkswagen as it ramps up its new automotive cloud development office, including resources to help drive hiring, human resources management and consulting services. The workforce is expected to grow to about 300 engineers in the near future. Beyond the technological rationale of the partnership, Microsoft provides access to cloud expertise across their organization so Volkswagen developers and engineers can benefit and learn from Microsoft’s strong culture of collaboration and agility and can transfer those experiences into the core Volkswagen organization.

DEVELOPMENT OF THE LARGEST DIGITAL ECOSYSTEM IN THE AUTOMOTIVE INDUSTRY In the long term, the solutions developed through the strategic partnership will be rolled out to other Volkswagen Group brands in all regions of the world, building the foundation for all customer-centric services of the brands. This includes the Volkswagen ID. electric family as well as conventionallypowered models. In the future, Volkswagen’s fleet of cars will become mobile ‘internet of things’ hubs linked by Microsoft Azure. 81

TECH

PORSCHE INCREASES INVESTMENT IN START-UPS BY EUR 150 MILLION Porsche (part of Volkswagen Group) has increased its total investment in venture capital activities by EUR 150 million for the next five years. The objective of ‘Porsche Ventures’ is to gain access to trends, new technologies and business models. The investment activities being undertaken by Porsche Ventures build in part on the company’s existing start-up investment activities. As a strategic investor, Porsche is focusing on investments in business models relating to the customer experience, mobility and digital lifestyle, as well as on future technologies such as artificial intelligence, blockchain and virtual and augmented reality. Through its venture capital activities, the sports car manufacturer is seeking to invest in new companies that are in the early and growth phases. “To continue building on the success that we have enjoyed over the past few years, we must fundamentally change our business model. Porsche has always been among the pioneers of the automotive industry. To date, innovation has been driven to a large degree by technology and with strong links to our current core competencies. In some cases, the changes that are now becoming necessary are linked to topics beyond our main fields of expertise. With this in mind, it is essential that we build a strong ecosystem with competent partners,” explains Lutz Meschke, Deputy Chairman and Member of the Executive Board for Finance and IT at Porsche AG. A minority shareholding in Berlinbased start-up Gapless represents the latest investment made by Porsche Ventures. This new company allows customers to digitally manage their vintage vehicles, including the entire vehicle history, and share this information with other users in a secure format that prevents forgery. To offer this service, the start-up is developing a solution based on blockchain technology designed to maintain or increase the value of collector’s pieces. Gapless is currently in 82

The Swiss start-up WayRay develops and produces holographic augmented reality headup display technologies. | Photo: Volkswagen

The start-up Gapless allows customers to digitally manage their vintage vehicles, including the entire vehicle history. | Photo: Volkswagen

the foundation stage and employs nine members of staff. Porsche Ventures has also recently invested in fast-growing technology company WayRay. This Zurichbased start-up develops and produces holographic augmented reality head-up display technologies and is working on the ability to seamlessly integrate virtual objects into the driving experience. Porsche bought into WayRay as a strategic lead investor during the Series C funding round. The total value of the financing round is 80 million US dollars. In addition, the Stuttgart-based sports car manufacturer holds shares as a strategic investor in start-ups Anagog, Miles and home-iX, as well as technology and sports car company Rimac.

Alongside direct investment deals, Porsche invests in selected venture capital funds, such as e.ventures in Europe and the USA as well as the Magma and Grove funds in Israel. The company is also a member of the Startup Autobahn innovation platform. In March 2018, Porsche Digital worked with Axel Springer as part of a joint venture to launch the start-up accelerator programme APX. However, in its search for suitable partners Porsche does not invest in start-up companies alone. In addition to the deals being made via Porsche Ventures, the sports car manufacturer invests in established businesses that are making a difference to the field of mobility through pioneering technologies. energyindustryreview.com

TECH

3 Romanian young scientists won the 2nd prize at EUCYS he EU Contest for Young T Scientists (EUCYS) is an initiative of the European Commission under the Science and Society programme. It was set up to promote the ideals of cooperation and information exchange between young scientists. The contest is held each year in a different European city. The 2018 contest was held in Dublin, Ireland from 14 to 19 September. 450 million 1TB hard disks, stored in 1g of DNA, all at a maintenance rate of around EUR 10 a year - is the digital storage proposal by Alexandru Liviu Bratosin (17 years), Petru Molla (17 years), Mihnea Vlad Bojian (18 years), students at Lycée Français Anna de Noailles, Bucharest. The project called ‘DNAdrive’ brought them the second place in the competition. The main goal was to create a safer and more extensive digital data storage alternative. By exploiting the immune system of a certain bacterial strain, the students managed to write information in bacterial genome, encoded by a homecooked conversion algorithm. This year’s European Union’s top prizes for young scientists were awarded to siblings Adrian Fleck and Anna Amelie Fleck from Germany for ‘FleckProtec – Body Protection Made from Starch’, Nicolas Fedrigo from Canada for ‘Improving Spinal Fusions: Redesigning the Pedicle Probe to Prevent Vertebral Breaches’, and Brendon Matusch from Canada for ‘Development of a Level 2 Autonomous Vehicle Using Convolutional Neural Networks and

Reinforcement Learning’. The winning young scientists will receive EUR 7000 for each of the three outstanding projects. The winners were among 135 promising young scientists aged 14 to 20 from 38 countries and the European schools. They presented a total of 88 projects at the 30th edition of the EU Contest for Young Scientists in Dublin, Ireland, in the hope of impressing an international jury. All the winners shared a total of EUR 57.500 in prize money, as well as other prizes such as science trips. “I warmly congratulate the winners of this year’s contest on their fantastic achievement. It’s encouraging to see so much talent in these young researchers and innovators. They are our future – with their groundbreaking discoveries and innovations that are no doubt to come, we will be able to better tackle the great challenges and ensure our prosperity and well-being,” Carlos Moedas, Commissioner for Research, Science and Innovation, stated. This year’s winners received their prizes from the Irish Minister of Higher Education Mary Mitchell O’Connor and Wolfgang Burtscher, the Commission’s Deputy Director General for Research and Innovation. The jury was chaired by Professor Tony Fagan from University College Dublin. The participants had all previously won first prizes in their home countries’ national science competitions in their specific fields. The projects covered a broad spectrum of scientific areas, including biology, physics, chemistry, computing, social sciences, environment, mathematics, materials, engineering and medicine.

Non-cash prizes included trips to the London International Youth Science Forum and the Stockholm International Youth Science Seminar as well as prizes from corporate sponsors including trips to Intel ISEF in the US. They also consist of educational visits to the European Commission’s in-house science service, the Joint Research Centre, and the eight organisations making up the panEuropean research group EIROforum. The food industry donated four awards and the Bio-based industry also awarded a prize. Other awards were donated by PRACE supercomputing, the Salvetti Foundation, EuChemS, Bulgarian Mathematics Summer School and the Swiss Talent Forum. There were also several host country prizes on offer. The European Union Contest for Young Scientists was set up by the European Commission in 1989 to encourage co-operation and exchange between young scientists and to give them an opportunity to be guided by some of Europe’s most prominent researchers. The contest seeks to support national efforts to attract young people to study science, technology, engineering and maths (STEM), and to eventually choose careers in science and research. The number of participating young scientists has grown from 53 in the first competition in 1989 to an average of 150 a year. Female participation in the contest reflects the broader issue of underrepresentation of women in STEM. This year, 41% of the participants were female (55 girls vs. 79 boys) and 41% of winners were female. 83

ANALYSIS

Limiting emissions CARBON TAX OR CAP AND TRADE?

By this time, we already know how dangerous climate change is. What we seem to be scrambling to figure out is how to limit it. Everybody is pointing their fingers at the big pollutants: fossil fuels. Still, there are ideas on how to put a lid on the problem. Reducing the use of oil, gas and coal might just be a matter of putting pressure on the right places. And it seems the perfect place to apply pressure is on the pocket. Vlad-Adrian Iancu

utting the environment at P risk should come with some safeguards, or if that is not possible or too late, at least some penalties, right? According to the World Health Organization (WHO), an estimated 12% of global deaths in 2012 are due to air pollution. And who is to blame? Well, everybody and nobody it seems. So, society takes the brunt of it. That is why the two methods of pricing carbon have been the subject of debate for a couple of years as they also aim at promoting low-carbon fuels, energy efficiency and renewables. The carbon tax is the first one, putting a price on carbon use that is determined by the rate of the tax for each tonne of greenhouse gas emitted. Measures like this mostly impact power utilities, oil companies and all the CO2 producing industries. This also has the advantage of yielding money. Now, depending on each nation’s policy, this revenue could be distributed to taxpayers, used to fund clean energy programs or support people who have lost their jobs due to the transition towards a low carbon economy. One model for the implementation of this tax could be the one undertaken in British Columbia. Standing as the first ever jurisdiction in North America to adopt an economy wide carbon tax they can boast with a change that did not hurt their economy in the slightest. According to Stewart Elgie, Professor of law and economics at University of Ottawa: “What British Columbia has done is lowered taxes on investment income and employment and increased taxes on pollution, which is exactly what we should be doing with our tax system,”. British Columbia has had this carbon tax since 2008 with a gradual change each energyindustryreview.com

ANALYSIS

year in order for companies to get used to the new reality, with all the revenues going back as income tax cuts. Mexico and Chile also have an approach to this matter, with their 5 dollars tax per metric ton helps fund social programs. Sweden, which has this type of tax since 1991, proposes that 50% of the revenue is forwarded towards income tax cuts while the other half goes to the government. So, it seems to be working. Of course, this is still hotly debated in the US. There are concerns that a carbon tax could hamper economic growth, but according to Stanford Energy Modeling Forum (EMF) project (www.worldscientific. com/toc/cce/09/01) it would only do so by a very modest rate, one that is definitely offset by the benefits of cutting pollution and slowing down global warming: “In every policy scenario, in every model, the U.S. economy continues to grow at or near its longterm average baseline rate, deviating from reference growth by no more than about 0.1% points. We find robust evidence that even the most ambitious carbon tax is consistent with long-term positive economic growth, near baseline rates, not even counting the growth benefits of a less-disrupted climate or lower ambient air pollution”. Ted Halstead, the Climate Leadership Council’s Founder and CEO states that according to their polls (www.clcouncil.org/media/BakerShultz-Carbon-Dividends-Plan-SurveyResults.pdf), Americans are two-to-one in favour of their carbon divided plan and millennials favour it four-to-one. The second solution, cap and trade or emissions trading system is based on limiting the maximum level of emissions for a specific period of time with a specific permit for each firm that produces greenhouse gas. These permits can then be bought and sold between companies depending on their needs. While the carbon tax increases after a time, so will these permits decrease the amount of CO2 permitted. Of course, a floor and ceiling for the permits might as well be imposed. As with all things, a balance must be found. The European Union was the first entity to set an example with their cap and trade system in 2005 but they indeed

ran into some trouble. That is, if the price of the permits or the penalties are high enough then assuredly companies will look and invest in low-carbon solutions, but if the before mentioned are low, nothing much changes. Or, better yet, free permits were distributed to get the reluctant industries into the scheme. Revisions are set to take effect in 2021 in order to restrict emission limits, reduce the free permits and take low price permission out of the market. A good example of this mechanic being put into place is California, where the cap and trade system exists since 2012. With a permit price averaging at less than 15 dollars per metric ton, around 85% of emissions have been covered, one of the best results in the world. The state has met its climate targets four whole years in advance keeping all the while an ever-growing economy. Many argue that these methods should be imposed globally, with exactly the same price everywhere in order to avoid companies just moving their operations to a more permissive environment when the going gets tough. But which method works best? In this case using the same model for every area might not be the correct answer. Each carbon tax or cap and trade system should be developed according to the same standards but should include local provisions. Cap and trade seems like the better option since it offers a peak or target easily followed and quantified. On the other hand, carbon tax offers more stability for industrialists and entrepreneurs when talking about long term investments. There seems to be a solution for G20 countries however. According to a new International Monetary Fund working paper: “The analysis suggests that when a carbon tax covers carbon emissions from a country’s fossil fuel supply, it will raise substantially more revenue than today’s cap-and-trade plans”. Since this tax will apply to all emissions sources, it would be better at limiting said emissions and reducing deaths caused by local air pollution due to fuel combustion. According to the publication “State and Trends of Carbon Pricing 2018,”

(www.openknowledge.worldbank.org/ handle/10986/29687) a carbon pricing structure is already in place in 45 national and 25 subnational jurisdictions with prices ranging from less than 1 dollar to 139 dollars per metric ton. More than 1300 companies use or intend to use carbon pricing this year or the next. For the moment they are just using it as a simulation in their balance to prepare for the day it becomes a reality. According to estimates by The Carbon Pricing Leadership Coalition, carbon prices will have to settle somewhere between USD 50 and USD 100 per metric ton by 2030 in order for countries to abide by the Paris Agreement reduction targets. This sounds good in theory but as evidenced by some, governments are still hesitant on taking real palpable action: “If governments proved willing to impose carbon prices that were sufficiently high and affected a broad enough swath of the economy, those prices could make a real environmental difference. But political concerns have kept governments from doing so, resulting in carbon prices that are too low and too narrowly applied to meaningfully curb emissions”. So, while actions are being taken, they are not powerful enough. Nobody wants to take the blame maybe? According to experts the solution is multifaceted. A carbon tax or cap and trade will work but never on their own. In order to achieve any palpable results these actions have to go hand in hand with climate policies, switching to low carbon fuels and increasing renewable energy production. Removing carbon by non-industrial actions will also work but even more involvement is required if we’re talking about planting trees or tackling agriculture in a different manner. To sum it up, there are solutions. We should act on them while we still have the chance. The best way is to do it collectively… otherwise: “Pretty much every respected economic body in the world in the last few years has said we’re moving toward a global economy that will reward low-carbon, innovative, resource-efficient production. And if we don’t prepare ourselves for that, other countries are going to eat our lunch.” 85

ANALYSIS

Q4 Employment Outlook survey Romania amongst the countries with the highest hiring confidence Vlad-Adrian Iancu

abour market activity is a pretty L important subject, specifically when you want to measure the economic prowess of a country. This is why the Manpower Group interviewed upwards of 59,000 employers across 44 countries and territories in order to forecast what Quarter 4 of 2018 might look like in terms of the activity on the labour market. The participants were asked to anticipate how the total employment at their location might change in the remaining three months leading to December 2018 compared to the current quarter. A whopping 43 out of 44 countries are expected to see job gains in the following period. Let’s see the specifics. According to the report: “Fourthquarter hiring plans strengthen in 22 of 44 countries and territories when compared to the July-September time frame, weaken in 14 and are unchanged in eight. When compared to last year at this time, Outlooks improve in 23 countries and territories, weaken in 13 and are unchanged in seven”. This spells good news for us as Romania is mentioned amongst the countries with the highest hiring confidence, along with Slovenia, the U.S., Japan and Taiwan while Switzerland, Argentina, France and Italy feature the weakest. Speaking about the EMEA region, things are indeed looking good; an 86

increase in workforce is expected in 25 out of 26 countries in the region. Again, Romania and Slovenia are at the forefront with employers reporting the most optimistic hiring plans. At the other end, Switzerland again reports the lowest hiring plan as well as the only negative forecast of the report. This is from a pool of more than 21,000 employers across 26 countries in the EMEA region. Talking about Europe’s big four in terms of economies, only modest job gains are expected in Q4 with employers in Germany forecasting the most favourable hiring environment out of the bunch and the strongest Outlook in seven years. There’s no surprise that job prospects are waning in the UK which features only cautiously optimistic forecasts but hiring plans are set to remain stable. Both France and Italy are reported to have somewhat conservative hiring plans too with job gains “expected in most of France’s industry sectors and regions, but France’s Outlook dips slightly in both quarterover-quarter and year-over-year comparisons. Italy’s Outlook rebounds slightly from the prior quarter’s negative forecast and is boosted, in part, by the strongest Manufacturing sector Outlook reported since the country launched the survey in 2003”. Belgium’s work market looks to be on the rise in almost all sectors, the

biggest gains expected to show in the Construction and Finance & Business Services. The same story seems to unravel in The Netherlands where the most consistent employment growths show in the Utilities and Finance & Business Services sectors again. Some opportunities might pop up in all of Spain’s industry sectors and regions while Austria’s outlook is reserved with Manufacturing showing again the best prospects for the second time in a row since 2008. As mentioned, Romania and Slovenia are the stars of the report, with a positive Outlook all across the board, with Construction and Manufacturing showing an active hiring pace in Romania, respectively Construction and Finance & Business Services in Slovenia. Hungary also boasts the strongest Manufacturing sector in the EMEA for this quarter, also with serious job gains in Construction and Transport, Storage & Communications sectors. The report on the Nordic nations shows “employers in Finland anticipate the most fourth-quarter job gains with optimistic forecasts reported in both the Finance & Business Services and Manufacturing sectors” while Sweden’s high points come from Manufacturing and Wholesale & Retail Trade sectors and Norway’s on the downturn as compared to three months ago. energyindustryreview.com

A CONVERSATION WITH

R. WENDELL HARRISON DISTINGUISHED SERVICE PROFESSOR OF POLITICAL SCIENCE AT THE UNIVERSITY OF CHICAGO

AULA MAGNA, BUCHAREST UNIVERSITY OF ECONOMIC STUDIES (ASE)

WWW.ROEC.BIZ

EVENT

Holiday for oil and gas professionals Daniel Lazar

elebrated since 1990, at C the initiative of the Petrom Federation of Free and Independent Trade Unions, the Oilman’s Day is under the auspices of St. Mary, chosen as protector of workers in the oil industry. This day is dedicated to oil industry personnel, and also to those working in oil drilling, extraction, processing and research. The Gasman’s Day is also celebrated in September. The moment was marked by the Petrom National Union (SNP), in collaboration with OMV Petrom, through an event attended by unionists, company representatives, partners and collaborators, from both the country and abroad. On this occasion, Christina Verchere CEO of OMV Petrom - mentioned: “I am glad to attend your holiday, of oilmen, which takes place after 25 years as a recognition of efforts taken by those working in this industry. I don’t know about you, but I personally am very proud of working in the oil and gas industry. We have a huge responsibility and privilege, at the same time, to ensure energy to Romanians. Mobility, light, heating, these are the forms of energy we provide, some of them essential for the day-to-day life. We know that they are obtained with great effort, with commitment and dedication. We are here, first of all, to celebrate your efforts, but at the same time to enjoy this event.” In turn, Florin Bercea, President of Petrom National Union, said that “if Mrs. Verchere started to talk in Romanian, it means 88

she plans to stay here for a long time, and we want to have good results together, for both the company and the people we represent. I want it to be a true holiday and put in the centre of attention those who allowed us to be here. It’s about those that made the history of the oil industry in Romania, as well as those who are today at their jobs and enjoy this holiday from there. It is a recognition for those who work hard to bring energy to the country. I want to put the man in the centre of all our actions and think that it is a resource we can hardly replace.” In sign of appreciation for the collaboration so far, the representatives of the counterpart union in Austria, Gerhard Singer and Christine Asperger, gave to SNP President Florin Bercea a diploma of honour and a mock-up representing a well. Romania has an oil history of 153 years, full of global premieres and extraordinary results. The natural riches of our country and especially the way in which they were capitalized by the most experienced oilmen, have attracted the attention of the entire world. We are proud that Bucharest was the first city in the world lighted with oil, and in Prahova County the Mehedinteanu refinery was the first company in the world to produce kerosene. Also, in the chapter of world premieres, we were the first country in the world to export gasoline, in the ‘90s, and 4 years later, in 1904, the first school of vocational school for drillers was established, training the

first oilmen ‘with diploma’. Through their work and dedication, Romanian engineers have managed to bring our country to the top places in the world rankings and to remain in direct competition with the great powers of the world. On the second Friday of September, Gasman’s Day is also celebrated, in order to pay tribute to those who work in this important area of the economy, natural gas. The moment was marked on September 7th at the Natural Gas Museum in Medias by the official opening of the Fine Arts Exhibition organized in the space devoted to the temporary exhibitions of the Gas Museum by the Union of Fine Artists Medias subsidiary in collaboration with visual artists from Sighisoara. On this occasion works of art were exhibited, namely painting and sculpture, bearing the signature of wellknown artists. The exhibition can be visited until 20 October 2018, between the hours 09:00-15:30, at the Natural Gas Museum. Also, in the competition named the Gasman of the Month, this time attention was directed to Stefan Man, engineer, former general manager of Romgaz and honorary citizen of Medias. At the Natural Gas Documentation and Information Centre, films presenting events in the natural gas sector were projected on a screen in the Conference Hall of the Centre, the evening ending with a chamber concert. energyindustryreview.com

Under the High Patronage of:

Confirmed Speakers Include:

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ION STERIAN General Director

BEGAJETA HABOTA Head of Geology

EDWARD DAWSON CEO

STIPO BULJAN Secretary

Hellenic Hydrocarbon Resources Management Greece

TRANSGAZ Romania

Federal Ministry of Energy Mining and Industry Bosnia- Herzegovina

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Federal Ministry of Energy Mining and Industry Bosnia- Herzegovina

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Gastech celebrates record visitor numbers for 30th edition in Barcelona astech 2018, the global G exhibition and conference at the forefront of the international gas and LNG industries, which was this year co-located with GPEX, the global event enhancing energy transition, has closed with the organisers reporting in excess of 30,000 attendees over four days - a record for the 30th edition of the event. The four-day exhibition and conference held in Barcelona brought together 500 global exhibiting companies and a record number of visitors from across the upstream, midstream and downstream gas, LNG and energy industries worldwide. The industry-leading event saw more than 1,200 CEOs, Chairpersons, Managing Directors, Presidents, Government Officials and Ministers among 2,500 global conference delegates consider the key challenges facing the industry today, and discuss the most important topics that will shape the future of the world’s gas, LNG and energy industries for decades to come. During the event, 300 speakers examined the global drive towards the greater adoption of gas and LNG as 90

the fuel of choice and how the industry continues to see signposts pointing towards further long-term growth. Gastech 2018 explored the new demand centres for gas, the challenges for the gas sector in Spain and beyond and a range of other issues including the burgeoning trading sector, project financing, the interplay between gas and renewable energy in power generation, project development, managing emissions and project financial risk management. Another key theme was the growth of the North American gas and LNG industry, a topic that will be a focus for Gastech 2019, which will be co-located again with GPEX at the NRG Centre, Houston, September 17-19. Gastech and the inaugural GPEX (Global Power & Energy Exhibition), the new hub for the international power and energy community, shared the same location this year. The GPEX exhibition and conference focused on the current transition in the energy industry, including new business models, innovative technologies and novel approaches to power generation, transmission and distribution.

“Gastech has once again been an enormous success and has provided an unrivalled platform for global gas companies, organisations and influential figures to network, share their thoughts on the most pertinent issues affecting our industry today and to do business,” Jenny Kelly, Conference Director, Gastech, said. “We are grateful to everyone who made Gastech and GPEX such excellent events, including dignitaries, consortium members, exhibitors, speakers and attendees. But now our focus is completely on Gastech and GPEX 2019 in Houston. As the world’s energy capital, Houston is the perfect location for Gastech, which returns to North America for the first time in 20 years, and we expect to build on the success of our first GPEX. Houston’s first-class facilities and infrastructure make it an excellent destination to host events of the magnitude of Gastech and GPEX for the world’s strategic and technical energy professionals. We look forward to seeing you all in Houston!” - Jenny Kelly added. Preparations are already underway for Gastech and GPEX 2019, which will take place at the NRG Centre in Houston, Texas, 17-19 September 2019. energyindustryreview.com

www.globuc.com/blackseaoilgas

6 th ANNUAL CONFERENCE

BLACK SEA OIL AND GAS 23 - 24 October 2018 Bucharest, Romania

UNLOCKING THE POTENTIAL OF THE BLACK SEA THROUGH EXPLORATION AND INFRASTRUCTURE PROJECTS Organiser

EVENT

A brighter spectrum after SPE RSOM 2018

On 8th September took place the long awaited South-Central East Europe 2018 Regional Sections Officers Meeting (RSOM) of the Society of Petroleum Engineers (SPE) in Paris, France. 92

he registration was massive, 10 countries (Austria, Croatia, T Italy, France, Germany, Hungary, Romania, Poland, Ukraine, UK) were represented by 37 participants to the RSOM, coming from 8 different Sections and 10 Student Chapters. The SPE Romanian Section was represented by an important delegation: Dragomir Alexandru - SPE Romanian Section Chairperson; Florea Minescu - Professor at Petroleum-Gas University of Ploiesti; Laura Precupanu - SPE Romanian Section Secretary; Manuela Badea - SPE Romanian Section Treasurer; energyindustryreview.com

EVENT

Tudor Catanoiu - SPE Romanian Section - PetroleumGas University of Ploiesti Student Chapter Former Vice-President; Cosmin Ghita - SPE Romanian Section University of Bucharest Student Chapter Chairperson. The Agenda of the event had the main purposes to allow everyone exchange good practices, disseminate the daily issues of Oil and Gas (O&G) industry and find answers to all unclear facts about SPE at a local, regional or global level. The event started with the welcome message, from SPE Regional Director for South, Central, and East Europe, Jean-Marc Dumas, which created a constructive atmosphere, followed by the introduction of participants. This part was followed by the keynote speakers Johana Dunlop - HSSE Technical Director and Member of SPEI Board of Directors, Phil Chandler and Ola Davies – SPE London Office, who made an update of SPE International and SCEE Regional. On the second part of the event every representative had the time to highlight and debate the hottest topics in Oil and Gas industry nowadays and to show his organization (National Section, Student Chapter or Young Professional) strengths by presentations in a new and revolutionary way, called Pecha Kucha style. A couple of topics discussed were: Educating and representing our industry to the public; Promoting embracement of digital technology/revolution in O&G; Volunteerism an enduring principle of SPE; Enhancing collaboration between SPE and academia; Collaboration between SPE and O&G related organizations; Preparing students for PetroBowl or Student Paper Contest or Being successful in awards nominations. The output of this discussion was tremendous, giving the opportunity to all representatives to implement the good practices discovered and to mitigate the effect of the daily issues. The meeting was closed by the long-awaited award ceremony. We are highly proud to announce that two of the SPE Romanian Section members and one of the most supportive companies of this section received the following regional awards: • Professor Florea Minescu from Petroleum-Gas University of Ploiesti: Reservoir description and dynamics regional awards 2018; • Liviu Stefan Firu from OMV Petrom: Production and operations regional awards 2018; • Romgaz: Distinguished corporate support regional award 2018. The SPE Romanian Section is really grateful to the host SPE French Section and SPE Regional Director for South, Central, and East Europe, Jean-Marc Dumas, who facilitated such an amazing event and proved once again that the SPE gathers the most dedicated and motivated professionals. 93

EVENT

Three Seas Initiative Summit EC PRESIDENT ANNOUNCES INVESTMENTS WORTH EUR 150BN Adrian Stoica

Plenary Session - An Initiative which delivers - key projects in energy, transport, digital interconnections. The Three Seas Initiative as catalyst for the cohesion and convergence of the EU and for the strengthening of the transatlantic link (18.09) Photo: Flickr Â© Three Seas Initiative 2018 BUCHAREST SUMMIT 94

energyindustryreview.com

EVENT

C President Jean Claude Juncker announced at the Three Seas Initiative Summit, which took place in Bucharest during 17-18 September, that EUR 150bn would be invested in the region between the Adriatic Sea and the Black Sea. Thus, projects in the energy, digital and transport sectors will be supported, all three vital for the integrated development of Europe. The Three Seas Initiative - Baltic Sea, Black Sea and Adriatic Sea - a project started three years ago, aims at cooperation in the field of energy, transport and communication infrastructure between the member states. “Europe needs to breathe with two lungs, one from the east and the other from the west, and we must put more emphasis than ever before on cooperation, to use a common language,” EC President Jean-Claude Juncker urged Three Seas Summit participants. He pointed out that the European Union (EU) allocates money for infrastructure development, to be able to travel faster and easier, for energy and gas supply, as well as for other investment projects. “We encourage projects. For example, between Poland and Lithuania, we have a project financed through a special mechanism. We believe that this project can later be used a model of links between EU countries. We have EUR 150bn in investments between the two seas, the Adriatic Sea and the Black Sea. We need to take advantage. Mrs. Commissioner Corina Cretu is in charge of this matter. We have a large range of projects. For example, EUR 2.5bn allocated for infrastructure alone, especially in your region. The same for energy and gas supply. These projects must be encouraged. And the gas pipeline between Austria, Bulgaria, Hungary and Romania (BRUA). And Junker Plan. Unfortunately, it is very little mentioned. It is a European investment plan. We would like to make available all the financial means you need, all the financial possibilities that the EU has will be provided to you,” Junker explained. Present in Bucharest, US Government envoy and Secretary of Energy Rick

Perry insisted to remind all those present about the aggressive stance of Russia. “This dependence of Europe to Russian gas has increased from 30% to over 40%, which creates concerns,” he said. In turn, US President Donald Trump has sent a message to the head of state, Klaus Iohannis, on the occasion of the summit in Bucharest, showing that the US remained a partner in the expansion of energy, transport and digital infrastructure. “New energy infrastructure is essential to supporting deeper economic integration, opening access to new markets, and diversifying energy sources throughout the region. I applaud Romania, Bulgaria, Hungary, Austria, and Slovakia for the progress they have made to support energy diversification through the construction of gas pipeline infrastructure. The United States remains a proud partner in these efforts through liquified natural gas exports to this strategically important region and the participation of American companies in the Three Seas Initiative Business Forum. At many levels, our country remains committed to working with the 12-member nations to continue expanding energy, transportation and digital infrastructure”, US President pointed out.

AUSTRIA WANTS NORD STREAM 2 AND BRUA AS WELL According to Austria’s President Alexander Van der Bellen, one of the main targets for both countries in the region and the European Union must be energy supply to European citizens and security in this field. “Energy security remains a prerequisite for realizing innovation, growth and our common potential. Energy supply to European citizens should be our common target, which requires the diversification of energy resources and transport routes (in the field - Ed.). We need both. Nord-Stream 2 is an important example of diversification of these efforts. Also, we particularly appreciate BRUA project, which supplements the energy pipeline from Romania to Austria. By diversifying suppliers to Central and Eastern

Europe, we strengthen our supply security,” Alexander Van der Bellen said. From the current position, when it holds the Presidency of EU Council, Austria plans to complete the EU’s green energy package, by the end of this year. “As an important investor in the region, Austria is pleased that the countries in this region are striving to improve their infrastructure, implement the principles of the European Union, which will be the key to building the necessary infrastructure that will enable the EU to compete in a globalized world,” Van der Bellen mentioned. The Austrian official also said that high performance, transport infrastructure along with the transport corridor between the participating countries in the region is a precondition for economic development and more efforts should be made to develop the digital infrastructure. Austria also welcomes the DAPhNE project, which provides for the development of the Danube.

POLITICAL SIGNAL The list of priority interconnection projects presented within the Three Seas Initiative Summit is “a political signal at the highest level”, Klaus Iohannis said during a joint statement with Croatia’s President Kolinda Grabar-Kitarovic, Poland’s PM Mateusz Morawiecki and US Secretary of Energy Rick Perry. “The main argument for Romania to assume the Summit in Bucharest was the potential of this Initiative to address the real need of the 12 participating states for economic development and regional interconnection, in order to reach convergence with Western Europe,” the head of the Romanian state has stated. He added that the high officials attending the event had adopted a joint statement stipulating the fundamental principles underlying the Three Seas Initiative and the concrete objectives targeted by this platform. “We now have a common understanding on the main objectives of the Initiative, which are pro-economic development in the region, pro-European Union and pro-Transatlantic connections,” Klaus Iohannis underlined. 95

EVENT

World’s first Zero Emission Vehicle Summit he UK held the world’s first Zero T Emission Vehicle (ZEV) Summit on September 11-12, bringing together representatives from across the globe to support and collaborate on a zero-emission future for transport around the world. Ministers, officials and business leaders from over 40 countries descended on Birmingham and Bedford for the twoday event, which sought to accelerate investment in both zero-emission technology and infrastructure. The Prime Minister, Theresa May, told delegates at day one of the conference in Birmingham that she wants to see Britain “leading from the front and working with industries and countries around the world to spearhead change”. And to help support that aim, the government has pledged £106 million for research and development in zero emission vehicles, new batteries and low carbon technology. This will be bolstered by over £500 million worth of investment, creating over 1,000 jobs across the UK. A total of 55 people spoke at the summit, including keynotes from companies such as Nissan, who emphasised the need to focus not only on the car but on the energy network too. Commitments made as part of the landmark summit include: • Signatories from 13 governments committing to a zero-emission future for transport, through action including consumer incentives, international collaboration, integration of zeroemission infrastructure into town planning and support for research and 96

development; • The first meeting of the Electric Vehicle Energy Taskforce – a group convening government with the energy and automotive industries – to plan for future electric vehicle uptake and ensure the energy system can meet future demand in an efficient and sustainable way; • A Clean Van Commitment from 16 of the UK’s largest van fleet operators to have nearly 2,400 ZEV vans by 2020 and go completely zero emission in cities by 2028; • A new £1 million fund from summit sponsors, Lex Autolease, to provide £1,000 off the first 1,000 pure electric vehicle orders from January 2019; • Trials of new LEVC vans with London Fire Brigade and the Met Police; • Plans for a new Degree Apprenticeship Centre at the University of Warwick which will focus on the high value manufacturing sector, backed by £10 million of government funding and with space for 1,000 students. “No one nation can tackle the effects of climate change alone. But as a community of nations, taking global action, we can not only have a bigger impact but unlock huge shared economic opportunities. That’s why the UK hosted the world’s first Zero Emission Summit. We are working to create a platform for international co-operation and knowledge sharing on emissions issues, gathering together signatories from around the world to agree the Birmingham Declaration and, we hope, helping to create a cleaner, greener legacy for future generations,” Jesse Norman, Roads Minister said. “As the global automotive industry goes

through this transformative period, the leasing industry has a huge role to play. We have been working with customers for a number of years to help them upgrade to low emission vehicles – where it’s the right move for them as individual drivers or fleets. One of the key benefits of leasing an electric vehicle is that customers avoid any of the potential risk associated with its future resale value. With battery technology and range continuing to improve, electric vehicles are fast becoming suitable for mainstream motorists. With this in mind, we’re pleased to have announced our new £1 million fund to encourage wider take up of zero emission technology,” Tim Porter, Managing Director of Lex Autolease, the vehicle leasing arm of Lloyds Banking Group, commented. The summit follows the Prime Minister’s ambition set out earlier this year to put the UK at the forefront of the design and manufacturing of zero emission vehicles, and for all new cars and vans to be effectively zero emission by 2040. The government’s Road to Zero Strategy published in July set out a clear pathway to zero emissions, to give clarity and certainty to both industry and motorists. The work is all part of the government’s Future of Mobility Grand Challenge, outlined in its modern Industrial Strategy, aiming to help reduce greenhouse gas emissions, make travel safer, improve accessibility, and present enormous economic opportunities for the UK. The summit was the next step in the mission to put the UK at the forefront of zero-emission technology saw industry stepping up to the challenge alongside the government. energyindustryreview.com

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OCTOBER’S READING

The future of operations – Beyond process automation Bringing cognitive robotic intelligence into the workplace. A cognitive toolkit enabling organizations to advance their business operations. he journey toward establishing a solid Robotic and T Cognitive Automation (R&CA) foundation can be a multi-faceted and unpredictable venture. To help companies harness the benefits these technologies offer, Deloitte Israel and NICE Advanced Process Automation Solutions joined together to create this implementation guide. The whitepaper is designed to combine the unique and innovative experience of both a global consulting firm and technology provider. It aims to provide a practical point of view on how to effectively leverage the growing trends of Robotic Process Automation (RPA) and Robotic & Cognitive Automation (R&CA). A key ingredient for success is to treat automation as a business transformation, in order to achieve scale, stability and ultimately long-term business value. As such, this paper addresses some of the most pressing questions and issues surrounding R&CA transformations. In addition, practical insights and techniques are explored via a business case example, to provide organizations with the guidance needed to kick-start or advance their process automation journeys. The rate at which technology changes resembles an exponential curve. On the other hand, the adoption of new technology on an enterprise level is much slower. Technology forms an integral part of everyday life, and cognitive technologies and Artificial Intelligence are making greater inroads into the lives of humans. Artificial Intelligence has the potential to drive sustainable competitive advantage and business value. In addition, Artificial Intelligence is fast becoming a transformative technology, which will have a far-reaching impact on how we interact and make decisions. 98

A lot of organizations are stumbling on a practical level to take the steps needed, and are seeking the answers to many questions, like: • What is Robotic & Cognitive Automation? • Why should enterprises embrace R&CA and what value will be gained by embracing R&CA? • How will R&CA influence the enterprise? • How do enterprises work with R&CA and what are the next steps? A simulated business case shows how a customer interfaces with robotic and cognitive technology and employee involvement during the process. See how R&CA can transform an organization’s processes one step at a time. See the report here: https://www2.deloitte.com/content/dam/ Deloitte/global/Images/infographics/gx-consulting-foo-beyondprocess-automation-info.pdf energyindustryreview.com