Cooperation underway with WB for new oil royalties system

For the future oil agreements, royalties will be differentiated for on-shore, off-shore
and deep off-shore, ANRM informs.

The Romanian Government works with the World Bank on a new system of oil royalties, differentiating onshore and offshore reserves.
‘On January 1, 2015 we will have a new Oil Law, with new royalties. The idea is to get little out of very much, not very much out of little. We consider stability over 15-20 years,’ Prime Minister Victor Ponta announced at the Bucharest Forum Energy, which is being organised during June 4-5 at the Parliament Palace.He asserted that royalties should be differentiated between onshore and offshore reserves, as the investment levels are much different. ‘Definitely it’s not possible to have the same royalties for onshore and offshore reserves, as there are huge differences in investments. I discussed with Exxon and Petrom representatives; they say that the investments [in the Neptun perimeter of the Black Sea] will be way in excess of EUR 1 billion. Any company has to recover its costs,’ the PM explained. He stressed that the new royalties will apply only to future concessions. ‘New laws cannot be applied to old agreements,’ the head of the Executive pointed out.
According to the law on the privatization of Petrom, royalties could not be changed for ten years; this term ends in 2014. OMV Petrom and US-based Exxon Mobil are jointly exploring the high-depth block of Neptun in the Black Sea, for which the first estimates show gas reserves that would allow Romania covering all the domestic consumption and exporting the surplus starting from 2019-2020, when exploitation begins.
“For the future oil agreements, royalties will be differentiated for on-shore, off-shore and deep off-shore”, the president of the National Agency for Mineral Resources (ANRM) announced. Dutu added that, for the current oil accords, royalties will be renegotiated with each side.
Now Romania is on the right track and made the correct decisions: a real and structural reform of the energy market. The activity of producing and supplying companies in Romania denotes the fact that this structural reform is correct. Adjustments are always needed, we must intervene when the effects are not extremely negative for part of the industry. This structural reform remain valid and we want to conclude it, PM Victor Ponta said at the event that is attended by energy experts from 15 countries. The premier assured that “Romania will soon have an energy market regulated of the most modern and open manner that is possible.” Victor Ponta also emphasised the importance opf exploring and extracting own resources of natural gas, “while observing the highest standards of environment protection.”
“Today we want to be more than a strategically relevant geography, a militarily relevant geography, but a geography that represents a strong economy. A strong economy cannot exist without energy,” stated the president of the Aspen Romania institute, Mircea Geoana, in the opening address to the Bucharest event. He warned on this occasion that the team of the Ministry of Foreign Affairs, led by Bogdan Aurescu, who negotiated in The Hague the arbitration with the Ukrainian neighbours over the delimitation of the continental shelf, must be prepared because Russia will claim that it is neighbour of continental shelf with Romania.
Deficit increased by RON 700 M
The budget deficit for 2014 will be increased with RON 700 M, representing expenses for the Ministry of Defence, Premier Victor Ponta announced, adding that the situation was negotiated by the delegate minister for budget Liviu Voinea with the representatives of the EC. Ponta thus admitted that the deficit target initially agreed will be raised. He also said that EC officials demanded the Government to range within the provisions of the Fiscal Treaty in relation to the deficit limits. With this regard, no new taxes are necessary as compensatory measures to the CAS reduction.
Acquisitions in the region
There are three priorities for this year, the first referring to the revision of Romania’s energy strategy until the beginning of October, the delegate minister for Energy, Razvan Nicolescu said in his address to the event. He also stressed the need to support the Republic of Moldova in having an alternative. “The Iasi-Ungheni pipeline will be operational at the beginning of July, probably August. We must do more in terms of electricity interconnection,” Nicolescu said, adding: “I will not hide to you that one of the objectives I assume is to be, until the end of the year, in the situation in which, for the first time, a state-run energy company in Romania will make an acquisition in the region.” Adding to this, Premier Victor Ponta mentioned that the Government plans to continue the listing on the stock exchange of the companies that are not listed now, in view of raising the involvement degree of private businesses.

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