Austria supports BRUA and Neptune Deep projects (Energynomics Magazine)

Austria would love to have a new gas supply towards Baumgarten, and it will be great if Romania would have its gas hub here. As the BRUA and Neptun Deep projects develop, Romania can see a lot of money coming this way, with trade balance improving and a more stable national currency, even before chasing in royalties, says Gerd Bommer, Head of Advantage Austria in Bucharest.

“Austria supports very much these projects,” he tells, in an exclusive interview.

What were the effects of the Government Emergency Ordinance 114 and its follow-up amendment, via GEO 19, on the business environment and the companies in the oil and gas sector in particular? How do you think freezing the gas and electricity prices is affecting the industry and Romania?

The Emergency Ordinance 114 was a problem in itself as it implied too many changes and too many different laws and regulations, changes done overnight, because it came out right before Christmas and most of it should have been into force starting with the 1st of January. The general problem that we have here is lack of predictability – as an investor, what you need is transparency, stability and predictability – and that was not given by the 114.

We have a lot of companies working in a lot of completely different types of business environments and legal frameworks and business cultures around the world. The companies can actually work with that because in most of the countries the environment is stable. So that is actually what is needed. A stable, transparent and predictable environment. And companies can adjust to it. Some of the provisions of 114, such as the bank tax, has been introduced without knowing how to calculate it. Another problem was that other some of the regulations like a gas price cap is against the European Union principles. It can attract an infringement procedure from the European Commission.

And all those changes actually had one negative effect – the prices for many materials and raw materials in Romania are the highest in Europe. The gas price, for instance, tends to be higher than the imported gas. So, in the end, when we talk about the Emergency Ordinance, a clear, transparent and normal way of implementing regulations is what companies wish for.

What is your opinion on BRUA (Bulgarian-Romanian-Hungarian-Austrian gas pipeline)? What about the Black Sea Neptune Deep project? How and when we will be able to have them running (especially since Hungary has opposed so far to a classic corridor for BRUA) and what is needed here to run the project smoothly?

If you look at the energy sector, the Austrian companies are very stable. For instance, the change of the CFO in OMV Petrom was planned for about a year, and was communicated several months before the change. In the government authorities the changes are too frequent. It leads to a lot of changes in kind of the way that the companies and the authorities work with the government.

Luckily, in certain state owned companies there was a bit of stability, like Transgaz, which is crucial for the sector right now, because of the BRUA and Neptune projects. BRUA is being built, and now what is missing is the connection to the Black Sea and to Hungary. And the government also decided – and that this is a good thing – about the gas hub, and which way the gas should be traded. I guess the issue with Hungary will get a solution, because initially Hungary was not eager to adopt BRUA, looking for Baumgarten as be the final hub. But from my talks with OMV Petrom I understand that Baumgarten is a rather small hub. But if it gets Romanian deep sea gas as well – at least partially, because the largest part is being traded here, in Romania -, then the hub will be more financially efficient.

The stability of the government and the state-owned companies working in that sector is in my opinion crucial for Romania as exports of gas will be exports in the trade balance, so the trade deficit will narrow – which will be also very good for the currency because right now the currency is basically stable because of interventions by the National Bank and the diaspora which wires euros back, which means that makes the currency strong right now. If the diaspora does not send that much money back anymore then the currency that can only be balanced by rising exports.

If we talk about BRUA, about the Neptun Deep sea project and the gas coming on to the market, this is going to be a complete game changer for Romania as a state.

But does Austria support these projects?

Very much. One should never forget that Austria has different and very stable sources of gas, and Europe seeks different sources of gas; for example, Poland started to import from the Arab world, the US became four years ago a net exporter of gas and right. So there are different sources which help to contribute to the stability as the supply diversifies.

Thus, for Romania these projects could contribute largely to its own stability, to its own financial stability, trade balance and the currency exchange rate, and Romania could also contribute very much to the stability of Europe overall, in terms of the economic stability that it gives, which is also a security issue.

Having diversified supply and having a lot of supply from within the European Union helps the stability and security of the European Union. So the project is very well perceived in Austria, in terms of the stability and security of Europe, overall.

How do you see the offshore law changes?

The offshore law was passed a few weeks ago. And the way it was passed brings kind of stability back into the framework for the investors. You are aware that Exxon Mobil pulled out of the project, not only, but also because of the instability in the regulations. So now there is at least a bit of stability. And the terms, as they are now in the law, let’s say that they are not most favorable for the investors, but at least they make the project feasible.

Also, the government gets more money from tax revenues in the years earlier to the investment, so that it doesn’t even matter that the royalties go down a bit. So in the end it would also help the finances of the state.

What other new energy investments do you see coming to the market?

The investment sector is a bit difficult, because photovoltaics were subsidized let’s say generously, and then the subsidies have been taken down by a large chunk, which made all the projects negative. So all the figures of the projects are negative. So there will no not be any new large investments into photovoltaics. But they could come from single family homes and factories, especially with an incentive. In Austria we have tens of thousands of single family homes that already have photovoltaics and solar and thermal panels on roofs.

Something we don’t see right now is also any private investment into hydro energy. Austria is one the biggest hydro energy producers, besides state companies like Hidroelectrica. But we don’t see any new investment there. What we do see is renovation and energy efficiency investments.

In wind energy, also, after the great significant changes, it’s very financially unattractive right now. So there will be hardly any new investments as also Romania achieved the renewable energy quota a few years ahead of time. What would be very good, for instance, is what Austria does – a lot of waste-to-energy projects. Biomass and biogas projects will be very favorable for agriculture, forestry and cities. So you don’t have to landfill the waste, but use the waste. If you look at Austria, the legislation provides you’re not allowed to landfill any more, at all. We have huge bio plants in the city of Vienna. We have a waste incineration plant in the city center.

So the project that the Bucharest City Hall tries to do in the city center is not awkward?

Gabriela Firea was in Vienna two years ago, and studied the plants there – Vienna has three incineration plants within the city limits, one in the city center. Of course it’s also crucial not to have the garbage trucks drive in and out. What is necessary for that concept, like in Vienna, is that you do the separation of the waste beforehand. Which means the consumer does the separation – which means you have different bins for paper, for plastic, for residual waste. And this way you can go with a garbage truck more or less directly into the waste incineration plant and you can go with all the recycling material into recycling plants, which is what is not being done yet in Bucharest. You will also have to change the setup of how the consumer collects the waste and how the garbage collection companies work.

Waste is a huge source of raw material.

The example of the waste incineration plant in the 9th District of Vienna which is north of the 1st district, in the very city center, shows that the waste incineration plant does not have to disturb the people. It has hardly any smoke coming out, it doesn’t stink. Also, the garbage trucks are being led in specific ways, so in terms of traffic they don’t divert into traffic jams.


This interview firstly appeared in the printed edition of Magazine, issued in December 2019.

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Gabriel Avăcăriței

Journalist experienced with both old and new media, Gabriel has been the editor in chief of since 2013. His great command in communication, organizing information and publishing are put to work every working day in order to develop all the projects of the B2B communication platform: website, magazine, and own-events.

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