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ROMANIA’s ENERGY INDUSTRY 2019 Dear Reader,

Welcome to the 2019 edition ofRomania’s Energy Industry Report, an in-depth Director: Irina Negoita analysis of one of ’s most exciting energy ecosystems. is the Lead Editor: Sorina Dumitru country with the lowest dependency on energy imports in Southeast Europe Analyst & Editor: Radu Dudău and prides itself with an impressive history as the very first nation in the world Media Specialist: Bianca Negoescu to explore and produce oil & gas. Graphic Designer: Flavia Negoescu This report is the result of six months of on-the-ground research, and over 90 interviews with public authorities, c-level executives, analysts and industry experts, coupled with key figures that amount to one conclusion: Romania is Business ripe with opportunity. intelligence After 160 years of exploration and production, the country still holds impres - you can sive untapped potential onshore, parts of which are expected to be revealed through the new licensing round that was just announced. Add to this the trust bountiful discoveries in the capable of propelling Roma - nia to become an essential provider of energy security in Europe. The country is gearing up for what is an inevitable energy transition in the wake of climate concerns – upping its game in resources, with immense potential for hydro, solar as well as wind and already boasting the largest- on shore wind farm in Europe. Fulfilling this immense potential, however,- de pends on tackling a few critical issues: unpredictable legislation, an ageing infrastructure and a shrinking talent pool.

Overall we found palpable excitement in the air, with people coming together to celebrate national accomplishments - 2019 saw Simona Halep bring home the Wimbledon trophy and people held their breath as Ianis Hagi delivered the key blow against England at the U-21 European Football Championship. get in touch There is no doubt that the world is transforming before our very eyes, -bor ders are dissipating with the flow of newfound resources, energy systems are www.investmentreports.co getting decentralized, and human ingenuity armed with modern technology [email protected] is changing the way energy efficiency is managed. Romania’s stake in this is captured in the pages that follow. We invite you to delve deeper. Enjoy the report!

Irina Negoita Sorina Dumitru Co-Founder & Co-Founder & Director Lead Editor table of contents

INTRODUCTION world’s first: oil & GAS 81. Interview Habau PPS Pipeline Systems 6. Land of Plenty: Romania’s Energy Industry 82. Interview CIS GAZ 9. Interview InvestRomania 83. Interview Oscar Downstream 10. Romania’s 84. Interview GEFCO 12. Interview 84. E-Mobility: The Future is Electric 13. Interview Hidroelectrica 85. Ushering Change: Energy Distribution Network 15. Interview Ministry of Economy 88. Interview CEZ Group 89. Interview E.ON Romania 17. Interview ROEC photo: OMV 18. Interview AHK & Interview Advantage 90. Turn on the Light: Energy Supply to End Consumers 19. Workforce: A Shrinking Talent Pool 92. Interview MET Romania Energy 21. Interview OGR & Interview Petroleum-Gas University 93. Interview Renovatio Trading 94. Protecting Vulnerable Consumers 95. Interview Tinmar & Interview Restart Energy LEGISLATION & REGULATORY bodies The first industrial production of oil in the world was reg- 24. A Rocking Boat: Legislation & Regulatory Bodies istered in 1857 in the Romanian Principalities of Walla- 26. Interview: ANRE chia and Moldova... ENGINEERING & TECHNOLOGY 28. Key Pieces of Legislation pp. 32 - 55 98. Smart Everything: Engineering & Technology 29. Expert Opinion Article: Deloitte Romania 101. Interview Eximprod 30. Expert Opinion Article: Privacy One in alliance with Biris Goran SPARL 102. Interview EnergoBit & Interview Elsaco on the rise: renewable energy 31. Interview Wolf Theiss 103. Interview Adrem 104. Technology & Decentralization We want to thank 106. Making Sense of Data: IoT & Analytics our sustainability sponsor VESTAS, EXPLORATION & PRODUCTION 107. Interview Ringhel & Interview Transilvania IT for its invaluable contribution towards 34. World’s First: Onshore E&P 108. Interview Siemens publishing this book on environmentally 37. Map: Active Perimeters for Exploration, Development & Exploitation 109. Interview Schneider friendly Symbol Freelife Satin paper. The 38. Interview 110. Interview Aggreko product is completely bio-degradable 39. Interview OMV Petrom photo: Hidroelectrica 111. So How Smart is Romania? and has a high content 42. Interview Mazarine Energy & Interview Sandhill Petroleum Romania 112. Interview ENEVO & Interview Electrogrup of recycled material. 43. Centralized Market Obligation (CMO) 113. Interview Emerson & Interview EATON 45. Interview BRM (Romanian Commodities Exchange) To learn more about VESTAS 46. Interview FPPG & Interview ROPEPCA & Interview Petroleum Club 116. FINAL THOUGHTS and its work please visit 48. Hidden Treasures: Offshore E&P www.vestas.com 49. Map: Offshore Perimeters The renewable energy sector is the one in which Romania 118. COMPANY INDEX 51. Interview BSOG (Black Sea Oil & Gas) has seen the most spectacular investment boom over the 54. Interview Deloitte Romania past decade... 120. editorial & management team 55. Interview Odfjell Well Services & Interview CDI Oilfield Services pp. 56 - 73

RENEWABLE ENERGY sources 58. On the Rise: Renewable Energy Sources exclusive interviews 60. Interview PATRES 61. Interview RWEA 62. A Stormy History: Green Certificates Scheme 64. Interview Repom 65. Interview Monsson 66. Welcome Prosumers 69. Interview Green Seiro 70. Interview Vestas 71. Interview PMG Wind & Interview Carpat Energy 72. A Field of Possibilities: Biomass & Biofuels 73. Interview Clariant Zoltan NAGY-BEGE Adrian VOLINTIRU Franck Albert NEEL Claudia BRÂNDUȘ Vice President CEO Member of the Executive President ANRE Romgaz Board Responsible for RWEA TRANSPORT, DISTRIBUTION & SUPPLY (The Romanian Energy p. 38 Downstream Gas (Romania Wind Energy 76. Opening Borders: Energy Transport Infrastructure Regulatory Authority) OMV Petrom Association) 77. Map: Romania Gas Pipeline Network & Expansion Projects pp. 26 -27 p. 39 p. 61 80. Interview Conpet INTRODUCTION to romania’s energy industry

Romania is an emerging economy and this can open more opportunities compared with a developed economy. It is also part of the EU and this membership provides guarantees in terms of legal & regulatory frameworks. Romania has a unique strength in Europe that is at the same time a huge- op portunity for the country – is has its own oil & gas resources.

As with any emerging economy, there is still considerable progress to be made, especially in terms of the country’s reg- ulatory framework and infrastructure development. Recent- ly, we have seen increased legislative volatility, but investors are still committed to Romania. Dialogue and consultations can move things forward and achieve win-win solutions both for business and for the country.

Franck Albert NEEL Member of the Executive Board Responsible for Downstream Gas OMV Petrom

Bran Castle, photo: Adobe Stock introducing romania’s energy industry investment reports investment reports

INFLATION RON 2018 (YoY) 4.6%

NATIONAL AVG. INFLATION EU CURRENCY 2018 (YoY) Leu (RON) 1.7% POPULATION 19,4 MIL AVG. 2019 CURRENT ACCOUNT 1 EURO = 4.7413 RON DEFICIT (% of GDP) URBAN 4.5% 54% photo:Stock Adobe ROMANIA’s GDP GROWTH % 6.9 Land of plenty YEARLY CHANGE -0.5% 4.8 4.1 Romania’s Energy Industry 3.9 MEDIAN AGE 3.5 3.4 41.6 2.0 2010 1.2 GDP / CAPITA (PPP) Romania boasts a diversified and well ROMANIA’S PRIMARY RESOURCES 2018 (% POWER OUTPUT) 2011 2012 2013 2014 2015 2016 2017 2018 balanced mix of energy sources. This € 23,900 lends it the enviable status of the coun- 0.5 3 -2.8 try with the lowest dependency on en- sources: World Bank, Eurostat & ergy imports in Central and Southeast- National Institute of Statistics ern Europe. 10.5 24 As a country of the Black Sea Basin market, gripping in symmet- is also an embodiment of its long and The energy sector accounts for 3.5% and a NATO member of the Alliance’s ric pincers, whose northern jaw is the rich history, especially in the oil & gas of the country’s GDP, but a robust easternmost border, Romania fac- Nord Stream system. Besides, there is sector. energy sector is crucial for other rea- HYDROCARBONs es a strategic environment fraught also the Southern Gas Corridor, due to sons as well – especially in SEE, which NUCLEAR with tensions and geopolitical rivalry. ship Caspian gas all the way to South- The oil industry is more than 150 years is still relatively poorly interconnect- HYDROPOWER The continuous militarization of the ern Italy, which will be a new source of old in Romania, while natural gas has 28 ed with the rest of the continent and WIND Crimean Peninsula, the ”frozen con- gas for the Black Sea countries in the been extracted and used for more than where the only source of import for SOLAR flicts” of Moldova, Georgia and Azer- early 2020s. Considering also the po- a century. natural gas is . Energy security BIOMASS 16 baijan, the tensions between Ankara tential transport of East Mediterrane- is therefore a fundamental pillar of the and NATO, as well as the Black Sea an gas through to Europe, the This has created a proud tradition, Romanian energy sector. Indeed, com- being a route for the Russian navy to- Southeast European vicinity of Roma- as well as a quite extensive oil & gas pared to its neighbors, Romania has a wards Syria has brought the need for nia looks like a hotbed of energy in- infrastructure. oil & gas productions remarkably diverse and well-balanced 18 increased rotational naval presence by frastructure development and rivalry. peaked in the 1970s, under the social- energy mix, which confers it a sound source: Ministry of Energy NATO military vessels. Romania’s energy status in the region ist system. Those levels were, howev- level of energy security. er, the result of unsustainable extrac- The region is also a crucial passage- tion, in a centrally planned economy. As a member state of the European way for natural gas volumes on their Indeed, after 1990, the hydrocarbons Union (EU), Romania plays by the EU energy consumption; and a 32.5% in- ropean countries. As such the ”clean way to European markets. In its - ef production declined significantly. At objectives and rules on energy and crease of energy efficiency compared energy transition” towards reaching 3.5% fort to bypass Ukraine as a conduit of present, Romania imports about 65% - climate. These are imposing tough tar to 2005. These are, at present, collec- the 2030 targets and, further on, to- Russian gas to Europe, the Moscow is ENERGY SECTOR’s of its crude oil, and 10% of natural gas. gets on the member states for 2030: tively, the toughest mix of energy-cli- wards virtually complete decarboni- building the Turkish Stream pipeline, This, nonetheless, places it among the overall reduction of greenhouse -gas mate policy of the world. zation by 2050 requires an ample and which will connect Russia with Turkey CONTRIBUTION least energy dependent states in the es emissions by 40% as compared to costly transformation. This calls for underneath the Black Sea. From the TO THE GDP EU. 1990; a 32% weight of the renewable Romania relies to a large extent on rapid adoption of new technologies, Turkish hub, the pipeline will continue energy sources (RES) in the total final fossil fuels, as do all the other East Eu- but also of new mindsets. through SEE to the Central European

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EASE OF DOING BUSINESS IN ROMANIA

100 100 Paula InvestRomania is the govern- 83.9 80 80.3 mental body responsible for 80 74.9 72.2 PÎRVĂNESCU promoting and facilitating 58.2 60 59.8 60 53.5 foreign direct investment in Romania. 40 Secretary of State InvestRomania 20

0 Starting a Dealing with Registering Getting Getting Protecting Paying Enforcing Resolving Trading Can you introduce our readers to In- cost one to higher value added invest- when a new investment comes, infra- Business Construction Property Electricity Credit Minority Taxes Contracts Insolvency across Permits Investors Borders vestRomania and your main activities ments. For instance, Bosch opened an structure follows industrialization - for as a promoter of trade and invest- R&D center for the automotive indus- instance Sebes area grew significantly source: World Bank, Doing Business 2019 ment? try in Cluj, where Porsche also set up after Daimler’s investment. a center for autonomous vehicles. We FDI IN ROMANIA BY COUNTRY OF ORIGIN (DEC 2017) We are the institutional partner- re are noticing growth in the energy in- A final issue that is being worked on is sponsible for bringing together all dustry arena as well, for example Clar- bureaucracy and the occasional diffi- relevant public and private actors, iant invested in Craiova together with culty in dealing with local authorities. The currently present or planning to invest GETEC. This has considerably improved over 25.9% 12.8% in the country. Our service offering the past year and we are working -to For years, the Netherlands has been a Germany is Romania’s most important includes technical assistance from gether to encourage regional devel- top 10 trading partner and the number trading partner both in exports (20%) scratch as well as post implementa- one foreign investor in Romania with opment. We need to look towards the and in imports (23%) and the second tion assistance, up to the successful future and also adapt our current -leg stock and assets on multiple markets largest foreign direct investor in the - totaling €19.6 billion. country, with investments totalling completion and running of each pro islation to present day needs. €9.7 billion by the end of 2017. ject. AUSTRIA What is your vision for InvestRoma- OTHERS ITALY Romania boasts a top 3 posi- 12.6% Our efforts over the past few years nia going forward and advice to - po 36.3% tion in attractive tax regimes Austrian FDIs in Romania totaled 6.2% paid off and culminated with the rise tential investors? in Europe, the 4th place in the €9.58 billion in 2017. Austria is also FRANCE in Romania’s fame as an attractive and the biggest foreign investor in the profitable business destination in the EU for cheap gas and 8th for We want to maintain the positive energy sector in Romania. 6.2% global ecosystem, and the manage- electricity. growth trends witnessed in the past ment of a €2,5 billion investment -port few years. Specifically we want to folio with 80 active projects which will maintain our position as one of the generate 22,115 jobs. leading recipients of FDI in the region, TOTAL INWARD FDI Romania (AS of DEC 2017)Electricity, gas and water supply INVESTMENTS and be in the right place at the right € 75.8 bn 8.5% of TOTAL FDI What are Romania’s key competitiveWhat are the main challenges foreign time to make businesses aware of the TOTAL OUTWARD FDI Romania (AS of DEC 2017) advantages? companies face when doing business opportunities at hand. Since spring € 783 MIL in Romania and what is being done to 2018 we have received requests rang- The country offers a highly skilled,overcome them? ing from €50 million and hundreds of multilingual and competitively priced millions, much more than in previous 4.9 workforce, with the third lowest sala- There is a global issue surrounding hu- years and we are noticing a growing 4.8 5 EUR BILLION man resources and Romania as well is desire to collaborate with local entre- 4.5 FDI FLOWS ries in Europe. Additionally, we have a 4 well developed network of 88 indus- making efforts to increase the training preneurs. in 2009 - 2018 trial parks, public as well as private,and retain its workforce. The Authori- 3.3 3.4 3 In 2017, FDI net flow went primarily to coupled with great fiscal incentivesty for Dual system Professional Train- To investors we say there is no time 2.7 the industrial sector (43.1%). The main for R&D. Non-EU companies are also ing was set in motion in this respect like the present to establish a pres- 2.5 2.4 2 2.2 industrial sector benefiting from foreign attracted by the access they gainand to we are also witnessing a growing ence! Romania remains one of the direct investments was manufacturing the EU’s 500 million consumers and collaboration between businesses and highest performing economies in the 1.7 with main investments in sub-sectors like 1 the associated advantages. universities. Secondly, infrastructure EU, as well as a regional pillar for sta- oil processing, chemical, rubber and is an acknowledged challenge that the bility and growth. 0 plastic products & transport equipment. 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 In recent years the economy started government is treating very seriously shifting from a labor intensive, lower with observable improvements. Often source:

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The problem is compounded by the cal consensus that the investment in built the 1,000 MW Tarnita-Lapustesti fact that the state has run out of- le two new reactors, whose construc- hydropower pumped storage plant. This, however, gal means to subsidize the two coal tion started in the 1980s but was is a decades-old project that has so far companies. The difficulties faced by interrupted in early stages, must be flows strong proved uneconomical – not to men- the lignite-fired plants, represent a finished. In 2014, a memorandum of tion its dim environmental prospects. challenge for the Romanian energy understanding was signed between Hydro energy is the most important system, since their yearly contribu- SNN and China General Nuclear -Pow kind of RES in Romania. Indeed, state- It is likely, therefore, that any new tion of 24% to the country’s electricityer Group (CGN) for the construction owned Hidroelectrica S.A., with its pumped storage capacities with real production, on average – and actuallyof two new nuclear CANDU reactors around 6,500 MW of capacity, is the chances are smaller-scale, geographi- about 40% in the winter months – ofis 670 MW net capacity each. Little backbone of the Romanian energy cally distributed and socially accepted. virtually impossible to supplant in the progress has been registered until- re system, given its major contribution Such demands are, in fact, narrowing short run. cently when, in May 2019, a Prelimi- not only to overall electricity produc- down considerably the list of serious nary Investors Agreement was signed, tion, but also to balancing the grid, projects. which has mandated the grounding of thanks to its hydro dams’ storage. phasing out a JV project company, with a majority RENEWABLES share owned by the Chinese part. As most of the country’s hydro pow- COAL ON THE RISE er plants were built between 1960 According to Cosmin Ghita, Gener- and 1990, the company needs mas- The coal sector has had a major his- al Manager of Nuclearelectrica, “The The renewables energy sector (RES) is sive refurbishment & modernization torical contribution to the country’s company will be established for a peri- the one in which Romania has seen the works. Moreover, Hidroelectrica plans economic development. Two sorts of od of two years and the new units are most spectacular investment boom to build about 200 MW worth of new coal are mined in the country’s two expected to start producing in eight over the past decade – mostly fromcapacities, pending the needed - envi main basins, respectively: hard coal years, namely in 2027.” 2010 to 2016, and especially for windronmental permits. in Jiului Valley, and lignite in Oltenia power. The country boasts Europe’s Meanwhile though, Romania ought region. Hard coal was, alongside oil, largest onshore wind park, namely theBesides, the latest energy strategy the fuel that drove the Romanian -in to be open to the fourth generation 600 MW CEZ Group-owned Fanta- draft published by the Energy Ministry dustrial progress, which started only in DOUBLING of nuclear reactors, which are smaller, nele-Cogealac Wind Park, in the- Doin 2018 lists among the four ”projects the middle of the 19th century. With modular, safer, cheaper and faster to brogea region. of national interests” that are to be the addition of thermal coal power DOWN ON build and install. Such projects are in plants in the 1970s and 1980s, the advanced approval stages in the US, This remarkable increase took place where pilot plants will be constructed valley turned into a hub of power gen - NUCLEAR on the back of a generous RES- sup eration. In the 1980s, the coal-fired until 2025. port scheme, introduced through Law plants started to cogenerate heat, Romania has relied for more than two 220/2008. The law established a man- which fueled the region’s district -heatdecades on nuclear energy, which has Considering the stringent long-term datory quota system, coupled with a ing systems. been a bedrock of the national ener- decarbonization goals of the EU, a trading scheme of green certificates - gy system. Further on, in the context safer, flexible and more affordable nu (GCs). However, only two years into At present, though, the two coal com- of ambitious decarbonization targets, clear technology must be considered. the application of the RES, the sup- This should be done alongside the panies – state-owned Complexul En- is ready to double down on port scheme was curtailed. ergetic Hunedoara, mining and using this type of low-emissions power gen- build-up of renewables, the increase hard coal for power generation, and eration. of energy efficiency and the overall romania has already Complexul Energetic Oltenia, doing ”smartening-up” of the grid, by means surpassed the the same with lignite – are facing deep Romania’s two nuclear reactors at of digitalization & automated systems. economic difficulties. Cernavoda, on the Danube river, oper- ated by state-owned Nuclearelectrica 24% price of CO2 emission S.A. (SNN), generate a steady 20% of renewable energy allowances within Romania’s electricity production. The quota set by the eu the EU ETS trading expansion of that nuclear capacity is for 2020 a strategic option, as reiterated in the scheme reached recent long-term national plans – the Last year’s draft National Energy Cli- Romanian Energy Strategy 2019-2030 mate Plan 2021-2030 submitted by €30 and the draft National Energy-Climate the Romanian Government aims at a Plan 2021-2030. meek 27.9% target for 2030, a fact in April 2019 that has been widely criticized and The life-extension of Unit 1, commis- eventually met with a rebuttal by the For every ton of emitted CO2, the sioned in 1996, is planned to take European Commission, which has coal-fired power plants must buy suchplace from 2026 to 2028. For further strongly suggested a 34% target for an allowance. development, there is a broad politi- Romania’s RES by 2030.

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The project for the Romanian Energy The new reactors will each produce Strategy 2018-2032 includes the de- 700 MWh and in terms of investment velopment of two new units for nu- we expect they will require around Hidroelectrica, a state owned clear energy production. Can you ex- €6,4 billion. This estimate is based Bogdan pand on the investments planned by on the most recent feasibility study company, is the leader in hydro Nuclearelectrica in the coming years? which was performed back in 2012, power generation and main BADEA so we may need to adjust the amount supplier of ancillary services Firstly, we are working on the refur- when we consider new market data required within the National bishment of Unit 1 CNE Cernavo- because many things have changed in Energy System. The company da, which will extend its lifetime for the economy since. plays a key role in Romania’s General Manager another 30 years. It is an extremely energy security. complex project, similar in terms of Some countries, like Belgium, have Hidroelectrica efforts to the construction of a new decided to fade out nuclear energy. facility but with fewer costs involved. What role do you expect it to play in We expect the refurbishment will re- Romania’s future energy mix? Hidroelectrica is currently one of the The company already identifies as a Quite an ambitious strategy - what quire approximately €1,5 billion, but Cosmin most profitable companies in Roma- 100% green. What contribution can are you prioritizing for the next few we will have definitive data in 2021. A change of paradigm is presently nia. How has it evolved in the local it further add to the country’s overall years? This project is handled 100% by Nu- taking place at EU level, and I am re- GHIȚĂ economy and what contributed to transition to clean energy? clearelectrica. ferring here to the decarbonization this successful outcome? We have 208 hydro power plants General Manager targets - the plan is to decrease the The number one goal we have now is in our portfolio and we have already carbon footprint with 40% by 2030, Hidroelectrica came into being to secure our existing production by begun a process of modernization. In and 80% by 2050. To reach these through the unbundling of the Nation- giving a new life cycle to our hydro- addition to this, we want to develop targets countries need clean sources al Electricity Company, a mammoth power plants. For a while now we have the power supply segment of our- busi of energy. Part of it will be achieved corporation, which in 1998 was bro- been analyzing previous investment ness. In 2018 the market has been- ful Nuclearelectrica through renewable energy sources, ken down into several producers by objectives that for various reasons ly liberalized and this was reflected in however, they will not suffice- espe Nuclearelectrica was founded in The investments that we have type of resources. Since then Hidro- were suspended, to understand which the company’s financial performance, cially if we take into account the need 1998 and is the only nuclear energy underway are the biggest electrica went through various phas- ones could be effectively pursued. We which reached a profit of about RON to have a stable energy system. A producer in Romania. The company es, including one of insolvency which are trying to squeeze every possible 2 billion. when it comes to the energy recent study published by MIT (Mas- presently operates two nuclear units required a major internal restructuring MWh from these projects and con- sector in Romania. sachusetts Institute of Technology) and led to the rethinking of the busi- tribute as much as possible to meet We have also started an action to with an installed capacity of 1,400 shows that nuclear energy will play a ness philosophy. This was followed by the consumption needs in this transi- identify opportunities for regional- ex MWh, covering 18-20% of the coun- key role in achieving decarbonization a period of consolidation and devel- tion. It is not a simple process though,pansion. Romania has been and still is try’s energy needs. In parallel we are planning the con- targets, and offer stability and security opment, with the central points being as it involves a high amount of rede- a regional hub for energy, and as- inter struction of two new reactors, this of supply. maximization of revenue and cost op- sign work and new authorizations. connectivity advances it brings new time through a joint venture with timization. opportunities for our business. China General Nuclear Power Corpo- Belgium is indeed phasing out nucle- We also aim to diversify our portfo- ration (CGN), which will hold a 51%ar energy, but many other European On top of these, in the past two years lio through the addition of wind and stake. countries plan to develop nuclear pro- we added a third strategic element in solar power generation capabilities. grams: by 2050, targets 36% regards to employees, namely creating This will help us mitigate the risks- as What investments will be required to nuclear energy, Poland 28%, motivation and loyalty by correlating sociated with production cycles - for develop reactors 3 and 4, and what 58%, Slovenia 48% and so on. Many the company’s success with increases example, on the hydropower side we are the expectations in terms of -pro of these are starting to develop their in their salaries and bonuses. produce a lot during spring time, but duction? nuclear programs from scratch, not the summer period is rather dry; we an easy feat if we consider that a nu- We want to start sowing We are now in full process of resum- can turn this into an opportunity by Cernavoda power plant was initially clear power plant requires numerous seeds so that when the time ing strategic investments, such as the harnessing solar power. designed in the 1970s and the goal studies and strong expertize, difficult - bidding for Vidraru with a value of comes we are able to repli for it was to accommodate five reac- to identify in a market that does not €82 million and upgrading large pow- Climate change is also a factor, as the cate the success we had in tors. The new units will use the same have previous experience. er plants such as Raul Mare, Retezat pattern has not coincided with the -sta technology that we have in place cur- the local market and become and Mariselul. The philosophy behind tistical data we had in previous years, Valentina rently, namely the Canadian CANDU Romania has an advantage from this a real competitor for the big these investments is based on a ho- and it is clear that we need to adapt to technology which is one of the most point of view, holding some of the companies in Europe. listic vision, that includes as strategic these changes. robust in the world (no incidents have best specialists in the world. We ex- DINU elements the individual performance ever taken place in nuclear plants that pect nuclear energy to represent 27% Head of Communication of each plant, tight cost control and a use this technology). Our power plant of the energy mix in Romania by 2050, strong team to manage these projects. & Investor Relations is, in fact, certified as one of the safest including the new units that are being in the world according to international built. standards.

12 romania energy industry 2019 romania energy industry 2019 13 introducing romania’s energy industry investment reports investment reports TACKLING AN AGEINg INFRASTRUCTURE LEGISLATIVE The two main energy transport systems, and Transelectrica, for natural gas and electricity, respectively, need ur- HURDLES gent refurbishments and modernization. The main Transgaz project under construction is the BRUA interconnector (Bulgar- ia-Romania-Hungary-Austria), which will link the Southern Gas Corridor with the Central European Gas Hub at Baumgar- One of the most controversial and ten (Austria). BRUA, partially financed with EU funds, is also plannedto serve as a conduit for the gas reserves of the Black disruptive pieces of legislation in the Sea, assuming the main titleholders, ExxonMobil and OMV Petrom will make a final investment decision. At present, the energy industry has been the notori- Romanian gas grid is relatively isolated from the European gas market, with limited import and negligible export capacity. ous GEO 114/2018, which upended As to Transelectrica, much of its high-voltage lines are old and in need of refurbishment. many of the norms and processes of the sector and brought uncertainty and discontent upon businesses and Niculae investors. On the electricity and gas markets, the GEO drastically curtailed several dimensions of the progressing BĂDĂLĂU market liberalization.

photo: Depogaz Minister of Economy Romanian Government

The instability of the How important is the energy sector to the overall economy of Ro- Fortunately, though, the company has moved forward with the implementation of major interconnectors, such as finishing legal and regulatory mania? the 400 kV line with Serbia (Resita-Pancevo), in 2018, and making tangible progress towards finishing the Romania-Hun- gary interconnection (Oradea-Bekescsaba). At the same time, Transelectrica is consolidating the national power grid by environment, in gen- The energy sector is extremely important, accounting for 3,5% of building the 140 km-long Smardan-Gutinas 400 kV line in Eastern Romania,which will be essential to evacuate the nuclear eral, is a major hin- our GDP. The Ministry of Economy holds under its roof the two big and from the Dobrogea region; and nearing the completion of the metropolitan high-voltage ring that will electricity and natural gas transporters. Transgaz is currently in the surround Bucharest. drance faced by new process of building BRUA, and we have also managed to reach an investments, and a agreement with them to include in the investment package funds primary factor in the for the modernization and extension of the national gas network: €25 million will be allocated this year, and another €100 million in overall investor risk the coming years. assessment. ANNUAL In terms of electricity, Transelectrica is close to finalizing the 400 kV 7th CONFERENCE electric ring at a national level, as well as the ring that will serve the capital city of Bucharest. As the economy keeps developing, the de- The government must address this mand for power is also increasing - these projects, along with further BLACK SEA liability by instituting substantive investments, will allow us to satisfy the needs of industrial consum- consultations with stakeholders and ers and will also bring a meaningful contribution to the development OIL & GAS improving the quality of its regulato- of our cities. 23–24 OCTOBER 2019 ry process. As pointedly put by Petre Stroe, CEO of MET Romania Energy, The industry needs to rely on a stable and predictable legislative BUCHAREST, ROMANIA ”Market liberalization has been a long framework in order to continue growing, yet lately unexpected leg- and arduous process in Romania, and islations have shaken some of the industry’s future plans – what re- recent legislation appears to bring assurance can you give new and existing investors that have voiced some winds of change in the opposite concern? direction. I do not believe that ANRE UNLOCKING THE POTENTIAL is the ‘bad guy’, they are doing their We invite investors to come to Romania with the promise that they OF THE BLACK SEA job, but having a stable, reliable and will find partners open to dialogue and collaboration, and that want predictable framework is crucial to to work together for the development of the country. This Cabinet doing business anywhere. I encour- has taken decisive steps to reduce bureaucracy, taxation and to de- OFFICIAL SUPPORT age further deregulation as I believe a velop a working Public-Private-Partnership bill. We strongly believe free market stabilizes itself and is the that this industry is a key factor in long term development, growth best way to ensure both a welcoming and job creation, and will fully support these objectives, as they are business climate for investors, and the shared by us. WWW.GLOBUC.COM/BLACKSEAOILGAS best price and services for the end consumer.”

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Eugenia THE ONLY WAY IS UP ROEC is Romania’s first Eng- lish language energy studies GUSILOV All in all, Romania is a country in full economic swing, with by means of low-emissions power generation, digitalization think tank, an independent significant natural and human resources. It is situated in a of infrastructure, smart grids, automation and demand-side organization focused on- en geopolitical region of high stakes, at the eastern margins of management, as well as clean transports, deep renovation ergy research and analysis, Director NATO and the EU, which raises even further the salience of of its buildings stock and, in general, increased efficiency established in 2010. its energy security. in the use of raw materials of any kind. A massive- reengi ROEC neering of its systems is required, bolstered by serious- in Romania Energy Center The main challenges of the country’s energy sector stem, vestment. But no less important is the cultural and -behav one way or another, from the transformation required by ioral shift that has to be undergone by consumers of energy the transition to a decarbonized economy. The severe services, because efficiency has an indelibly user-related constraints of the EU energy climate policies regarding component. The project for the National Ener- The benefits of regional intercon- The dividends of engaging top foreign the increase of renewable energy sources and energy ef- gy Strategy 2018-2032 has recent- nectivity have been explained and experts for Romanian academia, stu- ficiency are clashing with the immobility and vested inter- The expected transformation of the energy sector would ly been released - which objectivespromoted by market-oriented energy dents, current specialists as well as the ests of the incumbent energy producers. The record high go hand in hand with a future of clean transport, based on should be pursued with priority in experts for a long time now, but the wider public can be tremendous. They price of the ETS permits is downright suffocating the coal alternative fuels, circular economy, and overall efficiency your view? progress to put the missing links in develop critical thinking, build confi - companies, whom the government can barely subsidize any in the use of water, materials and prime energy. place has been very slow. These de- dence, and open windows of opportu - longer. Moving ahead, Romania needs bold, albeit realistic District heating is what I see as priori- lays were most likely caused by the nities for future professional coopera - strategic planning on energy and climate. Its goals must be Not unlike other EU member states, Romania is still- strug ty number one. In Europe, the tenden- local inability to move things forward tion and development, with potential aligned with the EU 2030 targets for energy efficiency, -re gling to reach a workable level of consistency in its clean cy has been to support cogeneration, swiftly. transformative effects for the entire newables and emissions of greenhouse gases. energy transition. But for the process as such, one thing is shown to be the most efficient way to Romanian society. clear: the only way is up, that is towards deeper integration heat urban areas. Unfortunately, the Adopting the Offshore Law, for exam- Alongside such large-scale individual projects, Romania in the EU’s energy market and its structures of energy- gov trend has been exactly the opposite in ple, took an impressively long time. must embark in a deep transformation of its energy systemernance. Romania, which has mostly regressed The lack of a proper policy-making in the past 30 years. To better put this due process is one issue. On the other in perspective, back in 1989 Romania hand, there is currently a prevailing na- had 315 cities and towns with work- tionalistic view at the decision-making ing district heating systems (DHS); level and a desire to keep the resourc - last year, there were only 60 left, es for internal use rather than opening We want to keep developing which means that two thirds of the up for export. This thinking explains our capabilities as a think DH system has been lost. It is a rather why Romania was not in a hurry to dramatic situation. In Bucharest, both build operational gas interconnec- tank, because there is a great ELCEN (the heat producer) and RA- tors all these years. Romania is final- need for high quality analysis DET (the heat distributor) are in insol- ly working on achieving reverse-flow and fresh, independent and vency. Generally, the local public ad- on the interconnections with Bulgaria The Energy Policy Group (EPG) is an independent think-tank on energy policy, competent voices in Romania. ministration (charged with managing and Hungary, but it has done so grudg- market analytics and energy strategy. district heating) simply neglected this ingly, and only as a result of significant subject for years, focusing on provid- pressure from Brussels. But the world It facilitates dialogue between the decision-makers and the stakeholders of the energy industry. ing subsidies to the population instead is moving very fast, projects such as of modernizing the infrastructure. Nord Stream 2 are underway, and Ro- Through publications and public events, EPG disseminates evidence-based information and analysis mania needs to keep up the pace if it More broadly, we are hoping for bet- about the sector’s policies and tendencies. The issue with no new investments is really wants to hold a strategic (or any) ter communication with the public that people end up paying more for role in the region. authorities and more respect for the EPG is committed to the promotion of a technologically advanced, economically efficient, socially acceptable, system losses, which inevitably ap- procedures that are in place to facili- and environmentally sustainable energy system. pear when the infrastructure is obso- What are ROEC’s plans for the near tate dialogue. I also want to see Roma- lete. On the other hand, the industryfuture? nia overcome its inferiority complex Radu Dudău has seen a fair degree of investments – oftentimes undervalue President EPG in the renewables sector which has re- One thing we are particularly excited themselves. Our entire work at ROEC e-mail: [email protected] ceived about €8 Billion. about is our “ROEC Bucharest Talks” is about this: building home-grown website: www.enpg.ro project - a series of events featur- professional expertise, working at How do you see the natural gas re- ing high-profile international experts Western standards and developing a serves in the Black Sea influencing whom we invite to Romania to speak stronghold of independent research Romania’s role in the region? on challenging and exciting topics. and analysis right here at home.

16 romania energy industry 2019 romania energy industry 2019 17 introducing romania’s energy industry investment reports investment reports introducing romania’s energy industry photo: Enel What are some of AHK Romania’s more impactful projects that are being worked on presently?

One key initiative we are working on is in the field of professional education. It is common knowledge that WORKFORCE there is a shortage of skilled labor. AHK would like to instill some fresh breath into the professional educa- a shrinking talent pool tion system, revitalizing the way practical and theoret- ical education is imparted on students. We are running Specialized labor force and low wages have, for years, represented a major com- projects such as “Scoala de Carte si Meserie”, “Carava- petitive advantage for Romania. But for a while now the paradigm has changed, na Meseriasilor” etc. and helping companies integrate as the talent pool started to shrink and recruitment has become a real challenge. themselves in the system. We feel that well skilled Gerd workers are a priority in order for Romania to remain Romania’s population has been dwindling steadily since the 1990s both be- competitive in the long run, especially considering the cause of a decrease in birth rate and a growing appetite for migration. dominant weight that the manufacturing industry car- BOMMER ries for the country’s economy and impending digitali- In 2018 Romania has seen its lowest birth rate recorded in the last half century, zation also changing the business environment. Commercial Counselor and all projections point to the fact that the country will continue to experience In the short term, the work- very significant population decline by 2050. Advantage Austria Renewable energy is an area in which Romania has a force deficit could reach wealth of natural resources to be harnessed – what is Emigration has also been one of the key issues in Romania since the early 1990s. 1.1 million employees if the There are many efforts being made to increase region- the angle of your work in this field? The problem only got bigger after the country joined the EU in 2007, leading to economy grows at the pro- al interconnectivity, for instance BRUA is currently an increased weight of high-skilled migration. United Nations Population Divi- jected rate and no meas- under construction. How do you expect this to influ- We are very strong in the area of green technologies, sion estimated the total number of emigrants to have reached 3.5 million as of ence the trade relationship and what does it bring for including a dedicated team of researchers. For instance, 2017, representing approximately 18% of the country’s population. In contrast, ures are taken to counter Austria itself? we are working to develop the waste-to-energy mar- Romania has welcomed very few immigrants during this time - Eurostat data this trend. - ket, a massive problem right now in Romania, especial shows that as of January 2018 the share of non-nationals in Romania was as low Source: PwC, 2018 BRUA will likely be a game changer for Romania be- ly considering current recycling practices. Clariant and as 0,6%. This outflow migration of skilled labor resulted in labor shortages, skill cause it will allow the country to export more. Present- GETEC are working together on the bioethanol facili- gaps, and distorted wage demand. ly the country’s trade balance is negative, and this is a ty, but they also face the same challenge of recycling great opportunity to turn things around and strengthen agricultural goods. Preliminary steps need to be taken Unemployement rate the local currency. to grow the biogas and biomass industries, and closer collaboration between the Energy and Environment (total) Another thing to consider is the supply of internation - Ministries is paramount in this respect, even in order to al gas from outside the , where we efficiently finalize the country’s national energy plan. ro EU do have reliable supply partners, but diversifying the sources would be beneficial for Romania, for us Aus - 3.9% 6.7% trians and for Europe overall in terms of stability and security of supply. Romania has the great opportunity to become self sufficient in oil & gas and also add to Unemployment rate the stability in the region, especially if we consider the (people under 25 years) Neptun Deep project. Time is critical, however, so Ro - mania needs to move a little faster. The back and forth ro EU that we have been witnessing in terms of legislation is counter productive and is decreasing the chances of achieving this desired outcome. 16.2% 15.2%

What is your assessment regarding the ease of doing business in Romania? Early leavers Sebastian from education Doing business in Romania is not particularly more dif- (% of persons aged 18-24) ficult than in other countries, when a company enters METZ a new market it is normal that they will need to adapt to local norms and culture. However, this process of General Manager & Board Member ro EU adapting becomes much more difficult when these AHK Romania norms change too often, as it tends to be the case here. 18.1% 10.6% (German-Romanian Predictability, transparency and stability are therefore key areas on which the country should focus on. Chamber of Commerce) source: Eurostat

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Petroleum and gas sit at the core of the University’s One particular issue of the energy in- romania population specializations. What can you tell us about the cur- dustry is that many students want to development & projection rent talent pool in this field? steer clear of heavy labor, rendering 1991 (1991-2050, millions) the industry rather unattractive. 23.2 The current situation is not the most favorable due to the decrease to approximately half the number of 2007 Moreover, while the country has ben- high school graduates over the past five years. To our 21.1 efited greatly from increased com- regret, there has been a degradation in the quality of petitiveness in the market, this has 2019 education and the interest of high school graduates for in turn generated difficulties in terms 19.4 technical degrees has diminished. of workforce - there are many more companies in Romania today which This is presently our priority, we want to improve the 2050 are looking for the same type of skills, 16.7 Andy quality of education. We look closely at the industry’s and this makes access to talent muchsource: Eurostat needs with regards to competencies of graduates, more complicated. BRIGHIDĂU and we also look for new ways to adapt to the re- quirements of the students and the way in which the Companies are engaging various strategies to tackle this issue: most ofteninitiate they collaborations with relevant univer- General Manager necessary information is transmitted to them. In other sities, and many have started to import workforce or use technology an alternative. as Human resources are becoming an Oil & Gas Recruitment words, teachers also need to adapt their teaching style increasingly important topic in the government’s agenda as well, as rgentlythey uneed to formulate and enact policies at a to the demands of the new technology. national level to address all aspects of the crisis. Workforce has been highlighted as one of the main How strong is the relationship between the university challenges faced by the energy industry in Romania. and the energy sector? What do you see as the main causes for this? The collaboration takes place on several levels: scien- There is an abundance of trained personnel that left tific research activities, solving technical problems,- or - The most notable [issue] is the deficit Romania in recent years and this has affected all in ganizing practical work for students and beyond. The of specialized human resources in our dustries. Referring specifically to oil & gas, the crisis university also benefits from material support from market and becoming ever more prev- that the industry has gone through in recent years has companies for the provision of laboratories, or spon- alent, particularly in the construction affected the workforce severely in the sense that many sorship for scientific and cultural events. For instance, specialists decided to shift to other industries. Training from sponsorships from economic agents, we have a Claudiu BUTACU industry. This is a result of Romania George CIUBOTARU companies have also reduced their activity given the laboratory for additive technology (3D printing). President & Co-founder functioning as an exporter of human Vice President circumstances. EFdeN resources and the solution is creat- Electroalfa ing an appealing enough local work We want the industry to know that the most impor- climate to encourage people to stay. This means that we are currently at a point where we tant help they can offer is to provide practical activities - We are in a position where we need to need to rebuild the workforce and this is done through through internships for all university students. We un recruit resources from places such as re-establishing training courses, converting people derstand that for commercial companies training more - India, Turkey or Vietnam to compen- from other industries and attracting workers from students requires additional efforts, but their contribu We are primarily focusing on improv- Four years ago we held the first sate for the dwindling local supply. neighboring countries, such as Bulgaria. One challenge tion is essential if we want well-prepared graduates. workshop about the crisis in human ing the efficiency of our processes, we are noticing is that we do not have available local resources. Many students wanted to both in terms of business operations workers with management level expertize - one focus steer clear of heavy labor, attract- and production. For instance we are area is therefore to nurture the talent and prepare peo- ed more by managerial roles even investing €5 million in modernizing ple for these higher levels. well outside their field of study or the production capabilities and in- by moving abroad. [...] The industry creasing efficiency. This change is What are the skills that you are looking for with prior- needs to realize that many fresh em- also driven by the fact that human ity, as applicable to the variety of clients’ needs? ployees are not being offered livable resources have become harder to wages for current living conditions find in Romania so we are using- pro We seek a variety of skills such as drilling, engineering, in Bucharest, which is causing Ro- Horațiu Sebastian CĂLUGĂR cess automation as a solution. subsea security, IT, catering and third party services. mania to lose an extremely valuable General Manager One key element is that we are looking for people with niche of potential future experts. CIS GAZ English language capabilities - the majority of the know how and technology in the offshore segment is sourced from the United States, so the terminology used is typ - Mihail ically in English. The same is valid when it comes to in - dustry experts and upper management, which tend to MINESCU be people from countries with long offshore traditions Vice-Rector in Charge of International Relations like the United States, or Scandinavia. & Partnerships with the Economic Environment Petroleum-Gas University

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A key aspect for the industry is to prioritize medium and long term thinking, and to avoid as much as possible con- flicts over short term gains. Producers may want prices to grow, suppliers may win if they decrease, but what is essential is that they remain attached to principles, even if this may entail losses at certain points in time. The thing is that if the principles are not respected, in the long run everybody will come out on the losing side.

Răzvan NICOLESCU Central Europe Leader for Gas, Oil & Chemicals Sectors, and Consulting Partner in Romania Deloitte Romania

Revolution Square, Bucharest photo: Adobe Stock LEGISLATION & REGULATORY bodies investment reports investment reports LEGISLATION & REGULATORY bodies

GEO 114/2018 tightens the grip

One of the most controversial and coal-fired power plants from the 2% disruptive pieces of legislation in the monetary obligation, which is discrim- energy industry has been the notori- inatory and distorting with respect to ous GEO 114/2018, which upended the workings of the competitive -mar many of the norms and processes of ket. In hindsight, it is instructive to the sector and brought uncertainty find the reasons why such a piece of and discontent upon businesses and legislation was deemed necessary in investors. the first place. One way to rationalize Cătălin NIȚĂ it is to read it as a device meant to pro- Executive Director On the electricity and gas markets, tect the final energy consumers from

photo:Stock Adobe GEO 114/2018 drastically curtailed market volatility and raising prices. FPPG several dimensions of the progressing (Oil & Gas Employers’ Federation) market liberalization. As underlined by ANRE’s Vice Pres - A ROCKING BOAT ident Zoltan Nagy-Bege, “Because From April 1, 2019 to February 28, there is little competition locally legislation & regulatory bodies 2022, a price cap of RON 68/MWh among producers (Romania is dom- (€10.5/MWh) was set on domestically inated by two big producers which produced natural gas. For electricity, hold 95% of the market) it was easy The ministries have several for their prices to follow the trend of ANRE is to regulate the end price for members with significant- ex imports. All these elements combined household customers during March perience and understanding Several pieces of legislation structure the functioning of the Romanian energy market in its var- 1, 2019 and February 28, 2022. Allled to a situation in which the gas price effectively doubled from RON of the industry, but few deci- ious sectors, along with the respective secondary regulatory packages. All of them, however, holders of an ANRE license in the gas, electricity and thermal sectors are to 64/MWh (approx. €13.5) to RON sions are actually taken after - underwent repeated and often abrupt changes by means of governmental decisions and emer pay a monetary contribution of 2% of 130/MWh (approx. €27.5) in Decem- serious deliberation, or after gency ordinances over the past few years. This has regrettably created a erceptionp of unpre- turnover from the activities covered ber 2018. GEO 114/2018 came as a commissioning impact stud- dictability and mistrust in the Romanian regulatory environment. by the license. response to this drastic price increase ies. By contrast, Hungary is a which made it difficult for vulnera- - In response to the outcry from the in- ble consumers to cover their energy good example of a well-man dustry, the government has partially costs.” aged regulatory framework, rescinded the emergency ordinance a country that profits signif- President Prime MINISTER NEXT presidential by means of GEO 19/2019, through Meanwhile, he also points out that icantly from trade and infra- ELLECTIONS - ”There is already an infringement Klaus Iohannis Viorica Dăncilă which some of the most onerous pro structure despite producing a visions have been relaxed – such as against Romania at the European mere 15% of its energy needs. November 2019 limiting the gas price cap only to the Commission so it is uncertain wheth- volumes for household consumers, er this measure can be maintained for while allowing competitive prices for the full three-year period. It is there- NEXT parliamentary the industry and services. However, fore essential that we implement allindustry’s reaction to GEO 114/2018 ELLECTIONS GEO 19/2019 has introduced new the necessary market mechanisms as has been unambiguous. elements, such as the exemption of soon as possible.” In any event, the late 2020 - early 2021 Andrew Costin, President of the- Pe troleum Club of Romania, did not Johannes BECKER mince words: ”[…] there are many laws european parliament romanian parliament party representation that are passed through Emergency Partner representation Ordinances that seem to be draft- psd 208 TPA Group ed to specific interests, and that spill EPP 14 alde 31 over into other sectors. It is an ad-hoc The Social-Democratic pnl 94 legislation and because the impact is s&d 10 usr 40 Other countries in the region pose challenges as well, but they not properly assessed, the legislation governing coalition pro europa 23 seem to hold an advantage in terms of legislative stability. As across these sectors becomes inco- udmr 30 renew europe 8 PSD-ALDE herent, leading to an unstable and minorities 17 an investor you want to be able to plan ahead for at least five has a 51.3% majority. pmp 12 years and that does not seem feasible in Romania at this point, unpredictable fiscal medium for the total seats: 32 energy industry. […] GEO 114/2018 is unafiliated 10 where more than 200 fiscal changes are made on a yearly basis. TOTAL 465 a great example for this”.

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The Romanian Energy Regulatory Zoltan Authority (ANRE) is an autono- mous administrative body under NAGY-BEGE parliamentary control, entirely self-financed and independent with regards to its decision-making pro- cess. ANRE is responsible for creat- photo:Stock Adobe Vice President ing and implementing the appro- priate regulatory systems for the ANRE electricity & natural gas markets.

GEO 114/2018 and the subsequent modifications brought We have also initiated the modification of various trading ANRE is presently working on an initiative to make PPAs all the changes unfolding at once. It is also important to be through GEO 19/2019 have imposed a price cap for nat- methodologies - for instance, we will allow transactions to (Power Purchase Agreements) available in Romania - one thorough in our work and communicate openly - FPPG has ural gas in Romania, despite the market being liberalized. take place in EUR and USD which will provide additional of the key issues renewable energy producers are facing. recently commissioned an in-depth study regarding the gas What were the reasons behind this decision? protection against currency fluctuations. For contracts What progress has been made so far? market which I see as a great starting point to address some with a duration longer than one year, we will allow some of the challenges. When Romania started on the liberalization path we devel- flexibility for both prices and quantities - this will -broad The issue is rooted in Law 123/2012 which changed many oped a calendar that involved a gradual increase in price, in en supplier options and trading opportunities in wholesale rules in the wholesale market. One of its articles mentions Producers and distributors will each look at the data based order to reach a level similar to that markets. The only thing missing at the that wholesale transactions need to take place on central- on their own interests, but I hope it will also stimulate co- of imported gas. However, in 2016 moment to have a market compara- ized markets, with a few exceptions (for instance renewa- operation and set a good example for working together in we noticed that the import prices ble to other European ones are deriv- ble production capacities lower than 3 MWh). other areas as well. started decreasing, and it became Although we had in place an atives - as the market matures, these apparent that if we continued instruments will also appear. Given that only companies that are already producing and obligation to trade gas on cen- with the initial plan the domestic hold a license are able to trade on OPCOM, this obligation prices would soon surpass them. tralized markets, these were Protection of vulnerable consum- made it impossible for renewable energy producers to close Under the circumstances, the Gov- not mature or liquid enough yet. ers was a founding element for this PPAs and secure financing for their projects. This is one of ernment (after long consultations We were also missing essential change. What measures are being the reasons why Romania has not seen new capacities de- with the European Commission), mechanisms such as the day- considered by public authorities to veloped in recent years. decided to liberalize the wholesale ahead or intra-day market. In address this pressing issue? market ahead of time, starting with 2017 the import pricing started Since last year we have been working on a solution for this, April 2017. During this time in which we can still namely we plan to create a platform within OPCOM where increasing, and in parallel Ro- apply the RON 68 (approx. €14.4) companies can trade energy even if they have not reached Lack of stability in legislation is just as much a This measure has been imple- mania reached a historical low price cap it is important that the Gov- production phase yet. We still have some small hurdles to challenge for us. Since 2010, Law 220/2008 mented for a limited period of in terms of production, extreme- ernment identifies the appropriate overcome but most likely the platform will be available dur- which deals with renewable energy has been mod- three years. What actions will be ly challenging especially during means to ensure the protection of ing the summer of 2019. ified at least once or twice every year and it is easy taken during this time to address winter time. vulnerable consumers. For the time the remaining problems? being the price cap acts to the benefit Another improvement we are working on has to do with to understand why an investor would be reluctant of all residential consumers, including the fact that quantities and prices are currently fixed for to enter the market. Similarly, GEO 114/2018 has All these elements combined led There is already an infringement those that are not actually in need of OPCOM transactions - this is a great disadvantage for re- kept us busy for the past four months, time that against Romania at European to a situation in which the gas subsidies. newable energy which is by nature variable. We initiated an I trust could have been used much better, for in- Commission level so it is uncer- price effectively doubled. GEO amendment to the regulation that allows some flexibility in stance to couple the day-ahead market with Aus- tain whether this measure can be 114/2018 came as a response What is proving extremely difficult terms of quantities, and also the use of price formulas. The tria and Germany. maintained for the full period. It to this drastic increase which is the process of actually identifying project is 90% ready and we are certain that it will go live is therefore essential that we - im these vulnerable consumers. Initial by the end of 2019. made it difficult for vulnerable plement all the necessary mecha- estimates show that about 20% of consumers to cover their energy nisms as soon as possible. the population is in this situation, and Lack of a stable regulatory framework is the problem most costs. to identify everybody entails a tre- often remarked by industry members. What causes this In 2018 we put great efforts into mendous workload for local authori- lack of stability & what do you see as a possible solution? implementing the day-ahead & intra-day markets. Now we ties. We have not yet seen concrete actions in this direc - need to maintain them and ensure they are functioning -cor tion from the Government but we hope this will start being One solution going forward is to tackle issues step by step - rectly. Starting with May 1st 2019 we also have a balancingtreated as a priority. ANRE is willing to offer all the support last year, when we started rolling out the new market mech - market in place. and expertize that it has available in the process. anisms, industry players had a tough time keeping up with

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for de-risking investment in low carbon emissions energy Expert Opinion Article sources, to incentivize investment in new nuclear plants and utility-scale RES capacities. How does the European Network

Law No. 184/2018 brought, apart from changes to Law & Information Security Directive 220/2011, the concept of prosumer, with the specification affect the energy field? that prosumers that own RES capacities of no more than 27 kW in capacity can inject in the grid the electricity pro- duced in excess, at the average price of OPCOM’s the Day-

photo: Adobe Stock Ahead Market in the previous year. As part of its cybersecurity strategy, the European Commission recently passed Key pieces the Network and Information Security (NIS) Directive, which facilitates imple- The stability and predictability of the energy sector’s regu- mentation of stronger cybersecurity controls and breach reporting capabilities of legislation latory framework looms large as a principle in the National for private and public entities that manage critical networks. Twenty-two EU Energy Strategy 2019-2030. member states have already transposed the directive into their local legislation. The exploration and production of oil & natural gas is reg- Although not officially committed to by the Romanian Gov- ulated by the Oil Law No. 238/2004. When in comes to cyber warfare, state actors’ priority is industrial infrastructure, ernment, the document outlines the country’s policy priori- which powers the daily lives of cities. From nuclear or hydro electrical power ties, keeping in mind its EU energy-climate obligations and, The law defines the framework of petroleum agreements, plants, to oil & gas-refining and water-filtering stations, one thing is common: more consequentially, lists four investment ”objectives of the types of petroleum operations, the royalties to be paid SCADA systems, used to monitor and control plants or equipment. national interest”: two new nuclear reactors in Cernavoda, by the oil & gas producers. For the offshore production, the pumped storage hydro-power plant at Tarnita Lapustes- the terms have been modified by means of the Offshore SCADA systems have been critical components of any industrial system since ti, another hydro-power complex on the Danube, at Turnu Law No. 256/2018, which introduced a new fiscal regime the 1960s and cybersecurity was only an afterthought. Initially running only in Magurele-Nicopole, and a new lignite-fired power plant at by adding, next to the royalties, a progressive tax on the isolated environments, now, many of them are left exposed to the public on the Rovinari. However, the economic and environmental viabil - ”supplementary revenue” resulting from the deregulation internet. ity of every single one of these projects is contentious. photo: pixabay.com of the natural gas price. Significant risk resides with SCADA systems used for industrial system and na- The draft National Energy-Climate Plan (NECP) for 2021- For any activity of power generation and thermal energy tional electrification control, which rely on complex communication networks for 2030 is mandatory under the new EU Directive on Energy produced by cogeneration, as well as trading, transport, the distribution and resilience of control data. Major efforts are undertaken for Governance. distribution and supply of electricity and natural gas, the implementing and enforcing security controls for these systems, but cyber-at- master document is Law No. 123/2012. This has also un- tacks take many forms. - dergone repeated changes, with the latest one having oc- The final form of NECP is due at the end of 2019, after ex tensive consultations with the stakeholders, the neighbor- curred in 2019. In particular, Law 123/2012 provides for State sponsored cyber-operations have now clear objectives and follow pre-de- ing member states and the European Commission. While the above mentioned restrictive centralized market obliga- fined, well tested techniques, tactics and procedures. Considerable resources basically aligned with the energy strategy, the draft NECP tions (CMO) for both electricity & natural gas. are invested in threat intelligence and security research. The adoption of the is more detailed and extensive in its coverage of Romania’s NIS Directive is an important step on this road, but it is only a small step. Clear The public support for renewable energy sources has energy and climate commitment for 2030. Nonetheless, its mandatory procedures and guidelines on how these systems will be developed ambition level has been widely assessed as underwhelm- taken place by means of Law No. 220/2008, which put in and tested are still to be defined. The directive now imposes to organizations ing, especially with regard to the RES and energy efficiency place the tradable green certificates (GCs) system. managing critical network infrastructure to report the incidents to the- desig targets. In response to the draft NECP, the Commission has nated national incident response body, which will most likely require a periodic already proposed a considerably higher RES target for Ro- The support scheme stopped taking in new RES capacities audit and security testing of the infrastructure capabilities. But a clear approach Adrian Ifrim mania of 34%, as opposed to the 27.9% advanced in the at the end of 2016. The government is currently consider- on what and how these tests should be carried out is missing. Manager Risk Advisory NECP paper. ing implementing contracts for difference, an instrument Deloitte Romania By comparison, for the financial sector, the European Central Bank has released the TIBER-EU (Threat Intelligence-Based Ethical Red Teaming) framework and its supporting documentation. Financial institutions now have to undergo complex Mihai G. POPA scenario-based attacks executed by teams of ethical hackers and tests are to be Corporate Legal performed on live production systems by specialized certified teams. As critical Department Director infrastructure of financial industry also falls under NIS Directive, these tests may replace the mandatory/periodical audit required by local legislation related to E.ON Romania NIS Directive.

In order to have a balanced regulatory environment, and generally if we want to establish adequate Taking this type of testing to SCADA infrastructure is, of course, not an easy step, parameters for the energy industry, we need to pay more attention to eth dialogue between indus- but definitely a necessary one. Safeguarding these critical assets will become an Andrei Ionescu try members and public authorities. The principle of transparency should be more valued, because important objective for governments, since health and safety of its citizens and Risk Advisory Partner economy stability are key priorities. it would decrease the level of contests and litigations that we are seeing at present time. Deloitte Romania

28 romania energy industry 2019 romania energy industry 2019 29 investment reports investment reports LEGISLATION & REGULATORY bodies

Expert Opinion article What are some of the key legislative the changes brought in 2018 were changes that impacted the Romani- beneficial. Smart metering systems & an energy market in the past twelve months? Romania is in a leading position in the personal data protection concerns region from a resource standpoint. BJ: The Oil & Gas Offshore Law - en How does it compare when the regu- tered into force after intensive debate, latory aspect if also factored in? which was a positive thing because it eased many of the investors’ un- BJ: The regulatory environment in certainties and doubts. The law also Romania is not particularly more- oner raised concerns, for example regard- ous than other countries in the region ing the fairly onerous “windfall tax”. and the existing regime is generally amenable. The richness in resources FN: On the plus side, the Offshore no doubt strengthens its position – for

photo:Stock Adobe Bryan Law provides that the tax regime will example, no matter how attractive the not change throughout the duration regulatory regime may be in a country of the petroleum agreements which like the Czech Republic, they are not JARDINE brings the much needed stability in- going to be able to extract natural re- vestors were looking for. The level sources (e.g. oil & gas) that either do Partner of royalties made for relatively good not exist or are simply not economi- Wolf Theiss news as well as they have been kept at cally viable there. 15 October 2018 was the starting point when the national regulatory authority 13,5%, a similar level to the onshore for the energy market published the framework conditions for the implemen- ones. Also, similar to onshore produc- What is the vision for Wolf Theiss in - tation of smart metering systems (SMS) in Romania. Between 2019 and 2028, ers, offshore ones must sell at least Romania looking forward, particular ly regarding your work in the energy the distribution system operators will design and approve the calendar for the 50% of the production on a central- and resources arena? implementation of the SMS, being able to determine in detail the real electricity ized market, in a transparent, public production and consumption for all network users of their concession. Imple- and nondiscriminatory way. BJ: The energy sector remains very mentation plans will be done separately for each village or, in urban areas, for each perimeter related to the main electricity transformers, taking into consider- Dana Dunel-Stancu The renewable energy sector in Ro- attractive for us, and is an industry ation the economical effectiveness, security in supply and ensuring competitive- Head of Energy and mania has undergone changes in where we are very well positioned to - ness in the electricity market. According to the authority requirements, the SMS Natural Resources leaps and bounds over the past decassist. Romania is blessed if we look at ade – how would you describe remaining the available natural resources will achieve a better management of the entire energy system, will optimize the Biris Goran SPARL consumption of electricity and last, but not least, will increase the quality of the current business climate? and there is a great deal of work yet distribution for the benefit of the network users. to be done. Despite the negative press BJ: There was a great deal of optimism that Romania has received on occa- Flaviu initially, leading up to Law 220/2008 sion we are still witnessing significant which created a very attractive invest- investor interest in the country, gener- NANU ment climate and resulted in a “- ated in part by the fact that there are - SMS also pose challenges from the point of view of data protection, as they en age” for renewables in Romania. not many other neighboring destina imply processing of personal data. In the complex ecosystem of energy distri- Counsel Unfortunately, the legislation subse- tions that are more attractive. bution, especially considering the regulatory obligations to unbundle services Wolf Theiss quently changed and the subsidies in Romania, it is crucial to correctly identify the role of the involved layersp (dis- were scaled back which led to a real tributors, sellers) in processing personal data through SMS, to determine if there crash in the market. The current busi- are any controller-processor or joint controller relationships. Depending on their ness plans no longer account for state role, one or more entities in the chain will be responsible with complying with subsidies, they are focused solely on the GDPR requirements (which are quite significant). Another challenge is iden- the revenue that can be generated by the sale of electricity. tifying the correct legal basis for data processing – on this issue, the national Wolf Theiss is a full service law firm legislation (ANRE Order no. 177/2018) sets out certain specific obligations in that opened its office in Romania in relation to the processing of personal data through SMS, but itis not sufficiently FN: At present, there is a sense of Romania needs to work 2005. The firm has four core are- clear and comprehensive in its integration of GDPR principles. Moreover, the cautious optimism prevailing in the through its issues surround- as: banking and finance, corporate market. Whereas two years ago most implementation of SMS also triggers the obligation to perform a DataProtection Dana Ududec & ing the regulatory and legis- Impact Assessment (DPIA), based on a specific procedure and template set out M&A, real estate and dispute res- projects were in distress, now they are Roxana Guiman - by the Smart Grid Task Force organized by the European Commission. olution, all of which spill across the slowly starting to sell their energy as lative framework, but its fun Partners energy sector. well as green certificates to a certain damentals remain strong and PrivacyOne in alliance with extent. Our clients are not building attractive. Biris Goran SPARL new projects but they are operating existing ones and their sense is that

30 romania energy industry 2019 romania energy industry 2019 31 OIL and GAS EXPLORATION & PRODUCTION

I would like to stress that liberalization is only a means to an end, and not and end in itself. Proper free market manage- ment serves everyone’s best interest at the end of the day, offering long term security, the backbone for fair treatment of vulnerable customers provided the right instruments are used, and a more attractive environment for what are neces- sary investments.

Sébastien ZIMMER Partner Emerton

Constanța Harbor photo: Adobe Stock EXPLORATION & PRODUCTION investment reports investment reports EXPLORATION & PRODUCTION

While virtually all domestic oil production is done by OMV Petrom, the land- scape of gas producers is more diversified and competitive. According to ANRE, in 2017, 47.7% of the entire output was produced by OMV Petrom, followed by Romgaz with 46.9 %. The remaining 5% or so was divided among several small independent gas producers: Amromco Energy, Hunt Oil, Foraj Sonde, Raffles -En ergy, and Mazarine Energy.

OIL & GAS PRODUCTION IN ROMANIA (2018) Adrian VOLINTIRU CEO ROMGAZ oil output - 3.6 MT (-2% from 2017)

OIL RESERVES - 100 MT

photo:Stock Adobe Many generations will come after us, so we should make OIL CONSUMPTION - 10.2 MTOE sure to use resources as mind- WORLD’s FIRST fully as possible. Gas is a fos- sil fuel that will be exhausted onshore exploration & production IMPORTS 2018 - 65% OF DOMESTIC CONSUMPTION over time, and in Romania the quality of methane gas is among the highest in the GAS OUTPUT - 9.5 BCM (-3.7% from 2017) world (99% pure methane), even more reason to be mind- ful about how we extract val- The first industrial production of oil in the world was registeredn i 1857 in the Romanian Princi- GAS RESERVES - 100 BCM ue from it. palities of and Moldova: 275 tons, most of which was extracted in Dambovita, Praho- va, Bacau and Buzau regions. In the same year, the first was commissioned in Ploiesti, GAS CONSUMPTION - 10.9 BCM For instance we can develop while Bucharest became the first city to use kerosene for lighting. further into petrochemistry, in fact as a company we are IMPORTS 2018 - 10% OF DOMESTIC CONSUMPTION already making steps in this direction. Romanian oil production has reached a peak of 15 million tons (mt) For the following decades, until 1900, in 1976 and 1977, followed by a steady decline, the Romanian oil production ranked caused by intensive extraction. fifth in the world, after the United States, Russia, Mexico and the Dutch Indies. The first industrial capture of gas took place near Ploiesti, and in 1924 the city became the first in the world to be heated and lighted with associated gas. The modern oil & gas industry is well aware of its notable past: “In Romania specifically, energy is a proud industry, with a 160 year- old history and the first refinery in the world, an outsourcer of know-how, talent and equipment. We should not let the world forget, and we should not ourselves forget“ says Catalin Nita, Executive Director of Oil & Gas source: BP Energy Outlook 2019 Employers’ Federation (FPPG).

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OIL & GAS MARKET STRUCTURE

Romania is the largest natural gas producer of Central and Eastern Europe. Pro- duction is dominated, by far, by two major players, Romgaz and OMV Petrom, with almost 95% of output between them, with the rest split among several small independent producers. At a relatively constant level of gas demand over the past years, any drop in domestic production must be compensated by in- creasing imports.

As of 2017, there were seven importers of – sourced entirely in the Russian Federation: WIEE AG, Dexia, Imex Oil, Trafigura, Vitol Gas & Power, Future Energy and Schweiz AG. One year later, a new player joined the line-up: AIK Energy.

The approximately 10 mt of crude oil used yearly in Romania are processed in the country’s four remaining refineries – out of which only three are produc- ing fuel, totaling a capacity of 12 mt/year (down from no less than 34 mt in 1989): Rompetrol’s Petromidia, in Navodari (owned by KMG International), OMV Petrom’s Petrobrazi, near Ploiesti and Lukoil’s Petrotel, also near Ploiesti. Vega refinery, also owned by Rompetrol, is the country’s sole producer of n-hexane TITLE HOLDERS and bitumen. 1. ADX ENERGY PANONIA S.R.L. 2. S.C. AMRO GOLD OIL S.R.L. 3. AMROMCO ENERGY S.R.L. 4. AMROMCO ENERGY S.R.L. + OILFIELD EXPLORATION BUSINESS SOLUTIONS S.A. GAS OUTPUT BY COMPANY 5. BLACK SEA OIL & GAS S.R.L. + PETRO VENTURES RESOURCES S.R.L. + GAS PLUS INTERNATIONAL B.V. 6. BLACK SEA OIL & GAS S.R.L. + S.C. TRANSATLANTIC WORLDWIDE ROMANIA S.R.L. 7. S.C. CARPATHIAN ENERGY - COMPANIE PETROLIERA S.R.L. OTHERS 8. CLARA PETROLEUM LTD 5.4% 9. OMV PETROM + EXXONMOBIL EXPLORATION AND PRODUCTION ROMANIA LIMITED 10. SNGN ROMGAZ S.A. + LUKOIL OVERSEAS ATASH B.V. + PANATLANTIC LTD 11. NIS PETROL S.R.L. OMV-PETROM 47.7% 12. NIS PETROL S.R.L. + EAST WEST PETROLEUM CORP ROMGAZ 13. OILFIELD EXPLORATION BUSINESS SOLUTIONS S.A. 46.9% 14. OMV PETROM S.A. 15. OMV PETROM + HUNT OIL COMPANY OF ROMANIA S.R.L. source: ANRE 16. PANFORA OIL AND GAS S.R.L 17. S.C. PETROMAR RESOURCES B.V. + PETROMAR RESOURCES S.A. 18. PETRO VENTURES EUROPE B.V. + BLACK SEA OIL & GAS S.R.L. 19. RAFFLES ENERGY S.R.L. + ZANITH RESOURCES S.R.L. + PXOG MASSEY LTD Most oil products thus produced are for a domestic market of about 9 mt/year, 20. SNGN ROMGAZ S.A. with the rest – especially diesel and gasoline – exported in the neighboring 21. SNGN ROMGAZ S.A. + RAFFLES ENERGY S.R.L. countries. The Romanian fuel retail market consists in about 2,600 stations. 35% 22. SAND HILL PETROLEUM ROMANIA S.R.L. + PANFORA OIL & GAS S.R.L. of this market belongs to OMV Petrom, followed by MOL, Rompetrol, Gazprom and Socar. About 600 fuel stations are independent. 23. SERINUS ENERGY ROMANIA S.A. + OILFIELD EXPLORATION BUSINESS SOLUTIONS S.A. 24. STRATUM ENERGY ROMANIA 25. SC UNIVERSAL PREMIUM S.A.

36 romania energy industry 2019 source: National Agency for Mineral Resources EXPLORATION & PRODUCTION investment reports investment reports EXPLORATION & PRODUCTION

Romgaz is close to completing con- A higher share of renewable energy is struction of Iernut power plant, one also beneficial for balancing consump- OMV Petrom is the largest of the few modern pieces of energy tion quantities. If you have a diversi- producer of oil and the - sec Franck Albert infrastructure in Romania since the fied mix, the various sources can com- 1960s-1970s. What were the circum- plement or replace each other when ond largest producer of gas in stances surrounding this investment? necessary. Finally, we believe strongly Romania. The company has NEEL that clean energy is the energy of the a refinery in Petrobrazi that We took over Iernut power plant in future. produces fuel, and a gas fired - power plant covering between 2013, as part of an enforcement pro Member of the Executive Board cess due to non-payment of certain 5-10% of the total market Responsible for Downstream Gas debts. Nobody was particularly hap- needs. py with the solution at the time, but OMV Petrom it seemed like the only way to recover the losses. Rather than looking at it as a burden, a cost center, we focused OMV Petrom is the largest private and providing balancing capacities to tices show that these mechanisms to on options to turn it into a profitable investor in Romania. What are your complement increasing power pro- protect vulnerable customers should Adrian one, and also decided early on that we Legislation is a big challenge strategic priorities at the moment? duction from energy sources. 2018not threaten production and security would be using only the best technol- of course, to work in this mar- was a very good year for our powerof supply. I think better interconnec- ogy available. We are happy to see the VOLINTIRU ket one needs a great deal Most of our investment budget is fo- plant, whose production covered 6%tivity in the region is also important, to construction is progressing very well, of agility, in order to adapt cused on upstream activities – core of Romania’s demand. ensure a broader base of supply, and and we expect that it will be up and operations are in Romania, but we to open the opportunity to import gas running in the first trimester of 2020. with ease to sudden changes CEO and without complaining too also have operations in Kazakhstan. In What are the biggest hurdles you when there are cheaper alternatives Romania, most fields are mature and are facing in Romania presently, andregionally. This experience has really opened much. GEO 114/2018 served facing declining production; therefore, what would be your suggestions for Romgaz our appetite to develop new pro- us well in this sense - we were high investments are required to miti- improvement? OMV Petrom holds an important jects, especially since there are few gate this natural decline. In our other stake in the Black Sea and is now companies in Romania that are able just deciding whether to - ex business divisions, the need for invest- When GEO 114/2018 was made -pub evaluating whether to move ahead to undertake such large investments. pand into renewable energy ment is lower because we had major lic at the end of 2018, it was very clearwith the final investment decision. We chose to develop the 500 MWh at the time, and this rein- modernization programs completed in that we face a substantial, structuralWhat criteria are you considering Romgaz is the largest natural gas gas based power plant in Mintia, and forced our feeling that is was recent years. For example, Petrobrazi shift in the Romanian energy- mar with priority as you are making this producer and the main natural gas we are in the process of acquiring the refinery benefited from approximately ket. After a long, fairly complexdecision? and supplier in Romania. It is a joint stockland, which will be under exclusive the right move. €1.6 billion for modernization, includ- not without delays gas market - lib company whose majority shareholder ownership of Romgaz. We aim to start ing filling stations. eralization process, and after barelyThe Neptun Deep project is a huge construction in 2020 and we are in is the Romanian State, owning a 70% two years of liberalized gas market,opportunity for Romania: to increase talks with potential partners for - sev stake. The company celebrates 110 we went back to a regulated status.revenues to the state budget, create eral other construction plans, because years of existence this year. Amendments brought to the Ordi- new jobs, secure Romania’s gas needs. there is a great need, as well as oppor- nance by GEO 19/2019 answer someUsually, for such large-scale projects, tunities for this in Romania. What are the key objectives Romgaz of the concerns expressed by the oil many& pieces of the puzzle pieces will be pursuing in the next two-three gas industry. Returning to unregulat- need to be aligned: such as regulatory You have recently announced your years? We invest, on average, ap- ed gas prices for industrial customersframework, fiscal stability, competi- plans to expand into renewable ener- represents an important step towards tive terms, liberalized gas market and gy. Why have you chosen this sector We have a market study underway proximately €1 billion each a liberalized gas market and this pro- key infrastructure. as one of the strategic directions for that is assessing opportunities in the year and this since mid 2000s. cess should continue. the future? petrochemical arena, a very interest- Basically, we reinvest most of Deepwater projects are large scale in- ing option for us. Other priorities are our operational profit. We believe a liberalized gas market vestment, billions of dollars have to be We considered the fact that Romania the expansion into renewable energy, can exist with the right mechanisms invested upfront. That’s why stability is still an importer of energy, and also developing our offshore capacity and in place to protect vulnerable cus- and predictability are of crucial impor- the fact that it is not yet truly diversi- extending internationally in a calcu- In downstream gas, we invested €530 tomers, in accordance with the exist- tance. fied. The largest share of energy pres- lated but persistent manner. Specif- million to build the gas fired Brazi ing good European practice. Together ently comes from hydro, and a small ically, we are in contact already with power plant, which was commissioned with FPPG we looked at measures part of it is gas-based. In the coming the National Gas Company in Poland, in 2012 and is the largest greenfield that have worked in other countries years over 220 MWh of coal will have and also in incipient talks with SOCAR project in power generation in Roma - and put the ideas forward to regula- to be discarded, because of environ- in . We will see in the next nia over the last decades. Brazi power tors. We are now in discussions on mental norms in place, and this will period which opportunities carry the plant plays an active role in securing possible schemes and how vulnerable create a gap in the market that we aremost value. Romania’s power supply, covering de - protection mechanisms could be- im happy to fill. mand during peak consumption times plemented in Romania. But best prac-

38 romania energy industry 2019 romania energy industry 2019 39 EXPLORATION & PRODUCTION investment reports investment reports EXPLORATION & PRODUCTION photo: pxhere.com

UNTAPPED POTENTIAL Unlike its neighboring states, Roma- ISSUES FACED BY PRODUCERS nia has not had a licensing round for almost a decade. The 11th licensing Romania has significant gas reserves, both offshore and onshore. Offshore,he t round has been long awaited, and yet Meanwhile, though, ANRM must modernize its methods so as to facilitate pre- estimates of the finds so far add up to more than 100 bcm. Onshore, the dis- repeatedly postponed, year after year, liminary knowledge and data access by prospective investors. The agency still covery made by Romgaz in 2017 at Caragele field, estimated at 27 bcm, is the on account of various other regulato- operates under an outdated secrecy law, with unjustifiably restricted access to largest discovery over the past three decades. Besides, there is a virtual con- ry grounds. ANRM (National Agency geological data – not to mention the lack of digitalization of archives and the - sensus among geologists on the untapped potential of the country at depths for Mineral Resources), has finally an- ability to access data online, which is an endemic issue of the Romanian admin greater than those drilled so far. Tapping into these resources – aside from the nounced in July 2019 that it will open istration in general. uphill battle with the natural decline of production – requires s ten of billions up new perimeters for exploration and of euros worth of investment, as well as a friendly and incentivizing regulatory production this year. Another type of hurdle stemming from unclear or inadequate legislation is the environment. issue of land access for geological exploration works, in which the operators Saniya MELNICENCO receive basically no support from the state in exerting their legal right of land President access for provisional works. In effect, the exploration companies must get the legal agreement of each and every individual land owner, which, for a typical on- ROPEPCA ANNUAL ANNUAL ANRM launched shore block, means hundreds, if not thousands of owners. Any disagreement in maximum maximum The 11th licensing practice results in protracted litigation in court, which makes exploration works gas gas round opening up exceedingly time and capital consuming. IMPORT EXPORT capacity capacity 28 new perimeters: 22 onshore & Onshore companies currently 14.35 bcm 1.58 bcm ensure more than 90% of Ro- 6 offshore mania’s energy independence in Enhanced recovery techniques and field redevelopments have great potential, terms of natural gas supply ... In Phil CHRISTIAN against the background of mature and fragmented fields of the country. In fact, Country Manager terms of geology, we believe the some players are already capitalizing on this potential. In the crude oil ector,s The industry is hopeful about this: Sand Hill Petroleum Romania potential for deep onshore - pro Mazarine Energy has developed a business model centered around the concept “We know that the National Agency jects is underestimated at the of redeveloping concessions it has bought from OMV Petrom. “We managed to for Mineral Resources has been work- moment, as there are massively grow production in some of the fields by up to 50% and re-started production in ing on a new licensing package, which unexplored areas and most of other four concessions in the first year with minimal investment. Thereafter we will open up 28 perimeters. The 11th started applying international re-development best-practices. We began acquir- licensing round was just announced the data we have available dates ing 3D seismic data and concluded that our bet was right, there were additional this summer. Now there is a greatFor exploration companies one challenge is always land access as we back to the 1970s and 1980s. To oil resources that had not been noticed before, which amounted to a couple of window of opportunity for Roma- need to cover large contiguous blocks with seismic surveys. The- Pe understand the true potential,million oil barrels,” said Spencer Coca, the company’s Country Manager. nia to benefit from new investmentstroleum Law grants these access rights but an involved and lengthy there is a great need for further that should not be missed. That’s why process is required to exercise these rights. In our EX-1 block -for ex investment in exploration. The success of this sort of operations, though, depends on the associated eco- issues like data access and declassifi- system of oil service companies. In effect, oil services are critical in satisfying the cation, as well as the consolidation ample,of we estimate that we’ll interact with as many as 3000- differ operator’s need of reducing production costs. ”Romanian deposits are typically the National Agency for Mineral- Re ent land owners or lessees. We must knock on every door to obtain mature with a natural decreasing production. The resources left are located at sources should be addressed to make their agreement. far greater depths, which means the investments required to reach them are also the next licensing round successful”, higher. The idea pursued by many producers in this circumstance is to use the added Saniya Melnicenco, President most advanced technologies and increase the recovery rate,” says Vasile Mogos, of ROPEPCA. General Manager of CDI Oilfield Services.

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What progress has been made so far in the two blocks owned by SHPR? THE CENTRALIZED MARKET We are purely in the exploration phase at the moment, having already drilled a well. We plan to drill more as OBLIGATION (CMO) soon as it is practical based on the outcome of new 3D seismic data that we acquired in late 2018, early & complementary REGULATIONS 2019. We’re quite pleased in that in only 2 years of operatorship, we’ve managed to complete a solid work While oil, be it crude or refined products, is traded in a completely liberalized program, with moreinvestment to come. reports fashion, following the relevant international benchmarks, the Romanian natural gas market has always been regulated. How would you assess the local business climate? Spencer There are currently three authorized centralized platforms for gas trading in We have found a professional and generally coopera- Romania: BRM (Romanian Commodities Exchange), OPCOM, and Humintrade. COCA tive bureaucracy in both ANMR and ANRE which over- Overwhelmingly, the domestic gas trade so far has taken place on BRM. With see our industry. Unfortunately, there has been some the introduction in 2016 of the so-called centralized market obligation (CMO), Country Manager deterioration in the fiscal/legislative environment since by which producers, traders and suppliers were mandated to trade at least 30% Mazarine Energy our arrival in 2017, of which the recent GEO 114/2018 of the volumes produced or purchased, respectively, on a centralized market is an example. Another example, is the benchmark platform, the total gas volumes traded wholesale on BRM increased year by year, price for royalties that are imposed on gas sales. This from a mere 16 TWh in 2016 to 71 TWh in 2018. However, as pointed out by In Romania, Mazarine Energy has focused its work on can significantly increase the royalty rate paid to the Emerton (2019), the 2018 BRM total gas trade was about nine times lower than redevelopment of mature oil fields. What was the ra- government on produced gas volumes, thereby lower- on the closest gas hub at CEGH, Austria. tionale behind this strategy? ing the value of the project overall. We are hopeful that as the government matures and develops confidence Moreover, in spite of the centralized market obligation, the liquidity on the cen- The reason stemmed from our belief that this is the that the major players in the industry are looking for tralized market has remained rather low. One of the main reasons for that has to most profitable activity in the oil & gas sector in Ro- win-win solutions, an industry-friendly legislative envi- do with several regulations since the beginning of 2018, which have disincentiv- mania. Should the 11th exploration bidding round be ronment will emerge. ized the domestic production of natural gas. launched, we do intend to participate but we do not believe that the greatest success will come from on- As you can imagine, the contractors working in the Ro- In chronological order, they are the following: shore exploration. Given the 160 years long history of manian oil & gas business are extremely professional this industry in Romania and the fact that more than and experienced. They are of the same level as you 62,000 hydrocarbon wells were drilled during this would find around the world – as you would expect The introduction of a calculation method for the due gas royalties byf re - time, the chances to find new major oil fields are -rel as many of them work internationally. All of the nec- erence to the day-ahead price on the Central European gas Hub (CEGH) in atively low. essary specialists and equipment are available here to Vienna, by means of Order 32/2018 of the ANRM President. On average, successfully complete our work and we have found the though, the CEGH index was in 2018 about 28% higher than the average Despite recent turbulences in legislation, you ac- prices very competitive relative to other markets in the monthly price on BRM, to the effect that the royalty payments are discon- quired new perimeters this year. What maintained world. nected from the Romanian sale prices. your appetite for investment?

We were not discouraged by the changes in legisla- The increase of the supplementary revenue tax paid by domestic gas pro- tion because they affected us much less compared to ducers on the difference between the actual sale price and a pre-given some of our peers, since they primarily targeted gas threshold of RON 47.5/MWh set in 2013. While the supplementary tax producers. We do produce some gas but only associ- used to be 60% of that difference, Law No. 73/2018 has introduced a wne ated with our oil production, and we do not sell -it di threshold: above RON 85/MWh, the due tax becomes 80% of the differ- rectly. Instead, through our five Gas-to-Power units we ence from the RON 47.5/MWh reference. transform it into electricity and sell it on the OPCOM market. This means we were only affected by the 2% A revision in 2018 of Law No. 123/2012 on Electricity and Natural Gas turnover tax, that only applies to the electricity we sell. raised the CMO to 50% for the domestic gas producers, while givingANRE the authority to raise the mandatory quota even further, on a yearly basis. It is not a simple coincidence though. When we - ac quired these concessions we purposefully stayed away from gas, and focused instead on oil assets. Historically Phil Governmental Emergency Ordinance (GEO) No. 114/2018 introduced in speaking, in Romania there have never been interven- December 2018 several highly consequential changes: it capped the sale photo: pxhere.com tions in the oil market, which evolved exclusively based CHRISTIAN price of domestically produced gas at RON 68/MWh from March 2019to on international quotations. We believe that things are Country Manager February 2021, and it introduced a 2% extra tax on the turnover of energy likely to continue in the same manner, so we will -main companies. tain our strategy to focus on oil. Sand Hill Petroleum Romania

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All in all, these regulatory changes What are the key commodities trad- done exclusively on the spot market. Sébastien ZIMMER have had a negative impact on the ed on the Romanian Commodities Ex- This is in fact the biggest problem that Partner upstream oil & gas segment. Absent change and how does energy fit into has come out of this situation: every- adequate amendments to the current your portfolio? body is in a state of confusion and Emerton regulatory framework and the due distrust. We expect it will take at least consultations with the sector’s stake- ID: Our team of specialists handle sev- one year until the market will return to holders before the introduction of any eral rings which include natural gas, a normal pace. consequential piece of legislation, the electricity (for the retail sector only), The market, while showing signs of improvement, was far from perfect even oil & gas industry faces a clear pros- as well as petroleum, cereals and any BRM Gaz Day-ahead platform, for the before GEO 114/2018. There are two main reasons for this and the first is pect of dwindling domestic produc- other commodities that are eligible for spot market, was launched last year. that the wholesale gas market has been illiquid and erratic, resultingn i a lack tion. the centralized market. About 40% of What was the rationale behind this? of trust in the market as an efficient channel of gas supply. Thishallenge c our activity is represented by natural would only be made worse by the obligation to sell half the production on the In response to the market’s reaction to gas - we transact approximately 70% GP: Many transactions happen on wholesale market, which is a simplistic condition that only addressesearly y the overwhelmingly negative effects of the total national consumption, and the spot market, and they are done volumes. This obligation is too constraining for producers, while at the same of GEO 114/2018, the government Gabriel in terms of volumes last year we trad- by a variety of companies, including time not being constraining enough because it does not touch upon the mat- rescinded parts of it by means of GEO ed 71 TWh on the gas market, and 2.1 producers, distributors, suppliers and ter of the calendar of sale. It is key to design a system in which volumes are 19/2019, by which the price cap on PURICE TWh on the retail electricity market. traders. Initially, the intention was to traded with regularity, as in any other healthy, predictable and liquid market. domestic gas has been kept only for President grant a monopoly on the centralized household consumers. The trend was upward in 2018 com- gas market to a single operator, OP- pared to previous years, and we be- Intuitively one would think that simply increasing volumes would fix themat - COM, but as most gas transactions Nonetheless, it would be squarely lieve this is directly connected to our were already done on BRM, it was- fi ter, but in reality this would be very damaging to the wholesale sector. What unwarranted to blame all the current client focused approach. Going for- nally concluded that competition- be we propose is to introduce a new type of daily and monthly obligation, which BRM troubles of the natural gas market on ward, we want to diversify our port- tween operators could in fact be ben- would impose a strict calendar for producers, creating predictability. Such (Romanian Commodities Exchange) GEO 114/2018. folio and figure out strategic direc- eficial for the market. We launched regularity would substantially improve the market liquidity itself, as well as tions that can protect us from sudden the platform successfully and we are BRM was established in 1992. Its the overall confidence in it. In addition, we recommend reducing the volume changes in legislation, such as GEO collaborating with BCR (the Romanian obligation from 50% to 12%, which should ease the burden of producers and portfolio includes more than 1,500 114/2018, which had a direct and Commercial Bank) to ensure that all counterbalance the calendar obligation we are proposing. clients, both public and private, and negative impact on the volumes -trad transactions are guaranteed through its turnover in 2018 amounted to a ed since its release. financial instruments. total of €2.8 million. Gas price level in Romania (BRM) compared to Austria (CEGH) Can you please expand on how GEO What objectives is BRM pursuing 114/2018 has impacted BRM’s activ- next, especially from a portfolio - di ity? versification perspective? (RON/MWh) 2018 GP: The GEO was passed at the end of ID: One initiative that is underway is 140 last year and as a result of this meas- the development of futures for the The average ure no gas transactions were made in natural gas and electricity markets, a 2017 price for CEGH is 28% higher the first trimester of 2019. We noticed strategic direction that we designed 120 The average than BRM a slight recovery after the publication based on the needs that we have iden- price for CEGH is of GEO 19/2019 which abolished the tified and analyzed in the market. The 16% higher capping of gas prices for industrial need is clear but it is very important to 100 than BRM consumers, but the volumes remained have a contract with a clearing house very low. in order to offer the full service, and 80 for this we are already engaged in ad- Ioana To further the issue, ANRE has passed vanced discussions. a series of instructions that are full 60 DRĂGAN of contradictions and market partici- Strategy Director pants are unsure about what they can or should do. This uncertainty is re- Jan 17May 17 Sep 17 Jan 18 May 18 Sep 18 Jan 19 flected for instance in the fact that all transactions in this period have been Monthly CEGH index Monthly price BRM

The weighted average for domestic production and imports on the BRM platform Source: BRM (Romanian Commodities Exchange), analysis Emerton

44 romania energy industry 2019 romania energy industry 2019 45 situation and how to overcome issues The 11th licensing round was just surrounding energy poverty. The key published in the Romanian Official findings of the report show that the Gazette and will be launched official- Romanian gas sector is not function- ly in a couple of months; it representsPetroleum Club of Romania is a al, its development towards a fair and the long awaited opportunity for suchnon-governmental and non-prof- balanced liberalized market is imped- investments to be made. There is anit association founded in 2001 in ed by major hurdles that have been increased interest for companies toorder to promote and protect the identified along the whole value chain. explore the region, given its geograph- interests of the Romanian oil & ical and political positioning. gas industry. Over the years the government has been collecting taxes from energy However, in order for the upcoming companies that were meant specifical- exploration projects to be success- ly to support vulnerable consumers, ful, it is very important to settle the Cătălin however they were never allocated for Saniya outstanding issues, such as access Andrew this purpose. Additionally, many of the to land, data declassification, asWhere well do you see most need for im- NIȚĂ people living in rural communities are MELNICENCO as the consolidation of the Nationalprovement in terms of legislation? COSTIN not even gas users, preferring wood Agency for Mineral Resources. Such and other fossil fuels. day-to-day problems can be all solved I was directly involved in the drafting through the amendment of the main of the Petroleum Law, 15 years ago, Executive Director Under such challenging circumstanc- President governing law for petroleum opera- which made for a much better frame- President FPPG es, what is FFPG fighting to achieve? ROPEPCA tions, namely the Petroleum Law no. work at the time. But a revision of this Petroleum Club 238/2004. The law has not been con- Law is needed once more. For exam- At FPPG we are bullishly pursuing siderably amended since 2004 and, in ple the environment issues need to be of Romania How balanced and sustainable would transparency and real dialogue be- the context of an increased complex- covered more extensively, the topics you say the regulatory framework is tween all stakeholders involved, and ity of the sector and market following of land access and fracking need to be This seems to be the problem most ROPEPCA (Romanian Petroleum at the moment? relaying why the industry concerns the licensing round, we believe that addressed, and the issue of offshore commonly referenced by the indus- - are relevant for everyone involved. ItExploration & Production Com the need for its amendment is greater concessions needs to be looked at try. How can it be addressed in your Accessible and varied natural resourc- is important to support a liberalizedpanies Association) was founded than ever. more carefully. view? es make Romania a highly attractive market that will eventually benefit endin 2012 to consolidate the posi- investment destination, as does its consumers, the usual scapegoat of tion of the onshore exploration At the respective time, when the Pe- As a last resort, it will be dealt with strategic geo-location and EU - mem most industry-governments clashes. and production sector. The Government has put forward the troleum Law was drafted, there were through lawsuits at European Courts. bership status. Regrettably, this is project for Romania’s National Ener- no offshore perimeters and there was Many of our members are looking counterbalanced by a lack of cohesive The industry historically has been re- gy Strategy for 2018-2030. How does not much interest in this direction. The into all the options they have at hand and stable political agenda, that has active rather than proactive, leaving it compare to the industry’s vision? situation is much different today, with and are set to defend the rights they yet to improve. them at the mercy of whatever the ROPEPCA brings together some of the much debated recent Offshore have won in negotiation and contract authorities decided, and at times mak- the key players in Romania’s oil & gas There are many valuable conclusions Law, that appears to have pleased no signing. It sounds radical but I expect GEO 114/2018 is an example of a ing them look like the “bad guy” in the sector - what is the aim of the organ- in the strategy, but the challenge we party involved, so we need to reassess we will see such litigations unless the measure taken without proper as- eyes of the mass media. They need to ization? see is in actually delivering the results. the legislation and fill in the gaps that situation changes. Meanwhile many sessment and consultation with the take a stance and communicate more We agree for example that there is a exist. companies have put their investments industry. The reason quoted for the effectively, highlighting the advantag- Romania has an outstanding tradition great need to stimulate exploration on hold and are expecting the Govern- GEO is the protection of vulnerable es, and indeed necessities, that their in the oil and gas industry and great and production through investment, The topic of legislation is a very del- ment’s next move, so it will all depend consumers but in reality they are the businesses entail for every average premises for further development, however the state’s recent measures icate one in Romania because there on what happens in the next period. ones who will suffer at the end of the citizen, from the clothes we wear to whether we’re talking about the ge- have been rather discouraging to- are many laws that are passed through three year period if the ordinance the warmth in our homes. FPPG, for ological potential or the country’s wards investors. Emergency Ordinances that seem to I am confident the market will see a stands. We have commissioned an example, alongside other industry as- highly trained professionals. Now, a be drafted to specific interests, and positive evolution because EU legis- impact study to proactively assess the sociations, is putting together a -man window of opportunity was opened Our vision revolves around three key that spill over into other sectors. It lation will force Romania to truly lib- ifesto about the joint benefits the in this sense, as the so long waited elements: a predictable and stable is an ad-hoc legislation and because eralize the gas market. This is some- industry will bring to Romania in the 11th licensing round for exploration regulatory and fiscal environment that the impact is not properly assessed, thing that we cannot do without. If FPPG (Oil&Gas Employers’ Fed- coming decade. It is a real shame to- al blocks has been officially announced. includes openness to industry input, the legislation across these sectors we agreed to be part of the European eration) represents employers low miscommunication and lack of -vi We will witness a diversification of the modernization of the Petroleum Law becomes incoherent, leading to an club we need to take on the require- upstream sector in Romania, as well as in the energy sector and is reg - sion to create unnecessary obstacles. to create more efficiency in operationsunstable and unpredictable fiscal- me ments as well, and I trust we will see Details and numbers can always be an increase in various exploration and dium for the energy industry. ulated by Law 62/2011 which and land access. We intend to work this alignment taking place in the next negotiated and amended, but guiding development projects. closely with ANMR and for it to have few years. Romania has tended to be deals with social dialogue. The principles are the motor that will drive more prerogatives and the necessary This is far from ideal as it createspushed from behind by different glob- organization oversees oil, gas, us forward. What are your views on the 11th li - resources to fulfill its mission and an to environment that lacks securi- al circumstances or international polit- energy and energy mining since censing round that has just been an- open new opportunities for invest- ty for investors, and the recent GEOical factors, and it is sometimes good its inception in 1991. nounced, after so much anticipation? ments. 114/2018 is a great example for this.that this is the case. EXPLORATION & PRODUCTION investment reports investment reports EXPLORATION & PRODUCTION

Midia Gas Development (MGD) Project

Mark Beacom, the CEO of BSOG, an- The estimated yearly production virtually tantamount to the nounced that the FID was taken under yearly imports of gas in Romania. the assumption that the provisions of GEO 114/2018, in terms of new taxes and financial contributions, as well as Investment trade restrictions would be rescinded. €350 million This, in effect, comes as a suspensive clause which may well delay the effec- ESTIMATED YEARLY tive beginning of field development PRODUCTION works. 1 BCM As a matter of fact, GEO 114/2018 came on top of other legislative and photo: Oil & Gas Recruitment regulatory changes that had the ag- gregated effect of a deteriorating- reg ulatory environment – seen from off- Mark BEACOM shore investors’ vantage point. Thus, CEO the newly approved Offshore Law No. BSOG hidden treasures 256 of November 2018 has estab- (Black Sea Oil & Gas) lished a new fiscal approach by which, next to the royalties owned by the- ti offshore exploration & production tleholders according to the Petroleum Law No. 238/2004, a new progressive Make no mistake – BSOG is not an example that should be tax on the ”supplementary revenue” used to insinuate that everything is alright. We firmly- be was introduced. These price levels are lieve that these issues need to be resolved if there is a desire to be adjusted on a yearly basis, start- to keep attracting investors. Our belief is that it will be fixed ing with January 1st, 2019, with the by 2021, one way or another. The Black Sea is deemed by geologists to have significant resources of natural gas, with a the- annual consumption price index. oretical potential of becoming a new North Sea. However, the exploration works have been

limited so far, with significant finds made only in Romanian waters. EX-27 muridava petromar resources bv 70% EX-28 EST COBALCESCU petromar resources sa 30% petromar resources bv 70% petromar resources sa 30% xiii pelican In March 2012, OMV Petrom and ExxonMobil discovered overview impact of $1 billion spent in BSOG 65% black sea offshore gas exploration, petro VENTURES EUROPE 20% a large gas field of 42-84 bcm at the Domino-1 well in the ex-29 est ex-30 production & development, 2018 - 2040 GAS PLUS INT. 15% Neptun Deep perimeter. In October 2015, Lukoil, PanA- rapsodia & trident tlantic and Romgaz announced discoveries estimated at lukoil overseas 72% panatlantic petroleum 18% about 30 bcm in the Trident perimeter. In the Media block, xviii histria romgaz 10% two important gas fields were discovered: Doina, in 1995, $ 1 BILLION omv petrom 100% and Ana, in 2008, totaling about 10 bcm. domestic xva midia investment BSOG 65% generates petro VENTURES EUROPE 20% The sole Final Investment Decision (FID) that has been GAS PLUS INT. 15% xv6 midia deep made so far belongs to BSOG (Black Sea Oil & Gas) – a 42.5% company owned by the American investment fund Carlyle 2,198 OMV PETROM 42.5% – for the Media Gas Development (MGD) project. Unlike $ 3 BILLION jobs xix neptun deep GAS PLUS INT. 15% the Neptun Deep fields, which lie in the deep waters of TO NATIONAL ≈ 50,554 exxonmobil 50% GDP man-years EX-25 LUCEAFARUL omv petrom 50% the Romanian Exclusive Economic Zone (EEZ), the Media BSOG 50% perimeter is in shallow waters. BSOG has also signed a petro VENTURES EUROPE 50% $ 1.9 10-year gas sale contract with Engie Global Energy Man- Map of Concessions BILLION agement, one of the two major gas distribution and supply state xix neptun shallow Offshore Romania companies in Romania. revenues omv petrom 100% source: Romanian Black Sea Title Holders Association (RBSTA) source: Deloitte Romania, 2018 48 romania energy industry 2019 romania energy industry 2019 49 EXPLORATION & PRODUCTION investment reports investment reports EXPLORATION & PRODUCTION

ble, followed by a number of studies In light of the tremendous effort- al surrounding assets and infrastructure, ready put in, we did decide to move offshore surveys and other works, forward with the investment. But I purchasing the land, and establishing cannot say with certainty that we an off-take agreement with Transgaz. would have done the same thing, had Additionally, we had to find a gas -buy we known in 2015 what was await- er, a reliable EPC contractor for sever- ing us. We feel the recent policies al necessities such as drilling the wells, are counterproductive to Romania fabricating the offshore platform, as a whole and will likely need to be laying the pipelines and building the amended. To be very specific, we are gas treatment plants. And last but not not pleased with the supplementary least, we had to get through the regu- tax, the constraints on the movement latory process, not a small feat to say of gas, the arbitrary price cap or the photo: Adobe Stock the least. We aim to start production additional tax for ANRE. We are lucky SUPPLEMENTARY TAX in February 2021. in a way that these changes will not impact us until we start producing & OTHER CHALLENGES for the industry Mark two years from now. Make no mistake – BSOG is not an example that should The Offshore Law also sets a maxi- Now, the changes in the fiscal regime Nevertheless, it must be well under- BEACOM be used to insinuate that everything mum limit for the deductibility of in- of the offshore oil & gas segment must stood that the government’s take is is alright. We firmly believe that these vestments in the upstream segment be understood against the background always dependent on the specific Only when all checkpoints issues need to be resolved if there is of 30% of the total taxes on the -supof a generalized political rhetoric, circumstances and prospects of any a desire to keep attracting investors. were secured, from the tech- plementary revenue for the reference which has expanded in the past few particular project, and that a complex CEO Our belief is that it will be fixed by price of RON 45.71/MWh. Such a years, favoring an increased ”govern- risk assessment influences the level of nical to the financial, and 2021, one way or another. very limited threshold goes against the ment’s take” in the overall distribution profitability expected by the investors BSOG no stone was left unturned, - over the project’s lifetime. As shown in grain of international practice in the of gains between the offshore inves could we confidently secure What is your perspective on -Roma oil & gas sector, which allows for full tors and the state. Indeed, compari- a 2019 report by Vasile Iuga and Radu (Black Sea Oil & Gas) the FID. nia’s general business ecosystem, and deductibility of investments from the sons were often made with jurisdic- Dudau on the risks affecting the - in your advice for future investors? taxes on revenue. This, in any event, tions such as Norway or Saudi Arabia vestment in the Black Sea offshore oil is the case in successful oil & gas juris - by some politicians and journalists in & gas sector, there is a wide array of Honestly, after establishing the- reg dictions such as Norway, United King - support of the notion that for Romania risk factors that weigh in the making BSOG is owned by Carlyle Group, one You had to deal with legislation that ulatory and legislative cornerstones of the biggest investment funds in dom, Denmark and the Netherlands. to take anything less would be unpat - of FIDs. in many ways did not as yet exist, (prior to the recent ordinances which At the same time, the royalties – cal - riotic or even treasonous. the United States, jointly with EBRD. how did you navigate these circum- as mentioned desperately need to culated, as has been shown, by refer - The company is focused on explora- stances? me amended/rescinded), and going ence to the Day-Ahead price index on Taxation rates of the supplementary revenue of tion and production in the Black Sea, through so much over the past nine the Central European Gas Hub, which offshore gas producers and the first to move ahead with a We took on the challenge of working years, I believe future investors will is consistently higher than the average final investment decision. on behalf of ourselves and alongside have it much easier than we did. We index of the BRM gas market – are RBSTA to amend regulations, and found the dialogue with the authori- also not deductible from the calcula- GAS PRICE TAX we were at the forefront of working ties on the regulatory front very -pos tion basis of the supplementary tax, (RON/MWh) (%) within the political arena to amend itive and often a matter of shedding which effectively translates into dou- What stage are you at currently with the legislation. We built a roadmap light on unclear issues, and our inter- ble taxation: royalty, on the one hand, < 45.71 0 the MGD project and what led to the 85 30 together on how to be properly reg- locutors receptive. and taxation of the royalty, on the oth - ≤ much anticipated FID? ulated and we are fairly pleased with er hand. ≤ 100 15 the resulting offshore law. When we Things got trickier in the legislative ≤ 115 30 The 3D Seismic we ran made it appar- embarked on this journey in 2015 we arena, where we failed to see a reso- ent that Midia had even more poten- The emphatic progressive element in ≤ 130 35 were confident in the success of our lute political will to get matters fixed. the fiscal framework brought by the 145 40 tial than anticipated. Ana and Doina project, but if anything took us aback, Romania sits in a strategic, unique po- Offshore Law can be seen as a means ≤ were a good place to start and any 160 50 it was the government’s somewhat sition in all of Europe, and it needs the for the state to stave off the price in - ≤ new discoveries would only add to - 175 55 hostile legislative amendments at the right framework to propel it to great crease of the Romanian offshore gas ≤ that. While work has also been doneend of 2018, defying past assurances ness and encourage development. We production, thus protecting the do- ≤ 190 60 on the Pelican block which is underand security. The new fiscal provisions are committed to the MGD and are - evaluation, the focus has definitely mestic end consumers. However, in > 190 70 and the constraints on the gas market keen to explore other opportunities as centivizing the gas producers to stay been on Midia. made it extremely difficult for us to well, and we welcome other offshore in a zone of low prices can only result source: EPG get financing, so in early 2019 when producers to discussions about shar- in significantly extended time frames Getting to FID was a long- road,we in were finally ready to move ahead, ing infrastructure and developing the volving making sure the technical for the capital recovery. This, in turn, is These price levels are to be adjusted on a yearly basis, starting with anuaryJ 1st our decision suddenly became signifi- offshore segment together. reserves were in place and quantifia- a disincentive to investment. 2019, with the annual consumption price index. cantly harder.

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RISK FACTORS THAT WEIGH IN THE MAkING OF

FINAL INVESTMENT DECISIONS (FID) All in all, reaching a long-term win-win made an FID, and also OMV Petrom vestors, nor the companies that have deal requires a professional negoti- has repeatedly expressed its reserva- already invested billions of dollars in Firstly, investors face a set of general risks: geological uncertainty about actual available resources, infrastructural and ation between investors and repre- tions regarding the impact of the cur- exploration. There is another factor logistical challenges, technology challenges (especially for deep waters), commercial and market risks, project management sentatives of the government, with rent regulatory framework over the that penalizes stalling the develop- challenges, environmental risks, geopolitical challenges, regulatory (includingfiscal) risks, security (including cyber and ter- relevant benchmarking of practices project’s profitability. This should give ment of the Black Sea projects: at the rorist) risks, and meteorological risks. from other jurisdictions and com- pause to the Romanian Government EU level, the long-term future of the panies worldwide. For Romania, it is and have it focus on the issue in order natural gas industry is facing a major especially the OMV Petrom – Exx- to be able to close a long-term win- challenge, given Brussels’ ambition of onMobil project of the Neptun Deep win deal. net-zero carbon emissions by 2050 perimeter that has a strategic value, and the already manifesting aversion fiscal & Geological environmental & with high economic, energy security The current state of uncertainty against continued investment in fossil regulatory uncertainty meteorological and political impact. Seven years from serves neither Romania’s strategic in- fuels in Europe. As such, the window risks risks the major find at Neptun-1, in 2012,terests and its reputation as an attrac- of opportunity for FIDs is narrowing the titleholding consortium has not tive jurisdiction for international- in month by month.

Decisive action is very much needed on the state’s side, in order to obtain clarity as soon as possible. The same Insufficient technological security Franck Albert NEEL point is made by foreign diplomats, energy challenges - challenges Member of the Executive Board underscoring the positive percep infrastructure (especially for deep waters) tion that Romania enjoys: “Romania Responsible for Downstream Gas has the great opportunity to become OMV Petrom self-sufficient in oil & gas and also add to the stability in the region, especial- ly if we consider the Neptun Deep Secondly, region specific risks are added. The Black Sea Basin presents high commercial risk on account of poor intercon- Neptun Deep project is a huge opportunity for Romania: to increase project. Time is critical, however, so nectivity with Western European energy markets. The rest are as follows: limited know-how and project management revenues to the state budget, create new jobs, secure Romania’s gas Romania needs to move a little faster. capabilities, low availability of local service companies, increasing geopoliticalisks, r considering the situation of Crimea, but needs. Usually, for such large-scale projects, many pieces of the puz- The back and forth that we have been also the older frozen conflicts in Moldova, Georgia and Armenia. witnessing in terms of legislation is zle need to be aligned: such as regulatory framework, fiscal stabili- counter productive and is decreasing Not to mention the fact that the Black Sea is virtually a closed body of water. The Bosphorus Strait has depths of less than ty, competitive terms, liberalized gas market and key infrastructure. the chances of achieving this desired 50m, while the bridges linking Europe to Asia in Istanbul are merely 64m high. Thus, drilling platforms must be taken apart Deepwater projects are large scale investment, billions of dollars outcome,” has stated Gerd Bommer, for undercrossing and then built up again, which raises overall operational costs. At depths surpassing 200m, the Black Sea have to be invested upfront. That’s why stability and predictability Commercial Counselor, Advantage contains hydrogen sulfur in high concentration, which is highly corrosive for pipelines and equipment. are of crucial importance. Austria.

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Last year, Deloitte conducted in- This is the best barometer, as it gives A few years back you set up CDI Oilfield Services depth research regarding the value of you access to perspectives from many Center of Excellence. What role does it play within Black Sea projects for Romania. How relevant stakeholders, be it from the the organization? has the situation evolved since? gas or renewables space, big industrial consumers and so on. This contributes The center has been a goal for us for many years and Black Sea Oil & Gas went ahead with greatly to creating a picture regarding it was rooted in the need to have all information -avail the final investment decision but the the impact on various sectors and un- able in one place, whether we are talking about devel- rest of the projects are in a “dormant” derstanding whether the measure is opment, innovation, storage, processing or integration state. These circumstances stem from positive or not. And it is also a method of data for the client. For instance, it allows us to- de current market conditions, namely that involves zero costs. liver downholeinvestment pumps or reports equipment to any of the over imposing a certain gas price and mak- 7,000 wells we are managing in less than 3 hours from ing it mandatory for an unsustainable Is there anything that the industry it- receiving an order. percentage of production to be trans- self can do in order to better the sit- acted on centralized markets. I see it uation? Alexandru It is also an efficient means to present our business as unsustainable because it prevents model and the full package of products, services and long term agreements, which are vi- The industry can express their point GOMOESCU technical support that we offer to potential partners. Răzvan tal when making an investment deci- of view and ask that when changes Regional Manager This is particularly important in present days because sion. When you deal with banks for are underway in terms of legislation, Odfjell Well Services we are actively working on expanding internationally, NICOLESCU instance, it is essential to be able tothose changes are to be made only in fact we have just welcomed a delegation from Egypt. prove that there is demand for your after public consultation. Another key product and that the investment is aspect is for the industry to prioritize How important is Romania to Odfjell Well Services’ What strategy are you pursuing to achieve this goal of sustainable. medium and long-term thinking, and wider business? international expansion? Central Europe Leader for Gas, to avoid as much as possible conflicts Oil & Chemicals Sectors and Romania can no doubt play a more over short term gains. Producers may The company has been operating in Romania since We are looking with priority at countries in which the Consulting Partner in Romania important role in the region but it want prices to grow, suppliers may win 2009 but the local entity has been set up a few years model we have in place has not been implemented, can also easily become an importer ofif they decrease, but what is essential later, in 2012. We are presently going through a period and where there are few or no local pump producers. Deloitte Romania energy. To reach the desired result ofis that they remain attached to princi - of growth and just recently surpassed 50 employees. We have participated in some international bids (for strengthening our role, investments ples, even if this may entail losses at instance we won a contract in Kazakhstan) but we -con are absolutely necessary. Not just incertain points in time. The thing is that Back in 2013 about 90% of our business was coming cluded that the best strategy for us would be to- es gas projects, but renewables and gen- if the principles are not respected, in from Romania. However, we were very dependent on tablish joint ventures with local companies, that know erally power generation capabilities, the long run everybody will come out one or two very large operators which were generat- the market and have a thorough understanding of its as well as the distribution network. For on the losing side. ing the majority of our revenue. For the stability of our needs. Our vision going forward is very much aligned

Deloitte is one of the Big Four pro- the time being we are still producing business we started shifting our focus towards new -ju with the globalization trend that is unfolding presently, on the basis of investments that were fessional services companies in the risdictions. Presently about 60% of our business comes which means that even in terms of workforce we are made way back in the 1960s-1970s. If from Romania, whereas the remaining 40% comes looking for people that have experience in internation- world, providing audit, tax, legal, fi- we do not figure out the way to nur- from other countries in the region. al markets. nancial advisory, risk advisory, and ture new investments, we will end up consulting. in the second scenario. What has been fueling the company’s recent growth? The world is changing What do you think is the main reason whether we like it or not, Through the nature of our activity we grow or slow for which Romania’s potential to be a and it is to our advantage down according to how the industry overall is perform- strategic player in the region remains ing. In other words, our volumes are directly impacted unfulfilled? to understand the direc- by the development plans undertaken by operators. tion in which it is heading. I There is demand in the market currently, mostly gen- The core problem is the present ad- have no doubt that change erated by operators’ efforts to maintain their produc- ministrative and governing capacity of tion levels, and the stabilization of the oil price has also the country. So many ministers have will happen in Romania made a positive contribution. changed in the past few years, and this even if it will not be driven makes things complicated, because by the state. The downside Although it is a competitive market, our activity has we lack continuity. Public opinion also been rather constant in Romania for onshore, and the plays a role - there are few people that is that it tends to cost more offshore sector keeps gaining traction. We are for -ex react based on principles, rather they compared to a situation in ample working on the first project that has received Vasile do it based on immediate interests. which the state vision is co- the final investment decision, and we are waiting for other key players to present their decisions in the com- MOGOȘ ordinated with that of the On the state’s side, the fastest road ing period. General Manager to better decisions is to respect the industry. law regarding decisional transparency. CDI Oilfield Services

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In 2008 we acquired a wind farm project in Fantanele, Co- gealac and we had the amazing opportunity to be among the first ones - when we started the project the installed wind ca- pacity in Romania was 2-3 MW, and the project we acquired amounted to 600 MW. Even today, it is the biggest onshore wind park in Europe.

Ondrej SAFAR Country Manager CEZ Group

Carpathian Forest photo: pxhere.com RENEWABLE ENERGY investment reports photo:Stock Adobe on the rise renewable energy sources

The renewable energy sector is the one in which Romania has seen the most spectacular invest- ment boom over the past decade – mostly from 2010 to 2016, especially for wind and solar power. The country boasts Europe’s largest onshore wind park, namely the 600 MW Fanta- nele-Cogealac, in Dobrogea region.

evolution of installed power from renewable sources in romania (mwh)

Romania has one of Europe’s highest potentials for commercial renewable energy sources (RES), as indicated in a 2017 IRENA study. As such, the country should be able to properly contribute to EU’s collective goal of 32% RES by 2030 – as Romania has already surpassed its 2020 obligation of 24%, reaching 24.6% of renewables in final energy consumption (including hydropower and biomass) by 2017 already.

The fact that last year’s draft National Energy Climate Plan 2021-2030 submitted by the Romanian Government aims at a meek 27.9% target for 2030 has been widely criticized and eventually met with a rebuttal by the European Commission, in its recent public appraisal of the member states’ NECPs. Thus, the Commission has strongly suggested a 34% target for Romania’s RES by 2030. Danube Delta photo: Adobe Stock 58 romania energy industry 2019 RENEWABLE ENERGY investment reports investment reports RENEWABLE ENERGY

belongs to renewable energy, and as renewables including hydro an organization we want to see an -en power generation ergy mix in which renewable energy nuclear Claudia holds a strategic value for the country. by source 2018 gas & other fossil fuels coal The support scheme for green certif- BRÂNDUȘ icates caused a boom in the industry, but also a lot of turbulence. What is eu28 romania President the situation today? RWEA Romanian Wind VL: The support scheme ended in 32.5% 2016 and there is currently a surplus 42% Energy Association of 13.5 million green certificates- with 25.5% Viorel out a buyer - the total value is around 18% €400 million, an amount that final 23% 16% LEFTER consumers basically owe to producers RWEA plays an active role in promot- To what degree are these EU funds of renewable energy. 24% ing the transition to clean energy in used at present and what is the situa- President 19% Romania. What needs to happen with tion in terms of investor appetite? MV: ANRE Order 78/2014 was a big priority in order for this transition to Mihai step back, and through the quantita- austria poland take place smoothly? Broadly speaking, if we consider the tive restrictions that occurred then, commercial and the market aspects, it VERȘESCU renewable energy was de facto ex- 13.5% I think that the first thing that should is a good moment for investment be- 9.5% cause Romania will not afford to not General Secretary cluded from the long-term bilateral be improved is the dialogue. Public energy contracts market. Positive authorities in Romania are not used have renewable energy in the coming news in this respect stemmed from 77% to organize effective public debates, years. It simply cannot fill in the gaps which is unfortunate, because there in other ways and there is no other the initiative that ANRE is currently 77% PATRES working on, regarding bilateral agree- is great value in bringing all parties in- solution that is faster or simpler than Renewable Energy Producers ments and flexibility for long-term volved at the same table, and encour- developing renewable energy. But Organization of Romania transactions. Our organization - be 20% aging them to work together to iden- there is also need for a nurturing- in lieves that it is mandatory to introduce tify the best solutions. Our experience vestment climate, and the reality at this product as soon as possible in the has been that exchanges of opinions present is that the country risk has How does renewable energy pres- regulatory framework, especially con- are rather limited, and sometimes fo- become rather high and so have the ently fit into Romania’s energy -land sidering the emergence of renewable GERMANY hungary cused on identification of problems costs of capital. Stability in legislation scape? energy sources in the energy mix, and conflicts and not on developing and protection of investment are- es sources that by their nature are 100% 9.5% common goals. In reality, the energy sential criteria that investors consider. VL: Romania has exceeded the 24%variable as output power. 35.5% transition is inevitable, coal based pro- There is little political openness- to quota set by the European Union, duction will eventually become obso- wards this sector and this is reflected however, production levels have- de What is your outlook regarding how 12% 52% lete, so it is in everybody’s interest to in the current climate, where unfor- figure out the best ways to fill the gap tunately Romania no longer appears creased compared to last year. Thisthe market will evolve over the next 17% happened because no new invest- few years? that will be left. on the investment plans of many big ments were made, and this lack of 22.5% companies, even those that are al- 35.5% Secondly, there is a need to under- ready present here. appetite is further caused by the longVL: The legal framework at EU level will 16% investment recovery periods - in the force us to change, including through stand the support that the EU is able current market conditions, recovery pollution reduction obligations. Prices to provide to our country in this pro- In terms of EU funds absorption rate, - can take up to 30 years, a very long of CO2 certificates reached €26 (com- france bulgaria cess. There are many financing op there is still a long way to go but I am time given that a reasonable period is pared to €5 as they used to cost 2-3 tions and the amounts made available happy to notice that Transelectrica normally 5-10 years. We expect this years ago) which is likely to stimulate 19.5% 15.5% very high, and as a country we need to has started to attract more funding. to change in the next period though, the renewable sector. be aware of them and use them to the If they manage to modernize the - net given for example the fact that the 35.5% best of our advantage. It is a chance work then it will be possible to - inte price of technology has decreased MV: People have become rather upset for us to go through this change with - grate renewables with great ease and considerably. with GCs but however you look at it, 73% out burdening the customers with the with very little costs into the system. the final consumer will have to pay a costs of the transition. Another advantage we have in this cir- The target assumed by Romania going certificate: either a green one that will 44.5% cumstance is the fact that EU author - forward is to reach a share of 27.9% support the development of clean en- ities check whether the money has 6.5% been spent wisely, which is an added clean energy by 2032, below the Euro- ergies, or a CO2 certificate. Ultimately pean average and well below the actu- this depends on what we as a commu- source: Agora Energiewende, guarantee because we can leverage al potential of the country. The future nity want to support going forward. The European Power Sector in 2018 their experience in this field.

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A STORMY HISTORY

For a good while, Romania had seen a remarkable development of RES investments. That exceptional increase took place After building the wind farm at Casimcea, in 2011 we decided ti was a on the back of a generous RES support scheme, introduced in 2008 through Law 220/2008 (whose secondary legislation became available only in 2011, after the European Commission gave its state aid approval). A mandatory quota system was good moment to start investing further in renewables. Romania benefits coupled with a trading scheme of green certificates (GCs). from fantastic natural resources, as well as lower cost labor, which were coupled with a very appealing government incentive scheme back in However, only two years into the application of the RES support scheme, the government decided to slow down the pace 2010-2011. Regrettably this was not maintained and with timeenewa r - of investment in renewables by curtailing the support scheme through various legislative measures. Sorin BONCIU CEO bles were no longer competing on an even playing field. LAW 220/2008 LAW 123/2012 Altius Fotovoltaic drafts GREEN CERTIFICATES FORBIDs BILLATERAL ELECTRICITY CONTRACTS cross-subsidisation scheme rESTRICTING THE TRADE to OPCOM

Transelectrica issues RES producers a number of GCs RES producers were procluded from the possibility of closing per 1 MWh produced depending on the energy source: corporate PPAs, critical to the bankability of projects in the field. Hydro (up to 10 MW installed power) 3 GC Wind* 2 GC GEO 57/2013 Biomass & BIOGAS 3 GC the gov pushes the brakes on RES market Solar 6 GC growth because of the unexpected boom

* applies until 2017. After 2017 they would receive 1GC/1 MWh Eduardo NIETO Deferment of aquisition for a number of GCs, depending on Country Manager Energy suppliers have to purchase a mandatory quota of technology until a much later date (1 GC for Hydro, 1 GC orf GCs calculated each trimester by ANRE, proportional to the Wind and 2 GC for Solar are postponed to 31 dec 2020 the EDP Renewables Romania total energy supplied. latest). photo: Adobe Stock

The CGs could be transacted through both billateral con- Introduction of a maximum yearly capacity for RES to be au- A RAY OF HOPE tracts & the centralized market managed by OPCOM and thorised by ANRE. One hopeful development in the RES sector comes from the Energy Minis- regulated by ANRE. The minimum price of a GC is set at €27 try’s intent to introduce the risk-mitigating instrument of contracts for dif- Our proposal for the Government and the maximum price is set at €55. Introduction of limits to GC trading. This heavily favoured in - ference (CfD) for investments in low carbon emissions sources – i.e. nuclear tegrated providers that were both RES producers & suppliers. is to develop an alternative sup- power and RES, as well as, for the longer-term, carbon capture and storage The cost for GCs is covered by the end consumer and billed port scheme, that would need to (CCS). CfDs are a different sort of state aid, much more competitive, well able separately. (up to approx. €11 /MWh in 2018). Exclusion from the support scheme of PV parks built on ag- cover two different aspects. One to minimize the cost impact on the end energy consumers, especially for RES. ricultural land. would be dealing with new pro- Necessary secondary legislation is developed in 2011 . The jects, whereas the second would Specifically, the government is considering allocating €125 million a year to support scheme applies over a period of 15 years, for RES The designated ministry would be actively implicated along- CfDs for RES capacities, which are to be predefined according to a national address existing investments that producers authorized until 2016. side ANRE in regulating the GC market. RES zoning plan. In light of the very good experience of other EU countries are relying on green certificates. (especially the UK, but also, more recently, Poland) for wind parks, which We have proposed a feed-in pre- jan 2013 government decision 495/2014 have closed such contracts through competitive allocation rounds at surpris- mium scheme and the possibility to massive protests break out in bulgaria EXEMPTIONS FOR energy-intensive Consumers ingly low levels. Thus, the bids in the November 2018 Polish tender for wind move our installed capacities under onshore were as low as €35.5/MWh, with an average price of €44.8/MWh, this new model. If this happens it This happened due to the increase in electricity & heating Industrial consumers are exempted from purchasing up to according to the action supervisor, the Energy Regulatory Office. The -suc will give us clear visibility on future prices for household & industrial consumers , a consequence 85% of their total GC obligations cessful projects must be built by May 2021. returns for the current installed ca- of the RES support scheme & the rapid growth of the market. pacity and resolve the issues that It is, therefore, paramount that the Romanian Government implements as 2008 - 2011 2014 - 2018 we are facing at present. initial ANUAL MANDATORY quota of E-RES ANRE kept decreasing the mandatory GC quickly as possible the legal basis for contracts for difference, given the im- that would benefit from gc scheme aquisition quota for energy suppliers portance of such an instrument to support the investment in clean energy. The date advanced by the Energy Ministry is December 2019. The initial quotas of E-RES that would benefit from the sup- The quotas of E-RES that benefited from the support scheme port scheme from 2014 to 2018 were: 15% for 2014, 16% from 2014 to 2018 were: 11.1% for 2014, 11.9% for 2015, for 2015, 17% for 2016 and 18% for 2017. 12.15% for 2016 and 8.3% for 2017. In order to keep the energy price for consumers low, RES producers were unable to sell 13.5 mil GCs equivalent of approx. €400 million

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sue is in the way the change was made used “fairness” as a strategy through- – very abrupt and without properly - out this dialogue. Of course we need Monsson has been present in assessing its impact. It was a decision ed to concede things on our side as Romania since 2014, as one of Sebastian that simply sent projects straight into well, but overall we found that this bankruptcy - some companies literally approach did manage to bring about the biggest developers of wind dismounted their turbines and moved positive change. parks with over 2,500 MW in- ENACHE them somewhere else. stalled. The company has also How do you see the energy transition developed the world’s largest How have the circumstances evolved unfolding in Romania and what are the wind park outside the United since and what measures are still biggest roadblocks you are noticing? States, located in Cogeleac, Business Development Manager needed to stimulate new invest- Romania with an installed ca- & Member of the Board ments? Romania has a better energy mix than pacity of 600 MW. Monsson most countries in Europe, but I am not Attracting new investments in a coun- sure that separating them by type of try like Romania are vitally reliant on resource was the best idea, because engendering trust and building a pre- it created a level of conflict between Martin dictable framework. Alongside my po- them. In my view even within the Can you briefly introduce our readers are positive, though not much willAt present, the majority of distribution sition at Repom, I am also senior vice same company there should be a mix, to Monsson and the company’s rap- change until 2021 because we needoperators in Romania have invested in MOISE president at PATRES, and through the because different resources comple- id evolution in the renewable energy to obtain new authorizations for therenewable energy, so they have a di- association we played a crucial role in ment each other. sector? parks, since many of them have - ex rect interest in the matter. Similarly, engaging with the authorities and de- pired. There is an advantage to theseTranselectrica wants to have a stable fining this year’s framework. They did The company was born in Sweden, but delays though, because Romania will system and this can be achieved for General Manager realize that they mishandled the situa- grew into the strong player it is today benefit from the latest technologies. example by using modern equipment tion, and in recent years they engaged through its work in Romania. This is Starting with 2021 Romania will install to connect to the network. Repom with us in open dialogue and looked well reflected in our workforce set up only 5MWh turbines, a great advan- for solutions to fix things. - - approximately 90% of our employ- tage because these turbines are much What can we expect from Monsson Romania finds itself in an in ees, including those in international more efficient and can reach grid par- in the coming two-three years re- There are positive outcomes to our teresting position at this point offices, are Romanian. When it comes ity without a public support scheme. garding international expansion? collaboration, for instance we - man in time. It is caught between to our activity, it is worth mentioning REPOM offers services surrounding aged to pass GEO 24/2017 and Law “old Romania”, which tends to that 30% of all active wind parks in Neighboring countries have been very 184/2019, which approved the re- the operation and management of be reluctant to change sim- Romania have been developed by us, interesting for us so far but their mar- power plants that are producing spective GEO. The most important and as part of our strategy we have kets have evolved in a similar way to thing, however, is that this new legis- ply due to human nature, and Romania, namely with many ups and energy from renewable sources, kept a 10% stake in all the projects we lation stays in place for a longer peri- developed. We have created the largest downs. At present we are keeping both wind and solar. The company “new Romania”, which tends od of time. If we look to our past, law training center in SEE for re- an eye on Croatia, Serbia, Kazakh- is able to handle development, find to be somewhat aggressive 220/2008 that grounded the initial in- About five years ago, when legislation stan, Russia, Georgia and Republic of - - newable energy specialists. locations, get the right authoriza vestments has been modified almost and wants everything to hap Moldova, because we expect them was no longer attractive in Romania, We are preparing more than tions in place, manage the financ- once every year. pen instantly. we saw ourselves in a situation where to evolve rapidly in the coming two- ing aspects and the project overall. the options were to either close shop 2000 people for this sector, three years. Mature markets tend to Open dialogue with public authori- The ideal situation and what or expand. We decided for the latter be it from Romania or neigh- pose higher expectations and lower ties has come up often as a challenge option, and at present we have offices gains, and a level of know-how about we strive for is a balance be- boring countries like Serbia, How have you seen the local renew- for the industry - how did PATRES in 20 countries around the world the specifics of the market. By - con ables market react to the swooping manage to create these fruitful -con tween the two. We obviously Croatia, Russia and so on. We trast, new markets can be moulded, changes that occurred in legislation versations? want to see as much renewa- As the transition to green energy have basically turned our- and newcomers can adapt easier be- in recent years? ble energy as possible, but we continues to unfold in Romania, what selves into net exporters of cause the rules are not as strict. We were extremely persistent in get- would you say are the main challeng- are also aware that if we shut renewable energy know how. Companies that came into the market ting them to listen to us - it is not es to be overcome? managed to build 5,000 MWh in re- that complicated to meet them, but down all coal facilities today, cord time, and invested €8 billion in for them to actually listen and truly we also need to be ready to The main problem I see is settling total - this is the highest investment understand your issue can be a chal- turn off the lights. This tran- on the appropriate legislation. I - be lenge. We also maintained a broad lieve that if PPAs become a reality, if in energy that Romania has seen since sition will happen over time, the 1990s, that came from private vision, we considered more than just the conditions for connecting new An important aspect is for investors, sources. The main attraction was the our own interest as an organization. but for it to be successful we producers to the national network distributors and transporters to align generous support scheme, maybe too Sometimes people tend to pursue need to start setting a reliable improve, and generally if there is a their vision. We need a common plan generous if we look back on it. An ad- their own needs only, but we believe plan in place. common strategy between stakehold- to strengthen the national network, so justment to these initial conditions that an inclusive approach leads to ers, then Romania can easily install that we can install renewable capac- was probably unavoidable, but the is- healthier decisions. If you will, we another 3,000 MW. The perspectivesities quickly and at reasonable costs.

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This point is aptly reinforced by Ondrej WELCOME Safar, Country Manager of CEZ Group, the owner of the largest onshore wind PROSUMERS park in Europe: ”Now that the price of technology has gone down so much, it There is also palpable progress with regard to prosumers, is becoming possible for investments i.e. active consumers, able to inject their surplus electricity to be feasible just based on the sale of - into the distribution grid. The Environment Fund Admin electricity. This is great news because istration (AFM), which operates within the Environment it attenuates the risks associated with - Ministry, is offering funding to household consumers in changes in legislation. We are noticing terested in co-financing rooftop photovoltaic (PV) systems. Wind Power accounts for 14% of EU’s elec- at present many companies coming The AFM provides vouchers of a maximum of RON 20,000 tricity demand. The power rating of the larg- back to their plans and looking into (about €4,200) per point of delivery, to pay for up to 90% options to develop previously frozen of the total investment in rooftop PV systems. The entire est turbine installed in 2018 was 8.8 MW projects. Going forward it will depend budget of the program is about €100 million. compared to only 4 MW ten years ago. very much on the market price of -elec source: Wind Europe tricity and how stable it will be. In the last two years the prices have steadily increased, and if this continues it will PUSHING give investors strong reason to move TECHNOLOGY ahead.” Other players are cautiously optimis- This goes hand in hand with the ostensible trend of stead- tic about the same issue: “The cost for ily decreasing prices for the RES technologies – especially 1 MW of wind power has become as solar PV panels and wind turbines. In effect, the interna- low as €800,000 - 900,000, compared tional experience of the past couple of years show that, in to ten years ago when we paid approx- the right regulatory environment, RES investment can take imately €2 million On the photovolta- AFM provides vouchers of max. €4,200 per place with no support scheme whatsoever. ic side, the price of one MW is now point of delivery to pay for up to 90% of the around €600,000 whereas the first one we installed cost us €3.2 million. total investment in rooftop PV systems. The The price of energy has also gone up entire budget of the program is about €100 somewhat, so it is becoming increas- million. ingly feasible to develop a profitable project without the need of a support scheme, but in my opinion that time has not yet come,” says Aurel Arion, CEO of Renovatio Trading. In addition to being able to access AFM funding, as per Law 184/2018, the prosumers are exempted from paying taxes Nonetheless, for this to happen in and excises for the electricity injected in the distribution Romania, a country with such an out- grid. In return, they receive a fixed price, calculated as the standing natural RES potential, prob- average day-ahead market price of the previous year, inde- ably the most important regulatory pendent from the current market conditions. change that is needed is the intro- duction of PPAs, which, as indicat- Now, one piece of criticism directed at the new prosumers ed, are currently banned under Law program has to do with the seemingly low level of their ag- 123/2012. gregated capacity: 750 MW. Another one has to do with the practicalities of unfolding the program itself. Paul -Var However, ANRE is actively working on ga, CEO and founder of Green Seiro, a service company an initiative to make PPAs available in the PV sector, worries that ”the companies responsible in Romania. Zoltan Nagy-Bege, Vice for installing photovoltaic panels, like ourselves, must first President of ANRE: “Given that only make the entire investment themselves and only after that companies that are already producing they will be able to recover the money from the state. This photo:Stock Adobe and hold a license are able to trade is very problematic, as it is difficult to take on such costs on OPCOM, this obligation made it for multiple customers and wait eight months in order to impossible for renewable energy pro- recover it from the state. No suppliers will give you such ducers to close PPAs and secure - fi long payment terms, so this set up is far from ideal.” Prometheus Statue, Vidraru Dam nancing for their projects.

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This is one of the reasons why Ro- mania has not seen new capacities de- veloped in recent years. Since last year we have been working on a solution Paul for this, namely we plan to create a platform within OPCOM where com- VARGA panies can trade energy even if they have not reached production phase yet. We still have some small hurdles CEO & Founder to overcome but most likely the plat- form will be available during the sum- Green Seiro mer of 2019.”

Can you please walk us through the voltaic systems, which allowed us to creation of Green Seiro and your -vi develop in-depth expertise and bring sion for the company? forth very high quality work.

I was always attracted by the idea of From the early days, however, we running my own business. The choice were keen to develop more complex of renewable energy was inspired by capabilities within the company, that a friend who worked in this sector, would allow us to build photovolta- both in Romania and Germany, who ic parks. We are still working on- ex was persuasive in explaining the im- panding this side of the business but Energy from utility-scale so- portance of this sector for the future. the legislation in Romania has made it lar plants has seen an 86% I was very young at the time, with norather difficult to progress. So far we price drop since 2009. The previous experience in business, so I have developed a small park in Roma- cost of producing one MWh went through a very steep learning nia in December last year, and at the curve regarding all aspects of how amoment we are working on a park in of electricity is now around business is run, from who to talk to,Poland. Ideally we would like the busi- €50 compared to approx. what needs to be done and how, and ness to be split 50/50 between the €350 ten years ago. what are the best ways to create visi- two segments. bility for my brand. source: Annual Levelized Cost of Energy Analysis, Lazard What do you mean more specifically Renewables turned out to be a good when you say legislation in Romania bet, the company has been growing made it difficult to progress? steadily and at present we are able to offer a full range of equipment andGenerally speaking the situation in the services for the implementation of- so market is still unsettled, many assets lar systems, both for residential usehave been sold following the 2013 and photovoltaic parks. change and presently we do not have Apart from incentivizing regulation, a real market for photovoltaic parks. another thing that must happen in or- How is Green Seiro’s business seg- The key issue is that it is not possible - der to lower the cost of RES integra mented at present and what is your yet to recover the investment solely tion in the electricity system is the de- outlook for development? based on energy sales, especially since velopment of infrastructure. Indeed, there are additional costs that accu - at any given point in time, the system About 95% of our business currently mulate. One can make some profit has a technical limit to being able to comes from the residential sector. We now that the technology prices are cope with variability in conditions of have developed excellent capabilities lower, but we are still talking about stability and resilience – a magnitude. in this area and this is well reflected rather low margins, which do not fully In order to increase that, the grid must in our numbers - between 2017 and justify the investment costs. - be reinforced and rendered more flex 2018, we have increased our revenue ible. Now, after a few years of stag - photo: pxhere.com by 400%. This growth was fuelled by nation, a positive dynamic seems to our team of well educated engineers have set in this respect, as Transelec- and electricians, as well as the fact trica has started to attract more fund- that we focus exclusively on photo- ing to modernize the grid.

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ble our team during this time, reaching it produces). Doubling the rotor diam- You are providing a necessary service to isolated resi- more than 160 employees. eter means up to four-fold revenues. dents, among others – what was the rationale behind The hub heights have also increased this strategy? Many companies are struggling to compared to a decade ago - the aver- find workforce in Romania, how age did hub height in Romania is around The majority of our work is indeed dedicated to the you manage to consolidate your team 105 m presently, but the technology residential sector, and particularly off-grid systems, a given this pervasive human resource that has been developed meanwhile chosen niche for us where demand is on the rise. The challenge? goes as high as 166 m. The higher development of this market was a natural result of un- the turbine the more and steadier met needs, as there are many isolated areas that do not Together with safety, human resourc- the wind blows. 1 m more hub height have access to the national grid at all, or if they do the es have always been priority number roughly means 1% more revenue. connection is problematic. People in these areas would one for us. Typically, the training peri- most often rely on generators, which use fossil fuels od for a technician to be able to work Călin and involve recurring costs, and this prompted them to independently takes up to six months, start looking for alternative solutions. Renewable ener- and to reach a level where they can FLORIAN gy systems fit their needs perfectly and people started perform very complex troubleshoot- trusting these solutions more and more over time. Dan ing it can take up to three years. We CEO did not shy away from making the nec- Last year we opened a new PMG Wind What impact do you expect the national program for essary investments to develop these PETRE logistics and training center installation of photovoltaic panels to have on the local skills, but we were well aware that it market? close to Constanta, that was essential to maintain this talent PMG Wind has its own production capacity in Cluj. within the company. spans an impressive surface What proprietary products are developed there? The idea is good and it will certainly have a positive Country Manager of 2,500 sqm and that serves impact on the population. For the end customer such We used various methods to make the entire region of Eastern We developed our first proprietary product at the very installations can bring annual cost savings of up to Vestas this happen and the fact that Vestas 75%. I do expect, however, some difficulties in the im - Europe. Through this center beginning of our activity, namely a generator. It took is present in many countries around us about three to four years of trial and testing and we plementation process, as both the customer and the the world served us very well. For- in and the expertize we have essentially managed to build the product from scratch parties responsible with installation will have to deal stance, we came up with a rotationnurtured in the past years we without any external help or funding and we take great with various layers of bureaucracy, at least in the be - program, so workers do not have to are completely ready to take pride in the result. We designed the generator to be ginning until all mechanisms are in place and the first leave home for very long periods, and - projects are completed. Vestas is a world leading wind tur- on the work that is coming used specifically in green energy, and keeping this par this allowed us to keep competent ticular focus in mind allowed us to create a product that bine manufacturer. With more than people on board and also gave them and poised for growth. performs spectacularly for wind and hydro production. We hope this program will not be a one-off initiative - 40 years of experience, the company the opportunity to strengthen their the funding offered presently allows for about 30.000 - designs, produces, installs, and ser skills and learn to work with the -new In the case of wind energy, for instance, you need a installations at a national level, which is relatively low vices wind turbines across the globe, est technologies. certain speed for the turbine to start producing and we compared to the interest we are seeing amongst con- holding more than 100 GW or 17% of What are your expectations for- Ro managed to have the lowest speed at which we go into sumers and also the potential that this field has. the global installed base. The most recent wind turbine tech- mania’s renewable energy sector over production. We also fare excellently in terms of resist - nology installed in Romania is already the coming two-three years? ance, which was proven by installations that we built in 10 years old - can you explain what difficult areas, with very high intensity winds. are some major technological ad- We see a great deal of opportunity vancements that were made since? going forward because energy con- The company is very active on international markets. Vestas opened its office in Romania in sumption is expected to increase and What does your geographical footprint look like at 2011. How has the company’s portfo- Just as any other technology wind tur- no doubt more production units are this point? lio evolved since, to meet the chang- bine technology becomes less expen- going to be needed. Furthermore, the ing needs of the market? sive and more efficient as it evolves. technology that is currently in use has About 70% of our production ends up outside of Ro- In 2010 we used to install 3 MW become rather old if we consider the mania and this percentage keeps growing. We have a Our market share in Romania is close turbines, state-of-the-art at the time, advancements that have been made strong footprint in Europe, in countries such as Bel- to 48%, having installed approximate- whereas presently we have developed in the past decade and upgrades will gium, Norway, Poland and Turkey and also in Africa, ly 3 GW. The wind energy market 5 MW+ turbines. be required. Our message to the in- which we find to be a very good market. here debuted very well, effervescently vestment community is to keep their even, but following the abrupt legisla- Similarly, 10 years ago the rotor diam- eyes on Romania, as we are confident Working in such varied locations involves a great deal tive changes in 2013 our strategy has eter was 90 m and now we reached new opportunities will soon unfold of challenges, because we need to adapt our config- Ovidiu been to focus mostly on services. The 162 m. This means a higher produc- with the renewable energy targets of urations to each particular climate. We take patience core of our investments went into de- tion capacity and more power in -are Europe, and Romania following with in understanding the specifics of the country because PUȘCĂ as where the wind is less strong (the veloping the skills of our technicians, increasing ambition and shaping the it allows us to personalize the solution according to Managing Director - bigger the rotor, the less wind it needs right policy and market frameworks. and despite the local market being al these specific needs and ensure the highest levels of Carpat Energy most frozen we have managed to dou- to spin, and implicitly the more power efficiency.

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Clariant has started construction of Can you tell us more about the main the first cellulosic ethanol plant in Ro- uses of cellulosic ethanol? mania. What were the circumstances that led to this investment? Firstly, it is closely linked to transpor- tation sustainability and the global We screened many potential locations concern regarding carbon footprint photo: pxhere.com in Central and Eastern Europe and reduction. Lignocellulosic biomass can ultimately decided on Romania for be used to produce advanced bioeth- several reasons. Firstly, the raw ma- anol, a highly sustainable solution that terials used in the production process has been welcomed and mandated by consist in agricultural residues (wheat the European Union and many coun- straw, barley straw, corn stover etc.) tries around the world. a field of possibilities and there is an abundance of such ma- terials in Romania. Furthermore, we These biofuels can be mixed with gas- biomass & biofuels looked at existing infrastructure (I am oline (available in petrol pumps in EU referring here to both transport and in 5-10% of the mix) and the result is Biomass is the fuel of choice in the have an exceptional potential for- suson the bioethanol facility, but they also Dragoș utilities) and the existence of a quali- a reduction of GHG emissions by up countryside, where almost half of Ro- tainable biomass. However, other thanface the same challenge of recycling fied workforce. to 95% with the sunliquid® ethanol. mania’s population resides. Indeed, the use of raw firewood, there is- bareagricultural goods. Preliminary steps GAVRILUȚĂ Another advantage is that it allows us most heating and cooking there takes ly any industrial development in the need to be taken to grow the biogas The location we decided on, Podari, to use the same infrastructure (for ex- place using fuel wood. Properly moni- biomass sector. and biomass industries, and closer is right next to Craiova city which has ample, there is no need to build new tored and collected, such wood is be- collaboration between the Energy and a rich history in chemicals and manu- pumping stations because the mix is ing accounted for as a renewable en- One crucial issue in ensuring the need- Environment Ministries is paramount Country Manager facturing, and that was able to meet done in advance through the refining ergy source, thus contributing to the ed biomass fuel chains has to do with in this respect, even in order to- effi all the essential criteria that we were process) and we also do not need to country’s overall share of RES. building a functional system of waste ciently finalize the country’s national Clariant looking for. The value of the invest- change our cars, because biofuels are disposal in Romania and developing energy plan,” explains Sebastian Metz, ment amounts to over €100 million compatible with the existing ones. Biomass is a multidimensional con- technologically viable solution of turn- General Manager of the German-Ro- and it will generate 100-120 direct cept, which must be properly opera- ing waste into energy. Thus, “we aremanian Chamber of Commerce (AHK). jobs in the long term on the industri- The sunliquid® technology is being tionalized. Following the US Energy working to develop the waste-to-en- As such, the sustainable biomass in- al platform and in addition, 300 or so used on an industrial scale for the Information Agency, here are the main ergy market, a massive problem right dustry also needs research and in- Clariant is one of the world’s leading jobs can be created in connected busi- first time. What kind of value does examples of biomass uses for energy now in Romania, especially consider- novation, to allow for development specialty chemical companies. nesses, e.g. the collection, storage and this new technology bring? purposes: ”Wood and wood process- ing current recycling practices. Clari- based on the most efficient and- envi transportation of straw. In terms of production, there are two ing wastes—burned to heat buildings, ant and GETEC are working together ronmentally friendly technologies. Originally from Switzerland, the types of technology that can be used. to produce process heat in industry, company has a strong international and to generate electricity; Agricultur- The first-generation technology uses footprint and its work is organized grains, corn, wheat and so on. What al crops and waste materials—burned into four business areas: Care Chem- as a fuel or converted to liquid bio- we are using is called second gener- icals, Natural Resources, Catalysis fuels; Food, yard, and wood waste in What is important to empha- ation technology, the difference being and Plastics Coatings. that we do not use the grains from the garbage—burned to generate elec- Johannes BECKER size is Romania’s tremendous tricity in power plants or converted to harvest itself, rather we use the agri- biogas in landfills; Animal manure and Partner potential for becoming a pro- cultural residues (wheat straw, bar- human sewage—converted to biogas, TPA Group ducer of advanced biofuels. In ley straw, corn cobs, bagasse or top which can be burned as a fuel.” fact, the raw materials that and leaves from sugarcane etc.) that would normally be either burnt or get are available here would al- chopped and incorporated into the Hence, many uses and many mean- What Romania does not really have at the moment are bio- ings. One important thing, however, is low for construction of many soil again. that the biomass industry develops in mass and biogas projects, which is atypical in the EU. Wedo advanced bioethanol plants. a sustainable manner, without causing have the raw resources technically, but in the case ofbiomass, We can become an essentialThe sunliquid® technology was devel- oped by Clariant, through R&D work deforestation, displacing food crops unlike in the West, we are not able to make full use thisof re- player on the production side - that started way back in 2006. In 2009 or resulting in net positive life-cy source due to the ageing heating and pipe systems.imilarly, S cle carbon emissions. Consequently, and ensure supply not just for we inaugurated our first pilot plant in there are several challenges to the in the case of biogas the resources are available, there is a lot Romania, but for other coun- Germany and in 2012 we started-up sustainable biomass industry: it must of organic waste in households, but we need to figure uto a tries as well. a “pre-commercial plant”, that uses the same technology but on a smaller be environmentally friendly, climate system for them to be collected and ensure we have theprop - responsible, socially acceptable, and scale of around 1,000 t/year. By com- er technology to process them. The legislation in the field also cost competitive. Even under all these parison, in Romania the goal is to pro- constraints, Romania is deemed to needs to be thought out in a way that allows for profitability. duce 50,000 t/year.

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There is an entire area of infrastructure waiting to be devel- oped, whether we are talking about roads, railways, water purification and treatment plants or the modernization of some power generation facilities, given that many of them have reached the end of their life cycle. We do have to tackle the challenge of a shrinking labor force, but aside from this the prospects are very good and we expect a boom in invest- ments in our field.

George CIUBOTARU Vice President Electroalfa

Transfăgărășan Road, Făgăraș Mountains photo: Adobe Stock TRANSPORTATION, DISTRIBUTION & SUPPLY investment reports ROMANIA GAS PIPELINE NETWORK AND EXPANSION PROJECTS photo: OMV Petrom opening borders energy transport infrastructure

Natural gas flows have undergone important changes in Romania, both due to the decline of old fields and the emergence of new sources. By contrast the structure of the national transport system has largely remained the same during this time. This stands to change, however, as there are many projects for re- gional interconnection underway which bring about exciting opportunities for theuntry. co NATIONAL GAS TRANSport SYSTEM (NTS)

The first pipe ever built as part of the Gas transport infrastructure plays a National Transport System (NTS) was crucial role in this context, and Trans- put in use in 1914. According to Trans- gaz is currently faced with a major gaz, the National Gas Transport Sys- challenge: to develop, in the short- tem Operator, a large part of it needs est possible time frame, a natural gas rehabilitation and modernization, 72% of the 13,350 km transport corridor that will ensure because it has been in use for more of natural gas pipelines both the necessary degree of - inter than 20 years. However, the technical require rehabilitation connectivity at European level and state has remained at appropriate lev- enough capacity to serve the domes- els, due to the fact that maintenance and modernization tic market. and development work has been done throughout this time.

Romania is presently interconnected with Ukraine, Hungary, the Republic Karl LEIDENFROST BRUA Project - Development Phases of Moldova and Bulgaria. All these Managing Director, For Phase I countries currently rely on Russian gas the objective is to develop Podisor-Recas Corridor, a pipeline Habau PPS Pipeline Systems with a length of 479km that can transport volumes up to 1.75 bcm per as their only source of supply. Recent year. This segment will include the construction of a measuring station years have seen sustained efforts to and three new compressing stations at Podisor, Bibesti and Jupa. diversify supply routes with the ob - vious purpose of increasing security Habau has been the leading pipe constructor for lots two Phase II seeks to expand the natural gas transport capacity from Recas and also to ensure better conditions and three [of BRUA], starting from September 2018. We to Hungary, and upgrade the compressor stations at Podisor, Bibesti and for price competitiveness. Romania now have, in Lot 3, 72 km built for which we are pressure Jupa. The length is about 50km and the volumes that can be transported already has the smallest dependence testing as the final step. We are well positioned forApril the on imported gas and new discoveries go up to 4.4 bcm per year. in the Black Sea are likely to strength- 2020 deadline. en its position in the region. source: Transgaz 76 romania energy industry 2019 investment reports investment reports TRANSPORTATION, DISTRIBUTION & SUPPLY

a game changer

The developments that took place in recent years have re- vealed that the most important supply routes for Europe will start from the Caspian and the Black Sea. BRUA (Bul- garia-Romania-Hungary-Austria) is a key element of the in- frastructure that needs to be developed to ensure that the

natural gas can be made available across the region. photo: pixabay.com

The pipeline will lead into Austria’s Baumgarten Hub, which means Romania will essentially be able to export gas to Western Europe.

The construction work for BRUA has begun and is set to un- fold in two phases. Phase I is under development and pro- gressing according to schedule, while construction of Phase II is envisioned to start this year and be finalized in 2022. However, Transgaz is still assessing the economic viability NATIONAL POWER TRANSMISSION GRID (PTG) of the project. For the time being only 40% of the transport The lines and electric stations that make up Romania’s pow- tunities for exporting electricity to neighboring countries. capacity has been reserved which is not enough to justify er transmission grid were mostly built between 1960 and This project has been included in the European List of Pro- the investment. Whether the project is implemented will 1980. The last few years have seen extensive maintenance, jects of Common Interest (PCI) because it contributes to depend on the demand in the market, also keeping in mind modernization and development the EU’s strategy for the trans-Eu- the regulated pre-established tariffs. Transgaz has been works, and older electrical instal- ropean energy infrastructure. working on a new round for capacity reservation, but the lations have largely been replaced. dates have been delayed several times, most recently until But additional efforts are neces- The completion of the About 64% of the construction October 1st 2019. sary in order to meet the current 400kV ring is expected to has been completed already, and necessities of the country. Since the remaining 36% consists of seg- The final investment decision (FID) from Black Sea Oil& the beginning of 2019 Transe- increase the safety of the ments that are either in work or in Gas touched down earlier this year after a long period of lectrica, the Romanian electricity National Energy System different phases or preparation. deliberation. However, the main supply source that the new TSO, has accelerated 38 invest- The total investment amounts to pipeline aims to serve is the onshore Neptun Deep perim- and help fulfill the obliga- ment projects focused on mod- approximately €200 billion. Fund- eter, under concession by ExxonMobil and OMV Petrom. ernization and refurbishment and tions assumed by Romania ing is being ensured through both The FID for this project has been postponed indefinitely, has launched six new procure- at EU level. local and European Union pro- because of the stalemate created between producers and ment contracts for the upgrading grams, and the various segments authorities. These stem from disagreements regarding the of electrical installations that are will be put into operation gradually Offshore Law and other more recent, controversial changes approaching the end of their life- up until 2027. that have been passed such as GEO 114/2018. cycle. Constructing the 400 kV Metro- Green Light Granted for the Black Sea – Podisor Pipeline Closing the 400 kV National politan Ring of Bucharest Power Ring EU Interconnection In May 2019, Transgaz obtained the right to start working Targets for Romania: The demand for electricity in the on the pipeline that will retrieve natural gas from the Black At present, Romania faces an im- capital city has been increasing at Sea and connect it to the NTS as well as BRUA. Niculae balance: 80% of the electricity a faster pace than the country’s Badalau, Minister of Economy noted: “It is a very big step 10% by 2020 production is concentrated in the average, and the trend is expected we take to create value around the Black Sea resources. Southern area of the country and to continue in the coming years. The pipeline built by Transgaz will allow us to direct the 15% by 2030 only 20% in the Northern part. Closing the 400 kV ring that will natural gas that we will exploit in offshore perimeters both serve Bucharest has therefore be- to BRUA - so towards export, contributing to regional and A key benefit of closing the 400kV come a priority. The first decisive European energy security, as well as to the National Gas national ring is facilitating the step in this direction has been Transmission System - that is, for internal use, enabling transport of electricity from over-production areas to wide- done in June 2019, when Transelectrica launched the ten- local communities and economic agents in the country to spread consumer areas in the most efficient way, and save der for the acquisition of a study which will help identify the have access to these gas resources that are particularly im- money all while doing so. The new infrastructure will also optimal solutions for this development. portant.“ increase the interconnection capacity and open new oppor-

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Conpet plays the essential role of We are also testing the market for operating the National Oil Pipeline other beneficiaries, and we will adapt Transport System. Can you give us an based on their requirements. Habau specializes in pipe- overview of its current condition? line & plant construction and Karl Given your highly developed pres- maintenance solutions, for the The pipeline network has a length of ence in Romania, are you looking to oil & gas sector. The company LEIDENFROST - 3,800 km and it is generally in good expand operations into new geogra is part of the broader Habau shape, so the work that we are un- phies? Group, which counts over 100 dertaking at the moment is mostly focused on maintenance. We did go Regional expansion is indeed one of years of experience, 5,000 Managing Director through a noteworthy modernization our objectives going further. We have employees and €1.5 billion Habau PPS Pipeline Systems process back in 1998, based on a re- signed an agreement with NIS Petrol turnover. port performed by Bechtel and funded and, as a next step, we will start trans- through the World Bank. At present portation by rail to Serbia. We try to be we have a program in place that aims present also for the reactivation of the Habau is one of Europe’s leading con- key projects surrounding lots two and ent in our industry. For example, we to eliminate all existing damages and, pipe that connects Pitesti with Pance- struction companies, and in Romania three for BRUA where we are in fact are collaborating with the Austrian Timur Vasile for pipes that are no longer in use, we vo, and when Serbia becomes an EU you have been involved in high pro- bidding and hoping to be selected. We Embassy to open training centers to are looking at solutions to either de- member we are ready to sit down with file projects in the oil & gas segment, are keen to take on additional projects educate young people – our first class activate or preserve them depending them to understand their needs and CHIȘ such as BRUA – can you introduce us but the reality is that we did not bid starts in September this year. on the case. how we can best work together. to your current capabilities? on some of the recent tenders due to a rather serious problem we are facing Having now spent over a decade in The extent of the network is enough We have also made a first step in- Po Our HQ is in Austria, however, we regarding human resources. We are in Romania’s business ecosystem, what to fully cover the needs of producers land, through the partnership we have General Director have subsidiaries all over Europe and a position where we need to import is your assessment of the ease of do- and refineries that are active in the with Serinus. What comes next will opened our office in Romania 12 years human resources from countries such ing business, and what are some of Conpet market today. Going forward, all de- depend on regional policies, and it is ago. Working with Petrom as of 2008 as Ukraine, Macedonia, Montenegro the challenges you have come across? velopment works will be made based worth noting that we will only develop came as a natural decision given our or Vietnam to do the necessary field- on new discoveries in the country. work when we have a clear beneficiary history and relationship with OMV in work. There are definitely things happen- One example is the agreement we in mind and agreements that have a Austria. We currently have 300 em- ing here, and overall a well develop- have recently signed with Serinus, duration of minimum four years. ployees in the country and achieved Human resources have come up fre- ing business environment. Of course with regards to their discoveries in the over €35 million turnover in 2018, in quently as a serious industry pain the number one consideration for Conpet provides specialized oil trans- region of Satu Mare. contrast to our humble beginnings of point – other than importing talent any investor is the political stability port services via pipelines and by rail, 15 employees. from other countries how are you factor, which can stand to improve securing the supply of refineries with What can we expect from Conpet in tackling this challenge? in Romania. The past few years have terms of investments in the next pe- domestic and imported crude oil and BRUA was a game changer last year seen more changes than any of us can riod? derivatives. The company also han- and gave us a chance to grow expo- count, and legislation can even trans- dles the operation and maintenance nentially. Overall we have built a spe- form from one day to the next. We are planning major investments of the National Oil cific niche constructing pipelines and in locations that are delicate from an System. affiliated solutions for the oil & gas There is some progress, though, that environmental perspective. One such Aside from regional develop- sector, serving clients such as OMV, is worth noting. When we arrived, the example is the Danube-Borcea area, One idea I believe in is ac- ment, we are advancing our Romgaz, Transgaz or Conpet. management of key administrative a project we will start in August this capabilities in road transpor- tively appealing to Romani- state institutions were changed along year and during which we will create Are there other projects currently with political parties, while nowadays a new undercrossing. The capacities tation for a variety of prod- ans working abroad, through in the tendering phase, do you have there is continuity in these functions. that are in place can hold for another ucts that extend beyond fairs and such, and making your sights set upon any particular Overall, our experience has been pos- ten years, but this way we ensure the - the oil & gas sector. We are ones? them aware that the work cli itive and I believe there is room for protection of the Danube Delta and, looking, for instance, at op- mate at home has changed. more investments to be made. at the same time, we ensure the secu- There are three major projects at the rity of the system. portunities to transport - ce There are large opportunities reals and chemicals, and the moment, BRUA, another development to find great work here, under in the Northern side of Romania, as Another major investment we have - fact that we have the loading well as a Black Sea Pipeline in the bid- good conditions and well re planned is the development of loading ramps already in place gives ding phase. Transgaz also has a num- munerated as well. ramps in areas in which our company ber of smaller projects under way, with will drive business in the future. For us a great advantage. thousand of kilometers scheduled instance, we are testing the market at within the next decade. It is not enough to import, of course, Caragele, with the expectation being rather we are working on multiple that the quantities extracted there will Our resources have been directed at fronts to attract, train and retain -tal amount to about 150 t/day.

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How has CIS GAZ evolved in the Ro- manian market since inception and what are the key sectors driving de- mand nowadays? Oscar Downstream is the largest independent fuel distributor in Romania. Their business solutions cover We managed to succeed the test of time and the transition between gen- all distribution channels: home-base filling stations, erations, and I believe this was a key fuel cards, wholesale deliveries, B2B and retail sta- factor in the evolution of the compa- tions, thus creating an integrated system that allows ny. Throughout the 28 years of activity customized solutions for each industry and client. The sense of value we were faced with many challenges, but the evolution was mainly a good one especially if we consider the last 10 years.

You have climbed the ranks of lead- significant impact on the fuel trans- Demand is presently driven by both Horațiu Sebastian ing downstream providers in what is portation as well. the ongoing need for maintenance a very competitive space - what was as well as the emergence of new -pro CĂLUGĂR your path to success? Secondly, some economic measures jects. The past few years have seen such as the increase of fuel excise tax, important projects taking shape, such General Manager OSCAR Downstream grew steadily have encouraged Romanian transport as BRUA, and the industry is at a very CIS GAZ and sustainably, and managed to be- companies to migrate a part of the exciting tipping point, more so than come a top five player in the - Roma fuel consumption from Romania to we have witnessed in the past two nian downstream segment. This was other European countries. This trans- decades. CIS GAZ is a 100% privately owned possible because we have national lates into a huge challenge for the sales coverage, strategic partnerships companies operating on Romanian Following market liberalization, CIS energy company, founded in 1990. for products supply, a very modern territory to be commercially creative, GAZ expanded into the supply busi- The company is one of the key EPCC and flexible logistic structure and a and to keep and increase the volumes ness. How has this sector progressed? contractors for the oil & gas industry, full circle service provider and also loyal customer base. sold and thus the business.

We obtained our first license as gas an independent energy producer and In 2004 we were the first to introduce You have your sights set on expan- supplier in 2005, amongst the first supplier in Romania. on the Romanian market the home- sion for the coming years - what do companies taking advantage of the base fueling station, DIESELpoint you wish to achieve with priority? 2004 market liberalization. We start - concept and service, covering the ed by supplying to industrial users, What unraveled afterwards led to a southern region of the country. ThisOur plans for growth bear in mind a and expanded to retail in 2015. - Ro few difficult years, however, things became the main growth driver of thevery competitive Romanian market, The OSCAR fuel, mania’s market liberalization was nothave started picking back up again company, for instance we extendedthe consumers’ needs and the over- always predictable, in fact it was quiteof late and reaching steady ground. at your service, to national coverage with more allthan potential of the oil & gas market. challenging at certain points in timeTogether with our partners we are 2100 fuelling stations in 2019. We will focus on capturing the de- in every moment. for the private sector. Besides, there considering once more to invest in mand growth, entering new business is still a need to inform and educatethis side of the business. One positive Romania’s EU accession in 2007 andsegments such as B2C, with stations end consumers on their options - exampleas of improvement is in the cost the free circulation of goods and- underser the OSCAR brand, and further a company we are already doing this of technology, much more accessible vices also created new opportunities,develop the RO stations franchise. proactively, and we hope the author- than it used to be and a game changer because it allowed us to import oil We will also consolidate our presence ities will also increase their efforts in for the industry at large. products with better quality and -pric on retail and other key business fields this matter. ing terms, and to put an end to the such as agriculture and transportation, What is your vision for the company dependence on local refineries for and increase operational efficiency in The same values, What was the rationale behind -ven going forward? product supply. sales, supply and logistics. Regarding turing into renewables in 2012? a new journey. the expansion plans of the company, One priority is to bring our retail pro- What are the main regulatory hurdles we can state our interest in expanding Starting in 2010 there was an -over ject to its full potential and make our you have noticed in your sector? our fuel stations network with region- whelming national and regional trend online platform “CIS Eficient” suc- al and international partnerships. in the development of renewables, cessful and beneficial to our clients. Firstly there is a lack of investment in coupled with strong regulatory sup- We are also keeping an open mind infrastructure (rail network, delays in port. It became a natural avenue for towards international expansion be- motorways construction) that is pro- oscars.ro CIS GAZ to follow in order to offer causea we want to make the most of ducing operational inefficiencies, cost full-fledged portfolio, complementing the know-how we gathered in the last burdens and logistical problems, with our existing services in natural gas.28 years.

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Sales of electric and hybrid vehicles in Romania reached 2,285 units in the first five months of 2019, up by 70% compared to the same period of 2018, according to statis- tics of the Association of Car Manufacturers and Importers – APIA. However, their share in the overall car sales remains rather low, at 3.4%.

Like many other countries, Romania decided to implement

a support scheme to encourage the shift to a sustainable photo:Stock Adobe transport. The Rabla Plus program, initiated by the Envi- ronmental Fund Administration (AFM), offers the highest Jérôme subsidiy in Europe towards the purchase of a new electric ushering change vehicle. CHEVROLET energy distributioN network Country Manager Dorin CORCHEȘ GEFCO Vice President AFM Ministry of Environment Romania’s power distribution sector was privatized in 2005 and 2006, when five distribution Can you briefly explain the relevance of the energy companies were acquired by large European energy firms and granted regional monopolies. The sector for GEFCO’s portfolio? importance of this sector for Romania has been highlighted through a PwC study in 2018, which The energy sector represents one of our strategic di- showed that the value added by the distribution sector to the GDP amounts to approximately rections for development, in Romania as well as global- Rabla Plus is dedicated to plug-in and fully electric cars, €2,8 billion, roughly 1,42% of the GDP. ly. It is a sector that is developing very fast and we are and Romania in fact offers a €10,000 incentive for go- keen to be a part of this story. The core of our custom- ing electric, the highest subsidy in the EU. According to ACUE (Federation of Associations of Energy Utility Companies) the distribution network requires an invest- ers from the energy sector come from oil & gas and re- ment effort of over €10 billion in the long run, in order to replace the obsolete infrastructure and reduce the gap compared newable energy, and we assist them with transporting to the EU average. good across Europe, as well as to and from China and Naturally this initiative needs to be complemented by an the United States. We have just recently organized a efficient charging station infrastructure, and Romania has Very large investments are difficult bulk transportation of cargo from Constanta to Turk- seen notable progress in this regard: “One challenge we are to undertake, however, because they menistan, a very complex operation because it involved noticing is people’s perception that their cars will run out of run the risk of not being approved by using the Danube river and crossing the Caspian Sea. electricity, but in reality, the network of stations is already Silvia VLĂSCEANU ANRE. The reason? All investments President developed enough that it allows for travel pretty much- an get reflected in final tariffs and can How would you assess the state of infrastructure in ywhere in the country” explained Aurel Arion, CEO of Ren- become difficult to bear by final ener- ACUE Romania and the ease of customs operations? ovatio Trading, the first company to build a public electric gy consumers. The appetite for invest- vehicle charging station in Romania. “We decided to build ment was also affected by the state’s From a logistics point of view infrastructure is- im the infrastructure well aware that it would take a long time decision to lower the regulated rate of portant of course, but it is an even playing field for to recover our investment (a fast charge station can cost up return (RRR) starting with 2019, which There is great need for new investments in Romania’s ageing in- everybody involved. Any problems I can think of are to €35,000). Things are moving slowly but surely, we are led to the dissatisfaction of many dis- frastructure – roughly 60% of networks are more than 40 years problems that our competitors are facing as well, so starting to see more competition in the market, which is a tribution companies. The RRR, which old. The state has been conducting maintenance works, and securing a top spot will depend on other elements. very good thing.” used to sit at 7.7% in the past, was private companies had investment programs as part of the pri- initially reduced to 5.6% in 2018, and There is certainly room for improvement when it One notable initiative in this area is NEXT-E project,- fi then increased again in April 2019 to vatization plans, but the reality is that some of them need to be comes to highways and railways, we welcome any nanced from European funds. Thus, 40 fast charge stations reach 6.9%. “It is still far from ideal, completely replaced. plans to upgrade them, but we understand that it is will be installed in Romania, of which 19 by E.ON Romania but these modifications did send out not an easy problem to fix. You cannot replace the- in and 21 by MOL Romania. Up to now, 9 charging stations a more positive message for the- in Another area that requires investment is digitalization, more frastructure each year and deterioration is bound to have been set into operation in the Moldova area. By the dustry, by showing that the concerns specifically the implementation of smart metering. The initial take place. Regarding customs operations we have not end of August, E.ON Romania intends to also implement expressed have been heard and that target was that 80% of distribution company customers to have come across any problems, we have experts handling this project on the route Iasi – Gheorgheni – Tirgu Mures, the dialogue has been effective to a smart systems installed by 2020, but progress was slow and last the procedures and they are cooperating very well with which will thus become an “electrical highway”, with the certain extent.” commented Mihai G. the authorities. charging infrastructure available on the whole route. Popa, Corporate Legal Department year the deadline was extended until 2028. Director at E.ON Romania.

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16 - 19 September 2019 PALACE OF PARLIAMENT BUCHAREST photo: Depogaz

Investments Geared towards Modernization & DIGITAL TRANSFORMATON

An area of particular focus in terms of manages about 1 million consumers, instance, has invested approximately investments is smart metering, widely and the investment required amounts €105 million last year in moderni - regarded as the cornerstone for smart to approximately €100 million, that zation works, the highest since the grids. Romania’s initial target was consumers in that area will have to pay company entered the Romanian mar- that 80% of distribution companies’ through tariffs over a period of time. ket. Frank Hajdinjak, General Manager end consumers have smart systems The installation of smart metering sys - noted: “We estimate that the annual installed by 2020, but progress has - tems must therefore be done in a ra investment budgets for the next years n Exhibitors from Romania and abroad been very slow. Last year the law wastional way, aligned with the consumer will come out at a similar level (around REGISTER changed and the deadline extended absorption capacity.” €100 million/year) if no other major n Workshops, fresh news and industry exclusivities until 2028. changes crop up.” ONLINE Still, there are many investments un - n The conference „Romania in Flux: The Energy Corneliu Bodea, Adrem, explains the derway, covering modernization and CEZ Group has also undertook signif- AND VISIT of the Future and the Future of Energy” reasons behind these delays: “A distri- expansion works and especially dig - icant investments in the past years. bution operator in Romania generallyital transformation. Delgaz Grid, for Speaking about what we can expect n Launch of „Romania’s Energy Industry Report 2019” from the company in the near future, IEAS 2019! Ondrej Safar, Country Manager men- n Announcement of winners and Gala „Technical tioned: “At this stage we are focusing Innovation Awards” more on digital transformation, includ- Details at offi[email protected] ing data collection, smart metering, mobile workforce management and Vasile CÂRSTEA generally a direction of being more www.ieas.ro General Manager and more effective when it comes to Depogaz using both our equipment and our people. We hold a lot of the knowl- edge still in a paper format and this makes it difficult to retrieve and turn There is room for growth for us here given the current circumstances. it into something meaningful.” This We plan to expand our storage capacity, namely we want to reach a 4,5 trend is likely to continue especially in Partner bcm of storage, and we want to grow our injection capacity up to 30 M light of disruptive trends such as that of prosumers, which bring about great ENERGY cubic meters per day, and 42-44 mcm in terms of withdrawal. Through Industry review Media Partners the increase of the withdrawal capacity we work towards reducing the challenges for classic transmission and dependence on external sources, therefore increasing stability and se- distribution systems, and stress the need for smarter grids. curity of supply in the energy sector. management intelligent

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CEZ Group has established a strong the sector presently? and diversified footprint in Romania. What initially drew your attention to The original investments were based E.ON Romania is the platform Frank this market and how has the company on public subsidies, and the turbu- company that supports and evolved since? lence the ensued in Romania is similar to what happened in many European coordinates the operations of HAJDINJAK The period 2004 - 2005 saw several countries at the time, whether we are E.ON Group in the energy sec- privatizations across Eastern Europe, talking about Poland, the Czech Re- tor in Romania. The company and a time when the Czech Nation- public or Spain. It is important to look handles distribution, supply al Energy company was looking for at these events from a broader per- as well as digital and e-mobili- General Manager opportunities to grow international- spective. Now that the price of tech- ty solutions. ly. We entered Romania at the same nology has gone down so much, it is E.ON Romania time with Bulgaria, by acquiring a local becoming possible for investments to distribution company, and in the first be feasible just based on the sale of years we focused on a transformation electricity. This is great news because Through Delgaz Grid, you handle by electric cars, this being the reason The connection between the energy process. it attenuates the risks associated with distribution for 20 counties in the why we got involved in the NEXT-E sector and technology, innovation, Ondrej changes in legislation. Northern area of the country. What project. Specifically, 40 fast charge digitalization is tighter and tighter. As In 2008 we acquired a wind farm pro- can you tell us about the current state stations will be installed in Romania, far as we are concerned, digitalization ject in Fantanele, Cogealac and we SAFAR of the infrastructure in the region and of which 19 by E.ON and 21 by MOL and innovation in general are clear and had the amazing opportunity to be investments you have planned for the Romania. compulsory answers for the future. among the first ones - when we start- near future? Digitalization means services that ed the project the installed wind ca- Within E.ON group we are running bring simplicity, time saving, mobility, pacity in Romania was 2-3 MWh, and Country Manager Last year the total investments of Del- several European projects whereby opening, easiness and clarity in the re- the project we acquired amounted to In the last two years the elec- gaz Grid, part of the E.ON Group in we foster the development of large lationship with our over three million CEZ GROUP 600 MW. Even today, it is the biggest tricity prices have steadily in- Romania, amounted to approximate- scale use of electric vehicles, which customers. onshore wind park in Europe. creased, and if this continues ly €105 million, the highest since we is one of the least polluting and most entered this market. As in every year, sustainable means of transport. In this From a distribution perspective you it will give renewable energy most investments targeted the mod- context, it is essential that we offer cover the entire region of Oltenia. investors strong reason to ernization of the gas and electricity easy access to charging stations to What can we expect in terms of in- CEZ Group is represented in Romania move ahead. We are looking grids. As a result of our investments, electric vehicles owners. At the same vestments in the next period? by nine companies, with capabilities ourselves for opportunities we already have visible improvement time, it is an opportunity for E.ON ranging from distribution to supply, at level of the performance indicators to offer new products and services At this stage we are focusing more on to diversify, and leverage the trade, energy services and renewable of the networks, but further invest- whereby we can meet the wishes and digital transformation, including data knowledge we gathered op- ment efforts are needed. needs of our customers. energy production. The company also collection, smart metering, mobile erating the largest onshore operates the largest onshore wind workforce management and general- wind farm in Europe. We estimate that the annual invest- In the current context of the farm in Europe. ly a direction of being more and more ment budgets for the next few years You have recently finalized the first energy world, ever more char- effective when it comes to using both will come out at a similar level (around smart street lighting project in- Ro our equipment and our people. We What is your assessment regarding acterized by decentralized €100 million/year) if no other major mania. Can you explain what role you hold a lot of the knowledge still in a ease of doing business in Romania generation from renewable changes crop up. Since entering the expect digitalization to play within paper format and this makes it difficult based on your experience here? Romanian market, we have invested E.ON Romania going forward? sources, smart grids, digitali- to retrieve and turn it into something around €1.6 billion (2005-2018, inclu- zation etc., we can no longer meaningful. It is also an investment Our experience has been a good one, sively). Over 7,500 km of natural gas Indeed, the first smart village project for the future - as prosumers become compared to other countries I have be just an energy supplier/ grid were modernized, alongside with in Romania was implemented last more common, the energy flows are worked in like Bulgaria or Turkey, -Ro distributor. Climate policy in around 6,000 km of power grid. year, in the commune of Frumuseni, going to become more complex, be- mania is no doubt more developed Arad county. Several efficiencies- the in future will focus not on cause often times they will produce and predictable. When it comes to crease works have been performedthe question of “if” abundant more than they consume. It will help people, I believe they are very well NEXT-E project is currently under- on the inside lighting systems in local us greatly to have online information educated, many have worked in inter- renewable electricity can be way. What progress has been made public administration buildings. The about this, know the precise load of national environments and can easily produced, but rather “how” so far and how do you expect the goals going forward have in mind the every part of the network and under- communicate in English. Especially if e-mobility sector to evolve in Roma- installation of PV panels to ensureit the can be integrated into the stand the patterns that come into play. we consider the current circumstanc- nia in the coming few years? necessary volumes of electric powersystem. es in countries like Hungary or Poland, for several buildings belonging to- lo The company has maintained a strong it is fair to say that Romania is well Since we are talking about electric cal public administrations. We are also position in the renewable energy sec - equipped to become one of the more mobility, we would like to promote considering the extension of the smart tor, despite the many legislative tur - stable countries in Central and East- an energy world which is powered village concept at national level. bulences. What is your outlook for ern Europe.

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A GROWING APPETITE FOR DIVERSIFICATION

Recent volatility in legislation has impacted the supply sector in the sense that it raised the risk of increased im- ports and also limited the predictability of their supply. For instance, no gas transactions were made in the first- tri mester of 2019 on the BRM (The Romanian Commodities Exchange) - keeping in mind that BRM transacts approxi- mately 70% of the total national gas market and consump- tion. Gabriel Purice, President of BRM further explained: “We noticed a slight recovery after the publication of GEO 19/2019 which abolished the capping of gas prices for in-

photo: pxhere.com dustrial consumers, but the volumes remained very low. […] The biggest problem that has come out of this situation is that everybody is in a state of confusion and distrust. We turn on the light expect it will take at least one year until the market will re- turn to a normal pace.” energy supply to end consumers Petre STROE CEO Romania finds itself towards the end of a long and rather arduous liberalization process. The MET Romania Energy electricity market has been fully liberalized starting with January 1st 2018, and the gas market caught its moment of freedom under the sun, alas only temporarily, startingwith April 1st 2017.

Liberalization was a great opportunity for energy consumers to negotiate both price and quality, and also a big challenge for companies to transform into entities that proactively work tottract a customers. Ondrej Safar, CEZ Group commented: - “The biggest challenge we faced was changing the mentality inside our own company: we went through a process of mixing We have invested in renewable energy, more specif the teams, for instance we brought in people from telecommunications to give a flavor of what the change entails, we had ically in solutions for photovoltaic systems, from resi- to invest a lot in new IT systems and generally to develop a mentality that is more customer oriented.” The market is today dential use to large parks, and we are in the process of a competitive one, holding 93 gas suppliers and 91 electricity suppliers, according to ANRE. building a wind park. These investments are driven by our desire to contribute to limiting climate change. Direct bilateral trading of electricity is not presently allowed in Romania, by virtue of the Electricity and Natural Gas Law, which is in contrast with the practice in any other European country. All electricity trading takes place on one of the trading platforms operated by OPCOM which has a legal monopoly on this segment. For natural gas, a quite stringent obligation In this context, many suppliers have turned their attention has been introduced regarding the obligatory trading quota on the Romanian centralized market, namely the Centralized towards developing their own production capabilities, and Market Obligation (CMO). renewable energy has caught the most attention. This move is also based on a slow, albeit noticeable increase in the public’s appetite for clean energy. For instance, MET Roma- nia Energy is in the process of building a wind park and is developing capabilities in the field of charging stations for electric cars: “While this is not a strategic direction for the company at present, we do recognize the potential of this field going forward and we want to be a part of it once it The challenges were plenty in the beginning. On the one side we needed to gains traction” explained Petre Stroe, the company’s CEO. attract customers into the free market, and at the same time we needed to ensure that we could source the entire amount of energy we needed. There Likewise, Renovatio Trading has developed solid produc- Aurel ARION were very few sources available at the time, we were mainly relying on state tion capabilities and created a set up where they overlap CEO owned companies, but things slowly changed as renewable energy produc- certain productions and alternate between hydro, wind ers started to appear. Renovatio Trading and solar power, to ensure constant availability of renew- able energy.

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Most recently we have added RWE Energie to our portfolio, a move that Renovatio Trading is an active has consolidated our position and has supplier of electricity and natu- increased our market share to about ral gas, present on the Romanian 10%, which places us among the top market since 2005. It is part of three suppliers in Romania. We are the larger entity Renovatio Group, happy to see out work recognized, but which develops projects in the we have no intention to rest on our energy sector, particularly in - re laurels - we are ambitiously pursuing newable energy. In Romania they - further growth, both organic and inor have developed 571 MW wind ganic, and we want to play our part in power and 92 MW solar power. improving Romania’s existing energy infrastructure and energy efficiency. Aurel Petre One of the key strengths of MET Ro- Can you introduce our readers to mania Energy lies in its Energy Man- Renovatio Trading and the larger -Ren STROE agement Centre. What was the ra- ovatio Group? ARION tionale behind this investment? We started our activities in renewable CEO We are the sole supplier in the coun- energy back in 2003, when our team CEO try and one of the few in the region was involved in installing the first Renovatio Trading MET Romania Energy to own such an energy management wind turbine in Romania. Around the centre, an element that sets us apart same time, we initiated a major wind from our competitors. In a retail mar- measurement campaign in Dobrogea parity. The price of energy has gone ket riddled with uncertainty and un- and other regions of the country and up somewhat whereas technology predictability, it is important to also be began to develop renewable energy MET Romania Energy is one of the prices have decreased, so it is becom- able to monitor and manage risk, not projects. In 2008 we started expand- country’s leading private suppliers ing increasingly feasible to develop a just internally but for our customers ing at European level and since 2009 profitable project without the need of of electricity, natural gas and en- as well. The centre is active 365 days we have a branch in Columbia. a support scheme. But in my opinion ergy services. Through recent ac- a year and we are capable to ensure that time has not yet come. quisitions in Romania, Repower in long term predictability, pricing fore- We try as much as possible to sup- 2016 and RWE Energie in 2018, the cast as well as real time consumption ply green energy (now it accounts for You were the first company to build company has become one of the top tracking. We took on the balancing about 65% of our volumes) but it is a public electric vehicle charging sta- three suppliers in Romania with a responsibility on the electricity market difficult given its variable character. tion in Romania. How is this sector To address this issue, we have creat- 10% market share. back in 2017, and at present we fare evolving? third amongst the local players, after ed a setup where we overlap certain CIGA and Electrica. productions, and alternate between We decided to build the infrastruc- hydro, wind and solar power. ture well aware that it would take a We are meeting you the day after What do you consider to be the main long time to recover our investment winning ‘Deal of the Year’ at the CEO challenges about operating in the lo- What is your outlook on the invest- (a fast charge station can cost up to Energy Forum for your latest acqui- cal business climate, also taking into ment landscape in the renewables €35,000). Things are moving slowly sition. Can you briefly introduce our account the regulatory framework? sector at the moment? but surely, we are starting to see more readers to MET Romania Energy’s competition in the market. history and your vision for the - comMarket liberalization has been a long We developed projects up until 2013 pany? and arduous process in Romania, and when we put a stop to investments Since last year we are the beneficiar- recent legislation appears to bring because of the legislative changes that ies of an EU co-funded project (CEF MET Romania Energy was establishedsome winds of change in the opposite were instituted. Out of the 40,000 Transport Program) that will ensure a in 2005 and is part of the greaterdirection. I do not believe that ANRE MW developed in Romania, only better development of the charging MET umbrella owned by the Swissis the “bad guy”, they are doing their about 4,000 MW have actually come infrastructure along core transport MET Group, and a strong player in thejob, but having a stable, reliable and to fruition. These projects were very corridors of the TEN-T network that supply of energy in CEE. In Romaniapredictable framework is crucial to spread out and left behind mountains cross our country. One challenge we the company appeared as a new and doing business anywhere. I encourage of problems. are noticing is people’s perception that nimble player in a field of a long- es further deregulation as I believe a free their cars will run out of electricity, but tablished network of energy suppliers, market stabilizes itself, and is the best As long as Romania does not join the in reality, the network of stations is al- and managed to grow both organical- way to ensure both a welcoming busi- new EU plan for subsidizing renewa- ready developed enough that it allows ly and through an acquisition driven ness climate for investors and the best ble energy, it will be difficult to devel- for travel pretty much anywhere in the strategy. price & services for the end consumer. op new projects until we achieve grid country. photo: pixabay.com TRANSPORTATION, DISTRIBUTION & SUPPLY investment reports

How has Restart Energy evolved in the Romanian market and what are some key milestones that shaped your presence here? PROTECTING We started from scratch, with extremely limited access VULNERABLE CONSUMERs to both material and human resources, so we had to in- novate in order to compete with the giants that domi- - Energy poverty is a relatively common In terms of protection mechanisms, methods have been successfully im nate the local market. We came up with Restart Energy - problem across the EU, and European several proposals have been put for plemented across the EU.” Franchise, the first franchise of energy and gas supply laws have deferred to members the ward for instance through the recent contracts in Romania. We realized that the only way to responsibility to identify and set in impact study commissioned by FPPG. generate sales of micro-volumes to domestic consum- place appropriate mechanisms to pro- The study assessed the situation of ers at a national level, in an efficient way with minimal tect vulnerable consumers. vulnerable consumes in Romania and 20% fixed costs, is by offering the chance to all individuals - explored options to overcome the is Estimate of Romanian Augustin and companies that qualify, to become franchisees and The progress has been very slow in sues surrounding energy poverty. population affected intermediate energy & gas subscriptions. Romania as public authorities are still OANCEA by energy poverty struggling to take basic steps such as Sébastien Zimmer, Emerton, author CEO We reached 10,000 customers after the first year of - defining and identifying the vulner of the study: “One obvious proposal Tinmar Energy activity and the largest national energy sales network, able consumers. Zoltan Nagy-Bege, is to subsidize the cost of energy for The issue of vulnerable consumer has all with minimal resources and relying strongly on the Vice President of ANRE: ““What is them. Others could be more long term not been treated with priority so far Tinmar Energy has grown to be one of the leading community’s wish to freely choose their supplier. proving to be extremely difficult is theand focus on improving energy effi- by the government, although is was a suppliers in the Romanian energy market. What has process of actually identifying these ciency, such as subsidizing efficient critical element that led to legislative been fueling this successful development? In 2018 you launched RED (Restart Energy Democra- - - vulnerable consumers. The initial es boilers and insulating homes. Anoth changes such as GEO 114/2018. The cy) Platform that uses blockchain technology. Can you problem is becoming ever more press- timates show that approximately 20% er idea is to forbid the disruption of This was the first year when we had to make sure that tell us more about this? ing and the government needs to de- of the population is in this situation,gas and energy supply in the case of our strategy is aligned with two different customer and to identify everybody entails a non payment of bills, particularly in cide on the appropriate framework as needs, namely wholesale (industrial/corporate) and re- The goal is to connect energy consumers directly with - - tremendous workload for local au winter time when vulnerable consum fast as possible, ideally while the RON tail (household customers). The priority now is to make producers using state-of-the-art IoT and blockchain thorities.” ers need it the most. Many of these 68 price cap can still be maintained. sure that our flexible approach to wholesale customers technology. We are basically talking about installing is perfectly aligned with the friendly relationship that intelligent sensors for consumers as well as renewa- the retail market demands. ble energy producers, that take the data from existing meters and upload them directly into a blockchain de- We truly hope that our offer meets all the needs of our centralized database. With this modern infrastructure customers and make their lives easier. Starting with of energy measurement it is possible to allocate and March 2019 we became an optional FUI (supplier of balance in real time (under one minute) the energy pro- last resort) and we are the gas and electricity suppli- duced from renewable and intermittent sources. Such er with the lowest price, both in the decentralized and a system represents a liberalization of energy in the regulated market. In this direction, we are planning a true sense of the word. large and important campaign for the autumn of 2019.

Your portfolio also includes renewable energy- pro duction capabilities. What is your vision for this side of the business going forward?

I truly believe the future is both green and clean. Sev- eral studies and reports have shown that green ener- gy is gradually replacing conventional energy, due to people’s wish of progressing and protecting the planet. Green energy means an increased accountability and an increased quality of life, but also a challenging pro- cess of changing mentalities. Tinmar wishes to have an important say in this entire process. Armand Doru We have already developed six solar parks with a -to tal of 50 MW installed power, located in some of the DOMUȚĂ brightest areas of Romania. The plan going forward is CEO to expand our production capacity by continuing to- in vest in the renewable energy sector. Restart Energy

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The connection between the energy sector and technology, innovation, digitalization is tighter and tighter. As far as we are concerned, digitalization and innovation in general are clear and compulsory answers for the future. Digitalization means services that bring simplicity, time saving, mobility, opening, easiness and clarity in the relationship with our over three million customers.

Frank HAJDINJAK General Manager E.ON Romania

Bucharest at Night photo: Adobe Stock ENGINEERING & TECHNOLOGY investment reports investment reports ENGINEERING & TECHNOLOGY

The country ranks 27th out of the reaching 28 EU member states, with a perfor- mance well below the EU average. Energy Efficiency While companies are ready to offer state-of-the-art technology there is Romania has very weak energy ef- still the question of adoption, espe- ficiency indicators at the moment cially in the energy industry which is and also carries a historical burden. known to be rather conservative. “The Much of its infrastructure was built Andrei CECLAN reason most often is simply inertia, in the 1960s and 1970s based on Co-Founder

photo: Verbund companies prefer to use older tech- explosive growth plans and energy nologies that have a history of proven requirements, but after the industry Servelect smart everything stability. However, in recent years we collapsed the country was left with have seen an increased interest in new oversized power plants that run inef- technologies and encountered more ficiently. Government priorities have engineering & technology knowledgeable partners of discus- usually revolved around maintenance sion. Companies should allow them- and while innovation and new initi- The potential for energy efficien- selves to be visionaries in this matteratives have often been brought up, cy in Romania, based on the ener- because the leaps in technology can they rarely resulted in concrete action. gy audits that were conducted in add to their efficiency and generate 2018, amounts to approximately 3 Not unlike its endowment with natural resources and production capabilities, Romania boasts a remarkable increases in their revenue,” The problem of inefficiency spills -fur mtoe/year. strong array of engineering, technology and IT companies. They range from foreign giants such explained Stefan Baciu, Country Sales ther into the economy. Andrei Ceclan, as Microsoft, Oracle or Siemens to locally born and bred success stories such as Eximprod, Elsa- Manager at SAS. Co-Founder at Servelect explained To better put this in perspective, co or Electrogrup, to name but a few, working in tandem to make processes, infrastructure and that “There is a strong correlation With concepts such as IoT, blockchain between energy inefficiency and- en this potential represents the yearly energy consumption overall more efficient. or smart cities ever more present in ergy poverty - many cities are having energy consumption of the entire business communities everywhere, it difficulties in taking on the costs of city of Cluj-Napoca, the second is clear that Romania needs to speed energy, but at the same time, there largest in Romania. FORGING AHEAD YET LAGGING BEHIND up its adoption pace in order to grow are many energy losses taking place its reputation as a technology hub. in the systems.” This sheds a glaring But where does most opportunity lie perspective on the issue of vulnerable Romanians like to boast about their top level internet speed, and general prowess and know how as far as technology is presently for the country? consumers for instance, which was at concerned. It is with good reason it seems, given than Romania ranks 29th globally according to Bloomberg’s 2019 In- the root of GEO 114/2018. novation Index, six spots up from the previous year. IT has become one of the country’s strategic sectors, outpacing key industries such as agriculture and construction as a share of GDP.

But Romania still has a very long way to go in climbing the ranks of true global engineering and digitalization leadership. A recent EU report (Digital Economy and Society Index, 2019) showed that Romania’s performance related to the digitaliza- tion of economy is lagging behind.

Digital Economy & Society Index (DESI) 2019 Ranking

romania eu The overall pace of innovation has rank score score accelerated. I believe that the cur- - 2019 27 36.5 52.5 rent trends electrification, decen tralization and digitalization, will 2018 27 35.4 49.8 continue to create new challenges Gheorghe MANOLE 2017 28 32.0 46.9 and opportunities for the energy sector. Owner source: European Comission Eximprod

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While subsidies have so far been the strategy employed by EnergoBit, Flor- Eximprod is celebrating 25 years of terest and loyalty of employees are -re preferred solution, using technology in Pop explained that the new vision existence this year. What are the grettably on a descending trend. Most as a means to reduce inefficiencies in “is more technical and it relates to the major milestones the company has likely, we need to shift our focus back the system presents itself as a more appearance of smart solutions and achieved since its inception? to education and work on bringing up sustainable, long term plan for the fu- generally the trend towards digitaliza- generations in the spirit of hard work ture. tion. […] It is a rather natural process The company evolved step by step, and progress based on merit. in our evolution as a company, our starting with low voltage products and These drawbacks and challenges are DNA remains the same but we strive later expanded into medium voltage widely acknowledged by the private to get closer to what the market needs production as well. We took this step sector and authorities alike, and in at this particular point in time.” by bringing in Romania the composite turn have engendered opportunity insulation technology, which initially In this segment mistakes are for growth and investment, with an Similar sentiments have been echoed we distributed, but in just a few years not really an option, and the overall optimistic sentiment perme- by many market participants and the we started our own production. At great responsibility is not to ating the industry. results are starting to show. One note- Gheorghe the time, we were the only compa- worthy example is that of Lisscom, an ny in Romania, and one of the few in create one good individu- Energy efficiency solutions range from automation focused company that MANOLE Europe with such capabilities, a great al component, but a million buildings management, both residen- has completed an extensive project in achievement for both ourselves and components that are equally tial and commercial, to power - gen Cluj. This involved the installation of Owner the country. This gave us the courage good. eration capacities and transmission BMS systems across 73 public build- Eximprod to take a third step in the 2000s when networks. SCADA and BMS Systems ings (universities, high schools, gyms, we entered the high voltage segment. are widely used and often represent student dorms, kindergartens etc.) strategic directions for engineering and the results have been remarkable How have you seen the local market What can we look forward to from companies. Speaking about the new if we consider that the administrative evolve during this time? Eximprod in the coming years? spending has been reduced by about €1,5 million “The costs were generat- There have been notable changes, Three years ago we went through an ed by the fact that every institution especially since 2004 following theaccelerated development phase in had individual contracts with provid- privatization of distribution andwhich the we created a full range of high ers of installation and maintenance unbundling of the big state-ownedvoltage equipment. It was an extraor- services, whereas the BMS system companies. This segmentation was dinary a effort, there is no -other com is able to take on all these tasks and mistake in my opinion, and in contrastpany in Europe of our size that has provide a single point of management“ with many Western countries that stillachieved such a thing at a similar pace explained Stefan Opris, Marketing- Di retain their integrated operators. -For and scale. This year we are pursuing rector at Lisscom. tunately for Romania, large operatorsstabilization, more specifically an ef- Domente have entered the market but this hasficient internal organization that will Ștefan OPRIȘ The power generation field also bears also brought about new challenges allow us to keep costs under control Marketing Director tremendous potential for optimiza- VASILE for manufacturers: today there are and execute production flawlessly. Lisscom tion. four operators and each has its own Owner particular standards, which means weDuring the past few years a lot of ef- Corneliu Bodea, CEO of Adrem: “The Eximprod need to create different products forfort went into developing new tech- prospect until 2030 reveals the need the same market. This involves devel- nologies for the Smart Grid. We part- to replace some of the production oping new molds, creating new- de nered with Cisco to develop a new Humans tend to be subjective in capacities that will become obsolete; signs and performing new tests, whichgeneration of SCADA system for the estimating the necessary heat- for example, charcoal-based power raised our production costs consider- automation of distribution, we have ing levels, whereas BMS systems generation centers, like Hunedoara ably. But generally speaking, despite developed cloud-based software ap- are objective and based on au- Energy Complex and Oltenia Power this increase in costs, the Romanian plications, commissioned the first Big tomatic measurement of data, Plant as well as others, will require market has diversified significantly Data applications for the distribution retrieved from all areas of the modernization or they will need to Eximprod is a Romanian born group and it is now active and competitive,of energy and we are advanced in de- building. The systems allows you be shut down and rebuilt altogether.” of companies, founded in 1994 and including at European & global levels. signing a new range of IoT-enabled to set up a working schedule and One challenge technology companies focused primarily on the energy sec- equipment for the distribution grids. need to respond to, however, is the What do you think can be done to The overall pace of innovation has in this way achieve significant tor. Over the years, the company has fact that these facilities were not -orig create a better dialogue between the accelerated. I believe that the current savings. In short, the BMS allows grown to become one of the most inally designed to work online. Instead industry and public authorities? trends Electrification, Decentraliza- you to consume only the amount important players in the Romanian they were thought out as isolated pro- tion & Digitalization, will continue to of energy you need, and only cesses and nowadays, with technol- market of products, equipment and The current political environment create new challenges and opportuni- when you need it. ogies such as IoT, the possibilities for services for T&D and the renewable suffers the same transformation that ties for the energy sector. We are con- interconnection are tremendous. energy development sector. the entire Romanian society suffered, fident that Eximprod will continue to namely de-professionalization. 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process in our evolution as a compa- of water and sanitation networks - for ny, our DNA remains the same but we which European funding is available Aadrem was founded in 1992 and strive to get closer to what the market (approximately €3 billion) - and district expanded into the energy sector needs at this particular point in time. heating projects, including requests in 1998. The company is divided from industrial players that are look- between Adrem Invest, which pro- What are some of the most important ing for ways to optimize consumption. vides services for utility networks, challenges associated with operating Adrem Engineering, that provides in the Romanian business environ - turn key energy infrastructure ment? Energy efficiency is one of Romania’s solutions and Adrem Link, provid- strategic objectives for development, ing solutions for energy efficiency There are two important points that and a core concern for Elsaco. Where and meter reading. should be considered by public au- does Romania stand currently from thorities. The first is related to a long an energy efficiency perspective? term vision for the industry, going Florin as far as 2030-2040, and this vision Valeriu Energy efficiency is on everybody’s The existing infrastructure was not Corneliu needs to be coupled with a determina- mind. Romania still has a long way todesigned with the connectivity that tion that makes it possible to actually go in this matter and there are threemodern technology offers. How chal- POP achieve the desired results. IFTIME key aspects it needs to consider: pro- lenging is it to bring it to a level of BODEA Deputy General Manager President duction, transportation and consumer automation in accordance with the The second important element which education. In terms of production wetimes we live in? CEO EnergoBit I have noticed primarily from foreign Elsaco have equipment and capabilities that Adrem investors that were eyeing the Roma- allow rather high levels of efficiency,It is not simple but we hold the nec- nian market and which became very but transportation is still very- prob essary knowledge and technology to important for local investors as well lematic. There are heat distribution do it. Many countries have faced this Elsaco started out in 1992 as is predictability in legislation. When networks in Romania that have not situation in various forms, whether we there is a law, regardless of the sector a distributor of utility meters been restored for the past 50 years, are talking about countries similar to of consumers to assimilate this invest- EnergoBit has had a very successful or what the respective law proposes, and developed over time into a and this causes about 30% of all ther- us where industrialization has been ment. A distribution operator -in Ro run in its 29 years of existence. What what is essential is that it remains sta- complex business, driven by the mal energy that is transported to be forced and done very fast, or countries mania generally manages about one was the reasoning behind employing ble so that you allow business plans idea of energy efficiency. Today, lost. The need for efficiency here- can that have developed more naturally million consumers, and the investment a new business strategy? or investment schemes to be based through its nine companies, Elsa- not be understated. like Western European ones. Such an required amounts to approximately on something predictable. In the case co provides turnkey engineering upgrade would involve, for example, €100 million, that consumers in that We have used several strategies of renewable energy for instance, it services, equipment, systems and The same is true when it comes to replacing or enhancing existing equip- area will they have to pay through tar- throughout time and we focusedwould have been preferable (and the solutions for energy efficiency. consumer education. Isolation of -res ment, provisioning switches with iffs over a period of time. The instal- on different capabilities at differentmarket would have still been attrac- idential buildings is already a valuablemodern command & control systemslation of smart meters must therefore points in our existence. The new- strattive) if the incentives were lower but initiative, and by installing smart- sys or replacing them with completely be done in a rational way, aligned with egy includes two core components:investors did not have to deal with tems for temperature adjustment we new mechanisms. The real challengethe consumer absorption capacity. one is related to major projects de- such unexpected changes in legisla- How has Elsaco evolved in the Roma- can achieve additional savings of- ap is to properly manage high volumes of veloped by transport and distribution tion. nian market and what are the key sec- proximately 20%. Reducing consump- information such systems accumulate. What are your views on the local operators and the second is related to tors driving demand nowadays? tion and educating consumer behavior business environment and the ease the area of industrial consumers. The Are you looking to seize opportuni- is maybe more important than build- Smart metering is another trend that of doing business? strategy is more technical and it re- ties outside Romania’s borders? We started out by selling utility me - ing efficient thermal plants. emerged in Romania. How do you see lates to the appearance of smart solu- ters and not necessarily with the idea this unfolding, also bearing in mind Things can always be better and there tions and generally the trend towards In the last few years our international of growing into a complex organiza- How do you see the local market un- the broader concept of smart cities? are issues in Romania that need to be digitalization. It is a rather natural activity has accounted for about 10% tion. However, working in this sector folding in the next years? acknowledged. But there are many of our business. Looking back, this gave us a great grasp on energy con- There are things in the industry about positives as well, if we consider for was rather a result of circumstances; sumption in Romania and from here Our priority is to participate in mod- which we can say with certainty will instance the spectacular GDP growth, we seized opportunities that came we started looking into how energy ernization projects in Romanian cit- happen, and smart metering is one one of the most remarkable evolu- EnergoBit started its activity our way. Recently, however, we have is produced and distributed, and ex- ies, and we are also keeping an open of them. In fact, this metering systemtions in Europe. Recent government in 1992 and stands of four key started paying more attention to -out panded into building distribution net- horizon for expanding internationally is the cornerstone of smart grids andpolicies that led to wage increas- pillars: in-house production of side markets. We now have people works and plants of various sizes. Our - though we will only do this strategi- demand control systems because it es have proven valuable and have electrical equipment (low and in the company that are dedicated to abilities are now numerous. Imagine a cally, in markets where we can remain makes the connection between thebrought about many benefits - it was medium voltage), electrical en- following international markets so we deserted city - Elsaco has the science competitive. We see Romania asa distribution system and the consum- absolutely necessary for Romania to gineering, operation and main- are talking about a proactive, calculat- and capabilities to fully supply it with market with a colossal potential and er. We can, however, ask a legitimateincrease minimum wage, allowing the water, electrical and thermal energy. tenance for electrical systems ed approach. believe that both private companies question about how and when to bestpopulation to invest money and gen- and general contractor for en- and the state need to fulfill their rolesmake this transition. Adoption in- Ro erate consumption. For realities like We see good opportunities in two -ar effectively, to successfully carry out this that I encourage investors to be- ergy projects. mania will be influenced by various eas at the moment: the modernization our goals for a cleaner future. factors, one of them being the abilitylieve in Romania.

102 romania energy industry 2019 romania energy industry 2019 103 ENGINEERING & TECHNOLOGY investment reports investment reports ENGINEERING & TECHNOLOGY POWERWEEK ASIA photo: pxhere.com the advent of The 5th annual international conference, provides 5 days of networking opportunities with C-level Ovidiu ANDREI executives during a 2-day conference as the main event, plus 6 workshops and masterclasses DECENTRALIZATION General Manager with real life case studies, expert views, and valuable insights to keep ahead of the competitive Electrica Serv market. Smart grids have received a great deal Mihai Versescu, PATRES pointed out of attention, mainly because of the that “The Ministry of Energy through 11 - 15 November 2019 very particular challenges that they the National Climate Change Plan PARKROYAL on Beach Road, Singapore pose. Decentralization is one of the has introduced a limit of 750 MWh We expect that storage capabilities most important ones, and it is closely by 2030 for prosumers […] It seems will become common in the Roma- linked to the evolution of the renew- that if this limit is exceeded, system nian market further down the road. able energy sector in Romania, more imbalances could occur because the This is mainly because technology 51% 32% 86% 74% 30+ precisely the disruptive trend of pro- network is rather old, which signals a prices are still on the high end, and C-Level Median Buy Side Asian Countries sumers. They are changing the local need for additional investment in the would require investments that may Executives Attendees landscape in the sense that production field.” be better used at this point in time Management Audience Represented is becoming more and more scattered to develop production. It is a good and power is generated somewhat un- Transelectrica has been struggling to moment for this considering that controlled, which represents a great adapt the national power grid to these prices for photovoltaic technology challenge for classic transmission and new realities but the progress has has decreased five times compared distribution systems. been relatively slow. Similarly, the- in to 2012. stallation of smart meters which rep- www.power-week.com/Asia

resent a stepping stone for smart grids ten times less than a smart meter and has seen significant delays - Romania which performs the same functions aimed to have smart meters installed except for tele-control), it is possible for 80% of its population by 2020 but to allocate and balance in real time the target has recently been delayed (under one minute) the energy pro- until 2028. duced from renewable and intermit- tent sources between consumers and Decentralization is also impacting producers who have subscribed to the Victor GÂNSAC other sectors of the industry, such as platform.” CEO energy trading. Restart Energy, for in- stance, is using blockchain technology Safetech Innovations to connect consumers directly with producers, essentially creating- a de centralized system for trading energy. 80% Armand Domuta, CEO of Restart -En of the population ergy, describes their recently launched scheduled to have Law 362/2018, also known as the platform: “The goal is to connect ener - smart meters Network and Information Security gy consumers directly with producers Directive (NIS), imposes a common using state-of-the-art IoT and block- installed by 2028 level of security for essential struc- chain technology. We are basically tures, that can cause prejudices to talking about installing intelligent sen- human and social life in case they The concept of blockchain technology sors for consumers as well as renew- are cyber-attacked [...] The law has is, however, very new to Romania and able energy producers that take the not been fully implemented yet, we SUBSCRIBE TO US AT its wide application will also depend data from existing meters and safely are still waiting for the application on an appropriate regulatory frame- www.globalenergy-magazine.com upload them directly into a blockchain norms which are expected to be -re decentralized database. With this work, another aspect where Romania leased in autumn 2019. modern infrastructure of transparent is lagging behind compared to other energy measurement (which can cost EU countries.

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Cluj has become one of the strongest regions in Ro- mania in terms of IT. What makes it such a nurturing environment?

It is linked to the fact that we have chosen an open cluster approach, easy to implement given the regional set up. In Cluj, more so than in other regions of the country, there is great openness from all parties in- volved, from companies to schools to public authori- ties, to work together on joint projects that can make

photo: pxhere.com a positive impact.

We have various initiatives underway and we are very Mihai happy with the collaboration. For instance, we have the Consultative Council for Entrepreneurship and Innova- DÂRZAN tion in IT, that includes representatives from the two CEO tech clusters in Cluj and meets monthly with the mayor Making Sense of Data: Ringhel to discuss the city’s strategy for digitalization.

IoT & Analytics Your platform for power and gas management is now Do member companies have a relevant presence on the most widely used in Romania. What was the tip- international markets? Or are they much rather fo- According to Accenture, up to 150 Tb difficult in the energy industry in Ro- rithms having been developed that ping point for companies to adopt your technology? cused domestically? of data can be generated in a large mania because much of it is still held in allow machines to learn from expe- industrial site in just one hour of op- pen and paper, making it very difficult rience and perform tasks that were As more and more players joined the supply market, The IT industry in Cluj has based its growth mainly on eration, an astounding amount of- in to retrieve. Nevertheless, companies once only achievable by humans. “Our the competition increased so companies needed to outsourcing. We work with customers in Western and formation to organize and leverage are focusing more and more on inte- capabilities in terms of text mining figure out ways to gain competitive advantages. We Northern Europe, USA, Asia, and less so in Romania. to one’s advantage. Turning data into grating smart tools in their daily activ- make it possible to identify particular were just the right partner to provide this advantage Companies in Romania have a lesser appetite for digi- valuable insights is proving particularly ities. entities, relationships between them, for them, because our solution had the capabilities to talization and also from an employee perspective there the context of a discussion and even make their work significantly more efficient. If in 2011 is a certain resistance to change, fueled by the idea One example is the increased adop- the feelings around it. We can identi- companies did not have an appetite for change, nowa- that technology might replace their jobs. Also some tion of IoT which uses sensors that can fy how a company fares compared to days they are proactively looking for tools to optimize companies perceive the costs of digitalization to be collect complex data about a compa- its peers in a specific region, how its their work and ensure that the knowledge stays within much higher than they are in actuality. 50-54% ny’s assets and transmit it in real time, products are perceived and draw con- the company even as employees change. of working time in even when we are talking about re- clusions about what works well and We are thinking of ways to encourage more deals lo- romania is spent mote or difficult to access locations. can be replicated to other regions or At an international level we have a great deal of com- cally, because we are able to offer very high quality on activities that The key is to contextualize this data areas where improvements are nec- petitors and based on how we see them evolving it is services and we are, for the time being, still very cost could be automated and apply intelligent filters, which is essary.” explained Stefan Baciu from clear that the need for automation and optimization is competitive. where analytics come in. SAS, a software company that offers growing. What we are finding is that there is a direct services in the niche area of advanced correlation between the openness of a market and source: Global Institute Analysis, McKinsey 2018 Artificial Intelligence has also seen analytics. their appetite for new technologies - Romania is for huge advancements, with new algo- example more open than Serbia at the moment. How- ever, the pace at which markets open up has increased and our goal is to capture this opportunity by being the first to set up shop in these markets. Ștefan BACIU Country Sales Manager What is your current geographical footprint and your SAS vision for development?

Given the similarities between countries in former Yu- Storing electricity is very expensive so it is key for companies to accurately estimate the goslavia, we expect the expansion efforts required on quantities needed. We are also able to estimate lossesaused c by infrastructure or fraud- our side to be lower so we are targeting this area as a ulent activities. Such projects already involve huge amounts of historical data but we also first step and next we plan to expand further into CEE, Bianca embed weather data, we can add if available macroeconomic data, such as the poverty and also the United States. Our goal for the next five years is to grow at a 60% pace year on year - this way, MUNTEAN index, the level of residential development, or investments made by companies in the area by 2023, we will have grown ten times compared to Cluster Manager that are going to influence the regional demand. the present moment. We trust this will be possible as big chunks of the market are still untapped. Transilvania IT

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Siemens helped implement the first and only renewable energy storage With global presence in over system in Romania. How do you see 100 countries, Schneider Elec- Marius this sector evolving in the near fu- - ture? tric is a leader in power man When it comes to smart cit- agement (medium voltage, PERȘINARU Storage is becoming increasingly im- ies, the best way to design low voltage and secure power) - portant primarily because of changes the concept is in terms of as well as automation sys tems. The company provides in power generation structures and Country President Romania & also consumption habits. Compared to their citizens’ quality of life, integrated efficiency solutions previous times when production was whether we are talking about combining energy, automa- The Republic of Moldova done in big, centralized structures, traffic, pollution or health- tion and software. Schneider Electric the trend now is towards decentrali- care. This is what drives the zation. More specifically, consumers trend, and there are many are developing production capabilities Digital transformation has been at and decentralization, decarbonization are being implemented punctually and from a grid perspective we need cities in Romania that have the core of your work. How do you and digitization will help better- man in various fields of activity but more Cristian to figure out the best ways to manage implemented projects that see this trend unfolding in Romania age the rising energy demand. Given support from the government is - need this distributed production and - con can be seen as elements of a in the coming few years? these circumstances, we need smart- ed for these results to become more sumption. It is particularly challenging SECOȘAN er tools, systems and infrastructures substantial. There are, however, some because energy is not typically used smart city. It is difficult to say Our bet is that the future is electric. to ensure electrical components can noteworthy efforts in terms of smart at the same time as it is produced, sowhen a city has become tru- The main challenges will be to have be easily implemented, work optimal, city infrastructure if we consider cities storage is becoming a real necessity. ly smart, because there will agile networks, so I think investments that they are safe for people and com- like Alba-Iulia, Cluj-Napoca or Oradea. CEO Romania & always be room for further will have to consider focusing more ply with regulations. This has not become very visible in and more on digital solutions. We are What can we expect from Schneider The Republic of Moldova Romania yet but it is a reality in many developments given that we already implementing digital solutions Electric in terms of developments in countries around the world. For the continuously innovate. Siemens on the Romanian market – ADMS dis- the coming two to three years? time being technology involves higher tribution management systems, which costs, but the prices will no doubt be are developed in our research and We are glad to bring this year to the pushed down as storage systems start development center in Serbia. These local market the augmented reality to be implemented on a large scale. If Siemens is a global technology com- has to do with integrating the decen- systems have advanced monitoring, technology – AOA (Augmented Oper- we consider photovoltaic panels, their Surprisingly enough, we fare pany focused on the areas of electri- tralized production and consumption control, analysis and planning func- ator Advisor), which improves opera- prices have decreased by 80% com- fication, automation and digitaliza- mentioned previously. Prosumers tions for greater efficiency. Proven- al very well when it comes to tional efficiency, reduces downtime pared to five years ago, directly linked produce when they can and consume tion. The company has been present ready in many regions, they have been adopting gadgets and we and human errors. We are also com- to their broad implementation. It is when they need to - smart metering in Romania since 1905 and its local implemented over the globe. mitted to continue the projects- fo difficult to say when storage will - be has started being implemented, and are leaders in terms of inter- cused on modernizing the distribution capabilities include four factories come common in Romania - a support net speed, but things did not this is a key element because it allows Can you expand on how IoT and oth- networks that we already started. and four local research and develop- scheme may be required in order to us to identify patterns and figure out er modern technologies can improve move as fast in the institu- ment centers with a total of 2,200 speed up the process, similar to what the best ways to manage and balance the way in which energy companies For 2020, our goal is to keep on bring- employees. happened in other areas of renewable tional area. the grid. conduct their business? ing new technologies on the local energy. market and promote our SMART -ener What are the main challenges you are As far as we can see, the energy par- gy efficiency solutions. Our innovation The company’s strategy is presently noticing in the Romanian business adigm is changing under the action of is founded on connectivity, sustaina- focused on digitalization and smart environment and the solutions you four major factors. Firstly, decentrali- How does Romania compare to other bility, efficiency, safety and reliability, solutions. What can you tell us about envision? zation is increasing and so is the use countries in the region when it comes empowering our customers to achieve the level of adoption of such technol- of solar energy. According to New En- to adoption of new technologies? the operational efficiency challenge in ogies in Romania? Any healthy business environment is ergy Outlook (Bloomberg New Energy a sustainable way. rooted in stability and predictability, Finance, 2016) 50% of new energy A recent EU report (Digital Economy Smart factories are already a reali- - areas in which Romania, unfortunate and storage capacity will come from and Society Index, 2019) showed that ty, for example in Romania we have ly, falls short sometimes. The reason solar by 2030. Further to this, decar- Romania’s performance related to the worked together with a gearbox pro- likely has to do with the fact that bonization is becoming a priority and digitization of economy is lagging -be ducer and they are now operating one some of the key decision makers in the pressure to reduce greenhouse hind significantly. Romania ranks 27th of the most advanced factories in the the country are not genuine experts gas emissions will increase the num- of 28 countries in DESI and has the country. in their activity area. I have no doubt ber of green buildings worldwide. lowest performance among EU mem- change will come, but it will happen ber countries in terms of digital pub- In the energy sector the focus is on in time, as generations start changing The electricity consumption is expect- lic services. In the private sector, we smart grids, which still pose several and leadership is taken over by people ed to increase by about 2% per year find solutions for digitalization which challenges. The most important one that are better qualified.

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From Aggreko’s offices in Romania you cover the entire Eastern Europe. How favorable do you believe the business environment is at the moment?

Romania is undoubtedly a good place to do business, and the private sector par- ticularly is keen to invest and evolve. We are a young nation, aggressively devel- oping and ripe with opportunities, for those who are wise to spot them.

Often times attention is directed towards scandals and problems, insteadof con-

centrating on what has actually been going well. Indeed there are chall enges photo:Stock Adobe coming from the public authorities, that are responsible for setting the rules and Sebastian making sure those rules are not in fact hindrances. But part of the in dustry’s role is to push for effective dialogue with them so that we can prioritize t ogether CHERTEȘ what needs to be done. Romania does not need fixing, it needs ameliorations .

What are the key milestones you wish to achieve at Aggreko in the coming few years? so HOW SMART IS ROMANIA? Business Development We wish to do more with renewables, leveraging the solar capabilities we h ave At the end of the day, technology is it ultimately boils down to a national Manager implemented in Australia. We offer solutions for the full cycle of buil ding, test- an instrument put at our disposal to scale strategy. Electrogrup’s Adrian Aggreko ing and operating solar and wind parks. Aggreko can build mini networks , and I make lives safer and more comforta- Florea points out that the approach believe the future of the energy industry is decentralization and more efficient ble. Romania’s millennial generation must be a gradual one: “In Romania, power management and self regulation. is eagerly waiting for 5G technology, the idea [of smart cities] is intriguing benefitting from an improved private for many local decision makers but In Romania gas is still the dominant fuel for the time being, though, and th e projects being implemented at Aggreko focus- healthcare ecosystem and working in the limited understanding in terms ing on gas-to-power are definitely a key focus point. Once the offsh ore projects will start in and Romania, we also BMS operated office buildings that did of the need for a very strategic and expect a spike in demand for our solutions in this area. As world l eader in temporary power generation solutions we are not exist a mere decade ago. holistic plan when embarking on this Alexandru LUPU certain to be of use, whether just for rental of ownership trans fer. road makes the implementation -a dif Sales Director Smart factories are already a reality ficult task [...] If you have a solid- infra Helinick in Romania, though still in a relatively structure, any other service like smart reduced number, and there are many parking, smart public transportation 2020 AFRICA ENERGY INDABA THEME cities in the country that have imple- or smart lighting can be added- after AFRICA’S ENERGY SECTOR: mented projects that can be seen as wards.” elements of a smart city. According to Smart cities are achieved through From Transformation to Transition the Romanian Association for Smart Overall, Romania is well positioned for companies such as ours and a myr- City and Mobility (ARSCM) there are a digital future. But for the country to iad others working independently over 300 smart city projects in Roma- take full benefit of the opportunities or together to create a better com- +160 nia - E.ON, for instance, has recently presented by digital transformation it munity. As an example, Helinick SPEAKERS finalized the first smart street lighting will have to count on all stakeholders recently developed an app called project in the country, in the com- working together, and better lever- Parking Spotter which allows- driv mune of Frumuseni, Arad county. age its population’s savviness when it ers to automatically identify the comes to technology. +350 nearest available parking place But while the private sector is respon- AFRICAN & GLOBAL CEOS through the use of video analysis. sible for driving much of the change, +4000 PARTICIPANTS Corneliu BODEA 3 & 4 MARCH 2020 CEO CTICC, CAPE TOWN +10 Adrem AFRICAN ENERGY MINISTERS REGISTER TO ATTEND on the website: Romania is already reasonably automated and we are now stepping further into Industry 4.0. […] Romania has www.africaenergyindaba.com Why should you attend? Attendees of the Africa Energy Indaba conference and exhibition will meet project developers, owners and investors at the cutting edge of Africa’s booming energy sector. a very fast internet connection and Romanians are early adopters, glad ot get acquainted with new technolo- TO BOOK A STAND Delegates will hear about current attractive markets, pitfalls to be aware of and how to get involved in regional gies, which makes me think that the transition will be relatively easy. As for smart grids and smart cities, they call 011 463 9184 or energy markets and energy infrastructure projects. It is the ideal event for investors who would like to start are further into the future, we will have to wait another 10-20 years. email: [email protected] energy businesses, but are not sure of how to get involved and build a successful business.

110 romania energy industry 2019 romania energy industry 2019 111 ENGINEERING & TECHNOLOGY investment reports

You recently ventured in a new market and opened Energy storage is a key topic nowadays, especially for a Smart City division. How prepared is Romania for the growing renewables sector – what are your capa- this digital future and what are the next steps in this bilities in this area? direction? We have a business line dedicated to critical solutions, Prepared or not, smart cities are already part of our namely uninterrupted power sources (UPS), used by present and certainly the way of the future. In Roma- critical consumers such as hospitals, banks and many nia, the idea is intriguing for many local decision mak- others. Given our numerous patents in the field of en- ers but the limited understanding in terms of the need ergy conversion it was a natural step for us to expand for a very strategic and holistic plan when embarking into storage. on this road makes the implementation a difficult task. Renewables were indeed a catalyst for a growing need Local authorities usually have micro ideas like traffic for adequate storage, in addition to balancing out gen- Cristian control, smart census and population mobility motor- Sebastian eral network dysfunctions. This is still a new field with ization, smart cameras and so on. But the main chal- many pilot projects currently underway, but we expect PÎRVULESCU lenge in the development of smart cities is building an FERECUȘ it to grow exponentially. CEO efficient ICT – Information and communications -tech General Manager SEE nology infrastructure that makes room for customiza- ENEVO Group Emerson Given your regional perspective on how favorable tion and all these services to be integrated at different various business ecosystems are across Europe, how points in time depending on budgets. If you have a sol- do you think Romania measures up? ENEVO Group positioned itself as a global company id infrastructure, any other service like smart parking, Why did Emerson choose Romania as a hub for its from the very beginning. What led to this decision and smart public transportation or smart lighting can be Automation Solutions business in South East Europe? Investors have been growing in numbers and business what markets are you currently present in? added afterwards. in on an upward trend, but nowhere near its poten- We looked at the advantages that were available in tial. There are of course some challenges and the most The decision came naturally, especially since we knew All things considered, does infrastructure in Romania the Romania market. Romania has welcomed foreign pressing one is largely surrounding infrastructure. An very well that the Romanian market had palpable chal- make for a smart investment? investment and the country has become an econom- example is the automotive businesses, some of which lenges - we are talking about a relatively small market, ic engine in South East Europe. We also considered are turning their gaze to Poland and other countries in where not much investment has been made, and that is Even if it may not look like it from a distance, Romania the essential role that the energy industry plays in the region despite Romania’s history in the field. also fairly traditional. Our vision for the first five years is still an emerging market. Even in the Western- Eu our portfolio. Romania has a domestic energy market was to acquire some quality references that will slowly rope there is still a lot of room for infrastructure devel- that is very diversified, with capabilities that include Another challenge surrounds available labor. Back in take us to the market we are targeting, namely power opment and modernization but in Romania we are at everything from exploration to production, refining, 2002 when our factory was the only one on the region and automation. As a new player you need to engender about one third of our need and potential. This makes power generation and distribution. Presently, the- en we benefited from the bulk of the local workforce. In trust and the best way to do it is through examples of infrastructure projects a safe and fast to make revenue, ergy sector generates about 80% of our non-export the meantime, with the development of several other projects that you have successfully executed. For us, as well as a low risk investment. business in Romania. facilities, we have noticed growing competition- par it was much easier to access such projects in markets ticularly in the past two-three years, and we too are where there is an abundance of opportunities. The other major reason we established our engineer- looking at innovative ways to attract and retain staff. ing and manufacturing campus in Cluj is because the Presently we have projects in execution in Saudi Ara - city has excellent universities, especially for training in bia, Bahrain, Morocco, and in the past we implement- technical skills. The talent available has led Emerson ed the automation for the back-up energy supply of a to make long-term investments in Cluj that have cre- back-to-back substation for the Uruguay-Brazil inter- ated a campus that now welcomes around 2,500 em- connection. Any market is interesting for us as long as ployees. our services are sought after and our people are safe. You offer a very broad portfolio, both in terms of prod- Where do you see the most room for growth going ucts and customer types. What has been driving de- forward? mand in recent years?

We see great opportunity in the industrial IT and cy- Until two years ago most of the demand in Romania ber security areas. Industrial IT is very different from and South East Europe was coming from the refining enterprise because we are talking about critical infra- segment, but recently the exploration and production structures that were not thought out, when they were areas have become increasingly active. Much of it has initially designed, to work online. Regarding cyber se- Adrian to do with the Black Sea discoveries and generally the Iordan curity, the need comes from the fact that new secu- offshore activity. We have also noticed more demand rity threats have appeared in the world, today’s wars FLOREA in the power generation area. For instance, we are sup- MINCĂ have moved into the area of exploiting vulnerabilities General Manager plying some technology solutions for greenfield power Sales Director Utilities EMEA of critical infrastructure, a challenge that will need to Electrogrup plants in Romania and Greece. When it comes to tech- EATON be countered with great care. nologies of choice, digitalization is the word.

112 romania energy industry 2019 Oltului Valley, Romania photo: Adobe Stock FINAL THOUGHTS

My message to foreign investors is to have confidence in Romania’s poten- Adrian VOLINTIRU tial because it is a sleeping giant. We are a NATO member state, the main CEO security provider in the Balkans with a particularly important geo-strate- Romgaz gic position. Our legislation encourages foreign investments with nimalmi barriers, but also smart and diligent people who identify with the umanh Eugenia GUSILOV Armand Doru DOMUȚĂ principles that underlie the formation of the European Union. omaniaR is CEO a country that wants more and will reward those who invest in the future. Director Restart Energy ROEC My message is that Romania is a very competitive market, and has a series of major ad- vantages. For instance, our fis- cal climate is among the most Traian HALALAI I want to see Romania over- Executive President come its inferiority complex – attractive in Europe, and best reflected in the automotive- in EximBank oftentimes Romanians under- I trust that if the industry is We are extremely pleased to value themselves. Even today, dustry which is flourishing at persistent enough, and if its ar- notice that important ears are foreign professionals tend to the moment. The population guments are based on thorough has also become more mature opening up to our generation’s receive much higher salaries studies, it can stimulate a more and this created an environ- viewpoint and we are actively compared to local ones. May- - effective dialogue. Keeping the ment that is overall very profes- encouraged to speak up at con be this practice was justified ferences, events and even polit- prices affordable is important, sional and ripe for accelerated Florin POP in the 1990s, when fresh out ical gatherings. There is a gap but it should not be the only We are experiencing globali- development. Deputy General Manager of communism, few Romani- perspective that is considered that we can bridge, between EnergoBit zation at its fullest, therefore ans were familiar with Western because it is a losing strategy. the precious experience and geographies almost cease to management/business culture The focus should be directed knowledge of older generations exist, a perspective that I found or possessed highly specialized towards optimizing costs and extremely applicable to the en- and the fresh skills and know expertise, but it is no longer improving services, which in ergy sector. This is the reason how that we bring. justified today. There are now time creates more competition I found it relevant to focus our In the last few years our inter- many generations that have & better options for consumers. national activity has accounted attention on the major progress studied in the world’s best uni- - for about 10% of our business. made by companies with Ro versities, built top expertise Looking back, this was rather manian capital especially, to and returned home. a result of circumstances - we expand internationally during seized opportunities that came the last years. The Romanian our way. Recently, however, we energy industry has a privi- Paula PÎRVĂNESCU have started paying more at- leged position and may play tention to outside markets. We an important role in the region Secretary of State now have people in the compa- and not only. InvestRomania ny that are dedicated to follow- Claudiu BUTACU ing international markets so we Claudia BRÂNDUȘ To investors we say there is no time like the present to establish a presence! President and Co-founder are talking about a proactive, President Romania remains one of the highest performing economies in the EU, as calculated approach. EFdeN RWEA well as a regional pillar for stability and growth. COMPANY INDEX

COMPANY/institution page COMPANY/institution page

ACUE (Federation of Associations of Energy Utilities Companies) 85 Hidroelectrica 13 Adrem 86, 100, 103, 111 IEAS (International Electric & Automation Show) 87 Advantage Austria 18, 53 InvestRomania 9, 117 AFM (Environmental Fund Administration), Ministry of Environment 66, 84 Lisscom 100 AHK (Romanian-German Chamber of Commerce) 18, 72 Mazarine Energy 40, 42 Aggreko 110 MET Romania Energy 15, 91, 92 Altius Fotovoltaic 63 Ministry of Economy 15, 78 ANRE (Romanian Energy Regulatory Authority) 25, 26, 27, 94 Ministry of Environment 85, 66 BSOG (Black Sea Oil & Gas) 49, 51 Monsson 65 BRM (Romanian Commodities Exchange) 45, 91 Nuclearelectrica 10, 12 Carpat Energy 63, 71 Odfjell Drilling 55 CDI Oilfield Services 40, 55 OGR (Oil & Gas Recruitment) 20, 21 CEZ Group 11, 57, 67, 86, 88, 90 OMV Petrom 5, 39, 40, 53 CIS GAZ 20, 82 Oscar Downstream 83 Clariant 73 PATRES (Renewable Energy Producers Organization of Romania) 60, 104 Conpet 80 Petroleum Club of Romania 25, 47 Deloitte Romania 23, 29, 48, 54 PMG Wind 71 Depogaz 86 Renovatio Trading 67, 90, 93 E.ON Romania 28, 85, 89, 97, 119 REPOM 64 EATON 113 Restart Energy 95, 105, 116 EDP Renewables Romania 63 Ringhel 107 EFdeN 20, 116 ROEC (Romania Energy Center) 17, 117 Electrica Serv 104 Romgaz 35, 38, 117 Electroalfa 20, 75 ROPEPCA (Romania Petroleum Exploration & Production Companies Association) 40, 41, 46 Electrogrup 111, 112 RWEA (Romania Wind Energy Association) 61, 116 Elsaco 102, 103 Safetech 105 Emerson 113 Sand Hill Petroleum 41, 42 Emerton 33, 44, 94 SAS 106 EnergoBit 100, 102, 116 Schneider Electric 109 ENEVO Group 112 SERVELECT 99 EPG (Energy Policy Group) 16 Siemens Romania 108 Eximbank 117 The DIPLOMAT 19 Eximprod 98, 99, 101 Tinmar 95 FPPG (The Oil & Gas Employers’ Federation) 25, 34, 46 TPA Group 25, 72 GEFCO 84 Transilvania IT 107 Green Seiro 66, 68, 69 Petroleum-Gas University 21 Habau PPS Pipeline Systems 76, 78, 81 Vestas 2, 70 Helinick 111 Wolf Theiss 31

118 romania energy industry 2019 romania energy industry 2019 119 EDITORIAL & MANAGEMENT TEAM

Irina Negoita Sorina Dumitru Co-Founder & Director Co-Founder & Lead Editor

Radu Dudău Bianca Negoescu Flavia Negoescu Analyst & Editor Media Relations Graphic Design

Our team is dedicated to bringing you comprehensive, high quality market intelligence from industries across CEE. We hope you find the present report useful, as well as an enjoyable ead,r and we highly welcome your feedback! Please contact us at [email protected] and visit our website to subscribe to our monthly newsletter t:a

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THANK YOU

We thank all executives, analysts and authorities that met with us, without whose precious insights our uniquely tailored studies would not be possible. In particular, we thank our partners:

InvestRomania EPG (Energy Policy Group) FPPG (The Oil & Gas Employers’ Federation) CRE (Romania Energy Center) ACUE (Federation of Associations of Energy Utilities Companies) ROPEPCA (Romania Petroleum Exploration & Production Companies Association) Petroleum Club of Romania

www.endorfilms.ro investment reports romania energy industry 2019 ISSN: 2668-5108ISSN: investment reports investment