Romania Sees an Opening to Become an Energy Power in Europe
By Stanley Reed, June 15, 2022, NY Times

A row of hulking concrete domes loom along the Danube-Black Sea Canal in Cernavoda, about two hours east of Bucharest. Two of the structures house nuclear reactors feeding Romania’s electrical grid. Two others were begun decades ago and are still
waiting for completion — though, perhaps, not for long.

“We have major plans,” said Valentin Nae, the site director.

The nuclear complex was conceived during the regime of Nicolae Ceausescu, the Communist dictator who ran Romania for a quarter century before he was overthrown and executed in 1989. Mr. Ceausescu’s strategy was to insulate Romania from the influence of
the Soviet Union by having it generate its own electricity.

More than 30 years on, as much of Europe looks to cut ties to Russia’s energy, Romania is benefiting from Mr. Ceausescu’s thinking. The two reactors very cheaply supply about 20 percent of Romania’s electricity.

Russia’s invasion of Ukraine, which shares a nearly 400-mile border with Romania, has strengthened Romania’s push for energy independence. Its ambitious energy plans include completing two of the Cernavoda plants and leading the way into a new type
of nuclear technology called small modular reactors. It also wants to take full advantage of substantial offshore gas fields in the deep waters of the Black Sea.

Yet the Romanian government is likely to keep close watch on investors and try to insulate Romanians from global economic forces. Outside of the faded elegance of some districts of Bucharest, Romania is a relatively poor country, its median income
ranking near the bottom in the European Union.

“There is an ingrained mistrust in the private market,” said Radu Dudau, director of the Energy Policy Group, a nonprofit in Bucharest. “There is an underlying understanding and expectation that the people and the nation will be safer if the state
controls it.”

Such principles appear to have been at work in 2018 when the government raised taxes and imposed export restrictions on offshore petroleum production. Exxon followed that move by putting up for sale its share of the Neptun field, believed to hold tens of
billions of dollars’ worth of gas. On May 3, Exxon said it would sell its share to Romgaz, a state-controlled firm, for about $1 billion.

If development of the project had gone ahead in 2018, Romania would perhaps be close to nearly doubling its current gas production. Instead, at best, the project isn’t expected to come onstream for another five years. The government’s moves “
significantly undermined the competitiveness of Romania’s offshore for investors,” said Ashley Sherman, research director for Caspian and Europe at Wood Mackenzie, an energy consulting firm.

Mr. Popescu, the energy minister, said the sponsors of the 2018 legislation had misjudged, figuring that Exxon would proceed with the project anyway, and had been proved wrong by “real life.” Recently, with energy security much higher on the agenda,
lawmakers passed legislation to repair the damage and ease some of the rules. Soaring natural gas prices and the war in Ukraine persuaded lawmakers that they had to “start exploitation of the Black Sea,” he said.

A a smaller gas field in the Black Sea began operating on Wednesday. Owned by a group including a unit of Carlyle, the U.S. investment management firm, the project will pipe fuel ashore near Constanta, Romania’s major port and offshore drilling center.
Eventually, it will produce about 10 percent of Romania’s gas needs.

Developing Neptun, estimated at $4 billion, is likely to be more difficult and expensive than if the work had begun a few years ago. With high oil and gas prices, costs of drilling and steel and other inputs have soared. The Black Sea is a risky area now
with mines floating around and the perils from Russian military activity adding to insurance rates. Exxon also has far greater expertise in operating in deep water than Romgaz or OMV Petrom, which has taken over from Exxon as operator of the project.

Despite those issues, concerns over energy security are so strong that the project seems likely to go ahead, even with Exxon gone, analysts say. It may even help that two Romanian companies are in charge.

“I think it definitely has the right context now,” Ms. Verchere, the OMV Petrom chief executive, said.

https://www.nytimes.com/2022/06/15/business/romania-energy-nuclear-power-natural-gas.html

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