SNP Petrom strikes natural gas in Black Sea

Petrom, the largest company on the Romanian market has found a several hundred million-dollar natural gas deposit in the Black Sea.

The discovery could give the State improved leverage in the future negotiations with the investors interested to buy the company.

SNP (National Oil Company) Petrom will begin to operate a natural gas deposit in the Black Sea by the end of the month. #leadend#This deposit is the first ever operated by the company, considering its other offshore resources consist in oil deposits only.

“Petrom will begin operating a natural gas deposit in the Black Sea by the end of August, following an investment worth some 350bn ROL (over $10 million) carried out in the last six months. The output will reach about one million cubic metres a day and I think we will be able to operate the deposit for about ten years from now,” Gheorghe Constantinescu, SNP Petrom general manager told Ziarul Financiar. The company will this way boost its current gas production of about 6 billion cubic metres a year by another approximately 360 million cubic metres, given that Romania’s total output reaches some 14 billion cubic metres. Petrom, the second-largest gas producer and Romgaz cover three quarters of the domestic demand together, with the rest imported from Russia through suppliers for $140-$150/1,000 cubic metres, according to the latest available data. Romania paid approximately $350 million for the natural gas imported from Russia.

Such deposits are very hard to appraise in cash. Still, if considering the estimated ten-year operation period and the one million cubic metre daily output, the deposit is worth $400 to $500 million, which includes the royalties the State is entitled to.

Constantinescu added “new land and sea drills are in the works,” which shows the new management of the company targets an increase in the gas and oil production over the next period, both in Romania and abroad.