HYDROCARBONS The natural gas deposit found in the Black Sea boosts the stock of "OMV Petrom"

"OMV Petrom" and "ExxonMobil Exploration and Production România" yesterday announced the discovery, in the Black Sea, of a deposit of natural gas, estimated at 42-84 billion cubic meters, the equivalent of three to six times our country's annual consumption.

After an initial discussion with specialists, we have obtained the following estimates: the Black Sea contains a natural gas deposit with Ukrainian, Azeri, Turkish, Georgians and others.

The deposit starts 7 miles West of Snake Island, in Romania's territorial water, and is 15-18 miles East from the Blue Stream underwater pipeline.

The deposit seems to extend beyond Romania's territorial waters, crossing over into those of the Ukrainians and the Turks. It would thus seem that Romania's explorers will have competition from the others on how soon they will begin the exploration, as well as when it comes to the extracted volume.

The press release of "Petrom" does not specify whether the announced finding brings any changes compared to the initial information available on the deposit.

Johann Pleininger, a member of the Board of "Petrom" said: "Together with our partner ExxonMobil, we have begun the exploration drilling at the Domino-1 well, the first deep-drilling well of the Neptun block, with encouraging signs. By February 3rd, the well indicated the presence of hydrocarbons".

Domino-1 is placed in the Neptun Block, 170 kilometers away from the shore, in waters with a depth of approximately 930 meters, according to a communiqué sent yesterday to the Bucharest Stock Exchange. The drilling operations began in December last year, and are expected to be completed this year.

• "Investments in the exploration and development stages could reach several billion dollars"

The representatives of "OMV Petrom" and "ExxonMobil Exploration and Production Romania" have said that it is still too early to determine whether the "Neptun" block will prove commercially exploitable. "Still, if the next works will confirm the technical and commercial feasibility of the deep sea production of natural gas in the Neptun block, the future investments in the exploration and development stages could amount to several billion dollars, and the first extraction might take place towards the end of the decade at the earliest", the communiqué states.

"ExxonMobil" and "OMV Petrom" intend to continue their work this year, as the results of the acquisition of seismic data will determine the next stages, the companies inform.

The Romanian natural gas market increased 3% last year, to 14.2 billion cubic meters, of which about 11 billion cubic meters come from the domestic production. Domestic consumption is covered both by the output of "Romgaz" and "Petrom", as well as through imports from Russia, from the "Gazprom" group.

Last year, "Petrom" extracted 5.23 billion cubic meters of natural gas, 3% more than in 2010. Last year, the output of natural gas of OMV stagnated at approximately 8.3 billion cubic meters, according to data presented yesterday by the Austrian group.

Some of the companies which own perimeters in the Black Sea comprise OMV Petrom, ExxonMobil (USA), Lukoil (Russia), Sterling Resources (Great Britain) and MOL (Hungary).

Towards the end of the 70s and in the 80s, Romania output over 30 billion cubic meters a year, with peaks of more than 35 billion, but the output gradually declined after 1989.

The current gas prices are creating an unsustainable situation, which could affect invest investments in the sector, including the activity of the Brazi thermo-electric plant operated by OMV Petrom, the company's CEO Mariana Gheorghe said yesterday: "The current state of things in the natural gas sector is unsustainable. The fact that the price of natural gas isn't being allowed to rise will affect future investments in the sector. 2012 and 2013 will be very difficult for the Brazi plant. Under normal market conditions we could be profitable with this plant over a period of 20-25 years. Until the pricing system isn't stabilized, we will have challenges to face".

She went on to say that OMV Petrom is carefully monitoring the discussions between the Government and the IMF on the liberalization of natural gas prices, and the company will adjust its investment plans depending on the outcome of these talks.

In the beginning of February, the head of the IMF mission in Romania, Jeffrey Franks, said that the process for the liberalization of the price of natural gas should gradually begin in 2013.