Romgaz lands option for Black Sea field

Feb. 18, 2013 at 12:05 AM
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BUCHAREST, Romania, Feb. 18 (UPI) -- Romania's state-owned Romgaz has acquired a 10 percent participation option from OMV Petrom and Exxon Mobil in a Black Sea natural gas exploration effort.

Romanian Prime Minister Victor Ponta, Romgaz and the two oil companies made the announcement last week in Bucharest. Under the deal, Romgaz will hold 10 percent of the exploration and exploitation operations in the Midia perimeter on Romania's continental shelf.

Exxon and OMV Petrom acquired the Midia block in October from Canada's Sterling Resources. It covers 125,000 gross acres 20 miles northwest of Exxon and OMV Petrom's Domino-1 giant gas discovery on the Neptun block, which has been identified as holding reserves of 1.5 trillion-3 trillion cubic feet of gas, Oil & Gas Journal reported.

The Midia block contains the newly identified Anca, Maria and Nadia prospects, which are in water depths of 330-400 feet and are believed by Sterling to be in similar formations to the Domino-1 well discovery.

Ponta said the participation deal marked a big step for Romgaz.

"It is an important achievement for Romgaz, and I congratulate the company," he said. "The agreement signed today enhances its portfolio of activities and strengthens its strategic profile at the regional level.

"Hopefully, it marks Romgaz's first step into the top league of big companies on a regional and global level."

Ponta added the Midia participation deal demonstrates his government's change in Romania's approach to energy policy that encourages and promotes domestic capital along with foreign investment.

"I think it's important that this agreement includes two Romanian companies -- Romgaz and Petrom -- alongside Exxon Mobil, which demonstrates the significance of the potential of the oil and gas sector in Romania and gives us hope that Romgaz's long-term involvement in the Black Sea operations is economically sustainable."

OMV Petrom Chief Executive Mariana Gheorghe said the agreement "is another step in our efforts to support Romania's objective to explore and develop offshore resources to the country's national energy goals."

OMV Petrom -- Romania's largest oil and gas company -- is majority-owned by Austrian company OMV and posted 2011 revenues of $7 billion with earnings before interest and taxes of $1.55 billion.

John Knapp, chief executive of Exxon's Romanian subsidiary added, "We are delighted to continue in this direction, while recognizing that deep offshore exploration involves high risk investment which requires stable and predictable tax and a favorable investment environment."

Romgaz, meanwhile, is set for privatization under an agreement with the International Monetary Fund through nearly $2 billion is to be raised for the debt-laden and recession plagued Eastern European nation.

Greg Konieczny, manager of the government property fund that is part-owner of Romgaz as well as the country's hydroelectric and nuclear power sectors, said Jan. 24 that after repeated delays an initial public offering for Romgaz will be carried out within 10 months, despite earlier statements from Economy Minister Verujan Vosganian it would happen in April, the daily newspaper Truth reported.

"There are still plans for IPOs for Romgaz and Nuclearelectrica this year," he said. "Plans for Romgaz are the most advanced and apparently will happen in September or October, only if the government does not change its mind."

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