SOURCES: Ciolacu refused OMV’s request to clarify the offshore law, demanded the withdrawal of the Paris complaint and asked the company’s bosses to „use their economic diplomacy” with Chancellor Nehammer for Schengen

Prime Minister Marcel Ciolacu refused in Monday’s government discussion a request from OMV chief Alfred Stern to clarify an article in the offshore law on Black Sea gas, government sources told G4Media. Ciolacu told the Austrian company’s representatives that „it is a legitimate subject”, but that at the moment he could not discuss any changes to the offshore law „because of the climate created by Austrian Chancellor Karl Nehammer’s veto of Romania’s entry into Schengen”, sources attending the meeting told G4Media.

Ciolacu also asked Austrian officials to withdraw their complaint filed with the Paris arbitration court.

In addition, Marcel Ciolacu invited OMV chiefs „to use their economic diplomacy to get Nehammer to change his position on Romania’s Schengen accession”, according to G4Media sources. He invoked Romania’s discrimination against Croatia, where Nehammer agreed to join Schengen.

The head of the Romanian government also said that he could not even open a subject related to the offshore law because, due to Chancellor Nehammer’s veto, Austrian companies have a rather bad image in Romania.

OMV Petrom has filed a complaint against the Romanian state – through the National Agency for Mineral Resources (ANRM) – at the International Court of Arbitration in Paris regarding the regime for the sale of gas from the Black Sea. The opening of the dispute takes place against the backdrop of OMV Petrom’s final decision to start gas production in the Black Sea. The official announcement to start production in the Neptun field in the Black Sea was made on 21 June by OMV Petrom.

The Austrian majority-owned company is asking Romania to clarify certain provisions of the offshore law. The law states that the government „may introduce temporary price and sales restrictions” for certain quantities of gas extracted from the Black Sea, but does not detail under what precise conditions these restrictions may be introduced.

The complaint filed at the Paris Court of International Arbitration is also directed against Romgaz Black Sea Limited, the Romgaz subsidiary bought from ExxonMobil and operating the Black Sea field with OMV Petrom.

OMV Petrom’s complaint is aimed at changing the offshore law on how the company can dispose of gas produced from the Black Sea.

Christina Verchere, CEO of OMV Petrom, told a press conference as early as July 2022 that she had asked for further clarification from the authorities on the offshore law. She said that the law promoted at the time by the PSD-PNL-UDMR coalition brings improvements, but further clarification is needed on the free market principles on the transfer of operation market which happens in 9-12 months before the final investment decision is taken.

„In order to increase Romania’s natural gas production, it is essential to develop gas resources in the Neptun Deep perimeter. We welcome the changes to the Offshore Law, but a number of clarifications from the authorities are needed. If all preconditions are met, the final investment decision is estimated for mid-2023,” said Christina Verchere, according to Economedia.ro.

Here is the article in the Offshore Law that is the subject of OMV Petrom’s displeasure:

Article 20
(1) Throughout the duration of oil agreements relating to deep offshore and onshore oil perimeters, the holders of the agreements, including their affiliated economic operators:
(a) shall have the right to freely market the hydrocarbons produced from those oil perimeters, at the prices and in the quantities determined by them, under the conditions of the national and European legislation in force;
(b) may not be subject to restrictions on the price, marketing, offer and/or sale of hydrocarbons after 31 December 2022, except as provided for in national and European legislation.
(2) By way of exception to the provisions of paragraph 1, the following shall apply (1), the Government, by decision, on the proposal of the Ministry of Energy, may introduce temporary restrictions on price and sale for the quantities necessary to ensure the consumption of domestic customers and producers of heat energy intended for the population, as well as those necessary to meet the obligations under the European solidarity mechanisms provided for by European regulations. These measures will be limited in time and purpose and will apply proportionally to the total quantities of domestically produced natural gas.
(3) In order to protect Romania’s energy security, bilateral contracts for the trading of quantities of gas exploited from the perimeters regulated by this Law shall be notified to the National Energy Regulatory Authority for monitoring no later than the date of their entry into force.
(4) The quantities marketed under the contracts referred to in paragraph 1 shall be notified to the Commission. (3) shall be offered for sale in advance, with priority, to the Romanian State, through the National Administration of State Reserves and Special Issues, hereinafter referred to as N.A.R.S.P.S. A.N.R.S.P.S. will accept or refuse the offer within 7 days of receipt of this offer, the absence of a reply being equivalent to a refusal of the offer. In case of refusal, the holders of the agreements have the right to continue with the sale of these quantities to third parties. If the quantities offered to A.N.R.S.P.S. as a priority are sold to third parties, the sale price of the natural gas shall not be lower than the price offered to A.N.R.S.P.S..

Note: The article has been updated with additional details from the official government meeting.