GBC has asked Wood MacKenzie, a leader in consulting services for the oil and gas companies, why the Black Sea is a hotspot for business and why an event on the upstream and midstream projects developed regionally is very timely now, when the major decisions are taken.
Aleksandrs Popovics is a Senior Petroleum Economist at Wood Mackenzie, joining the company in 2010. He is covering oil and gas taxation developments in Europe, Russia, Central Asia, and Caucasus. Aleksandrs is regularly publishing insights with detailed economic analysis of proposed and implemented tax changes.
How do you find the evolution of the Black Sea region in terms of upstream development in comparison with other strategic areas in Europe (eg. North Sea, Mediterranean Sea, Caspian Region)?
Much of the Black Sea basin remains less explored than other strategic areas in Europe. Most exploration to date has focused on the shallow water areas but the 2012 Domino field discovery in Romania proved potential of the deep water. There are a number of factors that impede upstream development of the Black Sea, most notably taxation and political instability, challenging monetisation options and a small service sector.
Should the Black Sea region be in the focus of business development managers?
We estimate the Black Sea basin holds 1.3 bn boe of yet-to-find (YTF) reserves. It is the 6th largest offshore basin in Europe by YTF volume. As such, we expect it could start to emerge as an exploration hotspot.
What are the main projects the companies should keep an eye on in the region?
Two main projects to be watched are both in Romania – the larger deepwater Domino field operated by ExxonMobil and the smaller shallow water Ana and Doina project operated by Black Sea Oil and Gas. Development challenges differ due to locations and sizes of the projects.
How do you see the development of onshore and offshore projects in the next 10 years?
Black Sea countries have mature onshore production. Some additional volumes could become available using enhanced oil and gas recovery and deeper drilling. However, this will be expensive and commerciality could be affected by the current tax terms. Deepwater Black Sea exploration remains promising, and potential offshore discoveries could achieve better returns if developed in clusters rather than on the stand alone basis.
We are looking forward to welcoming you at the 4th Black Sea Oil and Gas Conference. Could you please let us know what are your expectations for the upcoming conference?
I am hoping to meet with main industry players in the region and find out more about the progress at their projects.