The Federation of Oil and Gas Employers (FPPG), an organization that brings together the main producers of natural gas, covering over 98% of domestic production, welcomes the reintroduction of the Offshore Law in the parliamentary circuit. This first step is essential to ensure the competitiveness and stability of the fiscal regime while respecting the mechanisms of a free natural gas market, which, if implemented, would allow the start of strategic investments in the production of Black Sea resources. Unblocking these legislative changes is vital not only for Romania's energy security, but also for regional security, especially in the new context of sanctions against Russia. The FPPG members are currently analyzing the proposed amendments, both those that have been discussed for a long time in the public space, as well as the novel elements and their impact on the Black Sea gas developments, the FPPG position to be defined in the immediate future.
The FPPG brings together the main holders of oil agreements in the Black Sea, after the integration this year of Black Sea Oil & Gas as a member, completing the picture of the Romanian upstream sector both onshore and offshore. We express our wish that, in the near future, the Federation's members will contribute significantly to securing Romania's natural gas consumption needs for many years to come by adding quantities from offshore projects, which have been blocked until now by a law that was actually meant to facilitate them.
“The oil and gas industry is now at a turning point. In the current geopolitical climate, the urgent need to increase domestic production is a responsibility that both the producing companies and the Romanian state decision-makers have to shoulder, and this responsibility is not only towards their own citizens, but also towards the entire European project of which Romania is a part. We welcome the entry of the Offshore Law into the parliamentary circuit and we continue to assume a significant role in the dialog that will be essential for the restoration of a fair economic balance necessary for the development of offshore gas as a prerequisite to strengthen national energy security and sustainable energy transition”, says FPPG Executive Director, Cătălin Niță.
The uncompetitive and unstable fiscal regime, as well as frequent changes in the legislative framework and the introduction of specific conditions for natural gas commercialization have affected the functioning of the Romanian natural gas market and led to the constant postponement of investment decisions in the Black Sea resources. In the absence of these much-needed amendments to the Offshore Law, the bottleneck situation could not be resolved, which has had a major impact on the Romanian energy sector and, implicitly, on the national economy in recent years.
By adding the additional quantities that can be generated from the projects in the Black Sea, Romania can become the most important producer of natural gas in the European Union, once the Groningen deposit in the Netherlands is closed, natural gas being an essential fuel in the energy transition and for the country's energy security. Thus, the political decision to amend the Offshore Law is proving to be a highly responsible one, and the governing coalition has the merit of putting the national interest before the individual objectives of the parties which, despite ideological differences, are thus opening a dialog for the adoption of the best solutions to the current crises Romania is going through.
As a reminder, the specific effective tax rate on revenues from offshore gas production in Romania reached 51% in 2021, more than double the previous year and 10 times the European average in 2020, as revealed in a recent analysis published by the FPPG. We express our wish that the form of the new Offshore Law, which will be promulgated, will respect both Romania's national interests and the European Union legislation of which Romania is a member.
The FPPG also reiterates its full availability for a permanent consultation with the state authorities and assumes its responsibility to facilitate the most constructive dialog possible between the oil and gas industry and the representatives of the decision-making environment.
