Romgaz Neptun Deep

Romania’s Romgaz to buy stake of Exxon Mobil in Neptun Deep gas project for $1.07 billion

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Romgaz, the largest producer and main supplier of natural gas in Romania, will pay up to $1.07 billion to US energy giant Exxon Mobil for its 50% stake in Neptun Deep, a Black Sea offshore gas project, the Romanian state-owned company said.

Romgaz’s board approved the deal on Tuesday (Nov 2) and will ask shareholders to vote on it at a meeting on Dec. 9, when it will also request approval to borrow 325 million euros to cover a part of the transaction costs. Upon signing the share purchase agreement, the company will pay Exxon an advance worth $106 million.

The other half of Neptun Deep project is owned by Romanian OMV Petrom, a part of Austrian OMV Group. OMV Petrom is the largest energy company in South-Eastern Europe and the biggest issuer on the Bucharest Stock Exchange by value.

Last month, Romgaz announced that it has reached an agreement for the acquisition of the 50% stake held by ExxonMobil Exploration and Production Romania Limited (EMEPRL), and expects to close the transaction in the first quarter of 2022.

In early October, the  Romanian natural gas producer had also announced it was seeking a 1.6 billion lei ($375 million/ 323 million euro) bank loan to finance the purchase and cover its current working capital needs.

In April, OMV Petrom said that if ExxonMobil accepts the offer submitted by Romgaz, it would take over the operational management of the Neptun Deep.

Exxon confirmed in January 2020 it was weighing an exit from the Neptun Deep project, which holds the biggest offshore gas reserves in Romania’s Black Sea section estimated at between 42 and 84 billion cubic meters(bcm). Romania currently uses about 10 billion cubic meters of gas per year.

Romgaz share price
(Source: BVB- Chart by Trading View)

In 2008, OMV Petrom and ExxonMobil launched a joint venture for the exploration of the Neptun Block which covers an area of approximately 7,500 square kilometers in water depths ranging from 100-1,700 meters. The two companies invested over USD 1.5 billion between 2008 and 2016 in exploration and appraisal activities there. In 2012, Domino-1, the first deepwater exploration well in Romania, confirmed the existence of a natural gas reservoir.

Neptun Deep is not the first offshore gas project in the Black Sea, in which Romgaz would have a participation. The Sibiu-headquartered company already holds 12.2% interest in Block EX 30 – Trident, deep sea – water area of Black Sea. Lukoil Overseas Atash BV, a subsidiary of Russia’s Lukoil, holds the remaining 87.8% participating interest in the offshore joint venture exploration perimeter EX Trident,

Several gas producers have spent a decade and billions of dollars preparing to tap Romania’s Black Sea gas. The Neptun Deep project could become a significant game-changer for energy security in the South east European region.

Romgaz shares closed up 1.77% at 37.35 lei on the Bucharest Stock Exchange on Wednesday (Nov. 3). OMV Petrom’s shares jumped 2.82%.

Romgaz during its meeting on Tuesday (Nov. 2) decided to appoint Aristotel Marius Jude to the position of Chief Executive Officer (CEO) for a new provisional mandate of four months, from December 15, 2021 to April 15, 2022.