Energy prices this year, during the coming winter and next year are largely a consequence of European energy policies, Răzvan Popescu, CEO of Romgaz, said at the Eurogas Annual Regional Conference.
“The prices this year, the prices this winter, the prices next year are simply a consequence of these European policies,” Popescu said.
He highlighted the strategic importance of the Neptun Deep offshore gas project, jointly developed by Romgaz and OMV Petrom, noting that Romgaz took what he described as a bold decision when it acquired ExxonMobil’s stake in the project.
“Romgaz, together with OMV Petrom, took a very courageous decision when Romgaz acquired the Neptun Deep project from Exxon. This project should be viewed, more than ever, as a strategic asset,” Popescu said.
According to the Romgaz CEO, the main challenge facing energy projects at present is time, given the long development cycles associated with oil and gas investments.
“What is the main challenge at this moment? Time. Because any investment in oil and gas takes time,” he said.
Popescu also pointed to bureaucracy and the absence of a centralized “one-stop shop” for obtaining the permits and approvals required for energy projects.
“The bureaucracy and the fact that there is no one-stop shop where you can submit all the documents and have each permitting authority provide its approval within a certain timeframe” are major challenges, he said.
“This is why I say that time is currently the biggest enemy of energy projects, together with price volatility in the market,” Popescu added.
The Romgaz CEO said it is difficult to forecast gas prices for the coming winter or for next year, while investment decisions in the sector need to consider projects that may only start production several years after the initial decision is made.
“It is very difficult to say or estimate what the price will be this winter, what the price will be next year, because all these projects have an economic lifetime and certain economic values behind them,” he said.
“It is very difficult when you make an investment decision today for a particular project and you will only put that project into production five or six years later,” Popescu added.
He also highlighted the challenges facing Romania’s mature onshore gas fields, many of which have been exploited for decades.
“Most of our fields are mature, depleted and have been exploited for decades,” he said.
According to Popescu, Romgaz needs to invest more than €200 million annually in onshore gas production simply to limit the natural decline in output and maintain production levels.
“Putting onshore gas into production in order to somehow limit this natural decline in production requires investments of more than €200 million every year, just to be able to maintain production at a certain level,” he said.
For the oil and gas industry, Popescu said, predictability is therefore essential because of the long lead times required to develop projects.
“This is why the predictability that the oil and gas industry needs is the most important thing, because of the delivery time of these projects,” the Romgaz CEO said.