As Romania continues its quest to achieve a modicum of energy independence, it’s clear that the country is likely to open up its shale reserves to international prospectors.
According to the U.S. Energy Information Administration, Romania, Bulgaria, and Hungary collectively harbor as much as 538 billion cubic meters of gas. That’s more than adequate for Romania’s gas needs for the next half century or thereabouts.
Reuters reports that Chevron Corp. (NYSE: CVX) has already taken an early lead; the company has stated it will begin exploratory operations soon. Drilling is planned for the Vaslui county area, and geophysical studies are planned in the Black Sea region.
Reuters quotes Sally Jones, Chevron’s spokeswoman:
“The exploration phase has a multi-year timeframe. The results of the exploration stage will determine, in cooperation with the Romanian government, the commencement of any potential exploitation activities.”
Romanian citizens, by and large, remain opposed to fracking; they cite the usual concerns, namely water reservoir pollution, safety issues, and the like. Although the new leftist government supported the popular view after its election last year, advancing news regarding Romania’s possible shale wealth appears to have persuaded the government to change its stance.
At present, Romania has granted Chevron exploratory rights in three blocks, amounting to about 670,000 acres. The company also purchased a separate concession for exploration in Vaslui.
The country has not quite openly approved shale operations, but the national government has clearly been moving in directions that suggest it holds a favorable view of fracking operations.
The interesting part is that Romania isn’t nearly as bereft of domestic gas supplies as its neighboring nations are. The country not only has extensive domestic reserves, but it also has to import just about 25 percent of domestic consumption needs. As a result, Romania isn’t quite as reliant on gas from Russia as some other Central and Eastern European nations are (for example, Poland).
Of course, with Romania seemingly welcoming Chevron into the land, it’s inevitable that other oil and gas majors will quickly follow suit. And given the government’s revised stance toward fracking, it’s quite possible that we’ll see a lot of international oil and gas companies set up camp in Romania.
EU’s Shale Crisis
In the meantime, the European Union as a whole has turned its attention to the question of shale. While the North American shale revolution has been very kind to natural gas prices and even related sectors here in the U.S., it has also meant that the EU itself has seen a distinct decline in its competitive advantage.
In short, foreign firms are choosing to look toward U.S. sources for natural gas rather than sourcing it from the EU. That’s why an increasing number of European nations are considering seriously upgrading their shale operations.
In this camp we may count the U.K., Hungary, Romania, Poland, and Spain. France, however, remains opposed to fracking, although in the recent past there have been noises emanating from the French administration which suggests there may be some change coming.
At a recent EU summit, 27 heads of EU states deliberated the implications of the changed gas economy worldwide and what Europe could do about it.
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Since 2012, the EU has spent an estimated 1 billion euros per day for its total energy imports. Considering that the euro continues to do poorly, France has just entered a recession, and the general European economic climate remains anemic, that is simply not a sustainable level. And once winter rolls around again, heating costs will surely make themselves felt.
The North American shale revolution cannot be underestimated. Indeed, just this past week, the International Energy Agency declared that the consequences of this shale boom has been a “supply shock” of sorts, the results of which are fundamentally restructuring the global oil and natural gas landscape.
Demand for cheap gas from Asia continues to skyrocket, with China, Japan (post-Fukushima), and India leading the way. Whoever can establish a strong competitive position as far as gas is concerned will have much to cheer for over the coming decades.
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