Romania pitches itself as next big thing in energy

As energy production declines in Romania, the country is urging American investors to pump their money and technology into the Eastern European country as it seeks to develop its shale and deep-water capabilities.

Romanian Prime Minister Victor Ponta and a delegation of government leaders made their case to oil industry leaders Friday that the country has undertaken a series of reforms that will make investing more attractive to U.S. oil companies seeking predictable returns and minimal taxes.

"A lot of politicians have come here to ask for money and votes," Ponta said, speaking to a crowd at the Petroleum Club downtown. "I'm not asking for votes."

Over the last decade, the country's oil production has fallen 22 percent, and its natural gas production is down 73 percent over the last 30 years, according to the U.S. Energy Information Administration.

But those numbers belie a potential bounty. The Energy Department agency also estimates that Romania contains Europe's fourth-largest crude oil reserves and fifth-largest natural gas reserves.

That's prompted Romania to try to drum up international interest in tapping those resources.

Last year, the government decided to end its moratorium on shale exploration.

Today, Chevron owns and operates the 1.6 million-acre Barlad Shale in northeast Romania. It completed an exploration well in that region in June. It also owns and operates three concessions covering 670,000 acres in southeast Romania, where it's begun collecting seismic data.

The Spanish firm Repsol has a joint exploration venture with the Romanian energy company OMV Petrom.

But public outcry against shale development has been high, largely due to the same environmental concerns that have driven opposition to shale plays in other parts of the world.

Protesters launched eggs and rocks at Chevron officials during demonstrations earlier this year, according to BBC reports.

"I never knew so many violent activists were in Romania," said Ponta, who is running for president there. He suggested that Russia has instigated some of the shale protests.

Next year, Romania will begin accepting bids from energy companies for rights to 35 new onshore and offshore blocks, said Razvan-Eugen Nicolescu, the nation's minister delegate for energy

Ponta described shale development as critical for Romania and the region, adding that energy security is one of the most important issues Eastern Europe faces as Russia looms nearby.

"A year ago a big neighbor, Russia, was about 500 miles from Romania; this year they're about 200 miles from Romania," Ponta said, referencing Russia's annexation of the nearby Crimea. "I hope they're not coming closer."

Ponta said it will be important for Romania to take advantage of technology developed by U.S. companies to tap its unconventional resources, as well as burgeoning deep-water operations in the Black Sea.

He said the country is finalizing legislation designed to clarify taxation of natural resource profits.

The country is also trying to encourage U.S. oil companies to pursue enhance oil recovery techniques in its existing mature fields.

Romania has developed changes to tax rules designed to encourage exploration and production. That includes new rules that prevent taxation of profits reinvested in the country; a reduction in social security taxes paid by employers; and a mechanism to deduct research and develop expenses from taxable profits, said Ioana-Maria Petrescu, minister of public finance.

It has also reduced a construction tax that affected energy companies and found a way to largely exclude offshore construction from that tax. "Here in the government," she said, "we're really doing things pro-business."