The Romania oil and gas upstream market is expected to grow at a CAGR of more than 1.99% during 2020 - 2025. Factors, such as up-gradation of the current downstream infrastructure and increasing investment in the refining and the petrochemical sector, and sustained growth in the consumption of natural gas, petroleum, petrochemical products and modern developments of oil and gas exploration are the major drivers for the oil and gas sector in Romania. However, on the flip side, the decreasing oil processing capacity from 35 million tons in 2000 to 13.5 million tons in 2018, due to volatile oil prices and government policies are expected to hinder the market growth during the forecast period.
- The refining capacity has been growing considerably over the recent past is expected to grow over the forecast period, and the petrochemical segment is expected to be the most significant sector due to the industrialization of the chemical industry during the forecast period. Therefore, the downstream sector is expected to witness growth.
- Romania is the largest natural gas producer in Central and Eastern Europe, and most of Romania’s output is from the onshore fields, and it is likely to dominate the market during the forecast period.
- Digitalization and modernization of the refining and petrochemical sector are expected to reduce the refining costs and process losses. This, in turn, is expected to create an opportunity for the market in the coming years.
Key Market Trends
Upgradation of Downstream Industry to Drive the Market
- As of 2018, Romania ranks 11th in the world hierarchy of regional oil producers with proven reserves of 200 million tons of oil, without taking into consideration the oil potential of the Romanian Black Sea plateau area, under current exploration.
- The increasing production of gas and oil is expected to increase the refinery capacity of the country. For instance, in September 2019, KazMunaiGas International (KMGI) announced that they are planning to double the production capacity at the Petromidia Refinery. The investment for the expansion of refinery will be around USD 2 billion and the capacity is expected to be reach around 10 million tonnes per year.
- Furthermore, in April 2019, a new PolyFuel unit started at the Petrobrazi refinery. The PolyFuel unit of Petrobrazi refinery is the first of its kind valorizing C4 and C5/C6 fractions into high-quality gasoline and middle distillates, increasing the overall production of these products.
- Therefore, the aforementioned developments are expected to drive the Romania oil and gas downstream market during the forecast period.
Increasing Natural Gas Demand is Expected to Drive the Market
- Romania is relatively self-sufficient in natural gas, with imports averaging around 10-15% over the past few years and the Black Sea resources have the potential to turn the country into a net exporter.
- The annual consumption has reached 10.9 megatonnes in 2018. Therefore, while domestic production accounted for 33% of demand in 2018.
- Romania has a century of experience in natural gas production. According to BP, in 2018, 9.5 billion cubic metres (bcm) of gas were brought to surface locally and a remaining quantity of 1.4 bcm was imported to cover domestic consumption.
Romania oil and gas market is moderately fragmented. Some of the key players are OMV Petrom SA, Serinus Energy Company, Exxon Mobil Corporation, Romgaz SA, and Total S.A.
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