Wood Mackenzie has reported that the deepwater of the western Black Sea could offer a new source of gas for Eastern Europe.
Following the Domino discovery, deepwater drilling is set to about to move up a gear, with as many as ten wells expected to be drilled by 2018. Interest in these deepwater gas resources is being driven by supply diversification concerns of Central Eastern European (CEE) countries, with demand forecast to grow considerably.
Chris Meredith, upstream research analyst at Wood Mackenzie explained: “We’re on the cusp of a ramp up in deepwater drilling in the Black Sea. Based on commitment wells and submitted drilling programmes, we anticipate ten wells will be drilled in the next five years, compared with just seven to date.”
“There’s no doubt that Domino had been transformative for the region, stimulating interest in the Black Sea. While the field has yet to be fully appraised, we forecast that production could come on stream by 2019. The size of the discovery is a strong indication of the potential for further significant gas discoveries in the region,” Meredith added.
Potential for growth
Graham Freedman, senior European Gas & Power research analyst, commented: “CEE is the only area in Europe where demand has significant potential for growth. Increasingly strict European environmental legislation is likely to support new gas fired power generation at the expense of coal and gas demand is envisaged to rise from the current levels of 55 bcm. The rate of demand growth will also be influenced by the speed of unconventional developments. However, regional gas production has been in decline over the last decade, with production in Hungary and Romania falling most.”
A combination of rising demand and falling production has resulted in Black Sea countries facing increasing gas import requirements. Currently more than 90% of imported gas comes from Russia, under contracts with Gazprom. Wood Mackenzie states that the cancellation of the Nabucco pipeline has increased the need for CEE countries to find an alternative solution for diversification of gas supplies, given that the Caspian export route of the Trans Adriatic pipeline (TAP) bypasses many of the countries adjacent to the Black Sea.
Exploration well costs are currently at over US$ 100 million and there is no existing deepwater infrastructure or supporting service sector. The fact that the region has attracted the industry’s biggest companies including ExxonMobil, Total, Shell, OMV Petrom and Repsol, is therefore highly reassuring. Meredith explains: “These companies have the expertise, resources, capability and credibility to give us confidence in the outlook for the region. Deepwater exploration spending by ExxonMobil and Petrom in Romania through to 2015 could reach US$ 1 billion”.
Adapted from press release by Katie Woodward
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/18122013/promising_outlook_for_black_sea_deepwater_gas_96/