Europe might overcome the current natural gas shortages in the future. Natural gas mostly came through pipelines from Russia. But there are several other alternatives that could help Europe get through these harsh times. What was not promising in the past might save Europe today. LNG and Romanian natural gas could give respite to neighbouring countries for the years to come.
Let us be honest, natural gas prices will not be as low as in the past. The cost of natural gas was kept artificially low, reports Portfolio.hu. We can debate the true incentive of this, but the most important now is that these prices will probably not come back, at least in the foreseeable future. Because of the cheap Russian natural gas which flowed to Europe for decades, the incentive to exploit European natural gas fields slowly faded.
This is one of the many reasons why the Romanian Neptun natural gas field has not been exploited. The Romanian state as a regulator and the OMV Petrom-Exxon consortium could not agree on the shares in the 2010s. As the costs were low, this problem did not cause a huge debate. In the whole of Europe, natural gas production has fallen to a quarter compared to the production of the early 2000s. New projects were just not economically viable.
The reason behind previous decisions was purely economical. As natural gas prices started to skyrocket, the incentive to find alternatives grew exponentially. The most obvious solution is LNG (Liquified Natural Gas). However, its production and transportation are expensive and special facilities are required for it too. LNG is only part of the solution, but new exploitation projects seem more economically feasible. Previously, Russian gas exports made up 40 percent of European consumption and as such, LNG is not viable in the long-term.
Fortunately, the Romanian government has already made a deal in May, which created the necessary prerequisites for the start of the project. While Romania is almost self-sufficient in terms of natural gas, production levels have fallen so far. With the start of the war, self-sufficiency had become the main priority and instead of buying supplemental natural gas from Russia, Romania wants to produce it for itself.
According to the current estimates, the Neptun natural gas field holds around 42-84 billion cubic metres of natural gas. The mostly state-owned Romgaz bought out Exxon’s shares from the project. This means now OMV Petrom owns one-half of the shares and Romgaz the other half of the project. The extraction from Neptun will be an estimated 4-8 billion cubic metres annually. Romania only needs a small portion of this amount, so the rest will most likely be exported. This could very well decrease Hungary’s dependence on Russian natural gas, which constitutes about 8-9 billion cubic metres each year.
The total cost of the project will be around USD 4 billion, at least by current estimates. OVM Petrom still has to decide on the start of the project by the middle of 2023. In this case, extraction could start by 2027. It is a long time, but these projects take a lot of time to complete. However, it still could be a way out of the dependence on Russian natural gas.