Beacom: The impact of the new laws on BSOG investment plans is highly negative

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In spite of the fact that Black Sea Oil & Gas received the Ministry of Energy authorization for the offshore works required to start gas production in the XV Midia perimeter, the company warned that the new taxes could affect the development of this project, Reuters and Agerpres report.

In 2008, Black Sea Oil & Gas, a company now controlled by the Carlyle Group LP, discovered two deposits that would contain about 10 billion cubic meters of natural gas in an area located 120 kilometers offshore in the Black Sea. The company hopes to start production in 2020, to become the first company to extract the vast offshore resources of Romania.

But in December last year, the Government of Bucharest introduced more taxes through an emergency ordinance without an impact study or public debate, including a 2% turnover tax on energy firms and a cap on the price of natural gas. These came after an offshore drilling law stipulating that Romanian companies must sell at least half of their annual gas production in Romania.

“The impact of these legislative changes on our investment plans is extremely negative. Our ability to obtain a final investment decision is adversely affected”, said Mark Beacom, general manager at Black Sea Oil & Gas.

Unlike other countries in the region, Romania is largely independent in terms of its energy needs. It imports less than 10 percent of its gas needs from Russia, with the rest produced locally, mainly by state producer Romgaz and OMV Petrom, controlled by Austria’s OMV.

“(The price cap) removes investor confidence that being a Romanian producer will not result in being economically disadvantaged versus investing in other countries,” Beacom added.

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