Acasă » Oil&Gas » Consumers » KMGI plans to invest billions of dollars in Romania, funded by China Energy Company

KMGI plans to invest billions of dollars in Romania, funded by China Energy Company

14 July 2017

KazMunayGas International plans to make billions of dollars worth investments to improve assets in Romania, but also to acquire new assets, said Alexey Golovin, VP for Corporate Development and Strategy at KMGI, at 2017 Energy Strategy Summit, held in Bucharest. “Earlier this year”, he said, “the “One Belt, One Road” initiative by China was announced. It is a huge initiative which will probably encourage investments of around 125 billion dollars in the next 5 years. Around 11 billion of this investment will be invested in Romania in the next 5 years”. The information was bolstered by a representative of the Chinese company who said at the Astana Expo 2017 that CEFC will provide a three billion dollars funding after the approval of its five-year business plan. “These resources and capital will help KMGI to become an energy and investment platform for the next 5-10 years”, said CEFC’s Du Liefen, quoted by Agerpres.

Here it is a selection of ideas from Mr. Alexey Golovin’s intervention at 2017 Energy Strategy Summit.

Esteemed organizers, thank you very much for inviting me at this energy strategy summit. It’s a big pleasure to see such a big audience, which means that the topic is really interesting, not only for the business representatives, such as I am, but also for the public sector and for the consumer sector.

The panel is very generous, and since the redline of this panel is energy security I would like to share the perspective from our point of view, from a business point of view, more precisely how a company, by pursuing its own pragmatic and business objectives, is contributing to overall energy security of Romania and in general, to overall energy security of the region.

I also enjoyed very much the first panel, where many interesting insights have been said. Especially, I liked the notion proposed by Benedikt [Klauser, DG Energy, European Commission], when he said that before having any discussion about the regional cooperation, about the policies and strategies at the level of EU, it is always very important to take care of our own yard, and to have all things well sorted out here, domestically. By doing this, obviously, we may contribute to the security much more than having a large discussion with no real substance in the implementation.

KMGI, as you know, is one of the three oil and refining producers in Romania. We own Petromidia Refinery at the Black Sea, we have one of the largest network of filling stations in the Romania, through Rompetrol. But we also operate at a regional scale, in six EU countries, we also have a large presence in Moldova, in Georgia, and in Bulgaria. We are exporting products from Romania to other European countries, like Serbia, Hungary, Turkey, so we are essentially a regional player.

From the experience I have working here, Romania has a great potential to contribute to the energy security in the region and to become, if you want, this energy hub of the region. There are a lot of smiles when we talk about regional hubs and ambitions of so many countries to become regional hubs. And then, of course, there is this discussion on the definition of an energy hub, and on what really is an energy hub. However, we cannot ignore the fact that Romania is having undoubtedly a lot of advantages, in the Eastern-Central European region.

First undeniable advantage is its beneficial geographical position, and having access to the Black Sea. Black Sea, as you know, is one of the centers of gravity for oil industry. I will give you one example. As you know, Rompetrol is owned by KMGI oil company, representing Kazakhstan interests in O&G sector, and most of its exports are directed exactly to the Black Sea. The multibillion project of Caspian pipeline consortium is currently under expansion and we’ll be able to export from East to the Black Sea around 70 million tons of crude per year. 90% of this crude oil is originated from Kazakhstan.

In the past, Romania was largely dependent on Russian oil crude supplies, while today, on top of its domestic oil production, which is still in place, the diversification of oil supplies – from Russia, from Kazakhstan – brings more flexibility to the country and brings, of course, more predictability, in case of any disruptions in oil supplies will happen in the future.

As of today, Romania is already very well positioned and it is scoring very fine in terms of energy security. It depends on energy imports less than 20%, so it is almost self-sufficient. From this perspective, Romania is placed on the third position in the European Union, where the dependency on imported energy resources is around 55%, on average. This is a good base to further increase its energy security position in the region. Not only in regard with the domestic objectives of securing access to energy, but also for expanding the existing asset base and for contributing to energy security at a regional scale.

The EU energy policies are very clear and they seek to ensure the provision of energy whenever it is needed, to make the production of energy sustainable, and in a such competitive environment to ensure affordable prices for businesses, for enterprises, for private consumers. Mihnea Constantinescu said earlier that energy efficiency is the key on the long term for ensuring energy security. I fully agree with this! And here it is a practical example: as of today, for the last 5 years, our direct investment in the refining production facilities of Rompetrol amounted around 1,6 billion dollars. One of the key areas for our investment was exactly addressing the energy efficiency issue. By introducing new technologies we managed to improve our energy efficiency by more the 40%. There is no limit, of course, as new technologies are coming every year, but, clearly, each technology comes at a price.

As a closing remark, I will make another comment in relation with Romania’s potential. Earlier this year, the “One Belt, One Road” initiative by China was announced. It is a huge initiative which will probably encourage investments of around 125 billion dollars in the next 5 years. Around 11 billion of this investment will be invested in Romania, in the next 5 years. From our perspective, as a big player in the refining industry, in the O&G industry, we have a good potential to absorb these investments and to strengthen Romania’s position as an energy hub. KMGI agreed recently to strike a partnership with a private Chinese company which is committing to bring investments. Kazakhstan is bringing the resources and Romania has a significant asset base which can be expanded in the region. We remain positive in regards with the future evolution of the Romanian energy industry, however, in terms of what the government can do in order to encourage the inflow of investments, there are some simple things: predictability, stability, guarantees for the capital investors that their capital intensive projects and assets are secured. Then, the investment projects will happen naturally.

Leave a Reply

Your email address will not be published. Required fields are marked *