The EU punishes Romania for its 150-year history of oil and gas extraction: Petrom and Romgaz are obliged to provide a fifth of all CO2 storage capacity in Europe, the costs are billions of euros

Mihai Nicut (e-nergia.ro)

Petrom and Romgaz, Romania’s two oil and gas producers, will be obliged, at the level of 2030, to ensure in the country a carbon dioxide storage capacity in Romania that will ensure the underground storage of 9 million tons of CO2 per year, according to a presentation on CCUS (carbon capture utilization and storage) made by the Oil and Gas Employers’ Federation (FPPG)

The obligation resides in the NZIA (Net-Zero Industry Act), a European regulation already voted by the Parliament and through which Romania is assigned 9 of the 50 million tons per year, carbon storage capacity at the level of the entire European Union, a target that must be met by 2030.

It is the second highest share in the EU, after that of the Netherlands.

The reason why Romanian hydrocarbon producing companies (not the country itself) have such a large share depends on the interpretation of history: Romania has a 150-year tradition of hydrocarbon extraction (even now it is one of the few oil-producing countries and EU gases) and, as such, according to Brussels’ interpretation, Romanian companies, which have long used these CO2-emitting hydrocarbons, must now ensure the capacity for carbon capture and storage.

Romania tried to oppose this approach, but despite the efforts of our MEPs and the industry, Brussels could not be prevented from basically punishing Romanian oil companies now because the country was one of the oldest and largest oil and gas producers in Europe. And as it is still one of the few countries still extracting oil and gas, it was unable to find enough states to support its position when the NZIA was negotiated.

How much would it cost to implement a carbon storage capacity of 9 million tons per year? It is not yet very clear, the CCUS technology being still in its infancy, but one of the FPPG experts, did, at the request of the press, a rough calculation – just ensuring a storage capacity of 9 million tons per year, for 20 years, would cost the two Romanian companies around 4.5 billion euros.

And the entire value chain – storage, transport and storage – would cost around 15 billion euros.

Things seem irreversible, the NZIA is voted on, the only thing that has not yet been decided is the amount of penalties to be paid if companies do not comply.

Carbon capture and storage (carbon sequestration) is a set of technologies aimed at the safe permanent capture, transport and storage of CO2 that would otherwise be released into the atmosphere. Geological sequestration is a proven method of underground CO2 storage where it is injected underground into deep rock formations for long-term storage, and among the best places are depleted oil and gas deposits, onshore or offshore , but also in saline aquifer structures, as shown by the FPPG.

However, the technology is quite expensive and, even if it has lower risks than in other situations (CO2 does not burn), it still requires the identification of areas that allow its storage for at least 20 years. And before the actual storage, it is necessary to capture the carbon and transport it to the storage place, so we are talking about a whole chain and a whole industry that needs to be created.

Here is schematically how the process would work:

Benefits

Once the solutions are identified and the chain is created, carbon storage will also bring advantages from which companies that spent the money to create the storages will start to recoup their investments. This is where the resulting CO2 will be stored by industries that cannot fully decarbonize, a classic example being that of cement. Storage exempts them from paying for carbon certificates (now it is 60 euros per ton emitted, but it can also reach 90 or even 150). Almost all climate scenario models require the implementation of CCS, say those from FPPG in the study.

“Romania has extensive experience and know-how in the field of CCS projects and technologies, from the perspective of its long tradition in the field of oil and gas exploration and exploitation. In addition, research in the CCS sector continued in Romanian universities and research institutions. After the exhaustion of hydrocarbon deposits, Romania can use offshore deposits to become an important actor in the development of this key decarbonization technology if they will meet the specific technical-economic criteria”, the study shows.

The companies say that the support of the state is also needed.

“Oil and gas operators in Romania have emphasized that before any decision is made regarding the implementation of CCS projects at the national level, it is necessary to carry out environmental impact studies, to validate that it is safe to do so of projects, in relation to local communities. Responsibility for such environmental impact studies should be clearly assumed at national level by the authorities with powers in this sector. These assessments should not be left to operators, especially as there are several Member States that have formally banned underground CO2 storage, and others are on the way to doing so,” the study says.

“The oil and gas industry has increasingly signaled the need for the Romanian State to assume an active role in ensuring access to public funding or other financial support schemes, being essential for CO2 storage projects, due to investments with intensive use of capital, of long project development periods (8-10 years) with an uncertain price of the CO2 trading scheme as a measure to avoid costs along the entire value chain for such a long period and a long investment recovery period due to the longevity of operations and the longevity risk of environmental liabilities”, the study also states.