2014 is a paradoxical year for hydrocarbon exploration. On the one hand, numerous companies have announced the start of operations, while Chevron has concluded the first drilling for identifying shale resources in Romania. On the other hand, the numerous difficulties in the field have delayed the seismic exploration works and drastically reduced the activity of the main local provider of prospecting services for the oil and gas industry. Under such circumstances and in light of ambitions of energy independence supported by authorities, the role and importance of the Romanian Petroleum Exploration and Production Companies – ROPEPCA have increased significantly.
ROPEPCA was established in 2012, and this summer it was officially launched in an event with media presence. The Association’s mission is to come up with a unified position for the onshore upstream oil and gas in Romania and increase general awareness regarding the industry and its importance in terms of positive effects on the economy and employment.
Actions of the association are aimed at strengthening the oil and gas exploration and production sector in Romania, including through close collaboration with the state, government, regional and local authorities and regulatory agencies. Specifically, the association released a position on Tax on Special Constructions (TSC), in which it pointed out that an industry extremely expensive in terms of capital investment needs a tax system based on profit. It would allow the deductibility of material expenses and would support the industry with a prudent asset amortization system. The announcement of authorities on reducing the TSC level, from 2015, is considered a first step necessary to recognize the role played by industry in the Romanian economy and society.
“We welcome the Romanian Government’s decision to reduce pressure on investments. We shouldn’t forget that one euro invested in the oil and gas sector generates other 2.3 euros in the rest of the economy. Moreover, most jobs generated in the initial phase of the activity are addressed to highly specialized professionals and have a local impact. At the same time, after starting exploitation works, more jobs occur, and a job in the oil and gas sector generates 4.3 indirect jobs”, ROPEPCA President Michel Louboutin said.
Members of the Association believe that in order to continue encouraging investments in the oil and gas industry it is necessary that changes in the tax regime focus on obtaining a justified balance between the risks and benefits undertaken by investors, on the one hand, and the funding needs of the public budget. The same principle should also govern changes eyed by authorities in terms of hydrocarbon royalties.
A common voice of the industry
The Association also took a stand in the matter of access to land for the exploration and exploitation of hydrocarbon resources. Currently, ROPEPCA members own most onshore concession perimeters in Romania and highlight that any delay, hindrance or obstacle in the process of issuing permits and approvals have a direct impact on project deadlines., and results in a longer period the state fails to collect royalties to the budget.
“Government should increase its involvement in such projects, simplifying the process of approval and permit issuance”, ROPEPCA President Michel Louboutin says. “Currently, there are 17 companies in the association, with total potential investments of over one billion dollars. It is for everyone’s benefit – companies, authorities, general public – that operations approved and surveyed by authorities carry out in good conditions, according to planning”. These are the companies member of ROPEPCA: ADX Energy Panonia, Amromco Energy, Aurelian Petroleum, Beach Petroleum (CEE) SRL, Chevron Romania Exploration and Production, East West Petroleum, Expert Petroleum, Fora Oil & Gas, Hunt Oil România, Moesia Oil&Gas, NIS Petrol, Panfora Oil & Gas, Raffles Energy, Rompetrol, Winstar Satu Mare, Zeta Petroleum Romania.
From 2014, the Association was joined by OMV Petrom, holder of the largest number of onshore concessions in Romania and the most important investor in E&P operations. Companies within ROPEPCA have made in 2014 important investments in operations for prospecting hydrocarbon resources. The success of such activities means including the reduction of oil and gas imports, with a positive impact on prices and the Romanian economy as a whole.
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The full version of this article can be read in printed edition of energynomics.ro Magazine, issued this November.
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