Romania Energy Profile 2012

Petroleum and natural gas are Romania's most valuable minerals. Since reaching a peak in the mid-1970's, petroleum output has declined as reserves are being depleted more rapidly than new wells are being discovered and exploited. The Ploiesti fields and Moldavian fields near the Carpathians account for most of the oil produced. Natural gas, which comes from oil fields and from gas fields in Transylvania, is an increasingly important resource. Romania is among Europe's largest producers of natural gas. Oil production offshore in the Black Sea began in 1987. Coal is mined in moderate amounts. Small quantities of bauxite, copper, iron, lead, zinc, and other metallic minerals are also produced.

Romania Oil and Gas Report Q3 2010

The latest Oil & Gas Romania 's  Report  forecasts that the nation will account for 3.79% of Central and Eastern European (CEE) regional oil demand by 2014, while providing just 0.53% of supply. CEE regional oil use of 5.42mn barrels per day (b/d) in 2001 rose to an estimated 5.81mn b/d in 2009. It should average 6.03mn b/d in 2010 and then rise to around 6.69mn b/d by 2014. Regional oil production was 8.88mn b/d in 2001, and in 2009 averaged an estimated 13.35mn b/d. It is set to rise to 14.57mn b/d by 2014. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average 3.46mn b/d. This total had risen to an estimated 7.54mn b/d in 2009 and is forecast to reach 7.88mn b/d by 2014. Azerbaijan and Kazakhstan have the greatest production growth potential, although Russia will remain the key exporter.

In terms of natural gas, the region in 2009 consumed an estimated 668.5bn cubic metres (bcm), with demand of 780.0bcm targeted for 2014, representing 13.7% growth. Production of an estimated 830.3bcm in 2009 should reach 1,025.7bcm in 2014, which implies net exports rising from an estimated 162bcm in 2009 to 246bcm by the end of the period. Romania’s estimated share of 2009 regional gas consumption was 2.09%, while its share of production is put at 1.32%. By 2014, its share of demand is forecast to be 2.13%, with the country accounting for 0.84% of supply.

The OPEC basket of crudes will average US$83.00/bbl in 2010. Wide variations in crude differentials so far in 2010 make forecasting tricky for Brent, West Texas Intermediate (WTI) and Urals, but we believe the three benchmarks will average around US$85.11, US$88.22 and US$83.62/bbl respectively, with Dubai coming in at US$83.14.

By 2011, there should be further growth in oil consumption and more room for OPEC to regain market share and reduce surplus capacity through higher production quotas. We are assuming a further increase in the OPEC basket price to an average US$85.00/bbl. For 2012 and beyond, we continue to use a central case forecast of US$90.00/bbl for the OPEC basket.

For 2010, the assumption for premium unleaded gasoline is an average global price of US$96.83/bbl. The y-o-y rise in 2010 gasoline prices is put at 38%. Gasoil in 2010 is expected to average US$92.45/bbl, with the full-year outturn representing a 37% increase from the 2009 level. For jet fuel in 2010, the annual level is forecast to be US$95.58/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$82.46/bbl, up 39% from the previous year’s level. Romanian real GDP is assumed by BMI to have fallen by 7.0% in 2009, followed by forecast 2.0% growth in 2010. An  average annual growth of 3.5% in 2010-2014. Beyond the weakness of 2009/2010, oil demand could potentially grow at 3.0% per annum, rising to 254,000b/d by 2014. In spite of greater efforts by the OMV-backed national oil company Petrom, we see domestic oil production slipping from an estimated 95,000b/d in 2009 to 77,000b/d by 2014. This implies rising import levels, with volumes up to 177,000b/d by 2014. Natural gas consumption of an estimated 14bcm in 2009 can be expected to reach almost 17bcm by 2014. Romania’s gas production is forecast to slip to no more than 8.6bcm by 2014, providing an import requirement of at least 8.0bcm.

Between 2010 and 2019, forecasting an increase in Romanian oil consumption of 31.7%, with import volumes rising steadily from an estimated 126,000b/d to 241,000b/d by the end of the 10-year forecast period. Domestic production is forecast to fall from an estimated 95,000b/d to 53,000b/d during the period. Gas consumption is expected to rise from 14bcm to 20bcm by 2019, which will be met by 13bcm of imports.

Its gas production growth outlook, asset maturity and under-developed competitive landscape work against the country and are exacerbated by poor country risk factors. There is little immediate chance of Romania catching up with either Turkey or Russia in the rankings.

Mining Report 2010