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Romania’s BSOG still believes first gas ‘achievable’ in 2021: CEO

BLACK SEA
OIL & GAS

Romania’s BSOG still believes first gas ‘achievable’ in 2021: CEO

Private equity-backed Black Sea Oil & Gas (BSOG) is hopeful it can achieve first gas from its flagship Midia gas project offshore Romania in 2021 despite the impact of the COVID-19 pandemic, its CEO Mark Beacom told S&P Global Platts.

BSOG and Romanian gas grid operator Transgaz in September last year signed the order to begin development work to bring gas from the $400 million Midia project into the national grid.

Gas from Midia -- which is estimated to hold some 10 Bcm of gas -- is expected to boost Romania's gas production, along with other major projects in the Black Sea including the ExxonMobil-operated Neptun project, in the next decade.

BSOG had originally targeted first gas from Midia in the first quarter of 2021, but that timeline is set to slip.

Overall project completion is now at 33% and we are still of the view that first gas in 2021 is achievable.

Mark Beacom, CEO, BLACK SEA OIL & GAS

Beacom said progress on the project had been made in line with guidance regarding the coronavirus.

In Q2 we were able to complete an important milestone -- the transportation of all our 147 km of pipe from Greece to our storage yard in Constanta -- during lockdown measures while in full compliance with all COVID-19 restrictions.

Mark Beacom, CEO, BLACK SEA OIL & GAS

Pipeline laying

Midia -- which comprises the Doina and Ana offshore fields -- will consist of five offshore production wells, one subsea well at Doina and four platform wells at Ana.

A 126 km gas pipeline will link the Ana platform to a new onshore gas treatment plant with a capacity of 1 Bcm/year, which represents around 10% of Romania's gas consumption.

Beacom said that BSOG was "half way" to completing the Ana wellhead platform at the shipyard in Agigea.

While at the gas treatment plant in Vadu we are now working at the foundations and have steady progress.

Mark Beacom, CEO, BLACK SEA OIL & GAS

BSOG also hopes to be able to begin laying the 126 km pipeline from Ana to shore soon.

Assuming that there are no interruptions due to COVID-19 related matters, we could be commencing the running of the offshore pipeline at the end of the summer.

Mark Beacom, CEO, BLACK SEA OIL & GAS

The laying of the pipeline from the shore to the Ana platform location should take two months.

Mark Beacom, CEO, BLACK SEA OIL & GAS

There is also ongoing work to reactivate the pipelay vessel, he said.

Legal issues

BSOG -- majority-owned by the Carlyle Group -- is among a number of Romanian offshore companies looking to develop gas projects, but some developments, including Neptun, have been delayed due to what is perceived as an unfavorable regulatory environment in the country.

BSOG took FID on Midia in February 2019 under the assumption that the situation would improve.

There have been criticisms of the investment climate after the government implemented legislation in late 2018 imposing a gas price cap, a new 2% turnover tax on energy companies and a new offshore law that requires operators to sell 50% of their offshore gas output in a centralized marketplace.

We still insist that the revocation of the hostile measures such as the supplemental tax and Central Market Obligation that were imposed in November 2018 is essential in order to try and regain investor confidence in developing the Black Sea.

Mark Beacom, CEO, BLACK SEA OIL & GAS

We are seeing some efforts by the government to address these issues but without the full cooperation of all political parties, Romania will lose out on this tremendous, time-limited opportunity for the country. Our project is moving forward on the basis that these measures were to be resolved.

Mark Beacom, CEO, BLACK SEA OIL & GAS

BSOG has secured a long-term gas sales agreement with a Romanian subsidiary of France's Engie for all of the Midia gas production -- minus the volumes that the producers are currently obliged to sell on the centralized market -- as well as a gas transmission contract with Transgaz to transport the gas into the national grid for a period of 15 years.

BSOG is operator of Midia with a 70% share. Its partners are privately owned investment company Petro Ventures Resources (20%) and Italian gas producer Gas Plus International (10%).

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