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Romgaz signs $1.06 bln sale-purchase contract for Exxon’s stake in Neptun Deep, gas extraction can start in 2026

Romanian natural gas producer Romgaz reported on Tuesday that it has signed the contract for the acquisition of Exxon Mobil’s 50 per cent stake in the Black Sea offshore project Neptun Deep for 1.06 billion US dollars (1 billion euros). The transaction is expected to close in the second quarter of 2022.

The agreement includes all shares in ExxonMobil Exploration and Production Romania along with interest in the XIX Neptun Block offshore Romania. Operatorship on the block will transfer to its other titleholder, OMV Petrom. Employees of the Romanian affiliate will transfer as part of the sale.

“Together with Romgaz and OMV Petrom, we will meet our goal to provide the necessary gas for our consumption, and, provided that there will be sufficiently large quantities, to provide gas for our neighbours, both in the region and in the European Union,” Romanian Prime Minister Nicolae Ciuca said upon the announcement.

He added that Romania will be able to ensure the stability and predictability of its energy sector highlighting that gas will be extracted from the perimeter of Neptune Deep in the Black Sea no later than 2026.

“In the current geopolitical context, we have no time to waste. We will make the necessary efforts to speed up the start of the operation so we can consume Romanian gas,” said the Minister of Energy, Virgil Popescu adding that Romania will practically double its production beyond the current domestic consumption thus becoming a provider of regional energy security.

Offshore gas in the Black Sea has been recurrently debated in Romania. The country consumers about 11 billion cubic meters (bcm) of gas a year and the block is estimated to contain natural gas resources of approximately 42 to 84 bcm.

ExxonMobil has been present in Romania’s upstream sector since November 2008, when it acquired an interest in the deepwater Neptun Deep block in the Black Sea. Due to delays caused by changes in the tax and legal structure of Romania, ExxonMobil announced its decision to exit the project in 2019.

In March, Romgaz announced that its board of directors approved the acquisition of 100 per cent of ExxonMobil Exploration and Production Romania Limited, the holder of 50 per cent of the rights and obligations under the concession agreement for petroleum exploration, development and production in Neptun Deep.

In April, Romgaz has signed a 325 million euros deal with Raiffeisen Bank to finance part of the purchase transaction of the shares of ExxonMobil’s Romanian subsidiary.

The other half of the rights and obligations under the concession is held by Romanian oil and gas group OMV Petrom. In March, Austria’s OMV, which holds a 51 per cent stake in OMV Petrom, said it will make the final investment decision on the Neptun Deep project next year, pending a new offshore law from the Romanian parliament.

The coalition government of Romania finalized draft amendments to the Offshore Law in order to reactivate gas extraction from the Black Sea and sent it to Parliament on 15 April to be debated as an urgent matter.

The draft bill states the tax regime will not change for the duration of offshore gas projects and enforces a smaller tax for gas sales. Also, it removes export restrictions for natural gas, except in emergency situations.

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