Carlyle's BSOG Coaxes Romania over Law, FID
Black Sea Oil & Gas, the Romanian offshore explorer owned by Carlyle, has completed exploration on its XV Midia block in the Black Sea and plans to take a final investment decision (FID) in 4Q 2018.
It warned August 3 however that Romania’s recent Offshore Law – which BSOG said was sent back to parliament the previous day – needs to address the timely resolution of regulatory processes, the gas market structure, the fiscal regime and stability in order for FID to be taken.
BSOG and partners completed a two well exploration drilling program on the deepwater block, using drillrig GSP Saturn, initially scheduled to start in 4Q 2017. The two wells were unsuccessful. The first, Iulia-1, in 73 metres water depth and 115 km offshore, was spudded May 8 but encountered no gas bearing rock. The second, Paula-1, at 88 metres water depth and 147 km offshore, was spudded June 17; its net pay and volume of dry gas discovered was not “commercially viable for testing”. Paula-1’s results though, said BSOG, confirmed the potential of the Dacian play already associated with Ana and Doina discoveries in Midia.
BSOG CEO Mark Beacom said its offshore drilling campaign demonstrated the risks "inherent in trying to find gas resources offshore in the Black Sea where the chance of success is no greater than 25%.”
The company said it and partners had been working towards a FID for the last two years and that Romania needs discoveries in the Black Sea to be brought forward to successful development in order to realise significant benefits, such as long-term high-quality employment, tax and royalties. “The Offshore Law that was sent back to parliament on August 2 2018 needs to address the timely resolution of regulatory processes, gas market structure, fiscal regime and stability to bring these efforts forward to development,” it said.
On August 2, Austrian producer OMV said it was "not happy" about Romania's recent adoption of a law introducing higher upstream taxation and restricting where offshore gas may be marketed. OMV said its affiliate OMV-Petrom and ExxonMobil were "about to take FID" on their Neptun deepwater gas project, but would need "closer co-operation" with Romanian authorities for the development to go ahead.