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November 30, 2021

Start of the sub-marine pipeline installation works within the Midia – MGD natural gas development project

EconMin Popescu: Romania, important step to ensure it is first country to extract gas from Black Sea

By starting the works on the sub-marine pipeline within the Midia – MGD natural gas development project, Romania has taken an important step and makes sure that it will probably be the first country to extract natural gas from the Black Sea, the Minister of Economy, Energy and Business Environment, Virgil Popescu declared on Thursday at the official event to mark the start of the sub-marine pipeline installation works within the Midia – MGD natural gas development project.

“Today is a big day for Romania, for the strategic partnership between Romania and the United States of America, especially for its economic side. For us, for the Romanian Government, the exploitation of natural gas in the Black Sea has been, is and will be a priority. Today, here, we are witnessing an important step in this project, an American investment of over 500 million euros, through which the Romanian gas from the Black Sea will finally reach the homes of Romanians. Today, by starting the works for installing the sub-marine pipeline we will have the certainty that next year the first gas molecule will flow through these pipelines. I would like for this strategic partnership with the United States, this economic side to continue. (…) I wish Black Sea Oil & Gas and Petroleum Services Group every success, so that next year we are here and see how the first gas from the Black Sea comes out and enter the national transmission system. Behold, now, here, while we are talking, more gas fields are being discovered in the countries bordering the Black Sea, Romania is taking a very important step and is making sure that it will probably be the first country to extract gas from the Black Sea,” said Popescu, at the official event on the start of the pipeline installation works.

The Economy minister emphasized that, two years ago, in the Committee for Industries and Services, during the discussions on the offshore law, there was a “very big” debate about what will happen to the beaches when the pipes are installed and it was then decided that all the under-crossing works in these wilderness areas would be “environmentally friendly”.

“And that is why, by law, it was established that all the under-crossings be made in depth, not by digging and today, here, you will see that this is the way things will be done and these wonderful beaches will remain available to the people,” Popescu pointed out.

The Midia Natural Gas Development Project (MGD project), the first natural gas development project in the Romanian Black Sea continental shelf to be built after 1989, has the capacity to cover 10 pct of Romania’s natural gas demand in the first phase. There are currently about 10 billion cubic meters of resources that are expected to enter production at a volume of about 1 billion cubic meters per year. The project comprises the Ana and Doina gas deposits (320 Bcf P50 probable resources) discovered in 2007 and 1995 respectively.

The construction, installation and commissioning of the entire marine and land infrastructure of the MGD Project (construction of the offshore production platform, digging of the development wells, installation of offshore and land pipelines and construction of the gas processing terminal) will be carried out in about two years, based on a general contract with GSP Offshore. The GSP’s Uranus drilling rig will provide drilling for the five production wells.

In February 2019, BSOG partners and shareholders made the decision to invest in the MGD Project. It will generate an investment of 400 million US dollars and about 70 pct of the total contracted activities will come from Romania. In total, from day one, the cost of the project reaches 600 million US dollars, according to Mark Beacom, CEO of Black Sea Oil& Gas.

BSOG concluded a gas sale agreement with a Romanian subsidiary of ENGIE for the entire natural gas production, less the share that producers are obliged to sell on the centralized market, and a natural gas transmission contract with Transgaz for a period of 15 years.

Mark Beacom, CEO of Black Sea Oil&Gas:: Romania must be proud of the resources it has and must work to capitalize them

Romania must be proud of the resources it has and must work to capitalize them, because nobody wants to import gas from other producers in the Black Sea, said, on Thursday, Mark Beacom, CEO of Black Sea Oil&Gas (BSOG) at the official event to mark the start of the sub-marine pipeline installation works within the Midia – MGD natural gas development project.

“We must not forget that Romania is not the only country with a Black Sea littoral. It has other neighbors, who, desperately, are trying to reach the moment it is in now. I saw and heard the Turkish President speak of a significant discovery in the Black Sea. And what is absolutely remarkable is how proud the Turkish President is when he speaks on behalf of the Turkish state about this gas discovery and how confident he is when he speaks of the future opportunities of Turkey (…) Romania should be proud of the resources it has and must work to capitalize them, it must be confident that it can put those resources in production and can capitalize its potential at its true value and it can make similar projects”, said Beacom , according to Agerpres.

He emphasized, on the occasion of works starting for the underwater pipeline of the natural gas development project Midia – MGD, that the project represents just a small part of the economic potential of the Romanian area of the Black Sea and that Romania shouldn’t import, at this time, not even a single cubic meter of gas.

“I hope that this project is the starting point for Romania to kick off reaping absolutely all the benefits that it can have off the exploitations in the Black Sea. (…) I believe nobody wants, looking at Romania, to import gas from other producers in the Black Sea area, given that it has such a high potential. In fact, Romania shouldn’t import at this time not even a single cubic meter of gas. All the money that is paid for imports are going outside the country”, the BSOG official emphasized, according to Agerpres.

He also drew attention that the project of the company is the best example in this sense, given that it is conducted with Grup Servicii Petroliere (GSP), a Romanian company, and it uses Romanian platforms, Romanian ships, Romanian employees, logistic bases in Romania and Romanian subcontractors.

All legislation hostile to investments in the Black Sea must disappear

All legislation hostile to investments in the Black Sea must disappear for offshore projects to gain momentum, Mark Beacom, CEO of Black Sea Oil&Gas, said Thursday.

In order for projects in the Black Sea to gain momentum, it is absolutely necessary that all hostile legislation in the Black Sea hydrocarbon fields, which was adopted in 2018, disappears completely. And those rules that at the moment allow foreign companies and foreign producers to bring natural resources to Romania at the expense of local companies and producers must disappear. Romania must ensure that it can produce its own gas without problems and that it stops imports, said Mark Beacom, during the start of work on the submarine pipeline under the Midia – MGD natural gas development project.

He stressed that in this area the competition is fierce, but “it is Romania’s choice if it wins the competition for which it has all the necessary strengths and the necessary resources, or will lose it”.

The BSOG official made it clear that he does not want a preferential regime for the company he runs, as an investor in Romania, nor are conditions more advantageous compared to other industries, but to be a member waited for with open arms and part of the Romanian winning team.

He added that the additional charges law is unsustainable and will kill the industry, noting that he told the company’s shareholders not to worry and to move on, because the law will be amended until production starts.

U.S. Ambassador Zuckerman: BSOG is not just laying pipe today.  This pipe is essential infrastructure for guaranteeing Romania’s future prosperity, the security of this nation and that of its neighbors

Today we mark one of Romania’s most important strides forward in developing its Black Sea natural gas resources – a national treasure with the potential to transform Romania into an energy secure and more prosperous country.  It also marks an important step toward achieving energy security for Europe.  During the past seven years, Mark Beacom and the Black Sea Oil & Gas or BSOG team have been working hard on this project.  I am very pleased to see this strategic and pioneering project moving forward.  The start of this operation to lay pipe offshore is the most significant milestone for any U.S. energy company in Romania, the U.S. Ambassador to Romania, Adrian Zuckerman stated at the pipeline inauguration ceremony. 

“Two globally renowned investors back the project:  the Carlyle Group, through its Carlyle International Energy Partners Fund (CIEP), and the European Bank for Reconstruction and Development (EBRD).  This is another milestone in Romania’s economy.  I commend BSOG and its contractors for persevering and achieving great progress despite the challenges created by the pandemic.  This project is a key pillar of the U.S.-Romania Strategic Partnership.  When President Trump hosted President Klaus Iohannis on his second visit to the White House in August 2019, strengthening our energy cooperation was one of the key topics.  In a joint statement, the leaders reaffirmed our Strategic Partnership and agreed to prioritize two energy-related areas,” he added.

The U.S. diplomat stated that the two countries underscored the joint opposition of the United States and Romania to Nord Stream 2 and our efforts to provide greater energy security for Europe and to reduce dependence on Russian gas.  

“ Russia is enacting its plan to dominate and control Central Europe’s energy markets through a web of infrastructure.  Moscow uses natural gas to politically blackmail and coerce vulnerable governments throughout this region.  It seduces greedy politicians and manufactures billionaire oligarchs to do its bidding across Europe – from the continent’s largest economies to its smallest and weakest countries.  It has cut gas transit through Ukraine to threaten markets who depend on it and pursues pipelines such as NordStream 2 to starve Ukraine of vital state revenues.  It bullies the Moldovan government and puts the welfare of its people at risk in winter when lack of gas would mean certain death for many.  In Greece, Russia’s partners have grown tremendously rich and seek to expand their network and influence throughout the region,” Zuckerman also stated.

He named Romania  “an island of freedom gas surrounded by a sea of Gazprom”.  “In this audience today, I am proud to stand with BSOG and many others who have worked to keep it a bulwark against such forces.  The tentacles of Moscow reach through Ukraine, Moldova, Hungary, Serbia, Bulgaria, Greece and Turkey – all national economies and commercial relationships that perilously rely on Russian gas”, the U.S. official also said.

He also emphasized the need to improve Romania’s business and investment climate to attract more investment.  “These improvements are extraordinarily important to fostering the domestic and foreign investment climate necessary for projects such as this one to move forward.  I applaud the Prime Minister’s leadership in the development of onshore and offshore gas development.  I welcome the efforts of all those who understand the importance of energy security and legislative predictability and stability to making Romania’s economy vibrant”.

The U.S. diplomat also underlined that the security of this region, and achieving energy diversity, are critical U.S. interests and major areas of U.S.-Romanian cooperation.  “Romania is a vital NATO Ally in Central Europe and along with Poland, it forms the linchpin of the Eastern Flank.  It supports our mutual security and a Black Sea region free of aggression,” he said.  

“With an estimated annual output of one billion cubic meters, BSOG’s Midia Gas Development will contribute to energy security by ensuring diversification of sources of gas and reducing dependence on Russian gas imports.  This gives great relief and hope to those who grew up under Moscow’s oppression and dreamed as I did of a Romania that could throw off the shackles of communism to achieve freedom and prosperity for its people.  Americans and Romanians who work together to counter Russia’s use of natural gas to politically blackmail vulnerable governments in the region join us in celebrating today,” the American diplomat stated.    

He reiterated the United States commitment  to supporting Romania’s national security, which rests on its energy security.  “BSOG will play a significant role as a natural gas producer and contributor to regional energy security.  This project continues to require trust and mutual commitment – from the country and from the investor.  Romania has shown its commitment to a strategic infrastructure that will diversify natural gas sources, including the Bulgaria-Romania-Hungary-Austria or BRUA pipeline and the pipeline that will feed the gas from BSOG’s onshore gas treatment plant into the system,” Zuckerman also stated.

“America and the American people support you and appreciate every milestone you reach on the journey that is the Romanian renaissance.  BSOG is not just laying pipe today.  This pipe is essential infrastructure for guaranteeing Romania’s future prosperity, the security of this nation and that of its neighbors,” he concluded. 

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