Energy Industry Review - November 2019 Edition by Energy Industry Review

Content Last Amendments to the Construction Law

OPINION On 30 October 2019 the last amendments (adopted under Law no 193/2019 – hereinafter the ‘Amendment’) to the Construction Law no 50/1991 (the ‘Law’) were published in the Official Gazette of Romania. As per Article 12 para 1 of the Law no 24/2000 on legislative technique, the Amendments entered into force on 2 November 2019.

Delicate Situation of Romania’s Supply with Russian Gas in the Winter of 2019-2020

OPINION The winter is approaching and with it the need to import gas from Russia, through the points located at the border with Ukraine. The Romanian energy diplomacy of the recentrings Romania to a delicate situation.

Renewable Energy in the Fight with Coal

OPINION A worldwide effort is required on all directions for discovering other ways to reduce the use of coal; maybe the increase, also aided by new technologies, in the use of natural gas for cogeneration.

24 The Answer to Efficient Energy Consumption: EcoStruxure

UPG’s Major Projects for the Use of Renewable Energy

OIL & GAS

INTERVIEW Marius Persinaru, Country President Schneider Electric Romania & Republic of Moldova, presents energy and automation digital solutions for efficiency and sustainability.

Romgaz and GSP Start Trinity Project in the Black Sea

The Petroleum-Gas University of Ploiesti (UPG) is the first higher education institution in South Muntenia Region to sign a financing agreement worth around RON 30mln for the improvement of the university educational infrastructure through the Regional Operational Program 2014-2020.

2nd Investment Objective Completed Within BRUA Project - Phase 1

OIL & GAS

OIL & GAS The gas resource is estimated at approximately 30bcm, and the two partners, Lukoil and Romgaz (which owns a 12.2% stake in the project) will operate the well, with the help of GSP and Italy’s Saipem. 4

Podisor Gas Compressor Station is the second investment objective within the BRUA project Phase 1 the national gas transmission system operator inaugurates within one month, following the Jupa Compressor Station inauguration at the end of September.

On track Not on track

Local Regulation and Smart Technologies Critical to Secure Large-scale Adoption of EVs in Europe

Finland -15.5

Sweden 0.1

Estonia -24.8 United Kingdom -4.9

Ireland -23.5

Latvia -2.0

Denmark -16.2

Lithuania -14.0

Netherlands -3.6 Germany -16.2 Belgium -21.7

Austria -20.2

France -13.3

Slovenia -0.2

Italy -6.1

Portugal 26.2

POWER

Poland -20.9 Czechia -1.5

Luxembourg -25.3

Slovakia -5.4 Hungary -3.0

Croatia -1.2

Spain -9.7

Romania -12.5

Bulgaria -8.1

Greece 9.1 Cyprus -24.8

Malta -61.7

Sources:

EEA (2019b, 2019e, 2019f).

Significant Drop in EU Emissions in 2018

from the previous year. This reversal will help to ensure the 2020 Effort Sharing targets — to which Member States currently appear to be collectively on track — are met.

ENVIRONMENT

At the national level, current progress is more contrasting. Some Member States have already The European Union (EU)below cut its reduced their emissions to levels their 2020 target, while for gas others, the gaps between observed greenhouse (GHG) emissions by emissions and national targets are widening 2% in 2018, according to preliminary (see a presentation of progress at country level in estimates released on 31 October 2019 States Figure ES.3 and Table ES.1). In 2017, 18 Member had gas emissions levels atAgency. or below their by greenhouse the European Environment

respective annual Effort Sharing targets, while in 2018, this fell to 17 Member States. According to the projections submitted by Member States in 2019, only three Member States (Greece, Portugal and Sweden) expect that their current policies and measures will be sufficient to deliver their 2030 Effort Sharing targets on time. An additional seven Member States (Belgium, Croatia, France, Hungary, Italy, Slovakia and Spain) plan to implement additional policies and measures that will help ensure they achieve their 2030 Effort Sharing targets. The remaining eighteen Member States have not yet indicated in their

Europe is not ready to manage a major shift to electric vehicles and its significant impacts on the power system, experts from the Centre on Regulation in Europe (CERRE) say in a new report presented in Brussels on October 16.

Euro Sun’s Discoveries Near Rovina Valley

METALS & MINING Euro Sun Mining announced the surface generative exploration results from the Stanija Prospecting Permit directly adjacent to its Rovina Valley Gold project in Romania.

Trends and projections in Europe 2019

Status of National Power System

New PCI List for a Connected European Energy Grid

Record on the LNG Market

POWER

ANALYSIS

The analyses conducted by the national power grid operator in Romania Transelectrica show that the system could witness missing production capacities of over 2,500 MW by 2027.

The European Commission adopted the fourth list of Projects of Common Interest (PCI) for a connected European energy grid, fit for the future providing clean, affordable and secure energy for Europeans.

The strong increase in LNG demand in the last three years will continue in the future, boosted by the investment projects in LNG facilities throughout the world, the International Energy Agency (IEA) says in its report for 2019, recently published.

HEADLINES

TRANSGAZ AND TRANSELECTRICA TO BE TRANSFERRED TO SGG

U membership implies strict rules for the functioning of the companies, and the infringement proceedings have often stood as a sword above the head of Romania. Therefore, our country is extremely cautious and does not want to risk such proceedings triggered by the European Commission for breaching the Community legislation on the obligation to unbundle the production and transmission activities in the energy industry. If the Ministry of Economy, Energy and Business Environment, resulting from the merger, remained shareholder of Transelectrica and Transgaz, it would mean that the new giant ministry would control both the transmission and system operators and energy producers (Hidroelectrica, Nuclearelectrica) and gas producers (Romgaz), which would be against EU rules. Therefore, a draft

Emergency Ordinance for Government reorganization, on the agenda of the first meeting of Orban Executive, provides, besides the merger of the Ministry of Economy and Ministry of Energy and Business Environment, for the transfer of electricity and natural gas transmission system operators, Transelectrica and Transgaz, from the Ministry of Economy to the Secretariat General of the Government (SGG). Thus, following the merger of the respective ministries, the Government will change the institution responsible for exercising the capacity of majority shareholder of Transelectrica and Transgaz, which will be SGG, led by Antonel Tanase. Transelectrica and Transelectrica have been subordinated to SGG before, in 2014. In March 2013, the two companies were transferred from the Ministry of Economy to the Ministry of Finance, after the European Commission had imposed the separation

of the shareholder quality in economic operators carrying out the electricity and natural gas production and supply activity from the shareholder quality in the transmission operators. Changing the ownership of the two companies was announced since March 2012, but at the time the Government hadn’t decided which ministry would take over the stakes. In late 2013, the European Commission reported that Transelectrica and Transgaz were still not fulfilling the conditions imposed by the European legislation to be certified as Independent System Operators of the power grid and of the natural gas network in Romania, the Commission giving a negative opinion for two notifications in this regard of the National Energy Regulatory Authority (ANRE) and formulating recommendations to the authorities in Bucharest for the entry into the legality of the two companies.

project with polycentric events, whose main objective is to boost Romania’s transformation through technology. The first steps in achieving this objective is the coagulation of the key actors in three strategic directions: entrepreneurial ecosystem, entrepreneurial education ecosystem and public policies, with annual tactical and strategic objectives, in 5 and 10 years. The main aspects of the project include: Boosting the technology and entrepreneurship ecosystem for Romania’s development; Presenting the transformational projects carried out by

representatives of the local technology ecosystem; Providing know-how and resources for students, future or young entrepreneurs, start-ups and SMEs. Opening the event, the President of Romania, H.E. Klaus Iohannis, mentioned: “Romania Tech Nation is the project needed by the modern Romania, not only for the message dedicated to the importance of innovation and technology for the economy, but also for the call for mobilization that entrepreneurs address to the young generation. It is the best impetus for the young generation and future businessmen.”

ROMANIA TECH NATION

omania Tech Nation was launched on October 8, in the lecture hall of the Polytechnic University of Bucharest, an initiative of the National Council of Small and Medium Enterprises in Romania (CNIPMMR), together with Banca Comerciala Romana, an event held under the High Patronage of the President of Romania, Klaus Iohannis. Romania Tech Nation represents the project of Romania’s transformation through technology, entrepreneurship and digital education. Romania Tech Nation is a multi-year

LAST LINK IN THE MIDDLE CORRIDOR CHAIN

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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

RAMPET Group – Grup Feroviar Roman (GFR), GR Logistics & Terminals LLC (Georgia) and ASCO Logistic CJSC (Azerbaijan) signed in Tbilisi the Agreement establishing a Consortium that will operate regular shipping between the ports of Constanta and Batumi/Poti. The agreement represents another step by which the member companies of the Middle Corridor Association – the TransCaspian International Transport Route collaborate to intensify the flow of goods along this route. In June, GRAMPET Group - Grup Feroviar Roman (GFR) and NMSC Kazmortransflot LLP, the National Sea Carrier of the Republic of Kazakhstan, signed a Memorandum of Partnership as part of the same project. “One year after joining the Middle Corridor Association, we manage to activate the Batumi/Poti - Constanta shipping route, which has a very important role for the freight transit from Asia to Europe – it is basically the last piece missing from the Middle Corridor chain,” Gruia Stoica, president of GRAMPET Group, said. “At the same time, the Tbilisi agreement brings us closer to our stated goal of launching the

first rail freight transports between China and Western Europe that will transit Romania.” “The lack of a direct naval connection between the Georgian ports and Constanta has so far been a major obstacle in attracting transports for Europe on this route. Alternative routes, which go through Istanbul or Piraeus, are noncompetitive, because they have a transit time of 12 to 24 days. Once a permanent and regular connection between the ports of Georgia and Romania is launched, we can reduce this transit time by 5 days forth/5 days back, so that the transit time between the Georgian ports and Constanta is reduced to 2 days,” Sorin Chinde, Vice President of the GRAMPET Group’s Transport Division, added. Under the Agreement, the consortium will operate a ship with a capacity of 144 TEU (Twenty-foot Equivalent Unit) or 72 FEU (Forty-foot Equivalent Unit), which will carry shipments 3 times a month. The management team of the Con sortium will be formed by Gruia Stoica - GRAMPET Group President, Lasha Akhalbedashvili - Director of GR Logistics & Terminals LLC, and Azer Mammedov, General Manager of ASCO Logistic CJSC. 7

Journalists: Adrian Stoica, Daniel Lazar, Evgenios Zogopoulos, Dumitru Chisalita Digital Manager: Justin Iancu

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HEADLINES

LOWEST PRICE OF NATURAL GAS IN THE LAST 6 MONTHS IN ROMANIA

he spot gas market in Romania, operated by the Romanian Commodities Exchange (BRM), recorded the lowest price of the last 6 months, i.e. RON 67/MWh. Thus, the spot gas price fell below the regulated price of RON 68, witnessing a downward trend lately. Thus, on October 20, 2019, 300 MWh were traded at the price of RON 67 on the Intra-Day Market, and at the total quantity traded on this market (990 MWh) resulted in a weighted average price of RON 68.12. The total quantity traded on October 20, 2019 on SPOT markets of BRM was 990 MWh on the Intra-Day Market and 2,074.603 MWh on the day ahead market for natural gas. On October 20, 2019, weighted average prices for day ahead (RON

78.65/MWh) and intraday (RON 68.12/ MWh) were below RON 80/MWh, witnessing an obvious downward trend. Following the introduction of the gas price of RON 68/MWh both suppliers and producers, waiting for a better price, in the cold season, preferred to store significant gas quantities from the domestic production. The Romanian Commodities Exchange is a private company of public interest, established in November 1992, the first trading session taking place on December 10, 1992. Currently, BRM’s activity is regulated under Law no. 357/2005 on commodity exchanges and under Law 297/2004 on the capital market. BRM organizes several types of markets of public interest, the main activity being focused on the cash market and the auction market. In the

Cash Market, the commodities traded are: natural gas, electricity, petroleum products, coal, fuel processing, CO2 allowances, general merchandise, building materials, vegetables, fruits, grains. In 2007, BRM issued for the first time for the Romanian market the first quotations for petroleum products, and in late 2013 it issued the first quotations for grains. In the Auction Market procedures carried out are of acquisition, sale, rental, BRM being the most important consultant in the area of public procurement for products, services and works for any type of contracting authority. BRM’s activity is carried out at the headquarters in Bucharest and through the territorial network that includes 20 terminals.

ROMGAZ AND SOCAR TO COOPERATE IN UPSTREAM OIL AND GAS PROJECTS

omgaz and SOCAR, the State Oil Company of the Republic of Azerbaijan, have signed a Memorandum of Understanding under which the two companies will jointly cooperate in upstream oil and gas projects. The purpose of this Memorandum is to establish a strategic cooperation in order to develop projects of common interest primarily in the Republic of Azerbaijan and Romania, as well as internationally. “Cooperation with a partner like SOCAR represents an excellent opportunity that will bring a lot of mutual benefits for both companies.

Sharing the know-how and transfer of technology and experience between the two countries with a very similar history in the oil and gas industry will lead to a successful partnership. The state-of-theart technology and expertise may unlock significant discovery in the frontier basins, especially those in the underexplored frontier offshore basins,” said Constantin Adrian Volintiru, the CEO of Romgaz. Romgaz is 70% state owned company, listed at Bucharest Stock Exchange and London Stock Exchange, involved in exploration, production, storage and marketing of natural gas. It is the largest gas producer and the main natural gas 8

supplier in Romania. SOCAR is a state-owned energy company, operating on global scale. The company fulfils many functions among which exploring oil and gas fields, producing, processing, and transporting oil, gas, and gas condensate take a big part. SOCAR also markets petroleum and petrochemical products within the country as well as across a number of international markets. The company’s vision is to become a vertically integrated international energy company with advanced experience in operation efficiency, social and environmental responsibility.

HEADLINES

NEW GAS DISCOVERY IN THE PROXIMITY OF PRODUCING TOTEA FIELD

MV Petrom has discovered new hydrocarbon resources in Oltenia region (Gorj county). â&#x20AC;&#x153;Over the years, the Totea gas field has been one of the main contributors in our portfolio. As with any oil and gas field, Totea has started to decline after the end of the plateau production level in 2017. The discovery of additional resources in the proximity of Totea field is great news for the potential of the area and will compensate some of this decline,â&#x20AC;? said Peter Zeilinger, OMV Petrom Executive Board member responsible for Upstream.

The drilling of the well Totea 4461 was started in January 2018 and reached final depth in September of the same year. The well Totea 4461, drilled to a depth of over 4,300 meters, was successfully tested in April 2019 up to 500,000 cubic meter of gas per day. Tie in to the Totea facilities through a new built pipeline was achieved in less than a year and the experimental production to test the potential and extent of the new accumulation has been started. Investments in the new well and facilities amount to approximately 50 million euro. This is in addition to the 200

million euro already spent since 2011 for the development of the gas infrastructure in the Totea area. Development works included drilling of five deep gas wells and construction of the 4540 Totea surface production facilities. Natural gas from the Totea gas field is transported via a 25 km pipeline to the Hurezani gas hub for treatment and then delivered into the National Transportation System. With the newly added well, the gas production from the Totea field, could provide heating for over 500,000 households.

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

HEADLINES

SIEMENS GAMESA TO ACQUIRE ASSETS FROM SENVION FOR EUR 200 MLN

iemens Gamesa Renewable Energy has reached agree ment to acquire selected European assets of Senvion Group for EUR 200 mln. The assets included in the transaction are a large part of the European Onshore Service Business of Senvion Group and all associated assets and operations to provide full service, all the Intellectual Property of Senvion, as well as the onshore blade manufacturing facility in Vagos, Portugal. Senvion’s European service assets will strengthen Siemens Gamesa’s capacity and potential in an important segment. The acquisition of a Service fleet of 8.9GW from Senvion will take Siemens Gamesa to a total of nearly 69GW under maintenance. The addition of these assets helps to diversify Siemens Gamesa’s business mix and geographical

exposure with contracts that offer longterm visibility and renewal rates that have historically been very high. The onshore blade manufacturing plant in Portugal is one of Europe’s most competitive manufacturing facilities. The Vagos plant would help to strengthen Siemens Gamesa’s industrial value chain and reduce dependency on supplier sourcing from Asia, mitigating volatility amid the uncertainties brought about by current trade issues. The highly competitive facility is complementary to existing SGRE blade capacity, has a bestin-class operational features and will help to support international sales. The intellectual property of Senvion allows Siemens Gamesa to further enhance its technology portfolio for future Siemens Gamesa development. “This transaction is an important step forward for Siemens Gamesa,” said

Markus Tacke, Chief Executive Officer. “Bringing Senvion’s service assets on board will help us to drive growth in a key market segment and add important capacity in Germany and other important European markets, while the blade factory helps us mitigate the risk in the difficult trade environment. We’re bringing good people and good business into the company and that’s a win for all parties.” As part of the acquisition, approxi mately 2,000 Senvion employees are expected to join Siemens Gamesa. Subject to obtaining the necessary regulatory approvals and achieving other closing conditions, Siemens Gamesa expects to close the respective acquisition of assets in the first half of the fiscal year 2020 (October 2019 - March 2020), and as a result it will have no impact on financial performance in fiscal 2019.

INDUSTRY’S FIRST INTEGRATED AUTOMATION SOLUTIONS PROVIDER

ockwell Automation and Schlumberger announced the closing of their previouslyannounced joint venture, Sensia, the oil and gas industry’s first digitally enabled, integrated automation solutions provider. The joint venture leverages Schlumberger’s deep oil and gas domain knowledge and Rockwell Automation’s rich automation and information expertise to address this fast-growing market. “Sensia will make industrial-scale digitalization and seamless automation available to every oil and gas company so

their assets can operate more productively and profitably,” said Allan Rentcome, Chief Executive Officer of Sensia. “It will make oil and gas production, transportation and processing simpler, safer, and more secure.” Headquartered in Houston, Texas, Sensia is projected to generate initial annual revenue of USD 400 million and employ approximately 1,000 employees. Sensia will operate as an independent entity, with Rockwell Automation owning 53% and Schlumberger owning 47% of the joint venture. Rockwell Automation made a USD 250 million cash payment to Schlumberger at closing. 10

Sensia provides hardware, software, systems and petrotechnical expertise to automate processes and workflows in all segments of the oil & gas industry. The joint venture will leverage deep Schlumberger oil & gas domain knowledge and the rich automation and information expertise of Rockwell Automation to provide highly integrated and repeatable solutions, to increase the efficiency of oilfield production throughout its lifecycle. The combined technology and expertise will help oil & gas companies globally maximize the value of their investments.

HEADLINES

A LOOK AT LI-ION AND ALTERNATIVE BATTERY CHEMISTRY INNOVATION

rom consumer electroÂ nics to electric vehicles and stationary storage, high power and fast charge capability are key performance metrics for Li-ion batteries. Pure battery electric vehicles can now offer range in excess of 300 miles per charge, but a full recharge can take hours. How can this be improved? Silicon anodes and carbon allotropes can play a critical role in providing fast charge capability. Volume expansion and irreversible capacity loss are issues that delay the uptake of silicon anodes. Cost feasibility and production at scale will be

needed for the use of graphene or carbon nanotube (CNT) additives, though there is evidence this is beginning to happen â&#x20AC;&#x201C; LG Chem are expanding the production of CNTs and allocating a portion for use in Li-ion electrodes. Beyond materials and devices, fast-charging electric vehicles will have consequences for local power grids and charging infrastructure. Vehicle-togrid and stationary energy storage are being developed as solutions to ensure the continued stability of electrical power grids. The IDTechEx Show brings together players across the value chain, from material developers to system

integrators. Learn the latest developments in silicon anodes and high-power energy storage as well as the latest in charging infrastructure at the IDTechEx Show! in Santa Clara, November 20-21. Stationary storage is a growing market where Li-ion will not necessarily reign supreme. Rather than energy density, cost, safety and lifetime are critical. For these requirements, various technologies are being developed, including redox flow batteries and Na-ion batteries. Primus Power, ESS Inc and Natron Energy will be presenting on their solutions for stationary storage.

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HEADLINES

ADNOC AWARDS LUKOIL 5% STAKE IN GHASHA HYDROCARBON CONCESSION

n October 15, in Abu Dhabi (UAE), as part of the state visit of Vladimir Putin, the President of the Russian Federation, Accession to the Ghasha Concession Agreement with a 5% share was signed by Vagit Alekperov, President of LUKOIL, and His Excellency Dr. Sultan Ahmed Al Jaber, Group CEO of the Abu Dhabi National Oil Company (ADNOC). Ghasha is a project for the develop ment of previously undeveloped deposits of gas, oil and gas condensate as part of 9 shallow fields in the Arabian Gulf west of Abu Dhabi. Next to ADNOC, other partners in the Concession are ENI (25%), Wintershall Dea (10%) and OMV (5%). The project is expected to produce over 40 million cubic meters per day of natural gas and 120,000 barrels per day of crude oil and gas condensate. In addition to the Ghasha Concession agreement between LUKOIL and

ADNOC, a tripartite framework Agree ment on future cooperation in relation to the Ghasha concession was signed between LUKOIL, ADNOC and the Russian Direct Investment Fund (RDIF, sovereign fund of the Russian Federation). “The development of the Ghasha concession is the first LUKOIL project in the UAE and we are pleased to partner with ADNOC and cooperate with RDIF in this project. LUKOIL has extensive experience in offshore fields, both independently and in consortia with other major international companies. We are glad to enter the project in the UAE with such a significant resource base and with such experienced partners. Joining this project is fully consistent with our strategy,” Vagit Alekperov said. “We are very pleased to partner with LUKOIL on this crucial project, which also marks the first time that we partner with a Russian energy company across our full value chain. We are also pleased to have

agreed a strategic framework agreement with LUKOIL and RDIF that builds on the award and offers potential for collaboration in relation to the Ghasha concession. The concession award, as well as the framework agreement, reflect the strong and strategic bilateral ties between the UAE and Russia and highlight the important role of energy cooperation in strengthening the relations between our two countries. LUKOIL joins our other value-add partners on the Ghasha concession, which is integral to our objective of enabling gas selfsufficiency for the UAE. The transaction is consistent with ADNOC’s targeted approach to engage with strategic partners that contribute the right combination of best-in-class expertise and advanced technology, market access or capital to unlock maximum value from Abu Dhabi’s resources for our mutual benefit while delivering the greatest possible returns to the UAE,” Dr. Sultan Ahmed Al Jaber noted.

GSP TOOK OVER 3 COMPANIES FROM ROHRER GROUP

he Competition Council has authorized the transaction to be achieved by the acquisition of assets and takeover of activities and of the related staff from three companies within Austria’s Rohrer Group (Rohrer Oilfield Services, Rohrer Catering Services and Rohrer Emergency Services) by some companies member of GSP group (GSP Offshore, Grup Servicii Petroliere Logistic, Sea Protect Group Fire and Grup Servicii Petroliere Catering).

The transaction aims to provide maintenance services for the oil and gas industry, as well as cleaning, disinfection and pest control services in offshore and onshore locations, as a result of GSP Offshore being declared winner of a public tender organized by OMV Petrom. Rohrer Group mainly operates in the field of industrial insulation, industrial cleaners, scaffolding and fluid transport for the oil and gas industry. The companies within the GSP Group 12

carry out offshore drilling and offshore construction activities, oil equipment production, and tourism activities. Following an assessment of the economic concentration, the Competition Council has found that the proposed operation did not raise a significant obstacle to effective competition on the Romanian market or a substantial part thereof and there were no serious doubts on its compatibility with a normal competitive environment.

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

HEADLINES

CIVIL SOCIETY AND INDUSTRY TO PUSH FOR A CLIMATE NEUTRAL ECONOMY

broad group of 100 organisations from major industrial sectors and civil society calls on EU policymakers to accelerate the uptake of clean and renewable electricity as the most cost-effective and energy efficient strategy to deliver a climate neutral Europe. The European Commission’s LongTerm Decarbonisation Strategy ‘A Clean Planet for All’ showed that renewable and decarbonised electricity must increase significantly, replacing fossil fuels in Europe’s energy mix, as a precondition to meeting our climate and energy objectives. Electrification has the potential to profoundly reshape Europe’s economy, revitalise its industry and ensure a clean and healthy environment for its citizens. It can drastically cut Europe’s EUR 5bn per week bill for fuel imports, reduce energy consumption by 4-8 times and address the severe health risks associated with poor air quality.

The Declaration released by Wind Europe calls on EU policymakers to deliver a meaningful Green Deal and fasttrack Europe’s electrification by: • Mainstreaming clean and direct electrification in the heating, cooling and transport sectors (including heat pumps and electric vehicles), as the most costeffective and energy efficient strategy to address climate change; • Supporting a robust industrial strategy towards climate neutrality to ensure Europe’s leadership in renewablesbased, decarbonised and digital electricity solutions including electrolysers; • Ensuring that investments in energy networks, especially smart electricity grids, support the transition to a climate neutral economy; • Modernising the energy taxation regime to accelerate the shift towards decarbonising electricity consumption and increased uptake of clean electricity in end-use sectors; • Securing sufficient financing in

the EU budget to support regions and Member States with a different starting point, including a meaningful Just Energy Transition Fund; • Targeting Research and Innovation funding to accelerate a cost-effective transition in hard to abate sectors (e.g. cement, shipping, aviation), notably through an increase of the Horizon Europe budget to EUR 120 bn. “Zero-net carbon emissions by 2050 is technically and economically feasible. But only if we get renewables to supply the bulk of our energy demand. They’re one third of electricity today. But electricity is only 24% of our energy. We need to increase that. In particular we need to get more electricity into industrial processes, buildings and transport. They’re still largely powered by fossil fuels. Electrifying these parts of our economies would cut CO2 emissions and save money – because electric vehicles and heating are more energy efficient than fossil fuels,” WindEurope CEO Giles Dickson said.

SIGNING THE FINANCING CONTRACT TO BUILD THE 400KV OHL GUTINAS – SMARDAN

he National Power Grid Company Transelectrica informs the shareholders and investors about its signing the financing contract to build the 400kV overhead line (OHL) Gutinas – Smardan, amounting to 33.43 million Euros. The non-reimbursable European funding was obtained under the Large Infrastructure Operational Programme

(POIM) 2014-2020, Priority Axis 8 Smart and sustainable systems of electricity transmission and natural gas transport, Specific objective 8.1 - Increased capacity of the National Power System with a view to take over the electricity generated from renewable sources. The total value of such investment is 56.76 million Euros. The electric overhead line will be 140 km long, of which 2 km underground 14

cable, enabling removal of congestions along the main directions of power flows between generating power stations in the eastern part of the country and the western consumption and storage centres, as well as securing the electricity supply of consumers in Moldova region. The work initiation procedures for the new high voltage line will begin in 2020, and the completion term for this investment is December 2022.

ROMPETROL BULGARIA’S 55 FUELL STATION

ompetrol Bulgaria has officially opened a new fuel station in Dupnitsa, a city located 70 km south of the capital Sofia. Dupnitsa is an important industrial and commercial centre in the western region of Bulgaria, with modern facilities in the pharmaceutical sector and heavy vehicles. Thus, Rompetrol Bulgaria has created 9 jobs and is still committed to community development, through jobs generated and taxes paid. The new station is considered a step forward for the comprehensive development program of Rompetrol Bulgaria. “With the opening of this new fuel station, the company continues to develop its network. I am sure that the residents of Dupnitsa and the people traveling through the city will have the opportunity to use the highest quality fuels and to receive the highest-level services,” said Vladislav Rusnac, Chief Retail Officer of KMG International. The station is fully integrated into the Rompetrol concept, with modern facilities and services, using exclusively high-quality fuels obtained at the Petromidia Navodari refinery. “Rompetrol Bulgaria implements its

ambitious full-scale development plan in 2019. Our program includes intensive development - increasing the number of fuel stations in the country, along with progressive rebranding, to provide a new level of customer experience. Following the strategy of KMG International Group, we have already rebranded more than 70% of the Rompetrol Bulgaria chain,” said Ivaylo Trendafilov, General Director of Rompetrol Bulgaria. The development agenda includes active expansion and modernization in the coming years. As part of the KMGI Group, Rompetrol Bulgaria intends to finish a complete rebranding of the network in the next year, in parallel with the increase in the number of fuel stations. Rompetrol Bulgaria is part of the KMG International Group, owned by KazMunayGas, Kazakhstan’s national oil and gas company. Rompetrol Bulgaria has a current network of 55 fuel stations throughout the country and uses only high-quality fuels produced at the Petromidia refinery. The company is pursuing active development in the coming years, including expanding the network and constantly improving the quality of services. 15

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OPINION

Last Amendments to the Construction Law On 30 October 2019 the last amendments (adopted under Law no 193/2019 – hereinafter the ‘Amendment(s)’) to the Construction Law no 50/1991 (the ‘Law’) were published in the Official Gazette of Romania. As per Article 12 para 1 of the Law no 24/2000 on legislative technique, the Amendments entered into force on 2 November 2019.

Daniel Vlasceanu Partner at Vlasceanu, Ene & Partners

e interpret the Amend ments as a positive step forward towards reducing bureaucracy and, consequently, the duration of the permitting process. One may see that the legislator ‘invites’ the public authorities to use modern techniques (already available for a number of years within the business environment) – e.g. submitting clarifications via e-mail or issuing urbanism certificates with a digital signature. However, using such technical means by the authorities may be rather seen like an ‘audacity’ challenge rather than a technological one, but one should not exclude city halls located in remote areas (where internet has not reached yet). Kindly find below a brief description of the most relevant amendments for the energy sector: 1.Clear limitations as to what public authorities may ask from the applicant We have experienced situations when authorities extensively (almost abusively) interpreted certain (mostly technical) aspects of the permitting application and asked for supplementary documents or 18

even imposed conditions hardly related to the object of the requested building/ demolition permit. In an attempt to prevent such situations, the Amendment (under Art. 5 para 4 of the Law) expressly forbids requesting under the urbanism certificate any approvals unrelated to the permitted objective. 2.Measures to speed up the permitting process Filing/obtaining documentation with/ from the competent authorities in person may be inefficient (particularly in case of demolishment permits when it is likely that the applicant is no longer active in said area). We welcome the newly introduced possibility to validly communicate the urbanism certificate, in a digital format (bearing a digital signature), via e-mail (as per Art. 6 para 22 of the amended Law). Moreover, if the technical documentation needs rectification/supplementation, such actions may be requested via e-mail. These measures could facilitate official valid communication via e-mail (which would obviously speed up/ shorten the permitting procedure).

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Emergency issuance of building permit was reduced to only 7 days (from 15), against an emergency tax. However, the effective application of this emergency procedure will depend on the efficiency of the county/local competent authorities, as each of them must organize its own system and set a tax (Art. 7 para 16 of the amended Law). The urbanism certificate must be issued within 15 days (reduced from 30 days), as per Art. 6 para 2 of the amended Law. Moreover, the verification of the supporting technical documentation must be performed by the authorities within 10 working days for the urbanism certificate and within 5 working days for the building permit. 3.Simplification measures Overall, the spirit of the Amendment is clearly in favour of simplifying the permitting formalities; it introduces a number of measures meant to remove/ facilitate completion of the permitting steps. Some of said measures are currently (in a similar form) included in the Application Norms of the Law, but they will benefit of superior legal strength being directly reflected in the Law. The most relevant are: - should the works not start within the permit’s validity period, (under certain conditions) a new permit may be granted without the issuance of an urbanism certificate and other approvals [as per Art. 7 para (6) under the amended Law]; - should the works not be completed within the permit’s validity period, (under certain conditions) a new permit may be granted without the issuance of an urbanism certificate and other approvals [As per Art. 7 para. (61) under the amended Law]; - should the works be suspended for a period longer than the permitted execution duration, (under certain conditions) restart of the works may be allowed only on the basis of a technical report regarding the completed works [As per Art. 7 para. (62) under the amended Law]. 4.Specific aspects for the oil and gas industry There has been a debate for almost a

decade with respect to the necessity of obtaining (or not) a construction permit when acquiring seismic. Art 3 para 1 letter e) of the Law refers to industrial constructions that can be built with the observance of the provisions of the construction permit and of the specific regulation for (among others) “drilling and excavation works required for geotechnical studies and geological prospects”. The Amendment introduces under Article 11 para 7 letter c) of the Law an exception from the obligation to obtain a building permit for “seismic prospecting […] provided they do not entail drilling or construction works”. The Amendment maintains the exception from the obligation to prepare an urbanism documentation for permitting oil/gas wells located extramuros (Romanian: extravilan). However, for facilities or pipelines (also located extra-muros) this exception has not been extended; as such, it still can be required to prepare such urbanism documentation for extra-muros facilities/pipelines (sometimes substantially delaying the permitting process with direct consequences on bringing onstream the production itself).

Conclusions The difficulty in obtaining construction permits is one of the relevant elements when analysing a country’s openness for doing business. In most of the debates around investments in Romania, permitting (with various facades or implications – be it access to land, lack of title evidence, improper official records etc.) is constantly mentioned as an obstacle. Apart from this, our country ranks disastrously low when it comes to regulatory stability. Within this context, we dare mention the Amendment as a slim ray of light: although there is room for improvement, the Amendment aims to bring speed, clear limitations on the authorities’ interpretation and use of modern technology – all being good ingredients for improving the permitting procedure. 19

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Delicate Situation of Romania’s Supply with Russian Gas in the Winter of 2019-2020 “Romania floats on a sea of oil and sleeps on a pillow of gas” - statements of Romanian officials, which brought in 1964 Romania’s exclusion from the countries which benefit from Russian gas.

Dumitru Chisalita Judicial Technical Expert in Oil & Gas

he winter is approaching and with it the need to import gas from Russia, through the points located at the border with Ukraine. The Romanian energy diplomacy of the recent years brings Romania to a delicate situation. After the World War II, in the sphere of influence of the former USSR, which included Romania, an organization of economic and scientific-technical cooperation was established between countries in the respective sphere, conceived as a response to the Marshall Plan and Western interstate economic integration that began to take shape. Thus, in January 1949 the Council for Mutual Economic Assistance (CMEA) was established. The founding members, 20

together with USSR and Romania, were: Bulgaria, Czechoslovakia, Poland and Hungary. The German Democratic Republic, Mongolia, Cuba and Vietnam joined later. The purpose of this organization was to coordinate the development plans of national economies, specialization and cooperation in production, coordination of the main scientific and technical research of mutual interest. Within this organization, in addition to governing bodies, the standing committees were formed on branches, with regular meetings, which reviewed the situation and prospects of the respective branch, including in terms of gas. In 1970, the International Investment Bank (IIB) was established, whose members were Bulgaria, Czechoslovakia,

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Cuba, Mongolia, Poland, the GDR, Romania, Hungary, the USSR and Vietnam. The objective of its activity was to concentrate resources for industrial investments and other resources in member countries concerned and to grant long- and medium-term loans in transferable rubles, for a maximum duration of 15 years. By IIB establishment it was also aimed to extend the base of raw materials, energy and fuel, one of the main objectives financed by it being the construction of the gas pipeline Orenburg (field located in southern Russia) to the western border of the USSR, with a length of 2,700 km. This project, which laid the foundation of international gas transit

systems and gas supply to European countries, established that each country had to build its pipeline section on its own, subsequently following to benefit, in exchange, from natural gas supplied from the former USSR. This agreement did not include Romania, which was the only country that built its own pipeline section being paid for this operation. This situation was due to high officials from Romania, who at the first talks with the Soviets in 1964 on this project claimed loud and clear that this project was of no interest because “Romania floats on a sea of oil and sleeps on a pillow of gas,” as Nikolai Baibakov - head of Gosplan of the USSR said later. In recent years, the numerous

statements regarding gas imports from the Russian Federation, accusations against some companies selling gas of Russian origin and the lack of relationship with the representatives who own the sources that winter after winter (from 1989 to date) ‘save’ Romania, determined the reduction of interest for Russian gas to reach Romania. If we add the exaggerated statements regarding Romania’s energy independence, overlapping the lack of systemic reorganization of the natural gas sector, around the winter of 20192020 we are in a delicate situation in case the contract between Gazexport (Russia) and UkrTransgaz (Ukraine) is not signed.

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Renewable Energy in the Fight with Coal We start with a statement, or better said clarification, which appears frequently in the media of all types, phrases that inform us that the most known resource of Earth, coal, is already “on the street”; situation which will soon lead to its fall or to the end of using this resource to produce electricity. The question is - are these only statements?

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

e know that the dynamics of coal consumption, for heating etc., today, focused on global heating, has always been on the upward curve. Global figures could show, is approximate values, that in 1997 the use of coal was 50%, about 1,997 tons of oil equivalent. The, during 2007-2017, there was a certain decline at global level. Intergovernmental Panel on Climate Change – IPCC, a UN body, in the Special Report on Emissions Flow Compatible with the Need to Limit Global Warming to 1.5 degrees Celsius presented the above figures. This report gives the example of the UK, which has set the target of completely eliminating coal by 2025, as well as that of China and India which produce, using coal, 55% of the global energy. IPCC shows that the UK has resumed coal consumption, increasing the quantities pressed by the climbing price of natural gas. In parallel, coal production and export 22

from Russia and especially from China, countries that together cover 62% of the world’s total, have increased. As far as India is concerned, it will reach in 2040 to a coal consumption of one billion tons. Mathematically, analysing China and maintaining the current coal consumption, it will lift the presence of carbon dioxide to 28% of the quantity emitted worldwide. Angela Merkel has recently visited India, a country with record levels in terms of pollution, the city of New Delhi being the peak, with its negative record in terms of unbreathable air. Also, the pollution level is unacceptable, level that has raised mortality due to carbon smog over human limits. At the end of her visit, Angela Merkel promised to provide India with an aid of around EUR 1bn for the upgrading of the extractive industry and of the production of coal-fired electricity, possibly for the replacement as much as possible with natural gas or, the golden dream, with renewable sources.

OPINION

Global Carbon Project has recently provided the estimates recorded in 2018 compared to 2017. These ‘records’ are: India +6.3%; China +4.7%; US +2.5%; Europe much less, after a decade of major declines. The main causes could be: increased use of coal in China and India; increased demand for petroleum products as a result of continuously increasing car transport; quantitative increase in the use of natural gas in industry; insufficient increase in the production of energy from renewable sources to offset the increased use of fossil sources. The Bloomberg report on the level of investments for the development of the renewable sector showed a global decline, by about 8%, with China reaching 32% of the total. It is true that during the period under review, a 15% - 20% decrease in solar and wind power (installed power)

in China, the largest in the world, led to its inadequate use for the production of electricity to be sent to electrical networks. It obviously appears that the fate of the planet substantially depends on China and the switch from coal to renewable resources. In 2014, China’s Prime Minister declared a decisive war against pollution and poverty in equal proportions as significance. But the government obligations to reduce coal use by 2030 have proven to contradict the decisions of the same government, which leads to the further use of these resource proven to be dangerous. In the years since the signing of the Paris Agreement, significant investments, of USD 478 billion, have been made, the focus being mainly on the 120 coal-fired plants in China, the most technically efficient, the financing coming mainly from Japan. Chinese companies support

over 200 coal-fired power plants designed or under construction in less developed countries. This explains, to some extent, the accusation appeared in the New York Times, which labelled China as a “hypocritical, if not even a colonialist” country! Obviously, in the face of these truths, both political and technical, the rethinking of electricity production must be enriched with other technologies. Today, it is known that the production of renewable energy does not exceed, worldwide, 5% of the total production. Thus, a worldwide effort is required on all directions for discovering other ways to reduce the use of coal; maybe the increase, also aided by new technologies, in the use of natural gas for cogeneration, in order to get out of this ‘narrow place’ where we currently find ourselves, continuing to rely on coal.

The Answer to Efficient Energy Consumption: EcoStruxure Schneider Electric provides energy and automation digital solutions for efficiency and sustainability. The company combines world-leading energy technologies, real-time automation, software and services, developing integrated solutions for homes, buildings, data centers, infrastructure and industries. Marius Persinaru â&#x20AC;&#x201C; Country President Schneider Electric Romania & Republic of Moldova, echoed that in our conversation.

Dear Mr. Persinaru, you have been President of Schneider Electric Romania & Republic of Moldova since 2016. How does Schneider Electric position itself at global and regional level? Schneider Electric has a history of over 180 years, being founded during the first Industrial Revolution of Schneider brothers, in France. The company provides energy management and automation solutions, which allow clients to become more efficient and more sustainable. In a world where, often, the rush for profit prevails over anything else, our perspective is that a company can be more profitable making important cost savings, without forgetting that we live on a planet with limited resources and a reduced capacity of Earth regeneration. Our solutions capitalize on the latest technologies for housing, buildings, data centres, infrastructure and various industries. Due to our integrated solutions, processes within companies and electricity supply become more efficient, more sustainable and more reliable. We entered the Romanian market in 1997 and we activate on numerous segments, including buildings, IT, water & waste water, oil & gas, utilities, metals & minerals, mining. In the capital of Romania we have also our Bucharest Hub - a customer services centre, which serves a large part of Europe.

What does the portfolio of technologies of the company include and to whom are they addressed? Our focus is on the business segment. Our connected technologies and solutions for energy management and process automation within companies allow them to streamline their activity and make it more sustainable. We activate on numerous markets, such as: industrial sectors, energy, buildings, medical services. On the business segment our solution is EcoStruxure, IoT-enabled, open, interoperable platform, which has been tailored for main five key markets: EcoStruxure Building, Grid, IT, Plant & Machine. Our portfolio also includes products intended for B2C users, sold through partners - home automation solutions, switchgears or home UPS. 26

How do you assess the energy market in the area you operate in relation to the overall picture? The energy market is one of the most important for us and there are many things to be done in this field. It is interesting that, in the middle of so many discussions about digital transformation, it is not among the leaders in terms of digitization - not only in Romania, but on a global level. We believe it

should be one of strategic importance, so as to cope with the deep changes it needs to support the growing consumption and integrate more energy from renewable sources.

In the context of the current challenges at European and global level - climate change, amendments to the community directives, as well as the fiscal, legislative, technological evolutions, how attractive are the markets in Romania and the Republic of Moldova for investors? They are attractive in view of the fact that they have room for big growth, compared to the mature Western markets. Even if there are some challenges that must be overcome - in terms of fiscal or legislative unpredictability or with regard to infrastructure, there are some certain advantages: natural resources, geographical position, mobile telephony network and Internet access very well developed, maritime and river transport facilities (Romania), as well as a highly qualified workforce in the IT or engineering fields although insufficient in terms of number, compared to the demand.

be functional only in a digitized network. Moreover, distribution problems can only be solved by adopting digitized solutions, with advanced monitoring, analysis, control and planning features. The systems currently used operate based on several interfaces and multiple databases, obviously with higher management and maintenance costs. The alternative is a unique technology, of the

ECOSTRUXURE IS OUR EFFICIENCY SOLUTION, WHICH CAPITALIZES ON THE LATEST DISCOVERIES IN THE IOT, MOBILITY, CLOUD OR CYBER SECURITY FIELDS.

What are in your opinion the main problems/deficiencies of the energy system in Romania at this point and what could be the solutions? One of the problems is that, although traditionally an energy producer, Romania has significantly increased its import lately, at very high prices. We all know what huge impact on the economy a general blackout has, so measures to prevent such a situation are mandatory. Another problem is the price of electricity, which is high, one of the highest in the region, which has an impact on the industry. Therefore, measures to upgrade the electricity distribution networks, to avoid losses and make reaction more flexible in the case of interruption of electricity supply are vital.

One of the stringent issues remains, indeed, the workforce in the sector. How do you see the evolution of this situation? The workforce problem has been affecting numerous sectors for several years already and will become more acute in the future, in absence of measures coming from both the private environment and the public one. The private environment is already taking measures in this regard. Our company, for example, has partnerships with profile universities in several cities in the country, organizes internships for students and, in addition, focuses on the benefits granted to employees, so as to reduce staff fluctuation and attract new applicants. In the long run, it is possible that the import of workforce will have a higher share to balance the current situation.

In the latest draft energy strategy investments in the energy system are estimated at tens of billions of euros. How can they materialize in your opinion? Digitization of the electricity distribution system should be a top priority, for one very simple reason: any new developments in the field of energy will 27

type of EcoStruxure ADMS, which we have in our portfolio and comes with a single database and a unique interface. The benefits of implementing such smart systems are tangible: for example, in Italy, we have collaborated with Enel, which has approximately 32 million customers in the Italian Peninsula, to upgrade its network. According to the clientâ&#x20AC;&#x2122;s data, the modernization process has brought, besides an easier and more efficient management, a reduction of losses equivalent to the consumption of 50,000 Italian households, each year.

As energy efficiency is currently a number one priority, not to mention that electricity prices have recently reached a record level in Romania, what solutions does Schneider Electric propose to this end? EcoStruxure is our efficiency solution, which capitalizes on the latest discoveries in the IoT, mobility, cloud or cyber security fields. The connected products in its structure analyse the processes in a company and generate analytical data, based on which measures for the efficiency of activity can be taken. EcoStruxure is adapted for all areas where there is room for a greater efficiency of the

energy consumption - from spaces and commercial buildings to data centres and electricity distribution networks. Implementing these solutions has spectacular results, as it results from a report by Schneider Electric, which summarizes the data from the projects carried out over the past 5 years,

OUR CONNECTED TECHNOLOGIES AND SOLUTIONS FOR ENERGY MANAGEMENT AND PROCESS AUTOMATION WITHIN COMPANIES ALLOW THEM TO STREAMLINE THEIR ACTIVITY AND MAKE IT MORE SUSTAINABLE.

in 41 countries. Although there is a bias that digitizing processes within a company could be a costly and complicated process, the study shows that energy savings can reach up to 85%, with an average value of 24%.

What role does innovation (research and development) play within the company and what are the most important programs & investments in this field? Research is a very important field for our company, given that we plan to bring innovation to every level of a company. 5% of the global turnover goes to R&D annually. The company is involved, together with other partners, in numerous research projects, covering areas such as smart grid, cyber security, renewable energy, IoT, smart cities. One of the projects in progress - until 2021 - is FITOPTIVIS, which aims to increased flexibility in smart transmission grids with storage entities and large penetration of renewable energy sources. Another current example is Flexitranstore, an integrated platform for demand.

Renewable energy storage at a large scale would bring significant benefits for this type of energy. How does Schneider Electric see this business area? Renewable energy storage is related to the development of the prosumer concept, which is part of redefining the energy consumption paradigm. They can be organizations that produce energy with the help of solar panels, mixed electrical and thermal energy systems or wind turbines or household consumers who have the necessary technologies to produce and use energy. Romanian Energy Regulatory Authority (ANRE) regulations on prosumers were issued in our country last year. It is an important step, the procedures being simplified, and distribution operators having the obligation to make the connection possible within 30 days. Investment in the photovoltaic system is quite difficult to recover, but there are countries where the investment is recovered even in 5 years. Indeed, for a better control over the generated energy and a uniform distribution of resources - irrespective of the environmental conditions (whether or not), the energy storage systems are the solution. They allow 28

generation and storage at optimal times to be used when needed or even sell the surplus to the operator. In the case of those who enter a demand response management program, the system can automatically coordinate the requests from the electricity supplier. Schneider Electric has such energy storage solutions ready to be implemented.

What does the Smart City concept mean for Schneider Electric and what is the companyâ&#x20AC;&#x2122;s approach to it? From our point of view, a city must fulfil three conditions to be smart: have

a great degree of connectivity, energy efficiency and sustainability. Residents of a smart city have at their disposal the necessary framework for an efficient and comfortable lifestyle: accurate and handy information through applications, fluid traffic, smart parking systems. Considering that the urban global population will grow by 2.5 billion by 2050 (according to the United Nations Department of Economic and Social Affairs), it is vital for a city to reduce its carbon footprint and improve its electricity and water supply systems, to meet the demand. For example, a smart

city should monitor the energy consumption and find alternative sources, such as micro-grids or solar energy. There are potential solutions, but it is important that the local administrations have the vision of how they can make the cities smart and adopt the most appropriate measures.

What are the figures of the previous year (the most important achievements) and how do you estimate that 2019 will end? 2018 was a good year, with growths, and we expect 2019 to be even better. We focus on promoting augmented reality solutions, which allow for the detailed visualization of any information about an equipment, from a tablet, speeding up the decision-making process. Of course, we continue the projects of modernization of electricity distribution networks, already started. 29

OIL & GAS

Scarabeo 9 | Photo: Saipem

OIL & GAS

Romgaz and GSP Start Trinity Project in the Black Sea The National Gas Company Romgaz SA and Grup Servicii Petroliere (GSP) have announced the start of operations within Trinity-1X project, in Trident Block, located in Romaniaâ&#x20AC;&#x2122;s Black Sea territorial waters, in early November. The gas resource is estimated at approximately 30bcm, and the two partners, Lukoil and Romgaz (which owns a 12.2% stake in the project) will operate the well, with the help of GSP and Italyâ&#x20AC;&#x2122;s Saipem. Text by Adrian Stoica 31

OIL & GAS

rinity-1X well, at a distance of 215km off the coast of Constanta City, is the 3rd exploration well to be drilled in Romania within EX-30 Trident Block, water depth reaching in the exploration area 1,076m and the proposed well depth being 2,975m. Drilling of the exploration well will be followed by the detailed analysis and professional evaluation of the results obtained, and by integrating the new information the new geological model will underlie the future decisions whether to drill new wells or not; depending on data obtained, a final investment decision can be made to move to the field development phase. “It is a great success from my point of view and we hope it precedes other important achievements in terms of Black Sea exploration. The estimated resource would reach over 30bcm. The estimate comes after all the calculations, here we are talking about seismic, data interpretation, drilling and all the rest,” Romgaz CEO Adrian Volintiru has stated.

Investment worth USD 100mln Works are managed by GSP, but performed by Scarabeo 9 rig, owned by Italy’s Saipem, part of Eni group, one of the largest global players in the energy industry. Registered under the flag of Bahamas, Scarabeo 9 is a last generation semisubmersible drilling rig. Built in 2009, it is designed to work at depths of up to 12,000 ft (3,657.60 meters) and execute drilling at depths of up to 50,000 ft (15,240 meters). It has a gross tonnage of 36,863, length of 115 meters and breadth of 86.33 meters. Idu Shipping & Services is the agent of the vessel. Costs for this new well are estimated at USD 100mln. The major novelty for GSP is that for the first time the group manages a deep offshore drilling project, Gabriel Comanescu, owner of the offshore drilling company GSP, has mentioned.

The name Trinity was chosen with a view to the success of exploration, in the Christian religion representing “the unity between the Father, the Son and the Holy Spirit”. “Through an offshore exploration partnership in the Black Sea basin, Romgaz has approached a new direction of business development, as it aims to consolidate its portfolio of resources and reserves and create an optimal framework for a sustainable development of the company,” Adrian Volintiru also mentioned.

A new discovery expected

Exploration history - EX-30 Trident Block

Chances for EX-30 Trident Block in the Black Sea to hold another major gas reserve exceed 50%, besides the reserve already discovered in 2014, Gabriel Comanescu mentioned. The second reserve could reach 30 billion cubic meters of gas, i.e. Romania’s consumption needs for approximately three years. In the event where the information on the second deposit in EX-30 Trident Block is confirmed, it would mean that total reserves would amount to 60bcm. In a pessimistic scenario, the total reserve could reach 45bcm, which could cover Romania’s consumption for four years and a half. Given that Trinity-1X well drilling follows a recent commercial success obtained by the second well, 1X Lira, which led to the discovery of a gas accumulation with a contingent resource of approximately 32bcm, it is desirable that this trend continues, so as to be able to prepare a confident plan for the appraisal and development of EX-30 Trident Block.

During May - October 2015, the first exploration-discovery wells were drilled. Daria-1X Well reached a depth of 2,870m, in water depths of 335m, and the result without hydrocarbon shows has determined well abandonment, for this purpose following the best practices in the oil industry, in compliance with the European offshore regulations on exploration wells abandonment. Lira-1X Well, which led to the discovery of a gas accumulation with a contingent resource of approximately 32bcm, reached the depth of 2,700m, in water depths of 702m. The reserves of Lira discovery have not been considered sufficient for a profitable production from an economic point of view; therefore, the titleholders of petroleum agreement have considered necessary to extend the exploration period, to verify by drilling a least an exploration-discovery well, Trinity-1X, the confirmation of new potential hydrocarbon reserves.

From left to right: Marco Toninelli (Saipem), Adrian Volintiru (Romgaz), Gabriel Comanescu (GSP)

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OIL & GAS

OMV Petrom Posts Higher Investments and Sales OMV Petrom Group has published the financial results for the third quarter of 2019, when the investment value, of RON 1.1 billion, increased by 8% compared to the similar period of last year. The value of consolidated sales increased by 13% in the first nine months of 2019, compared to the similar period of 2018, to RON 18.2 billion, supported by higher sales in both Downstream Oil and Downstream Gas.

Text by Daniel Lazar

n the first 9 months of the year, the Clean CCS operating result was relatively stable (+2% y/y), totalling RON 3.5 billion, with a lower contribution in the third quarter, mainly influenced by the decrease in oil prices and hydrocarbon volumes. Net profit amounted to approximately RON 2.8 billion, up 3% compared to the similar period of 2018, and investments totalled RON 2.8 billion. Contribution to Romaniaâ&#x20AC;&#x2122;s state budget during JanuarySeptember 2019 was around RON 9 billion. In the third quarter of this year, the Clean CCS operating result was RON 1.2 billion (down 27%), and the Clean CCS net income attributable to OMV Petrom stockholders was RON 1 billion (down 26%). In the same period (July - September), in the Upstream segment, the clean operating result was RON 546 million,

down 43%, mainly influenced by the decrease in oil prices and hydrocarbon volumes, while production fell by 6.2%, especially due to natural decline and transfer of marginal fields. In the Downstream Oil segment, the Clean CCS operating result was RON 580 million, by 7% higher, capturing increased demand for refined products and excellent operational performance. The OMV Petrom indicator refining margin recorded the value of USD 6.46/ bbl, down 2%, and the refinery utilization rate stood at 99%. Moreover, retail sales volumes were by 4% higher. In the Downstream Gas segment, the Clean Operating Result was RON 57 million, down 40% (Q3/18 included Brazi power plant insurance revenues). In turn, the gas sales volume was 37% higher compared to the similar period of last year, supported by acquisitions from third parties. Net electricity production, of 1 TWh, was comparable with that in the 34

similar period of last year, in conditions in which OMV Petrom supplies natural gas and electricity to regulated markets: 4.47 TWh of natural gas were delivered in Q3/19 to the households and district heating for households suppliers, and 0.48 TWh to the power regulated market suppliers, as per the set allocations.

Sales 10% higher in Q3/19 Regarding the third quarter of 2019 (Q3/19) versus the third quarter of 2018 (Q3/18), the consolidated sales value increased by 10%, supported by higher sales volumes for petroleum products, higher sales volumes and prices for natural gas, and higher prices for electricity. In contrast, lower selling prices for petroleum products partially offset the aforementioned increases. Downstream Oil represented 74% of total consolidated sales, while Downstream Gas accounted for 24% and Upstream

OIL & GAS

for 2% (sales in Upstream being largely intra-group sales rather than third-party sales). The Reported Operating Result of Q3/19 amounted to RON 939mn, lower by 44% versus Q3/18, influenced mainly by unfavourable oil prices and the costs estimated for future soil remediation in relation to Arpechim refinery. The net financial result improved from a loss of RON (30) million in Q3/18 to a loss of RON (13) million in Q3/19 mainly due to lower interest expenses in relation to the discounting of receivables. As a result, profit before tax for Q3/19 amounted to RON 926 million, 44% lower than the Q3/18 value of RON 1,650 million. Income tax amounted to RON (140) million, while the effective tax rate was 15% in Q3/19. Net income attributable to OMV Petrom stockholders was RON

785 million, compared to RON 1,379 million in Q3/18.

Outlook for 2019 For the full year 2019, OMV Petrom expects the average Brent oil price to be at USD 65/bbl (2018: USD 71/ bbl) and refining margins are estimated to be around USD 5/bbl (2018: USD 6.28/bbl). Demand for oil products is expected to be above the 2018 level, and demand for gas and power is expected to be broadly similar to last year. At the entire Group level CAPEX (including capitalized exploration and appraisal) is currently anticipated to be around RON 4.0 billion and of this amount about 75% is to be routed to Upstream. In this sector, the company officials expect

production to decline by around 5% yoy, excluding portfolio optimization, mainly due to natural decline and maintenance activities. In terms of investments, it was planned to drill around 100 new wells and side-tracks and maintain a constant level of workovers yoy. OMV Petrom Group has an allocation to supply the regulated gas market with 12.7 TWh (revised up from 12.5 TWh in the previous ANRE decision) for the period May-December 2019 at the maximum price of RON 68/MWh, estimating higher total gas sales than in 2018. Also, Brazi power plant must supply to the regulated market 1.14 TWh of electricity for the period March - December 2019, at the price of RON 259.58/MWh, estimating a lower total net power production than in 2018.

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Prahova ranked among the top three counties at national level in terms of value of the Gross Domestic Product. Also, this county is among the top 10 counties of Romania in terms of contribution to national export. Referring to investments, both foreign and domestic, they have continued to develop, even if not at the same level as in the past years, at a time when the issue of energy security at national, regional, European and global level overlaps an economic and financial situation that many characterize as being on the verge of a new crisis, states the President of Prahova Chamber of Commerce and Industry Aurelian Gogulescu. 36

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Prahova Remains a Magnet for Investments in the Oil Industry Prahova is the heart of Romanian oil, Ploiesti being the capital of all oil-related activities in Romania and one of the most important centers of petrochemical technology, research and education in the world. With the help of Prahova Chamber of Commerce and Industry (CCIPH), we have conducted an analysis of Prahova economy, with a focus on the advantages attracting companies in this area, known as Romania’s Texas.

Text by Daniel Lazar

urrently, 4 refineries operate in Romania Petrobrazi, Vega, PetrotelLukoil and Petromidia, of which the first 3 are within the municipality of Ploiesti. Also, the Petroleum-Gas University, the only one with this profile in South-Eastern Europe, has been operating in Ploiesti since 1967. In Prahova there are 24,250 active companies registered with the Trade Register, most of them (41.14%) activating in the industrial sector. The surface of the county is 4,716 km2 (2% of the country’s surface), and the population is 795,931 inhabitants, which leads to a density of 169 inhabitants/ km2. The degree of urbanization is 50.5%, Prahova having 2 cities (Ploiesti

and Campina), 12 towns (Azuga, Baicoi, Boldesti-Scaieni, Breaza, Busteni, Comarnic, Mizil, Plopeni, Sinaia, Slanic Prahova, Urlati, Valenii de Munte) and 90 communes.

The oil industry in the economy of Prahova County The oil industry accounts for 22% of the economic activity of the county and 65% of the turnover of the industrial sector. The 772 companies in the field have a total turnover of RON 11.9 billion (EUR 2.53 billion), obtained with the 15,000 employees (10% of the employees of companies). According to the President of Prahova Chamber of Commerce and Industry, Aurelian Gogulescu, “Prahova ranked 37

among the top three counties at national level in terms of value of the Gross Domestic Product. Also, our county is among the top 10 counties of Romania in terms of contribution to national export. Referring to investments, both foreign and domestic, they have continued to develop, even if not at the same level as in the past years, at a time when the issue of energy security at national, regional, European and global level overlaps an economic and financial situation that many characterize as being on the verge of a new crisis”. In a ranking of the counties of Romania according to the value of the Gross Domestic Product, after the capital Bucharest, Prahova is the third county after Constanta and Cluj, with a GDP of EUR 9.2 billion, that is 4.7% of the

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national GDP. GDP/capita (in 2018) is EUR 12,470/capita, above the national average, which is EUR 9,500/capita. “Another important challenge is the labour force crisis, felt in most economic sectors, but in industry is felt the strongest. CCI Prahova has organized in the last two years a number of actions to identify solutions, together with all the factors involved or the impacted companies, to diminish the effects of this crisis. The immediate solution to diminish the effects of this crisis is import of workforce, to which many Prahovabased companies have already resorted. But the sustainable solution is to revive the vocational education, with a focus on the trades for which there is a high demand in the labour market. Also, a current challenge is the decrease in the inflow of foreign investments. It should be noted that, during the economic crisis, which started in 2009, Prahova maintained a good value of foreign investments. During 2011-2012, the peak years of the crisis, our county ranked third at national level, after Bucharest and Timis, in terms of volume of new foreign investments. But over the last two years they are increasingly modest, even in Prahova. Even so, we have to admit that, in the field of oil processing, of production of oil equipment, foreign investments have been and continue to be very important,” the President of CCI Prahova Aurelian Gogulescu also mentioned.

Arguments for investors The main arguments that attract foreign investors in the oil industry in Prahova County are: • Proximity to Bucharest, the capital of Romania, which is at a distance of 60 km from the city of Ploiesti; • Solid industrial tradition, especially the one related to the oil and gas industry; • The existence of 5 industrial parks in public administration and 5 private industrial parks, which offer investors spaces and utilities to the highest standards;

• The great variety of natural resources, among which oil is the most important, with other resources being extracted as well, such as gas, salt, coal, mineral waters and other minerals and raw materials; • Highly-skilled and specialized workforce, involving at the same time relatively low costs; • A developed network of educational units that ensures the highly qualified and specialized workforce and the existence in Ploiesti of the Petroleum-Gas University, which represents a nursery for specialists in the field of petroleum engineering, economic sciences, social sciences etc.; • Development of the financialbanking market, materialized in the presence of a large number of banks; • Strong development of road and rail infrastructure; • Modern telecommunications network; • Certification of an increasing number of companies on quality management systems, environment etc.

Contribution of industrial parks to attracting foreign investors The advantages of locating/ relocating the business in an industrial park are: the preferential tax regime: the absence of taxes on buildings and land; avoiding pollution restrictions given the tightening of environmental legislation regarding industrial activities in urban areas - which practically forces the relocation of production activities; streamlining of the production structure; concentrating the investment in one place and the possibility of attracting suppliers and customers in the same investment space can result in lower costs. In Prahova there are 5 industrial parks with public administration: Ploiesti Industrial Park (with 4 locations - Ploiesti, Urlati, Mizil and Ciorani), Plopeni Industrial Park, Brazi Industrial Park, Barcanesti Industrial Park (Administrator: Prahova County Council), Prahova Industrial Park (Administrator: Valenii de Munte Local 38

Council) and 5 industrial parks with private administration: Allianso Business Park, Dibo, WDP, Primus and Meteor.

International trade in goods In 2018, the exports made by the companies from Prahova County totaled EUR 2.43 billion, which represents 3.5% of Romania’s exports (EUR 67.73 billion). Imports amounted to EUR 3.82 billion, accounting for 4.6% of Romania’s import (EUR 82.86 billion). The main partners of Prahova County for the export activity were: Italy (19%), Germany (12.4%), France (6.9%), the United Kingdom (6.2%) and the Republic of Moldova (4.7%). The main products and services exported by Prahova-based oil companies were: oil, chemical and petrochemical equipment, drilling equipment: offshore and onshore; valves, compressors, gears, motoreducers, spare parts, in countries such as Saudi Arabia, Oman, Algeria, Republic of Benin, Gabon, Ukraine, Egypt, Congo, Kuwait, Russian Federation, Uzbekistan, Libya, Azerbaijan, Tunisia, Serbia, Turkey, Turkmenistan, Qatar, Bahrain and Iraq. Other chemicals and petrochemicals were exported - car LPG, gasoline, diesel, petroleum coke, naphtha, mineral oils, n-hexane, solvents, sulphur, heavy fuel oil, meta-bisulphite in the Republic of Moldova, Tunisia, Ukraine, Georgia, Cyprus, Malta, Netherlands, Turkey, Kuwait, China, Kazakhstan, Singapore, Turkey, India, Egypt and in the Russian Federation. Other export benchmarks are: heavy bearings (India, China), engineering services in the oil and gas industry - design, construction, industrial installations, technical consultancy and assistance, managerial consulting, technical services; project management, design, technical studies in the field of oil and natural gas. All of the above make us believe that the oil industry has a good future in Romania, and Prahova will continue to be ‘the Capital of black gold’.

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UPG’s Major Projects for the Use of Renewable Energy The Petroleum-Gas University of Ploiesti (UPG) is the first higher education institution in South Muntenia Region to sign a financing agreement worth around RON 30mln for the improvement of the university educational infrastructure through the Regional Operational Program 2014-2020. Also, other major investments in this prestigious higher education institution will be able to support the process of transition to the use of renewable energy sources, currently three projects falling within this strategy being shaped.

Text by Daniel Lazar

who attended the event for signing this agreement with UPG Rector Mihai Pascu Coloja and the President of Prahova County Council Bogdan Toader, a graduate of UPG. 1,170 projects have been submitted so far in the South Muntenia region (including the applications dedicated to SUERD), under which non-reimbursable funds of over RON 7.8bn are requested. Of these, 303 applications, with a requested value of over RON 1.9bn, were submitted by applicants in Prahova County. At the level of Axis 10, for the improvement of the educational infrastructure, 23 projects are submitted for financing, under which funds worth over RON 170mln are requested. “The Petroleum-Gas University of Ploiesti is concerned and involved in the process of transition to the use of renewable energy sources, three projects falling within this strategy currently being shaped,” the Prorector of UPG Mihail Minescu mentioned. The first project that can be implemented very soon (early 2020) is the one for the use of solar energy. The project consists of covering two of the car parks with photovoltaic panels that will produce the energy necessary for the functioning of the university campus. Thus, the university will become an

he project for the improvement of the university educational infrastructure through the Regional Operational Program 2014-2020 is aimed at the endowment of Building I, which belongs to the Faculty of Petroleum Technology and Petrochemistry, with tradition within UPG Ploiesti, which has launched a master’s program in English, a continuation of the license program in English. The period of implementation of this project is 42 months, expecting investments worth a total of RON 27,955,222.01. Of this amount, over RON 23 million constitutes the contribution from the European Fund for Regional Development, RON 3.6 million represents the allocation of the state budget, and the eligible co-financing of the beneficiary is almost RON 560,000. “This project will be completed by a second one, which is currently in the period of technical and financial evaluation, so that UPG will sign financing agreements worth RON 60mln, in conditions in which other universities in South Muntenia Region have found it more difficult to submit projects, and others have not submitted any. From this point of view, UPG Ploiesti has maintained its status as the most important university in the region,” said the Director of ADR South Muntenia Liviu Musat 40

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electricity producer with an installed power of around 300 KW. The produced electricity will cover the consumption needs of the university and the surplus will be capitalized by other consumers by selling it on the OPCOM platform. This project is also implemented through the ESCO program (Energy Services Company) and will be financed by Electrica Furnizare. The project includes the installation of charging stations for electric cars. The second project is financed from Norwegian funds through the Innovation Norway program - a hybrid system for energy efficiency using geothermal energy applied in UPG campus in Ploiesti. The project is in the last stage of technical evaluation and the working visit of the group of foreign and Romanian experts will take place during October 28 - November 30, 2019. The total value of the project is EUR 2.2mln, of which EUR 300,000 is the co-financing incurred by Prahova County Council and EUR 45,000 is that of the company PECEF Tehnica. The project consists of heating two buildings within UPG using heat pumps, with the thermal energy of water extracted from 8 wells dug at a depth of around 100 meters. The investment will result in decreasing the demand for thermal energy obtained in conventional gas-fired boilers and thus the decrease in CO2 emissions. A third project, submitted for evaluation a month ago, is one in which a consortium from three countries participates: Romania (which will finance the project with EUR 250,000), the Netherlands and Germany. Our country is represented by the Petroleum-Gas University of Ploiesti, which is also coordinator of the project. UPG’s partner is Veolia Energie Romania and the subcontractor is the University of Oklahoma. The partners from the Netherlands are Delft University of Technology and the Water Research Institute KWR - Bridging Science to Practice and the partner from Germany is the German Centre for Geological Research. The project is aimed to conduct a feasibility study for a system for the storage of thermal energy coming from hot water obtained following the production of thermal and electrical energy during summer, when no heat is supplied, by introducing the hot water in the soil where it will be stored and use this energy for heating during winter, using the water pre-heated in the soil in the thermal energy production system that will be used by population through the district heating system. Romania was included in this consortium because it has a well-developed district heating system compared to the two partner countries. “I believe that in this way the University can be an important vector for the local community to get involved in such projects, leading to the decrease in the current degree of pollution,” the Prorector of UPG Ploiesti Mihail Minescu has stated. Currently, UPG has relations of collaboration with countries in the European Union and beyond, based on 71 cooperation agreements with institutions from: Portugal, Bulgaria, Greece, Republic of Moldova, Kazakhstan, Turkmenistan, Lebanon, China, Serbia, Belarus, Azerbaijan, USA, Tunisia, India,

“The Petroleum-Gas University of Ploiesti is concerned and involved in the process of transition to the use of renewable energy sources, three projects falling within this strategy currently being shaped.” Prorector of UPG Mihail Minescu

Slovenia, Poland, France, Italy, Ukraine, Morocco, Cuba, Vietnam, Egypt. In 2018-2019, 15 new collaboration agreements were concluded with the university and economic environment. The mobility number was 95 (students and teachers), the total amount being EUR 172,567. In the new academic year, the mobility will amount to 202, for which the total amount of EUR 812,668 will be granted. Also, two grants have been won with the donor states Norway, Iceland and Lichtenstein, with a total value of over EUR 150,000, and following a donation of the Timken Foundation, of EUR 80,000, an online technology will be implemented in an amphitheatre that will allow hearing English courses from universities around the world. 41

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Will Romania Become a Player on the Regional Gas Market? In conditions in which Romania is not really connected to the major gas mains in the region, we need to be extremely attentive to all the decisions and reactions of the actors who decisively influence the situation from an energy point of view. There are constant mentions that our country could become energy independent if Black Sea resources are managed to our benefit by the political decisionmakers. But until then, we depend to a large extent on others. Or, surprise (?), we could help others.

Text by Daniel Lazar

or years, Europe has become accustomed to the fact that Russian energy giant Gazprom is the main supplier for many European countries. In the event (less likely, because the economic influence comes from here as well) where Gazprom were to stop transit to other countries, Ukraine’s state-owned company has considered Romania for transit in the region. Two years ago, Gazprom increased gas exports to Europe by 8.1%, to the record value of 193.9 billion cubic meters. Currently, Gazprom ensures one third of Europe’s gas needs, through three main routes: the pipelines in Ukraine, the Yamal-Europe route, via Belarus and Poland, and the Nord Stream gas pipeline, which links Russia to Germany, via the

Baltic Sea. Having a gas surplus, Ukraine could deliver it to Poland, Slovakia and the Republic of Moldova through the Romanian pipelines, if Gazprom stops the transit provided in an agreement concluded 10 years ago.

Will Romania come into play? Surprisingly, Ukraine’s state-owned gas giant Naftogaz considers, for the event where no agreement is reached with Russian monopoly Gazprom to continue Russian gas transit to Europe through the Ukrainian transmission system as of January 1, 2020, the option for countries such as Poland, Slovakia and the Republic of Moldova to be supplied with gas from Romania. The idea was expressed by Naftogaz CEO Yuri 42

Vitrenko, after the last round of tripartite negotiations between Ukraine, Russia and the European Commission, for signing a new agreement on Russian gas transit through Ukraine, negotiations carried out in Brussels, in conditions in which the one in force expires at the end of this year. The discussions have not reached yet any result and will be resumed at the end of November, with very little time before the expiry of the transit agreement.

European Commission believes in the success of negotiations The representative of the European Commission in the negotiations, Vice President Maroš Šefčovič, responsible for the Energy Union, is a Slovak politician fluent in Russian, who studied at the Institute for International Relations in

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Moscow. He expressed confidence in the success of the new round of negotiations, even though he is currently disappointed with the results. Maroš Šefčovič stated that the future agreement was supposed to be based on European Union legislation, and the participants in the discussions were going to determine the volume and duration of the agreement. “I had prepared today’s trilateral talks in a way that should have allowed us – if there was a political will on all sides – to see a positive progress. It was assumed that the future transit agreement would be based on EU legislation. It was assumed that the volume and duration of the future agreement would be determined. Also, it was planned to discuss the legal disputes between Gazprom and Naftogaz. These parameters were acceptable to our Ukrainian partners who were ready to engage on the basis of our proposal. Unfortunately, the Russian delegation was not prepared to do the same at this moment”.

Ukraine, energy bridge between various European states “Ukraine is trying to be an energy bridge between various European states, so that, for example, it can transport gas from Romania, where there is a surplus, to countries such as Slovakia, Poland or the Republic of Moldova. The issue of gas transmission to Moldova will be relevant this winter, because Moldova will also remain without Russian gas, if there is no transit (of gas through Ukraine - Ed.),” said Naftogaz’s CEO Yuri Vitrenko. He made this statement after being asked what options for using the Ukrainian transmission system were being considered for the situation in which Russian gas would no longer transit Ukraine. Vitrenko added that, at least in the near future, no such alternative use would be able to secure the revenues that Kiev currently receives from the transit agreement with Gazprom, which amount to about USD 3 billion per year. Ukrainian Energy Minister Oleksiy

extended with 3 months, until the end of this year.

Orzhel was pleased with the results of the trilateral negotiations in Brussels on the transit of Russian gas through Ukraine. He expressed hope that the talks were headed in the right direction, saying that Ukraine fully supported the proposals made by the European Commission, namely the conclusion of a long-term agreement with Russia, for 10 years, which would also contain concrete figures on gas volume. The Ukrainian parliament, he added, will soon examine the draft law on the creation of an independent operator on the gas transit market, adjusted to European rules. Moreover, the Kiev authorities say they have enough gas, because the mild autumn of 2019 made it possible for the state-owned company Naftogaz to save 21.6 billion cubic meters of gas for the winter, by a quarter more than the amount it had in the same period last year.

Russian Energy Minister Alexander Novak has mentioned that Russia was ready to work in accordance with European law and, if necessary, based on the existing agreement with adjustments. “Participants in the negotiation process are constructive. In the near future, we will continue the contacts regarding the drafting of acceptable rules of interaction between the gas transmission system operators in Russia and Ukraine, we will study the methodology of determining the tariffs for pumping gas on the territory of Ukraine and we will analyse it in terms of competitiveness,” said Alexander Novak.

Situation of Transgaz projects

Influences from the Republic of Moldova

On the other hand, phase 2 of the project of the operator of the Romanian national gas transmission system, Transgaz, for the interconnection of the national system with the T1 transit pipeline in Isaccea, with the assurance of gas flow in both directions (reverse flow), is delayed and will not be completed this year, but in 2020. In addition, it is necessary to sign interconnection agreements with the Ukrainian transmission operator, Uktransgaz. The latest official information, contained in the report of the Transgaz directors for the first 6 months of the year, shows that these agreements were being negotiated. In the longer term, Transgaz envisages the creation of a third interconnection point of the Romanian transmission system with that of Ukraine, in addition to the existing historical ones, Orlovka-Isaccea and Tekovo-Mediesu Aurit, the total value of the investment being estimated at EUR 125 million, and the deadline for commissioning is 2025. For now, from October 1, the agreement for Russian gas transit to the Balkan states, route known as the Trans-Balkan Corridor, between Transgaz and Gazprom, has only been

The discussions were also attended by 3 representatives of Moldova Gaz. The Minister of Economy and Infrastructure received assurances from the Russian Federation that the Republic of Moldova would have gas supplies in the cold season secured. “We have also discussed this topic with Mr. Novak, in Moscow, who once again confirmed that regardless of the circumstances related to the negotiations they were holding with the Ukrainian side, the Republic of Moldova would be supplied with gas during the winter. However, we, in the Government, also consider a plan B and C, if there are problems with gas transit, what we can do so that the citizens of the Republic of Moldova are supplied with gas,” Moldova’s Minister of Economy and Infrastructure Vadim Brinzan said.

What is Russia’s position

Instead of conclusions The situation is not simple at all, but may the time has come for Romania to negotiate from equal footing as the regional players of the gas market. Will it succeed?

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Csanádpalota Natural Gas Compression Station Inaugurated Hungarian gas transmission system operator FGSZ Földgázszállító, a unit of MOL, inaugurated a HUF 6 billion compressor station necessary for reverse flow of gas from Romania to Hungary in Csanádpalota (SE Hungary).

he necessary investments on the Romanian side will be completed by May 2020, allowing bidirectional flow of at least 1.75 bln cubic meters of gas annually through the interconnector, Minister of Foreign Affairs and Trade Péter Szijjártó stated. “Through creating an opportunity for the two-way transportation of natural gas between Hungary and Romania, the security of the country’s natural gas supply is further improving”, Péter Szijjártó declared at the inauguration of FGSZ Co. Ltd.’s new compressor station in Csanádpalota. At the inauguration ceremony, Mr. Szijjártó said the interconnection of Hungary’s and Romania’s gas pipeline systems and increasing transport capacity is the most important energy security development project to take place in Hungary during the past five years. “Once

the development projects have also been completed in Romania, the opportunity will be open to transport at least 1.75 billion cubic metres of natural gas in both directions each year”, he added. The Minister stressed that the project is a major step forward for the whole of Southeast Europe, and is contributing to the establishment of the Bulgaria-Romania-Hungar y-Austria energy corridor. “In the next phase of the development project, two-way gas transport capacity will be increased to 4.4 billion cubic metres”, the politician informed those present. Mr. Szijjártó explained that the elimination of the existing one-sided energy supply is one of the greatest challenges facing the European Union. “In Central Europe, natural gas plays a major role with relation to the functioning of industry and supplying the population. Until now, the supply of natural gas has fundamentally come from a single source 44

and along a single route”. He mentioned that the establishment of north-south infrastructure is in the strategic interests of the region. “It will contribute to enabling shipments of natural gas from the gas fields in Azerbaijan to reach the region, to enabling liquid natural gas (LNG) arriving in Greece to also be taken into account with relation to supply, and also the natural gas to be extracted in future from the offshore gas fields under the Black Sea”, the Minister emphasised. “There will be progress in the supply security of Central Europe if words are followed by deeds: if all the countries involved develop their transport systems and the links between their national gas pipeline networks are realised”, Mr. Szijjártó said, pointing out: “All this will make sense if we can also take new resources into account with relation to the region’s natural gas supply”. The politician underlined the Hungary has done its homework: “The national

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MOL Leader Zsolt Hernádi, Minister Péter Szijjártó and FGSZ President-CEU Szabolcs I. Ferencz, at the inauguration.

Photo by Tibor Rosta/MTI

transport system is operational, and we are continuously developing our international links”. “It is now time for everyone in the region and globally to complete their own homework”, he declared, adding that the West often puts forward expectations with relation to the diversification of the region’s energy supply, but has failed to provide the required assistance to date. “Neither Romania nor Hungary are impeding the inclusion of new natural gas sources in the region’s gas supply; the only question is: will natural gas ever begin to be extracted from the Black Sea gas field, and if so, when?”, the Minister said. “Hungary’s interests dictate that we cooperate with everybody, including with our existing partners, in the interests of assuring the country’s supply of natural gas”, Mr. Szijjártó emphasised. He explained that as a result of successful negotiations with Gazprom, Hungary’s natural gas supply has been guaranteed until the winter of next year. “All of Hungary’s gas storage facilities are full, and over 6.3 billion cubic metres of

gas are primarily serving Hungarian consumption. In addition, Gazprom is also storing 950 million cubic metres of gas in Hungary in the interests of supply towards the east and south”, the politician told the press. Mr. Szijjártó said Hungary is working with all neighbouring countries to connect their gas networks. “One of the goals of our cooperation with Serbia is to ensure that the natural gas arriving via the second strand of the Turkish Stream gas pipeline reaches Central Europe. Once the Bulgarian system operator issues its guarantee with relation to the quality of natural gas, a tender procedure for the pre-ordering of 10 billion cubic metres of natural gas may be issued for the Hungarian-Serbian border”, he stated. President and CEO of MOL Plc. Zsolt Hernádi explained that the natural gas market of the whole region has become more flexible and secure thanks to the fact that the Hungarian gas pipeline system has been interconnected with practically every neighbouring country. “We have 45

striven to ensure that the links between systems are two-way connections, but this has not been realised so far with relation to Croatia”, he added. Mr. Hernádi said the increase in storage capacity, including the establishment of 1.9 billion cubic metres of strategic capacity, has improved the security of supply. “It is costing 200 million euros-a-year to maintain the infrastructure; the company will continue to assure this in future”, the President and CEO stressed. President and CEO of FGSZ Co. Ltd. Szabolcs I. Ferencz said that the company has been working for ten years on linking the Hungarian-Romanian natural gas pipeline systems. “The establishment of the compressor station has enabled the transportation of 1.75 billion cubic metres of natural gas to Hungary, which is one fifth of Hungary’s consumption, in addition to the previous Hungarian-Romanian gas shipments. The 6-billion-forint (EUR 18 million) project was self-financed by the company and realised over a period of some twelve months”, he added.

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Second Investment Objective Completed Within BRUA Project - Phase 1 On October 31, in the presence of the President of Romania, Klaus Iohannis, and of other high Romanian dignitaries, European officials, ambassadors and diplomats, as well as specialists in the energy sector, the inauguration of the investment objective Gas Compressor Station within the BRUA Project Phase 1 was inaugurated in Podisor (Giurgiu County).

odisor Gas Compressor Station is the second investment objective within the BRUA project Phase 1 the national gas transmission system operator inaugurates within one month, following the Jupa Compressor Station inauguration at the end of September. On this occasion, Transgaz was awarded by the President of Romania with the ‘Industrial and Commercial Merit’ in the rank of Commander, as an appreciation of the importance of the company for the national energy system and its central role in ensuring the energy security of our country. “I am pleased to decorate Transgaz today for its achievements obtained not only now, but over the years, in the development of the energy sector in our country, both at national level and as part

of the regional gas transmission network (...) Podisor Compressor Station is not only an important component of the BRUA Project and a clear success of Transgaz, but also a benchmark for gas transmission in this region. Access to new gas sources and interconnection with Central and Eastern European markets places the BRUA Project at the heart of the efforts on energy security and the integration of gas markets in our region. I believe that the actual steps taken by Transgaz by completing two compressor stations, two out of three, as well as through the subsequent agreements to be concluded, will bring Romania closer to the status of credible partner involved in the increasing energy security across the region,” the President of Romania said. “Through your efforts, as specialists 46

and people dedicated to the energy sector, I expect that, after an investment of nearly EUR 500 million, the BRUA Project will place our country at the centre of the newest and most important regional gas transmission networks. It is indisputable that, in the energy field, Romania enjoys certain advantages. The qualified human resource, the geostrategic position, the diversified energy mix, the important production of natural gas and a strong energy independence provide Romania with authentic premises for a strategic path in the future,” Klaus Iohannis also mentioned. “Transgaz is dedicated to its strategic mission to develop energy infrastructure projects enabling diversification of gas supply sources, ensuring the energy security of the country and energy solidarity, creating the necessary conditions for the sustainable economic

OIL & GAS

development of our country and the whole region. Podisor Gas Compressor Station is one of the central nodes of the National Gas Transmission System. In fact, today we are witnessing a triple inauguration: Podisor Gas Compressor Station; approximately 82 kilometres of pipeline built in the Corbu-Podisor direction and the reclassification of another 42 kilometres of pipeline in the Podisor-Giurgiu direction, upgraded and ensuring a firm transmission capacity of 0.75 billion cubic metres per year, starting with November 1, 2019, through the Giurgiu-Ruse interconnector, by reverse flow. At the same time, after the inauguration of the Jupa Gas Compressor Station on September 30, I would like to announce that we have also completed the approximately 73 kilometres of pipeline between Jupa and Recas, which ensures a firm transmission capacity of 0.75 billion cubic metres per year from Romania to Hungary, by reverse flow. BRUA is not a highway without discharge. BRUA will be part of the National Gas Transmission System, an energy security factor and a driver for national economic development. The BRUA Phase 1 strategic project aims to diversify gas supply sources and facilitate gas transmission from the Caspian region to Central and Eastern European markets. Gas will reach Europe through TAP gas pipeline from the LNG terminals in northern Greece, in Revithoussa and Alexandroupolis, and further through the vertical corridor Greece-BulgariaRomania, providing bidirectional transmission capacities of 1.5 billion cubic meters per year in/from Bulgaria and 1.75 billion cubic meters per year in/ from Hungary,” said the General Manager of Transgaz, Ion Sterian. “Transgaz also carries out other investment projects particularly important for Romania and the region, such as the Ungheni-Chisinau gas pipeline, as well as developments of the National Transmission System, which will allow the connection of all local communities to the gas network,” he added.

About BRUA and Podisor Gas Compressor Station Podisor Gas Compressor Station is part of BRUA Phase 1, which is on the list of Projects of Common Interest (PCI - 7.1.5) of the European Union and is developed in the context of the necessity to diversity gas supply sources in the EU countries. BRUA project aims to ensure access to new gas sources, as well as facilitate Caspian gas transport to markets in Central and Eastern Europe. The project ensures bidirectional transmission capacities of 1.5 billion cubic meters per year in relation to Bulgaria and 4.4 billion cubic meters per year in relation to Hungary. BRUA - Phase I Project consists of achieving the following objectives: • 1 32” x 63 bar 479 km Podisor – Recas pipeline • 3 gas compressor stations (CS Podisor, CS Bibesti and CS Jupa) each station being equipped with two compressor aggregates (one operational and one as backup), with the possibility to ensure bidirectional gas flow. Podisor Gas Compressor Station is a technological installation interconnected with the following main gas pipelines: DN32” CS Podisor – CS Bibesti, DN 20” CS Podisor – Giurgiu, DN40” Tuzla – CS Podisor. The purpose of CS Podisor is to compress gas in the main gas pipelines to which it is connected, in order to offset pressure losses inherent in the gas transmission process. The station is bidirectional; it can compress gas both from Giurgiu or Tuzla to Bibesti and from Bibesti or Tuzla to Giurgiu.

Technical characteristics and specific parameters CS Podisor includes two Gas Compressor Units (one operational and one as backup) made by SOLAR TURBINES USA with 4.6 MW/piece, each of them consisting of: a SOLAR C40 centrifugal compressor for increasing gas pressure for transmission; a SOLAR 47

CENTAUR 50 gas turbine, which is the driver of the centrifugal compressor.

Investment Value The estimated value of works for CS Podisor is RON 104.5 million. The value of the 2 compressor units installed at CS Jupa is EUR 12.6 million.

Investment Execution The works related to the compressor stations are carried out by the Association INSPET SA (LEADER) – PETROCONST SA – MOLDOCOR SA – HABAU PPS PIPELINE SYSTEMS SRL – IRIGC IMPEX SRL – SUTECH SRL – TIAB SA – ROCONSULT TECH SRL, under Works Contract no. 333/23.03.2018. The works commencement order was issued on April 16, 2018. Average number of workers on site: 100/Maximum number of workers on site: 209

Investment importance and benefits In general, the role of the compressor stations in the gas transmission systems is to ensure the delivery of the gas quantities contracted during peak consumption periods. BRUA Project, supported by the European Commission, is a priority, being particularly important both for Romania’s energy security and independence and for integrating European gas markets. Implementing BRUA Phase 1 infrastructure will raise Romania’s energy security by ensuring, in perspective, access to diversified sources and routes for gas supply and interconnection to the regional and European energy market. Also, developing this infrastructure will open up new opportunities for the involvement of suppliers of energy equipment and services in Romania and the rest of Europe and will create new jobs for execution works and for operation on the territory of Romania.

CONSTRUCTION

Lead by TeraSteel An Innovative Solution for Buildings of the Future Text by Daniel Lazar

he companies’ battle to reduce energy consump tion in the pro duction process is increasingly fierce, especially that it also reflects in the financial reports through savings that cannot be overseen. Industrial premises, which are built near the major European cities, also keep up with this trend. This is why TeraSteel, one of the main producers of sandwich panels and lightweight galvanized structures in Central and Eastern Europe, has launched Lead - a new concept of metal hall. “There is a clear trend in terms of construction of sustainable buildings, and we pay special attention to our products and impact that they have on the environment. Lead by TeraSteel is a customized solution, which proposes the creation of modern buildings, prepared for the future. Lead means sustainable and reusable buildings, which places sustainability, energy efficiency and people at the heart of design. We thus meet the needs of our customers and align to the international market trend. The Lead by TeraSteel metal hall means reducing the carbon footprint, higher energy efficiency, a greater resistance to external factors, fire resistance, optimization of costs through superior tightness and the possibility of reusing

the elements when relocating. The beneficiaries of Lead buildings will be one step closer to obtaining BREEAM and LEED4 certification,” said Cosmin Patroiu, TeraSteel CEO. The buildings of the future will have an energy consumption equal to zero, and in the recent years the efforts of producers of construction materials have been focused on the direction of developing sustainable materials. TeraSteel’s decision to launch Lead is in line with the Directive on energy performance of buildings, adopted by the European Union, which provides that, by December 31, 2020, all new buildings should have an energy consumption almost close to zero.

What are the benefits Lead heat insulating panels are obtained with a special technology that allows a higher tightness and savings of up to 20% of energy consumption, compared to market average. The products based on Lead technology provide the beneficiaries of buildings with the possibility to obtain BREEAM (BRE Environmental Assessment Method) and/or LEED4 certifications, the most popular standards for assessing the ecological performance of buildings. Other benefits of the Lead system 48

include: easy relocation of construction, extended warranty for materials, savings of up to 20% of energy consumption, compared to market average, due to higher tightness. Last but not least, the Lead package stands out for its excellent anti-corrosion protection, reducing zinc leakage in soils due to the superior protection of magnesium-aluminiumzinc alloy and is in line with the European REACH standard. TeraSteel products are made in the production facilities from Romania and Serbia. The production facilities in our country are located in TeraPlast Industrial Park in Saratel, Bistrita-Nasaud County (production of heat insulating panels) and in Bistrita (production facility for zinc coated panels). The production facility in Serbia is located in the city of Leskovac and is the first production facility of Teraplast Group located outside Romania, but also the first production unit with entirely Romanian capital, opened abroad after 1990. Currently, TeraSteel exports its products in over 25 countries. The share of TeraSteel Romania and Serbia in the consolidated revenues of TeraPlast Group in the first half of 2019 is 31%. In the same period, production recorded two-digit growths in volumes: 28% for heat insulating panels and 38% for zinc coated panels respectively..

CONSTRUCTION

Best Performing Flat Roof Solution on the Market ROCKWOOL, a world leader in stone wool insulation solutions, has launched on the domestic market the Hardrock 1000 boards, with 1000N point load, which have the capacity to withstand pedestrian traffic on a roof. When installing a roof, most problems occur when there is heavy traffic, which can lead to damage to the stone wool sheets if they do not support a proper point load. Text by Daniel Lazar

he new ROCKWOOL boards with 1000N point load, i.e. around 100Kg force per 50 cm2 (50 cm2 model the heel of a male shoe), are recommended for walkable or semi-walkable flat roofs where different equipment is mounted which requires regular maintenance, as well as in cases where very good mechanical performance is desired. “Most roofing products on the market offer high compressive strength, but this is not relevant for situations where there will be pedestrian traffic; whether we are talking about pedestrian traffic during assembly or occasional pedestrian traffic during the maintenance period. For these, in choosing the right product, the main feature to be considered is the point load. And from this point of view, the Hardrock 1000 is the best performing solution available on the market right now,” said Florin Popescu, Business Unit Director, ROCKWOOL Balkans. Hardrock 1000 boards are made using the Dual Density technology, which

ensures, besides the performing point load, an easy and economical installation due to the higher resistance of the upper layer and the flexibility of the lower layer. The boards can be mounted in a single layer, without compromising the mechanical or thermal properties of the insulation solution. Beyond the mechanical performance, the product also benefits from a good coefficient of thermal conductivity, of 0.039 W/mK. ROCKWOOL Hardrock 1000 is used for the thermal insulation, sound protection and fire protection of flat roofs in the industrial and commercial segment, having as support both the concrete plate and the high-profile corrugated sheet. The company has already delivered over 40,000 m2 of Hardrock 1000 boards to a DIY chain and electronics retailer in Bulgaria. Hardrock 1000 boards are currently produced at the ROCKWOOL factory in Croatia, but in the future, they will also be available at the Romanian factory that the company is building near Ploiesti through an investment worth EUR 50 million. The production of stone wool at the 49

ROCKWOOL factory in Romania will start at the end of this year. “We represent the Group locally, providing advanced insulation systems for buildings. At ROCKWOOL Group, we are committed to improving the lives of all those who experience our solutions. Our experience contributes decisively in addressing the biggest current challenges of sustainable development, from energy consumption and noise pollution, to fire resilience, water shortages and floods. Our range of products reflects the diversity of the needs of the world we live in, while supporting those who use them to reduce their own carbon emissions. Stone wool is a versatile material and is the basis of all our divisions. With approximately 11,000 passionate colleagues from 39 countries, we are the world leader in stone wool solutions, from general building insulation to acoustic ceilings, from exterior plating systems to horticultural solutions, from fibres created for industrial use to insulation for the shipbuilding industry and offshore rigs,” the company representatives said.

ENVIRONMENT

Significant Drop in EU Emissions in 2018 Further Effort Needed to Reach 2030 Target

he European Union (EU) cut its greenhouse gas (GHG) emissions by 2% in 2018, according to preliminary estimates released on 31 October 2019 by the European Environment Agency. However, rising energy consumption continues to hamper progress on the share of energy generated by renewable sources and on energy efficiency. As in previous years, the transport sector remains a particular concern with rising GHG emissions, low uptake of renewable energy sources and insufficient reductions of transport fuels’ life-cycle emissions, according to the European Environment Agency. Moreover, the share of consumed energy coming from renewable sources exceeded the respective targets for 2020 for eleven of these Member States in 2017 (Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Hungary, Italy, Lithuania, Romania and Sweden) and for twelve Member States in 2018 (the same as in 2017, with the addition of Latvia).

Further Effort Needed to Reach 2030 Target The latest report from the EEA entitled ‘Trends and projections in Europe 2019 - Tracking progress towards Europe’s climate and energy targets’ presents analysis of the EU progress towards the

2020 and 2030 targets for climate and energy. The analysis is based on official statistics on energy and GHG emissions up to 2017; preliminary data for 2018, including the “approximated EU GHG inventory”; and national projections of GHG emissions reported in 2019. Two specific analyses provide an overview of emission trends under the EU Emissions Trading System (ETS) up to 2030, and of GHG intensity of transport fuels in 2017.

Reducing GHG emissions The EEA analysis shows that the EU is firmly on track to achieve its 2020 target to reduce GHG emissions by 20%, compared with 1990 levels. Preliminary data from Member States indicate that the EU’s total emissions decreased by 2% in 2018, bringing the total reductions to 23.2% below 1990 levels. However, Member States’ projections are not yet in line with the target for 2030 of at least a 40 % reduction in GHG emissions. According to the EEA analysis, Member States’ current policies can deliver only a 30% reduction by 2030, while implementing all reported planned policies could bring the total reduction to 36%. Based on 2019 reports to the EEA, only Greece, Portugal and Sweden expect to reach their 2030 Effort Sharing targets on time with current policies and measures 50

in place. Seven other Member States (Belgium, Croatia, France, Hungary, Italy, Slovakia and Spain) project to achieve their targets with additional policies.

Emissions down, auctioning revenues up A separate EEA briefing on the EU ETS shows that total emissions from stationary installations declined by 4.1% from 2017 to 2018. This decrease was particularly driven by the reduced use of coal in power plants. In contrast, emissions from airlines continued to increase, by 4.0% in 2018 due to the growing demand in air travel. Collectively, Member States’ projections with existing national policies indicate a 36% cut in ETS emissions by 2030, compared with 2005 levels. This is not yet in line with the targeted contribution of a 43% reduction, the EEA briefing notes. Fewer EU emission allowances were auctioned in 2018 but revenue from those auctions increased from EUR 5.5 billion to EUR 14.1 billion, due to the increase in the average allowance price from EUR 5.8 per tonne in 2017 to EUR 15.5 per tonne in 2018.

Deploying renewable energy: 2020 target within reach The target to increase the share of renewables in final energy consumption

Executive summary ENVIRONMENT

Figure ES.3

Projected progress of Member States towards 2030 climate targets

3 1 Gap to 2030 Effort Sharing target with existing measures (in percentage points of ESD 2005 base-year emissions) On track Not on track

Finland -15.5

Sweden 0.1

Estonia -24.8 United Kingdom -4.9

Ireland -23.5

Latvia -2.0

Denmark -16.2

Lithuania -14.0

Netherlands -3.6 Germany -16.2 Belgium -21.7

Luxembourg -25.3 France -13.3

Poland -20.9 Czechia -1.5 Austria -20.2 Slovenia -0.2

Italy -6.1

Portugal 26.2

Slovakia -5.4 Hungary -3.0

Croatia -1.2

Spain -9.7

Bulgaria -8.1

Greece 9.1

Malta -61.7

Sources:

Romania -12.5

Cyprus -24.8

EEA (2019b, 2019e, 2019f).

sources in 2017 and an estimated 18.0% yet to increasing to reach the Effort tofrom 20%the in previous the EU by 2020 “within willnot respective annual Sharing targets, while in 2018, year. Thisisreversal help ensure fast enough share in 2018 (EEA estimates), the EU EU target of 32% by 2030. According to reach”, according to the report. The EEA this fell to 17 Member States. the 2020 Effort Sharing targets — to which Member remains above the indicative levels for the EEA analysis, the share of renewables estimates that the share of renewables States currently appear to be collectively on track these years set in the Renewable Energy has been growing at an average rate of was 18.0% in 2018. In the transport According to the projections submitted by Member — are met. Directive. It appears everyin year sector however, only 7.6% of energy came 0.7 percentage points States 2019,but, only three Member Statestherefore (Greece,to be on track to meeting its 2020 target of a 20% over the next decade, the increase needs from renewable sources in 2017 and an Portugal and Sweden) expect that their current policies At the national level, current progress is more share. The current pace of deployment to be at least 1.1 percentage points per estimated 8.1% in 2018, leaving the sector and measures will be sufficient to deliver their 2030 contrasting. Some Member States have already remains, average. WithEffort a 17.5% sharetargets of ofonrenewable atreduced risk of missing the 10% to target set below for year Sharing time. An energy additional sevenhowever, their emissions levels theiron 2020 insufficient to achieve the EU’s 2030 consumed energy generated by renewable 2020. The share of renewable energy is Member States (Belgium, Croatia, France, Hungary, target, while for others, the gaps between observed emissions and national targets are widening (see a presentation of progress at country level in Figure ES.3 and Table ES.1). In 2017, 18 Member States had greenhouse gas emissions levels at or below their

Italy, Slovakia and Spain) plan to implement additional policies and measures that will help ensure they 51 achieve their 2030 Effort Sharing targets. The remaining eighteen Member States have not yet indicated in their

in GHG emissions including LULUCF. â&#x20AC;˘

The seventh and eighth scenarios would achieve net-zero GHG emissions in 2050, i.e. a net reduction of 100Â % compared with 1990 levels, due to the LULUCF sectorENVIRONMENT acting as a sink. While the seventh scenario focuses more on technology options, the eighth scenario also considers lifestyle changes as an important element.

Figure 2.2

Source:

(7)

The assumptions taken into account in the eight long-term vision scenarios

EC (2018b, p. 56).

This includes sources of renewable energy but also nuclear (fission) energy.

target of at least a 32% renewable energy share. Since 2005, the use of energy from renewable sources as a proportion of gross final energy consumption has been growing at an average rate of 0.7 percentage points every year. To meet the 2030 renewable energy target, the average annual growth of renewable energy use across the EU would have to increase to at least 1.1 percentage points per year over the next decade. Achieving such growth in the share of renewable energy sources can be achieved both through the further development of renewable energy generation and the reduction of energy consumed from non-renewable sources. In recent years, total energy consumption in the EU grew faster than energy consumption from renewable sources. Such trends will need to be

Trends and projections in Europe 2019 reversed to meet the 2030 target. In 2017, period. Meanwhile, estimates indicate 21 Member States (24 in 2018, according that primary energy consumption - total to recent EEA estimates) indicated a energy demand - decreased by 0.9 % in renewable energy share that met or 2018. With these trends, meeting the surpassed their respective trajectories 2020 energy efficiency target appears towards 2020 targets, as designated by the increasingly difficult, the EEA warns. Renewable Energy Directive. Moreover, to meet the 2030 target of 32.5 % reductions, EU energy consumption needs to decline more than twice as fast Energy efficiency: risk of not meeting 2020 as it did from 2005 to 2017. Despite the targets overall trends and the risk of missing The EEA estimates that final energy the 2020 energy efficiency target at EU consumption - energy consumed by level, a number of Member States have end users - in the EU in 2018 grew for demonstrated notable progress in this the fourth consecutive year, by 0.1 %. area, the EEA notes. To meet the 2030 The worrying overall trend is most target for energy consumption reductions prevalent in buildings, where final of at least 32.5 %, annual reductions energy consumption increased by 8.3 in EU energy consumption over the % from 2014 to 2017, and in transport next decade will have to be more than where the increase was 5.8 % in the same double the average rate of reductions 52

ENVIRONMENT

observed between 2005 and 2017. Primary energy consumption across the EU has fallen by an average of 13 Mtoe per year since 2005 and final energy consumption has fallen by 6 Mtoe over the same period. However, to meet the 2030 target annual average savings of 22 Mtoe and 13 Mtoe, respectively, will be required from 2017 until 2030. To reverse these trends in growing energy consumption and achieve the sustained pace required for the EU to meet its 2030 energy efficiency targets, Member States will need to adopt new policies and implement additional measures to those in place today. Despite overall energy efficiency developments and the risk of missing the 2020 energy efficiency target at EU level, a number of Member States have demonstrated notable progress in this area. In the context of the Energy Efficiency Directive, Member States have set their own national non-binding energy efficiency targets for 2020, and 20 of them seek to achieve reductions in their total final energy consumption. However, in 2017, 12 Member States had levels of energy consumption that exceeded a linear trajectory from 2005 levels to their national 2020 targets.

Slow progress in transport fuels The EEA’s ‘Quality and greenhouse gas intensities of transport fuels in the EU in 2017’ report shows that suppliers of fuel for road transport are not reducing the GHG intensity of fuels fast enough to meet the 6% reduction target by 2020, compared with 2010. Based on data from 22 Member States, the average GHG intensity of the fuels consumed in these countries was only 3.4 % lower than in 2010 in 2017 (2.3% when considering emissions related to indirect land-use change which are used by fuel suppliers for reporting purposes). According to the EEA report, diesel continues to dominate fuel sales in the EU with 72.3% of sales in 2017. The share of diesel as compared with petrol has increased over the years, from 55.6% of total sales in 2001 to 72.3% in 2017. All diesel sold in the EU

contained biodiesel, whereas 87.6% of petrol contained bioethanol.

Scenarios in Europe’s strategic long-term vision The in-depth analysis that accompanies the Commission’s strategic long-term vision explores eight different scenarios that describe possible future developments based on what are known as “no-regret policies”. Five of these scenarios explore how much GHG emissions could be reduced by different combinations of technologies and actions. The sixth scenario combines, cost-efficiently, the elements from the five previous scenarios. The seventh scenario includes all zerocarbon energy carriers and assumes increased energy efficiency. It includes the use of bioenergy carbon capture and storage (BECCS). The eighth scenario includes the elements of the seventh scenario in a highly circular economy, with fewer carbon-intensive consumer choices and lifestyle changes (such as dietary changes), limited growth in air travel, increased car-sharing and more rational use of heating and cooling. This scenario also focuses on how to strengthen the carbon sink to reduce the need for CCS and BECCS. The results of the scenarios highlight the complexity at play when aiming for net-zero GHG emissions and highlight the importance of sinks: • The first five ‘technology-driven’ scenarios reach around an 80% reduction in GHG emissions compared with 1990, excluding the LULUCF sector; • The sixth scenario includes all the technologies and actions from the first five scenarios and achieves a 90% reduction in GHG emissions including LULUCF; • The seventh and eighth scenarios would achieve net-zero GHG emissions in 2050, i.e. a net reduction of 100% compared with 1990 levels, due to the LULUCF sector acting as a sink. While the seventh scenario focuses more on technology options, the eighth scenario also considers lifestyle changes as an important element. 53

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POWER

Status of National Power System 2,500 MW Missing Inventory by 2027 54

POWER

In absence of appropriate investments, Romania risks not being able to ensure its energy demand within several years. The analyses conducted by the national power grid operator in Romania Transelectrica show that the system could witness missing production capacities of over 2,500 MW by 2027. This in conditions in which the commissioning of new units is continuously postponed and, on the other hand, a number of capacities will be withdrawn from operation in the following years.

Text by Adrian Stoica

he analysis recently conducted by Transelec trica, in terms of situation of the National Power System (NPS), reveals the extent of the disaster in which it is found after decades when investments were continuously postponed. The only certainty is the commissioning next year of the power plant build in Iernut by Romgaz. Otherwise, everything is in the project phase. In this situation is also the largest energy project, the construction of Unit 3 of Cernavoda nuclear power plant, which will probably be redesigned, given that signals have been launched on giving up the investment together with China General Nuclear Power Corporation.

CEO, the hot spot of the system One of the hottest spots is that relating to the survival of the Oltenia Energy Complex (CEO), whose existence is vital for the national power system. Ensuring 25% of the national power production, CEO is facing major financial difficulties due to accelerated increase in the price of CO2 emission allowances. The option proposed by the Ministry of Energy is to introduce a subsidy allowing the company to purchase CO2 emission allowances for a while, thus giving it the respite needed to retire a number

of groups operating based on coal and replace them with gas-fired groups.

Many projects, few achievements The sensitivity analysis of the national power system, recently conducted by Transelectrica at the request of the National Regulatory Authority for Energy (ANRE), shows that for 2022 there will be a lack of production capacity in the NPS in relation to the consumption demand of 1,799 MW and in 2022 the missing capacity will climb to 2,512 MW. The analysis points out that these values are at the limit of the import capacity of cross-border electricity transmission lines. “Covering an important part of the net domestic consumption by import involves certain risks on the potential lack of regional resources in terms of power generation capacities, taking into account the annual balance of countries in the region, which, except for Bulgaria and the Czech Republic, are net importers (Hungary, Poland, Croatia, Serbia),” the analysis shows. It was carried out in a critical scenario, for a consumption peak during winter, excluding the capacities under repair and the unusable ones. The analysis also specifies that, although a number of projects have been announced, their materialization is 55

delayed. The following are reminded in this context: 1. Failure to build groups 3 and 4 in Cernavoda by 2027, according to the forecasts initially sent by Nuclearelectrica (initially the estimated commissioning was provided for 2023-2024); 2. Failure to build the new gas-fired groups, estimated to be commissioned by 2022: in Arad (net power available of 38 MW), Govora (3 gas turbines with a total net available power of around 125 MW) and Bucharest (3 combined cycle power plants with a total net available power of 400 MW in Grozavesti, Bucuresti Sud and Progresul); 3. Diminishing, until the complete disappearance, of the energy capacities in the portfolio of Oltenia Energy Complex, considered unusable as of 2022, considering the potential consequences of the evolution of the price of CO2 allowances on the financial situation of Oltenia Energy Complex; 4. Withdrawal of a capacity of around 180 MW at CET Govora starting with 2022 for financial reasons, but also because the power plant depends on the primary resource coming from Oltenia Energy Complex; 5. The disappearance of the capacity installed at CET Drobeta due to the declaration of the bankruptcy of the Romanian Authority for Nuclear Activities (RAAN).

POWER

Subsidies for CEO, uncertain Oltenia Energy Complex, which currently has a total installed capacity of 3,240 MW in lignite groups in Rovinari, Turceni, Isalnita and Craiova 2 power plants, would remain with only 2,295 MW in 2020. In turn, new gas-fired groups will appear, with a total installed capacity of 800 MW, which will start being commissioned as of 2024, when the first 200 MW are available, according to the adequacy analysis of the power system carried out by Transelectrica. These new gas-fired groups would be brought online at Turceni (300 MW as of 2026), Isalnita (300 MW as of 2026) and Craiova 2 (200 MW as of 2024) power plants. Reconversion of gas-fired production will lead to a reduction of total CO2 emissions of the entire complex from 0.91 tons of CO2/MWh in 2019 to 0.77 tons by 2030. Until these targets are reached, allowing the survival of the complex in the context where the environmental rules have been increasingly restrictive, the Government that has been recently dismissed by a motion of censure wants to grant a subsidy to the complex, for a period of 10 years, which would amount to a total of RON 10.5 billion. But without this support Oltenia Energy Complex goes bankrupt, the Government claims, which thus wants to force all consumers to pay a special tax, named adequacy tax. The impact at consumers will be RON 0.033/kWh in the first year, 2020, following to decrease gradually, to RON 0.002/kWh in 2030. “Currently the regulated tariffs for household consumers are around RON 0.412/kWh, so the adequacy tax CEO will increase these tariffs by 8% in 2020, 4.8% in 2021 and 4.3% in 2022,” according to the support scheme that would be negotiated with the European Commission. For now, it is uncertain whether Romania will send to Brussels this project, because the new Energy Minister, Virgil Popescu, has announced that he did not support the introduction of this subsidy. According to the support scheme, from this money CEO will pay annually part of the CO2 allowances, the

modelling showing that, during the ten years, the complex will pay from its own sources 78.8 million allowances, and from subsidies the difference of 67.7 million. These figures were reached following the electricity production forecast of the complex for the following ten years. The evaluation of the support mechanism will be carried out annually, by ANRE, and the value of the aid or the period could decrease, depending on the energy capacity that appears on the Romanian market to replace CEO’s coal-fired power plants.

Without support, CEO risks bankruptcy Government has prepared a mechanism to support Oltenia Energy Complex that will be negotiated with Brussels. According to the plan, for ten years all electricity consumers will pay up to RON 10.5 billion, to support the company, severely affected by the rising costs with the emission allowances it must buy to produce electricity. But without this support, Oltenia Energy Complex will go bankrupt, the Government claims, which wants to force all consumers to pay a special tax. In the explanatory statement accompanying the draft support scheme, it is specified that without the intervention of the Romanian state, Oltenia Energy Complex is unable to acquire the CO2 emission allowances for 2019 until April 30, 2020. Without complying with this condition, thereafter the company will enter into insolvency or even directly into bankruptcy, as: - for the year 2019 the company can purchase from its own sources only 3,000,000 CO2 allowances out of the 12,200,000 CO2 allowances required, provided that the average price of CO2 allowances will be around EUR 27/CO2 allowance; - the cash flow deficit estimated is around RON 1,200 million.

Major risk for the NPS The adequacy study conducted by Transelectrica to argue the support 56

scheme for CEO took into account the option that the energy producer risks insolvency or even bankruptcy in 2020 because it cannot pay RON 1.6 billion on account of the emission allowances related to energy production for this year. Under these conditions, the conclusion was that Romania could not provide its consumption needs, even with imports to the maximum possible technical level, and prices would explode. In summary, the conclusions of the adequacy study were: - from 2022, in conditions in which all groups from of Oltenia Energy Complex will stop, the NPS will have a major problem of adequacy, which means that Romania will no longer have the resources necessary to cover the consumption of electricity, even with the maximum use of cross-border import capacity; - keeping operational the capacities of Oltenia Energy Complex, until they can be replaced by new low emission production capacities, is a national security issue; - covering an important part of the net domestic consumption through import involves certain risks related to the real availability of the energy that can be imported from the neighbouring electric power systems which operate synchronously; - the existence of a 1,800 MW inter connection capacity does not guarantee the import from the neighbouring energy systems which operate synchronously, at the maximum capacity level; explicit annual and monthly allocation of interconnection capacities is performed by annual/monthly auctions organized by MAVIR (for interconnection capacity on the Romania - Hungary border) and Transelectrica (for the interconnection capacities on the Romania - Bulgaria border, respectively on the Romania - Serbia border), in which traders of electricity, usually non-resident legal entities in Romania, participate; the commercial activity of import-export of electricity of the traders is determined exclusively by their commercial interest; - the price increase trend on the

POWER

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ENERGY EFFICIENCY

Also, at ANRE request, Transelectrica has conducted an analysis regarding the ratio between consumption demand and production capacities available at regional level. The purpose was to identify solutions for integrating distributed production and consumption demand in balancing the consumption/production balance, and the conclusion was that the area that delimits Northern Transylvania is the most suitable for developing new production capacities. Also, a number of new projects have been identified that reduce the transmission transits through the power distribution networks. These projects are: • Distributie Energie Oltenia: a new substation of 400/110 kV in Caineni area, Valcea County, and its connection to Tantareni - Sibiu 400 kV OHL to evaluate power produced in the hydropower plant in Middle Olt area; • SDEE Transilvania Nord: a new Bistrita 400/110 kV substation connected in Suceava - Gadalin 400 kV OHL or a substation in Dej area and its connection in entry-exit system in the existing Iernut-Baia Mare 220 kV OHL; • SDEE Muntenia Nord: doubling the transformer/auto-transformer units in Teleajen, Stalpu, Focsani Vest, Filesti substations, where there is only one transformer unit, and its unavailability leads to increasing the power transit through the power distribution network and construction of a new substation in Liesti-Cudalbi area, to evacuate energy produced in CEE Gemenele, Cudalbi, Baleni. As for ensuring the safety and continuity of supply in the metropolitan area of Bucharest, a study is underway on the development of the network from a 10-year perspective. It will be completed next year. For the moment, ensuring the supply of electricity to the metropolitan area of Bucharest at the level of the current requirements remains an unresolved problem.

PREDICTIVE MAINTENANCE

centralized markets for bilateral electricity contracts is determined by the increasing evolution of the prices registered on DAM, which are influenced by the deficit prices on the Balancing Market; - in the conditions in which Oltenia Energy Complex will no longer work, probably on the Balancing Market the values of the indicators that establish the dominant position on the market, as well as the concentration of market power, will increase; - by closing Oltenia Energy Complex, the NPS will be dependent on the imports made by traders, and the prices on the different centralized markets for electricity could be influenced by the import-export activity, by the new rules on the offer prices on the Balancing Market where there is a participant with a dominant position, by the rules prepared and approved by ANRE regarding the creation of aggregate entities; - the results of the simulations performed by OPCOM for the scenario in which Oltenia Energy Complex is stopped shows that the DAM price increases significantly both during the winter period and during the summer period within the limits of 40% -180%, the average value being 110%, compared to the reference situation; - it can thus be estimated that if Oltenia Energy Complex were to stop its production capacities, compared to the current situation the price on DAM will increase by 100% and the price on CMBC-EA will increase by at least 70%; - in the event of stopping the capacities of Oltenia Energy Complex, by increasing the electricity price by around 70%, the energy price would be around EUR 0.136/MWh, thus seriously affecting the national economy, through the risk of relocation of major processing industries (aluminium, steel etc.), with global marketplaces. Oltenia Energy Complex is the second largest electricity producer of Romania, with an installed capacity of 3,240 MW in Rovinari, Turceni, Isalnita and Craiova 2 power plants.

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New PCI List for a Connected European Energy Grid The European Commission adopted the fourth list of Projects of Common Interest (PCI) for a connected European energy grid, fit for the future providing clean, affordable and secure energy for Europeans. This list reflects the importance of infrastructure for the Energy Union and represents a balance among its objectives: sustainability, affordability and security of supply. “The Energy Union is a major driver of clean energy innovation in Europe and the rest of the world. We are making sure that this energy transition is socially fair, leads to innovation and is based on smart infrastructure, which is adapted to the needs of the future energy system. Through our Projects of Common Interest, we are building strong and well-connected networks across Europe in order to enhance security of supply,” Vice President for Energy Union Maroš Šefcovic said.

Text by Adrian Stoica the Paris Agreement. PCI’s are projects that have a significant impact on energy markets and market integration in at least two EU countries, they boost competition on energy markets and foster the EU’s energy security by diversifying sources, finally, they contribute to the EU’s climate and energy goals by integrating renewables. Under the Trans-European Network-Energy (TEN-E) Regulation, adopted in 2013, the Commission identifies the most important PCIs across the EU, so that these projects can benefit from simplified permitting and the right to apply for EU funding from the Connecting Europe Facility. Electricity and smart grids account for more than 70% of the projects, mirroring the increasing role of renewable electricity in the energy system and the need for network reinforcements enabling the integration of renewables and more cross-border trade. The projects on the fourth PCI list have been assessed and

“Europe’s energy transition is well underway, with record levels of clean and renewable energy and rapidly falling costs. But Europe’s energy infrastructure must advance in the same direction and with the same speed to fully support this transition. That is why we are focusing the new list of projects on key electricity interconnections and smart grids. Today’s steps to boost clean energy infrastructure are another important move towards making our energy system more sustainable, more competitive and more secure – providing genuine European added value consolidating our European Energy Union built on solidarity,” Miguel Arias Cañete, Commissioner for Climate Action and Energy, pointed out. PCIs are cross border infrastructure projects that link the energy systems of EU Member States. They are intended to help the EU achieve its energy policy and climate objectives: affordable, secure and sustainable energy for all citizens, and the long-term decarbonisation of the economy in accordance with 58

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selected in an open, transparent and inclusive process over the past 18 months, in line with the provisions of the TEN-E Regulation. The process has involved stakeholders, including consumer and environmental protection organisations. These groups have dynamically participated in the meetings of the Regional Groups. The projects are eligible to receive European funding for up to EUR 30 billion. They also include projects in the oil and gas sector that could generate criticism from ecologist MEPs, international media informs. The list published contains 151 projects and includes both projects in the field of oil and natural gas as well as projects related to electricity and smart grids that will improve the supply of electricity and integrate renewable energy sources. The Community executive has mentioned that the 4th list includes 32 projects in the field of natural gas, decreasing compared to 54 two years ago. These include gas pipeline projects and liquefied natural gas terminal projects, which would make the Community block less dependent on Russian natural gas. Regarding Romania, according to the document published on the Commission’s page among the 151 projects, there are: expansion of the Bulgaria-Romania-Hungary-Austria bidirectional transmission corridor (currently known as ‘ROHUAT/BRUA’) to enable the transmission of 1.75bcm/year in the 1st phase and 4.4bcm/year in the 2nd phase, including new resources from the Black Sea in the 2nd phase; the ‘Black Sea Corridor’ project, which has the role to consolidate the electricity transmission corridor along the Black Sea coast (Romania-Bulgaria); the ‘Mid Continental East Corridor’ project, which will increase the exchange capacity on the borders between Romania and Serbia.

“Through our Projects of Common Interest, we are building strong and well-connected networks across Europe in order to enhance security of supply,”” Vice President for Energy Union Maroš Šefcovic

Projects targeting Romania a/Cluster Bulgaria — Romania capacity increase [currently known as ‘Black Sea Corridor’], including the following PCIs: Internal line between Dobrudja and Burgas (BG); Internal line between Cernavoda and Stalpu (RO); Internal line between Gutinas and Smardan (RO); b/Cluster Romania — Serbia [currently known as ‘Mid Continental East Corridor’], including the following PCIs: Interconnection between Resita (RO) and Pancevo (RS); Internal line between Portile de Fier and Resita (RO); Internal line between Resita and Timisoara/Sacalaz (RO); Internal line between Arad and Timisoara/Sacalaz (RO); c/Cluster phased capacity increase on the (Bulgaria) — Romania - Hungary - (Austria) bidirectional transmission corridor to enable a capacity at the Romania-Hungary interconnection of 1.75bcm/a in the 1st phase, 4.4bcm/a in the 2nd phase, and including new resources from the Black Sea in the 2nd phase: 6.24.1 ROHU (AT)/BRUA – 1st phase, including: Development of the transmission capacity in Romania from Podisor to Recas, including, a new pipeline, metering station and three new compressor stations in Podisor, Bibesti and Jupa; ROHU(AT)/ BRUA –2nd phase, including: Városföld compressor station 59

(HU), Expansion of the transmission capacity in Romania from Recas to Horia towards Hungary up to 4.4 bcm/a and expansion of the compressor stations in Podisor, Bibesti and Jupa, Black Sea shore — Podisor (RO) pipeline for taking over the Black sea gas; Romanian-Hungarian reverse flow: Hungarian section 2nd stage compressor station at Csanádpalota (HU). The next President of the European Commission, Ursula von der Leyen, announced that one of her priorities was to make the EU reach climate neutrality by 2050, reducing greenhouse gas emissions by at least 40% by 2030, compared to the 1990 level.

Next steps The Delegated Act containing the fourth PCI list will be submitted to the European Parliament and the Council for a two-month non-objection period, extendable once.

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Local Regulation and Smart Technologies Critical to Secure Large-scale Adoption of EVs in Europe Europe is not ready to manage a major shift to electric vehicles and its significant impacts on the power system, experts from the Centre on Regulation in Europe (CERRE) say in a new report presented in Brussels on October 16. The adoption of technologies to manage congestion issues by shifting and distributing charging over time as well varying electricity prices depending on supply and demand will be critical to the swift development of electric vehicles in Europe. 60

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ver the past two years the number of electric vehicles (EVs) worldwide has more than doubled and projections for future growth are optimistic. In Norway, 46 per cent of new vehicle registrations in 2018 were for EVs. Yet, Europe as a whole is still in the very early stages of what is predicted to become a full-scale shift to electric vehicles. Researchers from the Centre on Regulation in Europe have analysed regulation and market penetration of EVs in three European countries (Norway, Luxembourg and the Netherlands) and found that public incentives and generous subsidies are the primary reasons for the wider adoption of electric cars in certain European countries. “With mandatory CO2 and particulate pollution emission reduction targets for new cars as well as major cities foreseeing bans on older petrol and diesel vehicles, the momentum driving a transition to electric vehicles seems clear,” explains Friðrik Már Baldursson, co-author of the report. “Yet, Europe is not ready to manage such a major shift. A full penetration of battery electric vehicles would have significant impacts

on the power system. As an example, this would imply fifty times as many electric cars in the Netherlands, which would exacerbate peaks in electricity demand, especially in the afternoon and evening, as people plug in their cars when they return from work.” The study states that the amount of charging taking place during peakdemand hour must be significantly reduced. The adoption of smart technologies will be critical to solve this as it can serve to manage congestion issues by shifting and distributing charging over time. Greater flexibility in charging behaviour is also essential and can be facilitated by a granular approach to pricing, where prices depend on the supply and demand at a given time, but also on the situation in a neighbourhood or even a street. Without this, the rise of electric vehicles may necessitate investments at substantial costs in distribution networks and the power system infrastructure. The prospects of such costs could slow down the electrification of transports. “Yes, electric vehicles pose challenges for the power system but they also create opportunities,” explain the authors of the CERRE report. “The average noncommercial car is parked 96 per cent of 61

the time. Imagine a large fleet of pluggedin electric vehicles. This represents a huge storage pool which could provide the much-needed flexibility to a power system that is more and more dependent on variable renewable energy sources. Harnessing this storage potential requires smart charging technology and an infrastructure that connects most stationary cars to the grid. But currently, there is neither a structure nor incentives to encourage such development. As far as we are aware, this potential has not been properly used anywhere in the world yet.” The report also emphasises the importance for Europe to develop regulation that is sufficiently flexible to be able to adapt to rapid technological developments and to national and local specificities, for example regarding spatial planning aspects. Europe cannot afford to ignore this if it is to meet its objectives for the deployment of EVs. Distribution system operators (DSOs) who manage energy distribution networks, have an important role to play in the roll out and planning of infrastructure for EVs, especially due to local specificities. Authorities should ensure close collaboration with them to better take into account and solve

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issues related to congestion in the energy system, infrastructure investments, and fair prices for users. Finally, it must be pointed out that the electrification of road transport also has negative side effects such as a decrease in the use of public transport and greater congestion, as experienced in Norway. To avoid this, mobility policies should be conceived holistically to include efficient pricing of road congestion, discourage the use of individual cars and incentivise greater use of public transport.

The Three Case Studies Norway has some unique characteristics that are important for the study of how electric vehicles affect the electricity system. On the one hand, the penetration of electric vehicles is higher in Norway than anywhere else in Europe. On the other hand, thanks to the availability of cheap hydropower, the Norwegian electricity system has been designed to support electric space heating in a cold climate. Hence, it has been able to accommodate high levels of electric vehicle penetration, even with relatively light-handed regulation on location and capacity of charging infrastructure. The unique characteristics of Norway make it difficult to generalise its experience. Nevertheless, it does suggest that electric vehicles can be accommodated by electricity systems, given reasonable levels of penetration and sufficient time to respond to the resulting demand for electricity. The Netherlands already has a welldeveloped network of charging points. The base for charging is provided by private charging points either at home or at work. Semi-public chargers with limited access are also an important category that is growing quickly. Public chargers are often deployed through a demand-driven approach, and this method of providing charging infrastructure where there is not enough private parking – and therefore a lack of private charging – is an option used

particularly in cities. The Grand Duchy of Luxembourg is a small, still developing system in terms of the number of electric vehicles. Luxembourg has organised the development of its charging infrastructure centrally and the main public charging network is owned by distribution companies. Due to its location, the Duchy cooperates with the Netherlands and Belgium to facilitate the usage of electric vehicles in the region so that users of electric vehicles can charge their cars in any station belonging to the three networks. Looking at the three cases, Luxembourg has taken a somewhat different approach to creating a charging infrastructure for electric vehicles than the other two countries studied. There, responsibility for ensuring the deployment of the necessary infrastructure has been vested with electricity network companies, who have produced a comprehensive national scheme based on public tenders, to ensure a timely rollout. Given the relatively low numbers of both electric vehicles and charging points in the country to date, it is however not yet clear how well this approach is working, especially compared to the alternative pursued in the Netherlands and Norway. Both the Netherlands and Norway have adopted more decentralised approaches to charging infrastructure. However, in both countries, such infrastructure has developed in line with the fleet of electric vehicles and charging facilities do not seem to be an obstacle to further growth of the fleet. The Norwegian experience is perhaps of particular interest, given the unusually high penetration of electric vehicles there. The fact that distribution networks are guaranteed financing of necessary upgrades from users has clearly played a part in facilitating the connection of charging points. The Netherlands has developed more of a bottom-up approach to account for the fact that a large proportion of people live in multi-home dwellings without access 62

to a garage or a private parking space.

About the authors Friðrik Már Baldursson is a CERRE Research Fellow and Professor of Economics at the Reykjavik University Business School where he formerly served as the Dean. He has extensive experience of economic analysis from a decade of service as Head of Economic Research and Managing Director at the National Economic Institute of Iceland. He has been active in public service in various roles, including the Supervisory Board of the Central Bank of Iceland. In October 2008, he led negotiations with the IMF on Iceland’s behalf. Ewa Lazarczyk Carlson is Assistant Professor of Economics at the Reykjavik University Business School. She previously served as a Postdoctoral Researcher at the Research Institute of Industrial Economics, a Stockholmbased private and independent foundation devoted to pursuing research for trade and industry. Her research interests include energy markets, the environment and smart cities. Nils-Henrik M. von der Fehr is a CERRE Academic Director and Dean of the Faculty of Social Sciences at the University of Oslo. In addition to numerous academic positions, he is a member of the European Energy Institute, and served as a Member of the Dutch Electricity Market Surveillance Committee. His research interests include microeconomics, industrial economics, regulation and competition policy.

About the Centre on Regulation in Europe (CERRE) CERRE is an independent Brusselsbased think tank that promotes robust and consistent regulation in Europe’s network and digital industries through research and dissemination activities. CERRE’s members are regulatory authorities, corporations as well as universities.

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Electric Vehicles, Bet with the Future In recent years, the desire of the major car manufacturers has been to become as environmentally friendly as possible. Perhaps also forced by the decision of leaders of European cities to prohibit in a not very distant future the use on their territory of diesel engine cars, the largest car manufacturers in the world bet huge amounts on the car of the future.

Text by Daniel Lazar

s prices are no longer prohibitive and marketing, NGOs and the legislative measures make their presence felt increasingly more, electric or hybrid cars will gain more and more ground.

In Romania - 200% increase in electric cars registration! 2018 was the best year for electric cars in Romania, with 682 fully electric units registered, an increase by over 200% compared to 2017. In the EU electric cars registration increased by 53% and in terms of volumes our country accounts for 0.4% of the total EU market, where Germany holds the highest share, with 24% of the total. Diesel had a disastrous year in the EU, with a decline by 18% of the number of new cars registered, but in Central and Eastern Europe there were also countries where sales grew; in our country, the rate

was -1%. Official data shows that last year 57% of the new cars sold in the EU were based on gasoline, 34% diesel and almost 9% were with alternative propulsion. The segment of fully electric cars increased from 97,000 units to 150,000, while in Romania the numbers increased from 188 cars in 2017 to 605 cars. The largest market was Germany, with 36,000 cars, followed by Italy, with 31,000. In the Netherlands there were 26,000 electric cars registered. Of the countries in the region, the Czech Republic has the best situation, with 1,300 electric cars entered into circulation. Norway, due to its entirely special situation, remains the largest European market for electric vehicles, with 46,000 units, by 13,000 more than in 2017. The evolution of diesel was interesting, due to prohibitions and the announcement of various plans for the final removal of this type of cars from 66

the roads. At EU level the decrease was by 18%, from 6.6 million in 2017, to 5.4 million last year. Among the large markets, the biggest decline was in the UK (-30%) and in Spain (-21%). In Romania, diesel car registrations fell by 1%, to 53,000 units, and in Poland they fell by 2.3%, while in Bulgaria they increased by 0.3%. Gasoline car registrations increased by 12.8% in the EU, and in Romania the growth was by 45%. Among the large countries, the biggest growth was in Spain (+30%). Last year, 8.5 million gasoline cars were registered.

4,572 green cars sold in Romania The number of green vehicles (electric, hybrid and plug-in) sold last year in Romania was 4,572, up 65.7% compared to 2017, according to the statistics of the Automotive Manufacturers and Importers Association (APIA). According to the quoted data, of the total recorded

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during January - December 2018, 3,585 units are hybrid vehicles, climbing by 59.8% compared to the similar period of the previous year, 682 are 100% electric (+102.4%), and 305 plug-ins (+72.3%). In the period under review, the share of new green vehicles in total sales, at national level, was 2.9%, while, in the same period of 2017, the share was 2.1%. APIA data shows that, in the top of the most sold purely electric vehicles, last year the first place was held by Volkswagen, with 175 units, followed by BMW (148 units), Renault (119), Smart (116), Kia (59), Nissan (54), other brands (10) and Mercedes Benz (1). At the same time, most hybrid cars sold in Romania, during the reference period, were registered by Toyota (3,198 units), Lexus (147), Ford (65), Kia (62), Hyundai (58), Suzuki (34), Mercedes Benz (20) and Land Rover (1). Also, the hierarchy of plugin car sales is led by Volkswagen - with 82 units sold. The following places are held by: Volvo (45 units), BMW (44),

Mitsubishi (41), Porsche (33), Mercedes Benz (30), Mini (13), Audi (9) and Land Rover (8).

The first hybrid SUV in Romania Ford Puma is the first hybrid SUV manufactured in Romania, its production starting, together with EcoSport, at the plant of the US group in Craiova. â&#x20AC;&#x153;It is a great achievement for us to produce here not only the most technologically advanced vehicle ever manufactured in Romania, but also the first with integrated hybrid technology,â&#x20AC;? the President of Ford Romania Ian Pearson said.

Memorandum to finance charging stations for electric vehicles The Government of Romania this year adopted at the proposal of the Ministry of Environment the Memorandum necessary to approve the state aid 67

scheme to support the development of the infrastructure for electrical charging of vehicles on motorways, national and European roads, to reduce to the minimum the dependence on fossil fuels, improve air quality, reduce greenhouse gas emissions and mitigate the impact of transport on the environment. Romania is thus taking another important step towards eco-mobility, this state aid scheme completing the measures taken by the Government for this purpose: the most consistent financial incentive in Europe for electric cars - EUR 10,000 and the financing program for charging stations in county seats. Through this new financing line, electric transport over long distances will become a reality in Romania. The budget allocated to the state aid scheme, over the 6 years of validity, is RON 250 million, and the budget for 2019 is RON 92 million. The scheme is addressed to a number of 600 potential beneficiaries, with an annual average

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number of 86 beneficiaries, and the beneficiaries of the financing measure are the economic operators, which operate in all sectors/fields of activity. Each facility will have 2 charging points, with a power of over 50 kW/point. The infrastructure for charging electric vehicles will be installed on motorways, national and European roads, at a distance of around 100 km from each other. Regarding the duration of the state aid scheme, it will be applied until December 31, 2025, period during which the beneficiaries can be selected and the grant agreements can be signed, payments within the agreements signed following to be made by December 31, 2027. This state aid scheme will be managed by the Environment Fund Administration and the Financing Guide for the program will be approved by Order of the manager of the central public authority for environmental protection.

Renault introduces hydrogen propulsion on the fleet of commercial vehicles According to an official announcement of Renault, it will introduce hydrogen propulsion on the fleet of commercial vehicles, with the first models expected at the end of this year and early next year. Renault has made a surprise announcement about the introduction of hydrogen fuel cell vehicles, initially for commercial vehicles in Europe. Thus, Renault Kangoo Z.E. Hydrogen and Renault Master Z.E. Hydrogen are the first models of the French group to enter the segment of hydrogenpowered vehicles. The great advantage of hydrogen-generated electricity is the large range they have, given by the hydrogen tank. This is the main resource of electric cells, which generate electricity and emit only water vapor. Renault says that the vehicles it launches will have three times more autonomy, while the refuelling time will be only 5 to 10 minutes, similar to the fuelling of conventional cars. Renault says it wants to offer hydrogen as a complementary solution to the electric and hybrid strategy, for companies

wishing to travel in city centres with vehicles without emissions, but with a very high autonomy. It is obvious that the sales of hydrogen vehicles could improve the groupâ&#x20AC;&#x2122;s emission values, in the fight with the targets imposed by the European Commission, but for this the volumes need to be sufficiently large. Renault says it has been testing the hydrogen technology since 2014, being developed in partnership with Symbio, a Michelin subsidiary. The system used is based on a range extender of fuel cell type that offers electric power, but also thermal power of 10 kW, the range reaching 350 km. The first model to be released later this year is Kangoo Z.E. Hydrogen, with a range of 370 km, compared to 230 km for the electric version Kangoo Z.E., 68

with an additional weight of 110 kg. The fuelling capacity will be 3.9 cubic meters, being affected by the hydrogen tank. The announced price will be EUR 48,300, in France. The second model announced will be Master Z.E. Hydrogen, which will have a range of 350 km, compared to 120 km for the standard electric version. The car will be available next year, in four body versions, two van and two cab. This model will have two hydrogen tanks, located under the body, and the fuelling capacity will be between 10.8 and 20 cubic meters, with an additional weight of 200 kg. Its price has not been announced yet. The technology it works with is a standard fuel cell, with hydrogen cells. The main recipients are the companies in transport and logistics, urban and service deliveries,

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municipal services, postal and special transports.

South Korea outpaces German investments in Hungary While, our country is just beginning to produce hybrid cars, the South Korean concern Samsung will produce batteries for electric cars in Hungary, and Audi will also produce electric car engines in the neighbouring country, expanding the initial investment by EUR 1.2 billion. With 1,200 employees, the factory near Budapest could be one of the largest in the world. Samsung’s investment in this factory is the third largest in Hungary since 2016 to date. Also, in Hungary, the South Korean company Bamchun Precision will build a factory for parts intended for electric cars, following an investment of EUR 41 million. As such, 2019 will be the first year that German investments in the neighbouring country are overtaken by those from South Korea.

Germany wants to double the subsidy for electric cars Starting next year, Germany plans to double the grants for electric vehicle buyers over the next five years. The measure is part of Berlin’s plan to speed up the adoption of low-carbon vehicles. Thus, subsidies for hybrid vehicles will increase from EUR 3,000 to EUR 4,500. For vehicles with prices over EUR 40,000, the grants amount to EUR 5,000. The German government plans to have 10 million electric cars in circulation by 2030, part of an offensive aimed at transforming the German automotive industry, seen as backward due to diesel models, into a leader in the field of electromobility.

Volkswagen will manufacture ID.3 on a large scale! The Volkswagen Group has started production of ID.3, its first exclusively electric model to be manufactured on a large scale, at a price of around EUR

30,000 in Germany. The model, which will be produced by the 8,000 employees at the Zwickau factory in Germany, will be the basis of other electric vehicles that will be launched in the future by the largest European car manufacturer. During the ID.3 production launch ceremony in Zwickau, Chancellor Angela Merkel promised that the Executive would make ‘substantial efforts’ to expand the network of charging stations for electric cars in Germany. By 2035, the German government will invest EUR 3.5 billion in the construction of charging stations for electric cars. Next year, VW plans to produce around 100,000 vehicles in Zwickau using the MEB modular platform, and in the medium-term production will reach 330,000 cars per year. The ID.3 model will be available in Europe from mid-2020, until now around 35,000 cars being reserved by international customers.

Air Taxi in Singapore! Manufacturers are not only satisfied with electric or hybrid cars, they are also experimenting with cars that will travel... by air! Thus, Volocopter, a German startup specialized in air mobility, presented, in October this year, the prototype of an air taxi in Singapore, in the context of its hopes regarding the possibility that this city-state will become the first country in the world that would allow the launch of its commercial services in 2021. The prototype took off from Marina Bay, near the city’s business district, and flew in a circle above the area for about a minute, before returning to its launch platform. The flight device - Volocopter 2X - looks like a small helicopter, but its 18 propellers are fixed on a circular structure above the cabin, instead of the single rotor with which the classic helicopters are equipped. Volocopter 2X can carry a pilot and a passenger over distances up to 30 kilometres, can take off and land vertically, is equipped with an electric engine and does not emit toxic gases. So, what we believed a few years ago to be SF stories becomes a reality under our eyes. What next? 69

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METALS & MINING

Euro Sunâ&#x20AC;&#x2122;s Discoveries Near Rovina Valley Four New Gold-Copper Porphyries Euro Sun Mining announced the surface generative exploration results from the Stanija Prospecting Permit directly adjacent to its Rovina Valley Gold project in Romania. Any mineralization defined on the Stanija PP could have synergies for mine development on the Rovina License as envisioned in the NI 43-101 Preliminary Economic Assessment Study released by the Company on February 20, 2019. 70

METALS & MINING

uro Sun has compiled historic surface explo ration work completed on the Stanija PP, which covers 42 square kilometres, comprised of state-geologic survey mapping, soil sampling and rock chip sampling. In addition, Euro Sun has completed further soil sampling extension and infill grids, systematic lithogeochemistry sampling, and detailed geology-alteration mapping. Euro Sun reconnaissance rock chip sampling and grab sample assay results indicated the presence of porphyrystyle gold (Au) – copper (Cu) mineralization and Au epithermal veinstyle mineralization. Examples include sample CS-10193 with 1.39 g/t Au and 0.34% Cu porphyry style occurrence and sample CS-10104 with 25.9 g/t Au and 0.005% Cu epithermal vein style occurrence. Compilation of historic and Euro Sun’s soil sampling programs which

cover approximately 80% of the Stanija PP, defines four porphyry targets and one broad zone with epithermal characteristics. A cluster of three porphyry targets (1.5 km apart from each other) occur 6 km east from the Colnic Au-Cu porphyry deposit on the Rovina Mining License. Porphyry Targets: Defined by ‘bulls-eye’ shaped soil geochemistry anomalies comprised of coincident Au-Cu and molybdenum (Mo). Lithogeochemistry traverses through these anomalies confirm the porphyry signatures with anomalous gold, copper and molybdenum. In addition, detailed geologic mapping defines discrete potassic alteration zones within broader phyllic alteration halos. Epithermal Targets: In the eastern part of the Stanija PP, a broad zone of anomalous gold-in-soils covers 1800 meters x 2200 meters. This is partly coincident with a low-level copper-in-soils anomaly and includes known epithermal

vein occurrences at Muncaceasca. This broad gold and copper geochemistry anomaly is adjacent to the Popa Stanija porphyry target. Further work by Euro Sun will compile and interpret historical drilling and underground sampling results from previous license holders and Euro Sun’s work to develop exploration target size potential and grade tenor.

Stanija prospecting permit background The Stanija PP covers 42 sq-km and includes approximately 75% of the Zlatna – Stanija volcanic belt which lies between the Rovina-Barza-Certej volcanic belt to the west and the Rosia Montana-Bucium Volcanic belt to the north east. These three Neogene volcanic belts comprise the Golden Quadrilateral of the South Apuseni Mountains and is known for its occurrences of large-scale epithermal gold and porphyry Copper-

METALS & MINING

Gold deposits. Euro Sun was granted the Stanija Prospecting Permit from the National Agency for Mineral Resources of Romania (NAMR) in September 2016. “Our team has worked diligently over the past three years on the Stanija prospecting license to determine the discovery potential adjacent to our Rovina Valley Project. Early field work included soil geochemistry, field mapping and selected grab samples and trenching. We look forward to the initiation process by NAMR for the exclusive exploration license which is expected to occur in early 2020,” Scott Moore, Euro Sun’s CEO states.

Environmental Impact Assessment Awarded to ERM Euro Sun Mining has awarded the Environmental Impact Assessment for the Rovina Valley Project to ERM Environmental Resources Management, based in Bucharest (Romania) for the ten million-ounce Rovina Valley Project

in accordance with the mining license granted by the Romania Government in November 2018. ERM is a leading global provider of environmental, health, safety, risk, social consulting services and sustainability related services. ERM operates more than 160 offices in over 40 countries and territories employing more than 4,700 professionals. ERM has delivered over 500 projects in Central and Eastern Europe with over 20 relevant permitting and EIA projects in Romania alone. Their Romania clients include international corporations such as OMV Petrom, Hunt Oil, ExxonMobil, Lukoil and Chevron. They have also concluded several projects for mining clientele in the region such as Rio Tinto, Lundin Mining and Dundee Precious Metals. “We are pleased to have engaged such a professional and globally recognised firm to assist in completing our EIA process and one that has extensive experience working in Romania in particular 72

and is certified by the Ministry of Environment for production of all types of environmental studies,” Scott Moore, Euro Sun’s CEO states. ERM will support Euro Sun’s 100% owned Romanian subsidiary, Samax Romania, in the preparation of the Notification, public announcements and Environmental Report for re-zoning, in line with the Strategic Environmental Assessment Directive, which came into force under Romanian legislation by Government Directive 1076/2004. ERM will also provide support during the permitting procedure, including participation to the Special Committee and Working Groups and support during the public hearing until Euro Sun has obtained the environmental approval for rezoning. Additionally, ERM will support the preparation of the Notification, Presentation Memorandum and Environmental Impact Assessment, in line with the EIA Directive, which came into force under Romanian legislation by Law No 292/2018. ERM will

METALS & MINING

provide support during the permitting procedure including participation to the Technical Analysis Committee meetings and support during the public hearing until the company has obtained the Environmental Agreement for construction. ERM and Samax hope to complete both SEA and EIA processes within the next twelve months.

About Euro Sun Mining Euro Sun is a Toronto Stock Exchange listed mining company focused on the exploration and development of its 100%-owned Rovina Valley Gold and Copper Project located in west-central Romania. The property hosts 10.11

million gold equivalent ounces (7.05 million ounces of gold grading 0.55 g/t and 1,390 million pounds of copper grading 0.16%).

About ERM Environmental Resources Manage ment (ERM) is a leading global provider of environmental, health, safety, risk, social consulting services and sustainability related services. ERM is committed to providing a service that is consistent, professional and of the highest quality to create value for our clients. ERM has worked with many of the Global Fortune 500 companies delivering innovative solutions for business and

selected government clients, helping them understand and manage the sustainability challenges that the world is increasingly facing. For over 40 years, ERM has been working with clients around the world and in diverse industry sectors to help them to understand and manage their environmental, health, safety, risk and social impacts. The key sectors ERM serves include Oil & Gas, Mining, Power, and Manufacturing, Chemical and Pharmaceutical. All face critical sustainability challenges and ERM’s clients in these and many other areas rely on ERM’s ability to assist them operate more sustainably which has a positive impact on the planet.

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

METALS & MINING

Extension of the Largest Quarry in Romania Blocked in Court T

he Bucharest Court of Appeal has cancelled the Environmental Permit no. 2/2016 that allowed the extension of the Rosia coal quarry, within Oltenia Energy Complex, and the largest in Romania, the court action being introduced by Bankwatch Romania Association. 1,457 hectares have already been exploited within Rosia quarry until 2016, when Oltenia Energy Complex requested the extension by other 280 hectares, of which 235 hectares are forest, which will be cleared. Under the new circumstances, Rosia coal quarry can continue operating in the existing perimeter, but extension and deforestation have become illegal. In its court action, Bankwatch Association raised a number of issues relating to the issue of the Environmental

Permit. First of all, there was no real consultation of the affected population, as provided by law, the debate being announced and organized at Farcasesti Town Hall, at a distance of 15 kilometers from the most affected houses. Moreover, Rosia quarry is 10 kilometers away from the Natura 2000 Jiu Corridor site and a number of protected species were to be affected by this extension, as coal extraction works affect groundwater over a distance of 30 kilometers. The total impact of the 8 quarries extended in the area is not assessed either. The negative effects of mining on the life of communities neighboring the quarries have been reported over time by citizens. The health of locals is affected by the ubiquitous coal dust and the excessive noise created by the operation of belts that transport the coal to the 74

Rovinari power plant, located a few tens of meters from houses. In Rosia de Jiu, one of localities the most affected by the extension of Rosia quarry, groundwater has been contaminated as a result of excavation at tens of meters depth and people were left without drinking water, according to Bankwatch Association representatives. â&#x20AC;&#x153;After Greece and Hungary announced they would close the coal industry by 2028 and 2030, respectively, there were only 7 EU Member States that did not set a date to give up the most polluting source of energy production. Romania must have a realistic strategy that will ensure both the replacement of outdated and expensive units, as well as the creation of jobs in the mining regions,â&#x20AC;? said Alexandru Mustata, Bankwatch Association campaign coordinator.

METALS & MINING

Innovative Solutions for Critical Communication Infrastructure HUBER+SUHNER enters mining market with innovative solutions for critical communication infrastructure. The company’s established knowledge and expertise in fiber optic technology has proven to be key in the mining market.

rawing on its extensive ex perience in providing solutions for optical connectivity in harsh environmental conditions, HUBER+SUHNER is now leading the way in supplying the mining industry with innovative bespoke solutions that address the market challenges. Working with Ampcontrol, a key player in the industry for power solutions, HUBER+SUHNER has created a simple yet robust toolbox enabling rapid deployment of fiber optic networks in mines. With a modular, flexible design, the toolbox enables networks to be modified by miners dynamically and with ease. This is critical as the network topology changes continuously as the mine develops. “As the fourth industrial revolution progresses, data connectivity is taking a more pivotal role – information from sensors, data-heavy automation solutions and data analytics must be conveyed across large distances and through challenging environments. Against this backdrop, fiber optic networks are critical enablers,” said Dr. Thomas Paul, HUBER+SUHNER’s Market Unit Manager Industry. “HUBER+SUHNER is highly-regarded for its knowledge and

experience in the telecommunications industry, and across a breadth of challenging industrial applications. It is this extensive expertise that brings us into the mining market.” In mining, the communications infrastructure is paramount as under ground communication networks are the critical link between operations underground and those working above the surface. With harsh environmental conditions and ever-increasing convergence of data, high-performance, quality, reliable and long-life solutions are essential for underground communication networks. “The mining industry is automating rapidly, so demand for flexible and high-bandwidth communication is soaring,” added Dr. Thomas Paul. “With our established experience in telecommunications we can provide solutions for the mining market based on recognised technology, while also offering specially designed, robust products that are fit for purpose, with ease of installation and the customer’s individual needs in mind.” As part of its continuously growing industrial portfolio, HUBER+SUHNER supplies the mining market with cables, 75

connectors and system solutions. The portfolio of products includes proven solutions developed from its expertise in the telecommunications markets, combined with products that are tailored specifically for the functions and requirements of the mining industry. HUBER+SUHNER is continuing to develop key solutions as it moves forward in cementing itself as a leading supplier for mining solutions. Its fiber optic industry offering is complemented by radio frequency (RF) products that enable wireless data links. At China Coal & Mining Expo 2019, HUBER+SUHNER highlighted its extensive expertise in critical communication infrastructure with key applications for video surveillance, clever fiber distribution hubs and multifiber connectors with quick-connect mechanisms that enable deployment of networks even by unskilled personnel. “As the biggest mining event in China, the China Coal and Mining Expo is the perfect platform to showcase our expertise in the industry,” concluded Dr. Thomas Paul. “With a major production location in Changzhou we are able to provide cables and cable assemblies for the domestic market as well as on a global scale.”

TECH

A Modern Approach to Pipeline Rehabilitation The present civilization is surrounded by steel pipes, many of them placed underground. In conditions in which in the major European cities one cannot excavate to replace a pipeline (which should also happen in Romania), and landowners in rural areas no longer allow access to those who replace pipelines, a solution that the Americans have been using for about two decades, but which is in the pioneering phase in our country, is necessary.

Text by Daniel Lazar

ome pipelines transport fluids with explosive potential, such as natural gas pipelines. As the years passed, due to factors such as the lack of cathodic protection, the reduction of the soil resistivity or the deterioration of the anticorrosive insulation, the phenomenon of corrosion appears, which leads to the loss of metal in the body of the pipeline and, finally, the loss of its integrity. At this time, the fluid with explosive potential is discharged into the environment, with high risks of human or environmental accidents. In order to avoid such situations, it is necessary to monitor the pipelines in time, using noninvasive techniques to diagnose their technical condition. The DCVG method for identifying insulation defects of surface pipelines, without excavation, is based on the

injection of pulsating DC current into the pipeline and measuring the voltage gradient generated in the soil at the points where the corrosion insulation is damaged. Thus, each insulation defect is easily and precisely identified, allowing the pipeline operator to take the necessary measures to prevent damage. In the last phase of life of the pipeline, it is necessary to rehabilitate it in order to prevent leakage of fluids into the environment. In the case of urban pipelines or pipelines located in areas where the landowners do not allow access for intervention, the modern approach is based on the â&#x20AC;&#x2DC;liningâ&#x20AC;&#x2122; type methods that involve trenchless intervention along the pipeline. A multilayer textile tube, soaked in epoxy resins, is inserted inside the existing pipeline through the inversion process, under pressure and 76

at constant speed. In order ensure the mechanical strength of the tube, one of its inner layers is made of Kevlar. After the insertion of the textile tube and the hardening of the epoxy resin, a new pipeline is obtained inside the existing one. The old pipeline remains underground without having any role in the transport of the fluid, its place being totally taken over by the new inner pipeline (liner). At the end of the operation, the CCTV inspection is performed inside the pipeline for the acceptance of the rehabilitation works. This approach, used by the company IAT Engineering & Design for some projects for Conpet, allows the rehabilitation of steel pipelines to technical parameters according to the applicable standards, in any area where classical excavation access is not possible, a situation encountered very often in contemporary society.

ORGANIZAT DE COMITETUL NAȚIONAL ROMÂN AL CONSILIULUI MONDIAL AL ENERGIEI

15th EDITION WEC CENTRAL & EASTERN EUROPE ENERGY FORUM 14-18 JUNE 2020

VOX MARIS GRAND RESORT, COSTINEȘTI, ROMÂNIA

ENERGY TRANSITION IN SOUTH EAST EUROPE: OPPORTUNITIES, CHALLENGES, PERSPECTIVES 14

VISIONS OF ENERGY TRANSITION FOR PROSPERITY

BUSINESS & TECHNOLOGIES. CHALLENGES & OPPORTUNITIES

REGIONAL ENERGY DAY POLICIES AND WEC’S STUDIES. VIEWS OF THE FUTURE

TUTORIALS

Paper and Poster Submission Deadline: 28 FEBRUARY 2020

SUBMIT YOUR PAPER NOW

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Comitetul Național Român al Consiliului Mondial al Energiei

TECH

TLT-Turbo On-site Test Lab Advances Product Quality Global ventilation fans and systems manufacturer, TLT-Turbo, has spent the past five years investing in and equipping its on-site test lab. The test lab now provides streamlined processes for research, advancing product quality and expanded capabilities for material testing. With a focus on particle impact wear testing, the test lab is driving innovation forward at TLT-Turbo as the results help improve product reliability, quality and performance in their final operating environment.

atrick Baumgärtner a Research and Develop ment Engineer – and expert in wear and corrosion protection – at TLT-Turbo, has played an instrumental role in building up the test lab – located at the TLT-Turbo Development Centre in Zweibruecken, Germany – to its current capabilities. Together with Sabine Groh, Industrial Fans Product Manager at TLTTurbo, they have been spearheading the current research. Currently, the core field of research at the test lab is the testing of new wearresistant materials and coatings for fan components. Baumgärtner says that the testing takes place in the lab’s solid particle impact wear test bench. There, various types of dust or abrasive particles are blasted onto the test material, varying the angle and speed of the blasting to observe the resulting wear. “We also carry out caking tests in which we select, for example, anti-adhesive layers for our fans, in order to find suitable solutions

for customer applications. A further main focus is the analysis of process residues that can have an abrasive or corrosive effect. Here the composition, size distributions, pH value and conductivity in the eluate are determined,” Baumgärtner explains. TLT-Turbo’s approach is to continuously test materials, coatings and components in order to produce fan components that are designed for performance excellence in any operating environment – no matter how abrasive. This testing is applied to current and new products in development but also to samples that are brought in from client sites in order to establish the wear patterns caused by their specific environment. In this way, TLT-Turbo is able to provide each client with a customized solution that will last longer and require less maintenance. The test lab now offers facilities for metallography, a stereomicroscope, a pycnometer for determining the density of materials and coatings, and an 78

automated solid particle impact wear test bench. “The capabilities of the test lab open a lot of doors for advanced research that will make a positive contribution to the engineering community at large as well,” says Baumgärtner. “Under my supervision, studies and thesis research takes place in the laboratory in cooperation with local colleges and universities. For me, this is the basis for successfully researching and developing new solutions in our field.” According to Groh, the test lab has almost endless possibilities for the improvement of product delivery to clients. “Our customers are often operating TLT-Turbo fans in abrasive and/or corrosive environments. To develop suitable solutions that match the wear resistance against particle impact we use our automated solid particle impact test bench. Compressed air accelerates a defined mass flow of abrasive particles to velocities up to 300 m/s and propels them onto a piece of sample material. This leads to material loss and wear that

TECH

Blasting nozzle and sample holder of test bench

we can examine. It is even possible to use original dust from a customer’s plant to evaluate the most suitable solution for them. By varying the impact angle, we can observe system characteristic wear curves. With this knowledge we can provide customized solutions for many processes.” These customized solutions can be best illustrated in the selection of coatings. This, says Groh, has an immensely positive impact for TLT-Turbo clients. “If we were to propose a new coating for a customer, the wear rate of the coating would be determined first. That is the main scientific-based decision criteria for wear resistant coatings. If the coating has a superior wear rate compared to other coatings or at least a wear rate that is on par with other coatings and another beneficial quality such as anti-stick effect, corrosive resistance or a cost advantage it will be implemented into TLT´s coating portfolio.” Groh says that they have also conducted tests that have led to the development of completely new proprietary coatings. “During the manufacturing process, coatings were tested to see the influence of welding heat on coating qualities – such as the development of cracks – to ascertain how to avoid damage caused by heat or weld splashes. We conducted research and testing on combining welded coatings and thin layer coating into a Hybrid Coating which can dramatically increase the operational lifespan of TLT-Turbo

fans at their clients’ plants.” This is one of numerous examples of how TLT-Turbo’s testing capability can positively impact ventilation systems across all applications. “Due to the broad database of wear tests on various materials and coatings, we are able to offer tailor-made wear protection solutions for various processes of our customers,” Baumgärtner acknowledges. Groh agrees, adding that the wide variety of chemical compositions and coating conditions such as acceleration of coating powder and heat development make it extremely difficult to objectively find the best coating by carrying out testing at a customer plant. “The process of reaching just initial findings in these conditions is very time consuming. In addition to this, there is a broad variety of conditions to contend with at different customer plants that hinder an accurate comparison of different coatings at different plants. If you test different coatings on one machine you might get a rough estimation what coating is superior, however different wear rates of coating cause imbalances in the impeller and vibrations at the fan.” She elaborates by explaining that finding a precise comparative measurement on different coatings is impossible without being able to analyse how the wear rate changes at different angles. “At the test lab we can control the conditions to find precisely what we are looking for in a shorter timeframe. Additionally, we are able to replicate the 79

fan’s operating environment. We can run tests using dust collected from the client site while simulating particle speeds that match the client’s environment to precisely simulate wear rates.” In the laboratory environment, the TLT-Turbo team is also able to determine additional coating properties as they have the capability to run additional experiments, e.g. corrosive resistance, anti-stick effect, robustness, heat resistance, suitable application methods, and combination possibilities like hybrid coatings. The test lab has afforded TLT-Turbo engineers a deeper understanding of the mechanisms behind wear and the effects of specialized solutions. This has led to new approaches in product advancement and development that are grounded in providing solutions that meet market requirements. “The analysis of residues from plants has a great influence on product development as we are making more informed decisions when choosing materials for corrosive and abrasive environments,” says Baumgärtner. This has also had an impact on TLTTurbo’s aftermarket service offering. The test lab, has allowed for new customer services can be generated, such as the performance of specific tests for customers. “The development of new solutions for specific customer problems is now much faster and more accurate. Also, the suitability of low-cost approaches or solutions that allow for wear induced damages to be repaired onsite integrate effortlessly into TLT-Turbo’s existing solutions,” Groh concludes. The test lab enables TLT to continuously improve their solution portfolio for different customer problems with a focus on wear. The combination of understanding the client’s exact requirements and challenges and having a tool that allows engineers to find the best solutions from a scientific basis are a key factor for success in the market and play an important role for TLT-Turbo’s on-going product development and quality client delivery.

ANALYSIS

Record on the LNG Market Capacities of 170bcm to be Commissioned in 2019 Global natural gas demand is growing strongly, supported by more and diversified supply sources, and this context is facilitated by the ever-increasing demand for liquefied natural gas (LNG). The strong increase in LNG demand in the last three years will continue in the future, boosted by the investment projects in LNG facilities throughout the world, the International Energy Agency (IEA) says in its report for 2019, recently published. Text by Adrian Stoica & Daniel Lazar 80

Figure 1.

Additions to global liquefaction capacity (2014–24) and FID volume (2014–19)

ANALYSIS Global Gas Security Review 2019

uch of the increase in LNG consumption is taking place in countries where LNG competes with other energy sources, meaning LNG importers want more flexibility. Increased transactions, together with the occurrence of new players on this market are signals that the LNG market is ready to respond to these increasing demands. This year’s report focuses on three topics. First of all, it provides an analysis on the flexibility of the LNG market based on a detailed evaluation of the recent contractual activity. It analyses the evolution of flexibility in LNG supply of traditional buyers in Asia and how this flexibility could contribute to increasing the security of supply for other rapid growing markets in Asia. Last but not least, the report focuses on challenges in north-western Europe on the security of gas supply, given that a major source of domestic supply, the Groningen field in the Netherlands, is phased out.

Figure 1.

Findings and recommendations

Additions to global liquefaction capacity (2014–24) and FID volume (2014–19)

Note: Capacity additions are based on the announcements of developers and only include the capacity of projects that had taken FID by the time of writing this report. Source: IEA analysis based on ICIS (2019), ICIS LNG Edge, https://lngedge.icis.com/ (subscription required).

A record-setting capacity of over 170 billion cubic metres (bcm) of natural gas liquefaction is due to take FID in 2019, far surpassing 2005’s previous record of 70 bcm. Note: Capacity additions are based on the announcements of developers and only include the capacity of projects that had taken FID by Growing adoption of the equity offtake marketing structure has contributed to this recent boost in the time of writing this report. contracting activity andICIS project sanctioning. In an equity offtake (or equity-lifting) model, partners Source: IEA analysis based on ICIS (2019), LNG Edge, https://lngedge.icis.com/ (subscription required).

have access to LNG market volumes according to their equity stake, reducing the need for longA record-setting capacity over 170agreements billion cubic metres of natural gas liquefaction due to take FID in term sale and of purchase (SPAs) (bcm) to secure a project’s funding. is Since this approach 2019, far surpassing 2005’s previous record 70 bcm. projects, developing under this model can accelerate couples financing and offtake forofprospective the FID process. Growing adoption of the equity offtake marketing structure has contributed to this recent boost in Figure 2. contracting FID-enabling contracts by signing year and structuring model activity and project sanctioning. In an equity offtake (or(2014–19) equity-lifting) model, partners have access to LNG market volumes according to their equity stake, reducing the need for longterm sale and purchase agreements (SPAs) to secure a project’s funding. Since this approach couples financing and offtake for prospective projects, developing under this model can accelerate the FID process. Figure 2.

FID-enabling contracts by signing year and structuring model (2014–19)

Transactions reached 420bcm/year in 2018

Flexibility of contracts, a key condition On LNG markets, buyers request increasing quantities and under more

Note: 2019 data reflect contracts signed up to the time of writing. Source: IEA analysis based on ICIS (2019), ICIS LNG Edge, https://lngedge.icis.com/ (subscription required).

Note: 2019 data reflect contracts signed up to the time of writing. Source: IEA analysis based on ICIS (2019), ICIS LNG Edge, https://lngedge.icis.com/ (subscription required). PAGE | 8

flexible terms. Therefore, the share of from three perspectives. First of all, it After 2017, a shift to the equity-lifting model among FID-enabling deals appeared to accelerate FID timelines contracts without a direct recipient monitors the progress of flexibility of with a novel approach to financing. has increased since 2015, reaching a LNG contracts at global level. Secondly, share of 40% of total LNG deliveries the report analyses the flexibility in 2018. Moreover, the volume of mechanisms used by the major LNG 8 in Asia. Finally, this year’s spot trading increased by almost 60%PAGE | importers since 2015, to over 100bcm/year, report weights the challenges faced accounting for almost a quarter of the by north-western Europe in terms of global LNG trade. The flexibility of security of gas supply and assesses the the global gas market in the following importance of flexibility of its supply. years will continue to be crucial, as natural gas plays an essential role in Portfolio players boosted investments energy transition to a cleaner and more sustainable system. Global gas security LNG contracting activity witnessed review is addressed in IEA report growth in 2018, reaching the highest 81

After 2017, a shift to the equity-lifting model among FID-enabling deals appeared to accelerate FID timelines with a novel approach to financing.

Demand for natural gas – and particularly for liquefied natural gas – is growing strongly. Gas consumption increased by approximately 4.6% in 2018 at global level, the largest annual growth rate since 2010. But LNG demand is growing even more quickly. The commissioning of liquefaction capacities, of over 50 million tons per annum (Mtpa) in in 2018 (the equivalent of 72 billion cubic meters per year) allowed LNG transactions to grow by 10%, reaching 420bcm/year. The availability of US LNG exporters, the main source of supply growth in the medium term, and the increased number of buyers indicate that the market responds to these growing requests, the report mentions.

ANALYSIS Global Gas Security Review 2019

The equity-lifting model for financing liquefaction projects has been increasingly used by investors. It allows contractors/partners to have access to the LNG volumes of the project proportionate to their equity stake and, as such, secures both the economic viability of the project and the volumes contracted under long-term agreements. Equity lifting has enabled some of the largest LNG liquefaction projects to reach the financing phase, thus ensuring an additional LNG production and contributing to a balanced global gas market and security of supply. The major companies that have already chosen the equity-lifting model include LNG Canada, Greater Tortue FLNG and Golden Pass LNG.

New projects, supported by long-term contracts Long-term deals have dominated the recent LNG contracts, reaching a share from 74% in 2018 to 92% in 2019. Moreover, the large contracts (over 4bcm/year) and medium-sized contracts (2-4bcm/year) have increased significantly, accounting for 56% and 82% respectively of total volumes signed in 2018 and 2019 (to date). This is in contrast to the last three years, when the majority of deals were for volumes under 2bcm/year.

Concluded LNG contracts by destination flexibility, exporting region and importing region (2014–19)

Notes: Data relate to contracts concluded and linked to projects that have already taken FID, as well as contracts concluded sourced from a portfolio. Data from 2019 include only the information available at the time of writing. In the exporting region chart, the Other regions category Africa, Asia East, and and Global Gascomprises Security Review 2019Pacific including People’s Republic of China (“China”), Eurasia, Europe, Middle Findings andCentral recommendations South America. In the Importing region chart, the Other regions category comprises Africa, Asia Pacific excluding China, Eurasia, Europe, Middle East, and Central and South America. Source: IEA analysis based on ICIS (2019), ICIS LNG Edge, https://lngedge.icis.com/ (subscription required).

to secure robust sources of LNG supply and meeting uncertainty of demand have been key objectives for these buyers.contracts is apparent as North America emerges as the key exporter and A strong move to destination-flexible portfolio players as key buyers. Given the uncertainty in the demand level, buyers have been seeking greater flexibility in their supply contracts. The average duration of a contract in the traditional Asian LNG buyers’ portfolio buyers with new and increasing demand for natural gas, particularly in Asia, still need to isSome 20 years. secure their supply and are actively signing new contracts. For example, the People’s Republic of China (hereafter, “China”) is rapidly expanding its imports, and among import contracts to single Figure 4. destinations Structure China of term contracts among traditional Asian volume2019. of LNG was the most popular destination in LNG 2018 buyers and so and far during Of imports all FID (2005–18) project contract volumes, China’s contracts represented 20% in 2018 and 22% in 2019 to date. Driven by air quality policy measures and gas shortages seen in the winter of 2017/18 (IEA, 2018), 200 Chinese buyers are seeking to reduce their exposure to supply risk and winter spot LNG price volatility. This willingness to contract reflects their interest in long-term supply protection. Short-term

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100

Other contractual elements such as contract indexation have also seen further development. Gas (< 5 years) contracts have increasingly been signed or renegotiated to include hub gas price indexation, reducing the historically predominant links to oil. North American export contractsMedium-term constitute a large proportion of export contracts with gas-to-gas indexation that exist in the market today. (5-10 years) During 2018 and 2019, diversification behaviour evolved further with the onset of new pricing structures based on the destination market and the use of the gas. Long-term (> 10 years)

LNG supply security in Asia: An opportunity forImported volume, all traditional buyers 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

The structure of the Asian LNG market is undergoing a major shift. Demand from traditional LNG

Note: Short-term contracts (< 5 years) do not include spotis transactions. buyers, namely Japan and Korea, likely to be flat or decline gradually depending on use in Sources: IEA analysis based on data from ICIS (2019), ICIS LNG Edge, https://lngedge.icis.com/ (subscription required); imported volume power generation. However, with or without a decline, these traditional buyers will still account data from GIIGNL (2019), GIIGNL Annual Report 2019, for over 180 bcm/y of LNG purchases by 2024, or 60% of Asian LNG demand. Creating measures https://giignl.org/sites/default/files/PUBLIC_AREA/Publications/giignl_annual_report_2019-compressed.pdf.

Over 85% of LNG procurement by traditional Asian buyers is via long-term contracts to secure stable supply. PAGE | 10

Options have become the tool of choice for increased flexibility. For example, cargoes can be increased in frequency to align with expected growth in demand (tranche option). A cargo can be formarket all durations. sourced to meet a sudden increase in demandcontracts during a tight (call option).InAt2018, times of58% low demand, a cargo can be diverted to another market option) and be sold to such market of the(diversion volumes contracted and linked to without the risk of the cargo remaining unsold on the spot market (put option). This is a major a project for which the financing decision improvement on the historically predominant demand adjustment mechanism, whereby a certain has beenafter made notofhave a fixed The flexibility is much percentage ofofthecontracts annually contracted volume canalready be adjusted the did closure the contract year, with thedespite obligation carried forward. destination, and in 2019 they reached more appreciated, the continuous

89% of the contracted volumes, without fixed destination

reliance Emerging on long-term transactions. 89% of the volumes. This is, besides Asian buyers are also seeking increased contractual flexibility. Most of the future growth other formsemerging of flexibility incorporated in Longer-term contracts do not necessarily in the Asia region is set to come from these non-traditional buyers, namely Bangladesh, Indiaflexibility. and Pakistan.Destination They are less dependent on LNG, withto domestic gas production and contracts, a way allow buyers to adjust mean aChina, lower imports available tofeature them. However, gasschedule demand isofquickly surpassing volume and deliveries. flexibilitypipeline becomes a common in theever-growing domestic production, meaning that more LNG is needed. This is creating a situation where LNG is required, but it has to compete on pricing with competition from domestically produced or pipeline imported natural gas.

Investments from own funds, preferred

Figure 3.

bcm

level in the last five years, and a large part of this growth was generated by the development of new liquefaction projects. Portfolio players continue to be key to this increased activity, getting involved in all liquefaction projects for which the final investment decision (FID) was adopted during last year. This increased activity can be attributed to the desire of portfolio players to reconfigure their portfolios, so that they can provide flexibility to the market and secure long-term deals, in line with the anticipated increase in LNG demand, the IEA report shows.

Findings and recommendations

Global Gas Security Review 2019

Findings and recommendations

ANALYSIS Figure 5.

Evolution of Asian LNG buyer types (2010–24)

Global Gas Security Review 2019

100% Evolution of Asian LNG buyer types (2010–24)

2010

2024

80%

80% Share of LT contracts in LNG supply 100% 60%

100% 60%

80% 40%

60% 20%

60% 20% 40% 0%

40% 0% 0% 20% -20% Japan

20% Korea

40%

60%

China

India

80%

100%

20%

Share of LNG 20% in gas supply -20%

Chinese Taipei

Thailand

Pakistan

40%

60%

Singapore

80%

100%

Malaysia

Bangladesh

0% Note:0% LT = long-term. 0% 20% 40% (subscription 60% 80% 100% Sources: IEA on data 60% from ICIS80% (2019), ICIS LNG Edge, https://lngedge.icis.com/ required); 2024 is based on 0% analysis 20%based40% 100% https://webstore.iea.org/market-report-series-gas-2019. LNG forecast import data from IEA (2019a), Market Report 2019, Share Series: of LNGGas in gas supply -20% -20% Japan

Korea

China

India

Chinese Taipei

Thailand

Pakistan

Singapore

Malaysia

Bangladesh

The growth of LNG demand among emerging buyers will be strongly affected by the pricing of the competing Note: LT = long-term. fuels. Sources: IEA analysis based on data from ICIS (2019), ICIS LNG Edge, https://lngedge.icis.com/ (subscription required); 2024 is based on LNG forecast import data from IEA (2019a), Market Report Series: Gas 2019, https://webstore.iea.org/market-report-series-gas-2019.

Expansion of LNGamong import capability is anwill urgent requirement unpredictable levels of The growth of LNG demand emerging buyers be strongly affectedto bymeet the pricing of the competing demand growth. This is where comprehensive contract flexibility becomes essential. In 2018 fuels. emerging Asian LNG buyers were overcontracted compared to actual imported volumes by 180%. Flexibility in their contracts allowed these excess contracted volumes to be managed. Expansion of LNG import capability is an urgent requirement to meet unpredictable levels of demand growth. This is where comprehensive contract flexibility becomes essential. In 2018 Figure 6. emerging LNG import andwere percentage covered compared by contracts, emerging Asianvolumes economies Asian volumes LNG buyers overcontracted to actual imported by 180%. (2014–24) Flexibility in their contracts allowed these excess contracted volumes to be managed. bcm

200%

180

160 Figure 6. 140

Other emerging

LNG import volumes and percentage covered by contracts, emerging economies AsiaAsian economies (2014–24) 150%

120 180

200%

100 160

100%

80 140

150%

60 120

50%

40 100

100%

20 80 0 60

2014

2016

2018

2020e

2022e

2024e

0% 50%

Pakistan Other emerging India Asia economies Pakistan Bangladesh India Average volume covered by contracts Bangladesh

IEA, 2019. All rights reserved. Average volume covered by contracts Emerging0LNG buyers have on average 80% of their demand secured by contracts. However, the unavailability 0% 2016 2018may cause 2020e sudden 2022e 2014 of imports or affordability mismatches supply 2024e and demand imbalances. IEA, 2019. All rights reserved.

Emerging LNG buyers have on average 80% of their Pdemand secured by contracts. However, the unavailability AGE | 12

of imports involved or affordability may cause suddenin supply demand imbalances. getting inmismatches distribution and theand following five years, as the bunkering activities. Harmonization of domestic gas production enters a phase regulations related to receiving ports and of rapid decline, while the domestic PAGE | 12 regasification facilities could facilitate consumption will remain constant. intraregional trade and hence improve Phase-out of Groningen field will require security of supply. the expansion of conversion facilities in the Netherlands. Challenges relating to gas supply come at a time when natural Transformation of the energy system gas becomes increasingly important for in north-western Europe electricity security. It is expected that The import requirements of north- electricity in north-western Europe will western Europe are expected to grow suffer a deep transformation, with an by one fifth (or almost 40bcm/year) increasing share of renewable energy

Growth on the Asian LNG market is determined by newer importers, while the demand of traditional buyers is expected to be stagnant. Most traditional buyers in Asia import LNG under sale and purchase agreements (SPAs). In practice, LNG SPAs have clauses relating to volumes, destination, delivery schedule and transport. In general, long-term contracts allow a greater commercial flexibility, as the contracted volumes are managed throughout several years. Thus, the buyers’ obligation to take over the LNG quantities or the sellers’ obligation to deliver the LNG quantities can be offset by various methods, and this flexibility has evolved in various ways. Thus, the buyers can resort to the entire LNG volume contracted or the unwanted quantities can be diverted and resold on other markets when an adjustment is needed. Practical experience shows that the flexibility mechanisms incorporated in LNG SPAs can be better exploited through regional cooperation, the parties benefiting from the synergies arising from short transport distances. Moreover, a greater flexibility of contracts is implemented as new public procurement strategies emerge, including the creation of joint ventures, joint procurement with other markets and expanded reloading capabilities. Through the creative use of these instruments, traditional buyers in Asia are able to become LNG sellers on the secondary market, providing intraregional flexibility for emerging buyers. It is estimated that 15bcm/year of the volumes contracted by traditional LNG buyers in Asia have flexible destinations. This flexible volume in terms of destination could cover up to 15% of the forecast LNG demand of emerging buyers in Asia. More recently, Japanese importers also invest in the development of LNG infrastructure to serve the Asian market. Moreover, they are actively developing their trading capacities and encourage the new demand for LNG in the Asia-Pacific region by

Findings and recommendations

Share of LT contracts in LNG supply 100%5. Figure

bcm

Innovation in contracting for a higher regional security

2024

2010

ongoing development of their importing infrastructure. One of the solutions could be in the form of traditional Asian LNG buyers, who can provide supplies of LNG using the flexibility in their contracts. It is estimated that 15 bcm/y of LNG contracted to ANALYSIS traditional Asian LNG buyers can currently be considered destination-flexible. This destinationflexible volume would cover up to 15% of forecast LNG demand among emerging Asian LNG buyers.

bcm/y

30 25 20 15 10 5

Global Gas Security Review 2019

0 2012

Global Gas Security Review 2019

2013

2014

Findings and recommendations

2015

2016

2017

2018

2019

2020

2021

Findings and recommendations

2022

2023

2024

North-western Europe’s gas flex: Still fit for North-western Europe’s gas flex: Still fit for purpose? purpose? The inherent flexibility of the north-western European natural gas system has played a crucial role in Japan

Others

Sources: IEA analysis based on data from ICIS (2019), ICIS LNG Edge, www.icis.com/explore/services/analytics/lng-market-intelligencesolution/ (subscription required); 2024 is based on LNG forecast import data from IEA (2019a), Market Report Series: Gas 2019, https://webstore.iea.org/market-report-series-gas-2019.

the ofAsian a of liquid, tradable well-integrated regional gasupmarket, where security The development inherent flexibility the north-western European natural gascover system has played a crucial roleof in LNG contracted to traditional buyers with a and flexible destination could to 15% of LNG demand supply is ensured by to market rules and the strong seasonality demand is satisfied with the development ofadherence a liquid, tradable and well-integrated regional gas of market, where security of from emerging Asian LNG buyers, potentially providing them with extra flexibility. adequate physical by natural gas supply. supply is ensured adherence to market rules and the strong seasonality of demand is satisfied with adequate physical natural gas supply. Japanese buyers are expanding their LNG networks to implement contractual flexibility. Examples Figure 8. North-western Europe’s gas demand by sector (2005–24) and by month (2005–18) include the formation of joint ventures and jointly procuring contracts with other market Figure 8. North-western Europe’s gas demand by sector (2005–24) and by month (2005–18) 50 participants. Also, the enlargement of receiving infrastructure is being observed in Japan, with 400 50 will enable these Japanese buyers to have an additional loading capabilities at LNG terminals. This 400 40 LNG onto another LNG vessel, into smallerLNG outlet during fluctuations in demand, by reloading 300 40 scale ISO containers, or onto LNG bunker supply vessels. All such operations are enabled by the 300 30 secured, thanks to ample additional supply greater flexibilities that traditional Asian buyers have 30 200 and the emergence of portfolio players. 20

200

This additional layer of supply security in the Asian 20 LNG market, over and above traditional 100 suppliers and global portfolio players, also contributes to the operational robustness of the fast10 100 growing yet immature emerging buyers. The traditional Asian LNG buyers’ contractual flexibilities 10 0 and implementation capabilities can further increase 0 trading flows regionally and interregionally, 0 serving new demand set to appear in other markets. 0 United Kingdom Belgium United Kingdom Belgium

France France

Source: IEA (2019b), Natural Gas Monthlygas Statistics, www.iea.org/statistics/monthly/#gas. North-western European natural demand is characterised by a pronounced seasonal pattern, driven by the heating needs ofEuropean the residential sectors. North-western naturaland gascommercial demand is characterised by a pronounced seasonal pattern, driven by the heating needs of the residential and commercial sectors. However, rapidly declining domestic production PAGE | 13 and increasing import requirements have gradually eroded thisrapidly flexibility in the past five years. The proportion winterrequirements gas requirements met by However, declining domestic production and increasingofimport have gradually production has fallen from 40% below The 5%. proportion of winter gas requirements met by eroded thisswing flexibility in the past fivetoyears. production swing has fallen from 40% to below 5%. Figure 9. Natural gas production and flexibility requirement in north-western Europe (2008/09– 2018/19) Figure 9. Natural gas production and flexibility requirement in north-western Europe (2008/09– 2018/19) 20 20 15

Natural gas production by month Natural gas (2008-19) production by month (2008-19)

Production swing vs consumption seasonality (gasswing yearsvs 2008/09-2018/19) Production consumption 100seasonality (gas years 2008/09-2018/19)50% 100 80

50% 40%

80 60

40% 30%

60 40

30% 20%

40 20

20% 10%

20 0

10% 0%

15 10 10 5 5 0 0

Germany

United Kingdom

Residential and commercial Power generation Germany Industry Others the Netherlands Residential and commercial Power generation Germany Source: IEA (2019b), Natural Gas Monthly Statistics, www.iea.org/statistics/monthly/#gas . Industry Others the Netherlands

bcmbcm

Other seasonal flex requirements Production swing Other seasonal flex requirements Production Production swing swing as share of flex requirement

the Netherlands

UnitedGas Kingdom the Netherlands Source:Germany IEA (2019b), Natural Monthly Statistics, www.iea.org/statistics/monthly/#gas. Production swing as share of flex requirement

Source: IEA (2019b), Gas Monthlyhas Statistics, www.iea.org/statistics/monthly/#gas. European naturalNatural gas production halved over the past decade, while its seasonal production swing fell by 90% duringnatural the same increasing the call onthe other sources ofwhile flexibility. European gasperiod, production has halved over past decade, its seasonal production swing fell by 90% during the same period, increasing the call on other sources of flexibility.

PAGE | 14

All reserved. rights reserved. IEA. AllIEA. rights

Global gas markets continued to consolidate and evolve towards greater flexibility, determined by the increasing role of portfolio players in the transformation of business models, of contractual trends etc. The contracting activity in 2018 reached the highest level since 2013, especially as a result of occurrence of new LNG projects. In 2018 and 2019 there was a gradual change of the investment activity compared to the past years. After two years of low activity, the investment decision was made for several projects last year, and this trend was amplified in 2019. According to estimates, projects with a total capacity of 170 billion cubic meters of liquefied gas would receive this year the approval for investments, which means an increase by three times compared to 2005, when projects for which the investment decision was made totalled only 70bcm. Of total contracts concluded in 2018 related to new projects that received green light, 42% came from North America.

LNG volumes contracted to traditional Asian LNG buyers with flexible destination (2012–24)

bcmbcm

Key discoveries

Figure 7.

bcmbcm

in the electricity mix, in the context in which the retirement of 45 gigawatts of nuclear and coal-fired power generation is announced for the next five to six years. Consequently, gas-fired electricity generation will play an increasingly important role in balancing the system. According to the quoted document, gas will ensure almost all the ‘thermal swing’ necessary to meet the increasing demand for energy. In this context, the need to increase the flexibility of the gas system in north-western Europe requires a regional approach. This could be ensured by developing an additional import capacity, improving interconnection and harmonizing regulations on gas storage. The consolidation of gas system flexibility in north-western Europe would also strengthen the position of the region within the global gas market, as this would allow timely and cost-efficient responses to changing global supply– demand dynamics.

Global Gas Security Review 2019

Findings and recommendations

Global Gas Security Review 2019

Findings and recommendations

ANALYSIS

Spare import capacity via Norwegian and Russian pipelines directly servicing north-western Europe fell to close to capacity zero during past twoand heating seasons. Spare import via the Norwegian Russian pipelines directly servicing north-western Europe fell to close to zero during the past two heating seasons.

What happens in our region? It is interesting to see what happens in this part of Europe. Russia does not stand idly by and is preparing itself for the LNG offensive that could come from the US. Thus, Novatek, a major gas company in Russia that last year exceeded Gazprom in terms of capitalization, will receive a tax deduction of approximately USD 600mln (RUB 40bn) from the regional budget of Yamal-Nenets region and USD

Continent

Belarus transit

Nord Stream Source: IEA (2019c), Gas Trade Flows, www.iea.org/gtf/.

Continent

United Kingdom

United Kingdom United Kingdom

20182018

Belarus transit

20172017

Ukrainian transit Nord Stream Ukrainian transit

20162016

10 0

20152015

10 0

20142014

20 10

10 0

20132013

30 20

20 10

20182018

30 20

20 10

20172017

30 20

20162016

40 30

20152015

40 30

20142014

50 40

40 30

20132013

50 40

20182018

60 50

50 40

20172017

70 60

60 50

20162016

70 60

60 50

20152015

70 60

20142014

80 70

20132013

bcmbcm

80 70

LNG imports

80 70

France

Belgium United Kingdom

the Netherlands France

Belgium

the Netherlands

Source: IEA (2019c), Gas Trade Flows, www.iea.org/gtf/.

Spare pipeline import capacity to north-western Europe has more than halved since 2013, falling from 70 bcm/y to just above 30capacity bcm/y, while spare regasification risen by 10% to2013, abovefalling 70 bcm/y. Spare pipeline import to north-western Europe capacity has morehas than halved since from 70 bcm/y to just above 30 bcm/y, while spare regasification capacity has risen by 10% to above 70 bcm/y. Gas interconnectors from Germany to the Netherlands are becoming saturated as a result of the evolving supply outlook in the Netherlands. Gas interconnectors from Germany to the Netherlands are becoming saturated as a result of the evolving supply outlook in the Netherlands. Figure 11. Interconnector flows to the Netherlands (2017–18) Figure 11. Interconnector flows to the Netherlands (2017–18) Emden interconnector Bunde/Oude interconnector 90 Emden interconnector Bunde/Oude interconnector 90 80 90

80 90 70 80

70 80 60 70

60 70 50 60

50 60

40 50 30 40

20 30 10 20

20 30 10 20 0 10

0 10

0 Flows

Firm capacity

Flows Firm capacity Note: mcm/d = million cubic metres per day. Source: ENTSOG (2019), Transparency https://transparency.entsog.eu/. Note: mcm/d = million cubic metres perPlatform, day.

Source: ENTSOG (2019), Transparency Platform, https://transparency.entsog.eu/. The utilisation of interconnectors feeding into the Dutch natural gas grid is saturated during periods of high demand, henceof limiting the availability of spare capacity. The utilisation interconnectors feeding into the Dutch natural gas grid is saturated during periods of high demand, hence limiting the availability of spare capacity. Global Gas Security Review 2019 Findings and recommendations Deteriorating storage economics has led to the closure of 5 bcm of storage capacity since 2013. Deteriorating storage economics has led to the closure of 5 bcm of storage capacity since 2013.

Figure 12.

Spread between summer and winter gas prices on TTF (2008–18) and gas storage closures in north-western Europe (2013–17) Summer-winter spreads on TTF 6

PAGE | 15 PAGE | 15

6 5

1 0

Cumulative storage closures in Northwest Europe

1 2008

2010

2012

2014

2016

2018

2013

2014

2015

2016

2017

Notes: MWh = megawatt hour; TTF = Title Transfer Facility. Source: Bloomberg Finance LP (2019), Bloomberg Terminal (subscription required).

Seasonal spreads on the TTF have more than halved since 2012 to an average below EUR 1.5/MWh, insufficient to cover the operating costs of some storage sites and leading to the closure of over 5 bcm of storage capacity since 2013. The flexibility of the north-western European gas system could further decline amidst the increasing import requirements of the region, expected to grow by 40 bcm/y by 2024, primarily due to declining domestic production. 85 Moreover, the challenging storage economics coupled with the expiry of long-term storage contracts could lead to the retirement of further storage capacity in the region. In the medium term, the north-western European power system is expected to undergo a profound

Allreserved. rights reserved. IEA. AllIEA. rights

Demand from traditional buyers, Japan and South Korea, is estimated to remain constant or decrease gradually, depending on LNG use in electricity generation. However, with or without the decline, these traditional buyers will still account for over 180bcm/year of purchases by 2024, or 60% of Asian LNG demand. Taking measures to ensure solid supply sources has been a key objective for these buyers. Thus, over 85% of LNG purchases of traditional buyers in Asia are long-term contracts, and the average duration of a contract in the portfolio of traditional buyers is 20 years.

LNG imports

Norwegian imports

Norwegian imports Russian imports (German entry points) 80 80

bcm/y

Japan and South Korea, 60% of the Asian demand

Annual spare import capacity into north-western Europe by origin of imports (2012–18) Annual spare import capacity into north-western Europe by origin of imports (2012–18)

Russian imports (German entry points)

mcm/d mcm/d

The number of contracts with flexible destination concluded in 2018 was higher than in the previous years, but the inherited contracts with destination clause covered the largest LNG volumes traded. For example, the People’s Republic of China is rapidly expanding its imports, and most of the contracts last year and this year were concluded having fixed destination. Also, the volumes contracted by China having as source the new projects following to be built accounted for 20% in 2018 and 22% in 2019. Boosted by measures taken for the improvement of air quality, as well as by the problems faced in gas supply in the winter of 2017, Chinese buyers thus tried to reduce their exposures to the risk of supply interruption and that relating to the volatility of LNG prices.

Figure 10. Figure 10.

EUR/MWh

Chinese importers go with fixed destination

The flexibility of the north-western European gas system could further decline amidst the increasing import requirements of the region, expected to grow by 40 bcm/y by 2024, primarily due to declining domestic production. Moreover, the challenging storage economics coupled with the expiry of long-term ANALYSIS storage contracts could lead to the retirement of further storage capacity in the region. In the medium term, the north-western European power system is expected to undergo a profound transformation, with an increasing share of intermittent renewables in the electricity mix and the announced retirement of 45 GW of nuclear and coal-fired power generation in the next five to six years.

Memorandum of Understanding between the ministries of Energy of Romania and Poland Bucharest on September 18, 2019 hosted the second round of intergovernmental consultations between Romania and the Republic of Poland, within which Secretaries of State Doru Visan and Krzysztof Kubów have signed the Memorandum of Understanding between Romania’s Ministry of Energy and Poland’s Ministry of Energy, on energy cooperation. Recognizing the interest to boost energy cooperation and considering the similarities regarding the objectives of energy and climate policies, as well as the impact of implementing the Clean Energy legislative package for 2030 and beyond, both countries wish to continue to explore, in detail, areas of common interest that can be exploited to consolidate the voice of both countries at the level of the European Union, as well as

100%

0% 0% 02-2015 02-2017 Intermittent renewables as a proportion of total generation Volatility

80 60 40 20 0

Nuclear

Lignite

2025

200%

10%

100

2024

300%

120

2023

400%

20%

140

2022

500%

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30%

160

2020

600%

2019

700%

40%

Nuclear and coal-fired power plant closures in Northwest Europe*

2018

Volatility of gas-fired power generation in the United Kingdom

UK volatility in gas-fired power generation (2015–17) and announced power plant closures in north-western Europe (2018–25)

Gas-fired power generation volatility

Figure 13.

Intermittent renewables

Hard coal

* Based on announcements by governments and companies. Sources: Share of renewables: IEA (2019), Monthly Statistics, www.iea.org/statistics/monthly/; gas-fired power generation: ENTSO-E (2019), Transparency Platform, https://transparency.entsoe.eu/.

The growing share of intermittent renewables, coupled with declining coal-fired and nuclear power generation, is set to increase the volatility of gas-fired power generation.

PAGE | 16 be available through the Polish terminal at international level. Secretary of State Doru Visan Świnoujście. highlighted that “there is a significant potential of cooperation in the energy BMW has tested LNG on trucks since 2017! sector between Romania and Poland, which has the capacity to result in a Liquefied natural gas (LNG) has valuable instrument yielding positive and potential as a sustainable propulsion concrete results in the sense of increased technology for the logistics of large energy security, diversification of energy industrial companies. This is the result of supply sources and routes, economic a two-week pilot test that BMW Group prosperity, progress to a secure, accessible has initiated and implemented with and sustainable future for both countries”. truck manufacturer Iveco and transport The bilateral discussions carried out company Duvenbeck. As part of the test, on this occasion between the delegations an LNG-powered truck transported daily of the two ministries highlighted that engines from the BMW plant in Steyr to both Romania and Poland put at the the BMW Group plant in Regensburg. center of cooperation the principle of Thus, valuable data has been obtained ensuring energy security, by developing a for the evaluation of the technology. As diversified and balanced energy mix and natural gas decreases in volume during by diversifying energy supply sources and liquefaction, the use of LNG in heavy routes. The officials of the two ministries traffic represents a decisive advantage: have expressed their mutual interest to the relatively long operating autonomy. cooperate in the field of electricity, where Thus, the Iveco Stralis 400 NP model there are strategic areas of mutual interest, could travel safely between Steyr and such as the nuclear and coal sectors, and Regensburg and back on a daily basis to harmonize their positions within the - all with a single tank. With electric European and international forums. propulsion system, this 530-kilometer Particularly appreciating the important road would require charging several times. steps Poland has taken in the development Generally, when using compressed natural of the LNG sector, the Romanian side gas (CNG), it would be necessary to install reiterated its interest in identifying the a tank with a capacity three times greater best technical solutions for the Romanian to obtain the same operating autonomy as market to access the gas volumes that will in the case of liquefied natural gas (LNG).

1.5bn (RUB 100bn) from the federal budget to build an export LNG terminal in the autonomous region in the northwest of Siberia. Novatek operates Yamal LNG plant, which has a capacity of 17.4 million tons per year, and is building the Arctic LNG plant, which will add other 19.8 million tons. In the end, Novatek plans to operate a total annual liquefaction capacity of 60 million tons. Novatek’s partners in Arctic LNG 2 project are Total, CNPC, Japan Arctic LNG and CNOOC (China). Gazprom also produces LNG, but to a smaller scale. At the beginning of this year, the Chief Financial Officer of Novatek, Mark Gyetvay, stated that Russia could become one of the top four global LNG producers in the following several years. Bloomberg estimates that starting with April this year the US and Qatar could have developed together a production capacity of 100 million tons per year by 2030, sharing the first place, Australia following with 95 million tons per year, and Russia would have reached the fourth place, with 75 million tons of LNG capacity.

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THINK BIG, ACT HUGE 87

EVENT

Energy Transition Event organized by ROEC and IENE R

omania Energy Center (ROEC) and the Institute of Energy for South East Europe (IENE) organized a highly informative conference dedicated to Energy Transition that took place on October 16, at the headquarters of the European Commission representation in Bucharest. The event featured a wellbalanced selection of speakers (half from abroad and half from Romania) coming from business, think tanks, European Commission (DG Clima) and industry associations (such as FORATOM Europe). The event was attended by close to 100 participants from an equally diverse background. The topics covered included the Integrated National Energy and Climate Plans, district heating in Denmark and Romania, the role of nuclear in energy transition, how to decarbonize non-ETS sectors, the role of gas hubs, prospects for ssLNG in

the region, the importance of energy efficiency in fighting energy poverty in the region. Mr. Jan Christoph Nill from the European Commission (DG Clima) offered the EUâ&#x20AC;&#x2122;s view on commitments made through the Integrated National Energy and Climate Plans (INECPs) towards achieving the 2030 climate targets. Lars Gullev (CEO, VEKS - the company in charge with the District Heating operation in Vestegnen, the western area of Copenhagen which includes 12 municipalities) gave a presentation on what energy transition means in Denmark and the role of district heating in it. While Denmark has already in 2017 reduced CO2 emissions by 40% compared with 1990, the country aims to further increase this percentage to 70% until 2030. Renewable energy use accounts for 35% and is projected to reach 54% by 2030. Electricity produced 88

from renewables, presently at 60% is projected to reach 109%. Electricity used for district heating is projected to grow from 55% (today) to 80% by 2030. Within renewable energy, wind and biomass have the biggest share. Moreover, Denmark plans to stop selling all new diesel and petrol cars in 2030. There are climate related measures for buildings, agriculture, construction, green research, electrification, afforestation (new forests), offshore wind, and coastal protection. Mr. Gullev, who is also the vice chairman of the IEA Executive Committee for District Heating and Cooling, spoke about the Energy Vision for the Greater Copenhagen area (adopted in 2015) which aims to produce all heat and electricity without fossil fuels by 2035, and make the transport sector entirely fossil fuel free by 2050. Finally, the Danish expert reminded the audience that although Denmark has been highly successful in switching to green energy

EVENT

since the 1970s, energy transition is costly (the price of electricity in Denmark is €150/MWh). Costis Stambolis (Executive Director of IENE) anchored the discussion on energy transition in a global and regional context. He outlined the main global trends, and then turned to South East Europe (SEE), a region that is heavily energy import dependent. He outlined that SEE is marked by divergent energy strategies (between EU and national policies), by more energy insecurity than the rest of Europe, by high hydrocarbon dependence, by a lack of adequate electricity and gas interconnections, and energy poverty. In his opinion, nuclear and coal will continue to be important as security of energy transport trumps supply diversification in this region, and economic development at all costs remains the number one priority for most countries in the region. He drew attention to the fact that the transition to decarbonized power generation is not an easy regional issue, as in most of SEE countries electricity generation, which is mainly based on coal and lignite, supports thousands of jobs and forms the basis of an extensive industrial base. He pointed to a paradox: although countries in the region all have committed to various extent to gas, RES, energy efficiency, at the same time, they are pursuing a parallel carbonization agenda as there are a number of coal-fired power plants under construction or at an advanced planning stage. This strong lignite/coal legacy in the region makes the energy transition process here much more complicated (especially in the Western Balkans). IENE’s analysis underscores a gap between new coal-fired power plants and planned new RES and gas installations in the region and points to the likelihood of a power generation shortfall as early as 2027 which could transform the SEE region from an electricity exporter to a net importer. Teodor Chirica (President of FORATOM Europe) gave a presentation on the role of nuclear in energy transition. He stressed that nuclear energy is seen

more and more lately as a key contributor to sustainable development and an ally in reaching the climate goals. There have been strong signals lately coming from the IEA, WEC, IPCC and even recent EU policy documents in that regard. Nuclear is projected to account for 15% of the EU electricity mix by 2050. He gave an overview of the ongoing efforts to add new nuclear capacity in Europe: NPPs under construction total cca. 7,500 MW while planned NPPs could add an additional 10,000 to 20,000 MW of new capacity. Finally, the FORATOM president underscored the importance of technological neutrality in sustainable financing, reminding that nuclear is one of the technologies that lead to zero emission targets. Otilia Nutu (Expert Forum) talked about a multi-country project covering 6 countries (Poland, Czech Republic, Romania, Hungary, Bulgaria, Slovakia) in which her think tank has participated lately. The project focuses on two nonETS sectors (transport and buildings) and identifies best practices to see if these can be extrapolated to other countries, countries with a similar experience to Romania’s. The reason Romania is doing well in the buildings sector is because it started from a low base (the country did nothing in the 1990s). By comparison, Slovakia started work on buildings in 1993-1994, and is now focusing on renovating buildings from the 1990s. Hungary and Poland have very good programs on electromobility, while Slovakia is doing a lot in the railway sector. Mrs. Nutu invited the participants to read the study which is posted on ROEC’s Energy Transition event page. Emil Negut (LNG Romania) who is working on structuring the first ssLNG project in Romania, talked about the prospects of ssLNG applications on the Romanian market, about the conditions required, difficulties faced as well as costs involved. He highlighted the EUfunded ‘LNG Motion’ project and the already exiting ssLNG import terminal in Bulgaria. Although right now, Romania has no ssLNG, it could be a substitute 89

for LPG and heavy liquid fuel. For a start-up ssLNG project, the investment requirement is estimated at €10 million over the next 6 years. Costas Theofylaktos (IENE, energy efficiency specialist) talked about the challenges of climate change in our region, about the EU energy policy to become CO2 neutral, and about the energy audits carried out in Greece until May 2018 (450 companies audits out of 800). He also presented the results of a survey conducted by IENE in 2017 among low-income households which showed that 37% of respondents faced energy poverty and 50% could not afford to upgrade energy efficiency in their households. In conclusion, he outlined that energy efficiency in SEE region is still in its infancy and a lot of work still needs to be done at state and local levels. Eugenia Gusilov (ROEC) spoke about district heating in Romania. She outlined that the sector had a negative development in the past 3 decades, a period which saw 85% of district heating systems (DHS) vanish. Romania is now down to 47 cities and towns which have DHSs from a high of 315 in 1989. She emphasized that this sector is sitting at the intersection of several thorny issues: old infrastructure, energy poverty, high price subsidies, low quality of service, slow legislative process, policy neglect and lack of understanding from politicians and local authorities. However, the most important factor that will shape this sector going forward is the ability to retain the confidence of the clients in district heating as the best solution to heat an urban area. Once this confidence is lost, the DHS (even if upgraded) can no longer be saved as too many disconnections make it uneconomical and inevitably lead to its collapse. She spoke about the situation in Bucharest, and said that although critical, the situation is still at a point when it can be turned around, but acting quickly is essential. To watch the HD video recordings of the two panels, view the photo gallery and download the PowerPoint presentations go to: www.roec.biz/etsee

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LABOUR PACT General Consensus to Avoid the Serious Labour Crisis!

Entrepreneurs have become the only opposition party in Romania. Unity, this is the word that can lead to avoiding a general crisis of the labour force in Romania and not only! This is the main conclusion reached by the representatives of the business environment in Romania, central and local public authorities, ministers, top managers in the major state-owned and private companies, representatives of the civil society. 90

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articipants in the conference series Labour Pact in Cluj, Iasi and Bucharest believe that for a sustainable development of the labour force in Romania a longterm macro vision is needed, including the following relevant aspects: stable and relevant economy with emphasis on the

following period. The opinions of those present in the debates will materialize in a Memorandum of Understanding (MOU) agreed and supported by all participants in the debate in order to improve conditions on the labour market. The document represents the starting point in negotiation with decisionmakers from the highest level in order to

are only some of the measures agreed by all those present in the LABOUR PACT debates. But in the long run things can be much more complex, and attracting Romanians who work abroad, increasing natality and analysis of the social assistance system by reducing the number of assisted people can significantly contribute to the development of a

development of disadvantaged regions and the reduction of inequalities at the level of regions, education correlated with the labour force by sectors of activity and the intrinsic and extrinsic motivation of the young people in order not to emigrate, as well as the continuous training and investment in people - the main resource of a people. The co-organizers of this project at national level - CONAF and FPPG (Oil and Gas Employersâ&#x20AC;&#x2122; Federation) aim to launch for discussion important topics and legislative amendments that can favourably influence the evolution of the labour force in Romania in the

determine ways to improve legislation and, implicitly, conditions on the labour market in Romania. Cristina Chiriac, President of CONAF and initiator of the LABOUR PACT project, believes that the entrepreneurial and employersâ&#x20AC;&#x2122; environment has become aware that there is no other way than unity. Fiscal and budgetary measures and investments, attracting foreign labour force from non-EU states, assuming a calendar of budgetary allocation for education, development of a dual education system and partnerships with the university centres, as well as amendments to the legislative framework

competitive labour force market and the creation of research and sustainable development partnerships. Because, for this first time, entrepreneurs have shook hands with the representatives of the central and local public administration, with top managers, specialists in taxation, civil society, so that for 2020 the LABOUR PACT continues by identifying the best solutions for a greater flexibility of the labour force market in Romania and through a continuous dialogue with political parties in order to implement the measures boosting Romaniaâ&#x20AC;&#x2122;s sustainable economic development.

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Cristina Chiriac: “LABOUR PACT - The solution for overcoming the labour force market crisis” Where did it all start? It all started from the awareness of the problem of the labour force in Romania and the need to find solutions leading in the short term to the flexibility of the labour market. The favourable global macroeconomic situation has stated to show signs of slowdown. In 2018, the economic activity in some advanced economies, as well as emerging ones, was poorer than expected. Progress in reducing inequality and relative poverty has been modest. All these make us become aware of the importance of the middle class as a key component of all European societies, representing over half of EU’s population. Returning to Romania’s situation, we are witnessing a process of decline and aging of the country’s population. External migration and immigration last year reached record values, and we all see the result: the lack of personnel in most sectors of activity of the Romanian economy.

Understanding’, agreed and supported by all participants in debates and, I hope, by all political leaders in Romania, in order to improve conditions on the labour market. How do you interact with the political class and how does this respond to the reported problems? So far, we have benefited from maximum openness, the Minister of Labour attended our debates and showed his openness to work with our task force so that we manage to improve the current situation on the labour market. The Minister of European Funds was also by our side, supporting our approach and ensuring his entire support in order to implement the identified solutions. But dialogue does not stop here. I believe through a constructive dialogue all political formations will embrace the idea of developing Romania, of creating beneficial labour conditions, of stimulating natality and creating an optimal development framework for our children. I believe in a cross-party dialogue whose main purpose is consistency, assumption and concrete actions to the benefit of the entire Romanian society.

How did you start the implementation of this project and what is the final purpose? I gathered beside me people who have the same values, who are aware of the problem and who want to find the best and immediate solution to solve it. Once the project written, we were joined by major stateowned Romanian energy companies: OMV Petrom, Romgaz, Nuclearelectrica, Hidroelectrica, which are aware of the need for immediate action on the labour market in order to support the future economic growth and identify the opportunities that the labour market can provide to make the migratory wave stagnate and to determine Romanians from abroad to return to the country. We plan to bring important changes on the labour market through valuable studies and analyses, revealing the necessity, importance and impact that some measures proposed by the business environment will have at budget level. Our opinions are materialized based on discussions with entrepreneurs, specialists in the fiscal and social field, Government officials, representatives of state-owned companies, representatives of employers’ organizations, top managers.

What are the plans for 2020? Because we want a broader approach at the country level, we have identified other pole cities for the growth and development of the labour market in the last period (Brasov, Constanta, Timisoara) in order to identify the gaps on the labour market and to improve the related legislation. We are launching for debate with the political parties the measures identified by the business environment in the MOU and we hope that by the end of the parliamentary session next year we will already have some approved and implemented changes.

Where did the idea of the Memorandum come from? Because efficiency consists of action, the conclusions and results are inserted in a document, ‘Memorandum of 92

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Waste and Packaging Management The Impact of the Legislative Changes On October 3rd, 2019, Vlasceanu, Ene & Partners, a law firm specializing in energy and environmental law, celebrated its 3rd anniversary by hosting a conference on Construction Waste and Waste Packaging Management at a prestigious conference location in Bucharest. The event was a great success and the law firmâ&#x20AC;&#x2122;s initiative was highly appreciated, the participants suggesting making it an annual event, thus making this the first edition of the kind. 94

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The conference brought together authorities (e.g. representatives of the Ministry of Environment), renowned market operators, the relevant professional associations in the field, academic bodies and many experts that shared their experiences related to some of the most impactful recycling topics and expressed opinions on key issues that the sector is currently facing. Views from across the borders were shared, as foreign speakers (including representatives of the Austrian Association for the Recycling of Construction & Demolition Waste) provided valuable insights on how construction and demolition waste has been managed & recycled in Austria and JASPERS’ representatives provided their overview on certain fundamental concepts related to waste and packaging management. The event was divided into two sections, the first session being dedicated to the construction and demolition waste management and the related legal framework; speakers and attendees expressed suggestions as to the improvement of the relevant legislation in order to enable a functional market for the waste flow. The second session was dedicated to the system of packaging and related waste management and the

practical implications of the last year’s amendments brought by GEO no 74/2018. Each session ended with a vivid Q&A session where participants had the opportunity to directly address their questions and concerns to the speakers and the two distinguished representatives of the Ministry of Environment specialised in waste management. The discussions were characterised by a high level of professionalism and by their objectivity, making this conference an invaluable knowledge and information resource on some of the most relevant aspects impacting the construction and demolition waste and packaging waste management. All participants were very responsive, open to collaborate and interested to find solutions for the current shortcomings of the waste management system. Thus, the conference ended with concrete action proposals (e.g. creating a working group dealing with the management of the construction and demolition wastes, as initiated by the recently established Romanian Association for Construction and Demolition Waste). Following the event, the organiser conducted several surveys evidencing the most pressing issues in the field that need prioritisation (available 95

at https://vepartners.ro/publicationsnews/events/). Further on, here are some words about the event’s hosts: Vlasceanu, Ene & Partners is a law firm specialized in energy and environment. The law firm’s partners enjoy great professional recognition, having gained substantial business experience during their in-house collaboration with the largest integrated oil and gas operator in South East Europe. Prior to setting up Vlasceanu, Ene and Partners, within his 10 year tenure in the largest integrated oil and gas operator in South East Europe, Daniel Vlasceanu held various management positions (in the Legal Department), then transferring to the Upstream Division and thus becoming the only specialized Romanian lawyer in the oil and gas sector with pure business experience. The firm’s environmental practice is coordinated by Stefan Ene, an exquisite environmental law expert. As part of his collaboration with the same integrated oil and gas operator, Stefan gained substantial environmental law experience, being involved in all major environmental projects carried out by said operator as well as in other permitting aspects of several projects of national strategic importance.

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Top Companies of Prahova 2019 The Sky Center complex in Paulesti hosted on October 25, 2019 the 26th edition of the TOP COMPANIES OF PRAHOVA Gala - the event that crowns with laurels the performers of the county’s economy, this being the most important business event in Prahova County, during the year. The event brought together 400 participants - the elite of companies in the county, together with numerous guests.

uests of honour were the President of Romania during 1996-2000 Emil Constantinescu and the former Minister for Business, Commerce and Entrepreneurship - Radu Stefan Oprea. The Gala was attended by numerous institutional partners of Prahova Chamber of Commerce and Industry - representatives of the Diplomatic Corps accredited in Bucharest, from 30 embassies - ambassadors, chargés d’affaires and economic advisers; parliamentarians, officials of the county and local public administration, presidents of foreign governmental commercial representatives, in Romania - JETRO (Japan) and CCPIT (China), associations of foreign businessmen, present in Romania the Bilateral Chamber of Commerce Belgium-Romania, Confindustria Romania, TIAD - Association of Turkish Businessmen in Romania, representatives of decentralized

institutions, of associations of businessmen and professionals - partners of CCI Prahova, representatives from the banking environment. From abroad, a guest of the event was the Secretary General of the Banja-Luka Chamber of Commerce and Industry, from Bosnia and Herzegovina, with which Prahova Chamber of Commerce signed a collaboration agreement. “Everything we bring in front of you on this occasion - the presence of distinguished personalities - guests of honour, prizes and trophies, an exceptional gala program - signifies how Prahova Chamber of Commerce and Industry, a representative organization for the business environment in Prahova and Romania as a whole, recognizes and celebrates excellence. Under the conditions of an economic situation characterized at the moment as being on the verge of a new crisis, against the backdrop of an increasingly severe shortage of the labour force, amid the decreased flow of foreign investments, 96

as well as the timing of the domestic ones, we are honoured to gather, this year as well, the elite of the local business community in the most important and grandiose business event of the county. The value of the companies you represent gives the strength of the Prahova County’s economy, which last year, year to which we related in drawing up the ranking of which you are the winners, was among the first three counties at national level, in terms of value of the gross domestic product. Also, Prahova county is among the first 10 counties of Romania regarding the contribution to the national export. Referring to investments - both foreign and domestic, in Prahova they continued to develop, even if not at the level of the past years. All these economic realities of Prahova County, synthesized in figures and data, are the result of the efforts, struggles, sacrifices that most often the entrepreneurs and managers of the top companies make in their daily activity. We are here today, in the

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presence of numerous and distinguished personalities who have accepted to be with us, precisely to appreciate and reward these efforts and these sacrifices transformed into performance. Our guests from the diplomatic environment, from the Parliament of Romania, from the central and local administration, from the chamber system, from the banking system - from the country and from abroad - are our partners and collaborators, of Prahova Chamber of Commerce and Industry, and also yours,” pointed out the President of Prahova Chamber of Commerce and Industry Aurelian Gogulescu. The laureate companies - classified by fields, groups of activity and size classes - received diplomas for ranking in Top 10. At the same time, the ‘Corporate Social Responsibility’ Trophy was awarded - granted to companies that successfully implement the concept

of Corporate Social Responsibility for sustainable development, the ‘Top Investor’ Distinction - to companies with domestic or foreign capital that have made significant investments during the period 2018-2019, the ‘Top Exporter’ Distinction and the ‘Business Woman’ Trophy - awarded to the ladies owner/ member or general manager of the companies present in the Top on the first 3 places. Laureate companies present at this gala - Romanian entrepreneurs, foreign investors, top exporters - represent a real economic force, as they produce in total approximately 35% of the turnover of the economy of Prahova County (at the level of 2018), their profit accounts for around 30% of the profit obtained by all companies in Prahova County, and their employees account for 14% of total employees of companies in the county. Laureate companies that participated

in the event are among the 3,019 companies in Prahova County classified in the TOP 10, out of a total of 6,235 companies that met the conditions for being included in the TOP. The National Top includes 420 companies from Prahova (out of a total of 12,603 from all counties), of which 69 hold the 1st place. The scale, the brilliance and the success of the Gala of the Top Companies of Prahova 2019 were also possible thanks to the support that the event enjoyed from the sponsors and partners, and also the media partners. The ceremony of awarding the diplomas and trophies of the Top Companies of Prahova 2019 was joined by an artistic program supported by the artists of the Bucharest National Opera, Daniela Raduica - soloist of the variety section of the Toma Caragiu Ploiesti Theater and the Kymata ensemble of the Hellenic Community of Prahova.

NOVEMBER’S READING

Global Gas Report 2019 Confirmed essential role of gas in the future with about 2% growth per year to 2040. Astonishing 5% growth of the global gas market in 2018.

nam, International Gas Union and The Boston Consulting Group present the Global Gas Report 2019, the new edition of the annual report that examines key global gas market trends, looking at recent developments and assessing progress towards the leading role that gas is expected to play in the energy transition. This year’s report special feature is a section on the Future of Gas in Europe, co-produced with key European gas infrastructure operators: DESFA, Interconnector UK, Teréga and TAG. The demand has responded strongly to ample supply and liquidity. With LNG trade expanding, prices at key regional natural gas hubs have reached multi-year lows and gas has become affordable for more consumers, taking share from coal. That has driven a 5% increase in global demand in 2018, with a particularly strong growth in the US and China, and a 4% increase in global gas trade. Now in its 3rd edition, the report reaffirms the positive scenario for natural gas. Over the past five years, the market has grown on average by 2% per year and it is expected to maintain a similar growth rate until 2040 to reach 25% of the global energy mix, mainly due to its environmental benefits comparing to other fossil fuels, growing supply and increasingly competitive pricing. This highlights the key role that cost competitiveness will play if gas is to deliver its full potential - notwithstanding

the diverse set of benefits that it offers to a world that is in the process of an unprecedented energy transition. It is a unique and abundant fuel that can reliably supply the world’s rapidly changing energy systems with more energy and support economic growth while helping to immediately cut emissions and improve air quality. “Natural gas is currently in a sweet spot and has exciting prospects in light of the potential for replacing coal in electricity generation and of the gradual growth of renewable gases such as hydrogen and biomethane. In fact, natural gas and even more the growing potential of renewable gases are capable of reducing both CO2 emissions and pollution, enabling the energy transition to take place at affordable prices for all consumers,” Snam CEO, Marco Alverà, said. “I am thrilled to see the two prominent trends of natural gas prices – as they are reaching lower levels and becoming more globalized, and I look forward to seeing the great benefits for a sustainable energy future, as gas is becoming more affordable in more markets,” Professor Joe Kang, President of the IGU, noted. Natural gas can contribute to a cleaner global energy system. But it faces its own challenges, including the need for sustained investment to expand access to low cost gas reserves globally, and in transmission, storage and distribution infrastructure, especially in emerging economies where the use of gas is expected to grow significantly. Together with cost and 98

availability, the gas sector’s prospects will also be shaped by a strong push to improve its environmental impact - continued action is critical to reduce methane emissions and ensure data availability and transparency. Finally, government policies to sustain innovation are required to boost development of low carbon gas technologies - including renewable gas, hydrogen, and carbon capture, utilization, and storage - as they can provide an efficient pathway to dramatically reduce greenhouse gas emissions of the energy system over the long term. The special section on the Future of Gas in Europe examines how the role of gas will be evolving across all sectors and how low-carbon technologies could impact the European energy system in the near future. It highlights the continued importance of natural gas infrastructure in the region, required to realize the benefits natural gas brings, including: improving network interconnectivity, supporting the integration of renewables, and scaling the development of low carbon gas technologies. In this section there is also a number of interesting case studies that explore renewable gases, reliability, and security angles of the future of gas in Europe. It is entirely possible to achieve a sustained rapid growth for natural gas, in a sustainable energy future scenario, but it will require deliberate effort, commitment, and leadership from the industry and working alongside its partners and stakeholders.