Romania and the Shale Question
By Editorial Dept - Jan 18, 2013, 12:02 PM CST
Situation: Romania is ushering in a new government following December general elections, and this new government-designate is indicating that the shale question will be decided very soon. At stake are Chevron’s existing exploration contracts, which are languishing under a moratorium on hydraulic fracturing. The Prime Minister-designate, Victor Ponta, has now said that Chevron’s situation will be “an area of interest” and that the new government will pursue a competitive oil and gas industry.
Bottom Line: In June, the Romanian government opted to postpone a move to allow hydraulic fracturing until after parliamentary elections in early December. Elections are over and the incumbents have won. With the public pressure now off the government in terms of votes, the government-elect is likely to move forward in the name of securing hydrocarbon self-sufficiency and competing with Poland to the disadvantage of Russia.
Analysis: What’s at stake in Romania is its sizable shale reserves. No one knows exactly what the breakdown is, but the estimates are that Romania, Bulgaria and Hungary share 538 bcm of shale gas reserves. Right now, Romania isn’t allowing fracking--there has been too much public and political opposition. But that’s the run-up to an election. Until votes were cast and counted, the incumbent ruling political party, the Social Liberal Union (USL)—which won the vote—kept quiet on the issue, attempting…
Situation: Romania is ushering in a new government following December general elections, and this new government-designate is indicating that the shale question will be decided very soon. At stake are Chevron’s existing exploration contracts, which are languishing under a moratorium on hydraulic fracturing. The Prime Minister-designate, Victor Ponta, has now said that Chevron’s situation will be “an area of interest” and that the new government will pursue a competitive oil and gas industry.
Bottom Line: In June, the Romanian government opted to postpone a move to allow hydraulic fracturing until after parliamentary elections in early December. Elections are over and the incumbents have won. With the public pressure now off the government in terms of votes, the government-elect is likely to move forward in the name of securing hydrocarbon self-sufficiency and competing with Poland to the disadvantage of Russia.
Analysis: What’s at stake in Romania is its sizable shale reserves. No one knows exactly what the breakdown is, but the estimates are that Romania, Bulgaria and Hungary share 538 bcm of shale gas reserves. Right now, Romania isn’t allowing fracking--there has been too much public and political opposition. But that’s the run-up to an election. Until votes were cast and counted, the incumbent ruling political party, the Social Liberal Union (USL)—which won the vote—kept quiet on the issue, attempting to appease the electorate. Now that it has secured another term in the 9 December vote, the pressure is off and it is highly probably that Romania will allow fracking to proceed.
The re-elected prime minister has hinted as much. That the Chevron case was listed as a top priority was the first indication, but another statement offers a bigger hint. During the second week of January, Ponta said that it would be the new government’s priority to ensure that Romania can compete with regional neighbor Poland, where fracking is not banned and shale exploration has already begun.
Right now, Chevron has three existing shale gas exploration licenses in Mangalia and another in Barlad—both on the Black Sea. But for now, it can’t start drilling.
Of course, the biggest pressure of all is not the Romanian public, but Russian gas giant Gazprom, which will do all it can to keep Romania from tapping into its shale. Romanian shale potential, in combination with its large conventional gas reserves (84 bcm), would render the country self-sufficient and no longer dependent on Gazprom.
