Romania post COP21

“Shifting to a low-carbon economy must be undertaken based on realistic hypotheses and without compromising energy security, existent infrastructures and current development plans,” says Artur Stratan – ROPEPCA President

Following the United Nations conference on climate change in Paris (COP21), the great oil and gas companies have taken on a series of commitments in order to reduce emissions of greenhouse gases. Recently, even President Obama proposed a tax of USD 10-a-barrel on oil to be introduced in the budget for 2017, a tax that would allow financing an important investment plan in eco transportation. Obviously, fossil energy sources will continue to play a big part in the energy industry. But how will balance be achieved again between industrial development and costs of decarbonisation?

Shifting to a low-carbon economy must be undertaken based on realistic hypotheses and without compromising energy security, existent infrastructures and current development plans. A long term structural reform is essential in creating rules and reliable regulations which will help create a welcoming environment for protection against climate change as well as stimulate investments in the EU countries. Protection against relocating carbon leakage is crucial in making sure that the companies in the energy sector (including upstream) are still competitive, at the same level as light industry.

The same rules must be applied to all companies that produce emissions. But these rules should not extinguish their development and investment plans. On the long run it is important to identify and meet the priorities. The thing that Romania needs most is industrialisation activities and conformity of these activities in all regions in order to eradicate economic difference between geographical areas. We still have hundreds of rural areas without water supply, without electricity and sewerage. If there is potential for industrialization then it must take place. We already have a recent history of sabotaging ourselves, driving away foreign investors and implicating ourselves in questionable eco terrorism games. This only serves at losing sight of our own interests. Sustainable energy could be an advantage in this process.
Nearly all hot zones in the country have now cooled down, investors are long gone and the local population is as poor, jobless and without positive perspectives as before. In a way we are cleaner and poorer.

What people simply cannot understand, and this is true around the globe, is that they are vulnerable to climate and environmental change because they are poor and not the other way around. Decisively, they are not poor because of the climate and environmental change. It is not the excessive carbon emissions that are at fault for the fact that a billion people don’t have access to potable water or for the fact that the planet’s poorest inhabitants are condemned to depend solely on subsistence farming.

It actually comes down to the capability of a society or a community, with a certain technological level and an improved standard of living, of controlling or limiting all these disruptive changes. Controlling this is easier, with much faster and prevalent results when there are sufficient material resources and means. To put it more clearly: imagine an anorexic person who is prescribed a long term diet for body detoxification. This is why, in the EU, measures should be assumed and implemented depending on the level of each country, either for development or greening.

It is not clear to me yet to whom the proposal of introducing a tax of ten dollars per barrel of oil in the 2017 budget is addressed. Is Obama referring to oil producers, oil providers to gas stations, or both? Anyway, this clearly isn’t the right time for this measure. Worldwide there is a crisis and the oil industry is fighting for survival. OPEC has proved that it’s out of its depth regarding current events and its members can’t reach an agreement anymore. The market mechanisms that dictate the sale price of oil barrels are not completely natural, a great deal of them being artificial and even manipulative and speculative.

The fundamental law of stock exchange is still at play: for a few winners there must be a lot of losers. In order for that additional ten dollars per barrel tax to be functional starting with 2017 in the USA, there must be a considerable growth of the oil price way above the 50 dollars per barrel. Otherwise, I can’t see a tax of a quarter, a third or even half of the sale price of barrel, ever come to reality. Not even in the cases where shale gas has been acknowledged for its low production cost. And, if we are to see this measure in a different light, we could very well interpret it as sign that the price of oil is set to make a serious comeback in 2017.

Artur Stratan holds a Ms. Sc. degree in petroleum engineering from the Oil and Gas University in Ploiesti, Romania. He has more than twenty six years of full-time work experience in various positions spanning Central and Eastern Europe, South Asia and the CIS countries. He possesses broad experience in all aspects of E&P activity in the domestic and international petroleum industry, doubled by significant experience in management, operations, coordination, commercial and business development and complex negotiations. His achievements are ranging from successfully undertaking an offshore exploration project in India to old wells re-entry and field development related activities in Komsomolskoe field in Kazakhstan. He was part of the OMV Petrom core team that negotiated and concluded the first two Production Enhancement Contracts in Romania in 2011 with Petrofac and PetroSantander and lead negotiator for the Joint Ventures set up in Romania for the exploration blocks Urziceni East and Adjud with Hunt Oil and Baicoi, Targoviste, Pitesti and Targu Jiu blocks with Repsol. He is currently the Director of Business Development for Amromco Energy Romania, as well as President and member in Steering Committee of ROPEPCA.

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