BSOG to start offshore gas production in 2019

Black Sea Oil & Gas (BSOG), which has leased two oil blocks in the Romanian Black Sea continental shelf, namely Midia and Pelican, announced in February that it has discovered significant gas reserves. According to the company’s CEO Mark Beacom, the overall reserves of gas depend on the future drilling results, which could add to the resources already discovered in Ana and Doina blocks and the total reserves could vary between 10 and 20 billion cubic meters. The commercial exploitation of these new deposits would turn Romania into a gas exporter.

BSOG estimate that the project will cover about 10% of Romania’s consumption needs for five years. According to Mark Beacom, the total investments of the consortium on this concession stand at about USD 200 million. He added it is difficult to estimate the total amount to be invested until the entry into production because it could include further investments due to future discoveries. The total amount could possibly reach USD 500 million. Currently, the Midia Gas Development Project in the Romanian sector of the Black Sea is in the preparatory stage for approval. If BSOG get approval by the end of 2017, then, after the completion of the construction works estimated to last two years, production could start in 2019, Mark Beacom added.

The company’s CEO emphasized that the implementation of the project depends on the government and on the National Authority for Energy Regulation (ANRE) decisions. In order to obtain the necessary approvals, there are a number of issues related to the legal framework to be addressed by the government and by ANRE. There is the risk that any delay in adopting the bills may cause delays, or even the project’s cancellation, the BSOG official said. The ANRE representatives are nevertheless more optimistic than BSOG in regard to starting the gas production in the Black Sea by mid next year. “As of next year, a new important source of natural gas, of 4 billion cubic meters per year, will be available, it is about the gas deposit discovered in the Black Sea. The operators and investors in the area showed us that, as of next year, on July 1, a new structure will go into production. So basically, from that moment, Romania will also become an exporter, because this structure adds gas to the usual demand in Romania,” ANRE President Niculae Havrilet said. “In the first year, the output will be of one billion cubic meters, and in the coming years will increase gradually to 4 billion cubic meters per year, compared to the consumption (in Romania) of 12 billion cubic meters this year and an import in usual conditions between 500 and 600 million cubic meters per year. Basically, from the very first year there will be no need for imports, but we will have to create the conditions for gas export so that this investor should be able to recover the investment,” Niculae Havrilet related.

Black Sea Oil & Gas was set up after Carlyle Group bought in 2015 the company Midia Resources from Sterling Resources and renamed it. BSOG has a portfolio of concessions in Pelican XIII, Midia XV and EX-25 Luceafărul blocks and include gas discoveries in Ana Doina, Luceafărul and Eugenia blocks, and a portfolio of prospects in the Midia block; the three blocks of the Black Sea Oil & Gas, namely Pelican XIII, Midia XV (shallow water) and EX-25 Luceafărul, totalling 5,000 square km in the Romanian continental shelf of the Black Sea, an area poorly explored hitherto. Black Sea Oil & Gas is the operating company in these blocks, on behalf of the partnership with Gas Plus International BV (for the Midia and Pelican blocks) and with Petro Ventures Europe BV (for the Midia, Pelican and Luceafărul blocks).

The international company for alternative investments, The Carlyle Group (‘Carlyle’, symbol CG on the NASDAQ Electronic Stock Exchange) at the end of 2014 was managing assets worth USD 194 billion, owned by more than 128 funds and 142 fund of funds entities. Carlyle invests in four segments - Corporate Private Equity, Real Assets, Global Market Strategies and Investment Solutions - in Africa, Asia, Australia, Europe, Middle East, North America and South America. Carlyle’s experience and expertise covers several industries, including: aerospace, government services and defence, consumption and retail, energy, financial services, healthcare, industry, real estate, technology and services for business, telecommunications and media and transportation. Carlyle Group has over 1,650 employees in 40 offices on six continents.

Besides the acquisition of the entire business in Romania of Sterling Resources Ltd. (symbol SLG on the TSX-V Stock Exchange), the transaction included the shares in Pelican XIII, Midia XV, EX-25 Luceafărul and EX-27 Muridava blocks. The blocks, located in the Romanian continental shelf of the Black Sea, included at that time a number of significant gas discoveries and had net resources in category 2C and potential net resources amounting to the equivalent of about 51 and 375 million barrels of oil respectively. In addition to the amount paid to buy Midia, Carlyle International Energy Partners (CIEP) has funded also the further development of the above-mentioned blocks. The development project focuses on drilling, completing the infrastructure, production and sale of natural gas on the market. The funds for this investment come from CIEP, a USD 2.5 billion fund which conducts international investments in oil and gas exploration and production, refining, transportation, storage and marketing of petroleum and petroleum products and, not least, in related services to the exploitation of oil in Europe, Africa, Asia and Latin America. This acquisition was the fourth investment made by the fund.

MIDIA XV BLOCK

The Midia XV block (shallow water) covers an area of 1,900 square kilometres and is found in the Histria Basin. Ten wells have been drilled in the Midia XV block, which contributed to understanding the potential for exploration and production. Some 1,740 sq km of 3D seismic search were analysed during 2014-2016 and there is a dense network of 2D seismic survey, conducted in 2008 and in 2012, as well as older regional profiles. Besides the discoveries in Ana and Doina blocks, this area contains several explorations estimated to have low risk and in the same trend. A depth exploration potential was also identified, at roughly the same horizon with Domino-1 discovery by ExxonMobil.

PELICAN XIII BLOCK

The Pelican block is in the Pelican Platform and has an area of 2,300 square kilometres. A single well was drilled in this area, in 2012, i.e. the Eugenia gas discovery. A cube of 100 square kilometres of 3D seismic survey was conducted in 2014 and there is also 2D seismic coverage.

SEISMIC ACQUISITION, COMPLETED IN JUNE 2016

Last June, BSOG announced the completion of the 3D seismic acquisition campaign in the Black Sea. The Midia XV block, in the shallow water area of the Romanian sector in the Black Sea, covers an area of 1,042 square kilometres. The campaign operator was BSOG. The 34 days seismic acquisition programme was carried out by the ship ‘Polar Marquis’ belonging to Dolphin Geophysical LTD. Processing was done with the Fast Track seismic data. The data obtained will be used to identify the best geological structures for the drilling campaign in 2017/2018 in Midia block, shallow water area, on the same trend with the Ana and Doina gas discoveries.

PROMOTING ENERGY PROJECTS IN THE BLACK SEA

Prime Minister Sorin Grindeanu has proposed the setting up of a ministerial team to provide technical support needed in order to support new energy projects with development potential in the Romanian Black Sea sector. The proposal was made during a meeting at the end of February between the Prime Minister and a delegation of the consortium consisting of ExxonMobil and OMV Petrom at Victoria Palace. During the meeting, the representatives of both companies - David Cochrane, Vice-President of ExxonMobil Development Company, and Mariana Gheorghe, CEO of OMV Petrom - have presented the project for gas exploration in deep sea, in view of the final decision on investment.

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