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BLACK SEA OIL AND GAS

October 2019   |   Black Sea region

``Infrastructure development is key in order to realise Black Sea transit potential and to enhance energy security both in the EU and in the region`` - Megan Richards, Energy Policy Director, European Comission

Posted by GBC on 02-10-2018

Shortly before the 6th edition of Black Sea Oil & Gas we asked Megan Richards, EU Energy Policy Director, and a keynote speaker, to answer few questions about the European Commission’s role and mission in the region.

What is the role of the European Commission in the Black Sea region?

The European Commission’s 2007 Communication on the Black Sea Synergy[1] identified the main goals and tasks for the Black Sea region across a range of economic sectors and thematic fields. The synergy is intended to be a flexible framework to ensure greater coherence and provide policy guidance, bearing in mind the fact that the EU already had specific policies in place to address the European Neighbourhood, Turkey and Russia. The synergy proposed a bottom-up project development approach aimed at building on deliverables in the fields of the environment, maritime affairs, fisheries, maritime transport, energy, education, civil society, cross border cooperation and research.

The 2015 review of the Black Sea Synergy[2] reported on the main activities and achievements made since 2007. The events in Ukraine at the 2014 and the increasing challenges in the relationship with Russia have obvious consequences on the Commission’s activities in the Black Sea region.

Concerning non-EU countries, the ongoing reforms in the energy sector in Ukraine and Moldova, in line with their Energy Community obligations, as well as the delivery of the first Caspian gas to Turkey this year, are important developments.

With respect to the two Black Sea EU Member States where the EU legislation is fully applicable, the Commission also is active in the Central and South Eastern Europe Connectivity (CESEC) initiative to accelerate the integration of the regional gas market.

Due to discoveries in the Black Sea, Romania is the largest producer of oil and gas in Central East Europe. According to Romania’s annual report seven offshore installations produce mainly gas and a minor volume of oil (in total 1 465 kilo tonnes of oil equivalent, ktoe).

For offshore oil and gas operations, the Directive on offshore safety (2013/30/EU) applies. It establishes minimum requirements for safety, environmental protection and emergency response across the EU. This is particularly important given the high risks for workers and the environment in the case of an accident. As with all Member States active in offshore oil and gas exploration, Romania and Bulgaria had to implement the Offshore Safety Directive by 19 July 2015: transitional periods for the industry to apply the Directive as implemented by Member States expired on 19 July 2018. No accidents occurred at Romanian or Bulgarian platforms in 2016.

The Commission, specifically the Directorate-General for Energy, is in charge of Directive 94/2/EC (Hydrocarbons’ Directive”) of 30 May 1994 on the conditions for granting and using authorisations for prospection, exploration and production of hydrocarbons. It provides rules on licensing to ensure competitive procedures, transparency, and fairness EU-wide by establishing the following requirement:

  • Procedures: notice inviting applications, criteria for selection published before the start of the period for submission of applications, 90 days deadline to reply.
  • Transparency: notice published in all EU official languages, provides all relevant background on authorisation offered as information on type of authorisation, the geographical area, date and time limit for granting authorisation.
  • Fairness/equality: criteria equally applied to all applications, criteria specified: technical and financial capability, the price for the license offered, other objective and non-discriminatory criteria.

[1] http://eeas.europa.eu/archives/docs/enp/pdf/pdf/com07_160_en.pdf

[2] https://ec.europa.eu/maritimeaffairs/sites/maritimeaffairs/files/docs/body/swd_2015_6_en.pdf

Does the Black Sea region have the potential to become the energy hub of the European Union? How can development of the Black Sea region infrastructure help European Union reach energy policy goals?

The Black Sea is a bridge between the EU market and key energy producers such as Russia, Azerbaijan and Central Asia. Infrastructure development is key in order to realise its transit potential and to enhance energy security both in the EU and in the region. In particular, the Southern Gas Corridor is a priority project for the EU as it offers a significant potential to increase energy security and supply diversification by linking Caspian and Middle East gas resources with EU and Black Sea markets (including Georgia and Turkey).

The Commission also supports the development of energy infrastructure projects in the Black Sea region through the EU’s Projects of Common Interest, the Projects of Energy Community Interest and in fora such as the CESEC Group (South Eastern Europe Gas Connectivity). The work in CESEC has concentrated on improving the co-operation and infrastructure development for natural gas between the countries of Central and South-Eastern Europe. CESEC is now being expanded to cover electricity, renewables and energy efficiency. By further interconnecting and integrating the physical energy networks and ensuring that the EU’s energy market acquis is fully implemented in the region’s EU Member states and Contracting Parties of the Energy Community, the energy security of the region and the wider EU will be enhanced.

What measures should be taken to boost the volumes of hydrocarbon exploration and extraction in the Black Sea region?

Total production of oil and gas (offshore) in the EU was 116 076 ktoe in 2016, from which Romania produced 1.29 % in 2016. The single active platform in Bulgaria produced 62 ktoe corresponding to 0.05 % of EU production. Most oil and gas from offshore installations is supplied by the UK (71 %), the Netherlands (12 %) and Denmark (10 %). In addition, Romania produces oil and gas onshore.

According to BP’s Statistical Review of World Energy 2018, Romania’s total proven gas reserves at the end of 2017 (offshore and onshore) were 0.1 trillion cubic meters; compared to the year 2007 (0.6 trillion cubic meters) estimated gas reserves declined sharply. Total proven oil reserves were up from 0.5 thousand million barrels to 0.6 thousand million barrels in 2017. However, future exploration may lead to a more optimistic estimation.

To ensure full benefits from offshore oil and gas exploration, Romania and Bulgaria must apply in full the provisions of the “Hydrocarbons’ Directive” on licensing conditions, which shall ensure the engagement of competitive and qualified investors in new exploration. Safe offshore oil and gas operations, and avoiding any pollution of seas and shores, contribute to getting support from citizens for enhancing these operations.

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