PEOP, SHORT VERSION: Gazprom, interested in the Pitesti - Pancevo pipeline

Serbian company NIS Gazprom Neft, part of the Gazprom group, has shown interest in taking part to the building of a pipeline between Pitesti and Pancevo (Serbia), a pipeline aimed at interconnecting the oil transporting network between Romania and Serbia. The Pitesti - Pancevo project is in fact a shortened version of the Pan European Oil Pipeline (PEOP) that had in view the connection between Constanta Port and Trieste (Italy). The European Commission had proposed in 2007 the extension of the pipeline to Marseille (France).

The PEOP initial project was 1,400 km long, meant for oil transport from the Caspian region to Constanta and further on to Trieste. At that moment the deadline for finalizing the construction was 2012, estimated costs envisaged amounted to USD 2 - 3.5 billion. The pipeline was thought to be one of the means to reduce EU dependency on Russian oil deliveries as well as deliveries from the Middle East. By 2010 it was suggested that Gazprom is included in the project.

“We are analyzing the participation of NIS Gazprom Neft to the Constanta - Pancevo pipeline, to building the Pitesti - Pancevo section. After Croatia withdrew from PEOP, Romania and Serbia have supported the need to develop the project within a new concept on the Constanta - Pancevo section, meaning interconnecting the two countries’ transport networks,” said Corneliu Condrea, Director of the oil and gas division with the Energy Department.

NIS is interested in developing the project in order to finalize an efficient supply route for its refinery in Pancevo which has an annual capacity of almost 4.8 million tons. Corneliu Condrea further said that “besides finalizing the Constanta – Pitesti - Pancevo pipeline, there is interest also for ensuring supply and storage of the fuels produced in Pancevo. These would support the developing of a regional project and the possibility of further investments by NIS Gazprom Neft in Romania.”

NIS Petrol, part of the Gazprom group, has started building filling stations in Romania, aiming at 120 stations and 10 percent market share of fuel deliveries by 2015.

We remind that seven years ago Croatia, Romania, Serbia, Slovenia and Italy signed the agreement to develop PEOP. Two years later Italy, Croatia and Slovenia have given up the project. Romania and Serbia have re-evaluated the situation and stressed their intentions to a new route, i.e. Constanta - Pancevo, later modified to Pitesti - Pancevo.

Institutional investors meet

Institutional investors met in August last year at the Bucharest Stock Exchange (BVB) offices in view of listing Conpet on the BVB market. Among the participants there were representatives of investment funds - ING, Raiffeisen, BCR, Erste, Allianz Tiriac, Eureko Romania, OTP and representatives of the financial investment companies - SIF 2 Moldova, SIF 4 Muntenia. Also present were Adrian Albulescu - Secretary of state with the Economy Ministry, Gabriel Dumitrascu – Director General with the General Division for Privatization and Administration of the State Assets in Energy and Adriana Marin – Analysis Director, manager of the ‘Institutional Clients’ division with SSIF Broker.

Major issues were related to the company’s developing objectives, future investments, economic results. Liviu Ilasi, Conpet Director General, revealed on this occasion two far-reaching projects:

- Interconnecting the national pipeline network with the regional one (Pancevo) and the European one. A first step would be the Constanta – Pitesti - Pancevo project, a viable oil transport alternative to supply the Pancevo refinery, with possible extension to Bosanski Brod (Bosnia); an important advantage is considered the fact that, out of the 760 km of the entire pipeline, the Constanta - Pitesti section of 320 km already exists, meaning the new pipeline Pitesti – Naidas - Pancevo to be built stretches only 440 km;

- Ensuring the oil safety supply. Currently there is an available capacity of 100,000 tons with the possibility to be increased by another 100,000 tons.

“Our strategy targeted the increase of the company’s efficiency, by improving structures and flows; it is also a flexible strategy, adapted to the current macro-economic situation, viable also after the implementation of professional management,” Liviu Ilasi said referring to the strategy implemented for the company during December 2012 - August 2013. It remains to be seen what the next steps would be, after Gazprom expressed its clear intention on the issue.

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June 2017