Election Could Unleash Romanian Shale Potential
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Elections this weekend in Romania could determine whether the country will allow foreign oil companies to go ahead with hydraulic fracturing of its sizable shale deposits.
US-based Chevron (NYSE: CVX), for one, is itching to see a moratorium on fracking lifted so it can start drilling for shale, and the oil major is hoping that the current anti-fracking movement will lose ground after the Dec. 9 vote.
It’s an uncertain gamble. Most analysts believe that the Social Liberal Union (USL) of current leftist Prime Minister Victor Ponta will win.
What’s the USL’s policy on fracking? Well, the party hasn’t really said, keeping the wraps on the issue to avoid losing votes this weekend.
The probability is that a new USL government would seek to the lift the moratorium on fracking, but would have to wait until after the elections to do so. Once votes are cast, the party will not be under the same pressure to give in to the public’s anti-fracking sentiments.
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Chevron clearly thinks the same. Once it has secured office, the USL will no longer be hostage to the electorate.
What’s at stake? Well, in combination with Romania’s already attractive conventional gas reserves of around 84 billion cubic meters, its shale reserves stand to make it entirely self-sufficient. This means no more Russia, which is presently Eastern Europe’s dream.
Together, Romania, Bulgaria and Hungary have an estimated 538 bcm of shale gas, so the region is hot for fracking, though the publics in all three countries remain concerned.
For Chevron, the stakes are indeed high. If the new Romanian government does not play ball with fracking, the US oil giant stands to lose its existing exploration rights. A separate referendum will be held alongside the elections on shale gas exploration in Mangalia, on the Black Sea. If the referendum passes, Chevron will lose its concessions here—3 large blocks in Mangalia, plus another massive block in Barlad, also on the Black Sea.
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Chevron hopes to start drilling near Barlad soon after the elections.
Also watching elections closely is ExxonMobil, though in this case it's conventional gas. With its partner OMV Petrom (Austria), ExxonMobil (NYSE: XOM) has discovered a potential 84 bcm of conventional gas offshore in the Black Sea. For ExxonMobil, however, lifting a moratorium on fracking would unleash shale gas resources that make its conventional discoveries less impressive.
Chevron’s optimism is not based on regional trends. Bulgaria has already given in to public pressure to halt fracking. The difference in Romania is an election that could be an instant pressure remover.
By. Jen Alic of Oilprice.com
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