October 24, 2018 / 7:55 PM / a year ago

Austria's OMV postpones decision on Black Sea offshore investment

VIENNA, Oct 24 (Reuters) - Austria’s energy group OMV has postponed an investment decision on its Black Sea exploration project until next year because the Romanian government took too long to set the framework conditions, its chief executive said.

The exploration of the Black Sea Neptun block is a joint venture between OMV’s Romanian subsidiary Petrom and U.S. major ExxonMobil, and includes the first deep-water exploration well in Romanian waters.

Romania’s lower house of parliament approved the much-awaited offshore hydrocarbons legal framework earlier on Wednesday, but Rainer Seele said at a panel discussion in Vienna that it came too late.

“We cannot make an investment decision at Petrom in this quarter as planned,” the CEO said, adding that OMV first had to evaluate the conditions for what the company has described as a “billion euro investment”, and will now decide next year.

Under the bill, which must be signed into law by President Klaus Iohannis, holders of current offshore petroleum agreements with Romania will be levied the current level of royalties, taxes and gross production thresholds.

It also stipulates that companies involved in production operations in Romania’s offshore perimeters, would need to sell at least 50 percent of yearly gas output in the country.

“We are very concerned regarding the fact that we will be restricted in the marketing of the gas,” Seele said. “The freedom in the marketing of the gas is very important.”

Seele emphasised that unlike other countries in the region, Romania already is almost entirely energy independent.

The state imports less than 10 percent of its gas needs from Russia, with the rest produced locally, largely by state producer Romgaz and Petrom.

In 2012, OMV and ExxonMobil said they had discovered 1.5-3 trillion cubic feet (42-84 billion cubic metres) of gas reserves at the ExxonMobil operated Domino-1 well, located around 170 km offshore.

OMV owns a 51 stake in OMV Petrom and the Romanian state holds 20.6 percent. (Reporting by Kirsti Knolle; Editing by Kirsten Donovan)

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