Bottom Line: Romania has officially ended its moratorium on shale gas exploration, and now it will take 3-5 years to accurately assess the potential here. The game is not over, however, and strong opposition to fracking remains.
Analysis: The moratorium was scheduled to end in December 2012, but the government was considering whether to extend it. Last week, the final decision was made to end the moratorium indefinitely. Shale gas exploration will begin in Vaslui, in the country’s east, and work its way southward. The moratorium was put in place in May 2012 due to growing public opposition to hydraulic fracturing and related environmental and land-acquisition concerns. Chevron was waiting on this decision to begin exploration for licenses it had earlier been awarded. Chevron will begin exploration in its Barlad concession. Chevron had begun shale gas exploration in 2010 and completed seismic work in 2011, but was forced to halt operations under the moratorium. Chevron now plans to drill an exploration well in Romania during the second half of this year.
Recommendation: This is not an ideal investment scene. There is too much uncertainly, and the lifting of the shale gas exploration moratorium is not definitive. Opposition remains both in terms of environmental concerns and issues of land reclamation for exploration. The Romanian government remains convinced that if Chevron makes any big discoveries, the necessary environmental permits will follow and public opposition will wane in favor of the country reducing its dependence on Russia. Chevron knows the game is not over. It’s not even talking about fracking for now—just exploration. Greenpeace threatened to sue the government last year for allowing Chevron to explore for shale gas, and there are traces of Gazprom’s involvement in this opposition campaign. (Next week we’ll take an in-depth look at Eastern Europe’s shale potential and the legal pitfalls in our Executive Report).
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