Energy Industry Review - September 2018 by Energy Industry Review

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The long hot summer and the Offshore Law

Daniel Lazar

very day I repeatedly open sites with E economic news in our country, to take the real pulse of business environment in Romania and not only. Optimism, crisis, investment, insolvency, profit, unemployment, hiring, restructuring, all are influenced by the current context, as well as the legislation. A sad but significant figure for industry has caught my attention: over 25,000 people have left, over the past ten years, five leading energy companies. Of course, it is debatable whether the staff schemes before the adjustments were oversized, or whether we pay tribute (and we will continue to pay for sure) to the widespread penetration of technologies. But, as I said, legislation also has a decisive role in these figures in the labour market. The business environment obstinately requests predictability, but those who have led the country have rarely taken into account in the most unambiguous way possible this desire of those who pay taxes and duties making investments. In this hot summer, a new law has set on fire the Parliament of Romania, as tough negotiations on the offshore law have opened a conflict between state leaders. The legislative act has had a long path, being approved by the Government and sent to the Senate, which voted it quickly and exactly in the form proposed by the Executive since last autumn. On 9 July, the Parliament voted the legislation regulating the regime of Black Sea gas exploitation, but President Klaus Iohannis sent back to the Parliament the legislative act for review. Chamber of Deputies’ Speaker Liviu Dragnea promised that this law could generate, after other blocks would have been exploited, revenues of USD 40 billion. The Social-Democrats want companies such as Exxon, Romgaz, Lukoil or OMV Petrom to pay royalties and windfall taxes depending on the price at which they sell the gas extracted, if they drill in the Black Sea. Moreover, half of what they extract must be sold in Romania.

According to the National Agency for Mineral Resources, Black Sea gas reserves amount to 200 billion cubic meters in the blocks where drilling has already been executed. It means that the country’s total production would double in the following 20 years, Romania being able to become the third largest gas producer in Europe! “If it comes to exploitation, it will mean more natural gas produced in Romania, so there will be prospects for increased competition and lower prices in the EU. It is an opportunity for Romania to play a regional role,” Razvan Nicolescu, energy expert and former minister of energy, has highlighted. Ink wasn’t even dry on the signatures of those who have validated this law and, only several days after, the Government of Romania made the decision to adopt an Emergency Ordinance to ‘clarify’ the Offshore Law, as PSD leader Liviu Dragnea announced, this being a law ‘of huge importance for Romania’. The decision also came after US Ambassador Hans Klemm said “the Parliament adopted the Offshore Law violating all principles of transparency and negotiation.” The representatives of companies did not agree either with the proposals voted by the elected officials in the joint industry and administration committees. As it was expected, the provisions of the new law are not precisely pleasing the investors, which want lower taxes and higher profits. “We couldn’t accept that Romania continues to maintain its energy dependence on Russia. The fact that we put 50% of the entire production on bilateral contracts and 50% to be traded on the Romanian market means that Romania becomes one of the few countries in the world that becomes energetically independent,” Liviu Dragnea reasoned the solution adopted. The conclusion is clear: only recently adopted, the Offshore Law will suffer changes. As everyone knows, energy resources are part of the strategic war of this world. But actually, no winners come out from a war... 3

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Content 38

Transgaz invests in eastern corridor development The operator of the national gas transmission system Transgaz plans to develop the eastern corridor through which gas to be extracted from the Black Sea will also reach the Rep. of Moldova.

Dumitru Chisalita Judicial Technical Expert in Oil & Gas page 20

Merkel and Putin to solve Nord Stream 2 gas pipeline conundrum The German government has been pursuing its Nord Stream 2 project for years, despite criticism from the United States and some Eastern European nations. Recently, at a meeting with Vladimir Putin near Berlin, Angela Merkel sought to dispel concerns that the pipeline would disadvantage Ukraine.

Ioan-Corneliu Dinu Scientific Counsellor at WEC - RNC page 22

Crown of concrete and doors of steel at the ITER Tokamak complex

Ciprian Nicolae ITER aims to produce a significant amount of fusion power (500 MW) for about 7 minutes or 300 MW for 50 minutes.

Principal at CVI Dom Maklerski page 24

62 Florin Aconstantinesei Petroleum Engineer at OMV Petrom - ICPT Campina page 42

First CEH facility in compliance with EU environment law The Ministry of Energy announced that as of 27 August, Paroseni thermal power plant has been operating in compliance with environmental values imposed by the European legislation, after an investment of EUR 65.3 million. Through this investment, Paroseni thermal power plant was equipped with a desulphurization plant that eliminates 94% of the SO2 emissions. energyindustryreview.com

26 68

Electric vehicles sales in Europe surpassed 1 million

Norway is Europe’s largest market, though Germany looks set to overtake it by the end of the year. Still, electric cars accounted for just 2% of new registrations in Europe between January and June. All Europe markets showed growth during the first half of 2018, though with varying pace.

Is coal on the way out?

Three Keys to Transelectrica evolution: Investment-Innovation-Progress CEO Adrian Constantin Rusu talks about the importance of the Power Transmission Grid, European projects in which the company is involved and the development strategy in European context.

Over the past few decades the production and consumption of coal in the EU has been in steady decline, due to the closure of coal mines and the phasing out of coal use for power generation. A new JRC study, titled ‘EU coal regions: opportunities and challenges’, investigates the impact of this transition on the regions most affected by the decline of coal.

92 H1 Review: Results, profits, dividends and statistical data Romania’s energy colossus Turceni TPP celebrates 4 decades of performance In July 1978, five years from the start of works at Turceni Thermal Power Plant, the turbo-generator no. 1 of 330MW was connected to the national energy system.

The manufacturing and extractive industries were the stars of the five months of the year in Romania in the share of industrial production compared to the same period of the previous year. Yet, electricity and heat, gas, hot water and air conditioning production and supply fell by 1.7%. 5

NEWS

BHGE BREAKS GROUND ON CSC FOR INSPECTION TECHNOLOGIES IN EUROPE

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aker Hughes, a GE company (BHGE), recently broke ground on a new European Customer Solutions Center (CSC) for its Inspection Technologies (IT) business, one of the world’s leading providers of non-destructive testing (NDT). The CSC will be housed on IT’s existing Wunstorf, Germany site and will be the flagship CSC for European customers and partners. BHGE will invest a significant amount in the millions of dollars in the new 9.250 sqm CSC and plans to add up to 100 jobs to the Wunstorf site as part of the project. The announcement follows the grand opening of IT’s largest CSC globally in Cincinnati, USA, earlier this year. Like Cincinnati, the Wunstorf CSC will also bring the most advanced NDT technologies under one roof, including x-ray, CT, ultrasonic, remote visual inspection and sensor solutions. Given the Wunstorf site’s heritage as BHGE’s radiography center of excellence, the CSC will have a specific focus on 2D X-ray systems and 3D computed tomography (CT), supplemented by high-tech applications for ultrasonic and electromagnetic inspection. In addition,

the facility will also house managed services for parts inspection and allow for personalized setups for training and collaboration. “The manufacturing industry is changing, and Industrial Internet of Things coupled with our innovation in X-ray, CT, and other inspection technologies enables us to set new standards in industrial quality and product reliability assurance,” said Holger Laubenthal, CEO of Inspection Technologies for BHGE. “We will support our customers through this change and that’s where a place like this Customer Solutions Center will be a huge asset. Here in Wunstorf, our experts will work together with our customers to develop technologies to solve individual challenges. We like to see ourselves as problem solvers, and I believe no one else in the industry can offer this level of high-quality service for non-destructive testing,” he added. IT is one of the world’s leading suppliers of non-destructive testing (NDT) technologies and services. The business offers customers a broad spectrum of professional applications in the field of state-of-the-art 2D X-ray systems (X-Ray) and 3D computed to mography (CT) as well as ultrasonic in spection and electromagnetic inspection.

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NEWS

THE SILICON VALLEY OF EASTERN EUROPE

luj-Napoca is considered the unofficial capital of the Transylvania region. In an effort to solve public problems and promote sustainable development, the city is boosting economic engines in the creative industries and university sector. ClujNapoca is stepping up as a technology hub that’s been nicknamed the Silicon Valley of Eastern Europe. As a technology hub, the ultimate goal is to improve the quality of life for citizens by focusing on five main areas: transport and mobility; citizen engagement; energy; infrastructure; and Internet access. More than 15,000 people work in the local IT sector, and the city is home to nearly 1,300 IT businesses, which mostly focus on outsourcing and process

optimization. The city is now looking to give the IT industry a boost of creativity to help strengthen innovation and the development of new products, creating the Transylvania Industries Cluster - the first in Romania - that works alongside local universities. Through these types of collaborations, the city hopes to create a cluster effect that allows competitiveness growth through information exchange, business partnerships, and economies by using shared resources (spaces and equipment). One great example of how ClujNapoca is boosting sustainability and making its systems more streamlined: a smart parking system in the city centre. In an effort to move away from a cash society and reduce air pollution, the city has developed an application that signals available parking spaces in real

time and allows drivers to easily pay online. The public transport system is also transitioning to become more carbon friendly, adding 10 electric buses to the fleet, with plans for 20 more on the way. Catering to a smartphone society, applications have been created for public transport, guided city tours, and city administration services. Thanks to the ‘My Cluj’ app, citizens can quickly engage with city officials on any issues they may have, as well as access administrative documents like agreements and certificates. Since launching, more than 5,000 users have signed on and reported issues on the app. By creating a city of ‘smart citizens’ and offering them the technology and tools to improve everyday issues, Cluj-Napoca is well on its way to achieving smart city status as Romania’s tech hub.

CASPIAN SEA OIL AND GAS AGREEMENT SIGNED BY 5 STATES

eaders of the five countries – Russia, Azerbaijan, Iran, Kazakhstan and Turkmenistan, along the Caspian Sea have signed a convention aimed at ending decades-long uncertainty over exploitation of its resources. The five countries also signed agreements on trade and economic relations, transportation, and the fight against terrorism. The agreement signed on August 12 in Aktau, Kazakhstan, by the presidents of the five states establishes rules for declaring each country’s territorial waters 8

and fishing zones. But the issue of how the seabed, which contains rich oil fields, will be delineated between the countries remains subject to further negotiations. “This issue will be settled additionally in the course of agreements between the relevant parties,” Iranian President Hasan Rouhani, stated. Rouhani also hailed a clause in the convention that prevents non-Caspian countries from deploying military forces on the Caspian Sea, adding, “The Caspian Sea only belongs to the Caspian states.” In his turn, Russian President Vladimir Putin said the settlement of the Caspian

Sea’s legal status “creates conditions for bringing cooperation between the countries to a qualitatively new level of partnership, for the development of close cooperation on different trajectories.” Kazakh President Nursultan Nazarbaev affirmed the agreement allows for the construction of underwater oil and gas pipelines, as well as setting national quotas for fishing. The parties agreed to set up a “special mechanism of regular fiveparty consultations under the auspices of the Foreign Ministries” to implement the provisions of the convention. energyindustryreview.com

NEWS

A PREMIERE FOR BACAU - ITS FIRST EV CHARGING STATION

ompetrol Downstream inaugurated on August 13 a new Rompetrol station in Bacau. This is the third unit in the city and it comes in addition to the other gas stations located on the European road E85, that connects Bucharest and Suceava. For the first time in the city of Bacau, the new unit is endowed with an EV charging station, a free service offered to all Rompetrol customers who own electric or hybrid cars. This service has become also available at the Rompetrol station on Republicii Street no 100. “The company continues to develop and consolidate its presence in Bacau and to cater to the needs of its customers by means of new fuel stations, innovative products and services. The efforts of the company are fully supported by over 120 Rompetrol employees, both in the city, where we have three gas stations, but also in the county where we operate another six fuel distribution stations. Our fuel that is produced by the largest refinery in Romania and one of the most modern in the Black Sea region - Petromidia Navodari. Our LPG bottle-filling terminal in Itesti enhances our presence as well,” stated Vlad Rusnac, Chief

Retail Officer of KMG International and GM of Rompetrol Downstream. By means of the facilities and services it provides, the new premium station addresses the needs of the inhabitants of Bacau, as the unit is endowed with two Efix and EfixS fuel dispensers, WiFi internet services, multimedia systems, modern payment facilities, and the hey restaurant - which promotes healthy food that is prepared quickly and will satisfy those who want a new revitalizing experience. The new station is also equipped with a modern lighting system with LED technology that allows it a low energy consumption. The EV charging can be done via AC and DC at 22kW, and the capacity of 50kW allows the simultaneous charging of two cars. Thus, it takes only 20 minutes for an electric vehicle to be charged at 80% capacity in the Rompetrol station, while in a regular station it would take between 7 and 8 hours. “The total investment in the new fuel station amounts to 1.1 million dollars, thus the contribution of Rompetrol to the budget of Bacau county last year represents 2.6 million dollars”, pointed out Vlad Rusnac. 9

NEWS

PETROLEXPORTIMPORT GOES INSOLVENT AFTER 70 YEARS OF EXISTENCE

etrolexportimport, an importer of petroleum products established 70 years ago, will become insolvent, the application to open the simplified insolvency proceedings following to be approved in the Extraordinary General Meeting of Shareholders scheduled for 1 October. “The Board of Directors of Petrolexportimport informs investors and shareholders that, following the analysis of the annual financial statements for the financial year ending on 31 December 2017 and of the interim financial statements prepared on 30 June 2018, it has found that the net asset of the company calculated as difference between total assets and total debts fell to

less than half of the value of the paid-in capital, recording negative values; at the request of creditor Piraeus Bank Romania, in the enforcement file no. 103 EP/2018 the property located in Bucharest, 72 Unirii Blvd., bl. J3C, Section 1, District 3, has been foreclosed. The Board of Directors, finding the insolvency of the company, will convene the Extraordinary General Meeting of Shareholders and propose for approval the formulation of the application for opening the simplified insolvency proceedings according to Law no. 85 of 25 June 2014 on insolvency and insolvency prevention procedures, also considering the concurrent dissolution causes from § 1.” The company was established in 1948, having as main object of activity

the export of crude oil and all petroleum derivatives. As of 1 January 1991, it was transformed into a joint-stock company, being the main foreign trade agent in the field of import of crude oil and export of petroleum products for the Romanian refining system. Until 1997, Petrolexportimport has held the monopoly of import and export of crude oil and petroleum products through the refining system in Romania. Since 9 May 2000, the company was fully privatized. Currently, Petrolexportimport imports and sells petroleum products, petrochemical products and additives for Romanian refineries, as well as for other domestic customers, through a distribution network.

ENERGISE LAUNCHES ONLINE INTERACTIVE DATASET

nternational ENERGISE team launches new online interactive dataset which maps over 1,000 sustainable energy initiatives across Europe. In response to the increasingly urgent climate change challenge, the European Commission is promoting several climate and energy targets with the goal to reduce greenhouse gas emissions and decarbonise the economy. However, the current pace and scale of change is insufficient to achieve the necessary sustainability transitions in the energy system; there is an increasing realisation that meeting energy targets is highly dependent on several complex aspects 10

of final energy consumption patterns or energy demand. Recognising these concerns, ENERGISE is an innovative panEuropean research initiative to achieve a greater scientific understanding of the social and cultural influences on energy consumption. Funded under the EU Horizon 2020 programme for three years (2016-2019), ENERGISE develops, tests and assesses options for a bottom-up transformation of energy use in households and communities across Europe. The international ENERGISE research team has conducted a systematic classification of over 1,000 existing sustainable energy consumption

initiatives (SECIs) from 30 European countries. As the lead on this ambitious task, colleagues at Aalborg University in Denmark have just launched these data in an open access online database. The database informs users about the content, scale and objectives of SECIs that specifically address final consumption, as well as providing an assessment of how the challenge of addressing excessive energy consumption is understood. The database and interactive map will be an invaluable resource for energy practitioners, researchers, community groups or anyone seeking good practice examples of energy initiatives from all over Europe. energyindustryreview.com

Achieving Operational Excellence NA Solid Petroserve Ltd. is a Canadian oilfield services company specialized in wireline and well testing services for oil and gas industry. Originally registered in Alberta Canada, Solid has been an active service provider, for over 15 years in Tunisia and Romania providing our customers with quality wireline and well testing services at competitive prices. NA Solid Petroserve Ltd. has made a commitment towards achieving operational excellence. Our goal is to deliver the highest possible value to our customers by providing the highest quality services and technical support. NA Solid Petroserve Ltd. provides full service capability for all types of slickline-conveyed BHP and downhole flow-control equipment. Our wireline service fleet includes fully-equipped wireline service trucks, along with truck-mounted cranes. We are committed to Health, Safety and Environmental concerns of our employees, contractors, clients and surrounding communities. Our goal is to build and maintain long-term service relationships with our customers.

NA Solid Petroserve Ltd. offers a variety of well testing equipment packages and services to meet virtually any well production testing program requirement.

Well Testing Services Early Production Facilities Wireline Services Downhole Measurements

EPF solutions provided by NA Solid Petroserve Ltd. enable our customers to generate early cash flow while continuing to evaluate reservoir potential. Real time data acquisition of well production parameters (pressure, temperature, flow rates etc.), combined with analysis of produced fluids enable real-time monitoring and appraisal of reservoir performance. Downhole Measurements include QuartzElectronic Memory and Surface Read-Out Gauges and also a downhole shut in tool, to allow for a quicker well build up and better pressure data quality.

Canada : (+1) 587-316-6877 Romania : (+40) 724 854 094 info@nasolid.com www.nasolid.com 11

NEWS

SHEARWATER TO ACQUIRE SCHLUMBERGER MARINE SEISMIC ACQUISITION BUSINESS

hearwater GeoServices Holding and Schlumberger jointly announced that they have entered into a definitive agreement for Shearwater to acquire the marine seismic acquisition assets and operations of WesternGeco, the geophysical services product line of Schlumberger. The transaction is subject to regulatory approvals and other customary closing conditions. The parties expect to close the transaction in the fourth quarter of 2018. Shearwater GeoServices will operate the combined businesses as a global, customer-focused and technologydriven provider of marine geophysical services. Shearwater will own and operate a fleet of 14 fully equipped seismic vessels offering a full range of acquisition

services including 3D, 4D and ocean bottom seismic (OBS). Shearwater shall continue to develop and offer high quality processing and imaging services and Reveal software. The company will also have a portfolio of proprietary streamer technology and processing software enabling effective execution of geophysical surveys and delivery of highquality data. After completion of the transaction, Shearwater will have close to 600 employees and operate in all major offshore basins around the world. “With the divestiture of our marine seismic acquisition business, WesternGeco will be strategically positioned as one of the largest asset-light geophysical services providers in the oil and gas industry. Through access to the industry’s global marine fleet, including

Shearwater’s vessels, we will continue to provide our customers with exploration and discovery services that leverage our leading global multiclient library, advanced seismic imaging and interpretation services, with the aim of helping to accelerate hydrocarbon discovery,” Maurice Nessim, President, WesternGeco, stated. Under the terms of the agreement, Shearwater will acquire 10 high-end seismic acquisition vessels, including seven 3D vessels and three multipurpose vessels (MPVs) configured to serve the growing OBS market, 12 complete streamer sets with spares, as well as two source vessels. The proposed transaction also includes WesternGeco proprietary marine seismic technology, as well as development and manufacturing facilities in Norway and Malaysia.

EU SUPPORTS ROBOTICS TECHNOLOGIES IN ENERGY

he EU-funded robotics project ESMERA (European SMEs Robotics Applications) has opened its first competitive call for experiment proposals. Within the European Commission’s Horizon 2020 Research and Innovation Programme, ESMERA aims to boost robotics innovation by European Small and Medium sized Enterprises (SMEs). In the context of ESMERA small-scale research projects, so-called ‘experiments’, will be conducted. SMEs developing 12

robotic technologies may now apply for providing solutions to predefined reallife challenges. The respective challenge winners will receive direct financial support through a cascade funding mechanism of up to 200.000 euros each. In January 2018, the European Commission launched the ESMERA project to unlock the innovation potential of robotics SMEs. ESMERA promotes applied robotics technology developed for industrial challenges set by key European companies. Thereby the SMEs get a chance to implement, apply

and prove new technologies that address real-life problems and thus already have a market. Key European companies have defined eight real-life industrial challenges that seek innovative robotics solutions. The challenges, that apply to the four areas of Energy, Manufacturing, Construction and Agri-food, have been selected because of their innovation potential. They allow multiple approaches and let SMEs be free to explore new directions in developing robotics technologies. energyindustryreview.com

NEWS

FIRST MULTILATERAL WELL DRILLED IN ROMANIA

MV Petrom started production from a new offshore well LVO7, drilled in the Lebada Vest field. LVO7 is the first multilateral well drilled in Romania. Drilling works started in February, being part of the offshore campaign announced in September 2017. “As part of this campaign, four new wells will be drilled: three wells in existing fields and one exploration well. Although the producing fields in the Black Sea have a production history of 30 years, they continue to provide a significant part of the group’s total production. The current drilling campaign is in line with our strategy to exploit the full potential of our core portfolio and to make production more efficient in order to manage the natural

decline”, stated Peter Zeilinger, Executive Board Member of OMV Petrom responsible for Upstream, at that time. According to OMV Petrom press release from September, 2017 “the campaign includes the drilling of two wells by the end of 2017 and another two wells by mid-2018, with estimated investments of around EUR 70mn; the wells are planned to be drilled to depths of up to 2,000 meters below sea level”. “Multilateral drilling is a new technology that allows us to reach different target zones within a reservoir through a single well. Multilateral wells allow us to recover additional resources from our mature fields and to increase production, while managing costs. I am proud that this new technology was successfully implemented in OMV

Petrom”, Peter Zeilinger, member of OMV Petrom Executive Board, responsible for Upstream, pointed out. The investment for drilling the well and connecting it to existing infrastructure amounts to approximatively 30 million euro. The well has two branches which were drilled at a length of ~3,200 meters, respectively ~2,200 meters below the seabed. With an initial production of 1,700 boe/day, LVO7 ranks among top 10 producing wells in OMV Petrom’s portfolio. Lebada Vest is the biggest offshore oil field in Romania which is currently in production. It was discovered in 1984 and has already been producing for decades, thus facing the challenges and strong investment needs related to a mature field.

GOVERNMENT APPROVES 16 STRATEGIC PPP INVESTMENTS

he Romanian Government passed a decision on August 23 to approve 16 strategic investment objectives that will be prepared and assigned in publicprivate partnership (PPP) through the National Strategy and Prognosis Commission. Eight of the projects approved are newly introduced. Among them are Turnu Magurele - Nicopole Hydrotechnical Complex on the Danube River and Tarnita - Lapustesti Pumped Storage Hydro Power Plant (PSHPP). Turnu Magurele - Nicopole Hydrotechnical Complex would ensure the long-term economic development of

Turnu Magurele city as well as the water supply of nearby towns and villages so they are no longer dependent on the Danube’s levels. The future hydropower installed capacity will be about 400 MW, that will help increase the energy security of Romania and lower dependence on imports. Also, this could be a new way of communication and railway land between Romania and Bulgaria. Another objective by creating Turnu Magurele - Nicopole Hydrotechnical Complex will be regulating the Danube, with positive effects for flood protection by embankments and drainage works or port raising works. Through this project, the government relies on the

economic revitalization of the region of Turnu Magurele, creating new jobs and benefitting from infrastructure modernization. Tarnita - Lapustesti PSHPP is an objective of national interest, considering the essential role that it will have in the participation to the necessary frequencypower ratio, upon the commissioning of the 3 and 4 CNE Cernavoda groups, during 2015 - 2017. In this context, the construction of hydroelectric pumped storage pumping Tarnita - Lapustesti represents a priority to short and medium-term strategy for development of the Romanian energy sector in the period 2007 - 2020. 13

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NEWS

MOL GROUP AND APK STRATEGIC PARTNERSHIP

OL Group and APK AG signed a strategic cooperation agreement in Merseburg, Germany. As a first step in the cooperation MOL will support the completion of APK’s Merseburg plant. The plant will serve as a pilot for the innovative solvent-based process, called Newcycling®, which enables the recovery of high-quality materials from complex multi-layer packaging. “In line with MOL 2030 strategy, we are taking steps to grow our petrochemicals business and enter knowledge intensive industries together with strategic partners. We see a growing demand from our customers

for recycled plastics and at the same time we are also fully committed to the idea of circular economy and sustainability. We aspire to become leaders in recycling in Central and Eastern Europe and with today’s agreement we are marking the first milestone on this journey. MOL, as an established polymer player in CEE, together with an innovative partner as APK will work on further developing the Newcycling® technology and bringing it to our core region where the need and the potential for plastic waste recycling is significant,” Ferenc Horvath, MOL Group’s EVP for Downstream commented. APK developed an innovative recycling technology named Newcycling® that can be applied to a

broad variety of mixed plastic types and process them into high-quality recyclates. The first Newcycling® plant using APK’s core technology is currently being set-up at APK’s headquarter in Merseburg. One of the cornerstones of MOL Group 2030 strategy is to expand the company’s petrochemicals value chain. As such MOL Group plans to invest around USD 4.5 billion until the end of the next decade into petrochemical and chemical growth projects. As part of this growth strategy MOL Group intends to build up its recycling capabilities, as plastic recycling is the most cost-efficient and environmentally friendly option for a responsible management of plastic waste.

SOCAR’S OIL TRADING ARM PLANS FOR LNG MARKET

OCAR Trading - a trading house of Azerbaijan’s state oil company SOCAR - supplied more than 12 cargoes of liquefied natural gas (LNG) for a gas power plant in Malta. “We are showing increased interest in LNG operations after successful participation in the gas power plant project in Malta. After the start of operations within the project in January 2017, SOCAR Trading specialists began to look for similar projects around the world. Pakistan, Benin and a number of states in the Mediterranean region are being considered. Today, active work is also continuing in Côte d’Ivoire, where it is planned to build a terminal for re-gasification of liquefied natural gas. Construction has not yet begun; however, 16

most of the necessary research and planning has been completed,” the company informed. Headquartered in Geneva, SOCAR Trading was incorporated in December 2007 as the marketing arm of the State Oil Company of Azerbaijan Republic (SOCAR) with a mandate to market Azeri barrels produced from the Azeri-Chirag-Guneshli field and other surrounding fields in Azerbaijan. While the company continues to market the bulk of SOCAR crude oil export volumes from Ceyhan port in Turkey, it has also been able to develop significant thirdparty volumes through both leveraging its system barrels, as well as its experienced traders developing new business. As of June 2017, SOCAR Trading

counts 257 employees worldwide, concentrated in its 5 main trading offices in Geneva, London, Singapore, Dubai and Houston as well as several other representative offices. Established in 1993, briefly before the Azeri-Chirag-Guneshli (ACG) production sharing agreement was signed by Azerbaijan’s President Heydar Aliyev in 1994, the State Oil Company of Azerbaijan Republic (SOCAR) was envisaged to be an integrated oil and gas company with assets across the entire value chain. While it has traditionally been an upstream oil and gas focused company, SOCAR now has a considerable presence in transport infrastructure and downstream, both in Azerbaijan and worldwide. energyindustryreview.com

NEWS

FIRST ENERGY EFFICIENT ISLAND IN GREECE

he Greek island of Tilos is an energy pioneer. Its installation, with EU funding, of a hybrid wind and solar power station is helping to change the way in which electricity from renewable sources is produced and consumed. Chosen first out of 80 projects to receive EUR 11 million of funding under the EU’s Horizon 2020 research and innovation programme, TILOS is an important research and development initiative. T.I.L.O.S. (Technology Innovation for

the Local Scale, Optimum Integration of Battery Energy Storage) aims to develop and operate an intelligent, innovative hybrid system using solar and wind energy, which, through a battery storage system, will cover (to a micro-grid level) the electricity needs of the residents of the village of Livadia (~500 residents) on the island of Tilos in the Dodecanese. TILOS is using new technologies to bring significant benefits to the local community and the economy. It will optimise the island’s energy production in a sustainable way, ensuring self-

sufficiency, lower prices for consumers, greater stability and a smaller ecological footprint. It will also help the country reduce its dependence on imported energy sources. Furthermore, smart management of the system will allow surplus energy to be used to charge electric vehicles for local transport. Once the project is completed, Tilos’ energy system will be managed to eventually meet all of the island’s energy requirements from renewable sources while, at the same time, regulating consumption.

EU IMPORTS OF U.S. LNG ON THE RISE

ince the arrival of the first U.S. LNG carrier in the Portuguese port of Sines April 2016 and today, EU imports of liquefied natural gas from the U.S. have increased from zero to 2.8 billion cubic meters. In their Joint Statement of 25 July in Washington D.C., President Juncker and President Trump agreed to strengthen EU-U.S. strategic cooperation with respect to energy. In this context, the European Union would import more liquefied natural gas from the United States to diversify and render its energy supply more secure. The EU and the U.S. will therefore work to facilitate trade in liquefied natural gas. “The European Union is ready to facilitate more imports of liquefied natural 18

gas from the U.S. and this is already the case as we speak. The growing exports of U.S. liquefied natural gas, if priced competitively, could play an increasing and strategic role in EU gas supply; but the U.S. needs to play its role in doing away with red tape restrictions on liquefied natural gas exports. Both sides have much to gain by working together in the energy field,” European Commission President Jean-Claude Juncker said. “Diversification is an important element for ensuring the security of gas supply in the EU. Increasing imports of competitively priced liquefied natural gas from the U.S. is therefore to be welcomed. This is happening at a time when EU indigenous gas production is declining more rapidly than foreseen and there is an accelerated phase-out of coal power plants in the EU,” Commissioner for Climate Action and

Energy, Miguel Arias Cañete, added. The EU has co-financed or committed to co-finance LNG infrastructure projects worth over EUR 638 million. In addition to the existing 150 billion cubic meters of spare capacity in the EU, the EU is supporting 14 liquefied natural gas infrastructure projects, which will increase capacity by another 15 billion cubic meters by 2021, which could welcome imports of liquefied natural gas from the U.S., if the market conditions are right and prices competitive. Currently, U.S. legislation still requires prior regulatory approval for liquefied natural gas exports to Europe. These restrictions need to be addressed and U.S. rules made easier for U.S. liquefied natural gas to be exported to the EU. energyindustryreview.com

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OPINION

The end of the cheap gas era Dumitru Chisalita - Judicial Technical Expert in Oil & Gas

fter the peak of gas prices reached in 2012, A the price fell to a level similar to the ‘90s. After 6 years of low gas prices, we will enter a new ‘era’ of prices, significantly higher. This period was used in an intelligent manner by companies and countries, to streamline certain activities, reduce costs, initiate investments in infrastructure (which otherwise wouldn’t have met the conditions of feasibility), and which allowed repositioning in the market. In fact, this period of cheap gas was used to prepare the following period, of expensive gas. Unfortunately, Romania did not take advantage of this period, hoping, like the cricket in the fable, that gas prices would remain forever low. The lack of strategy, failure to apply the existing legislation on market liberalization and ensuring a fair price in the market etc. will find many gas consumers unprepared for the following period, when gas prices increase, and applying the populist measures from the past to solve the problems of gas consumers’ vulnerability will only accentuate the problems in the future. The draft amendment to the gas law not only does it fail to come up with solutions to prepare Romania for this new ‘era’ of gas, but it also contains articles that will lead to an escalation of prices, i.e. an increase in prices for end-consumers. We notice that ‘The decision of today can ruin the joy of tomorrow’.

HISTORY AND TRENDS OF GAS PRICES IN ROMANIA The wholesale market: Analysing the transactions carried out during January – December 2017, on 20

platforms made available by the Romanian Commodities Exchange (BRM), we determined the average price weighted with the gas quantities purchased with delivery in the respective month, taking into account gas from domestic production traded on BRM. It can be noticed that starting with Q2 2018 there is an inflection of the trend of the weighted average price curve, which increased in Q2 2018 by 12.6% compared to Q2 2017 for gas from domestic production, expecting an increase by 15.6% in the price in Q4 2018, compared to Q4 2017. Analysing the minimum/maximum price limits of gas traded on the wholesale market through BRM’s trading platforms delivered in 2017 and those to be delivered until December 2018, we estimated an upward trend of the price of gas from current production, above the trend of 2017. The maximum price of gas traded in June 2018, with delivery in December 2018, is by 30% higher than the maximum price traded in the summer months with gas delivery in the winter 2017/2018, which shows that suppliers expect a significant increase in gas prices in winter months. Given the obligation established by ANRE for gas storage, the increase in petroleum products prices and thus in import gas prices, Romanian practice to use gas from import as balancing gas in the cold season will bring significant price increases in the cold season of 2018/2019 vs. the cold season of 2017/2018. We can notice an upward trend of the gap between the minimum/maximum price of gas traded on BRM, which shows how far we are from a normal market and especially the need to apply the natural gas law, amended 2 years ago by GEO 64. energyindustryreview.com

OPINION

The retail market: Transactions through the exchange on the retail market are increasingly few. To be able to compare the prices of gas traded, as commodity, we determined for each consumer who performed transactions the related regulated tariffs and thus deducted the price of gas as commodity, prices valid from the trading month for one year. Average prices of transactions performed on the retail market during October 2017 â&#x20AC;&#x201C; June 2018 were in continuous growth. The household market: Gas price trends, for both gas from domestic production and imported gas to be necessary in the cold season, as well as the use of gas from the underground storage facilities will lead to an increase in the price of gas for population in the cold season by around 10%, based on BRM data. Based on the same transactions, carried out on BRM, the conclusion is that the increase in gas prices for population will be much higher in the northern part of the country, where

the price could go up by around 13%.

HISTORY AND TRENDS OF GAS PRICES GLOBALLY Analysing the global trends of gas prices, we can see an upward trend of gas prices. CEGH Vienna Exchange, the closest European gas exchange to Romania, recorded a slight increase in gas prices in Q4-18 compared to Q417 according to futures contracts, by around 10%. The experience of the past years allows the use of this price as a benchmark for the price of gas from the Russian Federation sold in Central and Eastern Europe. Analysing the gas price trend in the US in futures prices Q4-18 vs. the average price in Q4-17, we can notice a trend of significant increase in gas prices, which according to certain analyses will be by 8%, but there are also analysts who show that it will increase by 40% in the following winter.

OPINION

A MODEL TO FOLLOW

Mini-wind power plants for agricultural areas Ioan-Corneliu Dinu – Scientific Counsellor at Romanian National Committee of the World Energy Council

he small agricultural firms are interested, among T others, in two topical subjects, one relating to the business portfolio, in terms of cultivated areas, production and the related products, their harvesting and marketing, and also the economic sustainability of the entire chain, from ploughing, fertilization, cultivation etc. An important place is held by the energy consumption and environmental protection issues. In this case, energy supply represents for the agricultural producer the approach to be considered as one of the sine qua non necessities in the chain described above. And, as renewable energy represents a key point on the agenda of the final document of the Paris Agreement on climate change, resolutions related to the production of energy from renewable sources and the respective energy consumption also obviously affect agricultural areas. This results in the idea to install mini-wind power plants with a maximum power of 25 Kw on poles recommended not to be higher than 24 m. The recommendation to use mini-wind power plants in agriculture appears in the National Energy Strategy of Italy, strategy launched by the Ministry of Development through the Energy Department last year. Of course, specialists in the field, rather concerned about energy efficiency, put first the optimal ratio between the development requirements of the agricultural firm and the supply and demand of energy produced. The advantages of installing mini-wind power plants for an agri-food firm having the productive establishment in 22

an energy efficient area include: • Much lower costs compared to other electricity generation forms; • Thanks to the incentive mechanisms, the installation of the mini-wind power plants is rapidly depreciated; • the possibility that at the place of energy production, after being partially used by the agricultural firm, energy be sent/sold in the network, considering the natural factors that are decisive in such situations. Support and incentive schemes for investments in plants producing energy from renewable sources, in parallel with the energy regulations in force, must be sustainable and approved/promoted by the legislative system. To better understand the possibility of a further expansion of using certain electricity generation technologies, in particular of installing mini-wind power plants, specialists claim that consultancy firms in this field should be considered. Hiring them is important in terms of new technologies that could have technical and economic implications requiring advice and punctual technical resolutions. In terms of installation of mini-wind power plants, it is indispensable not to create false opinions and distortions, such as: it is fundamental that users are certain that wind intensity in the installation perimeter do not fall below certain parameters measured and taken into account in the design and execution of the entire energy assembly. Providing details from a conceptual point of view about the portfolio and how the mini-wind power plant must be energyindustryreview.com

OPINION

chosen to the detriment of other sources used to produce electricity (solar sources, for example) it can be stated that compared to the solar power plant with the same installed power of 25 Kw, with the current technology the entire investment does not exceed EUR 100,000. Also taking consideration of the dynamics between supply and demand, there are small advantages of wind power plants, although support schemes are in favour of photovoltaic power plants. What makes attractive the use of the miniwind power plant is the quicker return on investment, within 8-10 years, obviously in an area with appropriate wind activity. Another advantage of using the mini-wind power plant in an agri-food farm is the fact that energy produced can be sold â&#x20AC;&#x2DC;locallyâ&#x20AC;&#x2122; if the wind activity is intense, sale sanctioned only after ensuring all the necessities for the farm itself, i.e. the operation of agri-food machinery and equipment, heating the farm, cooling it depending on the season etc. In the previous situation the owner may use the interchange of electricity with the grid as a so-called

battery to conserve the surplus energy produced. But, with all these advantages, without long-term strategic approaches, strategies containing rules on the future development of electricity production systems, obviously considering at the same time the environmental impact caused by the random installation of the support pillars, the propeller generator (engine), reduction of the sonic impact experienced in the localities near the installations. Therefore, the future of wind power will always be subject to various technological improvements. Concluding, it can be said without mistake that in areas with good wind and solar activity, the mini-wind and solar power plants can be considered complementary. Thus, a well-integrated project from a technical and economic point of view and well supported with investments, an adequate electricity and heat distribution to the neighbouring localities, permits and approvals necessary for investment development itself, proving the complementarity of the two systems becomes axiomatic - a model to follow in almost all areas where the two sources are properly present.

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OPINION

What kind of debt do institutional investors look for? Ciprian Nicolae, Principal, CVI Dom Maklerski

n the US and Western Europe, private debt has become mainstream and managed to become an investment class on its own. In Romania, as well as the majority of CEE countries, it is still rather unknown method of financing a company’s growth. At European level, according to Deloitte Alternative Lender Deal Tracker Summer 20181, private debt is primarily used for M&A transactions, amounting to a total of 67% of transactions aiming to fuel acquisitions while dividend recap, refinancing or growth capital are in minority. While these statistics do take Romanian deals into consideration, it is clear that they do not represent at all the current situation given the small number of private debt deals happening locally. This year alone we, CVI, have managed to provide a 25m EUR financing to Aaylex Group, after two previous investments carried out in 2017 – in Impact SA (EUR 12 million) as well as One United Properties (EUR 20 million). Of course, we do not make the whole Romanian market as in the past years we have also witnessed a number of smaller deals, mostly targeting retail investors, that floated on the Bucharest Stock Exchange’s AeRO market. Overall, we see that there is a growing appetite coming from local entrepreneurs to diversify their companies’ financing structure, be it through equity or private debt, although still at lower levels when compared to players from other regional markets, Poland being the ultimate leader in this field. In Romania, primarily thanks to the low cost,

Deloitte Alternative Lender Deal Tracker Summer 2018, available here: https://www2.deloitte.com/content/dam/ Deloitte/uk/Documents/corporate-finance/deloitte-uk-aldt-summer-2018.pdf

traditional bank financing remains the most popular mean of financing businesses, regardless of that fact that it offers limited leverage and flexibility, long and strict investment process and is generally not available for financing small and medium-sized M&A tickets. When looking at these specific characteristics and comparing them with the financing offered by private debt companies, it is clear that we do not compete with banks – our target businesses are completely different. Why so? Because we have a higher, when compared with banks, return expected due to a higher risk profile. This already helps us filter out an overwhelming majority of projects, where companies are looking for the lowest possible cost of capital. For those entrepreneurs who are looking for flexibility rather than low cost, private debt financing is usually the best possible choice – it allows to keep full control of the business, brings greater structural flexibility, provides access across the full capital structure and is significantly faster than bank financing. Most importantly, it is available for higher-risk situations where the banks are usually not able to provide financing and is provided under a tailor-made structure. While it all sounds relatively straightforward, given how robust the Romanian entrepreneurial sector has become in the past few years, even managing to re-start the local IPO market after a decade of inactivity from private companies, why do not we hear about more local private debt deals? On one hand, it is caused by the lack of awareness from entrepreneurs that such financing opportunities are present in Romania, which we are dedicated to changing, engaging in dialogues with many local companies. On the other hand, it is also caused by the fact that taking into consideration the higher risk already adherent to this kind of instrument, our screening process is also a thorough one, energyindustryreview.com

OPINION

which requires a large level of openness and transparency coming from the entrepreneurs themselves. We are open to provide financing for all kinds of goals – working capital, capital expenditure and investments, acquisitions, buyouts, refinancing of existing debt or even payment of additional dividends, but we always require a sound business plan from our partners that shows how can it support the company’s growth prospects. In practice, this means that we do analyse the business model drivers, look for opportunities, analyse the competition and of course carry out advanced financial analysis that looks at profitability, cost, balance sheet structure, liquidity, cash flow and financial metrics and rating. In some cases, we encounter bottlenecks or deal-breakers that we cannot overpass but in others, we manage to find partners, to whom we become a lender of a choice. We’ve had 108 such partners last year alone, private companies, to whom we provided financing, 2 of them

being Romanian. We keep looking for more, eager to grow the Romanian private debt market and further the development of the local economy.

ABOUT CVI CVI is a private debt manager, one of the largest investors in the region of Central and Eastern Europe and one of the biggest European institutions investing in corporate debt instruments, based in Warsaw, Poland. CVI begun its operations in 2011 and quickly became the leader in non-bank debt financing in Poland and the region. Since 2012, CVI has closed over 700 corporate debt transactions (out of which 450 were in private debt) and invested over EUR 1.6 billion in CEE. CVI has currently over EUR 1.3 billion assets under management out of which estimated EUR 1 billion is invested in private debt in the region. The company plans to double that amount no later than by 2021.

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INTERVIEW

3 Keys to Transelectrica Evolution Investment-Innovation-Progress

The National Power Grid Company Transelectrica SA is the transmission and system operator in Romania that manages, operates, maintains, upgrades and develops the transmission network, which includes 81 electric substations, with a capacity of over 38,000 MVA and 8,834.4 kilometres of overhead electric lines of 100/220 kV, 400 kV and 750 kV, managed by eight transmission branches. Transelectrica has recently accepted the upgrade works at the Substation 400/220/110/20 kV Suceava, an important node of the Power Transmission Grid (PTG) ensuring the safe operation of the National Power System (NPS) and connecting the historical provinces of the country. In an extended discussion, CEO Adrian Constantin Rusu talked about the importance of the PTG, European projects in which the company is involved and about the companyâ&#x20AC;&#x2122;s development strategy in European context.

INTERVIEW

Adrian Constantin Rusu has an experience of over 40 in the energy field, and within CNTEE Transelectrica SA has spent almost half of his career, being employed in the Company since its establishment, in 2000. Over the past 20 years he has held several management positions within Transelectrica, but also within other companies, for a brief period. Adrian Constantin Rusu graduated in 1979 from the Electrical and Power Engineering Faculty - the Electric Power Section within the Polytechnic University of Bucharest. In 2001, he obtained the title of Ph.D. engineer in electric power at the Polytechnic University of Bucharest. • April - May 2018 - Member of the Management Board - CNTEE Transelectrica SA • November 2016 - April 2018 - Manager of DM RET - CNTEE Transelectrica SA • June 2015 - November 2016 - Director of the PTG Maintenance and Operation Division - CNTEE Transelectrica SA • February - June 2015 - Director of the New Technologies Division CNTEE Transelectrica SA • November 2013 - February 2014 - Member of the Supervisory Board of Hidroelectrica SA • September 2013 - February 2015 - Director of the New Technologies and Non-Regulated Activities Division - CNTEE Transelectrica SA • March - September 2013 - Member of the Management Board CNTEE Transelectrica SA • November 2012 - March 2013 - Head of Excellence and Solutions Centre Compartment - CNTEE Transelectrica SA • June - November 2012 - Director of the PTG Operation and Maintenance Division • April 2011 - June 2012 - Program Director - Transelectrica Solutions • April 2010 - April 2011 - Special Projects Engineer - Electrica Muntenia Nord • June 2009 - April 2010 - Director of OMEPA Branch - Transelectrica • March 2009 - June 2009 - Investment Director - CNTEE Transelectrica SA • February 2007 - March 2009 - Director of Bucharest Branch - CNTEE Transelectrica SA • November 2005 - February 2007 - Deputy Director Asset Management Division - CNTEE Transelectrica SA • November 2001 - November 2005 - Chief Engineer - Bucharest Transmission Branch - CNTEE Transelectrica SA • May 2001 - November 2001 - Deputy Head - High Voltage Section Bucharest Transmission Branch - CNTEE Transelectrica SA • 1998 - 2001 - Head of the High Voltage Section - Bucharest Transmission Branch - CNTEE Transelectrica SA • 1984 - 1998 - Deputy Head of the Ploiesti High Voltage Section; Head of the Teleajen High Voltage Center; Senior Engineer Protection Automation Measurement (PRAM) • 1979 - 1984 - Head of the Mechanical - Power Workshop - Valenii de Munte Mining Operation Company - Electro mining 28

This year Transelectrica has a very serious and ambitious investment plan. In H1, the company commissioned investments worth RON 166mln and it has major projects in progress: closing the 400-kV ring, projects of common interest at European level, retrofitting and upgrade of substations.

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INTERVIEW

Dear Mr. Rusu, you have a career of almost 40 years in the energy sector and in Transelectrica you have spent more than half of this time. It can be said that this Company represents your life. Since May you have been appointed CEO of Transelectrica. What is your management approach? Indeed, most of my career has been dedicated to this Company, which, as you say, represents for me more than a job. When we talk about Transelectrica, it must be clear that we are talking about a company of strategic importance providing a public service and I would like to emphasize that the strategic importance of this national company is not limited within the countryâ&#x20AC;&#x2122;s borders, but exceeds

them, due to the role that Romania, through Transelectrica, has in the region in terms of energy security. Therefore, the priority objective of this company is to ensure the safety in operation of the power system, and it can only be achieved by permanently making investments and maintaining the facilities. Such a strategy translates in a long term in sustainability and predictability for the Company, shareholders and investors, because we shouldnâ&#x20AC;&#x2122;t forget that Transelectrica is a company listed on the stock exchange. This is where we start in the management approach, these are the concepts we build on. It is strategic to develop a vision focused on investments, to substantially improve the amount of investments, to

INTERVIEW

introduce the concept of digitization and channel all our efforts on this direction. Transelectrica has this year a very serious and ambitious investment plan. In H1 2018, we commissioned investments worth RON 166mln and we have major projects in progress and which we will start: closing the 400kV ring, projects of common interest at European level, retrofitting and upgrade of substations. Transelectrica is a strategic company at national and regional level. What is Transelectricaâ&#x20AC;&#x2122;s position in this European context? At European level, the energy sector is in a process of deep transformation. Emphasis is placed on transition from a predominantly national model of evolution and

development of the energy sector to an integrated and coordinated development model at European level, that would ensure unitary development at the continental level and also allow for adaptation to national specificities and the pursuit of legitimate interests of European countries. As an integral part of the European interconnected system, Transelectrica is responsible not only for the functioning of the Romanian power system under the safety and quality parameters and for supply to national consumers, but together with the other transmission and system operators, it has extended its competence and responsibility at European level. We are talking about 36 countries with 532 million consumers. Transelectrica is a valuable partner in preparing and

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INTERVIEW

Transelectrica is a strategic partner in preparing the ENTSO-E 10-year network development plan. Electricity transmission networks play a crucial role in meeting European aspirations, especially in terms of safety of supply to consumers, the formation of a common energy market and the integration of renewable sources.

negotiating legislative packages applicable to the energy sector, being part of the European family, as a member of ENTSO-E (European Network of Transmission System Operators for Electricity). Transelectrica has been an active partner through its technical and operational expertise as a transmission and system operator both in the process of developing the European network codes within the ENTSO-E structures and in the negotiation stages at European Commission level and through the competent ministry at the European Parliament level. Transelectrica is a strategic partner in preparing the ENTSO-E 10-year network development plan. Electricity transmission networks play a crucial role in meeting European aspirations, especially in terms of safety of supply to consumers, the formation of a common energy market and the integration of renewable sources. Within the ENTSO-E, integrated and coordinated planning of panEuropean transmission infrastructure development (TYNDP: 10-year network development plan) is carried out, the main corridors and priority projects (list of projects of common interest) are identified and incentive mechanisms are used to accelerate their implementation (e.g. the Connecting Europe Facility - CEF). Transelectrica develops, at national level, the planning of the development of the Romanian electricity transmission network, taking into account projects of regional and European relevance (e.g. cross-border interconnectivity, RES integration), as well as projects of national relevance (retrofitting, upgrade, replacements of equipment worn physically or morally). In parallel with the negotiations on the adoption of the energy regulatory framework, a number of projects are being carried out at the level of transmission and system operators, aimed at implementing the European single energy market,

implementing European network codes or investigating the specific aspects on challenges of the new legislative package: Clean Energy Package. The integration of the Romanian electricity market into the European internal market is a major objective of Romania, circumscribed to the strategic objective of creating the European internal energy market, a priority objective for Europe, which requires coherent measures and joint efforts of all the involved entities: competent ministries, regulatory authorities, transmission and system operators, energy exchanges. In this context, it is important to mention that Romania is at the confluence of the European CentralWest (CORE) and South-East (SEE) regions, and due to this position, we aim to become an interregional integration factor, thus contributing to increasing security and sustainability at panEuropean level. Operating since 2014 in the 4M MC coupled market (Romania, Hungary, Slovakia and the Czech Republic), Transelectrica has become a partner in the projects in Eastern-Central-Western European (CORE region), while being active in the Southeast European region, thus expanding its scope of engagement and competence across Europe. Simultaneously with projects for market coupling and coordinated allocation of cross-border transmission capacity, Transelectrica is part of the development and operationalization of platforms for trans-European trading in balancing energy. These platforms will contribute to an optimization of the process of balancing the electric power systems at European level, generating economic and social welfare and contributing to increased safety in electricity supply to European consumers. I would like to highlight what I meant by saying that Transelectrica specialists are very active, being part of many projects at European level involving transmission and system operators. 31

INTERVIEW

I mention only: TERRE - Trans European Replacement Reserve Exchange (implementing an information platform (LIBRA) dedicated to trading offers for the replacement reserve of the participating electric power systems), MARI - Manually Activated Reserves Initiative (implementing the European balancing platform for trading manual Frequency Restoration Reserves (mFRR)), PICASSO - Platform for the International Coordination of Automated Frequency Restoration and Stable System Operation (implementing a European balancing platform for exchanges between Transmission and System Operators of automatic

frequency restoration reserves) and IGCC - International Grid Control Cooperation (Imbalance Netting) (creating a unique European platform for real-time imbalance netting, in order to reduce costs with balancing energy). We are partners in European innovation research projects such as CROSSBOW, a project that proposes to share resources to promote the cross-border management of renewable energies and storage facilities, allowing greater penetration of renewable energy sources, while reducing the operational costs of the network and improving the economic benefits of RES and storage facilities. This project

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INTERVIEW

Transelectrica has six projects of common interest worth more than RON 1 billion, within the ‘Black Sea Corridor’ and ‘Mid Continental East Corridor’ clusters, part of the priority electricity corridor ‘Northsouth electricity interconnections in Central Eastern and South Eastern Europe’ (NSI East Electricity).

benefits from European financing of EUR 17mln. Transelectrica is part of the RESERVE project (Renewables in a Stable Electric Grid), a project aiming to investigate new concepts on technological system services, in conditions of large scale integration of renewable energy sources into electric power systems, and possibilities to use such sources in system balancing. I would also like to remind you of the project on the submarine cable connection with Turkey, with an essential role in the decongestion of the south-eastern part of Romania, namely the Dobrogea area. We can see that Romania, through Transelectrica, is an important voice in Europe. How do you estimate energy security in this context? In European context, as I said we act in two regions: Central Europe and Southern Europe, and this is the most important opportunity we have, in terms of energy security. Therefore, by the fact that we are the border of ENTSO-E, an extremely important role in this context is played by the project of closing the 400-kV ring of Romania. The European size of Transelectrica is the natural direction of development of the Company in terms of energy security. For this purpose, Transelectrica’s affiliation to the Regional Security Coordination Centre (RSCC) TSCNET Service GmbH was approved in late June under a memorandum adopted by the Romanian Government. Romania was the only country in the CORE region that was not part of the ownership of the Regional Security Coordination Centre TSCNET. Due to its geographical position, Romania, through Transelectrica, is a regional pole of stability in the European electricity transmission system, therefore it is very important to be on an equal footing in this context. Our goal for the following period is not only to maintain this regional role, but to consolidate it. Taking into account its resources, Romania has the right to be a strong voice at European level in terms of energy security. Transelectrica’s entry in TSCNET Services GmbH ownership together with countries such as Germany, Austria, the Czech Republic, Slovenia, Denmark, Croatia, Hungary, Poland, Switzerland, the Netherlands and Slovakia is a step part of a normal and necessary evolution for Romania’s positioning on the European energy map in the context of implementing the new model of the common electricity market, of European network codes and in the perspective of Clean Energy Package. In the same light of energy security in the region, Transelectrica has been invited to join the ownership of the European Centre for Cross-border Transmission Capacity - Joint Allocation Office ( JAO). We are 33

INTERVIEW

THE MAIN INVESTMENTS COMPLETED BY TRANSELECTRICA IN H1 • 400 kV OHL interconnecting Resita (Romania) - Pancevo (Serbia) • Upgrading the Cluj Est 400/110/10 kV electric substation • Replacing AT (autotransformers) and trafo (transformers) in substations – stage 2 – Batch I – Replacing AT1 – 200 MVA in the Craiova Nord 220/110 kV substation • Replacing AT and trafo in substations – stage 2 – Batch I – Replacing AT2 – 200 MVA in the Arefu 220/110 kV substation • Upgrade of the command-control-protection system of the Sardanesti 220/110/20 kV substation • Upgrade of the Suceava 110 kV and 20 kV substation – Stage II: 110 kV cells, AT – FAI 220 kV cell, 20 kV substation • Installing optical fibre on the Fundeni - Brazi Vest 220 kV OHL – Batch 1 • Connection of Turnu Magurele, Mostistea, Stalpu, Teleajen substations to the optical fibre network of CNTEE Transelectrica SA – Batch 2

currently in the stage of preparation of this step of Company’s affiliation to JAO. Transelectrica has the target of increasing the interconnection capacity from 7% of the production capacity currently installed, to 10% in 2020 and 15% in 2030. What is the company’s strategy on these targets? I would like to highlight that Transelectrica has in progress important investment projects for strengthening cross-border interconnection networks. We have recently inaugurated the 400 kV Resita-Pancevo OHL, achieving interconnection with Serbia, a European project implemented with Romanian companies, which will contribute to strengthening the electric power systems of the two neighbouring states and eliminating the risk of network congestions. Completing the 400 kV Resita-Pancevo OHL, a total investment of over RON 98mln, will allow for an increase in the transfer capacity between Romania and Serbia and in the entire Central and South-Eastern Europe. But in order to significantly increase the transfer capacity on this relation, it is very important to complete the switch to 400 kV of the Banat Axis, especially of the Anina-Resita section. Works are in progress and we hope that in 2021 we will complete works at the Portile de Fier - Anina - Resita section. In relation to Hungary, we will complete the 400 kV 34

OHL Oradea–Bekescsaba, a large-scale project blocked in the last 10 years, which could be restarted thanks to a Government Decision adopted in May 2018. Also, interconnection with the Republic of Moldova is a strategic project for which Transelectrica shows all openness and is carried out under the auspices of the agreements between the two governments, Bucharest and Chisinau. This entire picture means for Transelectrica continuous evolution, opening new horizons and Romania’s chance to become in the following period an energy hub in South-Eastern Europe. And the key for this evolution of Transelectrica is the triad: INVESTMENTINNOVATION-PROGRESS. You have recently completed the upgrade of the 400/220/110/20 kV Substation Suceava. What was the process, what importance does this objective have for the NPS and what amount was allocated for the project? It’s true, in late July we commissioned the investment under which the 110 and 20 kV voltage levels were upgraded at Suceava substation, which operates on four voltage levels, 400/220/110/20 kV. We are talking about an investment of RON 24mln and works consisted mainly of replacing primary equipment, replacing the existing protection and automation installations with an integrated command and control system, which will lead energyindustryreview.com

INTERVIEW

Members of the board, from left to right: Constantin Saragea, Adrian-Mircea Teodorescu, Adrian Constantin Rusu, Andreea Georgiana Florea, Viorel Vasiu

to higher security in operation, as well as to a decrease in maintenance costs. The 400 and 220 kV substations were upgraded in a first stage, during 2009-2011, within the project ‘Conversion to 400 kV of the axis Gutinas – Bacau Sud – Roman Nord – Suceava within the National Power System’. With the upgrade of 110 kV and 20 kV levels, the 400/220/110/20 kV Substation Suceava becomes a very important energy node allowing the closure of the 400-kV ring in the northern area, ensuring connection between Moldavia and Transylvania, through the future 400 kV Suceava - Gadalin line. At the same time, conditions are created for this substation to be a connection point for the future interconnection of the power systems of Romania and of the Republic of Moldova, through the 400 kV Suceava-Balti line. The full upgrade of this substation increases the security of supply to local consumers, but especially it increases the security in operation of the National Power System. Suceava Substation has a crucial role for the northern part of Moldavia, because, besides its strategic position in the National Electric Power System, it ensures electricity supply to Suceava and Botosani counties.

What other upgrade projects do you plan for 2018 and what is the value of investments scheduled for this year? Currently, we have in progress for upgrade and retrofitting 14 electric substations, we are carrying out projects for the upgrade of overhead lines and projects of common interest. An investment priority for Transelectrica and a challenge at the same time is the closure of Romania’s 400-kV ring. Completing the Ring, this electricity highway, will increase security in the operation of the NPS, besides fulfilling the obligations undertaken at EU level, and it will also contribute to increasing the regional energy security, as I have already explained. Currently, the 400-kV ring is completed at a rate of around 64%, the rest of around 36% representing segments that are either in work or in various phases of preparation. Currently, important investment works are being carried out within the Portile de Fier - Resita segment, for closing the 400-kV ring. Closing the 400-kV ring is fundamental for both the western area, where we will achieve a better interconnection with Europe, and for the eastern area, where there is this congestion of power evacuation from south-eastern 35

INTERVIEW

Romania, i.e. Dobrogea area. In short, the segments with the 400-kV ring necessary to be completed are: • The Banat - Portile de Fier - Arad axis - in various stages of completion, included in the 3rd list of projects of common interest of the European Commission; • 400 kV OHL Arad - Nadab; • 400 kV OHL Oradea - Bekescsaba - the section Oradea Sud - Nadab, project unlocked this year; • 400 kV OHL Gadalin - Suceava - in the design and permitting phase; • 400 kV OHL Gutinas - Smardan - the application for financing with European structural funds is in preparation. What is so important about the 400-kV ring? The main benefits of closing the 400-kV national ring consist of: increasing the security in operation of the National Power System; facilitating electricity transmission from the areas with surplus production to consumption areas; achieving an economic regime of operation of the Power Grid; as well as increasing the possibilities of electricity export to the Energy Systems of neighbouring countries. Strengthening Romania’s interconnection capacity will facilitate the export of energy produced, in certain periods, by wind and solar power plants within the NPS, in excess compared to domestic demand. Another strategic direction regarding the transmission network and ensuring the security in operation of the National Power System is related to the development of the Bucharest metropolitan power network. Following the specific conditions of economic development, in the Bucharest metropolitan area there is an increase in electricity consumption higher than the average per country. This trend is estimated to be maintained for the following period. For electricity supply in conditions of safety, over a long term, to Bucharest municipality, this growth trend of consumption must be reflected directly proportionally in measures to strengthen electricity transmission and distribution networks. At Transelectrica’s level, extensive analyses have been conducted, resulting in the need to build two new electric substations of 400/110 kV. In the same context, it is necessary to implement a 400kV ring of the Capital. What investment projects of common interest (PCI) of Transelectrica are currently approved at European level and what are the perspectives for the following period? In the line of European cooperation that I have told you about in detail, Transelectrica has six projects of common interest worth more than RON 1 billion, within the ‘Black 36

Sea Corridor’ and ‘Mid Continental East Corridor’ clusters, part of the priority electricity corridor ‘North-south electricity interconnections in Central Eastern and South Eastern Europe’ (NSI East Electricity). The ‘Black Sea Corridor’ cluster has the role of consolidating the electricity transmission corridor along the Black Sea coast (Romania-Bulgaria) and between the coast and the rest of Europe and Turkey. The ‘Mid Continental East Corridor’ cluster leads to a higher exchange capacity on the borders between Romania - Hungary - Serbia; boosts the European north-south corridor from northeastern Europe to south-eastern Europe through Romania, allowing a stronger integration of markets and increasing the security of supply in South-Eastern Europe. The six investment projects of Transelectrica included on the list of European Commission’s projects of common interest are: • 400 kV overhead line (OHL) Cernavoda - Stalpu, part of the Cluster Bulgaria - Romania capacity increase (‘Black Sea Corridor’); • 400 kV overhead line (OHL) Gutinas - Smardan, part of the Cluster Bulgaria - Romania capacity increase (‘Black Sea Corridor’); • 400 kV overhead line (OHL) Suceava - Gadalin, part of the Cluster Bulgaria - Romania capacity increase (‘Black Sea Corridor’); • Interconnection between Resita (RO) and Pancevo (RS) - part of the Cluster Romania - Serbia between Resita and Pancevo (‘Mid Continental East Corridor’); • Internal line between Portile de Fier and Resita (RO) - part of the Cluster Romania - Serbia between Resita and Pancevo (‘Mid Continental East Corridor’); • Internal line between Resita and Timisoara/ Sacalaz (RO) - part of the Cluster Romania - Serbia between Resita and Pancevo (‘Mid Continental East Corridor’). We have already obtained co-funding of EUR 27mln for building the 400 kV OHL Cernavoda - Stalpu. For starting works within this project we also received in May the first instalment worth EUR 2.2mln. The Cernavoda - Stalpu line will contribute to increasing the interconnection capacity between Romania and Bulgaria and to integrating wind energy from Dobrogea area, which is a major challenge for the power system of Romania in the current conditions, but also in the perspective of developing wind capacities in the area. The new 400 kV line will have a length of around 160 kilometres, and for its commissioning it is necessary to build the Substation 400 kV Stalpu and extend the Cernavoda and Gura Ialomitei substations. I hope that in the following period we will also obtain funding for OHL Gutinas - Smardan. energyindustryreview.com

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OIL & GAS

Transgaz invests in eastern corridor development CHISINAU RELIES ON THE BLACK SEA TO BREAK THE MONOPOLY OF RUSSIAN GIANT GAZPROM Adrian Stoica

energyindustryreview.com

OIL & GAS

The operator of the national gas transmission system, Transgaz, plans to develop the eastern corridor, through which gas to be extracted from the Black Sea, probably as of next year, will also reach the Republic of Moldova. Romania is currently connected to the Republic of Moldova through Iasi Ungheni gas pipeline, inaugurated on 27 August 2014, precisely one year from the beginning of construction. In the first phase the gas pipeline would carry an estimated 500mln cubic meters of gas; in the next phase a compressor station will be constructed. The gas pipeline will be able to transport at a final capacity of 1.5bcm of gas, more than the 1.3bcm of gas representing the consumption demand of the Republic of Moldova.

o be able to ensure the T parameters mentioned in the technical data sheet of the project for the interconnection of the national gas transmission system with the similar system in the Republic of Moldova, it’s necessary to achieve additional developments, both in the Romanian and in the Moldovan gas transmission systems. The technical solution agreed by the two states to increase the transmission capacity of the interconnection (1.5bcm per year or 171,000 cubic meters per hour at a pressure of 38 bars at the border), it’s estimated a value of EUR 110mln, according to the annual report of Transgaz, recently published. The development of the eastern corridor aims to ensure bidirectional interconnection with the Republic of Moldova, in Ungheni, and this requires the rehabilitation of some of the existing pipelines of this corridor, as well as the construction of new pipelines and the construction of compressor stations or the amplification of some of the existing ones (Onesti and Gheraesti).

LIMITED TRANSMISSION CAPACITIES In conditions in which gas exports through Iasi - Ungheni interconnector are still low, a new transmission infrastructure

will be built on the territory of Romania for Romanian gas to reach Moldova. The project is considered ‘of national importance’ by the authorities in Bucharest and, once realized, it would allow the Moldovans to consume gas to be extracted from the Black Sea. In this regard, the Government of Romania last year adopted a decision on the ‘Development of capacity of the National Transmission System to ensure gas flow on Romania-Republic of Moldova direction.’ “Given the configuration of the two national transmission systems and their technical characteristics, possibility to transport gas in bidirectional flow between Romania and the Republic of Moldova are limited, because: 1) The gas transmission system of the Republic of Moldova is based on pipelines with relatively small diameters (DN 100 – DN 250), operated at high pressure, 35 - 55 bars and 2) The gas transmission system in Romania is largely made of pipelines between DN 250 – DN 800, operated at pressure of 10 - 35 bars, with the exception of pipelines making gas transit from the Russian Federation to the countries on the Balkan corridor,” the substantiation note of the decision adopted last year shows.

INVESTMENTS TO BE MADE The development of this gas transmission corridor considers

ensuring operation at the designed technical parameters of physical reverse flow interconnection with the Republic of Moldova, and for this end it is necessary to rehabilitate some of the existing pipelines of this corridor, as well as to build new pipelines and build two new compressor stations, Transgaz’s strategy shows. In total, Transgaz’s project has a cost of EUR 131.7mln and involves the construction of two new gas pipelines, in the north-east of the country, and two compressor stations, according to the investment program of Transgaz. Investments will aim at: • Construction of a new DN 700, Pn 55 bar 104 km gas transmission pipeline in the Onesti – Gheraesti direction. The route of this pipeline will be mostly parallel with the existing DN 500 Onesti – Gheraesti pipeline; • Construction of a new DN 700, Pn 55 bar 61 km gas transmission pipeline in the Gheraesti – Letcani direction, this pipeline will replace the existing DN 400 Gheraesti – Iasi pipeline on the Gheraesti – Letcani pipeline section; • Construction of a new gas compressor station at Onesti, having an installed power of 9.14 MW, 2 compressors of 4.57 MW each, one active and one as a backup; 39

OIL & GAS

•

Construction of a new gas compressor station at Gheraesti, having an installed power of 9.14 MW, 2 compressors of 4.57 MW, each, one active and one as a backup. The project on the territory of Romania will be implemented in parallel with a new gas pipeline, built by Moldova, a pipeline between Ungheni and Chisinau, linking the capital of the Republic of Moldova, the largest consumer in the neighbouring country, to the Romanian border. By means of current evaluations of the coordination possibilities in the implementation of the project, with that carried out on the territory of the Republic of Moldova and in correlation with the access to the offshore resources from the Black Sea, it is estimated a period of joint commissioning, 2019 - 2020. “In the context of profiling major new sources of natural gas supply, the natural gas from the Caspian Sea region and those recently discovered in the Black Sea, the investments proposed by Transgaz in the Development Plan of the National Gas Transmission System (NTS) for 2018 2027, plan sent for approval at Romanian Energy Regulatory Authority (ANRE) are strategic investments in the energy field for the development of the natural gas transmission infrastructure of Romania and its compliance with the requirements of European legislation in the field,” the report shows. According to the quoted document, the company’s directors undertook to further launch and implement one of the largest and most important gas transmission infrastructure development plans in Romania over the past 20 years, with investment projects estimated at 1.9 billion euros.

EUR 360MLN FOR TUZLA PODISOR SEGMENT Transgaz will invest EUR 360mln to build the Tuzla-Podisor pipeline, which will take over gas to be extracted from the Black Sea. It will be carried to export pipelines, the H1 report for company’s directors shows. 40

The major goal of this investment is to build a gas transmission telescopic pipeline Tuzla - Podisor, 308.3 km long and DN 1200 and DN 1000 connecting the natural gas resources available at the Black Sea to the corridor BULGARIA - ROMANIA - HUNGARY - AUSTRIA, thus ensuring the possibility of transmission gas towards Bulgaria and Hungary through existing interconnectors Giurgiu - Ruse (Bulgaria) and Nadlac - Szeged (Hungary). Also, this pipeline will interconnect with the current international gas transmission pipeline T1 (Isaccea-Negru Voda). Transmission capacity amounts to 8.14 million cubic meters/year and the investment amounts to EUR 360.36mln. Currently, the feasibility study and the environmental impact assessment study have been completed and the construction permit has been obtained. The final investment decision will be made this year, and construction is estimated for 2019 - 2020. Commissioning and start of operation are estimated for 2020, depending on the evolution of upstream offshore projects.

SAFETY VALVE FOR THE REPUBLIC OF MOLDOVA Moldova’s Economy Minister Chiril Gaburici has recently stated that the Republic of Moldova would not negotiate yet an agreement with the Russian gas supplier Gazprom, but would focus on a project for the connection to the Romanian pipeline system, in conditions in which the current contract between Chisinau and the Russian energy giant Gazprom will expire in late 2019. However, in a subsequent intervention, the official from Chisinau highlighted that the Republic of Moldova would not give up the contract with Gazprom, but wanted to diversify its supply sources. “The possibility to have an alternative for the gas chapter will allow us to negotiate and obtain better prices. I did not say we would give up the contract

with Gazprom. On the contrary, I do not rule out that we will use gas from two or three producers, why not. It’s important to have more independence in this chapter,” Chiril Gaburici said for Radio Sputnik Moldova. In his opinion, the diversification of sources will allow the Republic of Moldova to better negotiate the price of gas for the citizens to have more affordable tariffs.

THE PIPELINES ARE ALSO HEADING TO UKRAINE Under the Development Plan of the National Gas Transmission System for the period 2018-2027, Transgaz also aims to achieve an interconnection with the Ukrainian gas transmission system, on Gheraesti - Siret direction. “For this purpose, supplementing the project on developments of the national transmission system (NTS) in the North-East of Romania in order to improve gas supply to the region and ensure the transmission capacities to/from the Republic of Moldova, Transgaz has identified the opportunity of an interconnection of the NTS with the gas transmission system of Ukraine, on Gheraesti - Siret direction,” the Development Plan of Transgaz shows. According to it, the project ‘Interconnection of the national gas transmission system of Romania with the national gas transmission system of Ukraine on Gheraeati - Siret direction’ consists of: • The construction of a gas transmission pipeline and the related facilities, in the Gheraesti – Siret direction; • The construction of a cross-border gas metering station; • The extension of the Onesti and Gheraesti compressor stations, if necessary. The costs would amount to EUR 125mln, the feasibility study following to be conducted this year, design - in 2019 2020, while all materials necessary would be acquired by 2021, so that the actual construction would start in 2022 and the start of operation would take place in 2025. energyindustryreview.com

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OIL & GAS

Productivity-stimulation treatment for wells affected by stable emulsions Valentin Balteanu, Florin Aconstantinesei, OMV Petrom SA - ICPT Campina

energyindustryreview.com

OIL & GAS

This paper presents a treatment solution for well stimulation where production is decreased due to the formation of stable emulsions. For this type of treatments, it is recommended to use an alkaline-surfactant solution for the treatment of asphalt-type oil emulsions with a high content of polar compounds. The presented solution (quaternary ammonium salt cationic surfactant in combination with sodium hydroxide) has the main objective to reduce the interfacial tension between water and oil and has a positive effect on oil recovery. he studies on heavy, asphalt-type oils are specifically T important for the petroleum industry first of all due to their composition. The problems related to emulsions forming and to the depositing of oil’s heavy components are present all along oil’s journey, starting from the reservoir to the processing installations. Of particular importance are problems created by asphaltenes and resins, both from the point of view of laboratory investigations begin of the physico-chemical characterization, interfacial properties, polarity, to the investigation of the chemical structure using the structural models, as well as the exploitation of these crude oils, on wells. The emulsions produced by wells are stabilized by emulsifiers (tension-active agents), which tend to agglomerate on the water-oil interfaces. The film formed by the tensionactive agent on the interface decreases the interfacial tension between the two phases, which favours the dispersion of the discontinuous phase’s drops with the forming of emulsions. The natural emulsifiers in oil include heavy fractions as asphaltenes and resins, organic acids or organic bases. These components are considered as the main constituents agglomerating on the water-oil interface in the natural emulsions. Other emulsifiers may be present in the formation as a result of certain treatments applied to the well or coming from the filtrate of the drilling fluid. Also, the fine particles may act as emulsion stabilizers (mechanical stabilizers). They may include: fine particles of shale, asphaltenes, quartz, corrosion products and mineral scale. The stability of the oil emulsions is also influenced by the very different dimensions of the water droplets; but the main influence of emulsion stability depends of the water percentage droplets of a certain size. Considering this, there are three emulsion types: finely dispersed, very stable, with water drops around 20 µm; medium dispersed, with water drops of 20-50 µm and the last type, emulsions of big dispersion, unstable, with water drops of over 50 µm.

As an improved recovery process, the alkaline - tensionactive solution system is recommended to oils with a high content of polar components (resins, asphaltenes), respectively organic acidity. The alkaline substances, in concentrations below 1%, dissociate integrally in water and lead to pH increases up to values of 9-13. The role of these inorganic bases is to react with the oleophilic acids of oil, transforming them to hydrophilic anions with active superficial properties. Thus, efficient tensionactive substances, regarding their chemical structure and compatibility with oil, are formed in-situ. Here are some of the most frequently used alkaline substances in treating the wells with alkaline - tension-active solutions: sodium hydroxide, sodium ortho-silicate, sodium carbonate, soda, ammonium hydroxide. This paper aims to develop a treatment solution for production stimulation of wells, where problems arise due to the formation of stable emulsions formed by the high content of asphaltenes from oil. Also, a specific test to verify the effect of this solution will be present on a physical model simulating that means to simulate the oil flow phenomenon from the productive formation to the production wells.

EXPERIMENTS Laboratory tests and analyses were performed on three samples of emulsified oil taken directly from the site from three production wells marked A, B and C. In this work, the following laboratory analyses and experiments were performed: • Physico-chemical characterization of emulsified crude oil and crude oil; • Selection of surfactants by performing crude oil emulsion burst tests and interfacial tension (IFT) analyses of oil/ brine, respectively crude oil/surfactants; • Testing the treatment solution on cores, under reservoir conditions (temperature and pressure) to assess the increase in the recovery factor of the crude oil. 43

OIL & GAS

Fig. 1. Microscopic analysis of oil emulsions: A - Very stable, B - Medium stability, C - Unstable emulsion

Fig. 2. IFT variation for 3 oil samples, using different tension-active agents

ANALYSIS OF EMULSIFIED CRUDE OIL - SAMPLES, TAKEN FROM THE WELLS The characterization of the studied emulsions was done by micro-photos taken with a Cx41+Camedia C7070 microscope (Figure 1). To perform the next tests, the emulsions were cleaned by centrifugation using a 6-16 SIGMA heated centrifuge (650C and 3,200 rpm). Three demulsifying agents were chosen to break the stability of emulsions A, B and C - anionic (AS), cationic (CS) and non-ionic (NS). The interfacial tensions (IFT) were determined for each of the three clean oils, along with the stability of emulsions by calculating the Emulsion Separation Index â&#x20AC;&#x201C; ESI. The ESI determination was done under the reservoir temperature of the wells the samples have been taken from (400C). The tension-active agents were tested in concentrations of 500 ppm. The work procedure consisted in adding the tension-active agent dose to 100 ml of emulsion sample, stirring and maintaining at work temperature for a certain time. The water volumes separated after 5, 10, 15 and 20 min are recorded, after which the samples are centrifuged for 20 min, under the same temperature. 44

Fig. 3. Emulsion separated index - ESI

OIL ANALYSIS - SAMPLES OBTAINED AFTER WATER SEPARATION For characterizing the clean oils, complete oil analyses were performed (density, viscosity, distillation, chromatographic separation on SARA compounds - Saturated, Aromatic, Resins and Asphaltenes), including the organic acidity. Also, IFT determinations were performed for oil/water systems, respectively crude oil/surfactants systems. The SARA analysis was carried out using the Iatroscan MK device. The organic acidity was determined by titration with alcoholic KOH standard solution, in the presence of Alkali Blue 6B, as an indicator. The ITF determinations were done using the KrĂźss tensiometer model DSA 100 and (with) the Pendant drop method, under atmospheric pressure and room temperature. The tension-active solutions were prepared using filtrated reservoir water, as 1% concentration of commercial product. Note that the laboratory tension-active samples are not 100% active substance, but each is provided by the manufacturer at a certain concentration of active substance. Based on the literature on the critical micellar concentrations for different tension-active substances and on the previous laboratory experiments, it was considered that the 1% concentration of commercial product is energyindustryreview.com

OIL & GAS

TABLE 1 THE WATER CONTENT AND THE SIZE (DISTRIBUTION) OF WATER DROPS IN OIL EMULSIONS Distribution of water drops in oil emulsions (μm)

Type of emulsion

20-30

Very stable

30-60

Medium stability

50-100

Unstable

Emulsion sample

The water content [centrifugation] (% vol.)

Emulsion A

Emulsion B Emulsion C

TABLE 2 OIL COMPOSITION ON COMPOUNDS CLASSES, ACCORDING TO SARA ANALYSE Oil sample

Density (0API)

Saturated (%gr.)

Aromatic (%gr.)

12.11

35.23

31.89

25.26

7.61

0.75

14.86

38.20

31.75

22.61

7.43

0.84

14.72

34.50

30.60

21.22

10.11

0.86

enough to evaluate the interfacial activity of the selected tensionactive agents.

DISPLACEMENT TESTS ON SYNTHETIC CORES WITH ALKALINE – TENSION-ACTIVE SOLUTION The displacement experiments with synthetic water and alkaline – tension-active agent solution on core-holding tubes were carried out using the thermal displacement installation of ICPT Campina. The tests performed for this work were done with sodium hydroxide, using this combination: 0.5% hydroxide + 1% tension-active agent. The test laboratory conditions were as follows: • The displacement experiments were done on physical models, using quartz sand with the grain size between 0.2 and 0.4 mm; • The saturation fluids were oil and reservoir water from well C, and the alkaline – tension-active solution was prepared using reservoir water (1% NaOH + 1.5% CS); • Tests were done at 400C and 10 bars. The main stages were: • Saturating of the porous space with reservoir water and setting the pores volume and the porosity; • Water displacing with oil until reaching the irreducible water saturation, and setting the saturation state of the porous space; • Injecting reservoir water, respectively alkaline – tensionactive solution;

• • • • •

Resins (%gr.) Asphaltenes (%gr.)

CII

Measuring the displaced oil volume and setting the saturation state of the porous space; Evaluating oil displacement efficiency by calculating the recovery factor. There were performed three dynamic tests, as follows: Test 1: displacing oil with reservoir water; Test 2: displacing oil with alkaline – tension-active solution; Test 3: displacing oil with synthetic water, followed by alkaline – tension-active solution.

RESULTS AND DISCUSSION a) The microscopic analysis of oil emulsions showed that their stability varies in this order A/B/C from highly stable to low stability. Figure 1 reveals that emulsion A has the finest dispersion of the water drops. Note that none of the emulsions separated free water. The calculation of ESI was done using relation (1), and data are presented as a graph in Figure 2.

ESI =

Ów Ón

(1)

where ESI = emulsion separation index, w = water separation at a given demulsifier concentration/time as a percentage, and n = number of experiments. b) The SARA analysis evaluated the asphaltenes behaviour 45

OIL & GAS

TABLE 3 DISPLACEMENT TESTS RESULTS Characteristics – physical model Test no.

Diameter (cm)

Length (cm)

Porosity (%)

Final saturation (%) SO=39.30

Recovery (%)

Test 1

40.82

SO=77.89 SW=22.11

Test 2

41,54

SO=82.07 SW=17.93

SO=35.86

SO=75.00 SW=25.00

SO=38.57 SW=61.43

48.57

SO=38.57 SW=61.43

SO=32.86 SW=67.14

56.19

Test 3

4.1

40.11

in the crude oil by calculating the Colloidal Instability Index – CII, using formula (2). Literature estimates asphaltenes stability as follows: stable asphaltenes (CII<0.7), asphaltenes of moderate stability (0.7<CII<0.9) and unstable asphaltenes (CII>0.9). Table 2 presents the results of SARA analyse. The analysed oils do not tend to deposit their asphaltenes, being thermodynamically stable. The problems given by the presence of asphaltenes are the emulsions stabilized by them and, in addition, the interfacial properties of oils are significantly altered by asphaltenes’ hetero-atoms. c) Oil analyses were done on oil samples (impurities content 0.3 – 0.6 % vol.). (2) The high viscosity of oils and the significant organic acidity (A – 1.54 KOH/g oil, B – 3.26 KOH/g oil and C – 5.78 KOH/g oil), recommends, for breaking the emulsions, the use of the alkaline – tension-active solutions. They are mainly recommended for the oils with a high content of polar components. d) The IFT values between oil and reservoir water were the following: A – 28.54 mN/m, B – 22.64 mN/m and C – 17.20 mN/m. Figure 3 shows that the tested tension-active agents decrease the oil-water interfacial tension from an average value of 20-25 mN/m, to values between 1.5 and 3 mN/m for AS, respectively to values between 0.2 and 0.9 mN/m, for NS and 46

Initial saturation (%)

SW=60.70 SW=64.14

49.55 56.30

CS. For the dynamic test on core, the CS tension-active agent was selected. e) Models’ initial oil saturation varied between 75% and 82%, and at the end of tests oil saturation was 33% for the displacement using reservoir water followed by the alkaline – tension-active solution, as compares to 39% for the displacement only using reservoir water. If the porous space saturations are So (oil) and Sw (water), their relation is Sw = 1 - So, and the displacement efficiency using reservoir water, respectively alkaline – tension-active solution, is given by the recovery factor, expressed as the ratio between the oil volume collected during injection and the oil volume at the beginning of injection. Recovery efficiency with reservoir water was between 48.6% and 50%. The displacement test using the alkaline – tension-active solution showed an approx. 6% increase of oil recovery.

CONCLUSIONS The work investigated three heavy, asphalt-type oil samples, all with a high potential of forming stable emulsions in the production wells. The following aspects were evidenced: Influence of size and distribution of water drops on oil emulsion stability; The cationic tension-active agents have a better influence on breaking oil asphalt-type emulsions than the anionic and non-ionic ones; For breaking the stable emulsions of the asphaltene-type oils and increasing wells’ productivity, recommend the alkaline – tension-active solutions. energyindustryreview.com

OIL & GAS

7 oil & gas giants have found their home in Ploiesti West Park Daniel Lazar

Celebrating ten years of activity in Romania, the business card of the largest industrial and business park in South-eastern Europe, developed by Belgiumâ&#x20AC;&#x2122;s Alinso Group, includes: an investment of several hundred million euros, 50 renowned companies that offer jobs just a few miles from Ploiesti, thousands of employees, social involvement and excellent relationships with local authorities and community. 7 oil & gas companies are also carrying out their activity within Ploiesti West Park (PWP). These are: General Electric - Lufkin Industries; Schlumberger; Halliburton; Oil Services Limited Eastern Europe; Odfjell Well Services; Lubbers Romania and Saipem. 48

hat once was a simple arid W area on the outskirts of Ploiesti has become, in less than ten years, an example of best practice in terms of development, concern for the environment and social involvement. To understand the size of the investment coming exclusively from foreign capital 100% private, we recall some of the important companies that chose to become partners of Alinso Group, investing in Ploiesti West Park: Unilever, General Electric - Lufkin Industries, Toro, Federal Mogul, Timken, Beaulieu International Group, Saipem (Eni Group), Schlumberger, Halliburton, British American Tobacco and Rockwool, the list being completed up to the 50 companies that currently occupy the business park. energyindustryreview.com

E.C.P.M.C. Consult & Learning

OIL & GAS

STRATEGIC POSITION, ENDOWMENT AT EUROPEAN STANDARDS AND DIRECT CONNECTION WITH THE BLACK SEA With Romania’s accession to the European Union and the positive signals received from this part of Europe, the Belgian group has participated with over EUR 100 million in setting up the area covering 300 hectares of land, the current size of the park. Companies have been attracted by facilities offered here, which include complete services, from security, construction adapted to client requirements, consulting and assistance to relocation and utilities at European standards. Other arguments that convinced foreign investors to bring in Prahova hundreds of millions of euros was the strategic position of the region, which is an important traffic hub that links to any area of Europe, on both road and rail. Any type of freight transport can leave on the railroad of the intermodal rail terminal developed by Alinso Group, with direct connection with the Black Sea. “Over ten years of activity in Romania, more than 50 clients have entered the park, all with the mission to create value and an inspiring working environment. More than 2,000 employees are happy to work in this park every day and many other jobs have been created outside the park. Our company has a precise goal, and that is to create jobs that inspire and motivate, develop creativity, everything in harmony with the environment. We are proud of the flexibility and multifunctionality of our facilities,” says Ivan Lokere, CEO of Alinso Group. “Domo Investment Group decided in 2008 to invest in Alinso Group in a business park near Ploiesti. At the time, it was a risky investment, of over EUR 130 million, based on confidence that the economic development of the region and attractiveness of investments in Ploiesti could be excellent for production and services. It was also essential that the regional and national authorities have maintained their support for this effort. Business parks can remain attractive for

potential investors seeking opportunities in a very competitive market only if excellent services are provided to these clients. I believe Ivan Lokere and his team have done a great job in this regard. The Embassy of the Kingdom of Belgium is proud to point to this investment as an example of the excellent economic relations between the two countries within the European Union. This is a winwin situation, not only for business, but also for Ploieşti and the region,” said Thomas Baekelandt, Ambassador of the Kingdom of Belgium to Romania.

GROWING INVESTMENTS Investments will not stop here. Moreover, Bogdan Toader, President of Prahova County Council, has provided investors with assurances on the support of the institution he runs and local authorities for business development. The situation of investments near Ploiesti is summarized by the President of Prahova Chamber of Commerce and Industry, Aurelian Gogulescu, as follows: “Ploiesti West Park has set a new standard in terms of business parks. I remember with pleasure, joy and emotion what happened ten years ago, when I was honoured to attend the opening ceremony of this beautiful investment, during which NATO Secretary General Willy Claes, who had a memorable speech, said, among other things, that this investment would mean very much for Romania and that it would reach the figure of one billion euro. Honestly, at that time, I found the figure slightly exaggerated, even utopian, as it was the moment when the doors were being opened for the economic crisis that had become visible for Romania as well. But, after ten years, it has become the largest private industrial park in SouthEastern Europe, of the 300 hectares 200 being already occupied, with an investment of almost EUR 800 million and with 2,500 jobs. Companies from almost 40 states, with activity in various business areas, have established here,” Aurelian Gogulescu mentioned. The story will certainly not stop here, especially that more and more investments are announced in the area.

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

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We deliver value through professional technical solutions to ensure the security of our partners working in hazardous environments. Design of systems and installations for limiting and extinguishing fires, signalling, alarming and alerting in the event of fire, design of ventilation systems for the removal of smoke and hot gases, except those of natural-organized type Obtaining the fire safety approval/authorization Development in the regulated areas of national public interest regarding the evaluation and prevention of risks in activities with hazard of explosive and toxic atmospheres, elaboration and application of regulations regarding the respective activities, elaboration of the technical documentation and field examination of the technical installations in order to obtain the certificate and the AntiEx report

E.C.P.M.C. - Consult & Learning S.R.L. A: 46 Fabricii St. | 6th District - Bucharest A: 1 22 Decembrie St. | Petrosani - Hunedoara T: 0728010140 E: ecpmc.petrosani@gmail.com W: www.ecpmc.ro

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Hägglunds Drive Systems Reliable high-quality products for improved performance

As of January 2011, Hägglunds Drives is an integrated part of Bosch Rexroth. The Hägglunds product name can still be found on the tough and reliable Hägglunds products and drive systems, now a part of the strong Bosch Rexroth portfolio. Hägglunds motors and drive systems are still the same, offering the same high quality and outstanding performance.

to high torque. Yet it’s also protected from torque stresses. You get the power to do more, but with less strain, less wear and less maintenance. Put simply, you get a drive that goes the distance. And behind it is a company that goes the distance with you. It begins with listening, as they work to understand the nature of your challenge. Their vast experience gives them the insight required, but also the knowledge that every challenge is unique. That’s why they put all their skills, equipment and innovation to work in solving yours.

The drive behind your success A Hägglunds hydraulic direct drive is a drive system beyond the ordinary. In far less space than other drives – and with far less weight and complexity – it delivers flexible, reliable power. With a Hägglunds drive, your machine has unlimited access

Benefits of a hydraulic direct drive • Robust design with an outstanding reliability • Full torque throughout the complete speed range • Insensitive to a tough and demanding environment

• •

ull control of speed and torque for F precise and smooth operation Shaft mounted motor with freely placed drive unit for flexible installation

A Hägglunds direct drive system comprises a hydraulic motor and a flexibly placed drive unit, overseen by a control and monitoring system. This simple configuration withstands the challenges of virtually any application or environment. Mounted directly on the driven-shaft, the compact motor supplies reliable power. The force and direction of the motor’s rotation is determined by the fast-acting hydraulic pumps in the drive unit, while the control and monitoring system provides information and advanced functionality. Supporting these components is a wide range of valves and accessories, creating even greater

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result of world-class workmanship. That same workmanship is found in the unique tools and processes used by Rexroth experts to repair Hägglunds motors and drive systems. Bosch Rexroth skilled Hägglunds service specialists are factorycertified to repair Hägglunds products, which gives you solid assurance that the work will be done right. The repair offering includes fixed-price repairs, preferred repair lead times, reman exchange, product upgrades and more. Only genuine Hägglunds spare parts deliver the same world-class performance as the Hägglunds drive systems you depend on. Bosch Rexroth spare parts program, which can be combined with discounts and extended warranty options, gets

flexibility in installation and operation. A Hägglunds solution is a total solution – of which the drive system itself is only one part. It’s a complete answer to your needs, built as much on knowledge, experience and commitment as it is on drive technology. It begins with listening, as we work to understand the nature of your challenge. Our vast experience gives us the insight required, but also the knowledge that every challenge is unique. That’s why we put all our skills, equipment and innovation to work in solving yours. The drive you receive is built with quality, delivered with confidence and supported with dedication. What you experience is full peace of mind, supplied not just by our drive technology, but also by the people behind it.

A full range of services for your Hägglunds drive system As the source of Hägglunds drive systems, only Bosch Rexroth can bring you the full range of Hägglunds service options, based on the latest knowledge and technology. From inspections to preventive maintenance, Rexroth field service engineers are ready to meet your needs on site – wherever you happen to be. Their local Hägglunds service specialists have a complete understanding of your Hägglunds drive system, as well as your situation. With their unique training and equipment, they resolve your drive issues quickly and completely. The rugged design and leading-edge technology of Hägglunds products are the

Hägglunds parts to you quickly and reliably. Strategically located parts inventories, found at Rexroth service centers worldwide, ensure it.

Bosch Rexroth Romania 2 Aurel Vlaicu Street, 515400 Blaj Tel. +4 0258 807 872 sales@boschrexroth.ro www.boschrexroth.ro

OIL & GAS

Merkel and Putin to solve Nord Stream 2 conundrum 52

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OIL & GAS

The German government has been pursuing its Nord Stream 2 project for years, despite criticism from the United States and some Eastern European nations. When German officials headed to the NATO’s summit in Brussels in July, they were prepared for what they considered to be an inevitable attack by US President Donald Trump over their low defence spending. Instead, Trump turned to another issue: the 1,300kmlong planned pipeline beneath the Baltic Sea.

he European Commission is T also concerned of Nord Stream 2 gas pipeline impact on stability of supplies to the European Union, the diversification strategy and Ukrainian gas transit. Recently, at a meeting with Russian President Vladimir Putin near Berlin (on August 18), German Chancellor Angela Merkel sought to dispel concerns that the pipeline Nord Stream 2 would disadvantage Ukraine. In his turn, Putin emphasised that “Russia had always been a reliable energy partner.”

THE PROJECT IN BRIEF Nord Stream 2 is a new export gas pipeline running from Russia to Europe across the Baltic Sea. According to Russia’s gas giant Gazprom, the decision to build Nord Steam 2 is based on the successful experience in building and operating the Nord Stream gas pipeline. “The new pipeline, similar to the one in operation, will

establish a direct link between Gazprom and the European consumers. It will also ensure a highly reliable supply of Russian gas to Europe.” “This is particularly important now when Europe sees a decline in domestic gas production and an increasing demand for imported gas,” warns Gazprom representatives. The entry point of the Nord Stream 2 gas pipeline into the Baltic Sea will be the Ust-Luga area of the Leningrad Region. Then the pipeline will stretch across the Baltic Sea. Its exit point in Germany will be in the Greifswald area close to the exit point of Nord Stream. The route covers over 1,200 kilometres. The total capacity of two strings of Nord Stream 2 is 55 billion cubic metres of gas per year. The aggregated design capacity of Nord Stream and Nord Stream 2 is therefore 110 billion cubic meters of gas per year. Nord Stream 2 will be put into operation before late 2019. This is a gas pipeline that would allow Germany to effectively

double the amount of gas it imports from Russia. In 2017, Germany used up a record 53 billion cubic meters of Russian gas, comprising about 40 percent of Germany’s total gas consumption.

CONCERNS AND DEBATES While energy policy experts say the project Nord Stream 2 makes sense from an economic perspective, the pipeline could come at a high political cost for Germany and for Europe’s energy transition. EU energy Commissioner Arias Cañete highlighted the Commission’s concern as regards the impact of the project on security of supply, the EU’s diversification strategy, and the future of Ukrainian transit in particular. On a visit at short notice to Germany, Vladimir Putin has met with Angela Merkel to discuss a range of bilateral and international issues, including the future of the controversial gas pipeline project 53

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Nord Stream 2. The pair met for the second time within just three months to talk about the project.

MERKEL WANTS UKRAINE ROLE IN NORD STREAM 2 “Ukraine has to play a role also with Nord Stream 2 in place,” Angela Merkel said ahead of their talks at the German government’s guest house in Meseberg near Berlin, reiterating a demand already made in April. Although the German chancellor sought to dampen expectations before Putin’s visit, saying no concrete outcome was in sight, she stressed that controversial issues can only be solved through dialogue. The new gas pipeline has caused much dispute within Europe and also drew sharp criticism from the US government. The government of financially stricken Ukraine fears its transit charges, currently amounting to about 3 billion dollars annually, could be lost after the new pipeline has opened. It also criticised that Germany is set to intensify economic ties with Russia, which stands accused of having annexed Ukraine’s Crimea peninsula in the Black Sea and of keeping the armed conflict in eastern Ukraine running. UK Foreign Secretary Jeremy Hunt agrees with US President Donald Trump’s criticism of Germany for supporting the Nord Stream 2 gas pipeline. “Trump points out that there is a contradiction between asking America to spend more as proportion of its GDP on defence and contributing to NATO and, at the same time, doing an economic deal with Russia that is going to mean Russia is richer and more able to spend money on weapons that could potentially be used in an offensive way,” Hunt told BBC radio.

UKRAINE TO CREATE EU GROUP TO STOP NORD STREAM 2 The Ukrainian authorities are creating a group in the European Union to halt construction of a second line of Nord Stream 2. The group will also negotiate with Germany on the creation 54

of an international consortium for the management of the Ukrainian gas transportation system, Interfax-Ukraine reports, citing the Ukrainian President, Petro Poroshenko. “Nord Stream 2 is an absolutely political project against Ukraine, which has no economic component, and is trying to take away from Ukraine a budget of almost USD 3 billion. However, I am convinced that with joint, united efforts we will be able to stop it... That is why we are now creating a group in the European Union, which should stop the Nord Stream 2. That is why we are actively negotiating with Germany. We invite them to create an international consortium for the management of the gas transportation system (GTS) of Ukraine,” the Ukrainian President claims. At the same time, he stressed that the condition for Germany’s participation in the international consortium for the management of the Ukrainian GTS is to stop Nord Stream 2. The Ukrainian President also noted that he will not disclose all the tools that Ukraine is using to stop the construction of the Nord Stream 2. Poroshenko explained the scale of the threat of Ukraine losing USD 3 billion from the introduction of Nord Stream 2. “This is the amount being spent today on the entire defence of Ukraine. Do you understand why it is being built? Not to diversify economic factors; but rather, to leave Ukraine without money to finance our defence,” the President added. He noted that a second factor that must be taken into account is the factor of security, which will cease to function if Russia gets the opportunity to supply natural gas to Europe while bypassing Ukraine. “Why does Putin hesitate before attacking our state? When we had almost no army in 2014, why did he not go further? Because if, as a result of the aggression, the gas transportation network is stopped, then Putin will stop receiving payments from Europe for gas pumped for transit through Ukraine; and this amount last year alone was USD 30 billion. Russia will not live without that USD 30 billion. When they bypass Ukraine, this security factor will stop working,” Poroshenko underlined.

‘A PURELY ECONOMIC PROJECT’ On his first bilateral working trip to Germany since 2013, the Russian president addressed Merkel’s wish to find a solution for the pipeline, saying “I know the position of the chancellor very well. But I want to emphasise that this transit through the Ukraine, a traditional transit route, must meet economic requirements.” Putin affirmed that the pipeline does not exclude the possibility of continued gas transit through the Ukraine and that it is “a purely economic project,” a formulation used by Merkel in the past. In April 2018, however, she acknowledged concerns by the Ukrainian government and said the pipeline “is not just an economic project, but, of course, political factors must also be taken into account.” In Meseberg, Putin especially emphasised that Russia had always been and would continue to be a reliable partner in energy trade. “Last year, we were able to celebrate 50 years of natural gas deliveries from Russia to Europe,” Putin said, adding that in all those years, Russia provided a stable energy supply. Putin also mentioned that Nord Stream 2 would ‘complete’ the European gas supply infrastructure, as the pipeline was not only meant for German buyers but also to its EU neighbours. The project will minimise transit risks and ensure that Europe’s growing gas demand will be satisfied. NORD STREAM 2 TO BRING DOWN GAS PRICES IN EUROPE “Nord Stream 2 makes a lot of sense for Germany and the EU from an energyeconomical point of view. Coal use will significantly decrease due to climate targets, and nuclear energy will not grow in the EU,” energy experts affirm. Given that the share of coal and nuclear energy is going to decrease substantially in the coming years, the pipeline could help bring additional lower-cost natural gas into the north-western European market and intensify competition especially with LNG, they say. LNG is decisive for setting the European price, and more gas from energyindustryreview.com

OIL & GAS

Russia through Nord Stream 2 would bring a significant price reduction. In spite of the ongoing criticism, the pipeline’s construction has started and continues unabated. The consortium has applied for a new license for a different route after the Danish government rejected the initial plan. The new route that will possibly run along the northwestern coast of the Danish island Bornholm would be about 40 kilometres longer than the initial route, but given the pipeline’s total length of 1,200 kilometres, the detour would not alter the total length substantially. “All the permits necessary for construction of the Russian section of the Nord Stream 2 pipeline were received on 14 August, 2018. Along with Russia, Germany, Finland and Sweden have granted all the permits necessary for construction of the planned pipeline within their jurisdictions. The national permitting procedure in Denmark is ongoing,” Gazprom Export informs.

KEY TO UNLOCKING THE PROJECT Europe’s desire for cheap, stable energy clashes with the political need to maintain cordial US relations and support Ukraine. Political consensus in Europe appears to be shifting on just how to soften the impact of Nord Stream 2 on Ukraine as a transit country, amid continued wrangling over the Russian pipeline. East European and Baltic states fear that the Gazprom project could increase Europe’s reliance on Russian gas and make a serious dent in Ukraine’s strained federal coffers. However, Western European powers like Germany and France argue that the additional pipeline is necessary because natural gas is as much as 25% cheaper than liquefied natural gas. The pipeline, which is due to be completed by the end of 2019 or early 2020, has received permits from four of the five European countries it needs, with Denmark being the only hold out. But even if the Scandinavian country does not give permission, the Nord Stream 2 company insists the route can be altered

without significantly affecting the timing and the cost of the project. In Greifswald bay in north-eastern Germany, workers are already welding pipes together ahead of plans to start laying them beneath the Baltic Sea. “Probably, there will be no delay,” Nord Stream 2 Chief Financial Officer Paul Corcoran announced. “Denmark’s section is 10% of the route. We can start building on time and we can finish this 10% after we get permission,” he added. US President Donald Trump has repeatedly criticised Germany for its energy dependence on Russia, saying the country is ‘totally controlled’ by Moscow because of its gas supplies. During the USEU July summit in Brussels, US Energy Secretary Rick Perry said the US was still mulling sanctions against Nord Stream2, but added “this is the last place we’d like to land”. Apart from Ukraine, other eastern and northern European countries, especially Poland and Denmark, are opposed to the new pipeline. To avoid construction in its territorial waters, Denmark’s parliament created a new legal basis that allows the government to deny licenses for pipeline construction on its maritime territory on grounds of security concerns, rather than only due environmental considerations. Poland is wary that the project will increase Europe’s energy dependence on Russia and fears that it will lose political influence on energy questions if its territory is no longer needed for Western Europe’s gas supply.

EUROPE’S GAS SUPPLY AND THE POLITICAL COST: WHO WILL BRIDGE THE GAP? “Nord Stream 2 has a very high political cost attached to it,” energy experts caution. While the pipeline will physically connect Russia with Germany, it is a joint project by companies from several European countries. Apart from Russia’s Gazprom and German companies Uniper and Wintershall, British-Dutch company Royal Dutch Shell, French energy provider Engie and OMV from Austria all

are invested in Nord Stream 2. The assessment by all European companies involved in Nord Stream 2 is that Europe is headed for a natural gas supply gap and the German government shares this opinion. Following a series of minor earthquakes that resulted from natural gas extraction, gas production in the Netherlands will be drastically reduced in the coming years, dealing a blow to Western Europe’s domestic gas supply. The United States is the source of much of the growth in natural gas production and most of the additional LNG exports. The United States, already the world’s top producer, accounts for almost 45% of the growth in global production and nearly three-quarters of LNG export growth. The development of destination-free and gas-indexed US LNG exports provides additional flexibility to the expanding global LNG market. The agreement between the United States and the European Union to work together toward ‘zero tariffs’ is setting the stage for increased US exports of liquefied natural gas to the EU, US Energy Secretary Rick Perry said at the opening of the second US LNG export facility at Cove Point, Maryland, in July. After a meeting with the President of the European Commission, Jean-Claude Juncker, US President Donald Trump said that the two agreed to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods. The parties also agreed to boost energy cooperation. “The European Union wants to import more liquefied natural gas from the United States, and they’re going to be a very, very big buyer. We’re going to make it much easier for them, but they’re going to be a massive buyer of LNG, so they’ll be able to diversify their energy supply, which they want very much to do. And we have plenty of it,” President Trump concluded. The US has made clear that it rather supplies its own gas to Europe through LNG shipping terminals than watching Russia expanding its share in the EU. 55

CONSTRUCTION

Crown of concrete and doors of steel at the ITER Tokamak complex 56

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30 times more powerful than the largest comparable experiment operating in the world TER (International Thermonuclear Experimental Reactor), meaning ‘the way’ in Latin, is a major international experiment with the aim of demonstrating the scientific and technical feasibility of fusion as an energy source. It will be 30 times more powerful than the Joint European Torus (JET) which is currently the largest comparable experiment operating in the world. ITER aims to produce a significant amount of fusion power (500 MW) for about 7 minutes or 300 MW for 50 minutes. ITER will allow scientists and

engineers to develop the knowledge and technologies needed to proceed to a next phase of electricity production through fusion power stations. The idea of ITER as an international experiment was first proposed in 1985 and started as collaboration between the former Soviet Union, the United States, the European Union and Japan under the auspices of the International Atomic Energy Agency (IAEA). Premier Gorbachev, following discussions with President Mitterrand of France, proposed to President Reagan that an international

project be set up to develop fusion energy for peaceful purposes. A collaboration between the Soviet Union, the United States, the European Union and Japan was fostered and a detailed design was agreed in 2001. On 24 October 2007, following ratification by all the parties, the ITER Agreement entered into force. Today, the international consortium consists of the People’s Republic of China, the European Union, Japan, India, the Republic of Korea, the Russian Federation and the United States. Together they represent over one half of 57

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the world’s population and a diverse range of economies. By working together, the seven parties are committing themselves to a global response to a global challenge – assuring sustainable energy resources. By ensuring the best possible knowledge is put into ITER, it will be all the more likely that a viable energy source will emerge at the end of the project. It is a very important step to bring together the most advanced nations in the world to co-operate in the development of a major potential new technology. The challenges of the ITER project require the best technological and scientific expertise, which can best be harnessed by pooling resources globally. The ITER Agreement is open for accession by or co-operation with other countries that have demonstrated a capacity for specific technologies and knowledge and are ready to contribute to the project. ITER is being constructed at Cadarache in the South of France. Europe, as the host party, and France, as the host state, has special responsibilities for the success of the project. In particular, Europe supports 45% of the construction cost and 34% of the cost of operation, deactivation and decommissioning of the facility as well as preparing the site. Europe’s contribution to ITER is managed by Fusion for Energy (F4E). F4E is the European Union’s Joint Undertaking for ITER and the Development of Fusion Energy. The organisation was created under the Euratom Treaty by a decision of the Council of the European Union in order to meet three objectives. • F4E is responsible for providing Europe’s contribution to ITER, the world’s largest scientific partnership that aims to demonstrate fusion as a viable and sustainable source of energy. • F4E also supports fusion research and development initiatives through the Broader Approach Agreement, signed with Japan – a fusion energy partnership which will last for 10 years. • Ultimately, F4E will contribute 58

towards the construction of demonstration fusion reactors. F4E is established for a period of 35 years from 19 April 2007 and is located in Barcelona, Spain.

CIVIL ENGINEERING WORKS PROCEEDING DESPITE HIGHTEMPERATURES As the temperatures rise in the south of France, the activity at the Tokamak complex gradually slows down. On the ITER site, however, the pace remains intense. The noise from drilling, building, and lifting, as the cranes gracefully lift massive loads, does not abate. The F4E team, responsible for the construction of the 39 buildings, ITER International Organization (IO), and the 2,000 contractors’ staff on the ground, remain focused on their tasks. People work round the clock, new equipment is arriving, shifts change, but there is one thing that doesn’t change - the race against time. The civil engineering works at the Tokamak complex, which consists of the Tritium, Tokamak, and Diagnostics buildings, are advancing. The construction works of the walls of the last floor (Level 5) of the Tokamak building have started, raising the total of people involved in the construction of the complex to 750. And just as the building is rising by one level, more concrete is poured to form the so-called crown, where the ITER machine will rest upon. Out of the four plots in total, two have been poured signalling a 50% completion of the works, which are expected to be fully completed by the end of August. Next, it will be the turn of the cryostat support bearings to be installed. On the first floor of the Tokamak building (Level B1) the first six out of the 46 port cell doors have arrived. Romaric Darbour, F4E Deputy Programme Manager for Buildings, Infrastructure and Power Supplies, explains that “after three years of design, development and qualification, and almost one year of manufacturing , the first ITER Port Cell doors have been delivered at the

Tokamak building. Each door of around 5.5 x 4 m is made of 30 t of steel. The doors have been transported from the area of Munich (Germany) in a special lorry. The company manufacturing the Port Cell doors is Sommer, a sub-contractor of the Vinci Ferrovial Razel (VFR) consortium, which has the overall responsibility of the construction of the ITER Tokamak Complex. Once the doors are delivered to the Tokamak building , they are filled with heavy concrete increasing the weight up to 58 t and lifted to their final position with the help of a mounting tool, especially manufactured for this purpose.” Nearby the Tokamak Complex is the Assembly Hall, where piping, cabling, and electricity distribution are on-going. The works are expected to be completed by the end of the year so that the building is handed over to ITER IO. Similarly, the Magnets Power Conversion buildings are expected to be handed over to IO by November 2018. The galleries, consisting of an underground network cross-cutting the entire ITER platform where pipping will be installed, has advanced reaching a 74% completion rate. As tooling keeps arriving from different parts of the world, the workforces in the Assembly Hall are busy putting together the sub-sector assembly tooling manufactured by ITER Korea. The growing number of components is gradually transforming the site from a construction platform to a technical hub. There is progress at the Cryostat workshop, managed by ITER India, where the massive shell is progressing bit by bit. A few metres away, the European tanks of the Cryoplant and cold boxes are fully installed, while other pieces of equipment are mounted inside the cryogenic facility. Europe’s Poloidal Field coils are also manufactured on-site at a facility exclusively set up for their production. There is a wind of change as the pieces of the biggest fusion puzzle start falling into place. The end of this year promises to be a turning point with the completion of some key civil engineering works and the arrival of more components. Stay tuned! energyindustryreview.com

CONSTRUCTION

Siemens and Bentley Systems expand their strategic alliance Joint investment initiative extended by an additional EUR 50mn, totalling EUR 100mn n the companies’ latest Alliance I Board meeting, Bentley Systems and Siemens decided to further strengthen their strategic alliance which started in 2016. The two companies have decided to extend their existing agreement, to further develop their joint business cooperation and commercial initiatives. Therefore, the joint innovation investment program will be increased from the initial EUR 50 million funding to EUR 100 million. In addition, as a result of the continuous investment of Siemens into secondary shares of Bentley’s common stock the Siemens stake in Bentley Systems now exceeds 9%.

A FULL DIGITAL TWIN FOR THE ENGINEERING AND CONSTRUCTION WORLD “I’m very pleased with how strong our alliance started. Now we are investing in the next collaboration level with Bentley, where for instance we will strengthen their

engineering and project management tools with Siemens enterprise wide collaboration platform Teamcenter to create a full Digital Twin for the engineering and construction world,” Klaus Helmrich, member of the Managing Board of Siemens AG, said. “Integrated company-wide data handling and IoT connectivity via MindSphere will enable our mutual customers to benefit from the holistic Digital Twins,” he added. “In our joint investment activities with Siemens to date, we have progressed worthwhile opportunities together with virtually every Siemens business for ‘going digital’ in infrastructure and industrial advancement. As our new jointly offered products and cloud services now come to market, we are enthusiastically prioritizing further digital co-ventures. We have also welcomed Siemens’ recurring purchases of non-voting Bentley Systems stock on the NASDAQ Private Market, which we facilitate in order to enhance liquidity, primarily for our retiring colleagues,” Greg Bentley, Bentley Systems CEO, mentioned.

Bentley Systems is a global leader in providing engineers, architects, geospatial professionals, constructors, and owner-operators with comprehensive software solutions for advancing the design, construction, and operations of infrastructure. Bentley users leverage information mobility across disciplines and throughout the infrastructure lifecycle to deliver better-performing projects and assets. Bentley solutions encompass MicroStation applications for information modelling, ProjectWise collaboration services to deliver integrated projects, and AssetWise operations services to achieve intelligent infrastructure – complemented by comprehensive managed services offered through customized Success Plans. Founded in 1984, Bentley has more than 3,500 colleagues in over 50 countries and is on track to surpass an annual revenue run rate of USD 700 million. Since 2012, Bentley has invested more than USD 1 billion in research, development, and acquisitions. 59

i.Comp Tower reciprocating compressor

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Premium quality for trades and workshop applications Anyone looking for a super-quiet, efficient and cost-effective supply of quality compressed air for their workshop requires a user-oriented solution. With the space-saving i.Comp 8 and 9, Kaeser Kompressoren is proud to introduce a completely new compressed air supply concept that has been specifically developed with this field of use in mind.

“Compressed air for the workshop”: The stationary ‘Tower’ version of the durable, variable speed and powerful i.Comp workshop compressor provides a dependable supply of quality compressed air for workshop business environments. These units are tough, powerful, compact, easy to maintain, efficient and much more. At the heart of the new i.Comp family is a new drive concept, which provides a multitude of advantages. It delivers the necessary power to cover the required compressed air demand with infinitely variable control. Needless to say, the reciprocating compressor itself is made in Germany and is manufactured to the highest industrial standards for which Kaeser is world renowned. Moreover, i.Comp family reciprocating compressors are able to operate with 100 percent duty cycles. Intelligent solutions - such as drawing the air for compression

in through the piston head - ensure exceptional filling performance and, as a result, outstanding efficiency. With a volumetric flow rate of 412 to 580 l/min, the i.Comp Towers can be used for a wide range of workshop and trades applications and assure a constant pressure of up to 11 bar with absolute operational reliability. Made from roto-moulded polyethylene to enable optimum corrosion- and impact-resistance, the attractive sound enclosure not only hides an advanced all-in-one compressed air station comprising a compressor and a refrigeration dryer, but also keeps sound levels to a minimum and helps retain system value. Kaeser’s field-proven Sigma Control 2 controller allows pressure preselection and infinitely variable speed operation, as well as connection to a master controller such as the Sigma Air Manager 4.0.

Since i.Comp Tower systems deliver oil-free compressed air, no oil enters the compressed air supply itself. This in turn eliminates the potential for accumulation of oil-contaminated condensate that would otherwise have to be carefully disposed of. In addition, there is no need for oil changes or oil inspection, which of course further reduces overall service costs. i.Comp Tower systems are the perfect choice for workshop and trades environments, such as in car repair shops, where a dependable supply of quality compressed air is required. 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

POWER

First CEH facility in compliance with EU environment law

he Ministry of Energy T announced that as of 27 August Paroseni thermal power plant, within Hunedoara Energy Complex (CEH), has been operating in compliance with environmental values imposed by the European legislation, after an investment of EUR 65.3 million. Through this investment, Paroseni thermal power plant was equipped with a desulphurization plant that eliminates 94% of the SO2 emissions. “We are glad that we have at Hunedoara Energy Complex the first power plant compliant with the European environmental legislation. This has a double importance. On the one hand, Paroseni thermal power plant will be supplied with coal from Jiu Valley, and on the other hand any step taken in the direction of compliance with environmental requirements by coal-fired 62

power plants in Romania ensures in the future an energy mix equally diversified,” Energy Minister Anton Anton has stated. The investment was funded through a loan from the EIB, BCR and EBRD, and works have been executed by the CNIM - LAB consortium. The project aiming to align Paroseni Thermal Power Plant to the European environmental legislation was started four years ago. The investment aimed at the construction of a flue gas desulphurization plant, as well as changing the technology for the collection, transport and storage of slag and ash resulting from the combustion of coal. In the summer of 2015, Paroseni and Mintia-Deva thermal power plants within CEH were prohibited to operate by the Environmental Guard following

an inspection ordered at the level of the Ministry of Environment. For both production units, CEH has challenged in court the decision of the Environmental Guard. Hunedoara Energy Complex produces, supplies and trades hard coalbased electricity, produces, dispatches, transports, distributes and supplies thermal energy, carries out geological research activities for the discovery of hard coal deposits, exploits hard coal deposits, carries out maintenance activities, so as to operate in an integrated manner and become a major actor at regional level by maximizing Romania’s potential in the field. CEH branches carrying out energyrelated activities are the Electrocentrale Deva Branch and Electrocentrale Paroseni Branch. energyindustryreview.com

POWER

Newcomer to join Atlas Copco Fleet

he fleet of Atlas Copco expands. The group presents the newcomer: QAC 1450 TwinPower™. The new addition delivers unrivalled versatility, optimized performance and excellent fuel economy in demanding applications. The QAC 1450 TwinPower™ is a 20foot containerized generator with 2 x 725 kVA generators inside, making it perfect for applications that have variable power needs, whether that’s due to the time of day or the current usage requirements. You can also run on one engine while servicing the other, giving you a built-in backup as standard. Because you get two generators in one platform, you have the flexibility you need to run at 100% power load or even low power loads in the most efficient way. What’s more, every feature you need comes as standard. Furthermore, the system is fully EU compliant.

Standard features The QAC 1450 TwinPower is able to accept more than 70% load step

acceptance within ISO8528 G3 class, thanks to the two engine/alternator performance associated with the advanced control system (Qc4003). You can also be assured the QAC1450 TwinPower performance is equal or better than conventional single engine generator running under normal load.

Serviceability: The QAC 1450 TwinPower is designed for easy service. Large access doors and custom service tools make for effortless maintenance and assured uptime; The positioning of the engine and alternator is set on opposite sides. Enabling multiple access points to all the main components.

CSC certified container ISO 20ft: Focussed on portable and intensive use; Robust twistlocks and forklift inlets enable quick handling at the workplace. Environmentally friendly: The spillage free frame reduces any potential environmental impact. It can contain 110% of the fluid capacity of the generator. Excellent performance: Designed for excellent cooling of the engine/ alternator, guaranteeing maximum power with no de-rating up to 50°C at an altitude of 1000 m; This makes the generator ideal for use in extreme temperatures and at high altitudes, with reduced risk of performance loss due to high temperatures.

24/7 power availability: The service requirement is less than 2 hours of maintenance for every 500 hours of operation; Due to the TwinPower™ concept, it is possible to still benefit from 50% of the unit’s total capacity during maintenance operations. Standard parallel package: To tackle even bigger jobs, the QAC 1450 TwinPower has two Qc4003 controllers, including touchscreen functionality, so you can easily parallel with other generators. You have the choice of island mode or PMS (Power Management System). You can run the generator in parallel with mains, peak shaving, mains power export/import, fixed power and AMF (Automatic Mains Failure). 63

POWER

Building the grid of the future he grid of the future will be more T sustainable and flexible, using an expanding network of traditional energy sources and renewables. We are going to see more microgrids — small-scale power networks operating independently of any larger grid — and a shift in how we transport electricity, including more high-voltage direct current (HVDC) transmission power lines, which can transmit electricity more efficiently than traditional alternating current lines. Plus, the grid of the future will need to be autonomous, with the ability to recalibrate itself in real time. These are some of Vera Silva’s insights on the future energy grid. Vera Silva holds a master’s degree and a PhD in electrical engineering. Fascinated by the field’s innovations and development, she has written four books and over 40 scientific papers and won three awards for her contributions in integrating renewable energy into the power system. Today she is the Chief Technology Officer for GE Power’s Grid Solutions, leading a team of 3,600 engineers in 17 countries. All this means she has spent a lot of time thinking about what the grid of the future will look like. “In the systems of the future, we’re going to see a lot more generation produced at the house,” she says, explaining that she believes we might see more communities sharing batteries that store locally collected energy or pooling solar energy that comes from the roofs of our own homes. “These might be simple solutions where energy will be managed in our little neighbourhood.” 64

“In the future, everyone will have access to electricity,” she says. “The solution might be in their own house or a small microgrid in a community.” While these kinds of solutions are just starting to improve lives, Silva says, there will be far more in coming years as the technology improves and becomes cheaper. According to Vera Silva, the grid of the future will be greener, more sustainable and more flexible — an expanding network of traditional energy sources like gas, coal and hydropower will see a sustained increase of wind power and solar. “It’s going to be much more of a hybrid system combining local decentralized systems with large transmission grids connecting countries and continents,” she believes. She also foresees a huge shift in how we transport renewables. “One big breakthrough is HVDC (high-voltage direct current), which allows us to transport high voltage to new regions,” she says. GE’s Grid Solutions is creating new ‘electrical superhighways’ for the modern economy using HVDC electric transmission lines with advanced features to support system security. While alternating current (AC) has long been the dominant method of shipping power over long distances, DC can transfer three times as much energy over longer distances far more efficiently. “Connecting HVDC is more than just connecting A to B like a pipe,” Silva explains. “It’s going to be able to actually support the system and contribute to stabilizing the system and provide ancillary services. And it will also bring about a range of technologies in other areas, like batteries

and flexible demand to make this future possible and cost-effective.” Digital technology, she says, will be game-changing for those who work on the grid. Right now, the industry takes a conservative approach to repairing sections of the grid, or putting extra energy on it, she says. But starting to use data and end-to-end grid-operation tools to run, analyse and optimize the system will ensure that power providers’ networks become more secure, reliable and resilient. “I love the movie ‘Minority Report’ because it was all about the ability to predict that something was going to happen,” she says. “I think we’re going to see exactly that in how we manage the system and plan maintenance on the grid.” Silva adds that new risks will affect the grid of the future, such as weather and cybersecurity. “We’re going to see a lot more climate events, extreme weather, storms and heat, which means there might be a need to develop new techniques to bring the system back online if it goes down,” she says. “And as this digital system grows, the physical threats outside the grid are expanding as well.” The grid of the future must be smarter, she says, meaning it needs to enable more decisions closer to real time and be more resilient. Digital technology and automation to handle disturbances and support balancing demand, multiple generation resources and energy storage will make this happen. “Our digital system relies on virtual infrastructure — we need to make sure our cybersecurity is just as good and well-understood as our physical security for the system infrastructure.” energyindustryreview.com

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RENEWABLES

ELENA Supporting investments in energy efficiency and sustainable transport LENA is a joint initiative by E the EIB and the European Commission under the Horizon 2020 programme. ELENA provides grants for technical assistance focused on the implementation of energy efficiency, distributed renewable energy and urban transport projects and programmes. The grant can be used to finance costs related to feasibility and market studies, programme structuring, business plans, energy audits and financial structuring, as well as to the preparation of tendering procedures, contractual arrangements and project implementation units. The ELENA facility is led by a team of experts consisting of engineers and economists with extensive experience in the transport and energy sector. Established in 2009, the ELENA facility has awarded around EUR 100 million of EU support triggering an estimated investment of around EUR 4 billion on the ground.

WHAT KIND OF PROJECTS DOES ELENA SUPPORT? Typically, ELENA supports programmes above EUR 30 million 66

with a 3-year implementation period for energy efficiency and 4-year for urban transport and mobility, and can cover up to 90% of technical assistance/project development costs. Smaller projects can be supported when they are integrated into larger investment programmes. The annual grant budget is currently around EUR 20 million. Projects are evaluated and grants allocated on a firstcome-first-served basis. ELENA may cofinance investment programmes in the following fields: Energy efficiency and distributed renewable energy • public and private buildings (including social housing), commercial and logistic properties and sites, and street and traffic lighting to support increased energy efficiency; • integration of renewable energy sources (RES) into the built environment – e.g. solar photovoltaic (PV) on roof tops, solar thermal collectors and biomass; • investments into renovating, extending or building new district heating/cooling networks, including

• •

networks based on combined heat and power (CHP), decentralised CHP systems; local infrastructure including smart grids, information and communication technology; infrastructure for energy efficiency, energy-efficient urban equipment and link with transport;

Urban transport and mobility • investments to support the use and integration of innovative solutions for alternative fuels in urban mobility; • investments to introduce on a largescale new, more energy-efficient transport and mobility measures in urban areas including passenger transport, freight transport, etc.; Energy Cities created a study focused on how ELENA can help unlock investment in cities. The study found that ELENA can be beneficial to trigger investment for climate action in cities by providing the necessary push for cities and local authorities to change the way they plan their investments, and develop projects to achieve their climate objectives. energyindustryreview.com

RENEWABLES

ONGOING PROJECT IN ROMANIA District 6 Energy Efficiency for Public Buildings (D6EEPB) Location & Beneficiary: District 6 of the Municipality of Bucharest Total Project Development Services (PDS) cost: EUR 1,283,300 ELENA contribution: EUR 1,154,970 PDS Timeframe: February 2018 – January 2021 The Project Development Services (PDS) financed by ELENA will provide support to District 6 municipality in acceleration of the implementation of the energy efficiency (EE) investment programme for deep energy retrofit of 11 existing buildings, such as schools managed by the Municipality, and to provide support to a construction of 8

NZEB (nearly zero-energy buildings), designed for kindergartens and afterschool programs, in existing school courtyards. The ELENA TA will contribute substantially to the implementation of the investment programme by bringing in missing resources and external expertise, since District 6 municipality has limited experience in energy efficiency projects for public buildings. The ELENA TA will strengthen the resources and capacities of the General Investment Department, within District 6 municipality, with external experts. ELENA TA will bring the know-how and manpower that will accelerate the investments, reaching a high level of energy efficiency improvements and renewable energy installations.

EXPECTED RESULTS • RE generation – annual total renewable energy generation 218 MWhel and 476 MWhth • Energy efficiency – annual total savings in the final energy consumption of 5.3 GWh • CO2 reductions – annual total emission reductions of 1,370 t CO2 eq • There is a high market replication for this ELENA supported investment programme by other municipalities in Romania. District 6 municipality of Bucharest will share its experience and results via press releases, website and articles in professional media. The project is aiming at the extensive promotion of the obtained results through replication at the level of other institutions.

TURNKEY SOLUTION FOR YOUR PROJECT Complete and functional in the shortest delivery time • Fencing and security: mobile fences, guard houses, security hut, manned security 24/24, alarm system and video surveillance • Utilities: electric generators, fresh and sewage water supply, waste empty services, waste tanks • Communications: internet, data, phone, IT solutions • EHS solutions: fire extinguishers, smoke detectors, first aid kits, FPE kit, lighted signs, signs • Work spaces: offices, meeting rooms, lockers • Accommodations spaces: dormitories, canteens, laundries and dryer spaces • Sanitary spaces: sanitary units, eco toilets • Storage solutions: lighted storages, units with shelves and secure locks • Equipment: telehandler, crane, nacelle, light towers • Project management, maintenance / guarantee, delivery and installations services

SIBIU Branch Depots: Cluj, Sibiu, Timisoara No. 30 Turda Street, Sibiu, Sibiu County T: 0269.224.555 F: 0269.253.201

BUCHAREST Branch info.ro@algeco.com www.algeco.ro

Depots: Bucharest, Constanta, Iasi No. 4 Bucharest Ring Road, Magurele, Ilfov County T: 021.457.44.55 F: 021.457.46.53

RENEWABLES

Electric car sales in Europe surpassed 1 million There are now more than 1 million electric cars in Europe, according to new figures. Norway is Europe’s largest market, though Germany looks set to overtake it by the end of the year. Still, electric cars accounted for just 2% of new registrations in Europe between January and June.

orway still leads the European N country ranking. 36,500 plugins were delivered including June and for the complete 2018 we expect 84,000 sales, a share of 45% in Norway’s market for passenger cars + light commercial vehicles. Germany sales grow faster, though, and we expect it to take the volume lead in Europe with 88,500 registrations when 2018 is closed, EV Volumes database reports. All Europe markets showed growth during the first half of 2018, though with varying pace. Plug-in sales in Netherlands and Denmark have turned around to rapid increases, following years of volume losses in adverse incentive schemes. France and UK continue with moderate increases as their domestic OEMs (PSA, Ford, Vauxhall) have less than compelling offers in the sector. Belgium has cut the incentives on luxury PHEVs and sales grew by a mere 4%. All others have double or triple digit growth during the period, albeit from smaller bases. In total, Europe plug-in sales grew 68

by 42%, compared to 2017-H1. Q1 increased 40%, Q2 by 45%. A caveat for high growth in the 2nd half is vehicle supply. EV Volumes.com tracking of plug-in vehicle inventory shows an average of only 4 days of supply on stock and 2 months of order back-log. Models with more than 10,000 unfulfilled orders, each, are Hyundai Kona, VW e-Golf, Jaguar i-Pace and Nissan Leaf and obviously the Tesla Model 3, all of them BEVs.

THE NORDICS LEAD IN EV ADOPTION This diagram shows the share of Plug-ins among all light vehicles sold in a country and the composition of BEVs and PHEVs in the overall share. Except in Denmark, where the market was confused by incomprehensible green car taxation plans, the Nordic countries lead in EV adoption. The plugin share in Norway is off the chart, as usual, with 37% YTD. EVs have a long

tradition in Norway (the Th!nk and Buddy microcars) and EV awareness in Norway started some years ahead of other countries. Thanks to clear, stable incentives in form of generous tax and toll savings, EVs have become the smart choice for light duty transport, despite long distances and a less than balmy climate. Low-cost electricity from 99% hydropower helps, too. Iceland is in a similar position. The mix of BEV vs. PHEV varies a lot between markets, highly depending on national incentive schemes. PHEVs captured more share compared to 2017, driven by the growing number of entries from German OEM. For 2018 YTD, 51% of plug-in sales were all-electric in Europe. PHEVs are the main contributor to high plug-in shares in Iceland, Sweden and Finland. It can be expected that future incentive schemes will reduce support for PHEVs and increase them for EVs. An example is the introduction of a tougher ‘bonus-malus’ vehicle taxation energyindustryreview.com

RENEWABLES

system in Sweden from 1st of July. It created a swing of 10% towards BEVs in the July registrations.

GLOBAL PLUG-IN SALES FOR Q1 2017 was a great year for Plug-ins and the pace continues: Quarter 1 deliveries of this year were 312,400 units worldwide, 59% higher than for Q1 2017. The numbers include all global BEV and PHEV passenger cars sales, light trucks in USA/Canada, light commercial vehicles in Europe and now also light commercial vehicles in China as a new, emerging category. Plug-in hybrids (+69%) increased faster than pure EVs (+52%) again, PHEVs stood for 39% for Q1 2018. 1076 fuel-cell vehicles were delivered, 34% more than for Q1 of last year. China was less impacted by delayed subsidies this year and had a strong start, BYD in particular, with their Qin and Song PHEVs. The long-awaited Tesla Model-3 had over 8,000 deliveries during Q1 and made it to place 10 in the global model ranking for March. The bestselling model overall was the new Nissan Leaf with 22,000 deliveries, 44% more than last year. The fastest growing markets in Q1 were China (+113%), Canada (+114%), Netherlands (+122%), South Korea (+138%), Spain (+118%, Finland (+144%), New Zealand (+99%) and Australia (+132%). Share leaders are Norway (as usual), where 46% of new 69

RENEWABLES

car sales were Plug-ins this year. Iceland comes 2nd with 26% and Sweden 3rd with 7% for Q1 combined. China usually starts the year with sales and NEV shares below trend. Delayed subsidy approvals and the Chinese new-year events cause a dent which is recovered later in the year. January of 2017 was particularly weak and 113% growth in Q1 need to be seen in that context. Nevertheless, a strong start in China for 2018. In Japan, 3 models (Leaf, Prius, Outlander) stand for 90% of the plug-in volume and the gains for the new Leaf caused losses for the Prius. Moderate growth in Q1, therefore. In Europe, the new Leaf had its sales start in February and March sales were 6252 units, 66% higher than for the predecessor. New PHEVs with low, or no sales last year, were important growth contributors. Germany shows the highest volume gains and is about to pass Norway as the largest plug-in market in Europe. USA is still waiting for larger supply of Tesla Model-3 and Nissan Leaf II. Still, the Model-3 was the best seller from January thru April, with 12,000 deliveries this year, including April. In Q1, Tesla had 1/3rd of the US plug-in market and all of their models were in the top-5 sales ranking. The tally for ‘Other’ looks odd, given that many markets grow at triple digit % now. The reason is in Hong Kong, where their 4,000-unit plug-in market collapsed when generous subsidies were cancelled after Q1 2017. Electric mobility is not limited to cars. In 2017, the stock of electric buses rose to 370,000 from 345,000 in 2016, and electric two-wheelers reached 250 million. The electrification of these modes of transport has been driven almost entirely by China, which accounts for more than 99% of both electric bus and two-wheeler stock, though registrations in Europe and India are also growing. Charging infrastructure is also keeping pace. In 2017, the number of private 70

chargers at homes and workplaces was estimated at almost 3 million worldwide. In addition, there were about 430,000 publicly accessible chargers worldwide in 2017, a quarter of which were fast chargers. Fast chargers are especially important in densely populated cities and serve an essential role in boosting the appeal of EVs by enabling long-distance travel. The growth of EVs has largely been driven by government policy, including public procurement programmes, financial incentives reducing the cost of purchase of EVs, tightened fueleconomy standards and regulations on the emission of local pollutants, lowand zero-emission vehicle mandates and a variety of local measures, such as restrictions on the circulation of vehicles based on their pollutant emission performances. The rapid uptake of EVs has also been helped by progress made in recent years to improve the performance and reduce the costs of lithium-ion batteries. However, further battery cost reductions and performance improvements are essential to improve the appeal of EVs. These are achievable with a combination of improved chemistries, increased production scale and battery sizes, according to the report. Further improvements are possible with the transition to technologies beyond lithium-ion. Innovations in battery chemistry will also be needed to maintain growth as there are supply issues with core elements that make up lithium-ion batteries, such as nickel, lithium and cobalt. The supply of cobalt is particularly subject to risks as almost 60% of the global production of cobalt is currently concentrated in the Democratic Republic of Congo. Additionally, the capacity to refine and process raw cobalt is highly concentrated, with China controlling 90% of refining capacity. Even accounting for ongoing developments in battery chemistry, cobalt demand for EVs is expected to be between 10 and 25 times higher than current levels by 2030.

Ensuring the increased uptake of EVs while meeting social and environmental sustainability goals requires the adoption and enforcement of minimum standards on labour and environmental conditions. The environmental sustainability of batteries also requires the improvement of end-of-life and material recycling processes. Looking forward, supportive policies and cost reductions are likely to lead to continued significant growth in the EV market. In the IEA’s New Policies Scenario, which takes into account current and planned policies, the number of electric cars is projected to reach 125 million units by 2030. Should policy ambitions rise even further to meet climate goals and other sustainability targets, as in the EV30@30 Scenario, the number of electric cars on the road could be as high as 220 million in 2030. The IEA’s latest Tracking Clean Energy Progress report shows that EVs are one of the 4 technologies out of 38 that are on track to meet long-term sustainability goals. IEA’s outlook still leaves plenty of room for fossil fuel-powered vehicles. Forecasts put the world’s total car count at roughly 2 billion somewhere in the 2035 to 2040 window. However, the IEA also sees a pathway to 220 million electric vehicles by 2030, provided the world takes a more aggressive approach to fighting climate change and cutting emissions than currently planned. While battery costs are falling, the IEA acknowledges that government policy remains critical to making EVs attractive to drivers, spurring investment and helping carmakers achieve economies of scale. “The uptake of electric vehicles is still largely driven by the policy environment,” the IEA’s report says. “The 10 leading countries in electric vehicle adoption all have a range of policies in place to promote the uptake of electric cars.” Policies in place today will make China and Europe the biggest adopters in the IEA’s view. energyindustryreview.com

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METALS & MINING

Is it on the way out?

Steady decline of coal in Europe 72

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METALS & MINING

Over the past few decades the production and consumption of coal in the EU has been in steady decline, due to the closure of coal mines and the phasing out of coal use for power generation. Europe has embarked on an energy transition, and in response the EU is creating an Energy Union based on renewables, innovation and digitalisation. Regions across Europe face the challenges and opportunities of this transition.

from State Aid are closing due to their poor competitive position, resulting in the loss of 27,000 jobs between 2015 and 2020. From 2020 onwards, mine closures will be aligned with the decommissioning rates and operating horizons of EU coal power plants, two thirds of which are expected to retire by 2030. The JRC report concludes that this could result in the loss of about 77,000 direct jobs by 2025 and 160,000 by 2030.

HOW IMPORTANT IS COAL FOR US?

new JRC study, titled â&#x20AC;&#x2DC;EU coal regions: opportunities and A challengesâ&#x20AC;&#x2122;, investigates the impact of this transition on the regions most affected by the decline of coal. It finds that while 160,000 directlyrelated jobs could potentially be lost as a result of this transition, with careful planning, regional economies can adapt and create new opportunities for those

formerly working in the coal sector. Coal-related activities are now under pressure from the progressive decarbonisation of the power sector. The EU, as a signatory to the landmark Paris climate agreement and a world leader in renewables, is committed to a 40% cut in greenhouse gas emissions (compared to 1990 levels) by 2030. Many mines which currently benefit

Coal still provides 15% of EU power generation. Two thirds of the coal power plants currently operating in Europe are expected to close between 2020 and 2030. Coal power plants in the EU employ around 53,000 people and coal mines 185,000 workers, totalling around 238,000 jobs. Indirect activities throughout the coal value chain, including power generation, equipment supply, services, R&D and other dependent activities provide around an additional 215,000 jobs. 73

METALS & MINING

WHAT WILL HAPPEN TO THE PEOPLE AND BUSINESSES DEPENDING ON COAL? An ill-prepared phase out of coal could send shockwaves through the most affected regions, causing businesses to close and more people losing their jobs. Therefore, the future of these regions must be planned carefully, based on their potential and according to the needs of citizens, with the full commitment of national and local authorities. Clean energy is part of the solution, as it already supports 2 million jobs across the EU. The European Commission, through the Coal Regions in Transition Initiative, assists the planning and execution of such energy transitions. Phasing out coal is going to present more of a challenge for some regions than for others. The most affected are located in Bulgaria, the Czech Republic, Germany, Greece, Hungary, Poland, Romania, Slovakia, Slovenia and Spain, where some coal regions already experience high levels of unemployment. One region in Poland, in particular, may lose up to 41,000 jobs by 2030, and a further three (in Bulgaria, the Czech Republic and Romania) are likely to each lose an estimated 10,000 jobs. Protecting the livelihoods of people formerly working in the coal sector depends on investing in public infrastructure, replacing coal with alternative energy sources, retraining workers, attracting innovation and investment, and diversifying the local economy. Following the closure of a mine, converting the site to a renewable energy generation facility can provide new job opportunities and economic value, as well as contributing to a more secure energy supply. Such projects can benefit from the pre-existent infrastructure and land availability. The report finds several regions that would be well suited to generating renewable energy. 74

For example, coal regions in Hungary, the Czech Republic and Poland have high wind availability. Several coal regions in Spain, Greece and Bulgaria are particularly well placed for solar power generation. Examples of mine site redevelopment for solar and wind energy generation are already abundant. One example is the solar power plant in Visonta in Hungary, which is situated on top of a lignite mine dump site and generates 16 megawatts of solar power. There are several projects in Germany, including the 5 wind parks in Klettwitz, Germany that are built on a former open cast mine and together generate 145.5 megawatts of wind energy. Further geothermal heating systems, utilising water from a former coal mine, have been developed in the Netherlands. Such installations, and associated skills, have also been identified as particularly suitable for employing former coal workers following some specific training.

WHAT IS THE EU DOING TO HELP? The Coal Regions in Transition Initiative is designed to help regions reap the benefits of the clean energy transition by bringing more focus to social fairness, better jobs, new skills, structural transformation, and financing for the real economy. It helps developing projects and longterm strategies for coal regions which kick-start the transition and respond to environmental and social challenges. It brings together EU, national, regional and local stakeholders involved in the transition to create partnerships and learn from each other’s experiences. Working together, stakeholders and experts in these regions should identify the most promising transition strategy that offers the best economic, social and environmental results. Once the local and national authorities make their decision, a plethora of EU funds and tools are available to support the transition, for

example: • European Structural and Investment Funds can support projects aimed at infrastructure development, low carbon economy transition and environment protection and resource efficiency; • The EU’s LIFE Fund can support projects implementing EU environmental legislation (e.g. improving air quality or the remediation or ecological restoration of old mining sites and degraded land); • The Modernisation Fund of the EU Emission Trading System provides support for cleaning the energy system and reskilling; • The Operational Programme Human Resources implements EU funding programs in Slovakia for job creation and strengthening social cohesion; • The European Investment Bank (EIB) and the European Institute of Innovation and Technology (EIT) and the European Investment Bank support the development of new, clean energy technologies. EIT InnoEnergy, for example, works with business, research and education organisations on innovation projects, business creation and acceleration and on unique education courses combining engineering with entrepreneurialism. The EIT Community is open to sustainable energy innovators and entrepreneurs with dedicated support in clean coal technologies; • The EU’s Cohesion policy helps regions achieve economic transformation by building on their ‘smart specialisation’ assets, i.e. their competitive strengths, with the aim to embrace innovation and decarbonisation. Via Cohesion policy, the EU is in direct and constant touch with regional partners on the ground and can provide tailored support to guide structural change. 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

METALS & MINING

Europe leading the world in copper recycling opper is the world’s most C reusable resource and for nearly 5,000 it was the only metal known to man. Currently copper is one of the most used and reused of the presentday metals. There are some interesting facts about the copper to keep in mind. • Copper has an infinite recyclable life. Copper, by itself or in any of its alloys, such as brass or bronze, is used over and over again. • Copper was first used by humans more than 10,000 years ago. A copper pendant discovered in what is now northern Iraq has been dated about 8700 B.C. • According to Copper Development Association, known worldwide copper resources are estimated at nearly 5.8 trillion pounds of which only about 0.7 trillion pounds (12%) have been mined throughout history... and nearly all of that is still in circulation, because copper’s recycling rate is higher than that of any other engineering metal. • Each year in the USA, nearly as much copper is recovered from recycled material as is derived from newly mined ore... and when you exclude wire production, most of which uses newly refined copper, the amount of copper used by copper and brass mills, ingot makers, foundries, 76

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powder plants and other industries shows that nearly three-fourths (72%) comes from recycled copper scrap. More than half of this scrap is ‘new’ scrap, such as chips and turnings from screw machine production... the remainder is ‘old’ scrap, such as discarded electric cable, junked automobile radiators or even ancient Egyptian plumbing. Copper’s recycling value is so great that premium-grade scrap normally has at least 95% of the value of the primary metal from newly mined ore. The ability to reuse copper extracted from recycled product is a tribute to an industry that’s environmentally conscious regarding its use of natural resources on behalf of consumers.

COPPER AND THE CIRCULAR ECONOMY Once mined, copper can be recycled over and over with no loss of properties. As such, it is a sustainable material that is pivotal to building the circular economy. Responsible mining and successful recycling help make copper sustainable and resource-efficient. Copper ore used in the EU is mainly imported from Chile, Peru, Australia and the USA, though there is also some

production in Europe, including Finland, Poland, Spain and Sweden. Copper mining provides many valuable by-products that can be used in advanced material applications, including cobalt, molybdenum, rhenium, selenium, tellurium and rare earth elements, as well as silver, tungsten, gold, lead and zinc. Copper is the metal of the energy transition, powering renewable energy systems and green technologies. Renewable energy systems use up to 12 times more copper than conventional power systems. Copper also typically improves energy efficiency. One tonne of copper used in rotating machines—such as an electric motor or a wind turbine— saves 7,500 tonnes of CO2 emissions over its lifetime. Copper consumption is predicted to rise more than 40% by 2035. Partly driven by green technologies—like solar and wind power, and electric vehicles— additional demand will be met through mining and recycling. Copper can be recycled repeatedly without any loss of performance, and recycling requires up to 85% less energy than primary production. Globally, this saves 40 million tonnes of CO2 annually. Europe already leads the world when it comes to copper recycling, with nearly 50% of its copper demand currently met by recycled material. The industry is now working to go even further. energyindustryreview.com

METALS & MINING

Gold’s role in improving energy efficiency and developing low carbon technologies he World Gold Council (WGC) T launched its ‘Gold and climate change’ report, aiming to provide investors with greater clarity around gold’s impacts on climate change. Marking one year since the recommendations from the Taskforce on Climate-Related Financial Disclosure (TCFD), the report is an initial step to build understanding of the gold industry’s greenhouse gas emissions (GHG) footprint, the efforts already underway to reduce emissions and gold’s role in improving energy efficiency and developing low carbon technologies. Acknowledging that limited data currently exists, the key findings include: • The total volume of carbon emissions for global gold production is significantly smaller than most other major mined products, including steel, aluminium and coal. Significantly, on a value basis, gold has amongst the lowest GHG emissions per dollar of the main mined products. In other words, the volume of GHG emissions 78

•

associated with a dollar spent on gold is lower than for a dollar spent on most other mined products. In addition, gold’s emission levels in relation to overall contribution to global GDP suggest that its carbon footprint per USD is similar to that of the global economy. Leading responsible gold miners are actively making operational changes to reduce GHG emissions and improve energy efficiency. Examples of current best practice highlighted include the use of solar power in Burkina Faso, sourcing hydro-electric power in Brazil and the Kyrgyz Republic, and the design and construction of the world’s first all-electric mine. Gold itself may also play an important role in technologies that help facilitate the transition to a low carbon economy. Technologies under development include gold catalysts to help convert CO2 into useful fuels, the use of gold nanomaterials to enhance

hydrogen fuel cell performance and the inclusion of gold to improve photovoltaics and how the sun’s energy is captured and utilised. • Gold can play a positive role in enhancing the sustainability profile, and reducing the carbon footprint, of investment portfolios over time. Initial research suggests that incorporating gold alongside equities may reduce the overall carbon footprint of an investor’s portfolio over the medium to long-term. “Given gold’s growing role as a strategic investment asset, the need for greater awareness of its climate-related impacts is a priority issue for many investors. Our initial findings, based on the limited research, help investors in better understanding gold’s greenhouse gas emissions profile and gold’s role as part of a diversified portfolio,” Terry Heymann, Chief Financial Officer at the World Gold Council, commented. The report’s findings were reviewed by environmental scientists at the Centre of Environmental Policy (CEP) at Imperial College London. energyindustryreview.com

Under the High Patronage of:

Confirmed Speakers Include:

ANTON ANTON Minister

IULIAN ROBERT TUDORACHE Secretary of State

FLORINA SORA Senior Advisor

NIKOS FARANTOURIS Head of Legal

GARRY LEVESLEY Business Development Manager

Ministry of Energy Romania

NAMR Romania

DEPA Greece

PetroCeltic Bulgaria

YANNIS BASSIAS Chairman & CEO

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

Prospex Oil & Gas UK

Federal Ministry of Energy Mining and Industry Bosnia- Herzegovina

THE REGIONâ&#x20AC;&#x2122;S MOST RELEVANT OIL & GAS SUMMIT

Organised by:

+44 (0) 20 3004 9770

marketing@in-vr.co

79 www.in-vr.events

TECH

Subsea water treatment module to improve oil recovery OV just completed a joint N industry project with the aim to verify and demonstrate installation - and performance aspects of a full-scale Seabox™ subsea water treatment module in a realistic subsea environment. The Seabox module was installed close to Stavanger, Norway, at 220-meter water depth. Seawater was drawn through the module and a 540-meter-long pipe by use of a submerged pump. To verify the performance of the Seabox treated water, samples of the treated seawater were compared with raw seawater samples collected from the same seabed location. The Seabox module has shown great results after a three-month duration of testing. Not only were the three parts of the Seabox module successfully installed, the treatment unit has been retrieved and the comparison samples show solids removal and disinfection capabilities beyond expectations. In that specific seafloor environment, the Seabox module removed on average 60% of all particles and 99.9% of all particles above 8.5µm. Tested according to oil industry practice, results demonstrate complete 80

bacteria kill. There were also no SRBs or GRBs below detectable limits. The Seabox subsea water treatment module showed a stable performance with 100% regularity throughout the test period, providing treated water with a stable solids removal and disinfection despite variations in the raw seawater quality. This verification of the performance of the Seabox module demonstrates the ability to serve a variety of duties for water injection – e.g. as pretreatment to filtration and membrane technology or as a standalone solution. The Seabox system enables water treatment to be done directly at the seabed and water to be pumped straight into the injection well. This will allow the operator to optimize waterflooding and improve oil recovery. Two successful pilot projects, backed by the Norwegian Research Council and several major oil companies, have demonstrated that the Seabox system reduces water treatment costs compared to other types of systems. Water injection is the most common way to increase oil production, but traditionally, this has required expensive and bulky topside equipment. With the

Seabox™ subsea water treatment unit and SWIT™ Technology, the water treatment is done directly at the seabed and the treated water is pumped straight into the injection well. The SWIT Technology provides the right quality water for water injection where it is needed, when it is needed. This fully flexible approach allows operators to optimize water flooding with the right quality water at any time and location to improve recovery. Seabox subsea water treatment unit and SWIT Technology is a subsea technology, developed during the last 10 years with support and sponsorship from major oil companies. The technology enables treatment of raw seawater directly on the seabed to the desired quality for injection into oil wells for pressure support, sweep and increased oil recovery. The development started in 2003 and embarked on a series of Joint Industry Projects (JIP) backed by the Norwegian Research Council and major oil companies. Through these projects, the Seabox unit and SWIT Technology have been developed and are now ready for real applications. energyindustryreview.com

TECH

Halliburton introduces automation to hydraulic fracturing alliburton unveiled ProdigiTM H AB Service, a first-of-itskind offering that introduces automation to hydraulic fracturing. By automating the breakdown process of a fracturing treatment, Prodigi AB Service helps deliver better well performance. The service uses algorithmic controls and is supported by a Halliburton completion advisor who will tune the system to optimize the performance. Prodigi AB service helps improve overall efficiency, maximize the performance of perforation clusters and mitigate the risk of screen-out. Prodigi AB Service provides consistent design execution, better distribution of fluid across the perforated interval, and improved treatment pressures and rates. The service delivers improved precision to achieve a lower cost per BOE. “Prodigi AB Service offers a significant change in the way we are able to optimize our hydraulic fracturing operations in real-time, accelerate the learning curve to optimize well design and improve the overall consistency of our performance at the wellsite,” Michael Segura, Vice President of the Production Enhancement business line said.

Halliburton has used Prodigi AB Service in the Permian basin with outstanding results for Primexx Energy Partners. The service reduced overall treating pressures, increased consistency of the formation breakdown process and resulted in an immediate improvement in cluster efficiency. “Prodigi AB Service is helping Primexx achieve our execution and production goals. The reduction in treating pressure and operational consistency is allowing us to execute treatments more efficiently and the improved cluster distribution is helping us make better wells,” Sam Blatt, VP of Operations for Primexx underlined. In unconventional fracturing design, there are many parameters used to optimize stimulation treatment outcomes. For example, to achieve ideal fracture spacing and efficient stimulation of long laterals, the number and density of perforation clusters per stage can be adjusted. The impact of execution process parameters on the success of a stimulation treatment is often underestimated. In particular, the breakdown process can greatly impact stage treatment results. Prodigi™ AB service utilizes intelligent fracturing control to optimize this process.

Flow rate during the perforation cluster breakdown process often varies from stage-to-stage and well-to-well. Common industry practice is to achieve designed rate as fast as the maximum pressure limitations allow. Often, this approach is not ideal for the formation limiting connectivity of fractures, cluster accessibility, and in some cases, events that result in screen-outs. Utilizing real-time measurements and proprietary rate control algorithms, pump rates are adjusted accordingly during the breakdown process. This engineered approach drives consistent stage-to-stage performance. Adaptive rate control can support a more efficient breakdown at the perforation clusters leading to improved connectivity of fractures. Implementing the Prodigi AB process has resulted in lower surface treating pressures and an overall reduced risk of screen-outs. Improved cluster efficiency and dynamic fluid distribution control have also been observed, resulting in better overall stimulation treatment performance. With Prodigi AB service, your breakdown process is automatically optimized on every stage of every well. 81

TECH

Vespa Elettrica

ccording to Piaggio Group, A electric innovation takes solid form in the most iconic of its brands, which once again sets new parameters for urban mobility. Vespa Elettrica will be the first Piaggio Group product to adopt innovative machine-man interconnectivity solutions. Staying true to the programmes presented at the most recent EICMA (International Motorcycle and Accessories Exhibition), the Piaggio Group will start production of Vespa Elettrica in September. The long-awaited electric version of the worldâ&#x20AC;&#x2122;s most famous and beloved scooter will be produced at the Pontedera plant in the province of Pisa, the same one where Vespa first rolled off the line in the spring of 1946 and that today is one of the worldâ&#x20AC;&#x2122;s technological leaders in terms of design, development and production of advanced mobility solutions. The first vehicles will already be possible to book at the beginning of October and only online on the dedicated website, with innovative all-inclusive financing formulas that will join the conventional purchasing systems. The price will be in line with the high-end bracket of the Vespa range presently being 82

marketed. Vespa Elettrica will then be gradually put on the market starting from the end of October to reach full marketing in November to coincide with the 2018 Milan EICMA show. Sales will begin in Europe to then be extended to the United States and Asia starting from early 2019. Vespa Elettrica is but a first step for the Piaggio Group in the direction of a new richness of interconnection between vehicles and human operators. Vespa Elettrica will be ready to be fitted out in the near future with solutions currently being developed for Gita, the robot currently on the drawing board at Piaggio Fast Forward in Boston (which will be entering production at the beginning of 2019), such as artificial intelligence systems both adaptive and responsive to all human input. They will be aware of people and other vehicles operating in the vicinity, extend the operatorâ&#x20AC;&#x2122;s ability to sense potential perils and opportunities, and provide real time mapping and traffic data that contributes to improving the design of transportation infrastructures in cities. Most of all, these new generation vehicles will thoroughly know their operators: they will recognize them

without key fobs, anticipate their driving choices, interact with other devices and vehicles on the road and allow for degrees of personalization that can barely be imagined today. Vespa Elettrica is launched as the contemporary icon of Italian technology around the world. By adopting electric drive, Vespa once again strongly makes a name for itself as a symbol of style combined with the best of innovation. Vespa Elettrica is not just a new electric scooter. It is a work of art of our day, with a technological core that is born carrying with it all the values of the world of Vespa, its image, its social and eco-friendly soul, now even more sensitive to the quality of life of our urban environment. Vespa Elettrica means riding easy, natural. It means advanced connectivity and silence, personalisation and accessibility, values that have always belonged to Vespa and that today have been totally achieved in Vespa Elettrica. The Vespa brand today is experiencing one of the most successful moments of its history, with over a million and a half vehicles sold during the last decade. The first half of 2018 closed with about a 10% increase in sales volumes compared to 30 June 2017. energyindustryreview.com

TOOLS & MACHINES

PRM helping to improve recovery from the Johan Castberg field First fields in the world to install the tool before production start igital technology developed D in Norway will help improve recovery from the Johan Castberg field in the Barents Sea. Equinor has awarded Alcatel Submarine Networks a contract for permanent reservoir monitoring (PRM), which in turn has signed a letter of intent with Nexans Norway AS for delivery of subsea cable. “PRM is a central element of the digital strategy for Johan Castberg and will be an important tool in improving the Johan Castberg recovery rate,” says Johan Castberg Project Director Knut Gjertsen. The technology is developed in Norway, and the contract is awarded by exercising an option in the framework agreement on PRM that we entered into with Alcatel when signing a corresponding contract for the North Sea Johan Sverdrup field in January this year. Johan Castberg and Johan Sverdrup will share the PRM project management, leading to both synergies and savings. 84

Johan Sverdrup and Johan Castberg are the first fields in the world to install this tool before production start. Nexans Norway AS is a subcontractor to ASN on the Johan Castberg PRM project. They will manufacture the backbone cable network and interstation cable at their facilities in Rognan, Norway. The supply will include more than 200 km of subsea cable. This is an important contract which strengthens Equinor’s presence in the north. Seismic stations will be incorporated into the cables at ASN’s facility in Calais, France. Equinor’s fields on NCS has a world class recovery rate, and the company expects the current portfolio of producing and sanctioned fields to achieve 50% recovery. Equinor has an ambition to hit 60% through IORinitiatives for their oil fields. PRM implies that seismic sensors are installed permanently on the seabed, providing better images of reservoir changes at a more frequent rate. Both

the amount and not least the quality of the information generated from this system will be central in Equinor’s plans for use of digital technology at the Johan Castberg field. This kind of data has a large potential in relation to visualisation, modelling and gradually also predictive analyses. More than 200 kilometres of fibre-optic seismic cables and 3,700 sensors will be spread on the seabed at the Johan Castberg field. The cables will start sending images before the field starts up in 2022, providing a basis and information about the reservoirs before production start. This will increase the well placement precision and help ‘control’ production and injection, says Benedicte Nordang, Subsea Manager for Johan Castberg. Estimated recoverable reserves for Johan Castberg is 450-650 million barrels. Planned start-up is 2022. The Johan Castberg partnership consists of Equinor (operator 50%), Eni Norge (30%) and Petoro (20%). energyindustryreview.com

TOOLS & MACHINES

Atlas Copco acquires the cryogenic business of Brooks Automation

tlas Copco, a leading provider A of sustainable productivity solutions, has agreed to acquire the cryogenic business of Brooks Automation, Inc., for a total value of MUSD 675. The acquisition includes cryo pump operations located in Chelmsford, USA and Monterrey, Mexico, a worldwide network of sales and service centers, and Brooks Automation’s 50% share of Ulvac Cryogenics, Inc., (UCI). The cryogenic business, which is headquartered in Chelmsford, MA, has about 400 employees and revenues of approximately MUSD 195 in the last 12 months. The revenue for the joint venture is not included in this number. UCI is a joint venture with Ulvac, Inc., a company listed on the Tokyo stock exchange (6728.T). UCI had total revenues of

approximately MUSD 100 in the fiscal year ending June 2017. “The acquisition of Brooks Automation’s cryogenic business gives us access to new technologies and products and complements our current offering for semiconductor chamber solutions,” said Geert Follens, President of Atlas Copco’s Vacuum Technique business area. “We will use the strength of Atlas Copco’s global presence in vacuum, to extend the application of the acquired products and technologies to general industry and the emerging medical and energy markets.” Brooks Automation is a market leader in advanced cryo pumps and associated products for the semiconductor industry through its CTI-Cryogenics and Polycold brands. The acquired business will significantly expand Atlas Copco’s

technology offering to customers in the semiconductor and general vacuum industries through the Edwards business, a brand in the Atlas Copco Group. The acquisition complements Atlas Copco’s existing technology portfolio with a new range of high vacuum pumps that optimize the removal of water vapour and hydrogen, which is critical to many semiconductor and industrial processes. The acquisition is an all-cash transaction utilizing Atlas Copco’s existing funds and is subject to regulatory approvals. The acquisition is expected to be completed during the first quarter of 2019. The acquired business will become part of the Semiconductor and Semiconductor Service divisions within Atlas Copco’s Vacuum Technique business area. 85

ANALYSIS

H1 REVIEW

Results, profits, dividends and statistical data

energyindustryreview.com

ANALYSIS

The manufacturing and extractive industries were the stars of the five months of the year in Romania in the share of industrial production, both as gross series, with 4%, and as adjusted series, with 5.7%, compared to the same period of the previous year, according to data from the National Institute of Statistics (INS). Within industrial production (gross series) there were positive results in the manufacturing industry (+5.1%) and extractive industry (+1.9%). On the other hand, electricity and heat, gas, hot water and air conditioning production and supply fell by 1.7%. Daniel Lazar

n the margin of 5.7% growth of I industrial production, as adjusted series depending on the number of working days and seasonality, the manufacturing industry registered a jump of 6.9% and the extractive industry of 2.1%. At the opposite side were electricity and heat, gas, hot water and air conditioning production and supply, with a decline of 1.4%. This was the context in which the activity of companies in the industry was carried out, and their financial results are presented next.

DIVIDENDS OF RON 8.041/SHARE AT CONPET Conpet Ploiesti, the national transporter of crude oil through pipelines, reported in the first half of this year a net profit of RON 21.6mln, while the turnover maintained at a similar value as that in H1/2017, i.e. RON 185mln. The operating profit achieved in the first half of 2018, compared to the same half of 2017, recorded a decline to RON 23.25mln (42.48%), mainly as a result of lower revenues from the provision of transmission services for crude oil, gasoline and condensate and an increase in staff expenses. Conpet Ploiesti carried in the first half of the year more crude oil than in the similar period of 2017 and posted

a turnover of RON 184.93mln, by only 0.74% lower. Operating income stood at RON 199.98mln, down by 1.3% compared to the amount of RON 202.60mln recorded in H1/2017, in conditions of an increase by 2.68% in the quantity of crude oil transported, to 3.30 million tons, from 3.21 million tons. Thus, while in the domestic transmission segment there was a decline of 1.51%, to 1.76 million tons, from 1.78mln million tons, in the case of imported oil the transmission climbed by 7.92%, to 1.54 million tons, from 1.43 million tons. The financial results have better prospects in the second half of the year, as the tariff for the domestic transmission of crude oil was increased by 6% in June, to RON 84.37/ ton, from RON 79.75/ton. The Ordinary General Meeting of Shareholders of Conpet Ploiesti approved the proposal for the distribution of a gross dividend of RON 8.04168315/ share. Thus, no less than RON 69.62mln, representing 90% of the net profit of RON 77.35mln obtained last year, will go to shareholders in the form of dividends, while other 3.84% of the gain, i.e. the amount of RON 2.97mln, would represent employees’ participation in profits, according to shareholders’ decision. The date of dividend payment was 28 June and the amount received by the state for its shareholding of 58.71% held through the Ministry of Energy would amount to RON

40.87mln. Also, portfolio investors should get RON 29.09mln.

ROMGAZ HAS PROPOSED A DIVIDEND OF RON 4.99/SHARE Romgaz recorded in the first half of the year a net profit of RON 797mln, down 10% compared to the profit recorded in the similar period of last year (RON 887.5mln), following an increase by 18% in expenses (and by only 5% in revenues). The main additional expenses were of fiscal nature: royalty being calculated at the gas price in Vienna (42.53% compared to H1 2017), which led to an increase by RON 60mln in expenses with the payment of the tax on windfall gains obtained as a result of price deregulation in the gas sector. Romgaz’s turnover went up 3.4%, from approximately RON 2.4bn to RON 2.47bn. Overall, the influence of increased taxation in the field (introducing a reference price from the Vienna exchange in the royalty calculation formula and its direct impact on the windfall tax) was RON 117mln (an additional amount of RON 57mln from royalties and RON 60mln from the windfall tax). If the National Agency for Mineral Resources (NAMR) hadn’t decided to chance the royalty calculation formula in February, Romgaz would have recorded a profit of RON 914mln in the first half of 87

ANALYSIS

the year, by 3% higher than the one in the similar period of last year, this despite a decrease in gas supplies by approximately 3%. National gas consumption recorded in the first 6 months of 2018 a decline by 3.5% compared to the similar period of the previous year, while Romgaz’s supplies went down only 2.96%, from 32.06TWh to 31.11TW. Therefore, Romgaz’s market share in the Romanian gas supply market reached 45.26%, by 0.27% higher than the market share held during the previous reporting period (44.98%). In the first half of 2018, Romgaz produced a volume of 2,640 million cubic metres of natural gas, by 81 million cubic meters (3.2%) more than in the same period of last year. The gas producer has proposed for dividends granted to shareholders the amount of RON 4.99/share.

REVENUES BY 84% HIGHER AT ROMPETROL WELL SERVICES In the first half of this year, Rompetrol Well Services posted total operating revenues of RON 27.73mln, by 84% higher than the amount of RON 15.07mln posted in H1/2017. In the same reporting period, operating expenses increased at a much slower pace, +46.19%, to RON 24.56mln, from RON 16.80mln. Thus, the company obtained an operational result of RON 3.16mln, compared to operational losses of RON 1.73mln in the first 6 months of last year. A positive impact also came from the financial result, which increased by 59.46%, to RON 1.77mln, from RON 1.11mln. This is the context in which Rompetrol Well Services obtained a net global result of RON 4.03mln, after in the first half of 2017 it had posted losses of almost RON 620,000. The turning point was recorded last year, when the petroleum services company obtained a net profit of RON 2.47mln, compared to losses of RON 5.82mln in 2016. On 30 June 2018, the total assets of the company stood at RON 134.19mln, by 3.28% higher compared to RON 88

134.19mln at the end of last year. Rompetrol Well Services, a company listed on the Bucharest Stock Exchange, is controlled by KMG International, company registered by the Kazakh owner in the Netherlands, with a 73.01% stake. Another significant shareholder, with a 10.67% stake, is the Finnish fund KJK Fund II, SICAV - SIF.

OMV PETROM’S NET PROFIT WENT UP 6% The OMV Petrom Group posted, in the first half of this year, a net profit of RON 1.28bn, up 6% compared to the similar period of 2017, when the result displayed was RON 1.21bn, according to financial data published by the company. Under these circumstances, earnings per share stood at RON 0.0227, up 6% in H1/2018. The operating result increased by 13% in the first six months of this year, to RON 1.781bn, while the Clean CCS Operating Result was RON 1.694bn, stable compared to the similar period of last year, the Upstream segment having the biggest contribution. Consolidated sales of RON 9,851mln for 6m/18 increased by 6% compared to 6m/17, sustained by higher crude oil and natural gas prices and higher electricity volumes sold, which compensated for the lower quantities of petroleum products and natural gas sold and a lower selling price for electricity. Downstream Oil represented 75% of total consolidated sales and Downstream Gas accounted for 22%. The number of employees of OMV Petrom is lower by 6%, i.e. 13,421 persons at the end of June 2018. In the first six months of this year, the company made investments of RON 2.102bn, up 130% compared to the first half of last year. OMV Petrom estimates investments of RON 3.7bn for the entire year 2018, 75% following to go to the Upstream segment. The increase in investments is explained mainly by a ramp-up in drilling of development and exploration wells

and intensified works in infrastructure projects in the Upstream segment, where investments during January - June 2018 amounted to RON 1.44bn, compared to RON 797mln in the similar period of last year. For the entire year, the company estimates investments of around RON 2.8bn (excluding E&A), including more than 100 new wells and side-tracks, around 1,000 workovers and the Neptun Deep project. Also, the company will sell 5060 fields to focus on the most profitable barrels. In Downstream Oil, increase in investments was related to the Petrobrazi refinery turnaround and the Polyfuel growth project. Downstream investments amounted to RON 661mln in 6m/18 (6m/17: RON 115mln), thereof RON 635mln in Downstream Oil (6m/17: RON 105mln). In turn, Corporate and Other CAPEX was nil (6m/17: RON 1mln). Group oil and gas production amounted to 29.18mln boe in the first half of this year. In Romania total oil and gas production was 27.90mln boe, 5% lower compared to 29.39mln boe in 6m/17. Crude oil and NGL production in Romania was 12.20mln bbl, 3% lower compared to 6m/17, mainly due to the natural decline. Gas production in Romania decreased by 7% to 15.70mln boe, due to the natural decline in the main gas fields (Totea Deep and Lebada East), the one-time effect of works and equipment replacement in the Totea - Hurezani area, and maintenance activities. The company has proposed a profit distribution rate of 45%, the proposed dividend being RON 0.02/share.

ROMPETROL INCREASED ITS GROSS TURNOVER BY 50% Rompetrol Rafinare, company member of KMG International, recorded in the first half of this year an increase by over 50% in gross turnover compared to the indicator reached in the similar period of 2017, to USD 2.6bn. Amid an increase by 27% in raw energyindustryreview.com

ANALYSIS

materials processed by its production units (Petromidia Navodari and Vega Ploiesti refineries, the petrochemical division), the company obtained an operational result (EBITDA) of approximately USD 86mln, by 49% higher than in the first half of last year. At the same time, the increase in the volume of raw materials processed and petroleum products sold, but also the continuation of the processing costs and operational expenses optimization programs supported a net profit of USD 2.78 million, compared to a negative value of USD 7 million in H1/2017. The results were influenced by the volatility of international quotations for petroleum products, in conditions in which the price of raw material - crude oil increased by around 36%, reaching in H1 to USD 70/bbl. At European level, European refining margins fell in the first half of the year by over 12%, compared to the indicator related to the similar period in 2017, in the context of an accentuated increase in crude oil prices, well above the evolution of petroleum products. The refining and petrochemical divisions of Rompetrol Rafinare managed to increase by 34% their quantities of petroleum products delivered to export in the first half of the year, their value amounting to over USD 926mln (by around 80% above the indicator in H1/2017). In the refining segment, the company posted a gross turnover worth USD 2.24 billion in the first half of the year, up by approximately 60% over the same period of 2017. The increase was mainly determined by the high quotations of crude oil and petroleum products. The net result obtained in the refining segment in H1/2018 was positive, of USD 17.5mln, compared to a negative one of USD 17.2mln recorded in the similar period of 2017. The financial results were supported by the improvement by 25% of the gross refining margin of the unit at the Black Sea coast to USD 49.6/ton and by 27% of raw material quantities processed and fuels sold.

Petromidia refinery processed in the first half of the year around 3.1 million tons of raw material, increasing by over 27% compared to the level obtained in the similar period of 2017. In the first half of the year, Vega Ploiesti refinery processed a total quantity of 194 thousand tons, increasing by 28% compared to the similar period of 2017. Currently, the refinery is the most longlasting unit in Romania and is the only domestic producer of bitumen and hexane. The refining capacity utilization increased by 28% in the case of Petromidia refinery (98.45%) and by over 25% for Vega refinery (117.53%). Thus, Petromidia refinery obtained about 2.42 million tons of fuels, of which over 64% were diesel fuels and jet fuels. The petrochemical division recorded a turnover of USD 114.3mln, increasing by 43% compared to the level recorded in the similar period of 2017. Currently, this is the only producer of polymers in Romania. Total production of polymers increased by 26% compared to the period January-June of last year, to a level of 81.6 thousand tons. The distribution segment recorded an increase by 38% in the gross turnover compared to H1/2017, amid a 12% improvement in domestic fuel sales (gasoline, diesel, liquefied petroleum gas). Thus, Rompetrol Downstream managed to increase by 12% the quantity of fuels sold, from 1.03 million tons in H1/2017 to 1.15 million tons in H1 this year.

DIFFERENT VIEWS OF THE MINISTRY OF ENERGY AND TRANSGAZ IN TERMS OF DIVIDENDS Transgaz has published on its own website the notices on auctioning the gas export and import capacities from and to Hungary and Bulgaria, for the gas year 2018 - 2019. In terms of dividends proposed, they have different values in the view of the Ministry of Energy, which wants RON 45.38/share at a profit distribution rate

of 90%, while the dividend proposed by company’s management is RON 25/share at a profit distribution rate of 50%.

THE LARGEST DIVIDENDS IN THE HISTORY OF HIDROELECTRICA Hidroelectrica distributed dividends worth a total of RON 1.134bn, the largest in company’s history, accounting for 90% of the profit posted last year. Thus, RON 908mln will be paid to the Ministry of Energy, which has an 80% stake, and RON 226mln to Fondul Proprietatea, the other shareholder, the amount distributed in total being by 10% higher than that granted last year. These things were possible because, in 2017, Hidroelectrica had record financial results: a turnover of RON 3.254bn and a net profit of RON 1.603bn, posted in conditions of an EBITDA of 69%. “The exceptional financial results of the company in 2017 allow us to distribute to shareholders the biggest amount resulting from dividends in company’s history. Company’s performance is even more notable as it was achieved in a year with low hidraulicity. We put these results on the effective contracting plan and on the very good understanding of the mechanisms and the way the energy market works. However, we are concerned about the long-term sustainability of the success of the company, so we have included in the strategy business diversification, especially in the green energy field, without losing sight of other opportunities,” said the President of the Management Board Bogdan Badea. Energy production and sales in the first half of 2018 predict that the current year will be even better for Hidroelectrica, Badea also said. The company produced 9.345 TWh since the beginning of the year to 30 June, about 20% more than in the similar period of 2017, when 7.783 TWh were produced. “We expect to surpass all records in terms of profitability. Beyond better hidraulicity, I see this performance as a result of the strategic measures that management has implemented since 2017: the staffing plan has been optimized, maintenance plans have been redesigned so we do not have capacities 89

ANALYSIS

withdrawn at peak times,” Badea also mentioned. The company has scheduled for 2018 investments worth EUR 109mln, the largest in the recent history of the company. In parallel, Hidroelectrica plans to resume in the near future the financing of some of the objectives with viable complex functions from an economic point of view, investments that so far have been blocked.

TRANSELECTRICA, STRATEGIC INVESTMENT IN NORTHERN MOLDAVIA The National Power Grid Company Transelectrica SA made the decision not to distribute dividends, but started upgrade works at the Substation 400/220/110/20 kV Suceava, which has an essential role in ensuring electricity supply to counties in northern Moldavia. The investment is worth RON 24,840,100 excluding VAT and execution was made by Siemens SRL - Emsens Prod SRL association. “Investments of strategic companies transporting energy, in the portfolio of the Ministry of Economy, are on schedule: Transgaz has started construction at BRUA pipeline and Transelectrica is working to close the 400 KV ring,” Economy Minister Danut Andrusca stated. “The Substation 400/220/110/20 kV Suceava is ready to become one of the key nodes of the National Power System, which links the historical regions of Romania, from an energy point of view. With the modernization of 110 kV and 20 kV levels, the Substation 400/220/110/20 kV Suceava allows the closure of the 400-kV ring in the northern area, ensuring connection between Moldavia and Transylvania, through the future 400 kV Suceava - Gadalin line. At the same time, conditions are created for this substation to be a connection point for the future interconnection of the power systems of Romania and of the Republic of Moldova, through the 400 kV SuceavaBalti line. The full upgrade of this substation increases safety of supply to domestic consumers and it also increases safety in 90

ROMANIA - MOST SIGNIFICANT QUARTERLY INCREASE Romania recorded the most significant economic growth in the EU in the second quarter of this year, compared to the previous three months, according to data published by the European Statistics Office (Eurostat). Both in the European Union and the Eurozone, Gross Domestic Product recorded a 0.4% gain in the second quarter of 2018, compared to the previous three months. Among the Member States, the most significant quarterly increase was recorded between April and June 2018 in Romania (1.4%), Slovakia and Sweden (both with 1%), Poland, Lithuania and Hungary (all with 0.9%). Data for seven countries are not available: Slovenia, Malta, Luxembourg, Croatia, Greece, Ireland and Estonia. At annual rate, in the second quarter of 2018 compared to the same period last year, Gross Domestic Product grew by 2.2% in the EU and the Eurozone. In this case, Romania ranks among the strongest growth countries, with a 4.2% gain, being surpassed by Poland (5%) and Hungary (4.4%). According to INS data, the Romanian economy grew by 1.4% in the second quarter of 2018, compared to the previous three months. Romania’s GDP recorded an annual growth of 4.1% in gross series terms and 4.2% in seasonally adjusted terms, between April and June 2018.

operation of the National Power System,” the CEO of Transelectrica Adrian Constantin Rusu has mentioned.

WHAT DO INS DATA SHOW Romania’s net coal production amounted to 2.05 million tons of oil equivalent in the first six months of the year, down 9.3% (209,400 toe), lower than in the same period last year, according to data centralized by the National Institute of Statistics (INS). During the mentioned period, Romania imported 225,300 toe of net coal, with 44,700 toe (24.8%) more than the imported quantity during January - June 2017. According to the National Energy Strategy, published on the website of the relevant ministry, Romania has total reserves of 12.6 billion tons of lignite, geographically concentrated in the Oltenia Mining Basin. Deposits under exploitation total 986 million tons. Hard coal reserves, concentrated in the carboniferous basin of Jiu Valley, amount to 2.2 billion tons, of which 592 million tons are in exploited perimeters. In terms of crude oil, Romania imported in the first six months of 2018 a quantity of crude oil of around 4.18 million tons of oil equivalent (toe), by 861,400 toe (26%) more than in the similar period of 2017. Crude oil production totalled, in the mentioned period, 1.67 million toe, being by 2.9% (50,500 toe) lower than in the previous year. According to the document mentioned above, a halving of the domestic crude oil production is expected for 2030, to approximately 2 million tons. Increasing the reliance on imports cannot be avoided in the medium and long term, except by encouraging the exploration and production activity, respectively by increasing efficiency in consumption of fuels and petroleum products. Also, it is estimated that oil production will continue its slow downward trend between 2030 and 2050, from 22TWh to 13TWh (1.93 to energyindustryreview.com

ANALYSIS

1.15 million tons of oil equivalent). In the ambitious scenario of decarbonization combined with low oil prices, oil production witnesses a turning point in 2035, starting from which a sharp decline takes place, towards zero. Romaniaâ&#x20AC;&#x2122;s proven oil reserves will be over within 12 - 15 years, at the current exploitation rate. Romania imported, in the first five months of 2018, a quantity of crude oil of over 3.46 million tons of oil equivalent (toe), by 620,100 toe (21.8%) more than in the similar period of 2017. Oil production totalled, in the mentioned period, 1.394 million toe, being by 2.9% (42,200 toe) lower than in the previous year. Primary energy resources increased in the first six months of 2018 by 4.5%, to 17.045 million tons of oil equivalent (toe), and electricity resources fell by 0.5% compared to the same period of the previous year, reaching 33.984 billion kWh. The main sources of primary energy, during 1 January - 30 June 2018, totalled 17.045 million tons of oil equivalent (toe), by 739,300 toe higher than in the similar interval of 2017. Domestic production totalled 10.427 million toe, down by 98,700 toe compared to the same period of last year, and import was 6.618 million toe. Electricity resources stood in this period at 33.984 billion kWh, down by 167.9 million kWh compared to H1/2017. In the first six months of this year, production of thermal power plants was 13.003 billion kWh, down by 940.4 million kWh (-6.75%). Production in hydropower stations was 9.762 billion KWh, increasing by 1.568 billion KWh (+19.1%), and in nuclear power plants reached 5.413 billion KWh, falling by 106.5 million KWh (-1.9%). In terms of production of wind power plants, during 1 January - 30 June 2018 it amounted to 3.627 billion kWh, down by 188.7 million KWh, and solar energy produced in photovoltaic power plants in this period was 802.3 million KWh, declining by 178.2 million KWh y/y. Final electricity consumption in the first half of 2018 was 27.878 billion kWh,

by 2.4% higher than in the corresponding period of 2017, public lighting recorded a decrease by 3.6% and household consumption fell by 10.6%. Electricity export amounted to 2.962 billion kWh, falling by 784.7 million kWh. Own technological consumption in networks and stations was 3.144 billion kWh, by 41.4 million kWh lower, INS data show.

THE LOWEST GAS PRICES IN THE EU FOR HOUSEHOLD CONSUMERS Romania in 2017 recorded the lowest gas price for household consumers among EU member states, according to data published by the European Statistics Office. For the first time, Eurostat published gas and electricity prices that are fully comparable among EU Member States. These prices vary in the European Union depending on supply and demand, including geopolitical situation, national energy mix, network costs and weather conditions. The lowest price per kWh of natural gas for household consumers was recorded last year in Romania (three cents), and the highest in Sweden (12 cents), while in most of the 21 Member States that provided the data for 2017 the price was below 8 cents per kWh. The electricity price per kWh paid by household consumers in 2017 varied from 10 cents in Bulgaria to 11 cents in Lithuania and Hungary, 12 cents in Croatia and Romania, to 28 cents in Belgium, while in most of the 24 Member States that provided the data for 2017 the price ranged between 10 and 20 cents per kWh.

WHAT ARE DIVIDENDS, WHO BENEFITS FROM THEM AND HOW ARE THEY TAXED Besides the right to vote in the General Meeting of Shareholders, the investor, as holder of part of the company, is entitled to receive part of the profit made by that company. Thus, dividends represent part of the profit recorded by a company,

which is distributed to shareholders after the approval of annual financial statements. Dividend value is established at the General Meeting of Shareholders (GMS), which is held at least once a year and within 5 months from the end of the financial year. Not all companies are required to distribute to shareholders the profit achieved and not all shares issued by companies give the same rights. Some may give the right to receive dividends, but do not give the right to vote in the general meetings of shareholders, others, preferential shares, give the right to preferential dividends that are paid before common shares that are deprived of vote. Under the law, they are distributed proportionally to the share of the paid-up share capital, i.e. each investor receives a share of the companyâ&#x20AC;&#x2122;s profit according to the number of shares it owns on the date of registration. Companies in which the state is majority shareholder (Romgaz, Transgaz, Transelectrica etc.) are required by law, as of 2017, to distribute at least 90% of the profit made to shareholders. To benefit from dividends, an investor should hold shares in that company on a date established and announced by the General Meeting of Shareholders. As the ownership of companies listed on the stock exchange changes continuously, companies establish a series of calendar dates that should be considered by investors. Dividend yield represents the ratio between the dividend per share and the price per share. Dividend distribution rate represents the percentage of the total profit made by a company, which will be distributed to shareholders that are entitled to dividends. As of 2016, dividends have been taxed with 5%, the tax being withheld at the source. Thus, the investor collects in its account the net dividend value. Declaration and payment of the tax on these types of revenues lies with the company that issued the dividend, the investor being exempt from such a payment obligation. 91

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Energy colossus Turceni TPP celebrates 40 years of performance

In July 1978, five years from the start of works at Turceni Thermal Power Plant (TPP), the turbogenerator no. 1, of 330MW, was connected to the national energy system. 40 years have passed from the â&#x20AC;&#x2DC;first parallelâ&#x20AC;&#x2122; successfully implemented by the Gorj-based thermal power plant. It has always been assimilated to the idea of performance, both for the immense construction and the number of MW produced. Lavinia Iancu

energyindustryreview.com

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he anniversary of the 4 decades T of activity was marked by the officials from the Oltenia Energy Complex on 17 August at the headquarters of Electrocentrale Turceni Branch. The event was attended by Energy Minister Anton Anton, state secretaries Iulian-Robert Tudorache and Doru Visan, MEP, members of the Parliament of Romania, former and current directors of the unit, union leaders, company’s Management Board, county and local authorities. Awards and anniversary booklets were granted during the reunion. The celebration ended with a visit to the thermal power plant.

are currently working on. We have already organized a group in the Parliament, we are working with Member States, especially with the Polish colleagues, who have the same problem as we do,” Norica Nicolai explained. She also informed that a conference would take place in October during which a new structure for the green certificates scheme would be proposed. “We have the first conference in October, together with the Polish colleagues, and by the end of mandate next year we have to shape up this scheme and promote it. For this year, a Romanian state support scheme should be found, because it’s a pity, Oltenia Energy Complex registers profits,” the MEP also mentioned.

RETROFITTING INSTEAD OF CLOSURE

TURCENI THERMAL POWER PLANT IN DATA AND FIGURES

Regarding the situation of coalfired power plants, the Energy Minister believes that “in this energy mix, coal has its share”. Even if “coal’s role will diminish in time, in the sense that thermal power plants will slowly reach their limit of life, it does not mean that they will die instantly, as it was understood,” Anton Anton pointed out. In the opinion of MEP Maria Grapini, the solution is retrofitting. “Retrofitting and new equipment are required, we can diminish pollution for example, and carbon emissions, through modern equipment for thermal power plants, but not close them. No way,” Maria Grapini highlighted.

An overview of the 40 years of operation of the Turceni Thermal Power Plant shows spectacular figures. • 180 TWh of electricity produced; • 3900 parallel connections; • 767 thousand total hours of operation of the energy groups; • The 1st in the country in terms of coal-fired electricity production and the 2nd in the top of the most profitable thermal power plants in Romania (after 2000); • 11.5% electricity market share; • Approximately 8 TWh - the largest energy quantity produced in the 40 years (in 2011); • 4826 employees, the largest number, recorded in 1990; it was started from a number of 784 employees (in 1977); today the large family of energy professionals in Turceni including 1375 people.

STATE SUPPORT ALDE MEP Norica Nicolai claims a balanced energy mix is necessary for Europe, as dependence on a single type of energy is not beneficial. “After long experience with green certificates, Germany has become dependent on Russian gas import. If these certificates produced a benefit, this was only strictly financial, they are mechanisms that have not encouraged and have not supported the industry to reduce the pollution factor. We need to find another application scheme so that part of these costs is found in investments for environmental protection. This is what we

The fruit of work of this generation of energy specialists was materialized in the current configuration, result of adaptation over time to the technical and organizational conditions of global energy. This was possible thanks to the introduction of cuttingedge technologies in the production of electricity and the fulfilment of the

conditions imposed by the European environmental protection legislation. The contribution of all these people, of whom 10 have completed 40 years of uninterrupted work in Turceni, was appreciated and celebrated in a festive setting, with the conviction that the greatest guarantee for the future of the Turceni Thermal Power Plant is the staff itself. “I live in the area and I have been linked to Turceni, to people here for four decades. I have been working at Turceni since 1978. I wish to be here in the room when 50 years of SE Turceni are celebrated, together with these people who know that the work of an energy specialist is very difficult,” President of Energia Turceni Union, Eugen Iovan, said. “The ability to withstand the challenges of time is the expression of the commitment of these people to the energy sector. We hope that their satisfaction has been at least equal to the effort taken and the human energy consumption which the Turceni electricity has come from over the years,” the management of Oltenia Energy Complex stated. In turn, the President of Directorate of the Oltenia Energy Complex, Sorin Boza, expressed his gratitude to the thousands of energy specialists who, with determination and devotion, have contributed to the growth of this giant of the Romanian thermal energy sector and then gave to the Romanian energy system more than 180 TWh. “Over the four decades, the Romanian energy sector has developed, taking over and applying all the major transformations at the European level for the consolidation and efficiency of thermal power plants, but also for the observance of the environmental conditions resulting from the necessity of creating a certain standard of living for all of us. The ability to withstand the challenges of time is the expression of the seriousness and professionalism with which generations of energy professionals have produced Turceni energy in a responsible manner to the environment and society and have brought major benefits for the local communities and the Romanian economy,” Sorin Boza emphasized. 93

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EPG Summer School 2018 he first edition of Energy Policy T Group’s Energy Summer School took place between July 23-27, 2018 in Bucharest, with a focus on ‘Smart Transformation in the Energy Sector.’ The Summer School enjoyed the participation of 15 young energy professionals from Romania and across the world. Indeed, they came from four continents, had an average age of 27, and were representatives of utilities, NGOs, academia, energy companies, research institutes and public sector. In one densely packed week, they debated the challenges and prospects of the energy sector and of the policy and market tendencies that are shaping the ongoing smart transition towards a decarbonized economy. 24 reputed speakers, Romanian and international (representatives of energy companies, energy consultants, diplomats, policy makers, members of NGOs and the academia) came to share their specialized knowledge and facilitate the debate. The opening day was hosted by the Academy of Economic Studies, when Valeriu Binig (E&Y Romania Energy Partner), Pal Gerse (Senior Business Development Expert at MET Power Hungary), Daniele Agostini (Head of Low Carbon and European Policies at ENEL Group), Claudia Brandus (President of the Romanian Wind Energy Association), Clive Gerada (Technical Energy Attaché for Malta at the Council of the EU), Corina Popescu (Electrica S.A.) and Andrei Covatariu (Senior Research Associate and Summer School Director at Energy Policy Group) 94

tackled the global, European and regional trends, the future of renewables and their integration in the electricity system, as well as the overall measures taken for decarbonization of the energy sector. On the second day of the Summer

School, the group visited the Cernavoda Nuclear Power Plant. The visit started with a session held by Dorin Chirica, President of FORATOM, who showcased the current status of the nuclear industry around the world. The group visited the energyindustryreview.com

EVENT

control room of Unit 1. A rich and interesting presentation was also given by Ionel Bucur, Principal Nuclear Expert. OMV Petrom hosted the third day of the Summer School, which focused on the clean transition in the transport sector. Wednesday’s speakers Radu Dudau (Cofounder and Director of Energy Policy Group), Vasile Iuga (reputed independent expert and member of EPG’s advisory board), Nuno Silva (Technology and Innovation Director at Efacec and FEL-100 Chair of the Board), Nolan Theisen (Head of Energy Program of GLOBSEC Policy Institute, Bratislava), Marius Chiriac (ENEL Romania), Daniel Apostol (Senior Economic Journalist at Profit.ro and Econonomistul) and Stefan Roseanu (General Manager of the Association of Metropolitan Mobility) opened thorough discussions about the transport sector and its fuels, challenges and prospects, but also about its clean alternative: electricity, biofuels, natural gas, and hydrogen, as well as smart urban planning, digitization etc. The fourth day was hosted by EFdeN at their educational passive house, where the participants had the opportunity to focus on digitalization, demand-side management and energy efficiency in buildings. Victor Grigorescu (former Romanian Energy Minister) and Razvan Grecu (President of the Romanian Association for Energy Efficiency) talked about smart technologies, emerging products and services, efficient solutions and needed policies and regulations. Then, Claudiu Butacu (President of Solar Decatlon) and Mihai Toader-Pasti (General Manager and co-founder of EFdeN) gave an extensive presentation of EFdeN’s passive house. The day ended with a Design Thinking Workshop, guided by Adelina Dabu (FEL Romania member) and Tudor Juravlea (Co-founder of Design Thinking Society). Friday, the final day of the Summer School, was again held at the Academy of Economic Studies. It included an interesting discussion about the energy trilemma, a session designed and conducted by Gelem Lluberes (Global Portfolio and Business Development at Siemens and FEL100 Board Member). The final activity of the day, guided by Andrei Covatariu, EPG Summer School’s Director, was the first-ever World Energy Simulation Game held in Romania (a role-playing exercise that enables people to try out the policies and investments that will allow them to reach their goals on climate change). The EPG Summer School 2018 was a great opportunity for graduate students and young professionals all over the world to interact, debate and connect, building the base of a community of alumni and lecturers that is bound to grow in the following years. This was only the first step of an ambitious educational project designed and managed by Energy Policy Group. The second edition is already being planned for the summer of 2019. 95

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3 Seas Initiative to reach Bucharest omania will host during 17R 18 September the Three Seas Initiative Summit (Baltic Sea - Adriatic Sea - Black Sea), a high-level meeting aiming to provide political support for better cooperation and interconnection of the economies of the states in the geographical area between the three seas, in areas such as energy, transport, telecommunications, environmental protection, defence industry etc. The initiative was launched by Croatia, together with Poland, in 2015, and a first high-level meeting took place at the UN General Assembly in 2015. The meeting to be hosted by Bucharest is expected to be attended by heads of state from Central and Southeast Europe, European Commission President JeanClaude Juncker, as well as high-level guests from the United States and from the management of European and international financial institutions. The Business Forum to be organized on this occasion will be attended by over 600 guests, businessmen and officials. Also, the Three Seas Initiative is also an important platform for high-level dialogue in the context in which it brings together EU and NATO members, and the Baltic Sea and the Black Sea play a key role in NATO’s policy on discouragement of aggression from the east, while the Adriatic Sea has a particular potential, given Croatia’s EU and NATO membership. The list of speakers includes over 70 persons, of which we name President of the Republic of Poland - Andrzej Sebastian Duda, President of the Republic of Croatia - Kolinda Grabar-Kitarović, Federal President of the 96

Republic of Austria - Alexander Van der Bellen, etc. The initiative includes 12 EU Member States located between the three seas: Austria, Bulgaria, Croatia, the Czech Republic, Estonia, Latvia, Lithuania, Romania, Slovakia, Slovenia, Hungary and Poland. Through this project, participants want to provide economic facilities and cooperate in the defence industry. The idea of an economic bloc of countries located between the seas of the region is not a new one. The first such initiative belonged to Poland during the interwar period, proposing the creation of a confederation of states situated between the Baltic Sea and the Black Sea, known as Intermarium. Led by Poland, the confederation should have played the role of a real defence shield against possible aggressions on the part of Russia. However, the initiative has died from the start, because of the different positions of the states in the area.

ROMANIA WILL PRESENT 6 PROJECTS The Government of Romania adopted in August three memoranda on the list of priority projects that our country will promote at the Three Seas Initiative Summit. According to Prime Minister Viorica Dancila, the six projects to be proposed by Romania aim at cooperation with the Three Seas Initiative participating states in three strategic areas on the regional and European agenda, namely: digital, energy and transport. Subsequently, the government

published the six projects proposed by Romania, two for each area (digital, transport and energy): 1) the creation of an intelligent digital platform for realtime monitoring of waters in the river basins located in the region of the three seas, which will provide the possibility of monitoring pollution factors, as well as conducting risk analyses; 2) creating an intelligent digital platform for the trading of transport and logistics services, and Romania’s third proposal concerns the definition and development of a roadmap towards a digitized and sustainable energy sector and the creation of a digital platform for energy storage; 3) FAIRway Danube project, which has as general objective the implementation of the Rehabilitation and Maintenance Master Plan for the Danube and its Navigable Tributaries, elaborated in the framework of the EU Strategy for the Danube Region; 4) RAIL 2 SEA project - Modernization and development of Gdansk - Constanta rail route, whose main objective is the modernization of railway corridors both for commercial use and for the rapid transport of military forces and equipment on the territory of Romania, with a total length of 3,663 km; 5) development on the territory of Romania of the National Gas Transmission System on Bulgaria Romania - Hungary - Austria corridor (BRUA, phase 1 and phase 2), further enlargement of the bidirectional gas transmission corridor (BRUA phase 3) and development on the territory of Romania of the Southern Transmission Corridor for gas from the Black Sea coast (from the Black Sea to Podisor). energyindustryreview.com

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SEPTEMBER’S READING

A New Era in Robotic Infrastructure Inspections Critical energy infrastructure can stretch for miles along pipeline right of ways or reach hundreds of feet in the air on wind turbine towers. Inspecting the integrity of that infrastructure is a time consuming and dangerous job. Energy industry managers have begun to turn to unmanned vehicles to assist human workers, and the hope is to one day conduct all inspection via UAVs. In this ASME Special Report, find out what managers need to be confident that robotic inspectors are doing the job as human technicians. The process of making sure highways, pipelines, refineries and other infrastructure are sound is critically important - but not easy. It often requires getting a good look at assets that are high up on towers, buried in the ground or under water - or close to hazardous materials or in hostile conditions. And to get a good look, typically, companies have had to send people to those difficultto-reach and dangerous locations using complicated and expensive methods. Now, however, that is changing. This white paper reports on the changes on many fronts that have enabled new capabilities and uses for inspection robots. “We’re getting to a level of sophistication with the technology, with the workflow, and with the culture in organizations where we’re 98

A New Era in Robotic Infrastructure Inspections Sophisticated methods are reducing costs and increasing safety A UG US T 2 01 8

starting to see a steep ‘hockey stick’ growth curve in the industry,” says Earnest Earon, co-founder and CTO of PrecisionHawk, a Raleigh, N.C., provider of drone remotesensing applications and data processing services. “And people are starting to see results and a real bottom-line impact. Changes on many fronts have enabled new capabilities and new uses for inspection robots. Mobile platforms have become more stable, reliable, and robust. Onboard computers have become smaller and lighter. Sensors have become more sophisticated. And robot components in general have become less expensive. It’s not any single factor - it’s all of these things coming

together,” says Earon. “As that continues, we’ll see an explosion in adoption and the widespread use of robots in inspection. A lot of capabilities that were possible a few years ago are now becoming very accessible, as well. So, we’re going to see a real sea change in the industry over the next two to five years,” he predicts. Robotic inspections offer a number of advantages over traditional methods— starting with costs. Inspections that require skyhook trucks, digging up gas lines, or flying human inspectors over pipelines are expensive. So too is the practice of taking assets offline for extended periods of time while they are inspected. Robotic inspections can reduce such costs significantly. A Michigan Department of Transportation study estimated that a typical highway bridgedeck inspection using people and a bucket truck takes about eight hours and costs about USD 4,600. The same work done with a UAV equipped with infrared and high-resolution cameras costs about USD 250, while also minimizing the need for lane closures that create congestion and delays. See the report here: www.asme.org/aboutasme/mechanical-engineering-magazine/ robotics-special-report-august-2018 energyindustryreview.com