Energy Industry Review - June 2019 by Energy Industry Review

COMMENT

Fighting climate change amidst growing challenges uropean Union leaders excluding Theresa May met in Sibiu to guide the EU ship amidst growing turbulence in the sea. The leaders vowed to fight for rule of law, climate change, and a new model for growth. Additionally, Angela Markel agreed to back a France-led proposal. It promises to spend a quarter of EU budget on energy efficiency and climate change.

Prof. Ionut Purica PhD Energy Expert

Angela Merkel, the German chancellor also rejected the endorsement of the proposal entirely. However, her backing for its provisions offers common ground for France and Germany to unite. Her acceptance of its provisions is in line with World Wide Fund’s recent criticism of the EU nations. The fund recently targeted EU members for consuming resources faster than their renewal rates. The meeting of EU leaders also led to a wider discussion on populism wave in Europe, and undemocratic practices. Currently, the EU stands extremely divided, due to internal challenges such as Brexit. EU also faces external threats such as changing global political landscape. EU nations are also perturbed by a troubled Iranian nuclear deal. Moreover, the European region remains behind in key areas like cyber security, and artificial intelligence (AI). Furthermore, the leaders signed a symbolic declaration urging EU nations to ‘defend one 3

Europe’ and ‘stay united’. The timing of the declaration is significant as top jobs in EU council will be reshuffled soon. European Council President Donald Tusk announced a new summit, expected to give key direction to various EU policies. Tweeting after the meeting of EU leaders (minus Theresa May) in Sibiu, the European Council President said the process “should be swift, effective and in accordance with our Treaties.” He added that “if consensus proves difficult, I will not shy away from putting these decisions to a vote in June.” EU leaders mandated the President Donald Tusk to start consultations with the EU member states and the European Parliament. This will prepare the ground for decisions at the next EU summit on 20-21 June. “I will now engage in consultations with the European Parliament, as foreseen by the Treaty. To kick-start this process, I have already offered to meet the EP’s Conference of Presidents as soon as they are ready. In parallel, I will also continue my consultations with Members of the European Council on the new heads of the European institutions. I can promise that I will be as open and transparent as possible,” Donald Tusk underlined after the informal European Council dinner on May 28. No matter what the talk of the town is, growing challenges promise to make the next EU summit very interesting.

Content EU leaders vow to fight climate change amidst growing challenges

OPINION EU leaders excluding Theresa May met in Sibiu to guide the EU ship amidst growing turbulence in the sea.

Oil barrel price reaching USD 90 - Fears and projections

OPINION

INTERVIEW

Continuing on a three-month downslide, oil prices leave May with the largest monthly drop since last November, as trade tensions weigh on investors’ outlook on the global economy and oil demand.

Carbon-free environment

Romanian energy sector priorities

OPINION The article is a small technical fable based on a material in a university publication from Scuola ‘Enrico Mattei’, dubbed the Italian University Temple of Energy, published under the title ‘Ulisse, le sirene e il futuro energetico italiano’ (Ulisse, the mermaids and the future of the Italian energy system).

Radu Dudau – EPG’s Director, reveals EPG’s role in creating a better understanding of policies and processes in the energy sector and proper solutions for the Romanian energy industry and market to function.

High-tech solutions for Rompetrol Rafinare’s transports

OIL & GAS Rompetrol Rafinare together with its main partner for domestic rail transport, Romanian Rail Group, successfully implemented a real-time monitoring and control system for oil products traffic - Shunting Expert.

110 years of history of the gas industry

OIL & GAS The history of the gas industry in Romania begins in 1909, when in Sarmasel, while drilling at over 300 meters deep for potassium salts, natural gas flew freely.

Positive financial results for OMV Petrom

OIL & GAS The net profit stood at RON 1.15bn and investments totalled RON 826mln, by 2% lower compared to Q1/18.

Renewable energy ready to go a step further without subsidies

RENEWABLES New companies and new countries adapt to a subsidy-free renewable energy environment.

Most advanced diamond recovery vessel in the world

METALS & MINING

New partnership to produce fossil-free fuel on a large scale

The special vessel will be the most modern and technologically advanced marine diamond recovery vessel in the world. The actual work for the construction of the vessel that will operate in offshore Namibia has already started, in a record time.

Smart cities - Driving through a fairytale

ENVIRONMENT Preem and Vattenfall want to lead the transition towards a sustainable society. A new three-year agreement forms the foundation for increased collaboration around fossil-free hydrogen for biofuel production, electrification and electricity supply.

Prices in Romania’s energy industry on the rise by 13.8%

ANALYSIS The concept of a ‘Smart City’ must be merged with sustainability for achieving the balance between human prosperity and our natural habitat.

Modernizing the regions dependent on coal mining

Oil&Gas Tech 2019 From field to market

POWER

RENEWABLES

EVENT

Romania ranks first in the EU when it comes to increase in industrial producer prices from one month to another, with an advance of 0.8%, being outpaced only by Greece where industrial producer prices increased by 1.1%.

RWEA, together with its member companies, such as Monsson - RESS and CEZ Romania, the Ministry of Energy and Petrosani University plan to open an Academy for Renewable Sources and Electricity Distribution in Jiu Valley.

Romania’s leading Oil and Gas event, designed for all industry segments, gathered over 100 CEOs, CFOs, BD, VPs and investors for a full day of behind-closed-doors networking and honest informal discussions.

EUR 46 MLN INVESTMENT AT COKER UNIT IN PETROBRAZI REFINERY TO REDUCE ENVIRONMENTAL IMPACT

Join us on Linkedin Energy Industry Review

Publisher: Lavinia Iancu Business Development Manager: Marius Vladareanu Scientific Board: President: Prof. Niculae Napoleon Antonescu PhD Members: Prof. Lazar Avram PhD; Assoc. Prof. Marius Stan; Prof. Ionut Purica PhD; Alexandru Patruti PhD Journalists: Adrian Stoica, Daniel Lazar, Evgenios Zogopoulos, Dumitru Chisalita Digital Manager: Justin Iancu

ISSN 2601 - 3819 ISSN-L 2601 - 3819

MV Petrom continues the modernization works at the Petrobrazi refinery. The company has invested around 46 million euros starting 2017, to upgrade the Coker unit. A closed blowdown system was implemented at this unit, in order to eliminate any potential emissions of volatile organic compounds, thus supporting the reduction of the environmental impact. “Petrobrazi is one of the most important refineries in Romania, which can cover the annual fuel consumption for approximately 3 million cars. We invested about 1.6 billion euros in the period 20052018 in Petrobrazi modernization, to implement the best available technologies at international level, which led to more environmentally friendly activities,” said Radu Caprau, member of the OMV Petrom Executive Board responsible for Downstream Oil.

The Coker unit is an important point in the refining process. This is where heavy oil components from the other units are redirected and where the final oil transformation processes take place. The coke obtained here is mainly used in the metallurgical industry. OMV Petrom has implemented in the Petrobrazi refinery the best available technologies for the recovery of hydrocarbon vapors in the Coker unit. Thus, the 20-year-old system was replaced with a modern, closed blowdown system that ensures complete elimination of volatile organic compounds emissions. The project involved complex civil works, installment of about 400 tons of pipelines and implementation of automated control and monitoring systems. The project counted more than 450,000 hours worked without incidents. 7

100147, 41 Costache Negruzzi St., Ploiesti, Prahova, Romania Phone: +40 (0)344-143.530; E-mail: office@energyindustryreview.com © Material in Energy Industry Review may not be reproduced in any form without the written consent of the Industry Media Vector. All rights reserved. All other editorial items are the copyright property of Industry Media Vector.

Subscription Energy Industry Review subscription rates: Annual subscription - 10 print issues per year RON 250 (€ 60) shipping included - ROMANIA only € 190 - EUROPEAN UNION shipping included

HEADLINES

GRAMPET GROUP - KAZMORTRANSFLOT MEMORANDUM OF PARTNERSHIP

RAMPET Group - Grup Feroviar Roman (GFR) and NMSC Kazmortransflot LLP have signed a Memorandum of Partnership during the Transport Logistics 2019 event in Munich, with an aim to open a regular connection between the Constanta and Batumi Ports. The agreement between the two members of Middle Corridor - TransCaspian International Transport Route (TITR) stands in line with the Association’s objective to enhance cooperation and increase the flow of goods along the Route. NMSC Kazmortransflot LLP, the National Sea Carrier of the Republic of Kazakhstan, owns the largest and most modern fleet in the Caspian Sea – tanker, tugboats, as well as vessels for transportation of bulky cargo and barges for various purposes.

GRAMPET Group - Grup Feroviar Roman is the largest private rail freight and logistics operator in Romania and Central and South Eastern Europe, and the first European company to have joined the Middle Corridor - Trans Caspian International Transport Route, last September. “The agreement signed today confirms our strong commitment to this strategic alliance that creates a new route between China and the European Union”, said Gruia Stoica, President of GRAMPET Group. “As we celebrate 20 years of pioneering and performance in rail freight & logistics in South Eastern Europe, we continue our network development on the European market, while pursuing new opportunities with our Asian partners.” “There are many synergies and opportunities between the two ports, considering their strategic location on the route of major transport infrastructure

projects, as well as the development potential for the long term,” Sorin Chinde, Vice President of the Transports division, added. The Batumi Port has a capacity of 18 million tons per year, 5 terminals and 11 berths. Investments in the port’s development amounted to USD 48 million over the past 10 years. Constantza Port has a handling capacity of over 100 million tons per year and 156 berths, while investments have hit record highs in recent years and new projects worth a total EUR 1 billion have been announced recently. With a declared objective to connect the Atlantic Ocean through the North Sea, to the Pacific, through the South China Sea, GRAMPET Group - Grup Feroviar Roman is one of the main drivers for the development of transport corridors which connect Europe and Asia.

SHELL REPORTS DISCOVERY OF ALBANIAN OIL DEPOSIT

nglo-Dutch oil giant Shell announced it had made “a significant light oil discovery” in Shpirag, a mountain region some 120-kilometres from the Albanian capital Tirana as earlier tests bore fruit. “We are pleased that these initial tests have confirmed the potential of this discovery and look forward to growing our business in Albania,” Vice-president of the group in charge of the exploration

Marc Gerrits was quoted by a statement as saying. Shell Upstream Albania, the Albanian branch of the oil group and a partner on the project since 2012, estimated that the deposit has a production potential of “several thousand barrels every day”. In parallel with the production launch Shell will continue its explorations in the region of Shpirag. The announcement “is very important news for the Albanian oil 8

and gas industry... this is the first such discovery in last 30 years,” Albanian Energy Minister Belinda Balluku stated. According to the authorities, Albania currently produces some 18,000 gross barrels of oil per day, but experts estimate that non-exploited reserves are still plentiful. These are believed notably to be along the coast in areas where Albania and Greece disagree over maritime borders.

FIRST QUARTER PROFITS SLIP FOR WORLD’S TOP OIL COMPANIES

ccording to data compiled by Anadolu Agency, from the Q1 2019 reports of the 12 top listed companies in the oil industry - ExxonMobil, Chevron, ConocoPhillips, Halliburton, Schlumberger, Baker Hughes, BP, Royal Dutch Shell, Total, Eni, Equinor, and Rosneft - the combined net income and revenues at those companies were lower in the first quarter this year compared to Q1 2018. Shell was the top performing company with the highest net profit and revenue in absolute terms, according to

Anadolu Agency’s estimates. Shell was one of the last oil supermajors to report Q1 earnings and it was the one that stood out among the crowd with better-than-expected results, as its trading and natural gas businesses offset weak oil prices and depressed refining margins that plagued the other majors in the Q1 earnings season. Volatile crude prices and weak refining margins led to lower earnings at all five oil supermajors in the first quarter of 2019, suggesting that Big Oil shouldn’t stay complacent several quarters after the

industry emerged from one of the worst downturns in a generation. Big Oil’s five majors - ExxonMobil, Chevron, BP, Total, and Shell - reported a mixed bag of results for Q1. While net earnings at all companies were lower than last year’s first quarter on the back of lower average Brent Crude prices compared to Q1/2018 and weak refining margins that battered downstream earnings, some supermajors, such as Shell, met and even exceeded analyst expectations thanks to strong trading profits and to their natural gas businesses.

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

HEADLINES

FIGHTING CLIMATE CHANGE

nergir (Canada), SoCalGas (US), and French utilities GRDF and GRTgaz shared a global discussion and their visions on viable solutions for fighting climate change. The presentation was part of the Movin’On Summit in Montreal and brought together executives from each of the utilities. The theme for this year’s summit was ‘Solutions for Multimodal Ecosystems’ and examines decarbonization and air quality, urban transit and society, innovative technologies, goods movement and the circular economy. Some of the highlights from the event, moderated by Énergir CEO Sophie Brochu, included discussion on the role of renewable gas and its growth potential, renewable energy technologies such as power-to-gas and effective ways to reduce transportation emissions through the deployment of natural gas vehicles fueled with renewable gas. “It’s time to move from deliberation to action. Now more than ever, renewable

natural gas has a role to play in the energy transition,” said Sophie Brochu, President and Chief Executive Officer of Énergir. “We need to capitalize on the experiences of our partners to continue and accelerate the development of this sector in Québec with a renewed commitment to resolve issues in the fight against global warming.” “We appreciate the collaboration we have built with Énergir, GRDF and GRTgaz because international dialogue and cooperation is how we will achieve global environmental goals,” said Maryam Brown, President for SoCalGas. “We must all work together on ways to reduce emissions and minimize waste, that is why SoCalGas is committed to replacing 20 percent of our traditional natural gas supply with renewable natural gas by 2030.” “The collaboration between our four companies focuses on the development of solutions supporting low-carbon and circular economy,” said Edouard Sauvage, Chief Executive Officer of GRDF. “We joined our efforts in order to speed up

the development of renewable gas and bioNGV as they are mature technologies which massively contribute to lowering CO2 emissions and improving air quality.” “And it is this combination: the environmental advantage and economic and operational performance which now allows the actors to ‘go ahead’ and explains this take-off of gas mobility,” said Pierre Duvieusart, Deputy CEO of GRTgaz. The Movin’On Summit marks the first-time executives from this association of innovative energy utilities have presented publicly as a group since announcing a collaboration between the four companies last year. All four utilities share a common goal of advancing policies to combat climate change while providing customers with reliable and affordable energy solutions. As part of the collaboration, representatives from each company speak regularly to learn about research and development initiatives and ways to achieve policy initiatives.

ATLAS COPCO TO ACQUIRE EUROCHILLER

tlas Copco has agreed to acquire Eurochiller S.r.l., an Italian manufacturer and distributor of industrial cooling equipment and related products. Eurochiller is based in Mortara, Italy and has approximately 90 employees. In 2018 the company had revenues of approximately MEUR 26 (MSEK 267). The company manufactures and

services industrial cooling and heat treatment products as well as related systems used in industrial manufacturing processes. “Acquiring Eurochiller with its great team and high-quality products will complement our existing product portfolio and allow us to further increase the productivity of our customers,” said Vagner Rego, Business Area President 10

Compressor Technique. The purchase price is not material relative to Atlas Copco’s market capitalization and is not disclosed. The acquisition is expected to be completed during the second quarter of 2019. The company will become part of the Oil-free Air division within the Compressor Technique business area.

HEADLINES

ENEL MARKS ITS BEST EVER STOCK EXCHANGE CAPITALISATION RECORD

nel established a new historic record on 21 May, when it reached its highest ever market capitalisation since going public. In so doing, the Group has consolidated its position as the foremost European utility in terms of market value at 58.7 billion euros, leading Iberdrola (53.2 billion) and EDF (37.8 billion). Worldwide, Enel ranks second only to the American NextEra Energy. The new record is due to an increase in share price which closed at 5.771 euros on Piazza Affari, the Milan Stock

Exchange. This excellent performance is not, however, an isolated episode: the growing share price over recent months reflects the markets’ positive appraisal of the Group’s strategy, in addition to its strong track record of stability and ability to deliver on its objectives. These signs of financial reliability were also appreciated by the Fitch agency which upgraded the Company’s long-term rating from BBB+ to A- on 11 February. The presentation of Enel’s 2019-2021 Strategic Plan at the Capital Markets Day on 20 November 2018 also contributed to

making the shares increasingly attractive. This was due to the Group’s increasing emphasis on investment in renewable energies, digitalisation and client care and, more generally, its industrial growth and leadership in the global energy sector. Since then, the Enel share price has increased by 23.9%. The most recent increases are linked in particular to the markets’ appreciation of the results of the Shareholders’Meeting which on 16 May approved the 2018 financial statements and the new dividend of 0.28 euros per share.

Complex transport & logistics. One solution. Lubbers.

Road Transport

Projects & Services

Global Freight

The best network to, through and from Europe. Standard, Dangerous, Exceptional. Hotshot, Urgent or Groupage.

All the specialist expertise, people and equipment you need for extraordinary transport and logistics.

Forward your business with our global connections. Tailored multimodal solutions by Air, Sea, Road & Rail.

www.lubbers.net 11

HEADLINES

3M TO SELL ITS GAS AND FLAME DETECTION BUSINESS

he company announced it has received a binding offer from Teledyne Technologies Incorporated, to purchase 3M’s gas and flame detection business for USD 230 million, subject to closing and other adjustments. Teledyne is a leading provider of sophisticated instrumentation, digital imaging products and software, aerospace and defense electronics, and engineered systems. The gas and flame detection business is part of 3M’s Personal Safety Division. The business is a leader in fixed and portable gas and flame detection with products sold under the Oldham, GMI, Detcon, Simtronics and Scott Safety brand names. 3M will retain the Scott Safety brand name, which is not included in the transaction. 3M’s gas and flame detection business has annual global sales of approximately USD 120 million. “After completing a thorough strategic

review, we plan to divest the gas and flame detection business to focus on the other businesses within our personal safety portfolio,” said Bernard Cicut, Vice President, Personal Safety Division. “Our employees have done an outstanding job and we thank them for their dedication to this business.” 3M’s Personal Safety Division is focused on applying 3M science to improve the health, safety and productivity of workers all over the world. The business is a global leader in providing Personal Protective Equipment and solutions to a wide array of industries including manufacturing, construction, oil and gas, mining, utilities, defense, healthcare, and the fire service. 3M Personal Safety offers an extensive product line which includes respirators, self-contained breathing apparatus, hearing protection, fall protection, reflective materials and head, eye, and face

protection. Approximately 500 employees who primarily support the gas and flame detection business are expected to join Teledyne upon completion of the sale. The transaction is expected to be completed in the second half of 2019, subject to customary closing conditions and regulatory approvals, while 3M’s acceptance of the binding offer is subject to the completion of consultation and information requirements with relevant works councils. 3M expects to record a gain of approximately USD 0.20 per diluted share from this divestiture. Houlihan Lokey acted as financial advisor to 3M. 3M is committed to applying science in collaborative ways to improve lives daily. With USD 33 billion in sales, their 93,000 employees connect with customers all around the world.

ALSTOM DELIVERED THE FIRST MODERN TRAIN LINE B METRO LINE IN LYON

lstom delivered the first modern train intended for use on automated metro line B network Lyon. It came to the depot at Poudrette on 25 April, 30 months after launching the project as planned. After going more than five months of tests at Valenciennes, where it covered

5,000 km, the first train started testing the network Lyon dynamic night in late May. In total, Alstom will supply 30 trains and automatic train operation system, designed to increase the transmission capacity of the line B metro line in Lyon. Each train has a length of 36 meters and can carry more than 300 12

passengers, providing a travel experience Renewed large windows, LED lighting, comfortable seats, passenger information screens, air conditioning. Accessibility and fluidity trains were hardened corridors and wide doorways, a fully lowered floor and open circulation inside that allows passengers to pass from one coach during the trip.

Tensor Revo HA

High access - It is smaller, lighter and faster When choosing assembly tools for high torque joints, the challenge is often to combine high quality tightening with acceptable ergonomics and usability. Some tools provide higher quality but can be large and heavy. Other tools are lighter, but may not live up to quality and durability requirements. Tensor Revo has it all and itâ&#x20AC;&#x2122;s extremely fast with the unique, patented T-design and packed with smart features, it is a truly revolution in high torque tightening.

Atlas Copco Tools Romania

Atlas Copco s.r.o., Elektrarenska 4, 831 04 Bratislava, Slovakia

Phone: +40 730 088 707, e-mail: florin.bujor@atlascopco.com 13 atlascopco.com/ro-ro/itba

HEADLINES

EBRD HELPS MOLDOVA’S SECOND LARGEST CITY BUY NEW TROLLEYBUSES

ome 150,000 people living in Moldova’s second largest city, Balti, will benefit from more environmentally friendly and energy efficient public transport with 10 new trolleybuses financed by the EBRD and the E5P multi donor fund, which supports projects in the EU’s Eastern Partnership. The EBRD is providing a EUR 2.5 million loan to Balti Trolleybus Department, a municipal company. The Bank has also requested a EUR 1.2 million grant from the E5P to complement the loan. The E5P facilitates investments in energy efficiency and environmental projects. Active in Moldova and other Eastern Partnership countries, the E5P is funded by the European Union, as largest donor, Czech Republic, Denmark, Estonia, Germany, Lithuania, Norway, Moldova, Poland, Romania, Slovak Republic, Sweden. The new trolleybuses will run on

electricity and opportunity charging battery technology which enables vehicles to be powered without overhead wires in remote areas. The project will also help extend the existing trolleybus routes to serve densely populated areas and improve overall service efficiency. In addition, the loan will finance the rehabilitation of old power supply infrastructure and the acquisition of maintenance equipment. The city will receive additional EBRD funds to support technical implementation of the project and the Bank will also provide support in developing a sustainable public transport plan. The new EBRD and E5P funds follow a successful renewal of the Balti trolleybus fleet between 2012 and 2014. The city bought 23 modern trolleybuses, spare parts, power supply infrastructure components and other equipment. The upgrades were financed with a EUR 3 million loan from EBRD and EUR

1.6 million investment grant from the European Commission’s Neighbourhood Investment Facility. As part of the latest project, the EBRD will support the municipality of Balti to develop a Green City Action Plan to identify, prioritise and address environmental challenges, under the EBRD’s Green Cities. The initiative strives to build a better and more sustainable future for cities and their residents through sustainable infrastructure investments and policy measures. Balti now becomes the 29th city to participate in the innovative EUR 1 billion programme. Moldova’s capital Chisinau joined the programme in 2016. The EBRD is a leading institutional investor in Moldova. To date the Bank has invested close to EUR 1.3 billion in the country in almost 130 projects which focus on banking sector, sustainable infrastructure, commerce and agribusiness.

LARGEST ACTIVE O&G RIG FLEET IN EUROPE

kraine has been placed on the international map of Baker Hughes Rig Count. According to updated May report, Ukraine leads in Europe in terms of the number of active drilling rigs. 84 rigs account for almost a half of entire European fleet (186, including 44 offshore platforms). Currently, almost all Ukrainian rigs drill for natural gas, associated with

condensate. According to the Association of Gas Producers of Ukraine, last year Ukraine produced 21 bcm of natural gas, nearly 90% of drilling volumes took place in the eastern Ukraine, where most of gas reserves were found at depth of below 3000 meters and reach over 6000 meters. Baker Hughes has issued the rotary rig counts as a service to the petroleum industry since 1944. It is considered a 14

significant indicator of activity in the oil and gas industry in the world and the main barometer of consumption and demand for hydrocarbons. BHRCs are published by major economic newspapers and are included in many industry statistical reports. Effective June 7, 2019, the Baker Hughes International Rig Count now includes the number of active drilling rigs in the country of Ukraine.

HEADLINES

DELEK GROUP & ITHACA ENERGY TO ACQUIRE CHEVRON NORTH SEA

elek Group and Ithaca Energy announced that Ithaca is to acquire Chevron North Sea Limited (CNSL) for USD 2 billion. The transaction will add a further ten producing field interests to the existing Ithaca portfolio, four of which relate to assets operated by the company, resulting in an approximately 150% increase in the proven and probable (2P) reserves of the company and a 300% increase in forecast 2019 production. Pro-forma the transaction, Ithaca’s asset base is estimated to consist of 2P reserves of approximately 225 million

barrels of oil equivalent (MMboe) plus a further 45 MMboe of proven and probable contingent (2C) resources associated primarily with additional near-field development and infill drilling opportunities. The enlarged portfolio, encompassing 18 producing field interests in total, is forecast to deliver proforma 2019 production of approximately 80,000 barrels of oil equivalent per day (60% liquids) at an operating cost of approximately USD 17 per barrel of oil equivalent. As part of the transaction approximately 500 employees will transfer to Ithaca, of which around 200

work offshore on the operated assets. With the addition of the high quality, long life assets that characterise the CNSL portfolio, the acquisition delivers upon a number of key strategic objectives of Ithaca and establishes it as the second largest independent oil and gas producer in the UK North Sea. The transaction provides a material step up in the scale and breadth of the company’s producing asset base, establishes a wider portfolio of investment opportunities from which to grow the future cashflows of the business and enables accelerated monetisation of Ithaca’s existing USD 2.2 billion of UK tax allowances.

OPINION

Oil barrel price reaching USD 90 Fears and projections

Evgenios Zogopoulos

ontinuing on a threemonth downslide, oil prices leave May with the largest monthly drop since last November, as trade tensions weigh on investors’ outlook on the global economy and oil demand. Prices have been low for most of the last week of May and they are now heading for the biggest monthly decline in six months, since November 2018, as intensifying trade tensions outweighed U.S. crude oil stockpiles draws. On Thursday 30/5, WTI Crude was down 2.09% at USD 55.41, while Brent Crude was trading down 2.14% at USD 63.93. Those were the lowest closes for Brent since March 12 and WTI since March 8. For the month, Brent is on track to fall about 8% and WTI around 11%, according to projections. The price of oil tanked on 29/5 after China’s gambit to escalate in the trade war, hinting at jeopardizing rare mineral exports towards the United States, which furthers the concern about the global economy and had investors flee risk assets. Oil prices fell almost 4% to their lowest in over two months on a smaller-thanexpected decline in U.S. crude inventories 16

and fears of a global economic slowdown due to the U.S.-China trade war and the rest of the geopolitical US gambits. The Energy Information Administration (EIA) said U.S. crude stockpiles fell nearly 300,000 barrels on the last week of May. Even if this decline reduced crude stocks from their highest since July 2017, they were still about 5% above the fiveyear average for this time of year. “An escalating U.S.-China trade war represents a risk to oil markets,” Bernstein Energy said in a note. Because of a diminishing demand, Bernstein said any upside for oil markets was capped despite to the apparent tight and monitored supply. Oil prices have been supported this year by output cuts from the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, as well as by falling supplies from OPEC members Iran and Venezuela due to U.S. sanctions. The Iranian crude exports, during May, dropped to less than half of April levels at around 400,000 barrels per day (bpd) after the United States tightened their sanctions on Tehran. This comes as a heavy blow to Iran which needs to export

OPINION

at least 1.5-2.0 million bpd of crude to balance its books. “We see an abundance of escalation risks in large part because the U.S. sanctions are subjecting Iran to almost unprecedented economic pain,” said Helima Croft, director of RBC Capital Markets. Arab leadership gathered in Saudi Arabia on 30/5 for emergency summits with Riyadh playing its diplomatic cards to warn Iran that the rest of regional powers will defend their interests against any threat following attacks on Gulf oil assets last month. Many analysts also expect OPEC-led strategic initiatives to extend the cut down on the supply until the end of 2019 in an attempt to prevent oil prices from falling back to levels seen in late 2018 when Brent slumped to USD 50 per barrel.

China Poor economic data from China and another trade tariff spat weighed again on equity markets and on oil prices. China’s manufacturing activity shrank more than expected, government data showed, making investors wonder how fast Chinese growth is slowing and how the U.S.-China trade war will weigh on economic growth in China and the rest of the world. China’s Xinhua news agency reported that: “Waging a trade war against China, the United States risks losing the supply of materials that are vital to sustaining its technological strength”. They continued by stating: “By making unilateral moves to contain technological development of other countries, the United States seems to have overlooked one fact: the international supply chain is so intertwined that no economy could thrive on its own, and if necessary, China has plenty of cards to play.” This escalation of the trade war resulted in another big drop in oil prices as investors focused on the demand side of the oil market. The scale of this protracted dispute between the two economic giants leaves investors and traders worried that

global economic growth will slow down, dragging down global oil demand growth with it.

Saudis & the Iran sphere It is pretty apparent that president’s Trump foreign policy, especially when it comes to Middle East, has positioned the relationship with Saudi Arabia as the cornerstone of America’s strategic interests in the region. President Trump sees a valuable partner in Riyad, able to counterbalance Tehran, even overseeing Saudi Arabia’s not so democratic approach to human rights and liberty of speech – 37 ‘terrorists’ have been executed by the Saudi Administration and one of the reportedly crucified. Riyadh has been implicated in the controversial killing of Saudi dissident journalist and U.S. resident Jamal Khashoggi in the Saudi consulate in Istanbul last October. The paper trail for the crime was traced all the way back to Saudi Crown Prince Mohammed bin Salman. Even then, Trump stood by his Saudi allies and the Royal family though it created a considerable backlash from both Democrats and Republicans and even internationally. Trump’s last pro-Saudi strikes back now with the president recently declaring a state of national emergency, due to regional tensions with Iran, and sweeping away and practically avoiding lawmakers in order to push forward the sale of over USD 8 billion worth of weapons to Saudi Arabia, the United Arab Emirates (UAE) and Jordan. The Trump administration officials have informed congressional committees that they would move forward with 22 military sales to the three allies, drawing fire for rebuking the longstanding precedent for congressional review of major military weapons sales. The sales are valued at USD 8.1 billion and include munitions and aircraft support maintenance, are meant “to deter Iranian aggression and build partner selfdefense capacity,” the U.S. Secretary of State, Michael Pompeo, stated. However, Trump’s administration 17

considers Saudi Arabia not only as a key ally in the Middle East, but also as one of the top weapon’s purchaser and a key player in creating leverage to control global oil prices. Perhaps more importantly, Riyadh is key in Trump’s policy to drive Iran to its knees economically and force it to the bargaining table over its nuclear, ballistic missile and Middle Eastern hegemony purists. Indeed, amidst rising tensions with Iran we see the two allies orchestrating and coordinating perfectly their joint initiatives against Tehran. This is the pandora’s box that no one (or maybe most of us) do not wish opened, as these continuous escalations could eventually lead to an open conflict, resulting in oil prices going over the roof. The president apparently considers Iran as a major threat to not only Middle Eastern status quo but its nuclear potential arsenal as a systemic global threat. Trump stands by Saudi Arabia, even with its obvious imperfections and problems, as a counterweight in the region. He is also willing to “take the heat” back home for his unbroken support to the Saudis. Backed by the strong U.S. support and amid tighter oil supply due to the U.S. sanctions on Venezuela and Iran, the world’s top oil exporter Saudi Arabia is expected to raise the prices of the crude grades it sells on its premium market, Asia, for July, according to trade sources. This seems to be in accordance with the global geopolitical U.S. strategy, as it will eventually hit China. Maybe just a coincidence though. In other news, Yemen’s Houthi rebels reported successful drone attacks in Saudi Arabia that halted the pumping of crude oil along a major pipeline in response to Saudi “atrocities in their country”. “The targeting of Saudi vital installations is a response to the aggressors continuing to commit genocide crimes and impose a siege on the Yemeni people,” Houthi spokesperson Mohammed Abdel-Salam tweeted on May 14. Saudi Arabia and its UAE allies intervened in 2015 to support the Yemeni government against the Iran backed Houthi rebels, engaging in a proxy war

OPINION

that has left around 10,000 people dead and pushed millions to the brink of starvation. Currently, Yemen is a red zone when it comes to human rights and state of life for its inhabitants. These pipeline attacks are part of the escalating tensions in the Gulf, following a series of alleged attacks on ships off the coast of the United Arab Emirates. The Pentagon has accused Iran’s Revolutionary Guard of “sabotaging four vessels at the Emirati port of Fujairah” and consequently the reports pushed oil prices higher. “The attack against the shipping in Fujairah we attribute it to the IRG,” said Rear Admiral Michael Gilday, as quoted by Reuters, specifying that the sabotage was executed with the use of limpet mines attached to the hulls of the vessels. There has been no explanation on how these mines were planted or deployed. Now, the recent Pentagon announcement states that President Trump said he will send 1,500 more troops to the Middle East to play a ‘mostly protective’ role. “We are going to be sending a relatively small number of troops, mostly protective,” Trump said as quoted by Fox News. “Some very talented people are going to the Middle East right now and we’ll see what happens.” A significant talent pool nevertheless. Apart from the contingent of 1,500 talents on the ground, Patriot missile batteries and other assets will be dispatched. Active Secretary of Defense, Shanahan and Chairman of the Joint Chiefs of Staff, General Joseph Dunford along with other White House officials agreed to the deployment. There was no word on the location of additional forces or a timeline for the deployment, which was first reported by The Wall Street Journal. Meanwhile, as part of the escalating spiral, Washington designated the Iranian Revolutionary Guard (IRG) a terrorist organization. Furthermore, Secretary of State Mike Pompeo said the administration would circumvent the required congressional review for the new arms deal with Saudi

Arabia, the United Arab Emirates and Jordan, saying that the freeze on sales by Congress could affect the allied operational abilities.

Strategic Petroleum Reserve (SPR) Whenever it comes to crisis, namely the trade war with China, wall-related sanctions towards Mexico, tensions with Russia or a potential conflict with Iran, we have to put in the frame the alternative sources of leverage that the U.S. government possesses in order to deal with the global trade markets but also the actual oil demand. The Strategic Petroleum Reserve was born as an idea and materialized after the Yom Kippur conflicts when Arab oil producers turned the taps off to punish the U.S. for its support of Israel. The SPR is therefore vital to stability and national security. In this historical context any news that Washington has decided to use oil from the SPR to keep prices stable could have trigger a backlashing effect and initiate global ripples of market stress. During 2018, due to the emerging U.S. sanctions against Iran, there was talk of Washington using the U.S. Strategic Petroleum Reserve to mitigate the consequences of a potential drop in supply. That would be a significant lever that could help in dealing with the international markets and, more importantly, prices at the pump. Nowadays, there seems to be the same talk again as prices remain excessively volatile. Once again, it is highly unlikely that the U.S. will succumb to the pressures and use the SPR. There are a couple of reasons for this: first, the effect of tapping the SPR to stabilize prices could come back and haunt Washington for the decades to come, and second, there is simply no actual necessity for now. Recent moments when the SPR has been used were the Iraq war, the Katrina hurricane and the Libyan civil war. Now, there is no such conflict or similar circumstance. We do have a ‘potentially grave’ geopolitical risk, with the key word 18

here being ‘potentially’. Specifically, Iran’s leverage to put pressure against the U.S. and its allies is to close off the Strait of Hormuz and they have indeed threatened multiple times in case of an aggressive intervention against them. This might happen even if the U.S. is successful in cutting off Tehran’s oil exports completely – remember their basic income source and therefore it could be perceived as an act of war. Yet if this happens, no amount of SPR release would rein in prices: Hormuz is the biggest oil chokepoint in the world. Meanwhile, Venezuela’s oil industry is in shambles, Maduro does not seem able to stabilize the situation, and the effect of this is beginning to be felt across the refining world as the heavy oil supply dwindles. However, there is always Canada and the domestic U.S. oil production, so any bullish impact on prices from the heavy crude shortage would be limited.

Conclusion In times of crisis and ambiguity, we need to return to the basics. Right now, there are 3 basic fundamentals that could drive up the prices, and more, but let’s just state the big ones: • Trade deal with China will probably happen; • OPEC is still trying hard to reduce supply; • Stock market will likely go up, and increase demand. Some say charts are smoke and mirrors, chartists say fundamentals are late news. They are both right, fundamentals drive prices, but if you really understand charts, they can tell you before these events actually happen, that they are about to happen. The problem with all these wise statements and the people behind them, the analysts, is that even if the latter did realize there are fundamentals and on top of it, they ‘read’ the charts, they still all fail to realize which way those fundamentals will drive prices. So last year all analysts and investors knew about the Iran

OPINION

embargos, but they failed to realize those embargos would drive prices down by USD 30. By the way, the prices amidst the Iran crisis spiral, continue to drop. The truth is though, that all those mirrors, smoke, fundamentals and chart projections go out of the window in times of war and global turmoil. The current oil price and fundamentals will mean nothing if we look at how President Trump is playing his hand in the Middle East. Iran is being pushed into a corner where they may well strike oil facilities and block Hormuz. A potential escalation or conflict could drive the prices over the roof. Again, the key word here is ‘potential’. And it will remain a potential, not very likely to happen, due to different, global, geopolitical reasons but also Trump’s own gambling strategy. The president has outlined and is doing his best to enforce a foreign policy vision that is distrustful of the traditional U.S. allies, scornful of international institutions, and indifferent, if not downright hostile, to the global world order that the United States has established and enforced since WW2. This, interestingly, makes the potential conflict highly unlikely as the U.S. is enjoying (?) a unique international solitude as the traditional allies are drifting away or even openly expressing their concerns and objections on the Iran spiral. Some of these differences, like the ones with European allies are magnifying, especially after the U.S. decided not to extend waivers to countries wishing to trade in oil with Iran; this led to an unusually strong joint letter by EU, UK, French and German Foreign Ministers taking “note with regret and concern of the decision by the United States.” Any cracks emerging in U.S.-European relations will be a gift to Russian President Vladimir Putin. With a trade war open with China, tensions with Russia and constant open fronts with North Korea, Venezuela and Mexico, the chances are not globally favorable for the U.S. side in case of open conflict. On top of that, America’s most trustful European (?) ally in terms of military

assistance, Great Britain, is in the middle of an ongoing Brexit crisis and without leadership after May’s resignation. Even on a closer strategic look in the region, the U.S. would have to overcome a lot to fully commit to an attack against Iran. The Iraqi administration is not at all in favor of such a move, Pakistanis are not likely to assist if they do not receive something in return, Turkey is more geopolitically far from the U.S. than ever and the Russians are close; too close. The U.S. has more to lose than gain. That being said, the U.S. is still the superpower on this planet, which makes Mr. Trump the most powerful man on it. The voices of logic and constraint within Trump’s administration have been silenced or removed (one of them interestingly being the ex-General Secretary of Defense, U.S. Marines General, James ‘Mad Dog’ Mattis.) One can and should hope that the remaining forces that have constrained Trump so far will continue to do so. Furthermore, Trump is entering an election cycle at home, the pressure to deliver overseas is growing, and enemies and allies alike are watching with cynical apprehension. Now that the North Korea deal (?) is off, the president must once more play another hand to show strength overseas, but it is highly unlikely that he will let this escalate to war. Most probably, Mr. Trump will continue pushing Iran but will not go much further; therefore, we may postpone the Armageddon for a while. Conclusively, with the potential conflict not being very likely, when it comes to projection for oil prices, there are people with lots of money, lots of information and lots of brain power who consistently get it wrong over and over again. My own wise (?) estimation is that oil price is not going to erupt upwards any time soon and that it will definitely not go over the threshold of USD 90 per barrel in the months to come, if war is avoided. So, the question you need to ask regarding the Armageddon and the oil price is “do I feel lucky?” 19

OPINION

Carbon-free environment A small technical fable

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

his article is intended to be rather a comment on a material in a university publication in which a famous teacher from Scuola ‘Enrico Mattei’, dubbed the Italian University Temple of Energy, published under the title ‘Ulisse, le sirene e il futuro energetico italiano’ (Ulisse, the mermaids and the future of the Italian energy system). For translating, presenting, interpreting and commenting on this article, I will appeal to the historical characters in the original article, such as: • Ulisse (Minister for Energy for the Department of Energy); • Mermaids (summum of rules/ constraints set out in the Kyoto Protocol); • Energy System (Ministry of Economy, Energy, Economic Development or as it is named in the EU country). First of all, I would ask the reader of this article to allow me to remember that the characters in the above title were taken from the historical work ‘The Iliad and the Odyssey’ by the famous historian-author Homer. These characters were mentioned in the article I mentioned earlier. I also use them to keep the explanatory-allegorical line of the original article. Referring to this work, I will try to present as a fable part of the energy problem faced by most countries using fossil fuels (oil, gas, coal) 20

for the production of electricity; that is, we will talk about an important part of environmental legislation. Obviously, the fight against the presence of carbon dioxide, scientifically-known as carbonic anhydride, can be extended to all countries, not only in Europe, taking into account that the Paris Agreement (general agreement to reduce global warming by 2030 to limit the rise in atmospheric temperature), concluded in 2015, was signed by 175 nations three years ago. The temperature will grow anyway without our will, an increase of 2 degrees Celsius according to specialists, the Paris conference limiting it to just 1.5 degrees Celsius, no more; the agreed target remaining the same, the end of 2030. The allegory is simple, in everybody’s language: The Minister of Economy, Energy, Economic Development etc., this ‘Ulisse’ who holds and thinks that his native country produces electricity using coal, but hits the Kyoto rules, rules ‘sung’ by the ‘Mermaids’, meaning rules that must be taken into account. Ulisse hears them, but he cannot do much to fully put them into the work. The energy system of the country, the plural should be used here, the energy systems of the countries have as a strict necessity the electricity for the assumed consumer. Each of the characters of the fable represented in the title of this material attempts to function as designed. This is how we should understand this

OPINION

small allegory, which gives us the general picture of the current situation, but also the unending presence, unfortunately, of the carbon dioxide emitted in the process of electricity production. Of course, the efforts of all the signatory countries of the said agreement, as well as the particular characteristics of each country, their legislation and strategies must be taken into account. A similar matter is the subject of an article written by Antonio Cló, former delegate administrator of Snam, part of the energy giant Eni. The article speaks of the current decision of the German Government, which has informed the EU Energy Commission that it would permanently stop using coal, either in its

own steel industry or in the production of electricity and not only, in 2038. The obligation laid down in Paris, as well as European rules for stopping carbon dioxide emissions in Europe, is desired for 2030. Professor Cló uses even the word ‘hypocrisy’ on behalf of Germany over the other countries where coal mines are closed, the first move in the application of the current restrictions under both the Kyoto Protocol and defined by the Paris agreement, but especially for the implementation of the EU program on the carbon dioxide emissions ban; hence the expected global warming slowdown. It is noticed that the problem related to the negative presence of carbonic anhydride in the terrestrial atmosphere is very broad...

I recall that the result of yearslong research, with the international participation of specialists, from the university and academic environment, has been disseminated in the oil world, a result that has defined crude oil as a renewable resource. The notion of renewability has not turned to the mostknown one, that crude oil has emerged through the fossilization of fish, sea animals etc. The research leads to the idea that the renewability of crude oil is based on physicochemical phenomena that occur at great depth, under certain conditions, the time as length acquiring not only the geological aspect that takes place in ages, epochs, but also in much shorter periods.

ENGINEERING EXCELLENCE Oil and Gas

Energy and Climate Protection Thermal power plants

Upstream facilities

Desalination plants

Pipeline systems

Renewable energy

Underground storage facilities

Climate protection

Tank farms and terminals

Power transmission and distribution systems

Refineries and petrochemical plants

Water and Environment

Transport and Structures Airports Hydropower plants

Roads

Water transmission systems

Railways

Water supply and wastewater networks

Urban transport systems

Water and wastewater treatment plants

Buildings and structures

Tunnels and caverns Alpine resorts

Office Ploies‚ ti Romania ILF Consulting Engineers Romania 16 Negru Voda Str. RO-100149 Ploiesti ‚ Tel.: + 40 (344) 401-333 Fax: + 40 (344) 401-334 romania@ilf.com www.ilf.com

Romanian energy sector priorities

Massive investment of capital and know how The Energy Policy Group (EPG) is a Bucharest-based non-profit, independent think-tank on energy policy, market analytics and energy strategy, established in February 2014. EPG’s regional focus is Southeast Europe and the Black Sea Basin, yet it covers the trends and processes at the EU and global levels. EPG promotes a technologically advanced, environmentally friendly and socially acceptable energy system. Its views are self-standing and science-based. EPG’s publications are freely available at www.enpg.ro. In this interview Radu Dudau – EPG’s Director, reveals EPG’s role in creating a better understanding of policies and processes in the energy sector and proper solutions for the Romanian energy industry and market to function.

The beginnings... Dear Mr. Dudau, your academic career, focused on teaching and research, is grounded in an interest in international relations, foreign policy, and international energy policy. You have been personal adviser to the Energy Minister, in charge with developing a new National Energy Strategy. How did the idea of establishing the Energy Policy Group emerge? Well, I co-founded EPG quite a few years before I became adviser to the Energy Minister. It was back in 2013, when the public uproar over the shale gas issue was still ongoing in Romania, that I felt the need to start a independent think-tank able to provide the public with quality information, based on evidence and validated science, on energy and environment issues. It was obvious that the Romanian citizens were, from then on, going to have their say in a domain that, in our country, had

been traditionally kept outside the purview of public consultation. At the same time though, a certain deficit of confidence in the official sources of information was palpable. Against a backdrop of anxiety and fear about the supposed consequences of shale gas operations, and suspicious of the intentions of their own government, many Romanians

EPG PURPORTS TO SERVE AS TRUSTED INTERFACE BETWEEN THE GOVERNMENT, THE BUSINESS ENVIRONMENT AND THE BROADER PUBLIC. 24

did turn, back then, to various other channels of information, many of which were unchecked, distorted or even manipulative. The press itself seemed to be ineffective in conveying lucidity and reasonableness – that is, when it did not itself fan the flames of hostility and suspicion – while the institutions of higher education, inasmuch as they got involved at all in the debate, were only limitedly able to make themselves heard and respected. Along with my friend Laurentiu Pachiu, we felt the need to create a new, independent and credible voice that would try to elevate the level of public debate on such issues. This is how we started EPG in February 2014, as a non-governmental organization. Other issues have soon followed in the public discourse: The Black Sea gas finds and their development; the oil and gas fiscal framework in Romania; the Nabucco pipeline – and its demise; the optimal energy mix and the energy strategy itself, etc. In all of these, EPG has been a steady source of information, analysis, and policy recommendations.

What are the goals of the EPG platform? Our goals have been largely delineated above: put succinctly, quality public information on all critical issues in the energy sector. At the same time, EPG purports to serve as trusted interface between the government, the business environment and the broader public. Indeed, in this latter respect, we have earned a good reputation for our specialized, solution-oriented events, in which we bring together the authorities and the relevant stakeholders.

What is EPG’s role in creating a better understanding of policies and processes in the energy sector? By always trying to produce objective, well-reasoned and solidly documented analyses, EPG purports to provide the public with relevant information on relevant topics. We have come to produce substantive papers and reports in virtually all segments of the energy sector. Then, there are our public events (conferences, workshops and roundtables) and educational programs (courses, seminars, and summer schools). We are 25

always learning and enhancing our analytic skills and understanding, while trying to impart that knowledge with others.

What are the main areas on which the EPG is focused? How about the most important research programs carried out by EPG? We started with the O&G sector, but have since diversified to electricity, energy markets, energy efficiency, EU energy and climate policy, renewables, etc. Apart from

this sectoral take, we have strong abilities to do strategic energy planning, thanks to our extensive understanding of the Romanian energy system and our quantitative analysis skills. We have been for the past few years in several international grants focusing on the energy systems of South-eastern Europe, typically involving modelling and quantitative analysis. An overarching concern is to match EU’s ambitious energy and climate goals for the next decades with optimized energy mixes of the region’s countries, and to emphasizes the changes that are needed in support of clean, reliable and affordable energy.

Overview As analyst specializing in energy, how do you estimate the energy market and the business environment in Romania compared to the interest area covered by EPG – Southeast Europe and the Black Sea Basin? The Romanian energy sector has come a long way since 1989 in terms of its restructuring, modernisation and competitiveness. However, 26

especially over the past few years, significant investments in the sector have been a rarity. This has mainly to do with a regulatory instability that seems to have been running amok. There is barely any segment or sector in which investors would not feel disincentivised by erratic pieces of legislation – including government ordinances – not to mention their often-dubious quality. To a certain extent, this is understandable, given the major policy challenges ahead (such as the corpus of EU climate legislation). Nonetheless, the institutional capacity of the Romanian state in the energy sector seems to exceeded by the tasks ahead of it, and is barely able to keep up with a vibrant private sector. More generally, there are two underlying traits consistently displayed in public

INTERVIEW

THE ROMANIAN ENERGY SECTOR HAS COME A LONG WAY SINCE 1989 IN TERMS OF ITS RESTRUCTURING, MODERNISATION AND COMPETITIVENESS. HOWEVER, ESPECIALLY OVER THE PAST FEW YEARS, SIGNIFICANT INVESTMENTS IN THE SECTOR HAVE BEEN A RARITY. rhetoric at all levels: a mistrust in the workings of the competitive energy markets (although, in theory, as an EU member state, Romania is committed to building and sustaining them, along with the needed checks) and a deeply entrenched inclination towards self-isolation and autarchy, in a syndrome of fortress besieged, in which the ‘goods’ are to be zealously guarded from greedy plunderers. Leaving aside the figurative language, I am not for a moment suggesting that the state should not vigorously guard its interests. My point is that, after three decades of rediscovered market economy and 12 years of EU membership, it is time for the state to really build capacity, bring forward professionals and draw on genuine know-how. I realize this is easier said than done, but there is no other way to really take advantage of our own potential and what the EU has to offer.

You have recently stated that the gas sector was dysfunctional. Please explain extensively what you refer to and what recovery solutions you envisage for the Romanian energy industry and market to function. In a way, the gas sector is the best illustration of what poor and tempestuous law making can cause in the energy market. After several year of increasingly burdensome fiscality, centralized market trading obligation, royalties calculated by reference to the Austrian gas market, an incomplete market liberalization that brought a major burden of cost upon the gas suppliers, here comes GEO 114/2018 on top of it all – a monument of ineptitude and irresponsibility. The gas market liberalization was to be utterly suspended for the coming three years, the upstream sector, already disincentivised by the said factors, was hit with a regulated price for the domestically produced gas, the regulated rate of return (RRR) for the distribution companies was dramatically reduced, to the point where no significant new investment was possible any more, and a 2% turnover ‘money contribution’ was introduced for every energy company licenced by the national energy regulator, ANRE. In all the panic and disarray thus caused, numerous investment projects were cancelled or mothballed, a lot of value was destroyed, and the reputation of the Romanian business environment was ruined. Add to that the fact that no new block O&G has been put on tender for the last 10 years by the Romanian authorities, that the state-owned energy companies are systematically deprived of capital by the insatiable appetite for money of their owner, thus constantly upending their investment plans, etc. 27

Now, this is what I call a dysfunctional sector – though not to everybody, in all fairness: the traders of imported gas, which has grown in higher demand, have been blossoming for the past half year or so.

In the Black Sea Basin in particular the developments are quite slow. How do you assess that operations will be carried out in this area? It is hard to understand why such a hugely important project for the Romanian economy, energy security, and political relevance is still stalling, seven years after the discovery of the Black Sea’s main gas find. Although, again, the above explanations about the regulatory instability go a long way. After last year’s frantic elaboration of the Offshore Law, the state should now be able to offer the investors the terms for a longterm, win-win deal. And the investors need to know that they will be shielded from aberrations such as GEO 114. Any delay translates into high opportunity costs.

What is your opinion on the heavily debated Ordinance 114 and its impact on the energy sector? It seems that investors are expecting its annulment... Well, I suppose I have not minced my words on GEO 114/2018 so far. Such distortions occur when people disconnected from the true concerns of the energy domain get to act on their own, in narrow circle, driven by self-sufficiency, resentment, and probably group interests, with no accountability. And it is not just about energy, but also about banking, constructions, telekom and others. An allout assault on the entire economy. Unfortunately, the chaos thus caused will be hard to get past. The very untenable effects of GEO 114 made it from the outset very difficult to comply with. Some of its most untenable provisions have been already rescinded by means of GEO 19/2019, while other have been sweetened

ROMANIA IS A COUNTRY WITH SIGNIFICANT ENERGY RESOURCES. MOREOVER, THE COUNTRY HAS A MASSIVE POTENTIAL FOR RENEWABLE ENERGY SOURCES AND SIGNIFICANT RESERVES OF NATURAL GAS, ESPECIALLY IN THE DEEP WATERS OF THE BLACK SEA. by ANRE. However, quite a few others are still in place. And, in any event, the reputational costs are high and long-term.

Strengths/Weaknesses What are, in your opinion, the most important assets of Romania as regards its positioning on the regional energy market? Romania is a country with significant energy resources, a well-developed, though rusty, infrastructure, and a well-qualified work force, inheriting a 28

tradition in the energy industry. Its energy mix is diversified and its dependence on energy imports (especially of natural gas) is reasonably low. Moreover, the country has a large potential for renewable energy sources and, again, significant reserves of natural gas, especially in the deep waters of the Black Sea.

How about the chapters in which Romania has weaknesses? The Romanian energy sector needs massive investment of capital and know how. However, the country has a unstable and suboptimal regulatory environment,

an insufficiently developed and modernized energy infrastructure, and a sizeable risk of supply security in case the transit of Russian gas through Ukraine is interrupted. The coal sector, still a sizeable contributor to the country’s electricity mix, is on the brink of collapse, while the government has no real mid-term solution and no long-term coal exit strategy. The country needs urgently new electricity production capacities, modern and competitive, yet it is uncertain that the so-called ‘projects of national interest’ listed in the recent energy strategy will ever come to fruition. Meanwhile, lacking the right regulatory environment, investors find little incentive to finance new projects. After decades of underinvestment, the district heating systems are inefficient in most of the cities, with Bucharest being the most blatant case. Energy poverty is a widespread social problem, and the vulnerable consumer is, in fact, no more than an ill-defined concept. I will stop here with the list of negatives, lest I skew the picture.

Given the global technological trends, energy markets dynamics, climate effects, energy geopolitics, legislative issues, when and how do you see Romania’s transition to a circular economy – Europe’s strategy for a clean environment and sustainable development? Climate change is not a genuine concern in the Romanian decision-making circles, and circular economy, as a concept, is still in the eye of the beholder. Investment in renewables has come to a halt in the past three years or so; energy efficiency is more talk than action, in spite of some success stories, and the other trappings of the clean energy transition –digitalization, distribution, prosuming, e-mobility – are either incipient and still marginal, or pushed back in time for many years by the regulatory framework – consider, for instance, the lack of ambition regarding the smart meters in Romania. On a positive note, though, the state has started subsidizing some salient programs, such as the installation of rooftop PV panels by households, through the Agency of the Environmental Fund, while recent regulation by ANRE has paved the way for prosumers. In effect, I think that, absent other large-scale, costly energy investments, the renewable energy sources will grow on a small and medium scale, close to the customer. Natural gas will complement them, offering back up and flexibility, while the regulatory framework will have to adapt to a more decentralized and volatile electricity system. 29

OIL & GAS

High-tech solutions for Rompetrol Rafinare’s transports Rompetrol Rafinare, a member of the KMG International Group, together with its main partner for domestic rail transport, Romanian Rail Group, successfully implemented a real-time monitoring and control system for oil products traffic - Shunting Expert. Shunting Expert is to be used on the two platforms operated by Rompetrol Rafinare - the Petromidia Refinery and Vega Refinery from Ploiesti. Through the app, operators will have unlimited access to about 13,000 wagons monthly (10,000 to Petromidia, 3,000 to Vega).

he impressive volume of petroleum products, transported through a significant number of railway manoeuvres, requires strict control over all parameters, and the software is capable of recording and relaying in real time the position of the wagons on the lines. The application can also be seen as a basic tool that facilitates and mediates decisions made by the direct coordinator of manoeuvring operations. “We are always looking for digital solutions to streamline the work of the two refineries. A precision instrument such as Shunting Expert helps us have a very clear picture of the products

we send across the country. We are making a significant forward step in the digitization of Rompetrol Rafinare’s business and we are glad that we are constantly finding solutions that will support us to achieve rising operational results every year,” says Yedil Utekov, General Manager of Rompetrol Rafinare. The state-of-the-art system makes it possible for people with a different professional background to access the manoeuvre coordinator. Specifically, it allows them to see with great precision the route, load and status of each moving car. With the help of the Shunting Expert, digitization is 100% integrated and the benefits are countless: the total control 30

of the wagon condition, the total track control of the railway lines (implicitly also controlling the occupancy of the lines), the considerable decrease in human effort and errors that can be caused by humans, accuracy of reports, traceability of wagons, locomotives and specialized personnel or interconnection with other applications. None-the-less, Rompetrol Rafinare has unlimited access to wagon history, road reports, but also a complete and correct image of the trains shipped to Capu Midia or the Ploiesti Nord halt. The Shunting Expert application is a premiere at national level and in the Southeast of Europe, and Rompetrol Rafinare is the first company to use the

OIL & GAS

state-of-the-art system to track traffic on both Petromidia and at the Vega Refinery in Ploiesti. The implementation of this software is not the only digital collaboration between Rompetrol Rafinare and Romanian Railway Group. Recently, the two sides have successfully integrated the Electronic Book of Letters. Until now, all documents proving a freight traffic were completed by hand or in printed form. Currently, important data is placed on a digital platform, where it can be endorsed and tracked by all parties involved. â&#x20AC;&#x153;If Shunting Expert creates a digital bridge in the operational plan, the Electronic Book of Letters will redefine the relationship in the commercial

plan. Upon completion of this process, we can say that GFR will have the highest level of digital cooperation with Rompetrol on the rail freight market in this area of Europe. In an industry that needs sustained growth, such as rail freight transport, it is necessary to integrate technology into daily work to remain competitive and to achieve performance,â&#x20AC;? says Amedeo Neculcea, Deputy General Manager of Grup Feroviar Roman. For the KMGI Group, implementing a digital solution on the trading segment provides a clearer picture of the management of petroleum products. Rompetrol owns six fuel depots (Arad, Craiova, Mogosoaia, Simleul Silvaniei, 31

Vatra Dornei and Zarnesti), which successfully cover the market demand in Romania. During its 40 years of operation, the Petromidia refinery has, on the backdrop of major investments, continuously developing its production activities. For example, from a quantity of raw material processed in 1979 (commissioning time) of 1.26 million tonnes to 3.82 million tonnes in 2007 (the time of acquisition by KazMunayGas), 5.66 million in 2017 and 5.92 million tonnes last year. Established in 1905, the Vega Refinery in Ploiesti recorded 8 historical records in 2018, including the processed raw material, but also the obtained products (bitumen, solvent, hexane).

OIL & GAS

OMV Petrom completed the modernization of the fuels terminal in Arad O

MV Petrom completed the modernization of the Arad fuels terminal, the largest in West Romania and the second largest in the country. The project required investment of approximately 19 million euro. The Arad terminal has a storage capacity of over 32,000 cubic meters, equivalent to over 550,000 car refuels. The storage terminal addresses mainly fuel demand in the counties in the West of Romania - Arad, Bihor, Timis and Hunedoara. “With the modernization of the Arad fuel storage, we successfully complete the optimization program for our fuel storage infrastructure. The program aimed to concentrate operations in six large-size terminals across the country and required investments of around 145 million euros over the last 12 years,” said Radu Caprau, member of the OMV Petrom Executive Board responsible for Downstream Oil. The Arad terminal is one of the most modern and safest fuels terminals in Europe, using the best available international technologies in the field. The terminal, which covers an area of over 50,000 square meters, is equipped with 5 fuel tanks which were modernized.

Within the project, modern technologies were implemented including automated management and automated fuel deliveries, as well as the best available systems for fire protection and reducing the environmental impact. Construction works included the modernization of 5 large fuel storage tanks, the installation of almost 12 kilometers of new pipelines, the casting of approximately 6,500 cubic meters of concrete and modernization works for 2 kilometers of railroad serving the 32

terminal. The program to optimize OMV Petrom’s fuel storage infrastructure was launched in 2007 and required investment of around 145 million euro. Within the program, three new terminals were built at Jilava, Brazi and Isalnita and three other terminals were modernized - in Bacau, Cluj and Arad. They have a cumulated capacity of 119,000 cubic meters and they cover geographically the entire territory of Romania in order to meet the country’s mobility needs.

Products API and non-API downhole pumps Fiberglass Sucker Rods (FSR) and accessories Steel Sucker Rods (SSR) and accessories Plunger lift equipment and accessories

Product Services Downhole API pump repair service FSR/SSR technical service and installation Rod string design and optimization Rod pump failure analysis Customized services and solutions

Performance-Based Asset Management Full-line production and run-life optimization Asset tracking and condition monitoring utilizing our Proprietary Interface Upstream Platform

7 Piatra Craiului St. | DIBO Industrial Parc | Negoiesti | Romania Phone: +40 244 542 029 For more information please contact us at office@endurancelift.com 33

OIL & GAS

ROMGAZ - 110 years of history of the gas industry ROMGAZ celebrated on May 7, in Medias, 110 years since the first gas discovery in Romania. The history of the gas industry in Romania begins in 1909, when in Sarmasel, while drilling at over 300 meters deep for potassium salts, natural gas flew freely. This phenomenon marked the beginning of an industry, now a century old. 34

OIL & GAS

OMGAZ marked the 110 years of history of the gas industry by organizing a festivity, dedicated to all those who have contributed to the development of this industry. This solemn event was attended by over 250 guests, leading representatives of the oil and gas industry, including Florin Ciocanelea - State Councillor in the Cabinet of the Prime Minister, Florin Gheorghe - Director General within the Ministry of Energy, Christina Verchere - CEO of OMV Petrom, Eric Stab - CEO of GDF SUEZ Energy Romania, Ion Avram - former Minister of Machine-Building Industry and former Deputy Prime Minister, numerous personalities, representatives from the energy sector, as well as other special guests. At the opening of the event, Constantin Adrian Volintiru, CEO of ROMGAZ, thanked the former and current employees for their professionalism and ambition to lay the solid foundations of this company that is today a successful company and thanked the guests who honoured ROMGAZ with their presence at this anniversary. “ROMGAZ has gone a long way on the scale of its development, from a local company to an international one, nowadays among the top European companies. This was due to the team working in the company, and when I talk about the team, I bow to all my colleagues from the wells, from branches, and all the staff. I believe in teamwork; I rely on professionalism and fairness and I am convinced that only together we can overcome the barriers of time and history.” State Councillor Florin Ciocanelea conveyed the message of Prime Minister Viorica Dancila. In the context of ROMGAZ vision to consolidate and develop its position on the national and international markets, Florin Ciocanelea mentioned: “ROMGAZ must become a company not only with a past, but also with a future. Become a very power company at regional level. You can become a very important player on the gas commercial market as well.” On the occasion of the celebrated 110th anniversary, the Ministry of Energy awarded a diploma of excellence to the company for its achievements. Florin Gheorghe, Director General within the Ministry of Energy, mentioned, inter alia: “ROMGAZ is a company with permanent concerns to increase the portfolio of gas resources and reserves, to optimize and develop the underground storage activity, to consolidate its position on energy supply markets and identify new business opportunities. ROMGAZ is a powerful brand, a company with a solid position on the market and a strong financial position and an important vector in achieving the desideratum of energy security of Romania.” “Romania was the third largest producer of equipment in the oil and gas industry, after the U.S. and Russia, and was the second largest exporter of equipment, being an authority in the field,” reminded former Minister Ion Avram, who believes that the gas industry is of great future and ROMGAZ’s future is represented by the diversification of activity and products. 35

“ROMGAZ has gone a long way on the scale of its development, from a local company to an international one, nowadays among the top European companies. This was due to the team working in the company, and when I talk about the team, I bow to all my colleagues from the wells, from branches, and all the staff.” Constantin Adrian Volintiru, CEO of ROMGAZ

At ROMGAZ event celebrating 110 years of energy, those who marked the 110 years of natural gas history in Romania were rewarded, as recognition of their contribution to what ROMGAZ means today. Along with the anniversary of 110 years of tradition in the gas industry, ROMGAZ announced that it joins the Oil & Gas Employers’ Federation (FPPG), an organization that now represents the interests of more than 90% of the gas production sector in Romania. By substantiating its values, the Federation supports the endeavour of the economic forces’ unity in the energy sector for the harmonious development of the entire society, by continuously promoting the principles of stability, predictability and competitiveness of the legislative framework.

OIL & GAS

Romania, regional energy hub with the help of gas? Romania has been bypassed for years by the major petroleum products or gas transmission networks. Thus, the Iasi-Ungheni gas pipeline has come to be a major achievement from this point of view. Currently, works at BRUA corridor are underway, which could put our country back to the regional map of hydrocarbon transmission networks interconnection.

Text by Daniel Lazar

RUA project will improve interconnectivity with neighbouring countries, will create a new regional gas transmission route, from various supply sources, liquefied natural gas included, will create the necessary infrastructure for taking over and transporting significant volumes of Black Sea gas, while carrying an important potential to create a valuable link between

the Southern Gas Corridor and Central Europe, with Romania as a regional energy hub. “Energy security and diversification are among the top priorities of Romania’s Presidency of the Council of the European Union, these being common concerns on both sides of the Atlantic,” said Deputy Prime Minister Ana Birchall at the first edition of the EU-US HighLevel Energy Forum, which took place in 36

Brussels in May this year. The meeting was attended by European and US political leaders, such as U.S. Secretary of Energy Rick Perry, U.S. Ambassador to the European Union Gordon Sondland, European Commissioner for Energy and Climate Change Miguel Arias Cañete, DirectorGeneral for Energy within the European Commission Dominique Ristori, as well as ministerial representatives from EU

OIL & GAS

Member States. The guests also included numerous representatives of European and US energy companies. Ana Birchall had an intervention during a session on the development of gas infrastructure, reiterating the fundamental role of connectivity and the importance of largescale investments in the field of energy infrastructure, including as regards liquefied natural gas infrastructure. “Romania is in a privileged position at the Black Sea and must capitalize on its strengths. Maximizing the economic potential of the Black Sea for the benefit of the wider region is an assumed goal and energy investments open strategic opportunities. The BRUA project is a good example of successful cooperation among the states in our region. This new gas corridor will improve interconnectivity with neighbouring countries, will create a new regional gas

transmission route, from various supply sources, liquefied natural gas included, will create the necessary infrastructure for taking over and transporting significant volumes of Black Sea gas, while carrying an important potential to create a valuable link between the Southern Gas Corridor and Central Europe, with Romania as a regional energy hub,” the Romanian Deputy Prime Minister said. Ana Birchall also attended a roundtable meeting on ‘Critical Infrastructure and European Energy Security’. During the discussions, Ana Birchall stated that “the energy sector is a crucial priority, and Romania, through its geostrategic position, has turned out to be one of the most important regional partners, our country being a supporter of strengthening the energy infrastructure in the wider Black Sea region.” Ana Birchall had a bilateral meeting

with U.S. Secretary of Energy Rick Perry. On this occasion, the officials discussed about the main dimensions of energy cooperation, aspects of regional energy security and the development of transport and interconnectivity projects. According to a communiqué of the Romanian Government, the geostrategic position and the role of Romania in strengthening the regional and European energy security were appreciated. The Romanian official reiterated the importance of the Three Seas Initiative and of continuing the significant US support. At the same time, Deputy Prime Minister Ana Birchall restated the firm commitment of the Romanian Government to ensuring a transparent and attractive investment environment for companies investing in energy, through projects to diversify energy supply sources and transmission routes.

OIL & GAS

RON 30,000 to modernize the laboratories of the PetroleumGas University of Ploiesti Transgaz, the technical operator of the national gas transmission system, has financed with the amount of RON 30,000 the acquisition of an innovative 3D scanning system within the Department of Mechanical Engineering, the Faculty of Mechanical and Electrical Engineering of the PetroleumGas University of Ploiesti (UPG). Including a structured light projector, the scanning camera, with a 0.5% precision, tripod, turntable and software package that allows basic scanning and processing of the raw scan result, the system can be used in teaching and research activities.

Text by Daniel Lazar

he Petroleum-Gas UniÂ versity of Ploiesti tries to keep up with the latest technological novelties, either through its own efforts or with the support of the business environment, of all those who understand that investing in intelligence, in training specialists able to integrate progress is the best financial investment,â&#x20AC;? said the Prorector of the university, Ph.D. Prof. Eng. Mihail Minescu.

The scanner also allows the recording and transmission of information about the appearance (texture) properties of the scanned surfaces. With the turntable, controlled by the software package, 360-degree complete scans can be performed, which are then assembled with the option of closing the holes. Even models with dimensions of hundreds of millimetres can be scanned. The entire assembly can be complemented by a second scanning camera, which would 38

reduce operating time and also increase the quality of the result of the scanning process. At UPG Ploiesti there are 6,191 students, of which 227 foreign students, coming from 29 countries. Transgaz ended 2018 with a turnover of RON 1.74 billion, 3.2% lower than in the previous year, while the net profit decreased by 16%, to RON 490.4 million, according to the consolidated annual financial results.

Start saving on your business travel expenses today!

A dedicated corporate benefits program for your business travel needs What if travelling for business reasons would get you even more benefits? What if each and every trip taken by you or your collegues would add up to free flight tickets to your company? That is exactly what is offered by bluebiz, the Air France, KLM and Delta Air Lines program designed exclusively for business. Upon registering for bluebiz your company starts earning blue credits, which can be redeemed than towards air tickets and more, making the most of your companyâ&#x20AC;&#x2122;s travel budget. Benefits of bluebiz at glance: Earn blue credits on all flights with Air France, KLM and Delta Air Lines Award your company with free tickets and flight related services fully covered by blue credits Use your blue credits for Upgrades on AirFrance and KLM flights and enjoy more comfort Ont he same ticket a company can earn blue credits and travelers can earn Flying Blue Miles

OIL & GAS

OMV Petrom continues the series of positive financial results Text by Daniel Lazar

OIL & GAS

OMV Petromâ&#x20AC;&#x2122;s Upstream Burcioaia | ÂŠ OMV Petrom

OMV Petrom Group has published its financial results for the first quarter of this year, being better than the ones recorded in the similar period of the previous year, which confirms the global figures in 2018, when the company posted the highest profit in the last 5 years.

t macro level, the value of consolidated sales increased by 11% compared to Q1/18, to RON 5.4bn, supported by higher market prices expressed in RON of commodities and higher volumes of electricity and petroleum products

sales. The Clean CCS Operating Result increased by 28%, to RON 1.2bn, as a result of positive evolution, in both Upstream, due to higher prices, and Downstream, as a result of higher volumes of petroleum products and electricity sales. The net profit stood at RON 1.15bn and investments totaled 41

RON 826mln, by 2% lower compared to Q1/18, including mainly Upstream investments.

Upstream With a Clean Operating Result of RON 825mln, by 28% higher, the

OIL & GAS

Upstream segment had a contribution representing approximately two thirds of the clean operating result of OMV Petrom. Hydrocarbon production at Group level fell by 5.5%, mainly due to natural decline in Romania, as well as the low production in Kazakhstan. Daily production in Romania fell by 5%, mainly due to natural decline, in conditions of decrease by 8% in gas production, while crude oil and NGL production was relatively stable. Production cost was USD 11.66/boe, 2% lower, in conditions in which the favourable foreign exchange evolution and continuous cost management offset the decline in production.

Downstream Oil The Clean CCS Operating Result stood at RON 221mln, by 9% lower, the strong operational performance partly offsetting the weaker refining margins. The refining margin indicator fell by 45%, to USD 3.62/bbl, being influenced by the evolutions of international crude oil and petroleum products prices, while retail sales volumes increased by 6% due to higher demand.

Downstream Gas The clean operating result doubled, reaching RON 157mln, mainly based on better conditions on the electricity market. Instead, gas sales fell by 14% due to a decrease in own gas production and lower volumes available in the storage facilities. Net electricity production increased by 21%, to 1.08 TWh in Q1/19, supported by the higher electricity price.

RON 2.8bn, taxes paid to the budget In the first quarter of this year, the company paid to the state budget taxes worth a total of RON 2.8bn, in line with the growing business. “The return to the non-regulated gas prices for industrial consumers is a step forward towards a liberalized gas market. We believe

that a liberalized gas market can exist in parallel with the implementation of appropriate mechanisms to protect vulnerable consumers, in line with the best European practices. After passing GEO 114/2018 and GEO 19/2019, the OMV Petrom group must supply 12.5 TWh of gas to the regulated market, at a maximum price of RON 68/MWh for the period May - December 2019 and 1.14 TWh of electricity at a regulated price of RON 259.58/MWh for the period March - December 2019,” a company press release shows.

The highest profit in the last 5 years Considered the largest oil and gas producer in Central and Eastern Europe, OMV Petrom Group announced for last year a net profit of RON 4.07bn, rising by 64% compared to the 2017 level. This is the highest net gain obtained from 2013 to date, when it posted a net profit of RON 4.8bn. The value of consolidated sales in 2018 was RON 22.523bn, by 16% higher than in 2017, due to an increase in the price of commodities and in the volume of electricity sales, partially offset by lower volumes of gas and petroleum products sales. Downstream Oil represented 76% of total consolidated sales, Downstream Gas accounted for 22% and Upstream for approximately 2%. As of December 31, 2018, the total proven oil and gas reserves in OMV Petrom Group’s portfolio amounted to 532mn boe (of which 509mn boe in Romania), while the proven and probable oil and gas reserves amounted to 810mn boe (of which 766mn boe in Romania). Capital expenditure amounted to RON 4.289bn in 2018, 44% higher than in 2017. Investments in Upstream activities (exploration and production) represented 73% of total Group CAPEX for 2018 and amounted to RON 3.15bn, being 29% higher than in 2017, as a result of intensified drilling and workover activities, partially offset by the lower number of field 42

redevelopment projects in progress. Of this amount, exploration expenditures increased to RON 466mln, as a result of the increased drilling activities in deep onshore exploration wells.

Strategic highlights Q1 2019 •

•

In line with the strategy to simplify Upstream footprint and optimize portfolio, on 1st of March, OMV Petrom completed the second round of divestments consisting in the transfer of licenses for nine marginal onshore Romanian fields to Mazarine Energy Romania. The new Polyfuels unit in Petrobrazi refinery started production in March, following investments of approximately 65 million euro. The new unit uses an innovative technology to convert LPG and other products into diesel and gasoline. It can produce up to 50,000 tons of diesel and gasoline, equivalent to 1 million car refuels. In February, as part of the strategy to enhance customer experience, OMV Petrom signed a memorandum of understanding with Auchan Retail Romania to continue discussions to extend the partnership for opening convenience stores in Petrom branded filling stations.

The highest dividends since 2013 The Executive Board proposed a dividend of RON 0.0270/share for 2018, up 35% compared to 2017, which involves a pay-out ratio of 38%. Compared to data published by the Bucharest Stock Exchange, where OMV Petrom is listed (ticker: SNP), this is the highest value of dividends since 2013, when it was RON 0.03/share. In conclusion, the best results of the company in the past five years open the prospect for business at least as good for the next period, especially as regards the sales of fuels, because the holiday period comes and people will travel a lot…

Choose the Flowserve SIHI equipment! Customer Trust Remains the Focus of Our Commitment Using our resources and collective experience, we support our customers, at global level, to exceed their business targets. We fulfil this promise by the careful way in which we listen to customer requests and subsequently by delivering the products and services they need. Our strengths • A business model underscoring the advantages for customers, such as: predictable/low maintenance costs and increased reliability. • The large number of customers, proof of increased productivity, optimization of equipment maintenance and repair costs, contributing to obtaining competitive positions in their markets. • We expand technological innovations whenever possible, with the aim to improve our ability to meet the needs of our customers. • We are open to new challenges and potential projects, which we will approach with the particularly successful team of Flowserve SIHI. • Starting on 14th April 2017, the name of our company has changed from Sterling Fluid Systems (Romania) to Flowserve SIHI Romania - the only official entity of Flowserve SIHI Corporation for Romania and Moldova.

Flowserve SIHI România SRL 105-107 Mihai Eminescu RO-020074 Bucharest Tel.: + 40 21 211 76 78 Fax: + 40 21 210 82 87 www.flowserve.com WIK Pump - according to API 610 (BB5) Standard

OIL & GAS

Beyond risk A different approach When we talk about risk, three alternative answers resume briefly its management: accept it, mitigate it or avoid it. The fact that risk is our partner seems somewhat unusual. But for DOWNHOLE WELLSOLUTIONS it is a belief.

veryone is aware of the risk. As humans, we see it as a threat or a potential nightmare. We decided to consider risk a keyelement and use it to design and protect future and present. DOWNHOLE WELLSOLUTIONS is not different due to its philosophy, but due to its team, certifications and capabilities. We handle risk and give it dimensions. We want to measure it. In fact, we manage risk assessment to provide risk management tools and procedures. As third-party provider, DOWNHOLE WELLSOLUTIONS provides and delivers case and risk measurement from a technical point of view for insurance companies and also prepares reports and evaluations for incidents, not only for financial institutions or insurance companies, but for all the companies involved. Our company has an insurance policy covering EUR 1.8mln on behalf of our potential clients. The DHWS team consists of renowned people from universities, as well as highly skilled and

experienced engineers. DOWNHOLE WELLSOLUTIONS is a company with 100% Romanian capital, whose aim is to investigate, assess and solve well incidents. Basically, there are two aspects in one: risk assessment and risk management. By investigating incidents, we have actually become specialists in risk investigation. And then, beyond fatality and fate, the question we ask ourselves is: what is risk? Is it only a business disturbing factor? Is it only an unavoidable cost? Is it friend or foe? Or is it a partner? We believe risk is a partner, it is unavoidable, immutable, present, but it is loyal and necessary. If you are interested and aware of the phenomenon, you will realize that it is actually the best possible controller. Managing drilling hazards requires understanding how practices and technologies can improve the risk profile and add value to demonstrate a positive balance between costs and benefits from the perspective of risk adjustment. Any risk mitigation agent should diminish the likelihood of a risk event, and the adjusted 44

cost must be financially beneficial for the entire operation. In any activity, endeavour, any type of relations, there is a risk. And the nodal point is human life that cannot be replaced or has no replacement value. In a world dominated by money and capital to make profit at all costs, people have become pragmatic and have gained the power to create, innovate, and the instinct of defence, conservation or survival, as needed. Failure to protect people or to warn of dangers is a crime. Taking frustration to high levels, education and prevention can bring added value and consistency. Human error is unavoidable, but it can be predictable and, as such, it is possible to reduce its effects through multiple barriers and filters. Assessment and, consequently, insurance are two of them. Rules, procedures, compliance with best practices and education, personal awareness and discernment are the key elements without which no process, approach or construction can safely exist. According to statistics, today, with a focus on new technologies and

OIL & GAS

equipment, the cause of incidents is in around 90% cases human error. Thus, there is a great need for the industry: a code of best practice. Together with all decision-makers in E&P companies in Romania and with the support of the responsible state authorities, we want to promote this code. Codes of best practice, once adopted, tested and mostly trained and simulated in real conditions, make this rate drop. A risk assessment in the well automatically leads to a general audit. The conclusions and recommendations relate to the selection and training of staff, to the care and attention of contracting firms in terms of: equipment, daily calorie intake, conditions created at the workplace. It is about cohesion and teamwork. The process of cooperation between young people with aspirations, needs and desires

with the older, but more experienced and inclined to wisdom, should be encouraged. Human nature governs everything. It must be taken seriously, not just in the sense of strict survival. On the other hand, beyond HSE, these carefully considered recommendations ensure the quality of operations, of work procedures and of the process of selection of subcontractors. Often, price and not quality matter in another critical point: redistribution of profit, which rarely takes into account a decent payroll level. A decent salary gives the worker a comfort zone, but also a greater degree of responsibility. This optimization (together with a permanent investment in new equipment that results in lower cost of the execution time, better quality and more safety) should be understood by shareholders as the best business

consolidation, which also ensures a steadily growing profit in the long run. Calculation of probabilities and the applied methods of risk investigation and assessment are taken from gambling. However, in the worst-case scenario, there is a risk of losing money. In our line of business, human lives can also be lost. The requirements of E&P clients must be accompanied by clear criteria to reach the targets at fair costs and in terms of maximum safety, from both a financial point of view and in terms of staff. In fact, the vision of a safe and constant profit, based on awareness, and not purely speculative, must be shared by everyone involved, according to the winwin principle. What has long been the healthiest principle has become a new approach, albeit old, in business. And, at the same time, to deal with risk.

DOWNHOLE WELLSOLUTIONS is a certified THIRD-PARTY company that evaluates the quality of in hole services for the oil and gas well operations, in order to obtain risk management insurance for the companies involved. • •

Technical evaluation of companies that want to insure downhole tools with a certified insurance company Evaluation of downhole incidents for the involved parties with reports containing recommendations and guidance

OUR MISSION is to offer customized solutions to the companies in the oil and gas industry in order to obtain risk management insurance.

,t^ ŽǁŶŚŽůĞ tĞůůƐŽůƵƟŽŶƐ

risk as partner

DOWNHOLE WELLSOLUTIONS Office: West Mall Ploiesti, 1A Vestului St., 3rd Fl. CIF 28661711; J29/1012/2011 www.dhws.ro Email: office@dhws.ro Phone: 0040-749127720 45

EXPERIENCE, PROFESIONALISM AND TECHNICAL SUPPORT • •

Competent personnel: oil and gas university teachers, field engineers and junior engineers Evaluation software containing both Risk Assessment and Risk Management factors

DOWNHOLE WELLSOLUTIONS is certified by NAMR, IADC, IWCF and in partnership with Vienna Insurance Group through Hobbit Broker de Asigurare Reasigurare SRL.

OIL & GAS

OMV Petrom signed the contract for the decommissioning of Gloria Jack-up offshore rig 46

OIL & GAS

OMV Petrom is starting the decommissioning of the Gloria offshore platform, which has reached the end of its economic lifetime limit after more than 40 years in service. It is a complex process, which will be undertaken for the first time in Romania. GSP Offshore, a Romanian company, has won the tender for removal services, with an estimated value of approximately 5 million euro.

he Gloria platform has made its full contribution to ensuring Romania’s energy supply. Its cumulated production over the last 20 years is equivalent to over 20 million car refuels and the energy for heating 170.000 homes. However, the platform has reached the end of its economic lifetime and it needs to be decommissioned. We will make every effort to carry out this process efficiently and in a safe manner. The Gloria platform will remain in the history of the offshore industry in Romania. We will continue to operate the other six offshore production platforms, which provide over 16% of the Group’s production,” said Peter Zeilinger, member of OMV Petrom Executive

Board responsible for Upstream. The company took the decision to decommission Gloria in 2018. Later in the same year, a tender was launched for the removal services which was won by GSP Offshore, a Romanian company. The decommissioning solution consists in reinstating the platform jacking system, positioning the Gloria platform on a cargo barge and transporting it to the shore.

History of the Gloria platform The Gloria platform is the first offshore drilling platform in Romania. It was commissioned in 1976 and was built based on a license from Offshore Co., USA. In 1980, the Gloria platform 47

completed drilling at Lebada 8 - which became the first commercial offshore hydrocarbon discovery in Romania. Between 1976 and 1986, Gloria operated as a drilling rig, drilling 17 wells with a total cumulated length of approx. 50,000 meters. Between 1987-1998, Gloria was used as a production platform for the first developed Romanian offshore field Lebada East. Since 1998, the Gloria platform has been in its current location, approximately 30 km from the shore, in meters water depths of around 40 meters and was used as a production platform. Current production is approx. 200 barrels per day, accounting for less than 0.15% of OMV Petrom’s total production.

ENVIRONMENT

Preem and Vattenfall partnership to produce fossil-free fuel on a large scale Vattenfall and Preem want to lead the transition towards a sustainable society. A new three-year agreement forms the foundation for increased collaboration around fossilfree hydrogen for biofuel production, electrification and electricity supply. 50

ENVIRONMENT

he agreement provides for increased collaboration be tween the companies around fossil-free hydro gen for biofuel production, electrification and electricity supply. Work on the first joint project will be intensified with ongoing preparations for fossil-free hydrogen production through water electrolysis at Preem’s refinery on the island of Hisingen outside Gothenburg. The aim is to develop a plant with a capacity of 20 MW, which would be Europe’s largest water electrolysis plant for the refinery sector. Preem is Sweden’s largest fuel producer and plays a leading role in the transition to more renewable fuels. Vattenfall is Sweden’s largest electricity generator and aims to help its customers and society reduce emissions of greenhouse gases and enable fossil-free living within one generation. “Partnerships with Preem and Swedish industry are crucial if we are to achieve success in the most important issue of our time: meeting the climate challenge. The new agreement deepens, reinforces and broadens the partnership. It gives us the potential to produce fossil-free fuel on a

large scale,” says Vattenfall’s President and CEO, Magnus Hall. “Hydrogen is an important component in our production of renewable fuels, but supplies of fossil-free hydrogen are low. The partnership with Vattenfall allows us to produce fossil-free hydrogen using electrolysis, which will increase the renewability of our fuels by a few more percent. The plant maximises the currently available grid capacity, which needs to be expanded to reach its full potential,” adds Preem’s CEO, Petter Holland. Sweden’s environmental targets mean that carbon dioxide emissions from the transport sector must fall by 70 per cent between now and 2030, which in turn means that generation of renewable fuels must increase considerably. Preem and Vattenfall have the shared goal of reducing the climate impact of the production of sustainable fuels. This makes society less dependent on fossil fuels. Preem’s objective is to produce three million cubic metres of renewable fuel by 2030, which together with direct electrification would account for the bulk of the reduction in carbon dioxide emissions in the Swedish transport sector. Preem has identified a number of strategic investment opportunities which would enable it to be less fossil dependent, with a significant contribution coming from increased electrification of the production of fossil-free hydrogen. Preem is the largest fuel company in Sweden. The company’s vision is to lead the transformation towards a sustainable society. Its two refineries are among the most modern and environmentally adapted in Europe, with a refining capacity of more than 18 million cubic meters of crude oil per year. Preem business encompasses production, sales, distribution, trading and goods supply. The company refines and sell petrol, diesel, heating oil and renewable fuels to companies and consumers in Sweden and Norway. Around two-thirds of its production is exported. It also has a nationwide service network with some 570 fuel stations for private and commercial traffic. 51

PETROTEL-LUKOIL

115 years of challenge

and energetic

change!

235 St. Mihai Bravu 100410 Ploiesti Romania Tel: +40 (0)244 504 000 office@petrotel.lukoil.com www.petrotel.lukoil.com/ro www.facebook.com/rafinariaPLK

ENVIRONMENT

MOL Romania, extension of the WEEE collection activity MOL Romania has become a Recycling Patrol Supporter - the national environmental education program that promotes the selective collection of waste electrical and electronic equipment (WEEE) as a responsible gesture to the environment. The company has created collection points for waste batteries and small electrical waste in 210 stations in the country, in order to support the responsible collection of these types of waste. This extends the national network of collection points.

ne can bring to MOL filling stations portable batteries and accumulators, energy saving light bulbs, small electrical waste. Moreover, MOL employees are also involved in the program. Thus, they have received small boxes in which they will collect the batteries, and when they need to dispose of unnecessary electrical appliances from home, they will call TelVerde 0800 444 800. “MOL Romania is a traditional partner of communities and also an actor actively involved in programs and actions that promote eco-education. We are glad that by participating in this program, we can provide our customers with convenient and easily accessible

options for collecting waste electrical and electronic equipment (WEEE). Recycling is the right way to keep the environment clean for the benefit of future generations. MOL Romania is involved in actions that contribute to the creation of a better and cleaner environment and will continue to be involved in ecological and environmental protection actions,” MOL Romania representatives say. “The 2018-2019 edition is the ‘Supporters’ Edition’. MOL brings a new boost to this community of companies and institutions in the public and private sector and millions of people who understand that we cannot wait any day without doing everything in our power to reduce pollution, and concern for recycling of electrical waste is a priority 52

in this context,” says Ada Lungu, PR Editor of the program. The partnership with MOL Romania helps the Patrol get closer to a new record - 5,000,000 kg of electrical waste sent to recycling from the start of the program in 2011, and also the objective of the current edition - to contribute to the collection of at least 100g of WEEE/capita. It is the objective that the Recycling Patrol has set for this edition, which coincided with the Centenary 100g of WEEE at 100 years. MOL Romania currently owns 215 stations, 2 fuel tank farms, in Giurgiu and Tileagd and an LPG terminal in Tileagd. Starting with 2017, MOL Romania has been part of the NEXT-E project, aimed at installing 40 charging stations for electric vehicles.

ENVIRONMENT

New protocols on hazardous waste A

Romanian delegation participated during April 29 - May 10 in the meetings of the 14th Basel Convention Conference of the Parties on the control of transboundary movements of hazardous wastes and their disposal, the Ninth Conference of the Parties to the Stockholm Convention on persistent organic pollutants and the Ninth Conference of the Parties to the Rotterdam Convention on the prior informed consent procedure applicable to certain hazardous chemicals and pesticides subject to international trade. These conferences have been attended by states parties to the Conventions, states that want to adhere to them, international organizations such as UNEP, UNIDO, UNDP and international NGOs. In the context of the Presidency of the Council of the European Union, Romania has coordinated the common position of the 28 Member States. The Romanian delegation was led by Róbert Szép, deputy general commissioner at the National Environmental Guard, and was composed of specialists from the institutions responsible for implementing the provisions of the Conventions and the Permanent Mission of Romania in Geneva. The main topic of the meetings was ‘Clean Planet, Healthy People: Sound Management of Chemicals and Waste’ and the meetings included joint sessions covering issues relevant to at least two

separate conventions and sessions of the meetings of each of the three COP’s. The Basel Convention regulates the control of transboundary movements of hazardous wastes and their disposal. The theme on the COP14 Basel agenda that raised the highest interest concerns marine pollution with plastics and microplastics. During the plenary session within which this topic was addressed, more than 80 delegations had interventions to highlight the importance of this issue. To this end, COP14 aims to identify and adopt solutions agreed by the 187 Parties to the Convention on the environmentally sound management of plastic waste and to strengthen the control of international movement of these wastes. COP14 Basel has adopted technical guidelines on: environmentally sound management of hazardous waste and other wastes, the management of wastes containing or contaminated with persistent organic and mercury pollutants, household waste management, as well as measures to better apply the provisions of the Basel Convention. The Stockholm Convention on Persistent Organic Pollutants (POPs) is an international treaty aimed primarily at protecting human health and the environment against persistent long-term chemicals in the environment, widespread in geographical areas that accumulate in the food chain. The Stockholm Convention was ratified by Romania, as a Party state, by Law 261/2004 for ratification of 54

the Convention on Persistent Organic Pollutants, adopted in Stockholm on May 22, 2001. The works of the Ninth Conference of the Stockholm Convention also took place during April - May 2. Decisions to include DICOFOL and PFOA in Annex A, decisions to include PFOS in Annex B, with specific exceptions for production and use, have been approved within it. Developing countries have requested technical and financial assistance to strengthen development capabilities for the ecological management of those substances, identification and use of alternatives. Also, the Convention Secretariat has presented reports on its implementation. The decisions were discussed and adopted in the Plenary session following discussions in the contact groups (Group on listing chemicals; Group on compliance mechanism, Group on technical assistance/financial resources). According to the agenda of the Conference of the Parties 2019 (COP9), the debates on the themes of the Rotterdam Convention were held in the last part, so the period reserved for them was May 7-9, 2019. After 15 years of attempts to find consensus among the Parties, a historic decision was made on May 8, 2019 (9th day of the COP9 debates) representing the first COP vote in the 20-year history of the Rotterdam Convention, thus adopting the new annex on compliance procedure and mechanism.

Organised by:

3rd Annual International Summit and Exhibition 7–8 November 2019, Belgrade, Serbia

300+ decision-makers of hydropower plants, investors, project initiators Among the participants 2018: Andrei Petrișor Maioreanu,

Bogdan-Nicolae Badea,

Zeljko Kovacevic,

State Secretary,

President of Management Board,

General Director,

Ministry of Energy of Romania

HIDROELECTRICA

Elektroprivreda Republike Srpske

Ivan Trpeski,

Christopher Millward,

Jaap Sprey,

Director for Development and Investment,

Head for Europe, Middle East and North Africa,

Head of the Office,

ELEM

MIGA

EBRD

SUMMIT HIGHLIGHTS 2019: • Strategic plenary session: What are mid- and long-term hydropower development strategies in the Balkan countries? What are challenges and opportunities for hydropower industry development? • SPECIAL FOCUS! Updates and the latest information on major projects for HPPs construction and renovation in the Balkan region within 20202025 implementation period • Case studies from companies successfully carrying out the construction, modernisation and operation of HPPs across the region Bronze sponsor 2018:

• Exclusive exhibition: innovative solutions and equipment in the context of greenfield and brownfield development • ROAD SHOW: Innovative technologies and equipment for hydropower development • Unparalleled networking opportunities: gala dinner, exhibition, champagne roundtables, and face-to-face meetings

Among participants 2018:

Request more information: www.hydropowerbalkans.com events@vostockcapital.com +44 207 394 30 90 +7 495 109 9 509 55

CONSTRUCTION

Energy efficient buildings How healthy it is to live and work in Romania

Spiru Haret University Pro Business (Bucharest) hosted, on May 10, an international event on the quality of houses we live in and how we can live healthier if we are concerned with the alignment of housing and building style of the modern man, responsible for both his own health and the impact of buildings on sustainable development.

rganized together with Zero Energy associ ation, the seminar was an opportunity for academic presentations and communications, as well as of presentations of the business environment in the construction field in relation to modern housing. Both the concept of nearly zero energy buildings (nZEB) and that of active house have been presented. While the former is more focused on reducing up to elimination greenhouse gas emissions from the use of buildings and using green energy, the second, much broader, is aimed at more radical changes in the design of buildings, the materials used, integrating them into the environment

of solutions and technologies that bring healthier living in the house. One of the conclusions of the debates was that there is currently insufficient education of Romanians on the advantages of such buildings, including human health, which is why demand is low and does not stimulate such supply of national or international producers. “We are in the same vicious circle met in other national markets of avantgarde products of paradigm shift towards ecology and bio-economy based sustainability, new principles that place human health and balance with nature at the heart of society’s concerns. On the one hand, educational shortcomings persist at the level of people, consumption. On the other 56

hand, entrepreneurial attitude adapts and stimulates these shortcomings in the desire to gain immediately and easier. USH Pro Business remains consistent with the idea of practice communities, clusters, alliances and collaborative platforms that can trigger more accelerated processes of changing attitudes towards these sustainable development goals that, in fact, Romania has assumed as a member state of the European Union”, said Costin Lianu, Director General of USH Pro Business. USH Pro Business is a center spe cializing in activities dedicated to the entrepreneurial environment, being designed to support companies and provide solutions to sustain com petitiveness across all their lifecycles.

Kraftanlagen Romania S.R.L. was founded in 2007 as a subsidiary of the German company Kraftanlagen MĂźnchen GmbH and expanded its local services successfully in 2014 with KAROM Servicii Profesionale in Industrie S.R.L. and in 2016 with IPIP S.A. We engineer, design and build complex piping and plant systems for the chemical and petrochemical industry. Our technical competence covers also requirements for new plants and maintenance for refinery, extraction & production and industrial plants. The range of our solutions: Feasibility, process studies Basic design and front end engineering design Multidisciplinary detailed engineering Technical documentation for authorities Project management Technical assistance for commission, start-up, test run, guarantee test Supply and installation of all pipelines and brackets Basic and precision installation of all components, such as devices, columns, pumps and compressors Steel construction Installation of cracking and reaction furnaces Tank farm construction System integration, operating checks and commissioning Plant revisions Pipeline and bracket corrosion protection Insulation Scaffolding

CONSTRUCTION

100 thousand tons of PVC waste buried annually in Romania TeraPlast Group, the largest Romanian manufacturer of construction materials, invested EUR 4 million in the recycling business line during 2017-2018, and from April 2019 it was transferred to TeraPlast Recycling. At the end of 2018, the group concluded with E.ON Energie an agreement worth EUR 2mln for energy efficiency solutions.

Text by Daniel Lazar 58

CONSTRUCTION

he company has recently received the visit of Deputy Prime Minister & Environment Minister Gratiela Leocadia Gavri lescu, who has held talks on sustainable development. One of the items of discussion of the meeting was compliance with the environmental legislation and sorting PVC waste. Most waste from demolition and construction reaches the environment. “Unfortunately, approximately 100.000 tons of post-consumption PVC are buried in Romania annually, waste coming from demolition in construction. For 2019, in Romania we expect a similar volume of collected waste as in 2018,

amid issues of compliance with the environmental legislation faced especially by the construction market in terms of waste management. It means that we will be forced to import over 7,500 tons of rigid PVC waste. If only 15% of the total PVC waste coming from construction were collected in Romania, meaning 15,000 tons, we wouldn’t be forced to import waste from abroad. During today’s meeting, I have seen the desire of the Ministry of Environment to take legislative measures in the field and we hope that their implementation will have effects in the near future,” said Dorel Goia, Chairman of the Board of Directors of TeraPlast. Over 61 million tons of construction waste are generated annually in Europe.

At 1,000 tons of waste, 5 tons represent PVC waste. In 2018, TeraPlast recycled over 5,000 tons of rigid PVC waste, with more than half of it coming from abroad, the factory having a processing capacity of 12,000 tons per year. Over the past 2 years, it has invested over EUR 6mln in this direction and it takes important steps each year to reduce the carbon footprint through energy efficiency and increasing the quantity of materials recycled. Minister Gratiela Gavrilescu has stated that the Ministry of Environment planned to take measures with regard to the environmental legislation and waste sorting, through consistent projects that will meet the Romanian businesses and contribute to responsible development.

E.C.P.M.C. - CONSULT & LEARNING Providing safety and security E.C.P.M.C. - Consult & Learning services •

•

In addition to the aforementioned, E.C.P.M.C. executes projects relating to the protection of objects, goods and valuables against any unlawful actions infringing upon the right to property, their material existence, and the protection of individuals against any hostile acts.

In accordance with NEx 01-06 requirements for installations and equipment operating in potentially explosive atmospheres - related documentation for submission to INSEMEX Petrosani and onsite examination of technical installations, aiming at the prevention of explosions; Design of signalling, alarm and fire alarm systems and installations; - Design of systems and installations for limiting and extinguishing fires; - Design of ventilation systems and installations for the disposal of smoke and hot gases, except those of natural-organized type, according to the authorizations: Series A No.: 7261, 7262,7263 of 31.07.2017, for an unlimited period, issued by IGSU - the National Centre for Fire Safety and Civil Protection, according to the legislation in force.

E.C.P.M.C. - Consult & Learning is recommended by INSEMEX Petrosani - the national authority in the field. Together with its experts is certified by INSEMEX with the Certificate no. GANEx.Q.2016. (01). 12.0026 and NVIV 01-06/2007, according to the Amendment no. 1/8947/22.09.2017. E.C.P.M.C. holds the economic operator code (NCAGE: 1GYEL) in accordance with the procedures of the NATO Coding System No. 2124 based on Government Decision no. 4445/2003 for the approval of ‘Rules on the organization and conduct of coding activity for defence equipment items.’

Keep your business safe from fire with ECPMC Consult & Learning 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

POWER

Prices in Romaniaâ&#x20AC;&#x2122;s energy industry on the rise by 13.8 per cent In Romania, overall industrial producer prices (domestic and non-domestic) increased by 5.2% in March 2019 compared to the same month of the previous year, according to data from the National Institute of Statistics (INS). In the analysed period, industrial producer prices (domestic and non-domestic) went up 0.8% compared to February 2019. At the level of industrial producer prices, on the domestic market there is a 6.6% growth in March 2019 vs. March 2018, and for the non-domestic market industrial producer prices rose, in March 2019, by 2.9% compared to the similar period of the previous year.

Text by Daniel Lazar

n large industrial groups, in March 2019 vs. March 2018, INS statistics show price increased in the energy industry (+13.8%), in the intermediate goods industry (+3.8%), in the durable goods industry (+3.09%), in the current use goods industry (+2.9%) and in the capital goods industry (+1.5%).

On NACE sections and divisions, in March 2019 compared to March 2018, in the extractive industry there was an increase in prices by 16.4%, in the production and supply of electric and thermal energy, gas, hot water and air conditioning - by 14.04%, in water distribution, sanitation, waste management, decontamination activities - by 6.4% and in the manufacturing 60

industry - by 3.3%. In March 2019 compared to the similar period of 2018, prices of products coming out of the gates of plants were up 3.1% in the European Union (EU) and by 2.9% in the euro area, among the member states the first place being held by Romania, where industrial producer prices grew by 6.7% year-on-year, according to data published by Eurostat.

POWER

Industrial producer prices on the domestic market 2015=100

110 Euro area total industry

EU28 total industry

Euro area total industry excl. energy

EU28 total industry excl. energy

105

100

The situation in the EU In March 2019, compared with February 2019, industrial producer prices fell by 0.1% in the euro area (EA19) and rose by 0.1% in the EU28, according to estimates from Eurostat, the statistical office of the European Union. In February 2019, prices increased by 0.1% in the euro area and by 0.2% in the EU28. In March 2019, compared with March 2018, industrial producer prices rose by 2.9% in the euro area and by 3.1% in the EU28 monthly comparison by main industrial grouping and by member state. Industrial producer

prices in the euro area in March 2019, compared with February 2019, fell by 0.5% for the energy sector, remained stable for non-durable consumer goods, and rose by 0.1% for both capital goods and durable consumer goods and by 0.2% for intermediate goods. Prices in total industry excluding energy remained stable. In the EU28, industrial producer prices rose by 0.2% for intermediate goods, by 0.1% for capital goods, durable consumer goods and non-durable consumer goods, while prices in the energy sector remained stable. Prices in total industry excluding energy rose by 0.2%. The largest decreases in industrial producer prices were recorded in Denmark (-1.6%), Cyprus (-1.2%) and Estonia (-0.8%), while the highest increases were observed in Greece (+1.1%), Luxembourg and Romania (both +0.8%). 61

03-2019

12-2018

09-2018

06-2018

03-2018

12-2017

09-2017

06-2017

03-2017

12-2016

09-2016

06-2016

03-2016

12-2015

09-2015

06-2015

03-2015

12-2014

09-2014

06-2014

03-2014

12-2013

09-2013

06-2013

03-2013

12-2012

09-2012

06-2012

03-2012

12-2011

09-2011

06-2011

03-2011

12-2010

09-2010

06-2010

03-2010

Annual comparison by main industrial grouping and by member state Industrial producer prices in the euro area in March 2019, compared with March 2018, rose by 7.8% in the energy sector, by 1.5% for both capital goods and durable consumer goods, by 1.3% for intermediate goods and by 0.1% for non-durable consumer goods. Prices in total industry excluding energy rose by 1.0%. In the EU28, industrial producer prices rose by 8.2% in the energy sector, by 1.7% for intermediate goods, by 1.6% for durable consumer goods, by 1.5% for capital goods and by 0.5% for non-durable consumer goods. Prices in total industry excluding energy rose by 1.3%. Industrial producer prices rose in all member states, with the highest increases recorded in Romania (+6.7%), Belgium (+6.4%), Latvia (+6.1%) and Hungary (+5.5%).

POWER

Nuclearelectrica to continue the project of Units 3 and 4 of Cernavoda NPP with Chinese partners N

uclearelectrica (SNN), China General Nuclear Power Corporation and CGN Central and Eastern Europe Investment have signed the Investors Agreement in preliminary form in order to continue the Project of Units 3 and 4 of Cernavoda NPP. The signing ceremony took place in the presence of Deputy Prime Minister Viorel Stefan, Romanian Energy Minister Anton Anton, His Excellency, Ambassador of the People’s Republic of China to Romania, Mrs. Jiang Yu and Mr. Guan Gang, Economic Counsellor of the Embassy of the People’s Republic of China in Romania. The Investors Agreement in preliminary form was approved by SNN shareholders in the General Meeting of Shareholders held on April 10, 2019. CGN has also completed the internal approval process. Signing by the parties involved in the continuation of the Project of Units 3

and 4 of Cernavoda NPP of the Investors Agreement in preliminary form according to the Revised Strategy represents an essential stage of the selection process launched in 2014, from a technical and operational point of view. The Investors Agreement in preliminary form provides for setting up the joint venture company (JVCO), having the limited purpose of being the technical and operational platform for the subsequent development of the Project. The deadline for setting up the JVCO is 60 working days since the signing date of the Investors Agreement in preliminary form (May 8). JVCO is a joint stock company, established under the Companies Law No. 31/1990, and will have an initial duration of 2 years. CGN’s stake in the project company will be 51% and that of SN Nuclearelectrica SA - 49%. “Achieving a consensus in the negotiation process, mutually beneficial for both parties, materialized in the 62

approval by SNN shareholders of the Investors Agreement in preliminary form, actually means the actual start of concrete measures for the continuation and development of Units 3 and 4 in Cernavoda. Throughout the initial duration of the project company of 2 years, we will also define and structure the model for the continuation of the project, being basically the first essential stage preceding the construction of the two Units,” Energy Minister Anton Anton said. The representative of CGN, Mr. Bian Shuming, has highlighted that signing the Investors Agreement in preliminary form marked a new stage of development of the bilateral cooperation between CGN and SNN. CGN has shown its firm commitment for the successful development of the future stages of the project, in line with the agreed principles, within the good cooperation already established with the Romanian partner.

World Conference for Inspection and Maintenance Robotics 2019 The global Inspection & Maintenance Robotics community will gather in Rotterdam for the second edition of the World Conference for Inspection and Maintenance Robotics.

22-23 October 2019 De Doelen Rotterdam, The Netherlands

The conference will focus on the use of robotics for Inspection, Maintenance, Repairs and Cleaning in the following industry segments: Oil and Gas Road & Rail Chemical Public & Civil Infrastructure Energy Ports & Maritime Infrastructure Aerospace Water Infrastructure

Join us and register now: https://www.sprintrobotics.org/conference/ 63

POWER

Energy efficiency, large-scale challenge in the EU Text by Daniel Lazar

rimary energy consum ption and final energy consumption in Romania increased in 2017 compared to the previous year by 5.7% and 4.2% respectively. These growth rates were however lower than the economic development rate, GDP increasing by 7% (compared to 2% the average value in the EU). It obviously results that this increase in energy consumption was determined by the economic development at national level and was achieved in conditions of energy efficiency growth. Romania has the lowest value of primary energy consumption per capita among the 28 EU Member States (1.648 toe/capita in 2017), almost twice lower than the EU-28 average in the same year (3.052 toe/capita). In Romania, energy consumption per capita in the household sector recorded in 2017 accounted for 69.6% compared to the EU-28 average. Differences from the Nordic countries are normal, given the differences in climatic conditions. However, there are also differences from countries with similar or even milder geoclimatic conditions (Italy, Slovenia, Croatia etc.). These are only some of the conclusions of the presentation of ANRE representative Irina Nicolau, within the XIII edition of the Conference ‘Energy

efficiency, a prerequisite for sustainable development’, organized by Meda Consulting, on May 15, in Bucharest. The event enjoyed the support of ANRE, CRE, ACUE, ESCOROM, ARPEE and AFEER, as Official Partners, together with Energy Industry Review, Media Partner of the event. Also attending the conference with presentations were: Zoltan Nagy-Bege (ANRE VicePresident), Corneliu Bodea (CRE President), Ionut Purica (Energy and Environment Expert, Romanian Academy), Oana Gulei-Gradinaru (NGVA Romania), Laurentiu Dinu (Managing Partner EU Advisors), Mihai Moia (Executive Director, ROENEF Association), Andrei Ceclan (Energy Auditor, Servelect), Silvia Vlasceanu (Executive Director, ACUE), Dorin Branzoi (Technical Manager, Guard One). The data adapted from studies and prepared by International Energy Agency and JRC (2017) for EES companies in the EU describe the existing situation and make recommendations for the future market development, with a focus on energy performance contracting. The value of ESCO global market increased in 2017 by 8%, to USD 28.6bn. In 2016, the respondents of JRC survey (Energy Service Companies in the EU, 2017) estimated an investment potential of around EUR 780 million per year for the 64

entire RO ESCO market (in the public and private sectors). The legal framework for energy efficiency services in Romania has a number of shortcomings: lack of EPC model (EE, LV, MT, SE, RO); lack of specific procurement procedure in SEAP; lack of definition of the legal regime and the right of ownership over the goods within the EPC; lack of clarity of the situation and modality of VAT payment; lack of procedure to register energy savings in accounting; lack of specific standardized methods (Baseline; M&V, Calculation and result evaluation etc.); lack of certified specialists (there are only in ES, FR, UK, IE, PT). The barriers met in Romania, identified by Carmen Pavel (ESCOROM) include: complexity of the concept/lack of information; lack of confidence in the ESCO industry; low energy prices; administrative barriers in the public sector; lack of government support - regulations and fiscal policies; programs for energy efficiency investments; existence of funding programs (POR; LIOP etc.). Of course, there are also favorable factors: the installation of smart metering to consumers; increasing the share of energy management systems in industry; implementing remote monitoring platforms.

Just START Subscribe now, it’s only € 60 for 1 year! Why subscribe to Energy Industry Review? Stay informed and keep in touch with Romania’s and the regional energy community. We will take you on a journey with interviews, analyses, various points of view, technical and innovative solutions & ideas to grow and expand your business. Why advertise in Energy Industry Review? You will get featured on the desk of the most important company representatives. The market will know what you do and who you are! E: office@energyindustryreview.com P: +40 (0)344 143.530

ITMA: Smart, efficient compressed air solutions for the textiles industry Kaeser Kompressoren proudly celebrates its 100th birthday in 2019 and, to mark this anniversary, will be showcasing the full extent of its expertise in the field of compressed air production and treatment at this year’s ITMA. A host of innovations will be on show under the theme of ‘Tradition and Innovation’, demonstrating not only the most reliable, efficient and cost-effective compressed air supply solutions available, but also the increasing importance of ‘Industrie 4.0’ for the textiles industry.

igh-efficiency compres sors, economical air treatment systems, smart engineering and intelligent services are just some of the highlights that demonstrate what a modern, demand-oriented compressed air supply can look like when combined with expert planning. You can even take a look into the future: using Smart Engineering station simulations, it is possible to see how the compressed air system will perform when fully operational even before it has been built. Furthermore, the new Sigma Smart Air service shows how servicing and maintenance works in the age of ‘Industrie 4.0’: Sigma Smart Air combines remote diagnostics with data-led predictive maintenance - a comprehensive, worry-

free service package that not only saves the user both time and money, but which also ensures maximum compressed air availability. At the core of this futuristic concept is the Sigma Air Manager 4.0 in combination with the Sigma Network. This intelligent master controller and the high-performance, self-contained network are the perfectly-matched prerequisite components for Kaeser’s ‘Industrie 4.0’ package. Efficiency, in every sense of the word, is a key priority at Kaeser, as is the company’s commitment to responsible use of resources. To this end, all frequencycontrolled rotary screw compressors will now feature a synchronous reluctance motor, which ensures lower losses particularly in the partial load range - than an asynchronous motor and is therefore 66

significantly more efficient. With flow rates from 1.1 to 17.5 m³/min, the CSD/CSDX series is the next machine range to follow in the footsteps of the ASD series by boasting up to 10% improved efficiency and entry into the world of minimal energy costs. Should you require a dependable supply of quality compressed air using oilfree compression, then look no further than the FSG rotary screw compressor range. Together with i.HOC rotation dryers, these versatile compressors are not only highly efficient and economical, but are also able to deliver stable pressure dew points down to -30°C. With available drive powers from 7.5 to 45 kW, Kaeser’s innovative boosters are the perfect choice for applications requiring higher pressures (up to 45 bar). Compact, space-saving, low-vibration and super-

Maximum efficiency thanks to optimum tuning: CSD rotary screw compressor variants with frequency control are available with a highly efficient synchronous reluctance drive system.

FSG rotary screw compressor + integrated i.HOC rotation dryer: oil-free compression for quality compressed air and stable pressure dew points down to -30 °C.

Both the portable and stationary versions of the i.Comp offer practical and convenient solutions for The new DSD rotary screw compressors impress with their significantly improved efficiency. trades applications.

quiet; they are ideal complete systems and are also offered as frequency-controlled versions. Needless to say, Kaeser Kompressoren also offers a comprehensive range of compressed air solutions for smaller compressed air requirements. i.Comp family reciprocating compressors are robust, powerful, compact, maintenancefriendly, highly efficient and much more besides: as one would expect, i.Comp machines are manufactured to Kaeser’s renowned industrial quality standards and are also available as space-saving ‘i.Comp Tower’ all-in-one variants. These

compact systems represent a completely new compressed air supply concept that was specifically created with smaller compressed air demands in mind. Furthermore, Kaeser Kompressoren is proud to announce expansion of its highly successful Secotec range of refrigeration dryers with the introduction of its latest innovation: the TG.2 series. Designed to provide application-tailored compressed air treatment for flow rates up to 98 m³/min, these next-generation dryers feature completely new thermal storage technology. All Kaeser Secotec refrigeration dryers are manufactured to 67

assure maximum efficiency and energy cost savings. They are also charged with the new R 513A refrigerant, which means that these machines are future-proof for the duration of their service life regarding compliance with applicable fluorinated hydrocarbon emissions regulations. 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

POWER

Electrogrup to launch its Smart City division Electrogrup will launch a special division, dedicated to Smart City projects, which consolidates the capacities and resources of companies within E-INFRA holding, in order to become leader of the Romanian market for solutions in the field.

â&#x20AC;&#x153;We aim to become the largest supplier of Smart City solutions in Romania, and our beneficiaries are the inhabitants of all localities in the country, irrespective of the size, open to the implementation of such projects.â&#x20AC;? Dragos Nedelea - Business Development Director Smart City

POWER

he future of the global economy relies on cities as growth poles, and cities of the future will be based on smart infrastructure - Smart Cities. Implementing Smart City solutions is primarily based on infrastructure components, and Electrogrup is, in essence, an infrastructure company, among the few operating with full Romanian capital. Our ambitions to become a regional champion involve our direct, consistent presence in a segment with a beautiful and certain future - Smart City,” says Adrian Florea, Chief Executive Officer, Electrogrup. Thus, Dragos Nedelea joins the Electrogrup team as Business Development Director Smart City. Previously he held the same position within Telekom Romania, laid the foundations of the department of services dedicated to the public sector within Deloitte Audit Romania and worked at the Public Procurement Coordination and Verification Unit of the Ministry of Public Finance. The new division also includes Corina Palos, as Bid Manager, and Costin Constantin, as Business Development Manager, both with significant previous experience in the implementation of Smart City solutions within Telekom Romania, as well as within other integrators. “We aim to become the largest supplier of Smart City solutions in Romania, and our beneficiaries are the inhabitants of all localities in the country, irrespective of the size, open to the implementation of such projects. We will not limit to implementing punctual solutions, but we plan to generate smart regions and common platforms, which will integrate solutions across multiple verticals. Moreover, it is all based on open standards, without limiting to a single type of technology, to ensure a successful integration of all solutions,” Dragos Nedelea points out.

Most important projects Smart City expertise within E-INFRA includes, so far, several projects implemented by companies within the group, such as smart video surveillance, in Cluj-Napoca (Electrogrup), air quality monitoring and the illegal parking monitoring system in Alba Iulia (Direct One), Smart Energy and Smart Metering solutions (Nova Power & Gas), as well as the utility network management system developed for the metropolitan optical fibre network in Bucharest (NetCity). Due to the important component of civil works and integration, the Smart City division becomes an integral part of Electrogrup, which will operate as a pole for projects of this type for the entire group. “The future of the global economy relies on cities as growth poles, and cities of the future will be based on smart infrastructure - Smart Cities able to attract talent and ensure a high level of quality of life. Our vision is to be the facilitators of this development. E-INFRA is the best-positioned group to support the development of cities in Romania, through the infrastructure and solutions needed to transform them into Smart Cities,” Daniel Farmache, Chief Executive Officer, E-INFRA, concludes.

About E-INFRA Starting with 1997, Electrogrup has been providing and supporting longterm partnerships for infrastructure projects, providing energy, telecommunications and construction infrastructure services. Electrogrup is part of E-INFRA, a group of five companies active in the field of energy and telecommunications infrastructure, together with NetCity Telecom, Direct One, Nova Power & Gas and WESEE, which currently bring together over 600 employees and generated a consolidated turnover, at the level of 2017, of over EUR 100 million. 69

Temporary solutions for on-site steam generation Complete and safe solutions including all required accessories and 24/7 service. Contact us 24/7 +40 728 500 607 www.atlascopcorental.com

RENEWABLES

Modernizing the regions dependent on coal mining Up to 8,000 specialists to bee retrained 70

RENEWABLES

SIGMA AIR MANAGER 4.0

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

KAESER SIGMA SMART AIR

Industry 4.0 DIGITAL TWIN INSIDE

Ready for Industry 4.0

ENERGY EFFICIENCY

development of human resources in the energy sector we are strengthening our involvement in the formation of new generations of specialists. Along with the Electrician Apprentice program, carried out in high schools, and partnerships with Romanian universities, the project run together with RWEA responds to an industry problem which also has a strong social impact,” says CEZ Romania CEO Ondrej Safar. RESS Center - Renewable Energy School of Skills, in Constanta, which will be ‘cloned’ in Jiu Valley, has so far trained about 4,500 persons, at international standards (it is a member of GWO - Global Wind Organization), figure which includes those that standards oblige to come to training each year for certain specializations. They currently ensure not only the maintenance of the 3,000 MW installed in wind power parks in Romania, but also outside it, developing a new concept and term, of wind energy navigators. “Over 95% of specialists in renewable energy - mainly wind energy - from Romania carry out project-based works abroad and return monthly in Romania, generating revenues way above the average of areas they come from,” says Sebastian Enache, Development Director, Monsson. “The labour force demand in the electricity distribution field in Romania is another target of the project, by establishing in Tg. Jiu and Craiova, to support miners in the two areas, training and retraining centers for professionals in this field, with the involvement of CEZ Romania. During the 10-year project implementation period, we aim at retraining about 3,000 miners into electricity distribution professionals,” he adds. In the development of this project, RWEA, Monsson - RESS and CEZ Romania have found open partners in the Ministry of Energy and the Petrosani University and this is encouraging for establishing the Academy as soon as possible and to overcome the challenges of energy transition and energy sector modernization in Romania.

PREDICTIVE MAINTENANCE

he wind energy industry, through the Romanian Wind Energy Association (RWEA), proposes an ambitious training and re-training project for persons in areas dependent on the coal-fired energy production sector. RWEA, together with its member companies, such as Monsson - RESS and CEZ Romania, the Ministry of Energy and Petrosani University plan to open an Academy for Renewable Sources and Electricity Distribution in Jiu Valley. The academy aims to access available funds through the Platform for Coal Regions in Transition, given that during the 10-year implementation period of the project, it is intended to retrain approximately 5,000 wind energy specialists and 3,000 electricity distribution specialists per year, for a total of up to 8,000. The technical and professional skills of technicians in the mining sector are easily transferable to the renewable energy and energy distribution sectors, and certifications obtained following training and retraining courses will enable them to work in the installation, operation and maintenance of renewable projects and electrical networks from all over the world, with attractive salary benefits. “At a time when barriers to energy transition have ceased to be economic in nature, it becomes clear that this transition must be just and equitable in order to be accepted by the whole society. And Romania has not only a significant potential for increasing the share of energy produced from renewable sources, but also the responsibility to ensure a future of the mining-dependent community that has contributed over time to the industrialization of the country. A successful energy transition includes modernizing the economy of regions dependent on coal mining and adapting to structural and technological changes, in order to ensure a future for communities in these regions,” says Claudia Brandus, RWEA President. “Through this new project for the

RENEWABLES

Prosumerâ&#x20AC;&#x2122;s Guide All you need to know to become a prosumer The Prosumerâ&#x20AC;&#x2122;s Guide, an energiaTa initiative with Engie Romaniaâ&#x20AC;&#x2122;s support, is now available online, providing all stakeholders with useful information on how to become a prosumer (energy producer and consumer), on energiaTa and engie.ro websites.

s of January 1, 2019, Romanians can produce and inject into the grid energy produced by sun and captured by means of a photovoltaic panels system. It turns energy produced by the sun

into electricity needed to cover own consumption, and the energy surplus produced can be sold to one of the accredited electricity suppliers, at a price of RON 0.223/kWh. The advantages of solar energy production are multiple, both in view 72

of non-polluting environmental impact and savings in electricity bills. Thus, throughout the amortization of the initial investment, estimated at approximately 7 years, savings in electricity bills are significant, and at the end of this period energy production costs are eliminated,

RENEWABLES

the prosumer being even in the situation of getting money for the electricity surplus produced and injected into the grid. Moreover, the installation of photovoltaic panels also contributes to the increase of the market value of the building where they were installed. Solar energy is also a very good solution for the quick connection of remote buildings. To stimulate the development of photovoltaic panels, in the following period, the Environment Fund Administration (AFM) will grant financing incentives to beneficiaries, within the limit of RON 20,000 and, respectively, RON 25,000 in the case of remove homes. Eligible expenses to benefit from financing are the purchase of panels, the inverter, connection materials, the system installation structure and the power board, the communication module and the smart meter. To be able to access financing from AFM, applicants may resort to the services of an approved installer in the county of origin, and the analysis committee within the institution will publish the list of approved projects. Applicants have 90 days available to obtain the construction permit and can implement the project within 8 months. Launching the Prosumer’s Guide took place on May 24, 2019, within an event attended by 100 prosumers, installers, equipment providers, energy distributors and authorities. The step is part of the energiaTa program, an educational and awareness program launched three years ago, with the goal of facilitating the creation of a community of prosumers in Romania. energiaTa currently has over 5,000 members across the country. “After 3 years of efforts with energiaTa, as of January 1, 2019 Romanians can finally sell solar energy into the grid, and our initial mission has been accomplished. Our goal now is the first million of prosumers, and to accelerate transition to an economy based on clean energy, we have drawn up the Prosumer’s Guide, which helps Romanians understand what solar energy is, what solar panels do, what is the procedure to become a prosumer, what they need to pay attention to before purchase and after, during the operation period,” said Mihai Toader-Pasti, co-founder of energiaTa and Guide Coordinator. “One thing is certain: the way we produce and consume energy is in constant change. More and more consumers will choose energy autonomy and so will become producers. Engie has integrated this direction in its strategy. Thus, we are glad to support efforts to raise awareness of the multiple, economic and environmental benefits of green energy solutions,” said Eric Stab, President and CEO of Engie Romania. “Romania is paving the way for decentralized production of energy by households. At the initiative of the passionate youngsters of the NGO EFDEN, who already achieved outstanding results at the International Solar Decathlon, I was delighted to take part in the launch, on behalf of Engie, of Romania’s most helpful prosumers’ guide. The interest for rooftop PV is significant and Romania’s energy future is green!” Eric Stab added. “Responses to the crisis on energy security, climate change and social inequality will come from the technological revolution and 73

“After 3 years of efforts with energiaTa, as of January 1, 2019 Romanians can finally sell solar energy into the grid, and our initial mission has been accomplished. Our goal now is the first million of prosumers, and to accelerate transition to an economy based on clean energy.” Mihai Toader-Pasti, co-founder of energiaTa and Guide Coordinator.

digital revolution. Prosumers are a necessity in this transition to renewable electricity,” said Iulian Iancu, President of the Committee for Industries and Services. “There are currently about 70 prosumers connected with as many sale-purchase contracts,” said Gabriela Munteanu Head of the Technical Regulations Service, Romanian Energy Regulatory Authority (ANRE). “I can say that there are about 270 installers at national level who can implement the photovoltaic panels program. An internal procedure will follow, between AFM and the Ministry of Development, which is currently uncompleted. Later, we will be able to outline the deadlines for starting the program and present a timetable. Currently we are unable to announce exact deadlines,” said Cornel Brezuica, President of AFM, on the date of launching the guide.

RENEWABLES

Renewable energy ready to go a step further without subsidies The renewable energy sector is entering a new phase of subsidy-free growth across the world, according to the 53rd EY Renewable Energy Country Attractiveness Index (RECAI). Mainland China and the US remain in the first two positions in the ranking of the 40 most attractive markets in the world for renewable energy investments, while other countries such as France, South Korea or Vietnam make strong moves.

Text by Adrian Stoica 74

RENEWABLES

reen energy acquisitions exploded last year, with more companies entering the market for the first time. According to the report, power purchase agreements last year supported 13.4GW of clean energy generation, more than double the 6.1GW recorded in 2017. A major recent growth trend in the renewables sector has been offshore wind, which has been a large success in Europe, and is now increasingly venturing into new countries. In Europe, this segment is estimated to continue to grow significantly over the coming decade. Emerging markets for offshore wind include the United States, mainland China, Japan, Taiwan and South Korea.

Companies adapt on the go The report also indicates that new companies and new countries adapt to a subsidy-free renewable energy environment. For many companies, the motivation to enter into a power purchase agreements (PPAs) is strictly economic – contracts that run for

ten years or more, which offer a longterm hedge in the face of volatile power prices. Other companies are choosing to procure renewable energy for reputational reasons or to reduce their exposure to carbon emissions. In several countries, such as Japan and Indonesia, it is difficult to enter into PPAs with developers due to regulatory barriers. However, new countries are realizing that the investment into energy infrastructure need not come from taxpayers. In countries such as Taiwan, corporate PPAs are now possible, while in other markets (such as France, Spain and Australia) changing conditions are resulting in PPA volumes taking off. China’s renewable energy market is undergoing a transition, as the government seeks to rein in the cost of subsidies. However, with continuing concerns about pollution, falling technology costs, and revived interest from international players, growth in the world’s largest clean energy market is set to continue. “We continue to see strong moves towards an all-electric future, driven by growth in renewable energy and nontraditional end uses of electricity. We foresee a sustained growth in demand for clean, carbon neutral electricity driving investment in new energy technology, including battery storage and electric vehicle infrastructure,” said Benoit Laclau, EY Global Energy Leader.

France climbs to the third position France moved up two positions, reaching the third place, led by a new focus on floating offshore wind capacity and doubling of its annual targets for onshore wind capacity additions. Other notable gains in position have been seen in South Korea (24th position, up by 7) and Vietnam (26th position, up by 17), which made strong moves with their plans to build new renewable energy projects of 4GW and 475 MW respectively. Norway (36th, up 75

by nine) and Finland (39th, up by three) are bouncing back with planned new investments shored up by power purchase agreements (PPAs) in a near subsidy-free environment. Countries with downward evolution include Mexico (19th position, down by six) and Taiwan (33rd position, down by six) that have both suffered due to major policy uncertainty. “Romania can return on the map of major investors in renewable energy with the increase in the competitiveness of the new equipment, due to the rapid decrease of the production and installation costs globally,” says Mihai Draghici, Senior Manager, Business Advisory Services, EY Romania.

The market is no longer vulnerable As renewable energy grows into an increasingly unsubsidized sector, where projects compete in the market on their economic and environmental merits, the latest edition of RECAI examines two related characteristics of this new landscape: how projects are grappling with new-found exposure to wholesale power prices and market imbalance (merchant risk) and the growing role of corporate energy buyers in underwriting clean energy projects. “Europe has led the way with unsubsidized projects in areas with good renewable resources. Multiple projects across the Nordics, UK, and Spain are being developed which are backed by private investment and corporate PPAs to provide the required stability. For the renewable energy market overall, however, a future without government subsidy is one that will no longer be vulnerable to sudden shifts in policy, or to retroactive changes to promised tariffs. Instead, it will be one where market forces impose discipline, drive efficiencies and accelerate the cost reductions that have allowed the sector to stand on its own two feet,” said Ben Warren, EY Global Power & Utilities Corporate Finance Leader.

METALS & MINING

Damen Mangalia to build the most advanced diamond recovery vessel in the world

From left to right: Arnout Damen (CCO, Damen Shipyards Group), Ruud van der Stroom (Damen Sales Director Offshore, Damen Shipyards Group), Otto Shikongo (CEO, Debmarine Namibia), Willy Mertens (Chief Financial Manager, Debmarine Namibia), Michael Curtis (Head of AMV3 Project, De Beers Marine) | ÂŠ Damen

amen Mangalia starts building a vessel for the search and recovery of deep-sea diamonds. The special vessel, 177 meters long, will be the most modern and technologically advanced marine diamond recovery vessel in the world. The actual work for the construction of the vessel that will operate in offshore Namibia has already started, in a record

time. The new offshore vessel will benefit from a dynamic positioning system (DP2) based on a seven-thruster propulsion system powered by six generators of 3230 eKW each. The value of the contract is approximately EUR 42 million. The beneficiary of the vessel is the company De Beers Marine Namibia (Pty) and the contract for the construction of 76

the vessel was signed in February 2019. De Beers Marine Namibia operates the largest offshore mine in the world, working at a water depth of between 90 and 150 metres off the south west coast of Namibia. The company owns five mining vessels and a dedicated sampling vessel, and additionally charters one sampling/ mining vessel. De Beers Marine Namibia (Pty) is

METALS & MINING

a new client of Damen Group and the contract is part of the opportunities the Mangalia shipyard enjoys from the partnership concluded with the Ministry of Economy. Damen Mangalia Shipyard is the largest in Europe. The unique features of the shipyard allowed to generate contracts for the construction of large-size vessels. They include RORO ferries, measuring 148 metres in length, 155-meter-long Cruise vessels, and the new 177-meter offshore diamond mining vessel. “Once again, this contract proves the capacity of the shipyard and proves that we have the best specialists, able to successfully complete any project. I strongly believe that Damen Mangalia Shipyard is able to compete with any shipyard in Europe and Asia! Mangalia has a rich history. Takeover of operational management by a powerful partner such as Damen allows the shipyard to be more performing than ever,” Economy Minister Niculae Badalau said. “So far, Damen’s newbuild focus has mainly been on standardization and inhouse or own design vessels. However, the facilities in Mangalia allow us to accept the challenge launched by De Beers Marine Namibia: an engineered-to-order project with vessel dimensions beyond that built by Damen ever before. I am convinced that the expertise of specialists we have in Mangalia will ensure the success of this project,” said Ruud van der Stroom, Damen Offshore Sales Director. The special steel cutting ceremony took place on May 15, moment which also marks the beginning of actual construction, which will take approximately two years. De Beers Marine Namibia officials are optimistic that there will be a long collaboration with Damen Mangalia Shipyard. “We were already well aware of Damen’s reputation as a reliable, efficient shipbuilder. It is vital to work with the best ship buildings in the world,” said the representative of De Beers Marine Namibia, Michael Curtis. 77

TECH

The Green Ocean solution to costly AST leaks Although the quality of spill prevention systems had been improved over the years, oil leaks still damage the environment. Companies found guilty of oil pollution face steep EPA fines. Green Ocean, a Netherlands-based company presents its experiences and solutions in the field.

bove Ground Storage Tanks (AST) failures have the potential to release large amounts of oil, which can pollute the environment and damage plant and animal life. Any incident of this nature draws negative media coverage and results in costly clean-up operations. However, the main threat is not massive spills, but small everyday leaks, caused by mistakes in operation, human error or equipment failure. Leaks create serious contamination of the land and underground waters. By the time the leak is detected the whole site may be declared as contaminated. In Europe, there may be as many as 2.5 million potentially contaminated sites, which need to be investigated. Of these, approximately 14 percent (340,000 sites) are expected to be contaminated and likely to require remediation. Mineral oil and heavy metals are the main contaminants contributing around 60 percent to soil contamination. In terms of budget, the management of

contaminated sites is estimated to cost around EUR 6bn annually. Netherlands-based company Green Ocean, which produces 100 percent environmentally friendly super absorptive spill response products, came up with a cost-effective and easy-to-install spill prevention system.

Spill Prevention Shield The company calls it â&#x20AC;&#x2DC;Spill Prevention 78

Shieldâ&#x20AC;&#x2122;. In the heart of the system is a mineral mat which hold up to 300 litres of oil. The mat repels water and snow and works in any temperature. It can be installed in Brownfield or Greenfield locations and boasts a 72hour spill reaction policy. The mat or parts of it can be easily replaced in the case of a spill or a leak. The Spill Prevention Shield works great for AST, Rail Roadâ&#x20AC;&#x2122;s Oil Terminal, Pipes and any other object that may leak.

+ pixel hoto and digital products

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

energyindustryreview.com 79

ANALYSIS

Smart Cities Driving through a fairytale With the increasing effects of natural disasters, abnormal weather effects and the emerging threat of global warming hovering above humanity, the concept of a â&#x20AC;&#x2DC;Smart Cityâ&#x20AC;&#x2122; must be merged with sustainability for achieving the balance between human prosperity and our natural habitat.

Text by Evgenios Zogopoulos 80

ANALYSIS

History - Context Until the 1800s, only 2% of the global population lived in urban areas. By the dawn of the 20th century, the number had increased to nearly 13%, and finally in the year 2000, the percentage of people located in urban areas reached 47%. According the United Nations’ ‘World Urbanization Prospects’ report published in 2018, over three quarters of the world’s population is expected to live in urban areas by the year 2050. Currently more than half (55%) of the global population resides in cities. Between now and 2020, the global urban population is expected to jump by about 1.84% per year. This surge towards urbanization is understandably currently occurring at a higher rate in developing countries than in developed nations.

The origin of the need: Urbanization It is difficult to exact the causes of urbanization, both in terms of physical land area and population size. When discussing urban land expansion (the process whereby the planet’s surface is

configured for urban uses), for example, studies indicate that growth in GDP per capita is highly influential upon urban land expansion in China and North America whereas this was less so the case in India, Europe and parts of Africa (where population growth plays a much larger role in urban land expansion). The rise of urbanization is sufficiently linked to economic growth, industrialization and the perception of better employment prospects. The United Nations views urban centres as drivers of economic and human capital development and argues that “a critical mass of people, ideas, infrastructure and resources acts as a magnet of development, attracting migrants, private firms, investors and developers. All of this enhances the prospects for more employment opportunities, wealth creation, innovation and knowledge, which are all major factors of prosperity.” A 2013 study by Harvard University economist Edward L. Glaeser found that while there is an overall correlation between economic and urban development, cities that support 81

urbanization with appropriate and adaptive policies, institutions and strategies fare far better than those that don’t. UN under-secretary-general and executive director of UN Habitat, Dr. Joan Clos signifies the urgency for efficient, integrated city planning by outlining the way urban centres affect the environmental scale: up to 70% of greenhouse gas emissions originate from urban areas which comprise just 4% of the planet’s land mass. This trend towards an increase in the population in cities, coupled with the polarized economic growth, spearheaded by the same urban centres, underlines the rising reliance upon digital technologies in daily life and the need to decrease greenhouse gas emissions (GHGs). This is exactly the driving force pushing forward the need for so-called ‘smart cities’, meticulously-planned urban areas that incorporate digital infrastructure to promote accessibility, eco-friendliness, resource efficiency and safe management of an influx of residents.

The manifestation of the need: Pollution Urbanization does not come bearing gifts only; it also comes with challenges. Many cities are plagued with various environmental, social and economic issues such as resource scarcity, congestion, pollution, poverty, lack of affordable housing, proliferation of informal dwelling, as well as sewerage and sanitation problems. Speaking of environmental challenges, one cannot dismiss climate change, largely attributable to human activities, as one of the most critical issues impacting our planet. Climate change brings adverse consequences such as threats to biodiversity and ecosystems, risks to human health, rising sea levels due to accelerated melting of glaciers and ice caps, increasing water stress as well as a decline in agricultural productivity. These issues are driving many worldwide economies and cities to focus on mitigating (GHGs) in order to push back

ANALYSIS

the impact of climate change. Cities account for the majority of greenhouse gas emissions and energy consumption across the globe. In fact, cities account for 60–80% of energy consumption across the globe and for more than 70% of worldwide carbon dioxide emissions. In order to provide better living conditions for existing and future generations, cities need to improve by adopting the smart route and at the same time focusing on the sustainability aspect. As cities are economic growth drivers in most of the nations, urbanization is projected to increase further in the near future. This, in turn, will drive the depletion of non-renewable resources as well as add to the extent of carbon dioxide emissions. Innovation must be combined with energy, digital technology and information and communications technology to address urbanization challenges and ensure sustainability. Sustainability covers not just the environmental aspect but also social equity and the economy.

How would you characterize your community’s overall commitment to smart cities?) (n=468)

7.9%

17.1%

High priority

16%

Medium priority Low priority

22.2%

36.8%

Not a priority Not applicable

For each of the following sectors, what level of priority do smart city technologies represent for your community? 50%

Top Priority (Top Five Sectors)

40% 30% 20% 10% 0%

Public safety (n=348)

Customer service/ public engagement (n=347)

Water and wastewater (n=343)

Telecommunications (n=344)

Transportation (n=346)

What is your community’s current level of engagement with smart city technologies? 60% Active Deployment (Top Six Areas)

50% 40%

ICMA Survey Research The International City/County Management Association (ICMA) conducted a survey in partnership with the Smart Cities Council to learn more about the priorities and activities of U.S. local governments related to smart-city technologies. The Smart Cities Council defines smart cities as communities that use information and communication technology to enhance livability, workability, and sustainability. Launched in the spring of 2016, the survey was sent to 3,423 U.S. local governments with populations of 25,000 or greater. Responses were received from 493 jurisdictions yielding a response rate of 14.4%.

Highlights • Smart City Activities are a Higher Priority for Larger Communities than

30% 20% 10% 0%

Smart payments and finance (i.e. Web-based payment for services) (n=346)

Civic engagement (i.e. Streamlined mobile interface for city services) (n=345)

Energy (i.e. smart meters) (n=346)

Smaller Communities. There is a positive correlation between jurisdictions’ population size and the prioritization of smart city activities. Overall, survey respondents most frequently identified smart city activities as a medium priority. • Smart City Technologies Represents the Highest Priority for Public Safety. Public safety is indicated as the sector that smart city technologies represent top priority by the 48.9% of the respondents, which is followed by 82

Water and wastewater

Telecommunications

(i.e. Smart meters) (n=341)

(i.e. public WiFi, interoperable systems) (n=345)

Public safety (i.e. police body cameras) (n=344)

customer service/public engagement and telecommunications. • Communities are More Active with Smart City Technologies on Smart Payments and Finance. 59.5% of the respondents identified that they are actively deploying smart payments and finance technologies. Civic engagement and energy are the other technology areas that respondents are active. Communities are not active in public safety area much even though it was selected as the top

ANALYSIS

How important are each of the following benefits in motivating your local government to implement or expand the use of smart city technologies? 82.0% 81.8% 81.6% 81.4% 81.2% 81.0% 80.8% 80.6% 80.4% 80.2% 80.0% 79.8% 79.6%

Very Important or Important (Top Five Motivators)

The solution: Smart Cities Definition

Capital and/or operational cost savings

Resiliency for Safety and critical operations security benefits (n=354)

(n=353)

(n=354)

Economic development (n=352)

Enhanced services for residents (n=352)

To what extent do each of the following issues represent barriers for your community to implement smart city technologies? Very Significant or Significant Barrier (Top Five Issues)

70% 60% 50% 40% 30% 20% 10% 0%

indicated peer-to-peer information exchange as the smart city collaborative effort that their communities participate in.

Budget limitations (n=358)

Need more internal capacity (n=357)

Need more supporting infrastructure (n=355)

Need more technical expertise (n=353)

Need more long-term vision/plan (n=358)

What collaborative smart city efforts does your community participate in?(n=342)

14.3 % 24%

Peer-to-peer information exchange

70.8% 34.5%

County level efforts State/regional system level efforts Organized by regional authorities such as districts

44.2%

None

priority for smart city technologies. • Capital and/or Operational Cost Savings is Identified as the Most Important Motivator for Implementing Smart City Technologies. Cost savings is indicated as either very important or important motivator by 81.9% of the respondents. Resiliency for critical operations and safety/security benefits are the other top two motivators with high percentages. • Budget Limitations Represent

a Significant Barrier to Implement Smart City Technologies. 75.4% of the respondents indicated budget limitations as a very significant or significant barrier for their community to implement smart city technologies. It’s followed by the need for more internal capacity and need for more supporting infrastructure. • Peer-to-Peer Information Exchange is the Most Common Smart City Collaborative Effort among Responding Communities. 70.8% of the respondents 83

The concept of a ‘Smart City’ combines sustainability and innovation for achieving the balance between human prosperity and our natural habitat. The merging of innovation with technology will dramatically contribute in optimizing the management of infrastructure and resources and, at the same time, focusing on inclusiveness and a greener environment. Many ‘sustainable’ projects were devised and executed, on an international, national, municipal, local and individual level. There was one problem: they were not financially sustainable. The return on investment (ROI) for sustainable solutions was too low for all the levels mentioned. But there is a sustainable ROI for smarter solutions. The megatrend of the last decade — Green products — will be replaced in this decade by Smart products and services. A smart city is an innovative urban centre that uses information and communication technologies (ICTs) among other means to improve quality of life, efficiency of urban operation and services, and competitiveness, while ensuring that it meets the needs of present and future generations with respect to economic, social and environmental aspects. Due to the irredeemable complexity of how cities are operating, growing, and financing themselves there can be no easy fixed definition for ‘Smart Cities’. Nevertheless, the notion can be broken down as the process by which cities and urban areas become more efficient, livable and environmentally friendly by maintaining incentives for investment. In the words of the Committee of Digital and Knowledge-Based Cities to be precise, “a city can be considered as ‘smart’ when its investment in human and social capital

ANALYSIS

and in communications infrastructure actively promote sustainable economic development and a high quality of life, including the wise management of natural resources through participatory government.” Depending on the situation, a smart approach to city planning may include some of the following elements: Modern efficient, and intelligent infrastructures such as smart energy grids and effective waste management; Information integration with communications technologies that support and enhance day-to-day urban life; Accessible and citizen centric urban design; Adaptive planification methods that accommodates new and existing residents and where city planners can learn from experiments and create new models; Transparency, where all citizens have access to data from city services and establishments.

• Smart People. According to consulting firm Frost, by 2025, 26 cities around the globe will be deemed as smart (i.e. meeting five or more of their eight criteria) with the majority of these being in North America and Europe. Designs and initiatives for smarter cities are spawning on a global scale with an immense rise in Brazil, India, North America and Europe. This rise is also accompanied by a number of national, international and multinational plans for the promotion of Smart Cities. One of the most well-known proposals is the European Union’s (EU) initiative on smart cities, also known as the ‘European Innovation Partnership for Smart Cities and Communities’. The initiative, which was launched in 2011, currently has a budget of almost 100 million EUR (for the period of 2014-2020) and plans on “strategic partnerships between industry and European cities to develop the urban systems and infrastructures of tomorrow”.

Smart Cities – The future

Initiatives: Public and Private Sector Climate expert and strategist, Boyd Collaboration

Cohen narrows the notion down with his Smart Cities Wheel, analysing smart cities with distinct six factors: • Smart Economy; • Smart Environment; • Smart Governance; • Smart Living; • Smart Mobility;

Public-private partnerships (PPP) has been hailed as the preferred route for developing smarter and sustainable city projects around the world. Large global players, with their wealth of knowledge and resources, are investing in R&D and focus on developing customizable solutions that can be replicated and scaled

up around the world. Innovative start-ups and local players will also play a critical role. According to a report by Frost & Sullivan, smart cities are anticipated to create huge business opportunities across different industries with a total market value of USD 1.6 trillion by 2020. Technologies such as smart metering, wireless sensor networks, open platforms, high-speed broadband and cloud computing are key building blocks of the smart city infrastructure. Research shows that two companies are top vendors in the ‘smart city’ tech market with IBM and Cisco in podium positions. While the investment opportunities increase, the business focus naturally turns towards ROI and measurable, specific indicators.

Sustainable Development Goals (SDGs) The SDGs are a proposed set of global development targets to be adopted by governments around the world. There are currently 17 goals with 169 indicators that will define the global sustainable development agenda post-2015. Spearheaded by the United Nations, the SDGs are here to replace the Millennium Development Goals (MDGs). The MDGs led to unprecedented progress in certain areas but fell short of transforming societies, as they were focused solely on poverty alleviation in the developing world. The SDGs, on

SUSTAINABLE DEVELOPMENT GOALS (SDG)

ANALYSIS

the other hand, will be globally relevant and present a holistic approach to progress by embracing economic, social and environmental dimensions. As governments gear up to sign the SDGs, key roles will be carved out for multiple stakeholders, including society and businesses. Besides public funding, the list includes possible funding from multilateral and bilateral development agencies, pooled municipal debt obligation facilities, municipal bonds, real estate investment trusts and infrastructure investment trusts. Smart and sustainable projects targeting climate change mitigation and adaptation may access the Green Climate Fund (GCF) of the United Nations Framework Convention on Climate Change (UNFCCC). Projects with positive environmental benefits can also utilize the green bonds. Projects that are in the spirit of corporate social responsibility (CSR), as defined by the Companies Act, 2013, may attract funds from companies with significant unspent CSR budgets. Crowd-funding has also been identified as a potential route for supporting citywide projects.

HERE IS HOW THE FIELD IS MAPPED BASED ON EXECUTION AND STRATEGIC INITIATIVES FROM THE PRIVATE SECTOR.

Energy Perspective

role, in governance, pursuing more platforms to engage with the energy sector and request sustainable solutions; The need for collaboration between different cities and different partners, sharing knowledge and especially sharing data. These are some of the corporations leading the transformative initiatives to shape the market at this point: • IBM • Cisco • Microsoft • Siemens • Hitachi • Oracle • GE • Schneider Electric • Huawei • Ericsson • Toshiba One of the most brilliant and futuristic projects, showcasing what the Public

The natural evolution of green products and services shows the way into becoming smart ones, with intelligent sensing technology and Internet connectivity with a direct aim at unilateral optimization. Smart cities are expected to create huge business opportunities, with a multi-trillion market value by 2020. And companies implementing smart solutions can earn lots of money by stepping into this market. In fact, we have: Megacities targeting decarbonization, creating demand for permanent and efficient products and services from the Energy sector; Digitalization and AI as another driver formulating the market; Electric cars, with Tesla spearheading the market, bringing with it a range of new services; Citizens/Consumers in take a leading

and Private sector collaboration can offer, is the Smart Highway in Holland. Recent innovations such as ‘dynamic paint’ and ‘interactive light’ can now integrate these features right into the road surface itself, creating new ways highways communicate, bringing us closer to the ubiquitous ‘Smart Highway’ – the name Daan Roosegaarde and Heijmans Group called their pioneering concept. Charging at daytime, glowing at night, three photo-luminescent green lines run along each side of the dual carriageway indicating the edges of the road. Among other suggestions for Roosegarde (route N329), are temperature-reactive paints that will indicate to drivers when roads are icy, interactive street lamps that come on as vehicles approach then dim as they pass by and ‘wind lights’ powered by the air from passing vehicles. That is how the future could look like: “Driving through a fairytale”.

EVENT

Oil&Gas Tech 2019 From field to market Romaniaâ&#x20AC;&#x2122;s leading Oil and Gas event (conference and exhibition), designed for all industry segments, including upstream, midstream, downstream and oilfield services, gathered over 100 CEOs, CFOs, BD, VPs and investors for a full day of behind-closed-doors networking and honest informal discussions.

Text by Lavinia Iancu 86

EVENT

il & Gas Tech 2019 is a communication platform for senior management and top executives working in the energy industry in Romania and not only. With representatives from the entire value chain and an audience made up of over 65% VP level and above, government officials and investors – the event focused on helping operators drive down costs and increase efficiency.

MAJOR THEMES • Development Update: Changes to the Oil & Gas Industry in the recent years; New fiscal measures and the impact on energy supply, employment and investments; Industry engagement priorities for 2019 and beyond • New Technology: Impact of science-technology-innovation on competitiveness and economic growth; Upgrading the resources through technology, productivity and exploration success; Striving to improve performance as technology and innovation evolve by continuously working with regulators,

government and stakeholders; Smart energy transmission systems • Data and Digital: Digital transformation - Key driver shaping an efficient, reliable and sustainable future; Improving oil and gas efficiency through digital transformation; maximizing value from digital investments • Industry Trends and Best Practices: Struggling to keep up as oil prices stay low; Identification, understanding and implementation of trendsetting solutions; Biggest challenges while unlocking the most innovative technologies; Following and learning from domestic and international experiences in the energy efficiency area • Health and Safety: Balancing risks and profitableness across the industry; Improving work place health and safety; Next steps towards climate friendlyenergy; 2018 was a year of quick succeeding events, the focus being on the major energy transition. In terms of climate, the tone has been set by the Integrated Pollution Prevention and Control, IPPC, which requested the shift from a target of 2 degrees Celsius to 1.5 degrees Celsius, 87

in the context in which geopolitics and policies on global trade, more strained, have been against accelerating the downward progress. Oil has again witnessed an increase in volatility, partly driven by the same amplified tensions within geopolitics. However, oil and gas continue to play a pivotal role in the world’s energy to meet growing demands for heat, power and transport. The Oil & Gas Industry is in an era of Digital Revolution and embracing digital technologies to solve complex business challenges like real time insights on production operations & predicting the failure of assets. In Romania, oil production is following a downward trend, with a reserve replacement ratio below par, due to a high depletion of fields, according to the draft Energy Strategy, published on the website of the Ministry of Energy. It is estimated that oil production will continue its trend of slow decline between 2030 and 2050, from 22 to 13 TWh (1.93 to 1.15 million toe). The same document shows that Romania’s gas reserves will be exhausted in the following 14 years, and exploitation of Black Sea fields is a condition sine-quanon to continue to rely on this resource in the energy mix of the country. Increasing the degree of recovery is possible, but investment efforts, which are not negligible, require packages of stimulating economic and fiscal measures. Responsible policies can encourage the responsible development of resources needed.

WORKING TOGETHER TO EFFICIENTLY PRODUCE OIL AND GAS High-level officials and experts opened dialogue on RESPONSIBLE POLICIES & REGULATIONS TO ENCOURAGE RESPONSIBLE DEVELOPMENT OF RESOURCES, showing that a common effort is needed to surmount major challenges and legislative barriers within the industry. How will oil & gas companies act through the uncertainty remains the main

EVENT

High-level officials and experts opened dialogue on responsible policies & regulations to encourage responsible development of resources, showing that a common effort is needed to surmount major challenges and legislative barriers within the industry.

question that every person should seek an answer to. Policies to attract foreign investments, shaping the regulatory framework and the industry impediments and opportunities in Romania, energy transition were also key topics of the conference. “So far, at international level, when energy security was under discussion, the focus was rather on the security of energy supply and energy transit. Turmoil on the oil market, at the beginning of 2015, has caused numerous budget cuts or restrictions of activities among companies in the oil industry, a trend that has proven not to be a productive solution in the long run. The year 2018 has embarked on an even more complex context in the energy sector, imposed by the political leaders’ commitments at the Paris Climate Conference, a context that favours the global energy transition to low-carbon economies. In the new international framework, in order to achieve the targets in the field of energy and climate, there is a need in particular for the profound transformation of the energy systems and increasing their flexibility, for a new market structure,

as well as for international cooperation and coordination in the field of energy policies,” the representative of the Ministry of Energy - Cristian-Florin Gheorghe, Director General of the Oil and Gas Directorate, highlighted. “The effects of the economic crisis were felt at the level of the oil and gas industry in Romania, as in most countries, through a decrease in consumption, in the financial liquidity level, as well as through difficulties in attracting the funds necessary for new investment objectives. Oil prices register again downward trends, amid turmoil in the global energy landscape. As it is normal, we want the national energy sector to grow and we want Romania to be an important energy actor at regional level. I assure you that we are permanently concerned to establish an effective and sustainable regulatory framework, able to ensure a fair distribution of benefits between state and investors, which contributes to establishing a long-term partnership between the two sides, as well as to consolidating trust in the perspectives of the national economy,” the representative of the Ministry of Energy also mentioned. 88

“Romania is currently the only significant hydrocarbon producer in South-Eastern Europe. Romania’s transmission infrastructure can contribute to gas transit from the Caspian region, Middle East or Eastern Mediterranean to the European market. The extremely varied energy mix allows Romania to have a high level of energy security, compared to the other states in the region. The question that is more and more asked in the regional circles is the following: can Romania reach its potential of becoming an energy hub and important energy bridge to the EU market? The answer is undoubtedly yes! I have also heard voices talking about political and regulatory uncertainty, about an inadequate behaviour leading to blocking an integrated market at regional level. I believe we have already proven that we need a long-term vision on how to capitalize on energy resources and integrate the national market into the regional energy market. But we shouldn’t forget that energy projects, especially the large-scale ones, need major investments and this is why I want to emphasize that Romania wants to show

EVENT

investors in the energy sector that it has significant investment opportunities. Romania is a country with an attractive energy potential, with significant growth opportunities, where investment can be turned into successful projects,” Florin Gheorghe concluded. Dialogue continued with the intervention of the representative of the Romanian Energy Regulatory Authority (ANRE) - Zoltan Nagy - Vice-President, who reviewed the latest developments in the domestic gas market, the status of alignment with European standards, and the chapters where Romania still has shortcomings. A hot topic, which was not bypassed by ANRE representative, was GEO 114/2018, as well as its dramatic impact on the gas sector in Romania. Joining the debate were also the representatives of associations in the field - FPPG (Oil and Gas Employers’ Federation) and ROPEPCA (Romanian Petroleum Exploration and Production Companies Association). Both Catalin Nita - Executive Director of FPPG,

and Saniya Melnicenco - President of ROPEPCA, brought to discussion the problems currently faced by the oil and gas sector in absence of a stable and predictable fiscal framework. Moreover, they recalled an older stringent issue, that of the lack of qualified labour force in the oil and gas industry, which was also the point of view of the Prorector of the Petroleum-Gas University of Ploiesti, Mihail Minescu.

MAJOR PLAYERS ON MAXIMIZING RETURN ON INVESTMENT WITH THE LIGHTEST, SAFEST AND SMALLEST OPERATIONAL FOOTPRINT Some of the highlights from the first technical session of the event, moderated by ROPEPCA’s President Saniya Melnicenco, included discussion on increasing production and replacing consumed reserves with new ones; mature fields management – tackling production decline, complex surface constraints, decreasing reserves; advanced technology to maximize oil

and gas recovery; drilling and completion technology innovations; state-of-the art natural gas recovery and compression equipment. The most important players in the oil and gas sector presented their latest products, technologies, strategies for the future, development directions. Romgaz, the major producer and supplier of natural gas in Romania, celebrates this year 110 years of history of the gas industry. Romgaz group is also Romania’s largest operator of underground gas storage facilities. Adrian Volintiru, CEO, highlighted the most important milestones on Romgaz’s path from a local company to an international one, which is today among the top European companies. He also reviewed the main areas of interest, the results obtained and the development directions of the company for the following period. “Romgaz has the potential and ambition to consolidate and develop its position as one of the most important natural gas companies in Romania and become a

The highlights from the first technical session included discussion on increasing production and replacing consumed reserves with new ones; mature fields management – tackling production decline, complex surface constraints, decreasing reserves; advanced technology to maximize oil and gas recovery; drilling and completion technology innovations; state-of-the art natural gas recovery and compression equipment.

EVENT

leading player on important Central and Eastern European markets by means of an efficient and competitive production, able to face the increasing pressure exercised by regional and international companies,” he stated. “Romgaz monitors with great interest the routes of gas pipelines, while aiming to increase storage capacities. We plan to increase and upgrade the storage capacities - Ghercesti (on BRUA route) and Sarmasel (on Eastring route). Romgaz plans to modernize communications and quickly adapts to market conditions,” Adrian Volintiru also mentioned. OMV Petrom is the largest energy company in Southern and Eastern Europe, with an annual Group hydrocarbon production of 58.3 million boe in 2018. The Group has a refining capacity of 4.5 million tons per year and operates an 860 MW high efficiency power plant. OMV Petrom is present on the oil products retail market in Romania and in the neighbouring countries through 792 filling stations, at the end of March 2019, under two brands – OMV and Petrom. The company is active on every aspect of the energy value chain: from wells, producing oil and gas, to refining and fuels distribution, gas supply and power generation & supply. During his presentation, Peter Zeilinger - Member of the Executive Board responsible for Upstream, insisted on technologies used in OMV Petrom Upstream. He referred to the multilateral horizontal well – LVO7 (Lebada Vest field), the first multilateral well drilled in Romania; optimization of production from mature fields using water & polymer injection; lined tubbing, casing while drilling (a technology implemented in New Zealand, Austria and Romania with great with success) & heavy oil recovery. He also underlined that Romania set the world record for 20” casing section (503 m) and European record for 13 3/8” casing section (729 m) in 2013. As for the heavy oil recovery, the world’s longest lasting in-situ combustion project is performed by OMV (50 years of production). Applied in Suplacu oil field, the reported recovery factor up to date

was 55%. Comoti Turbine Engines Research and Development Institute is the only unit in Romania specialized in development and integration of scientific research, constructive and technological design, manufacturing, experimentation, testing, technological transfer and innovation in the field of aviation turbine engines, gas turbine industrial machines and high-speed blade machines. The representative of the institution, Leonard Trifu - Marketing Manager, mentioned the portfolio of activities, capabilities, major projects, the main partners of the company, as well as several applications of equipment dedicated to the oil and gas industry. In terms of energy and energy saving, the focus falls on the development of Romanian industrial gas turbines (1.5-5.4 MW); high-efficient generation of electric and thermal power with gas turbines (CHP); high-efficient centrifugal and screw compressors for air and natural gas; renewable energy (biomass gasification for industrial gas turbines, wind turbines, bio-fuels). The series of equipment for the natural gas sector includes: screw compressors CLP64, CLP90, CMP128; screw compressors high pressure CHP128, CHP200, CHP220; expander – electric generator; centrifugal oil-free compressors for air and gas (EGC and CCAE). As a distributor and authorized packager for ARIEL Corporation, Euro Gas Systems (EGS) brings world-class compression to the European, Middle East, North Africa and CIS markets. As areas of activity, EGS covers the entire value chain, providing packaged gas compressors, reciprocating compressor packages, screw compressor packages. EGS’ main focus is the upstream industry, but the company serves, with few limitations, the midstream and downstream industries as well. EGS equipment solution is based on reciprocating and screw compressor technology with capabilities of packaging gas compressors up to 5,000 HP both engine or electric driven from basic manual operation to full automation using 90

the most advance technologies in the field. In terms of production capabilities, EGS operates 2 workshops summing up approximately 4,000 sqm of assembly floor, 4 x 50 tone cranes, 2 x 12,5 tone ones and 6 x 10 ones, 3 paint booths, shop blast booth, NDT Lab etc. In terms of designing capability, everything that is built at EGS is modelled in a 3D environment by a team of highly experienced package engineers, in this way giving them the possibility to be very flexible in terms of adapting to any customer specs and nevertheless improving or upgrading these specs when required. The presentation of Claudiu Orban - Sales Manager EGS, focused on the marginal wells concept. Starting from the explanation of the term, familiar to most of those present, he emphasized the importance of wellhead compression. Lowering the surface pressure of a well by using compression will generally result in: more production, prolonged well life, increased reserves, he recalled. Claudiu Orban supported his statements with relevant case studies. Exploring with the archive ahead of the drill bit - How legacy geoscientific data can be used to identify new opportunities in both conventional and unconventional reservoirs was the topic of Christopher Hughes - Multi-client Studies Manager, Xodus Group, presentation. He explained the secret of the success behind the U.S. shale play revolution. There are over two million publicly-accessible well datasets in continental United States. These wells have been drilled and their data were acquired over 150 years of hydrocarbon exploration and production history. Data acquired over this period were predominantly for conventional E&P activities. New analysis techniques and reassessment of legacy data have revealed missed and new opportunities. All major shale basins were defined by older wells before being proven with new drilling. This has given birth to the unconventional business that the rest of the world is now following. All these have been achieved through critical information and critical processes. Using sophisticated technology

EVENT

from specialist data management contractors, accurate inventories of both structured and unstructured data can be created, said Christopher Hughes. Full content searches of scanned images & digital data using crawling techniques and search criteria can pull out complex information. In addition to the application of new interpretation and analysis to legacy datasets using manual methods, significant success is now being achieved using machine learning and artificial intelligence processes from contractors like Quantico and PetroScale, he added. The presentation was completed with some examples of where the same approach has been successfully applied to determine missed hydrocarbon opportunities and unconventional play potential and an example of where the approach won’t work.

SECURING ROMANIA’S ENERGY FUTURE CONNECTING FIELDS TO MARKET The third session of the event,

moderated by Energy Expert Ionut Purica, brought to the attention another hot topic: Romania’s energy future. Romania could sustainably benefit from a competitive gas market – is the point of view of Franck Neel - Member of the Executive Board responsible for Downstream Gas, OMV Petrom. Romania has the highest growth potential in the regional gas market, he stated. Within the region, Romania has the largest share of domestic gas in consumption. Also, domestic gas production is a huge strength. Still, committed infrastructure developments are needed. The horizon for reserve depletion is estimated at 15 20 years, so reserve replacement requires large scale & long cycle investments. According to EFET (European Federation of Energy Traders) and OIES (Oxford Institute for Energy Studies) studies, the European gas hubs have reached different development stages. Several Western and Central European countries have taken significant steps towards the development of their

wholesale gas markets while SouthEastern European markets are in an early stage of development. Compared to the neighbouring countries, the Romanian wholesale market is still in a very early stage of development. The volumes traded on the Romanian dayahead market are still low compared to neighbouring hubs. The currently applicable Centralized Market Obligation (CMO) is not fully adapted to improve market liquidity. However, the new regulatory environment is impeding the emergence of competitive and wellfunctioning markets, leaving Romania vulnerable to any disruption of Russian gas flows through Ukraine. Romania is dependent on gas imports during peak demand periods and also vulnerable to potential disruptions of Russian gas imports. Conclusions show that in order to get back on track, Romanian gas market needs stable investment framework, infrastructure development acceleration, economically driven functionalities. Delivering Romania’s transport of

The third session of the event brought to the attention another hot topic: Romania’s energy future.

EVENT

crude oil and rich gas needs was the theme of Conpet’s presentation. Conpet operates the crude oil National Transport System (SNTT), a very complex transport system via pipelines and by rail tanks comprising facilities related to the oil and gas industry. Timur Chis - General Manager, defined the elements of company’s development strategy for the following period, as well as the main directions of the investment program. The multiannual investments program is extremely ambitious and mainly includes the following objectives: pipeline replacements; safe disposal works on the pipelines; rehabilitation of the pipelines undercrossing the Danube and Borcea Arm; continuation of the program for the modernization and monitoring of the cathodic protection system related to pipelines and tanks; implementation of a system for detection and location of crude oil leaks (losses); modernization and replacement of several tanks; ongoing modernization of the systems for the monitoring and security of pumping stations; continuation of the projects for the modernization of pumping stations; continuation of the activity related to the modernization of logistics with state-of-the-art specific machinery and equipment; implementation of the geographic information system - G.I.S.; continuation of the project started in 2017, related to SCADA optimization and upgrade of hardware and software of the data transmission and automation system used in Conpet; continuation of the projects related to the modernization of the rail loading/unloading ramps and related infrastructure; replacement of the shunting locomotives and procurement of new tank-cars for crude oil transport; continuation of the rehabilitation and modernization of Conpet head office and secondary establishments. Completing the presentation supported by Franck Neel was the study conducted by Emerton, having as topic ‘Recommendations for a competitive, attractive and affordable Romanian gas market’. Sébastien Zimmer

- Partner, Emerton, has synthesized in his presentation a series of hurdles on the value chain impeding the wellfunctioning of the Romanian gas market, such as: lack of investment opportunities in the upstream sector; limited interconnections with EU gas markets limiting the option to access more competitive prices; the centralized market obligations (CMO) proving not efficient in enhancing the liquidity of the wholesale market; heavy penalties applied for each non-compliance with the Romanian regulatory framework, undermining the attractiveness of the gas sector. Furthermore, the RON 68/MWh cap undermines the efforts made towards market liberalization and threatens the security of supply in the long run, Sébastien Zimmer highlighted. Also, the Emergency Ordinance 114/2018 does not fix the dysfunctions of the Romanian market at their roots; it is expected to amplify their side effects and seriously threaten the security of supply in the long term, he added. A comprehensive roadmap was proposed to mitigate these hurdles and develop a competitive, attractive and affordable gas market in Romania. The roadmap recommends combining at least 2 complementary indicators in the definition of energy poverty, in order to increase the number of beneficiaries. Using these 2 indicators, energy aids would cover around 20% of the Romanian population, and the income from the windfall tax applied to gas producers would be able to provide a robust protection to vulnerable consumers, the study reveals. The roadmap includes several actions aiming at boosting the liquidity of the wholesale market and improving the security of supply. The roadmap also aims at enhancing the competitive intensity of the retail market to the benefit of end-users. The idea was continued by Radu Dudau - Director, Energy Policy Group, who focused on the long-term prospects of natural gas in the EU: 2050. The analyst presented a prospect on the gas sector towards 2050, which included natural gas consumption in the EU; projections 92

of gas demand: 2030 and 2050; longterm strategy of the EU; projections for hydrogen and renewable gas production. Daniel Vlasceanu - Partner, Vlasceanu, Ene & Partners, resumed the topic of GEO 114/2018, dealing in his presentation with its amendments and impact on the energy sector. The expert analysed, from a legal point of view, the amendments brought by GEO 19/2019 and its consequences on the industry. The conclusions were very clear. Romania should capitalize on its favourable conditions: highly skilled work force; available data and well-known geology; long-term and established tradition. Romania needs to build TRUST in order to attract investments.

ADAPTING TO THE NEW ENERGY AGE - BEST PRACTICES, PROCESSES AND PROCEDURES The session that ended the OGT 2019 conference focused on best practices, processes and procedures within the oil and gas industry. The main directions and objectives highlighted referred to low emissions technologies; optimization of plant operations and maintenance; alignment to the Best Available Technologies standards and European environmental regulations; modernization programs to meet growing demand for high-quality fuels; new initiatives to drive digitization for the oil and gas value supply chain; improving safety, efficiency and profitability with big data analytics capabilities. BrandSafway is a leading global provider of access, specialized services, and forming and shoring solutions to the industrial, commercial and infrastructure end-markets. “At BrandSafway, environmental health and safety (EHS) is our foremost value. It’s a basic right that we owe to our employees, customers and everyone we interact with,” said Catalin Musuroi - Director Industrial Services, Hunnebeck Romania. He mentioned some of good practices implemented within the group, global capabilities, the range of access solutions and services (insulation, coating, in-house specialist

EVENT

The session that ended the OGT 2019 conference focused on best practices, processes and procedures within the oil and gas industry.

services). It’s worth mentioning that the group has an international service capacity of 8,800 employees. A different approach – Beyond risk was proposed by Radu Mircescu - General Manager, Downhole Wellsolutions. For Downhole Wellsolutions, risk is a partner, says Radu Mircescu. He believes risk is a key-element to be used in designing and protecting the present and the future. “Downhole Wellsolutions is not different due to its philosophy, but due to its team, certifications and capabilities. The DHWS team consists of renowned people from universities, as well as highly skilled and experienced engineers,” the manager explained. According to statistics, today, with a focus on new technologies and equipment, the cause of incidents is in around 90% cases human error. Thus, there is a great need for the industry: a code of best practices. “Together with all decision-makers in E&P companies in Romania and with the support of the responsible state authorities, we want to promote this code. Codes of best practice, once adopted, tested and mostly trained

and simulated in real conditions, make this rate drop,” Radu Mircescu stated. The importance of a strictly applied regulatory framework as a key-factor for improving the level of safety of Black Sea Offshore Petroleum Operations was highlighted by Constantin Gheorghe - President, Competent Regulatory Authority for the Black Sea Petroleum Offshore Operations (ACROPO). ACROPO is a new institution established following the official release of the Offshore Safety Directive, implemented by Law 165/2016. The level of the regulatory framework, both in quality and exigency, is quite high, very close to the one developed by other similar authorities in Europe, having a longer history (UK, Norway, Denmark). This has been recognized and well received on several occasions by all the European regulatory authorities, Constantin Gheorghe mentioned. The national legislation applicable to the offshore oil & gas operations was not at the required level and this is why, in developing the regulatory framework, ACROPO used 93

guidelines of best practice, international applicable standards, common webbased platforms for sharing the expertise, used by all the European regulatory authorities, and also the expertise of own specialists, he added. Since mid-last year ACROPO has evaluated a number of 31 documents sent by the operators and rig owners, with a total volume of 5372 man-hours. 10 inspections at the offshore installations (8 productive and 2 nonproductive) have also been completed. Currently, ACROPO is preparing for the deep-water projects (expecting to have at least one this year) and for a project quite new: the decommissioning of a productive installation. Constantin Gheorghe also underlined the support the authority had received from all the operators and rig owners, who have understood that working together will help reaching the final target: to preserve the health and safety of both people and environment. About Ragsol’s integrated approach for smart brownfield concept we have heard from David Doppelreiter

EVENT

- Managing Director Oil & Gas Field Solutions. Ragsol offers a novel approach for oil field digitization from an operator’s perspective in view of big data and industry 4.0 topics. For Ragsol smart means: low cost; retrofit; easy usability; holistic approach; improving the work flow; increasing workers safety. The objective is to effect a smart technology change to state-of-the-art conditions in mature brownfields assuming low oil prices, minor hydrocarbon production rates, high water cuts and the availability of a certain percentage of a well’s turnover for digitization and monitoring purposes, as required by the company’s management. Ragsol’s smart brownfield concept is based on a team of multidisciplinary professionals working on projects with the aim of introducing and implementing state-of-the-art technology solutions, in order to optimize production in mature brownfields. The project team consists of three main pillars to cover key organizational, commercial and technical key aspects. Additionally, Ragsol focuses on the individual skills of each team

member, which are essential for the successful implementation of the defined objectives. The session ended with the presentation of Andrei Ceclan - Energy Adviser, Servelect - High efficiency energy conversion in Oil & Gas, from opportunity cost to real business. With over 13 years of experience, Servelect offers integrated services and solutions to optimize energy consumption and reduce operational costs across the entire value chain of the oil and gas industry (upstream, midstream, downstream) and not only. For the upstream segment, Servelect focuses on: integrated air & steam & power generation; ORC on G2P; waste heat recovery; flare and associated gases; adaptive pumping; aggregation and demand response; tax deduction on power losses. Some examples of offshore and onshore turbine applications were also mentioned, as well as expander turbines. Midstream applications include transmission, storage, metering, processing, cathodic protection. As for the downstream segment, Servelect is entitled 94

to provide solutions for power & steam generation, waste heat recovery – pinch, smart cooling, ORC electricity, adaptive pumping, flexible energy forecast. Downstream applications solutions also refer to: providing utilities & gasoline; CNG; electric chargers; heat pumps in HVAC & refrigeration; μCHP for power supply; PV local generation; aggregation and demand response.

OGT 2019 IN BRIEF Oil & Gas Tech 2019 a meeting place for the oil and gas professionals to share their breakthrough technologies, expertise, solutions, best practices and the latest developments of the sector from field to market – also provided a broad range of networking opportunities. Exhibitors benefitted from the chance to display their products and present in depth their services to a highly engaged audience. The conference hall and the exhibition space directly facilitated valuebased discussions between presenters, exhibitors and attendees in an amiable and engaging atmosphere.

DIGITALIZATION OF UTILITIES: BLOCKCHAIN AND OTHER TECHNOLOGIES 20 June 2019, 9h30-14h00



University Politehnica of Bucharest Central Library

Event organized by:

With the support of:

Event Partners:

„The one thing above everything else that is keeping energy leaders awake at night is the impact of digitization on the future of the energy system. New business models and digitization will define momentum on a path of innovation, which will change the way we produce and use energy in industrialized and developing worlds.” Christoph Frei, Secretary General, World Energy Council It is essential to understand correctly the characteristics of the current transition period and the future of the energy sector, but there are still many uncertainties, as well as progress vectors for new technologies (Internet of Things, Blockchain, Data AI, electricity storage, innovative transport, etc.). It is useful and exciting to discuss these with industry representatives to clarify how these technologies are applied for the benefit of consumers. At the same time, it is important to understand how these things will transform the three dimensions of energy trilemma and will help identify future solutions. This conference is ambitious to be the first in a series to discuss the implementation modalities and effects of new IT technologies in the energy sector in Romania. The aim of the event is to facilitate strategic sharing of knowledge between experts from national and international organisations, energy stakeholders and policy shapers, and to clarify the barriers that still lie ahead of new technologies and how to remove them in Romania. This one-day Conference will be organized in four sessions: one session of keynotes, two debate panels and the final sessions with conclusions. Key driving directions for discussion:  Is the Romanian energy sector ready for new digitization technologies?  What is the state of implementation of the technologies in Romania?  What should be changed in the legislative and regulatory framework for optimal use of new technologies?  What future plans do utilities and connected companies have?  What impact is expected from the use of new technologies? Simultaneous translation (Romanian & English) Registration is free of 95 charge, but mandatory

EVENT

FOCUS BUCHAREST Infrastructure, prerequisite for attracting foreign investment

The Chamber of Commerce and Industry of Bucharest (CCIB) organized, in Carol I hall of its historical headquarters, the second edition of the FOCUS BUCHAREST conference. The event was dedicated this year to addressing transport infrastructure issues and identifying viable solutions to solve them.

he conference gathered representatives of the business community of the Capital, officials from the central and local administration, as well as top specialists, in order to clarify the problems encountered in the relationship between authorities and the business environment and to identify solutions and best practices meant to transform Bucharest into a modern metropolis of Romanian business. “Organization of this event by CCIB is in line with the role we have assumed in the economic and social life of the Capital. We are the natural and longdistance partner of ministries and local administration, their interface with the Bucharest business environment and we have the vocation of dialogue. We ensure a platform for open and honest debates between authorities and the

business environment. I am convinced that this type of construction generates ideas and solutions whose application leads to a capital smarter and ‘friendlier’ with businessmen, as well as with its inhabitants,” said CCIB President, Ph.D. Prof. Eng. Sorin Dimitriu. “I am convinced that there are no chances to bring back to the country Romanians who have left to work abroad. It is a waste of money and energy to try to do that. We should rather plan to keep here the remaining ones,” CCIB President also pointed out. During the official session, participants had the opportunity to meet in a structured framework with: Alin Serbanescu, spokesperson, National Company for Road Infrastructure Administration; Aura Raducu, Director, Intercommunity Development Association for Bucharest-Ilfov Public Transport; Raluca Badau, Principal 96

Banker, Infra Europe, the European Bank for Reconstruction and Development (EBRD); Bogdan Vulpe, Business Development Manager, TPARK, and Cristian Dragu, Vice-President of the Romanian Association for Smart City and Mobility (ARSCM). “The current ring road of Bucharest can no longer have the nature of national road and cannot have a motorway profile. Here’s why, for the economy of the Capital, it is very important to implement the belt motorway project. The southern section was launched, the northern section will soon follow so that, as soon as possible, we can ensure an efficient transport flow and connect it with A1 and A2,” said Alin Serbanescu, who also pointed out the importance of an integrated approach of infrastructure projects, as well as solving the problems of funding these projects. “Romania cannot develop itself if

EVENT

it fails to attract foreign investments and European funds,â&#x20AC;? CCIB President emphasized. This idea was also found in the intervention of Aura Raducu, who also talked about addressing important projects in public-private partnership. As far as European funds are concerned, the director of the Intercommunity Development Association for BucharestIlfov Public Transport pointed to the fact that there are no quality documentation and standards for major infrastructure projects, which prevents many communities from accessing such funds. In the opinion of Aura Raducu, another problem is represented by the lack of multiannual budgets. Appreciated by the public was also the intervention of Raluca Badau from the European Bank for Reconstruction and Development (EBRD), who talked about the projects that can receive funding from this bank, as well as about the funding

conditions and solutions for accessing such funds. She also presented to participants success cases in the countries where the bank operates, including in Romania. ARSCM Vice-President talked about how we can have a smarter Bucharest, addressing this concept from both a theoretical and practical point of view, presenting pictures with projects whose implementation takes us closer to achieving this goal. Moreover, Bogdan Vulpe, Business Development Manager, TPARK, presented an efficient parking payment solution that has already been successfully implemented in Hungary, Serbia, but also in cities in central and western Romania. The event was also an excellent opportunity for participants to present their problems, to identify solutions, to interact with speakers attending the conference and to initiate new business 97

collaborations. The necessity of building, prior to the Bucharest Motorway, of the beltways connecting the companies operating on the IMGB platform, taking into account, within projects, the weight and volume increase of the oversized equipment (up to 1000 tons) requiring transport, traffic management, the issue of parking, including the non-taxation of money from existing parking facilities, the resistance of local authorities to implementing modern and efficient solutions were some of the topics approached by the participants in the Q&A section. FOCUS BUCHAREST is a new stage in the development of CCIBâ&#x20AC;&#x2122;s activity, whose declared purpose is to provide a platform for business and practical debates and proposals, aimed to contribute to the modernization of the business legislation and of the business environment in general.

JUNE’S READING

Delaying climate action increases the challenge urrent climate actions are far from enough to put the world on a path to keep global warming well below 2 degrees. Global emissions increased in 2018 to reach an all-time high – and the longer this continues, the stronger measures will be necessary to reach common goals. The need is ever more urgent for rapid and significant change. These are some of the findings in the 9th edition of Energy Perspectives, a report published by Equinor to provide a global review of possible macroeconomic and energy market developments towards 2050. The report particularly focuses on the challenges and opportunities related to meeting the world’s energy demand in a sustainable manner. “The world is progressing on ensuring access to energy for more people. We also see record growth in new renewables. However, as time goes by without reductions in global CO2 emissions, the path to a sustainable future becomes ever more challenging,” says Equinor’s Chief Economist Eirik Wærness. The future of energy is uncertain, and the report outlines a vast outcome space through three scenarios. The Renewal scenario shows a way to achieve the targets of the Paris Agreement and limit global warming to well below 2 degrees. This can be delivered through rapid

and significant policy tightening, global cooperation, technology developments and substantial changes in business and consumer behaviour. To succeed, the changes in global energy systems have to be unprecedented and far-reaching. Solar and wind’s share of electricity generation is already growing: From 1 per cent in 2007 to around 7 per cent in 2018. By 2050, around 50 per cent of electricity should come from solar and wind, almost eradicating the use of coal. The global car fleet must also change from less than 1 per cent to around 90 per cent electric. But even this is not enough. Energy Perspectives also includes a Reform scenario based on policy tightening to achieve the Nationally Determined Contributions (NDCs) pledged in Paris in 2015, as well as continued technology improvements. In this scenario, energy-related CO2 emissions peak around 2030 and then decline moderately, but not enough to deliver on climate targets. The third scenario, Rivalry, describes a future where the energy transition is slow – due to lack of trust, geopolitical volatility and ineffective solutions. Total global energy demand grew by 2.3 per cent in 2018, the fastest since 2010. Every day the world relies on around 100 million barrels of oil and 11 billion cubic meters of gas. To reach the ambitions from Paris we need to see peak oil demand soon. The projected demand 98

in 2050 in the different scenarios ranges between 52-118 million barrels of oil and 9-13 billion cubic meters of gas per day. Due to natural decline, existing oil and gas fields are not sufficient to meet this demand. New resources must be brought on stream, also in a scenario consistent with the well-below 2 degreestarget. The non-energy sector, including petrochemicals, is playing an increasing role in driving long-term oil and gas demand. Interest in hydrogen as a zero-carbon fuel is on the rise. The report shows how hydrogen could become a clean alternative for the industry, heating and transport sectors that cannot easily be electrified and also an energy storage opportunity, potentially providing an additional lever to reduce global CO2 emissions. The analysis in Energy Perspectives is important input to Equinor’s strategic priorities, but does not reflect the company’s views or strategy. “Equinor’s purpose is to turn natural resources into energy for people and progress for society. We want the global energy mix to transform in a sustainable direction, and we want to take part in the shaping of such a future. That is why we are developing toward a broad energy company, producing oil and gas with ever lower emissions while building a strong position within new energy solutions,” says President and CEO Eldar Sætre.