An International Energy Agency study says Romania still must do much to modernize its oil and gas industry.
Romania asked for the study, which found that the country holds the best exploration prospects in eastern Europe and has moved faster than other former Soviet bloc countries to attract foreign oil companies.
In 1992 Romania signed exploration/production contracts with Shell and Amoco for two onshore areas and the Canadian Occidental/Enterprise combine for two offshore blocks. IEA said problems in negotiating other deals show the need for a better approach.
DRAFT PETROLEUM LAW
A draft petroleum law has been before Romania's parliament for some time. It sets up a concession system and allows flexible royalties for small fields.
It also requires oil pipelines to operate as common carriers. One of foreign operators' key concerns has been how to move crude out of the country. They may export any oil they find or sell it at a negotiated price on the domestic market.
IEA noted the government also needs to complete oil and gas price decontrol.
The report said the state companies Petrom and Romgaz, after years of inadequate maintenance, have an urgent need for money to rehabilitate producing fields.
And while foreign firms may play a key role in opening new fields and improving recovery from existing ones, Romanian companies still must make most onshore investments.
Romania is a mature oil and gas region with 30,000 wells. Proved recoverable oil reserves were estimated in 1992 at about 215 million metric tons, down from 225 million tons in 1988, and are expected to drop to 181 million tons in 2000. Gas reserves have fallen from 550 billion cu m in 1991 to 543 billion cu m in 1992 and will slide to 400 billion cu m in 2000.
IEA said oil production should hold at 6.4 million metric tons/year and gas at 20 billion cu m/year during the next few years.
It said discoveries could be made offshore and in the relatively unexplored strata below the 3,500 m salt horizon in Transylvania. In established areas, new technology also could reveal deposits in complex geological formations.
DOWNSTREAM BARRIER
IEA said a barrier to privatization and foreign investments in Romania's processing sector is that decades of centralized control have inextricably linked some refineries to petrochemical plants.
Although some individual companies are competing for investments, Rafirom, the state refining, petrochemical, and distribution company, has been slow to restructure.
Romania's 10 refineries had operable capacity of 27 million tons/year and nominal capacity of 34 million tons/year at the end of 1992, far above domestic demand of 12 million tons. About 4.2 million tons were processed for third parties in 1992. Five small, obsolete refineries have 4.9 million tons/year of capacity, while the five larger refineries are integrated with adjacent petrochemical plants.
Romania has eastern Europe's largest petrochemical industry, but overcapacity in bulk petrochemicals on the continent may require some plants to be closed.
