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If Chevron's Romania Fracking Deal is so Good, Why the Secrecy?

By John Daly | Thu, 12 April 2012 22:18 | 0

Hydraulic fracturing of subterranean natural gas deposits seems a godsend to energy starved countries, particularly those in Central and Eastern Europe, which have seen their energy independence nobbled by their reliance on continuing imports from the Russian Federation.

Quite aside from the national security issues, Russian imports, provided by the Russian Federation’s natural gas monopoly Gazprom, are increasingly expensive, as the company regularly pegs its prices to the global market.

Accordingly, any and all alternatives are considered, from the former Soviet republic Baltic states contemplating building liquefied natural gas terminals to the exploitation of indigenous gas resources.

In the absence of “traditional” natural gas deposits affiliated with oil reserves, many Eastern European states are accordingly embracing “hydraulic fracturing,” or “fracking,” as it’s more familiarly known, as a national way out of dependence on Russian natgas imports.

Poland and Bulgaria are both investigating the process, and the latest entry into the energy autarchy sweepstakes is Romania, which has partnered with U.S. energy giant Chevron to develop an indigenous natural gas alternative to Russian imports.

Too good to be true, right?

Apparently – as certain aspects of the agreement remains secret, leading to an unseemly public contretemps between Chevron and Bucharest.

Taking the high ground, Chevron Country Manager Tom Holst told a Romanian private television channel that the decision to maintain secrecy about the Romanian government’s accords with Chevron for sites in Dobrogea was a governmental decision.

Holst piously intoned, "Chevron has an exploration license for Barlad area (north-east of Bucharest) and the government, some two weeks ago, offered us three exploration licenses in Dobrogea region (southeastern Romania). The decision to keep the secrecy about the accords for the Dobrogea sites belonged to the Romanian Government, it was a decision of the National Agency for Mineral Resources (ANRM), it was not us who requested this. We observe the law in Romania and the ANRM decision."

At issue are three energy accords that the Romanian government has recently approved for exploration, development and drilling in EX-18 at Vama Veche, EX-19 at Adamclisi and EX-17 at Costinesti in Dobrogea sites for Chevron’s Romanian branch, which came to light when they were published in a resolution in the Official Journal on March 20.

Romania’s Civic Platform non-governmental organization immediately went on the counteroffensive, with Civic Platform’s Nicolae Rotaru declaring, “The issue of shale gas drilling by hydraulic fracturing ‘is of utmost importance for the entire country’... It is dangerous for human life. We examined the Chevron contract and… encountered suspicious secrecy at all levels. We want a law to be worked out to regulate the drilling for shale gas in Romania.”

A 5 April editorial in Jurnalul Nationa, an independent, center-right newspaper summed up the opposition to the agreement, stating, “But will this eventually achieve energy independence for the Romanians? Until we learn more details, we must note that the contract in question contains secret provisions, despite the recent claims of the Romanian president and ruling coalition officials that no trading contract with secret provisions should be accepted and, certainly, that the existing ones should be declassified. But our political leaders, including the prime minister and the president, are operating behind the scenes.

They are behaving as if they had something to hide and as if something were extremely dirty. What will Chevron exploit? Shale gas from a huge area, which includes the region around the city of Barlad, as well as famous localities in terms of tourism, archeology, and culture, such as Vama Veche, Adamclisi, and Costinesti? What method will be used? An old method, increasingly questioned for good reason by environmentalists, called hydraulic fracturing. This means underground explosions that result in contaminated water, a process that is sometimes irreversible.”

The opposition to shale gas fracking has been building for some time in Romania. Last July an editorial by Ilie Serbanescu in “Romania Libera” stated, “What are the world's largest oil companies doing in Romania? The new technologies that might reportedly be used in existing deposits represent only 40 percent which could be drilled using the old technology. Additionally, deep deposits, previously considered either inefficient or impossible to exploit, could be drilled using the new technologies. Plus, thanks to the new technology, the so-called ‘shale gas’ is becoming feasible. Shale gas could become an alternative to drilling oil reservoirs. The honey jar lies somewhere else, however! The exploration permits reportedly cost nothing or next to nothing. We do not know whether the exploration is carried out at the expense of the concession holder or with the participation of the state. The state's ‘participation’ would not be ruled out because what we know for sure is the fact that the royalties paid to the state by those who exploit the natural wealth of the Romanian people are ridiculous, regardless of the domain, oil, gas, metal, or stone. These royalties are so tiny that they cost almost nothing, the private operators who profit from the exploitation and give peanuts to the state.”

So, who’s correct? Multinational energy corporations, who prefer to work outside of the glare of publicity, energy-starved governments seeking autonomy, or activists opposing environmentally hazardous procedures?

If fracking is such a potential boon for Romania, why the secrecy? Will either Bucharest or Chevron enlighten the populace?

As they say in the cafes of Bucharest,  “Nu depinde de el” (“don’t depend on it.”)

By. John C.K. Daly of Oilprice.com

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