The situation in Ukraine is getting worse, with increasing violence between anti- and pro-Russian factions. While the news media is full of detailed reports of day-day changes, LongTailPipe readers will remember the backstory is all about natural gas in Ukraine, Romania, and the rest of Europe, as well as plans to begin hydraulic fracturing (fracking) operations in shale deposits in Ukraine, Romania, Poland, and elsewhere. It’s time to take a look at the latest developments.
For this post I’ll focus on Romania, and a followup post will focus on Ukraine.
Romania is apparently in a precarious situation in terms of energy security over the long term. While the country was one of the first to develop commercial fossil fuel exploitation, Romania’s domestic supplies of Oil and Natural Gas began tailing off in the 1970’s. Today they import 25% of their natural gas, over 95% of which comes from Russia. That’s not as bad as some of the neighboring countries, but it’s thought Romania’s natural gas supplies will only last for another 10-15 years. If Romania is to avoid developing an unhealthy dependence on Russia’s natural gas and oil, they must develop alternate sources of energy.
That was part of the message in a Radio România Actualităţi
(Radio Romania News) interview with Chevron’s Thomas Hoist yesterday. The main topic of that interview was on exploratory drilling in Pungesti, but more on that in a bit. His point echo’s a report by a Romanian Oil Industry think-tank last month saying Romania has no choice but to start Fracking. I also found an article posted on New Eastern Europe about prospects for Energy Independence / Security in Romania.
The most immediate concern is what happens in Romania, and other parts of Europe, if the Russia-Ukraine conflict causes another disruption of natural gas shipments from Russia to Europe? For Romania that means disrupting 25% of their natural gas supply, and several other European countries are even more dependent on Russia.
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| These stickers are plastered everywhere in Romania |
The Russia-Ukraine conflict has a direct consequence on Romania as well: Moldova. To a Romanian, the Republic of Moldova is called Basarabia and is considered part of Romania’s historical territory. Russia grabbed Moldova from Romania as one of the very first steps of World War II, and following the war that territory became part of the U.S.S.R. Re-integrating Basarabia and Romania means first getting the Republic of Moldova to sign an agreement with the European Union, but we saw how Russia reacted to Ukraine’s plan to sign an EU agreement. Little-known Transnistria could play a critical part because of the huge presence of ethnic Russians in this splinter of Moldova’s territory.
Getting back to natural gas – Romania had pinned their hopes on the Nabucco West gas pipeline project designed to bring gas from Azerbaijan to Romania and other energy dependent countries of the region. I wrote about Europe’s quest for energy security at length earlier. The key is that Europe is looking to replace a dependence on distantly-located natural gas from Russia, with a dependence on distantly-located natural gas from Azerbaijan. The idea is a pipeline through Turkey (a NATO country) and into Europe, bypassing any territory controlled by Russia. Unfortunately for Romania the Nabucco West project was not chosen, and instead Azerbaijan chose the TAP (the Trans-Adriatic Pipeline) project. TAP will supply Italy through Greece and Albania, bypassing Romania and other countries.
That left Romania with no prospect for natural gas supply when domestic supplies run out in 10-15 years.
According to the New Eastern Europe report, Romania is taking actions in three directions:
- Exploring the exploitation of Shale Gas resources (fracking)
- Offshore oil and natural gas in the Black Sea
- Developing natural gas pipeline interconnection with neighboring countries
I’ve covered the fracking plans in both Romania and Ukraine recently. The fossil fuel discoveries in the Black Sea will use conventional technology, no fracking.
Natural gas pipeline interconnects lets Romania easily trade Natural gas with its neighbors. The Giurgiu-Ruse interconnect is to connect Romania with Bulgaria, the Ungheni-Iasi interconnect is with the Republic of Moldova, the Arad-Szeged is with Hungary, and the Mokrin-Arad interconnect is proposed for connection with Serbia.
On Thursday, SOCAR (the State Oil Company of Azerbaijan), announced a plan to supply Romania with natural gas through the TAP project. They intend to extend TAP deliveries throughout Central Europe, including Romania, and is already investing millions of Euros in Romania.
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Sponsored |
Chevron, after several months of preparation and many delays thanks to near-continuous protests, and after saying a month ago they were almost ready to start drilling, has begun exploratory drilling at its site in Pungesti, on May 1, 2014. This small village in the Moldova region of Romania became ground zero for intense protests, featuring rioting grandmothers, beginning in late 2013. The protesters sought to block fracking in Romania by blocking the practice in Pungesti, but fracking operations have been quietly springing up all across Romania. Thanks to a government imposed crackdown on protesters, Chevron has been able to go ahead and set up the drilling operation, whose purpose is exploring the actual potential of Romania’s shale deposits.
Chevron’s Thomas Hoist was interviewed by Radio România Actualităţi (Radio Romania News – the text is in Romanian, but Google Chrome will translate it for you) about the project. The questioning was softball – for example, uncritically accepting Chevron’s claim of being good ecological stewards (“Do it safely or not at all” and “always find a time to act right”). The interviewer seemed rather well informed, but did not mention times when Chevron failed to act right.
Jobs for Locals: If Fracking or other hydrocarbon drilling is great economically, then will it mean a real honest boost in the local areas of Romania? The hollow promises of jobs in US areas being fracked should raise an alarm flag. Most of the jobs in oil/gas operations, in the US, are given to specialists from outside the area. The Chevron dude said 65 jobs had gone to local people.
Environmental monitoring: A big worry is groundwater pollution. The villagers have seen all the evidence that fracking poisons ground water, and can even make the water flammable. The Chevron dude says they’re building monitoring wells at 10 meters and 85 meters depth.
Five Years: Chevron is halfway through the process of developing shale gas resources in Romania, a process that began in 2010 or earlier with initial geological assessments. The current phase is exploratory drilling to assess how, or if, the shale deposits are frackable. According to Hoist the assessment phase will take five years.
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| Romanian Prime Minister Victor Ponta |
With that in mind, consider a statement last week by Romanian Prime Minister Victor Ponta that shale gas exploitation (fracking) won’t occur within five years.
“For the time being and in the next five years, not a single cubic metre of shale gas will be exploited in Romania,” said the prime minister to Radio Romania Actualitati, explaining that “in the next five years, Romania has to set in place the best performing and most up-to-date environmental protection legislation, so that we may have all the guarantees in place if shale gas will really be exploited in five years’ time.”
Ponta is saying that the five years required by Chevron et al to complete their assessments will give Romania time to develop environmental legislation etc. One hopes that’s actually true.
Ponta also raised the spectre of dependence on Russia: “If we do not have gas from domestic production, we will buy it from Gazprom, because there is no other gas producer in the region selling gas. Romania securing energy independence for itself and Moldova is such important an objective that by all means, yet in compliance with the highest environmental standards, but by all means to have such resources from the Black Sea or elsewhere in Romania, we have to use them.”
As someone who wants renewable energy, not fossil fuel energy, to dominate all this talk of energy security through maintaining the fossil fuel paradigm is maddening. All this difficulty I’ve just discussed is about preserving fossil fuels as the dominant energy source. So, what of renewable energy in Romania?
I did see some Solar and Wind installations in Romania while visiting that country last summer. Turns out that Romania installed over 1 gigawatt of solar photovoltaic capacity during 2013, according to a report on Green Tech Media. There was an incentive program in place, that was stepped down on Jan 1, 2014, making for a rush on photovoltaic projects in Romania. During 2013 incentives gave six green certificates per megawatt-hour of electricity produced, each certificate earning at least 27 euros per megawatt-hour on the spot market. On Jan 1, the rate was changed to three certificates per megawatt-hour.
As a result expectations in 2014 are for a few hundred megawatts of capacity to be installed in Romania. Further a feed-in tariff is being introduced this year for small-scale photovoltaic projects in Romania. The market should shift from large utility scale projects, to residential and small commercial systems.
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