Romania: Romgaz’ offer to ExxonMobil

, SEE Energy News

In early April, Romanian natural gas producer Romgaz has confirmed that it submitted a binding offer to the US company ExxonMobil for the acquisition of a 100 % capital of its local subsidiary ExxonMobil Exploration and Production Romania. Through this company, ExxonMobil holds a 50 % stake in the Neptun Deep offshore gas field in the Romanian Black Sea.

According to CFO of Romgaz – Razvan Popescu, the company has received first response from US ExxonMobil regarding its offer for the takeover of 50 % stake in Neptun Deep Black Sea gas project.

However, Popescu did not provide any details due to confidentiality reasons. He argues that it would be best for this transaction to be in euros, on the European market, because of the high level of financing involved and the low liquidity on the local market. ExxonMobil has invested alone around 750 million dollars in the exploration phase of the project.

Romgaz has the Government’s backing for this acquisition, as it wants to start the extraction of natural gas from the Black Sea as part of the country’s strategy to transition to less-polluting energy sources and the closure of coal-fired power plants. According to an informal agreement between Romgaz and OMV Petrom, Romgaz will become the operator of the project, a position previously held by ExxonMobil. The role of the project’s operator should also secure the support of the opposition for the deal and for the amendments to the offshore hydrocarbon law, which is supposed to offer more favorable terms to foreign investors. ExxonMobil announced in November 2019 its intention to sell the stake in the Neptun Deep project, which holds the largest offshore gas reserves found in Romania’s Black Sea section (40 to 80 billion cubic meters). Romanian OMV Petrom, a part of Austrian OMV Group, holds the remaining 50 % in the project. The two operators have invested close to 1.5 billion dollars in exploring the perimeter but have postponed a decision on its commercial exploitation due to the new offshore law adopted in late 2018.