Interview | Andrew Costin
President
Petroleum Club of Romania

12 August 2019

Petroleum Club of Romania is a non-governmental and non-profit association founded in 2001 in order to promote and protect the interests of the Romanian oil and gas industry. The association aims to establish an ideal framework for communication for those working in the energy sector who want to cultivate and develop relationships with their colleagues at the highest level. Petroleum Club of Romania also acts as an ambassador of the local oil & gas industry in relation to other countries.

 

Romania has an impressively long history in the oil & gas field. What is your assessment regarding the current state of the industry?

A long history indeed but in modern times the world started to hear about Romania along with the privatization of Petrom that took place in 2004. The fact that a small Austrian company like OMV managed to buy a Romanian giant drew everybody’s attention. A few years later, ExxonMobil was also drawn into the local market by the remarkable discoveries in the Black Sea. What happened as a result of these two important events was that a good deal of other companies followed suit and entered the local market. For instance Schlumberger, the largest oil and gas service provider in the world moved their headquarter from Milan to Bucharest, and the production sector also welcomed new valuable members such Winstar Satu Mare (Serinus Energy Romania), Expert Petroleum, Hunt Oil or Mazarine Energy to name a few. This paved the way for the dynamic industry we have today.

I would say that the industry looks good at this point in time, but there are a few issues that need careful consideration. One is the lack of human capital, for instance there is great scarcity of geophysicists. Very few students graduate anymore, although the Geophysics and Geology University in Romania is one of the best in the world. There is a gap in this area and it is just one example, generally speaking Romania used to have schools dedicated to jobs in the oil and gas industry that no longer exist. One thing that generates this issue in my view is the fact the energy industry is perceived as not very attractive, young people are much more tempted by the idea of wearing a suit than by the idea of “getting down and dirty”. But the reality is that this industry offers a broad range of possibilities, it relies heavily on creativity and innovation. Whenever the market went through challenging times, it had to reinvent itself and figure out new methods to produce faster and more efficiently.

 

What does the Petroleum Club of Romania do in order to address such issues?

In terms of workforce, we have very tight relationships with The Oil & Gas University in Ploiesti, as well as with the Geophysics and Geology University in Bucharest. It is a means to promote the industry and generate interest amongst young people. We also work with our members and encourage them to make contributions to these schools, either by funding lab equipment or opening internship programs, so that students can understand the practicalities of the industry.

Regarding NARM, the answer for this particular problem is not in the industry’s hands unfortunately. It is up to the state to figure out the best way to consolidate the resources of the agency.

 

Where do you see most need for improvement in terms of legislation?

I was directly involved in the drafting of the Petroleum Law, 15 years ago, which made for a much better framework at the time. But a revision of this Law is needed once more, for example the environment issues need to be covered more extensively, the topics of land access and fracking needs to be addressed, and the issue of offshore concessions needs to be looked at more carefully. At the respective time, when the Petroleum Law was drafted, there were no offshore perimeters and there was not much interest in this direction. The situation is much different today, with the much debated recent Offshore Law, that appears to have pleased no party involved, so we need to reassess the legislation and fill in the gaps that exist.

The topic of legislation is a very delicate one in Romania because there are many laws that are passed through Emergency Ordinances that seem to be drafted to specific interests, and that spill over into other sectors. It is an ad-hoc legislation and because the impact is not properly assessed, the legislation across these sectors becomes incoherent, leading to an unstable and unpredictable fiscal medium for the energy industry. This is far from ideal as it creates an environment that lacks security for investors, and the recent GEO 114/2018 is a great example for this.

 

This seems to be the problem most commonly referenced by the industry. How can it be addressed in your view?

As a last resort, it will be dealt with through lawsuits at European Courts. Many of our members are looking into all the options they have at hand and are set to defend the rights they have won in negotiation and contract signing. It sounds radical but I expect we will see such litigations unless the situation changes. There have been rumors that GEO 114/2018 will be adjusted, meanwhile many companies have put their investments on hold and are expecting the Government’s next move, so it will all depend on what happens in the next period. 

I am confident the market will see a positive evolution because EU legislation will force Romania to truly liberalize the gas market. This is something that we cannot do without. If we agreed to be part of the European club we need to take on the requirements as well, and I trust we will see this alignment taking place in the next few years. Romania has tended to be pushed from behind by different global circumstances or international political factors, and it is sometimes good that this is the case.

 

What is the vision for Petroleum Club of Romania going forward?

It is very important for us to keep offering our members solid events, with content that is interesting for our segment and to foster discussions about innovation. Each market has its specificities and we need to understand how innovations can be adapted in Romania given its particular market and geology.




 

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