Lukoil strikes gas off Romania's Black Sea coast

By bne IntelliNews October 14, 2015

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Romanian gas company Romgaz announced on October 14 the discovery of a natural gas field preliminarily estimated at 30bn cubic metres (cm) in the Trident offshore block. The block is controlled by Lukoil, with Romgaz holding only a 10% participation and PanAtlantic Petroleum 18%.

The volume of the discovery is equivalent to Romania’s consumption over three years, making this the second largest gas find in the Romanian Black Sea after the Domino field discovered in 2012.

Developing Romania’s offshore gas resources will turn the country into a net exporter of gas at a time when countries across Europe are looking to boost energy security in the context of the rift between the EU and Russia. However, given that Lukoil has a majority stake in the project, it is not impossible that the Russian company could consider sending gas to Crimea, though this would not be welcomed by Bucharest.

Romgaz said the discovery had been made when drilling the Lira exploration well in Romania’s deep water Black Sea area. According to seismic data, the area of the field Lukoil could reach up to 39 km2.

The success of the Lira well will reduce the risk for further exploration at a series of prospective sites with significant potential reserves, located both close to the Lira structure and in other parts of the block, Romgaz announced.

The Trident block is close to the Neptun block where OMV Petrom and ExxonMobil made the Domino discovery, which is expected to come online around 2019. The field is evaluated at 42-84bn cm

The block operator will have to make a choice about the route for the gas, which may not coincide with the Romanian government’s preferences. While OMV has considered the sending its gas to Turkey, where the group operates processing facilities, Lukoil could potentially consider sending gas from the new discovery to Crimea, which relies on gas deliveries from Russia via Ukraine - an unstable arrangement since the region’s annexation by Russia in 2014.

Making a decision over where to sell the gas is likely to be further complicated by the already tense relationship between the Romanian authorities and Lukoil after accusations from Romanian prosecutors of fraud at the Russian company’s Romanian refinery.

The Trident block has been operated by Lukoil, which has a 72% stake in the concession, since 2011, alongside Romgaz and PanAtlantic Petroleum. The three partners hold the same shares in Rapsodia Est, another block in Romania’s Black Sea.

Lukoil began 3D seismic surveying at both Rapsodia Est and Trident in September 2012. It has earmarked $1.5bn for oil projects in Romania, of which $400mn is being spent between 2012-2015 to survey and confirm the reserves.

Romgaz produces roughly half of Romania’s natural gas, mainly from onshore blocks that are gradually reaching mature stages of development. Romgaz also has the right to purchase a 10% stake in the deep-water Midia XV block operated by OMV Petrom and ExxonMobil.

The Trident discovery, to be subject to further evaluation, means more resources available locally but also helps Romgaz diversify its production base at a time when its onshore deposits are reaching mature stages.
“For Romgaz, this partnership for exploring a Black Sea block represents a new direction to develop the company’s business and its portfolio of resources,” Romgaz director general Virgil Marius Metea said in a statement. “We are open to new challenges in the field of off-shore works and happy to work with highly experienced business partners.”
As more resources are discovered in the region, Romania is expected to come under pressure to developing inter-connectors with its neighbours, from both the European Union under common market requirements, and from local gas producers wanting to export their output.

Following the Domino discovery three years ago, neighbouring Bulgaria has also stepped up efforts to develop its own sector of the Black Sea. The Bulgarian energy ministry announced on September 29 that Royal Dutch Shell will invest €18.6mn in deep-water prospecting and exploration for oil and natural gas off the Bulgarian Black Sea coast.

Lukoil strikes gas off Romania's Black Sea coast

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