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Romanian oil and gas revenues on the rise

Revenues from Romania's oil and gas industry have continued to increase over the past year, with the state cashing in €130 million worth of royalties in the first half of 2014 alone.

That is the key statistic in new data published by Romania’s mineral resources agency ANRM, which also reveals that the value of royalties was 15 per cent greater than in the same period of 2013, indicating increasing growth in the sector.

The biggest rise was seen in royalties for gas exploitations, which increased by almost 38 per cent to stand at around €72 million, and more than offset the slight decline in royalties for oil extraction, which fell by seven per cent to stand at €56.7 million.

Major contributions

The largest royalty payer by far was OMV Petrom, which paid in the region of €94 million, followed by the state-owned Romgaz, which stood at €32 million.

Generally, the royalties for oil and gas exploitations are between 3.5 per cent and 13.5 per cent of the gross quantities extracted, and calculated for each oil or gas deposit on the basis of its particular production.

The news comes a month after it was announced that new royalties for the oil and gas sector in Romania will go under debate at the beginning of 2015.

The aim is for the new royalties system to ensure budget revenues are brought closer in line with the European average for the sector, but without discouraging investment in the industry.

Level field

It is the brainchild of Prime Minister Victor Ponta, who is keen to keep interest high while levelling the playing field with Romania's European neighbours, with discussions currently underway between the country and the World Bank, as well as the International Monetary Fund.

These will be available for public debate at the beginning of next year, and are likely to be welcomed by industry analysts, as new royalties have been a key subject of debate in Romania for many years.

OMV Petrom in particular has benefited from its low-royalty scheme over the last decade, thanks to a clause in the privatisation contract signed by the Romanian state with the Austrian group in 2004 - something that will expire at the end of 2014.

It is expected that the royalties will be increased after this point, but the government is wary of not increasing them too substantially, and risking a cut in investments.

In the meantime, the Prime Minister continues to explore other avenues, and recently travelled to the US to talk with ExxonMobil and Halliburton about possible investments in Romania’s oil and gas sector as the country looks to maintain its upward curve.

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