By Robert M Cutler
MONTREAL - With potential ramifications for the entire Euro-Caspian energy complex from Central Asia to Central Europe, a new natural gas strike has been made in Romania's offshore sector of the Black Sea. This find will re-jig calculations around the European Union's Southern Gas Corridor while providing potential new sources of energy for East Central and especially Southeastern Europe.
In that context, the potential for Romania to become a natural gas exporter to Southeastern and even East Central Europe comes into focus. The significance of the Romanian strike concerns the eventual choice by the consortium developing Azerbaijan's offshore Shah Deniz natural gas deposit, between the "western" (through Greece to Italy) route for its 10 billion cubic meters per year (bcm/y) gas and the "northern" (through Bulgaria to Southeastern Europe) route.
Romanian President Traian Basescu announced last week that a consortium comprising the US major ExxonMobil and the Romanian company Petrom (a subsidiary of the Austrian OMV) has struck over 100 bcm of gas in Romania's first deep-water offshore exploration. He said this figure was subject to revision upwards, since there were five other geological formations in the area with characteristics similar to the successful find. If they all proved out the same way, the result would give Romania over a half a trillion cubic meters of offshore natural gas - equivalent to 25-30 years of total Romanian gas consumption at the present rate, or 75-90 years worth of its gas imports.
Separately in Bulgaria a week ago it was announced that, in conformance with a February 2011 decision by the EU's European Council that every EU member state should have at least two sources of natural gas and electricity, the Bulgarian company Bulgartransgaz will cooperate to build the transborder Interconnector Bulgaria-Romania (IBR). Bulgaria imports most of its gas from Russia, which cut off supplies for three weeks in January 2009 and is thought to be maneuvering within the Bulgarian political environment to maintain its hegemonic position in the Bulgarian gas market.
Thus while according to the Bulgarian press agency Novinite the US company Chevron will soon start drilling for shale gas in the northeastern Romania around Barlad, the Bulgarian cabinet recently made it impossible for Chevron to develop shale gas in Bulgaria by revoking an earlier awarded permit for hydraulic fracturing ("fracking"). Bulgarian environmental activists are now seeking legislation to make that ban permanent.
In response, an organization called Movement for Energy Independence (DEN) has formed in Bulgaria calling for the fracking moratorium to be cancelled and for the until now dilatory work on all interconnectors to be accelerated, including the ITB, the IBR, and also the Interconnector Greece-Bulgaria (IGB).
DEN also criticizes the current government for enforcing Bulgaria's gas dependence upon Russia by favoring the Moscow-based South Stream gas pipeline project (Moscow to Bulgaria under the Black Sea) and seeking to help exempt Gazprom from oncoming EU antitrust rules by accelerating the pipeline's timetable.
The IBR, on the other hand, if constructed to be bidirectionally reversible, would make it possible not only for Bulgaria to import Romanian gas directly from Romania, but also to transit to Romania the gas that Bulgaria might receive from Azerbaijan's offshore Shah Deniz deposit via Georgia, Turkey, and the Interconnector Turkey-Bulgaria (ITB) still under construction.
An Interconnector Turkey-Greece (ITG) is already operating, but the Shah Deniz consortium has ruled out its extension into the Interconnector Turkey-Greece-Italy (ITGI) to Southern Europe via the Interconnector Greece-Italy (IGI) across Greece and under the Ionian Sea to Italy's geographical boot. (The undersea segment by itself is called the Poseidon pipeline.)
However, this does not mean that the Shah Deniz consortium has ruled out either the ITG or the separate Interconnector Turkey-Bulgaria (ITB), should it choose a northern rather than a western route for its gas. Given the newly announced interconnector between Bulgaria and Romania, either the ITG-IGB duo or the ITB by itself would be able to hook up into Romanian national pipeline system via the IBR.
The Shah Deniz consortium has yet to choose between the BP-proposed South East European Pipeline (SEEP) or a reconfiguration of the Nabucco pipeline project for the possible northern route. After choosing one of those, it will then choose between it and the designated western-route pipeline, the Trans-Adriatic Pipeline (TAP), which is set to cross Greece, Albania, and go underneath the Adriatic Sea to Italy's boot.
Indeed, earlier this week, the Bulgarian cabinet approved the agreement between the Bulgarian company Nabucco Gas Pipeline Bulgaria and the international consortium Nabucco Gas Pipeline International, signed in June 2011. The next step is for the Bulgarian Parliament to ratify the contract, following which the stages for implementation of the Nabucco project in Bulgaria may be further specified.
However, none of this means that the ITGI or the IGI is dead. As a consequence of the debt crisis in Greece, the Greek principal in the IGI consortium, the public gas company DEPA, is a candidate for privatization; and Russia's Gazprom has shown an interest.
The possibility of the IGI segment transiting gas later in the decade from Moscow's South Stream natural gas pipeline has been discussed in the Greek press now for some time. Sourcing problems, however, continue to plague the South Stream project; Russia has never said where any of its gas will come from....