Energy Crisis

Balkan countries count on offshore platforms, LNG to replace Russian gas

Balkan countries offshore platforms LNG replace Russian gas

Photo: iStock


April 20, 2022






April 20, 2022





Southeastern European countries are urgently cutting red tape for offshore gas exploration and production, offering incentives and looking at LNG as an alternative to Russian gas. Environmentalists are opposing the rapid change in energy policy.

Russia’s invasion of Ukraine made Europe’s severe energy crisis even worse. The European Union and its member countries are still formally holding on to their climate pledges and are even promising to add more clean solutions than planned. At the same time, they want to replace imports of Russian fossil fuels as quickly as possible, but renewables can’t cover the entire added demand in the short term.

The biggest challenge is the dependence on Russia’s gas, which comes through pipelines. European Commission President Ursula von der Leyen said the goal is to eliminate the need for Russian fossil fuels by 2027. The measures from the REPowerEU package, expected to be rolled out next month, should provide more clarity.

The EU will use much more renewables, nuclear power and coal than in the goals from the original Fit-for-55 package, according to preliminary information from the revision process. Apparently, there is also a vital role for hydrogen and biomethane, which can both be used instead of fossil gas.

With the drastic increase in energy prices, the European Commission, EU member states and fossil fuel companies are all promoting investment in offshore gas, LNG terminals and related infrastructure

Financing such an undertaking is a different matter. The EU already adopted the NextGenerationEU package, worth more than EUR 800 billion, as an emergency tool to speed up the recovery from the pandemic and make it green. In any case, consumers can expect energy prices to remain high for years.

Countries throughout Europe are rolling out and accelerating plans for terminals for liquefied natural gas (LNG) to source the fuel from elsewhere by sea. Many are also betting on domestic offshore gas projects, and the Balkans are no exception, while environmentalists are sounding the alarm with regard to pollution and greenhouse gas emissions.

A jump in prices of any commodity or product, and the current one in the fossil fuel and electricity sectors has been extreme, normally boosts the corporate sector’s interest in investing.

Romania tables offshore law to start offshore gas production sooner

Romanian Prime Minister Nicolae Ciucă said last week that a proposed law is aimed at facilitating the extraction of gas in the Black Sea to start in the second half of the year. The bill is set to lower taxes and remove export restrictions for the fuel. Black Sea Oil and Gas (BSOG) earlier said it would start extracting gas from its Romanian offshore project by the end of June.

Exploitation at the Neptun Deep field can start in late 2026 at the earliest, according to the prime minister. After ExxonMobil abandoned the project, Romgaz said it would acquire its 50% stake in the project, while OMV Petrom holds the rest.

Prime Minister Nicolae Ciucă is confident BSOG would start production at its Black Sea offshore well this year

The prime minister added the law would also help onshore gas production. Exploitation at Caragele in Buzău county, the largest gas field discovered in the last 30 years in Romania, should begin in 2024, Ciucă said.

In Bulgaria, TotalEnergies and OMV Petrom got an extension for their oil and gas exploration license for the 1-21 Han Asparuh offshore block in the Black Sea, obtained in 2012. Minister of Energy Alexander Nikolov highlighted the project’s importance for the country’s energy security. The two companies plan to invest almost EUR 1.5 billion in the two-year period, according to the ministry.

Croatian INA getting oil assets online while sunk platform is left to rot

Croatia has revealed it raised the capacity of its LNG terminal at Krk island from 2.6 billion cubic meters per year to 2.9 billion. In addition, the facility’s operator LNG Hrvatska told Montel that it is looking to increase the volume to 3.5 billion cubic meters per year.

INA, owned by Hungary’s MOL, started to produce gas in March in the North Adriatic at its new offshore well Ika B-1R-DIR. The company said the capacity is 55 million cubic meters per year.

Croatia abandoned a plan for offshore exploration drilling six years ago

Production at another well was scheduled to start this month. INA added its third new unit would require the construction of a platform and that it would make an investment decision in the coming years. The company is also conducting exploration on land and developing new gas production units.

A plan for offshore exploration drilling was abandoned six years ago under public pressure and because potential investors withdrew from the projects.

Balkan countries count on offshore platforms LNG to replace Russian gas
Photo: Nevio Smajić / Greenpeace CEE – Greenpeace Croatia

Activists from Greenpeace’s Croatian branch protested in front of INA’s headquarters in Zagreb to point to the fact that 500 days after gas platform Ivana D sunk there is still no information about what caused the incident, and no recovery efforts. The government must step up with supervision and examine all offshore gas platforms, including for methane leaks, the activists said.

Five hundred days after INA’s Ivana D gas platform sunk in the Adriatic Sea, officials are silent about the cause

They called on a moratorium for investment in fossil fuel infrastructure in the Adriatic for several decades. Greenpeace said the government is sending a message that the fossil fuel industry can do anything without consequences. The organization urged for the deployment of clean energy solutions to achieve true energy independence.

Neighboring Slovenia has lately been examining the possibility to build an LNG terminal at its Adriatic coast.

Turkey cuts taxes to accelerate development of giant offshore gas field

Turkey has just said it is backing Turkish Petroleum’s offshore gas field project Sakarya with tax exemptions. The USD 9.9 billion endeavor is planned to come online next year. The field in the southwestern Black Sea was discovered in 2020. The reserves are estimated at 540 billion cubic meters.

The country gets almost all of its fossil gas from abroad, and mainly from Russia, but the Sakarya is supposed to cover a quarter of current imports when it reaches full capacity.

Turkey has conducted gas exploration in the Mediterranean Sea in waters also claimed by Greece and Cyprus. Conversely, Cyprus is pushing for offshore hydrocarbon exploration and exploitation on its behalf, while the government in Ankara is threatening to stop the activities.

Greece to give boost to efforts to search for gas

Last week, Greece announced that the country would accelerate efforts to explore and exploit potential oil and gas reserves and build infrastructure for hydrocarbons and gas pipelines. Greenpeace Greece criticized the plan to speed up the extraction of gas on land and sea and its transport to the rest of Europe, saying it is not the proper response to the energy and climate crises.

The first exploration well in the Adriatic Sea offshore Montenegro turned out to be dry. Still, more drilling for oil and gas is ahead. Albania allows exploratory offshore drilling, but the projects have been dormant for many years.

On the coal front, the deadline for the closure of some power generation units in Bosnia and Herzegovina has been postponed indefinitely. Greece decided to produce 50% more lignite this year and two old coal plants may remain active for longer if necessary. Romania is still sticking to its plan to phase out coal by 2032 and the government intends to increase its renewable energy targets, but in the meantime it is getting idle power plants back online.

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