Kazakhstan: Romania’s Energy Security boosted by KMGI
As Europe braces itself for what the long-range weather forecasts predict will be one of the coldest winters in recent years, thoughts in Romania are turning to energy security for the supply of gas and oil over the next six months, writes James Wilson.
The energy security agenda is driven by long-term strategies to diversify external energy sources, suppliers and routes, to lower energy consumption and to increase energy efficiency. The issue has risen up the EU’s policy agenda in recent years due to the need to reduce dependence on oil and gas supplies from Russia in order to guarantee secure and sustainable supplies as well as affordable market prices for oil and gas products.
Romania is in a more favourable position than neighbouring Hungary and Bulgaria, and many other EU member states, thanks partly to the investment in its own oil reserves. National oil reserves are forecast to cover internal demand for the next 20 years. But more importantly for the longer term future, Romania has diversified its suppliers with access to oil not only from Russia but also from Kazakhstan. This ensures stronger energy security, not only for Romania but also for Europe, thanks in large measure to private sector investment in the diversification of energy resources, suppliers and transportation routes.
The largest single investor in Romania’s energy economy is KazMunayGas International (KMG International), with a total foreign direct investment since 2007 of $1.6 billion in the refining and distribution of petroleum products and petrochemicals. KMG International contributes significantly to securing Romania’s diversity of crude oil supplies; it is also among the top contributors to oil and petroleum products reserves in Romania. KMG International’s imports from Kazakhstan account for approximately 40% of Romania’s total refinery intake.
Kazakhstan is one of the world’s 10 top countries in terms of oil reserves and produces about 80 million tonnes per year of which about 22 million tonnes per year are imported by KMG International into Romania – or the equivalent of 4 times Romania’s national production. The Tengiz (onshore) and Kashagan (offshore) oil producing fields are the largest in Kazakhstan, and these reserves can further expand the crude oil volumes available for Romania. The EU enjoys an enhanced partnership and association agreement with Kazakhstan, that covers cooperation in the energy sphere, and framework conditions for investment and business operations.
KMG International’s refining capacity in Romania through the Petromidia and Vega refineries represent almost half of Romania’s total processing capacity. Since 2007, KMG International has invested about $1.4 billion to upgrade the Petromidia refinery, thereby increasing the refining capacity from 3.7 million tonnes per year to 5 million tonnes per year. This refinery upgrade means that KMG International has the potential ability to cover 70% of the current domestic demand in Romania for diesel and gasoline with crude supplied from Kazakhstan that is refined in the extremely versatile Petromidia refinery.
The presence of KMG International in Romania is central to national energy security and national economic stability. The company is also helping Romania to achieve higher performance in respect of sustainability and environmental protection through a comprehensive compliance programme with EU legislation and standards.