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HomeUncategorizedOpportunity to become Romania's European energy center

Opportunity to become Romania’s European energy center

To strengthen energy independence and take advantage of export opportunities, Romania is accelerating nuclear power projects and oil drilling.

Along the Danube – Black Sea canal in Cernavoda, about a two-hour drive east of Bucharest – two Romania’s power-supplying nuclear reactors are in operation. Two other projects started decades ago and will probably be completed soon. “We have big plans,” said Valentin Nae, the complex’s director.

The nuclear complex was formed under the Nicolae Ceausescu regime a quarter of a century ago. At that time, Mr. Ceausescu’s strategy was to separate Romania from Soviet influence by building its own electricity supply system.

Over the past 30 years, as much of Europe sought to sever ties with Russian energy, Romania now benefits from his vision. Two reactors provide about 20% of the country’s electricity.

An operating simulation room for training at the nuclear power complex in cernavoda, romania.. Photo: nyt

An operational simulation room for training at the nuclear power complex in Cernavoda, Romania. Photo: NYT

The Ukraine crisis underpinned Romania’s energy independence efforts. Ambitious plans include the completion of two plants in Cernavoda, paving the way for a new type of nuclear technology known as small modular reactors. It also wants to make the most of offshore gas fields in the deep waters of the Black Sea.

Some even argue that Romania has the potential to become a regional energy power, helping its neighbors in Eastern and Southern Europe break free from dependence on Moscow. The owner of the Cernavoda nuclear complex, a state-controlled company called Nuclearelectrica, plans to spend up to 9 billion euros ($9.5 billion) on nuclear initiatives this decade.

“For Romania, these projects are extremely important,” said Cosmin Ghita, CEO of Nuclearelectrica. Mr. Ghita said nuclear power could help Romania achieve a variety of goals, from reducing carbon emissions to fighting Russia on energy issues.

With that, the war in Ukraine provided the impetus to break years of stalemate and step up the production of Black Sea gas that Romania could export. “We will provide energy security for the neighborhood,” said Virgil-Daniel Popescu, Romania’s energy minister.

Romania’s oil and gas industry is among the oldest in the world, dating back to the 1860s. While famous oil fields are dwindling, companies say drilling in the Black Sea could produce enough natural gas to make Romania, now an importer, the largest producer in the European Union.

“Opportunities lie offshore,” said Christina Verchere, CEO of OMV Petrom, Romania’s largest oil and gas company.

Romania also has dams that generate almost 30% of the country’s electricity. And the nuclear industry, which employs about 11,000 people, is assessed internationally. “They’re a great operator who knows what they’re doing,” said Carl Marcotte, Vice President of SNC-Lavalin – the Canadian company that owns the Cernavoda reactor technology and is involved in the upgrade at the complex – said.

This potential has also attracted the attention of the US. In 2020, with encouragement from the Trump administration, Romania stopped negotiating with China to complete the reactors at Cernavoda and turned to Washington as the main source of nuclear support.

While plans for Cernavoda were underway, the Romanian government and the Biden administration in May announced a preliminary agreement to build a small modular reactor at the site of a closed coal-fired power plant. door.

The supplier will be an Oregon company – NuScale Power – which has received more than $450 million in support from Washington to develop new nuclear technology that will revitalize reactor construction in Romania.

The idea is to build factory parts in the workshop and then assemble them on site. The goal is to cut costs and prolong construction time. Over time, these reactors could provide electricity to European countries, replacing coal and gas from Russia.

“Europe must find clean and reliable energy sources that are free from coercion and malicious political influence,” David Muniz, Representative of the US Embassy in Bucharest, said at the announcement of the agreement. NuScale approval.

Experts say that, for a country with a well-trained, low-cost workforce like Romania, making equipment for this new type of reactor could become an export industry. opportunities to export surplus electricity.

“I believe it’s a huge opportunity,” said Ted Jones, senior director of strategic and international programs at the Washington-based Institute of Nuclear Energy.

However, working in Romania will probably be a challenge for companies from the US and other Western countries. The government has a reputation for welcoming outside investors with cumbersome taxes and tough regulations.

The reason is because Romania is a relatively poor country, the middle income ranks near the bottom in the EU. The notion that people and countries are safer if the state controls the market is quite common. “There is an ingrained distrust of the private market,” said Radu Dudau, director of the Energy Policy Group, a nonprofit in Bucharest.

Such principles appear to have been implemented in 2018, when the government raised taxes and imposed export restrictions on gasoline. Exxon responded by offering for sale its 50% stake in Neptun Deep, a heralded Black Sea project that is likely to be the largest new natural gas producing field in the European Union.

Exxon’s brief statement said the company wanted to focus on projects with “low supply costs”. Romania’s tax regime is considered Europe’s toughest. On May 3, Exxon said it would sell shares to Romgaz, a state-controlled company, for about a billion dollars.

If project development goes ahead in 2018, Romania will probably almost double its current gas output. Energy Secretary Popescu said lawmakers in 2018 misjudged that Exxon would go ahead with the project anyway.

Port of constanta. Photo: nyt

Port of Constanta. Photo: NYT

Recently, with energy security increasingly on the agenda, legislators have passed legislation to repair the damage and ease some regulations. “Natural gas prices skyrocketed and the war in Ukraine convinced lawmakers that they had to start exploiting the Black Sea,” he said.

In the near future, a smaller gas field in the Black Sea is expected to operate. Owned by a group including a subsidiary of Carlyle (USA), the project will produce about 10% of Romania’s gas needs.

The installation of the rig at the Neptun field is estimated to cost about $4 billion, which is more expensive than if it had been carried out a few years ago. With oil and gas prices high, the cost of drilling, steel and other inputs has skyrocketed.

The Black Sea is currently a risky area with risks from Russian military activity, so insurance costs also increase. Exxon has far more expertise in deepwater operations than Romgaz or OMV Petrom, which took over Exxon as project operator.

Despite those issues, analysts say, energy security concerns remain so strong that the project looks set to continue, even after Exxon is gone. It might even help the two Romanian companies in charge.

“I think it definitely has the right context to deploy at the moment,” said Ms. Verchere, CEO of OMV Petrom.

Session An (according to NYT)

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