Romania's petroleum industry is seeking western capital to recover from setbacks flowing from the recent overthrow of the 23 year dictatorship of Nicolai Ceausescu.
Bucharest reports indicate that French firms, including Elf, Total, and Renault, and West German companies will be invited to help modernize the Romanian oil and gas producing sector, as well as related manufacturing operations such as rig construction. Mixed enterprises will be encouraged, with foreign capital investment no longer limited to 49%.
Romanian officials expect to make early use of $1 billion in credits from the European Economic Community and have pledged early repayment. The Ceausescu dictatorship severely restricted most production for domestic use in a program designed to eliminate Romania's foreign debt.
WHAT'S PLANNED
Bucharest's new regime plans to restructure Romania's rigid economy by permitting gradual introduction of market principles in some sectors. Private enterprise employing as many as 20 workers is now allowed.
But the energy industry will remain under full government control.
Romania's leaders are afraid the growing number of strikes and big wage hike demands made by the nation's workers will cripple economic recovery. Top officials admit that most requests for increased pay are justified, but they warn that without labor restraint and a high rate of industrial activity previously concealed inflation will grow and worsen Romania's present economic crisis.
Moscow reports say Romania's big refining and petrochemical industries were in "catastrophic condition" when the Ceausescu dictatorship fell last December. The Soviets assert that the Romanian petroleum equipment manufacturing industry was in poor shape because its products were made with such low quality metal they could not compete on the world market.
The Moscow newspaper Sovetskaya Rossiya revealed that Romanian refining capacity has risen to a record 680,000 b/d, but it noted that full utilization has not been achieved.
Runs increased from 452,00 b/d in 1982 to 612,000 b/d last year, with much of the crude purchased or battered from members of the Organization of Petroleum Exporting Countries and custom refined for foreign interests.
Sovetskaya Rossiya said that during the past 20 years, operating losses incurred by one Romanian refinery "were the equivalent of what would be required to build a new refinery and a gilt-edged one at that."
OIL AND GAS SUPPLY
Romania's crude oil imports from Iran are projected at 112,000 b/d this year.
The Soviet Union, which applauded Ceausescu's overthrow, increased oil, gas, and electricity exports to Romania as an emergency measure in first quarter 1990. Much of this energy was designated for civilian use.
The Ceausescu regime had reduced civilian energy supplies to the point that the population did not have enough heat during winter months. Gasoline for nongovernmental use was strictly rationed.
Last January and February, Romania hiked natural gas supplies to the people by 50% and doubled electricity deliveries.
Under the Ceausescu rule, Romanian oil production fell from a peak of 294,000 b/d in 1976 to about 180,000 b/d late last year. Natural gas flow rose from about 28 bcm in 1973 to a peak of 37 bcm in 1984 but has since fallen to less than 30 bcm/year.
Soviet crude oil exports to Romania, recently close to 80,000 b/d, are not expected to rise significantly during the long term. But Soviet gas sales to Romania have climbed from virtually zero in 1979 to more than 4 bcm/year, with deliveries during the early 1990s slated to continue fast growth.
Under Ceausescu's austerity policy on domestic energy use, Romanian oil consumption fell from 395,000 b/d in 1979 to less than 300,000 b/d in the late 1980s. Gas consumption reached nearly 39 bcm in 1986 and may hold near that figure as higher imports offset much of the expected decline in domestic production.
Romania's efforts to hike oil and gas production by developing fields in the Black Sea have not paid off and are regarded as another of Ceausescu's failures in pushing grandiose economic plans. Six Romanian rigs are active in the Black Sea, with oil and gas production under way in two fields reportedly having modest reserves.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.