Name: Romania approves long-awaited fiscal and regulatory reforms
Brand: Wood Mackenzie
SKU: 142737
Price: 1350 USD
Availability: OnlineOnly
Author: Wood Mackenzie

Insight 06 June 2022

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Report summary

After four years of upheaval, Romania has finalised investor-friendly amendments to its 2018 Offshore Law. This had disrupted plans for Black Sea gas growth, most prominently from the giant pre-FID Neptun Deep project. The reforms took effect after full approval by the country’s parliament and President in May. In our view, the law addresses several of the core points contested by Romania’s leading offshore operators. The rebalancing of value between investors and the state is significant, and the terms now also apply to deep onshore fields. Romania’s large-scale Black Sea gas resources matter both nationally and for the wider EU. Especially in the current geopolitical context. The Neptun Deep development would support the domestic energy transition and regional energy security, amid accelerated efforts to diversify away from Russian hydrocarbons.

Executive summary
Vital reforms of the 2018 Offshore Law, which had set the sector back
- Excess revenue tax (ERT) adjusted for offshore gas
- Tax stability reinstated for offshore projects
- Freedom to export offshore gas restored, but potential for price caps persists
- Separate upcoming reform also set to cancel use of ‘reference price’ for gas royalty
Romania’s two main offshore projects gain commercial impetus
- Midia Gas Development (MGD) – value derisked, with production just weeks away
- Neptun Deep – FID back on the agenda in next 12 months, after four years of waiting
A delayed crossroads for Romania’s gas market outlook
- Neptun Deep’s scale matters for the EU too
- But it still won’t be all plain sailing to a Neptun Deep FID
The reforms reduce government share to competitive level, but are unlikely to change investors’ perspective

Tables and charts

This report includes the following images and tables:

Romania - summary impact of fiscal changes on Black Sea valueFiscal benchmarking of model offshore gas fieldExcess revenue tax - marginal and effective rates

Excess revenue tax - overviewGas price comparison - Romania sales price and ‘reference price’Midia Gas Development - value impact of fiscal reformsNeptun Deep - value impact of fiscal reformsRomania - gas supply-demand outlook