The Romanian government wants to transform the country’s energy infrastructure and energy mix to attain energy independence, but experts warn there are still issues while environmental groups call for a bigger role for renewables.
Last year, 45% of Romania’s primary energy consumption was provided by imports, according to the country’s National Institute of Statistics. The country relies on Russian imports for 29% of its gas consumption and a quarter of its imported fuel, according to the Intelligent Energy Association in Romania.
Transgaz, the Romanian natural gas transmission system operator, said that annual consumption varies between 11-12 billion cubic meters (bcm) and could increase by another eight billion annually.
However, the Energy Ministry said Romania is one of the least dependent states on Russian gas as neither the Romanian state nor the companies have contracts with Gazprom. Still, there are intermediaries of the Russian company that sell gas in Romania.
“The vulnerability of a country is not only given by how much it imports in a year but by how much it matters in an hour/day of maximum consumption, what are the hourly resources stored that you can rely on if you do not have gas from import, which are the immediate energy alternatives that a consumer can use in the event of a lack of gas and especially if the import is the source on which you are going to lose your balance,” said Dumitru Chisăliță, president of the Intelligent Energy Association (IEA).
The owner of the Cernavoda nuclear complex, a state-controlled company called Nuclearelectrica, plans to spend up to 9 billion euros ($9.5 billion) on nuclear initiatives this decade.
“For Romania, I will definitely tell you, these projects are super important,” said Cosmin Ghita, Nuclearelectrica’s chief executive, for The New York Times.
Ghita said nuclear power could help Romania achieve a variety of goals, from reducing carbon emissions to “countering Russian aggression in the region” on energy matters.
The war in Ukraine has created momentum to break years of stalemate and step up drilling in the Black Sea to unlock potentially rich troves of natural gas that Romania could export.
“We will supply energy security for the region,” Virgil-Daniel Popescu, Romania’s energy minister, said in an interview after lawmakers passed legislation designed to encourage investment in gas production.
Yet working in Romania will probably prove to be a challenge for companies from the United States and other Western countries.
The government has a reputation for greeting outside investors with cumbersome taxes and heavy-handed regulations. Romanian consumers could end up paying as energy giants made profits, have probably driven outside companies away.
Exxon Mobil sold its 50 percent stake in Neptun Deep, a Black Sea project that had been heralded as potentially the largest new natural gas production field in the European Union. Exxon’s brief announcement said the company wanted to focus on projects with “a low cost of supply.” Romania’s tax regime is considered Europe’s toughest.
Romania’s petroleum industry is one of the world’s oldest, dating to the drilling of wells as far as back the 1860s and centered on the vibrant hub of Ploiesti, about 35 miles north of Bucharest.
While the venerable oil fields are on the wane, industry executives say drilling in the Black Sea could produce enough natural gas to turn Romania, now a modest importer, into the largest producer in the European Union.
“The opportunity resides in the offshore,” said Christina Verchere, chief executive of OMV Petrom, Romania’s largest oil and gas company. Romania also has dams generating nearly 30 percent of the country’s electricity. And the nuclear industry, employing around 11,000, receives high marks from the global industry.
The idea is to build components for the plants in factories and then assemble them at the site with the hope of cutting the enormous costs and long construction times that have hampered the nuclear industry. Over time, these reactors could provide European countries with an alternative to polluting coal and imported gas from Russia.
“Europe must find trusted sources of clean and reliable energy, sources free of coercion and malign political influence,” said David Muniz, the chargé d’affaires at the U.S. Embassy in Bucharest, at a news conference announcing the NuScale deal.
More than a third of Romania’s electricity production is provided by hydropower, followed by coal and wind power (approximately 16% each), fossil fuels with 14.3%, and nuclear and solar energy contribution just over 7% each.
Grateful to 🇷🇴Romanian hosts for showing the 🇺🇸U.S. delegation Cernavoda, one of the world’s safest, best run nuclear power plants. pic.twitter.com/Dn8xvAp0HS
— US Embassy Bucharest (@AmbasadaSUA) May 24, 2022
“Due to the country’s currently slow growth of renewable energy, projections show Romania will not meet the EU target of 32% renewables by 2030, even though their actual share in the energy mix is already 25%” – the 2022 Climate Change Performance Index shows, recommending policymakers to need to speed up policy ambition, as the National Recovery and Resilience Plan (NRRP) includes phase-out for both lignite and hard coal by 2032.
The Romanian government expects €16 billion of EU funds until 2030 to develop its energy sector in the transition to an environmentally friendly economy and to combat the effects of climate change.
The EU Modernisation Fund supports 10 lower-income member states in their transition to climate neutrality and could bring an additional €1.1 billion to strengthen the energy distribution network.
The European Commission already approved a €2.66 billion restructuring aid for the third-largest electricity producer in the country, Oltenia Energy Complex, to replace lignite-based electricity production with electricity produced from natural gas and renewables (1.2 GW in combined cycle turbines and 725 MW of photovoltaic energy).
Funds will also be directed to upgrading the power line next to the Black Sea to allow the installation of an additional 600 MW of renewable energy in that region.
Romania committed €1.6 billion to the energy sector in its national recovery plan adopted in the wake of the COVID-19 pandemic. This includes €460 million for renewable energy production, €300 million for high-efficiency cogeneration and €200 million for the integrated production capacity of photovoltaic batteries and panels.
But the president of the Intelligent Energy Association is pessimistic.
“Even if we manage to produce renewable energy for the entire domestic consumption, we will still be dependent on technology import,” he told EURACTIV.
For a country like Romania with a well-trained, low-cost work force, experts say, making equipment for this new type of reactor could turn into an export industry, not to mention the chance to export surplus electricity.
“I believe it is an immense opportunity,” said Ted Jones, senior director for strategic and international programs at the Nuclear Energy Institute, an industry group in Washington.
The Romanian government is likely to keep close watch on investors and try to insulate Romanians from global economic forces. Outside of the faded elegance of some districts of Bucharest, Romania is a relatively poor country, its median income ranking near the bottom in the European Union.
“There is an ingrained mistrust in the private market,” said Radu Dudau, director of the Energy Policy Group, a nonprofit in Bucharest. “There is an underlying understanding and expectation that the people and the nation will be safer if the state controls it.”
The government raised taxes and imposed export restrictions on offshore petroleum production. Exxon followed that move by putting up for sale its share of the Neptun field, believed to hold tens of billions of dollars’ worth of gas. On May 3, Exxon said it would sell its share to Romgaz, a state-controlled firm, for about $1 billion.
The Romanian Black Sea port in the city of Constanta has become one of the main transit hubs for Ukrainian grain export, with the war-torn country in a race against time to export about 20 million tonnes of grain stuck in its silos in time to accommodate the harvest of its new crops, which is set to start next month.
“Before the war, there was absolutely no Ukrainian cereal transiting the Constanta port. Now, it amounts to approximately 30 percent of our activity,” said Dan Dolghin, director of the cereal operation at Comvex, one of the main grain operators in the Constanta port.
With a grain storage capacity of 1.5 million tonnes and featuring the fastest cereal handling terminal in the European Union, the port of Constanta became a viable alternative in the context of the maritime blockade of the Ukrainian Black Sea ports, which used to be the main export routes for cereal before the beginning of Russia’s full-scale invasion of Ukraine.
Since the blockade, 616,000 tonnes of Ukrainian grain have reached the Constanta port, with an additional 166,500 tonnes set to arrive in the following weeks, according to the port’s administration.
The relatively slow pace of the Ukrainian grains transiting the Romanian port is set by difficulties in transporting high volumes of cereal from Ukraine to Constanta by land, or by barge via the Danube River from the small Ukrainian ports of Ismail and Reni.
“We initiated the development of a new investment aiming to increase the speed of unloading the barges, the transportation method in which significant quantities of cereal from Ukraine reach us. This investment, which will be operational by the end of June, will increase the unloading capacity of barges to about 28,000 tonnes per day,” said Viorel Panait, director of Comvex.
Romania’s land border crossings with Ukraine and Moldova have been jammed in the recent weeks by queues of trucks longer than 10km (6 miles), waiting for days for customs checks.
There are coordinated efforts being made by the Romanian and Moldovan governments to supplement the number of customs officers and open additional border transit lanes in order to decrease the waiting time at the border.
By train, the main difficulty is the difference in the gauge of the Ukrainian and the EU railways, train wagons needing adjustments before they can cross into Romania, resulting in a slow transit speed, with trains waiting for weeks to cross.
The Romanian transport ministry started the rehabilitation of 4.5km (2.8 miles) of wide gauge railway, which links Ukraine and Moldova to the Romanian port of Galati, the main regional port on the Danube River.
The railway, which has been out of operation for the last 20 years, proves to be essential in decreasing the transit time for cereal and other bulk goods from Ukraine, as its gauge matches the one of the railways in Ukraine and Moldova.
The proximity of Constanta port both by land to Ukraine and by maritime routes to the Suez Canal “make Romania the best candidate to handle these supply routes, which this way become shorter”, said Panait.
“Considering the large grain volumes that are in need of export from Ukraine, I believe this has to be a conjugated effort of all the European operators that have the capacity to participate,” he said. “There is no place for ego here.”