• Different risk profile
    Higher geological and technical risks
  • Higher costs
  • Can exceed 15 years from exploration to first production
    Investors spend all money upfront

    Pioneer projects: Domino 1 well - first deepwater well drilled in Romania (2011); ongoing offshore projects first offshore new gas production facilities to be built in Romania in last 20y

    The lack of existing offshore infrastructure: Offshore projects do not benefit from existing infrastructure. Investors would construct the entire marine, underwater (located 120-150 km offshore) and onshore infrastructure up to the takeover in the National Transportation System
  • Fundamentally different conditions for the infrastructure construction and operation
    Compared to operations performed exclusively onshore

    Black Sea specificity implies special technologies:
    being corrosive over 100m
    access through Bosphorus straits

    Watch: Ocean Endeavor Rig Mobilization
  • Higher effective royalties rates
  • Consistent with other European countries’ practices
    Including Great Britain, Italy, Netherlands, Poland, Spain, etc.

    Read more: European and international practice differentiation between offshore and onshore upstream oil and gas taxation
  • Fiscal stabilization clauses are a common concept in the oil and gas industry and implemented by governments around the world
    Over 80 governments recognize the need for stable fiscal terms, especially for the oil and gas industry, and have fiscal stabilization clauses embedded in their legal and/or contractual framework. Recent examples where governments have introduced new or revised fiscal regimes, but maintained existing terms for current titleholders, include Brazil, Canada, Croatia, Greece, Ireland, New Zealand and the U.S.

    Read more: Fiscal Stabilization in Oil and Gas Contracts – The Oxford Institute for Energy Studies
  • Romania applies stability principle and existing offshore petroleum agreements benefit from
    Petroleum Law no. 134/1995 provides that: : Art. 13, para. (5); Article 42
    Petroleum Law no. 238/2004 provides that: Article 31 (2); Article 61 (1)
    Government Emergency Ordinance no. 160/1999 approved by Law no. 399/2001 Article 1; Article 2

    Furthermore, the titleholders of offshore petroleum agreements benefit from stability clauses included in the individual petroleum agreement
  • Sanctity of contracts is a fundamental principle for the global business community, which requires all parties to respect all the terms of a contract throughout the life of that contract
  • Legal and contractual confirmation of offshore oil and gas fiscal stability is essential for investor confidence and will be critical to Titleholders decision on whether to proceed with final investment decision
    E.g. Typical investments prior to first production from offshore deepwater developments such as Romanian Black Sea range from 3 to 4 billion Euros

    The legislative proposal reconfirms both validity and stability of the existing terms at the time initial investment decisions were made and will increase investor confidence as potential Black Sea investments are considered

    Stabilization clauses cover entire period of a concession agreement (30yrs with possibility to 15yrs max extension). Lifecycle of an offshore concession agreement: 10-15yrs exploration; 3-5yrs construction…remaining time for production. No revenues until production
Following more than 10 years of intense activities and more than $2 billion in investments for exploring the Romanian Black Sea, investors are about to move to the development phase
However, no decision can be made without clarity regarding the regulatory process
  • There is NO authority nominated to issue the “construction permit at sea"
    Per Art. 4 (6) Law 50/1991 – the competent authority requirement was introduced in 2011, still no clarity to date.
  • There is NO centralization of the regulatory acts necessary to develop projects at sea
  • There is NO regulation of how to cross the public properties
    Need to clarify rules and process for accessing public property and work in the near shore area (for eg. beach) for sub-crossing pipes lift of interdiction to construct confirmed in 2016. No construction will be performed on the beach. See more: Graphic of pipeline undercrossing the beach (example)
  • There are NO regulations regarding the archaeological discharge and declassification of historical monuments
    Established on the surface of the seabed (addresses the ambiguity regarding underwater archeological sites on entire continental shelf)
  • It is NOT allowed to place infrastructure beyond the boundaries of marine blocks
    (need to confirm that works can be performed outside the block in order to build the infrastructure to bring the gas onshore)
  • Recognizes significant difference between onshore and offshore industries
  • Confirms continuation of fiscal stability principle FOR EXISTING CONCESSION AGREEMENTS ONLY
    Romania applies stability principle and existing offshore petroleum agreements benefit from stability clauses included in the individual petroleum agreements
  • Potential $6+ bn in near-term investment for new offshore projects and associated infrastructure
    Boosts investor confidence, making Romania more attractive for additional investment
  • Potentially tripling current gas royalty revenues
  • Increased security of supply
    New domestic production off-sets decline in onshore production

    New infrastructure and 2-way interconnections provide long term supply diversity/independence.

    See more: A fully-integrated internal energy market
  • Catalyst for economic growth
    New industries and consumers in the gas value chain – Petrochemicals, power generation, services, etc.

    Grow capabilities and capacity in deep water offshore development

    See more: More money flowing in economy from employees, contractors, etc.
*Only projects in advanced stage are to be considered