Pursuant to the Romanian Constitution and the Petroleum Law, all petroleum resources located in the subsoil of Romania’s national territory, as well as in the Romanian portion of the economic exclusive zone in the Black Sea, are subject to the exclusive public ownership of the state. Private entities can obtain concession rights to exploit the resources, such right being given by way of executing a petroleum agreement.

The concession rights are awarded to Romanian and foreign legal entities following public tender proceedings organised by the National Agency for Mineral Resources (NAMR).

Generally, petroleum agreements regulate two main stages, namely exploration and development and production stage. Nevertheless, licences or temporary permits authorising only exploration activities, within a given area and for a pre-determined exploration period, may also be granted.

Further to declaring a commercial discovery, titleholders carry out exclusive production operations and automatically acquire title to the produced hydrocarbons the moment they reach the wellhead, being also entitled to freely dispose of the production (subject to certain limitations in the case of natural gas, as further detailed below).

Petroleum resources and operations are mainly regulated by the following public authorities.

Ministry of Energy

The Ministry of Energy (ME) is the part of the government with general jurisdiction over energy matters in Romania.

One of the main functions of the ME is to enact the secondary legislation in the energy sector and to develop and implement long and short-term energy strategies and programmes. The ME is also in charge of issuing authorisations for the development of certain types of energy projects, such as projects of national interest and offshore projects and of monitoring the compliance of the energy sector with the international treaties ratified by Romania.

National Agency for Mineral Resources

The NAMR is the state’s representative in the natural mineral resources sector and manages the country’s resources and reserves inventory.

Being subordinated to the Secretary General of the government, the NAMR has extended attributions regarding the petroleum industry, being authorised to initiate public tenders for awarding concessions, assess the technical and financial capabilities of titleholders, to approve and supervise the performance of petroleum operations and to enact relevant secondary legislation.

The government recently proposed a change in the NAMR’s status from agency-level to authority. If implemented, the NAMR shall become an autonomous authority, subject to parliamentary control only and financially independent.

National Energy Regulatory Authority

The National Energy Regulatory Authority (NERA) is an autonomous administrative authority under parliamentary control, financed entirely from its own revenues and independent from a decision-making, organisational and operational perspective.

The NERA enacts and oversees the implementation of energy and natural gas secondary legislation, subject to observing the equality, non-discrimination, fair competition, transparency and consumer protection rules. The NERA also issues permits and licences in the upstream petroleum sector, such as set-up permits and licences for operation of the upstream pipelines.

Competent Authority for Regulating Offshore Petroleum Operations

The Competent Authority for Regulating Offshore Petroleum Operations (CAROPO) is a specialty body of the central public administration, subordinated to the government and entrusted with overseeing the safety of offshore operations on the Black Sea.

CAROPO is independent of other regulatory authorities and is related to the safety of offshore oil and gas operations, the authorisation of such operations and collecting of related revenues. It also enacts and oversees the implementation of policies, guidelines and procedures relevant for safety matters and monitors compliance thereto.

Local authorities are also involved in the regulatory process, being authorised to issue permits and authorisations which are key to the development of petroleum projects.

Although all former state-owned companies have been privatised, the state still holds shares within the major players, such as Romgaz (70% stake) and OMV Petrom (20% stake).

Romgaz

Romgaz carries out exploration and production activities in 15 blocks, either as sole titleholder of petroleum rights and obligations or as co-venturer.

Notably in the second quarter of 2022, Romgaz acquired via a share deal a 50% stake in the Neptun Deep offshore gas project from ExxonMobil. This added to the company’s existing offshore acreage, Romgaz being a minority co-titleholder and a non-operator of the deepwater EX-30 Trident Block, in a joint venture with Lukoil Overseas.

OMV Petrom

The privatisation process of Petrom SA was completed in 2004 when OMV bought a majority stake of 51% in the company. As a result, OMV Petrom currently operates 193 commercial oil and gas deposits, approximately 7,000 onshore wells as well as several offshore platforms in the Black Sea in the XVIII Istria block. It also holds 50% of the XIX Neptun Deep block.

Principal Upstream Petroleum Laws and Regulations

The Romanian onshore upstream petroleum regime is governed by the Petroleum Law and the related Methodological Norms enacted by Government Decision No 2075/2004. The said legislation transposes Directive (EU) 94/22/EC (the “Hydrocarbon Directive”).

The Petroleum Law and the Methodological Norms regulate the following main aspects:

• concessions’ legal regime including the award procedure;
• content of the petroleum agreement;
• rights and obligations of the titleholder;
• usage and access rights regarding lands on which petroleum operations are performed;
• petroleum transmission and transit regime;
• tariffs and level of petroleum royalties; and
• NAMR competencies;
• contraventions and sanctions.

In addition, secondary legislation issued by the NAMR regulates for various matters, such as:

• the annual work programme for petroleum exploitation, petroleum conservation, abandonment and decommissioning operations;
• experimental production;
• instructions regarding the content of the petroleum book;
• assessment, classification and confirmation of reserves determining the petroleum reference prices for royalties;
• various technical documentation for the development and production blocks; and
• the regime of exploration wells.

The Romanian offshore upstream petroleum regime is governed by Law No 256/2018 on certain measures required for the implementation of petroleum operations by the titleholders of petroleum agreements relating to offshore petroleum blocks (the “Offshore Law”) which provides the special rules applicable to offshore operations, such as:

• legal rights of way over private properties or public properties of the state or administrative units;
• special authorisation proceedings of offshore infrastructure;
• windfall taxes applicable to the offshore sector; and
• stability provisions regarding royalties due for offshore natural gas production.

Various enactments regulating the onshore construction works, as well environmental and health and safety law and regulations, also contain vital provisions for the development of petroleum projects.

Principal Midstream and Downstream Petroleum Laws and Regulations

The midstream and downstream sector is governed by the Electricity and Natural Gas Law No 123/2012 and by a diverse body of secondary legislation issued by the NERA.

The Electricity and Natural Gas Law implements the European Third Energy Package, setting forth provisions related to the following main aspects:

• regulatory regime applicable to the production, storage, transmission, distribution and supply of natural gas;
• requirements for obtaining authorisations and licences issued by the NERA;
• rights and obligations of market participants;
• third party access to networks;
• centralised market obligations; and
• contraventions and sanctions.

The secondary legislation for the midstream and downstream sector is issued by the NERA and regulates the following main aspects:

• issuance of authorisations and licences;
• prices and tariffs applicable to the natural gas sector;
• centralised market obligation;
• natural gas network code;
• standards of performance for transmission, distribution and supply of natural gas services; and
• various technical norms relevant for the midstream and downstream sector.

Private investments in the upstream sector are performed based on petroleum agreements entered with the NAMR, pursuant to which national or foreign legal entities can obtain a concession right allowing them to carry out petroleum operations.

Petroleum agreements grant to their titleholders the exclusive rights to carry out petroleum operations in the respective blocks and, as a rule, are awarded for exploration, development and production. Where a petroleum agreement is executed with two or more co-titleholders, the said titleholders are jointly and severable liable.

Additionally, the NAMR may also grant non-exclusive rights for performing exploration works, by means of prospecting permits having a validity of up to three years.

The proceedings enacted by the Petroleum Law for awarding concessions for the performance of offshore petroleum operations apply to onshore and offshore alike.

While all underground natural resources are publicly owned by the Romanian government, as soon as hydrocarbons (oil, condensate and natural gas) reach the wellhead, their title passes automatically to the titleholders, which are entitled to dispose of/sell the produced hydrocarbons on the market, in compliance with the applicable laws.

As of 2020, the Petroleum Law was amended to transpose the provisions of the Hydrocarbons Directive, according to which, based on grounds of national security, the Romanian government may refuse to allow access to and performance of petroleum operations to any entity which is effectively controlled by third countries or by third-country nationals.

Against this background, the government has extensive rights to block any entity controlled by third countries/third-country nationals from entering petroleum agreements and acquiring concession rights in Romania, regardless of whether such is made by means of acquiring such rights pursuant to the public tenders organised by the NAMR, acquiring a direct or indirect control over the titleholder, or acquiring a participating interest in concession by means of a farmout. Starting from the provisions of the Hydrocarbon Directive, under certain unclear provisions of the law, it could be construed that the government is also authorised to terminate petroleum agreements on national security grounds.

These recent evolutions supplement the existing regulatory framework which authorises the Romanian Supreme Council of National Defence to perform a prior control approval procedure, also on national security grounds, regarding any transactions in certain vital sectors of the Romanian economy, such as the oil and gas sector.

Following the performance of public tender procedures, the concession right for performing petroleum operations is granted by the NAMR to the winning bidder, for a maximum period of 30 years, with the possibility of being extended by an additional 15 years.

Prior to initiating the tender procedures, the NAMR establishes the list of petroleum blocks for which concession proceedings and organised and publishes it in the Romanian Official Gazette and in the Official Journal of the European Union (OJEU). Bids must be submitted in a 30 to 270 days timeframe of publication.

Each bid will contain the proposed exploration, development-production, production programme, proof of the bidder’s technical and financial capacity, as well as any other documents requested by the NAMR through the tender book.

Licensing Rounds

The latest round of public tender procedures was initiated by the NAMR in 2019, by publication of the order for initiating the concession proceedings under Round XI, for 28 blocks (22 onshore and 6 offshore), but the tender notice is yet to be published in the OJEU.

To date, the NAMR has tendered a little over 400 blocks. Round XI will be the first round of public tender proceedings organised since 2010, when 20 concessions were awarded.

General Tender Requirements

The bids for public tender procedures are prepared in Romanian language. One bidder may submit only one offer for a given block. Alternative bids are not allowed. Bids are evaluated based on the general legal criteria, as well as on the tender-book specifications and criteria.

Additionally, bidders will submit to the NAMR the proposed petroleum operations programme, an appraisal of the estimated hydrocarbon reserves, an assessment of related costs and phasing of works, as well as a pre-feasibility study (in case of concessions for development and production rights only).

A report on the areas available for concession, the petroleum agreements and permits in force, the titleholders thereof and the estimated national reserves is published by the NAMR and submitted to the European Commission each year.

Two or more entities may join efforts to undertake the performance of operations by way of joint operating agreements (JOAs). As a rule, JOAs follow the Association of International Petroleum Negotiators standard model contracts. The titleholders may transfer (totally or partially) their participating interest in the concessions by way of farmout agreements, subject to government approval.

Furthermore, a unitisation obligation applies where the hydrocarbon fields have continuity under neighbouring blocks.

As a rule, titleholders of petroleum agreements are subject to:

• 16% corporate income tax;
• royalties levied gradually on production in the limits provided by law;
• windfall taxes; and
• various parafiscal fees and tariffs.

Corporate Income Tax

As a rule, all Romanian and non-resident legal entities, are subject to the standard 16% corporate income tax applicable to their taxable profit derived from the activities performed in Romania/pertaining to their permanent establishment for natural gas – between 3.5% (for quarterly gross production (QGP) of <10 million cubic metres) and 13% (for QGP >200 million cubic metres).

Natural Gas Supplemental Tax

All entities performing both production and supply of natural gas produced in Romania are subject to a tax on the supplementary income realised following the deregulation of prices in the natural gas sector. The tax ranges between 60% (applicable to prices up to RON85/MWh) and 80% (applicable to prices exceeding RON85/MWh) of the supplementary incomes minus the royalties due in relation to the said incomes and the investments made by the titleholder in the upstream sector (up to a 30% of such investments).

The windfall tax is computed and paid monthly and is deemed deductible expense for the purpose of computing the corporate income tax.

As of 2018, pursuant to the Offshore Law, a separate supplemental tax was introduced for offshore production. Via the recent amendments introduced by Law 157 of 2022 the same fiscal regime is applicable to onshore deep concessions (for fields deeper than 3,000 m isobathic), Currently, the tax ranges between 15% (applicable to prices between RON85/MWh and 100/MWh) and 70% (applicable to prices exceeding RON190/MWh) of the supplementary income. Also, the deductibility of investment made in the offshore and deep-onshore is limited to 40% of the value of the related supplemental tax. 

NAMR Parafiscal Fees and Tariffs

Titleholders also owe various parafiscal fees and tariffs for, among others, the documents issued by the NAMR in the normal course of business and conduct of operations (eg, drilling permits) and for allowing access to the Oil Book. These tariffs are gauged by the NAMR based on its costs with salaries, social contributions and other material expenses.

NERA Tariffs and Contributions

Some upstream operations, such as operating the upstream pipelines, are subject to parafiscal tariffs and contributions due to the NERA.

Operators of upstream pipelines and having end customers/distribution systems connected directly to the upstream pipelines must pay to the NERA an annual contribution, determined by multiplying the volume of natural gas transported through the upstream pipelines to the end customers/the distribution systems connected directly to the upstream pipelines (in MWh) with a fixed index.

CAROPO Tariffs and Contributions

CAROPO charges a EUR165/man-hour tariff for its review, inspection and approval activities and a fixed yearly amount negotiated with each titleholder under a framework agreement. The industry is dissatisfied with the level of transparency and predictability of CAROPO’s procedures and data used to calculate the final amounts for the above.

As a rule, all Romanian legal entities are subject to the standard 16% corporate income tax applicable to their taxable profit derived from their in-country activities. Additionally, foreign legal entities carrying out activities via a permanent establishment are also subject to the corporate income tax, applicable to the taxable profits derived from the activities performed through their Romanian permanent establishment.

In respect of the fiscal deductibility regime, some minimal tax deductions such as the exemption from excise duty for natural gas due for consumption or the exemption from taxes in case of imported gas is provided by law. There is no such exemption for oil-related activities.

Foreign legal entities entering petroleum agreements are obliged, as a rule, to register in Romania a subsidiary or a branch, which is to be maintained for the entire duration of the agreement and to have a permanent establishment in Romania, for corporate income tax and VAT purposes.

During the communist era in Romania, the country’s oil and gas industry was entirely state-owned. However, from 1990 a gradual privatisation process of the industry commenced which led to the former state-owned companies becoming private, but with the government still holding significant stakes in the major players. 

While the Petroleum Law has no specific local content provisions, these requirements exist under the legislation applicable to the offshore, namely:

• for at least 20% of staff involved in the operations to have a fiscal residency in Romania;
• the non-resident subcontractor’s obligation to establish and maintain a local subsidiary for the entire duration of the agreement; and
• the priority purchase of goods and services from local/EU-based providers (under equivalent technical and pricing conditions).

Some of these provisions could be viewed as being in breach of the fundamental freedoms of the EU single market, such as the freedom to provide services.

Furthermore, the Electricity and Natural Gas Law and related secondary regulations obliges producers to offer for sale minimum quantities on the Romanian centralised markets.

Prior to entering development and production, titleholders must carry out the minimum works programme, in accordance with the petroleum agreement (and their bid to the public tender). Compliance with the minimum works programmes is paramount for the NAMR, since the scoring of the works programme represents a determining factor for awarding the concessions.

In case exploration leads to discoveries, titleholders must prepare and perform an appraisal works programme. Subsequently, if the appraisal works conclude a commercial potential of a discovery, titleholders must prepare the development plan and declare a commercial discovery. Each of these steps requires the NAMR’s prior approval.

Petroleum agreements may contain detailed clauses regarding the sequence of activities required prior to declaring and confirming with the NAMR the commercial discovery.

Development and production works may be initiated by titleholders only after the field development plan (FDP) is approved by  the NAMR. The FDP must contain all data required to appraise the hydrocarbon resources and reserves, taking into consideration the available technologies, the applicable costs and prices, their forecasted evolution, as well as the boundaries of the production area.

To a certain extent and depending on the results of the exploration/production works, titleholders may request the NAMR to amend the initial requirements under the petroleum agreements in relation to matters such as work programmes, extension of phases (without exceeding the legal terms), unitisation and amendment of resources and reserves.

The Petroleum Agreement provides for exploration work to be done in two phases, namely a mandatory first phase (Phase I) and an optional second phase (Phase II). As a rule, the works performed during the optional Phase II will be based on the results obtained during Phase I.

The maximum duration of petroleum agreements is 30 years. This may be extended with an additional period of up to 15 years, subject to government approval, issued based on the NAMR’s endorsement.

Titleholders may relinquish those block areas where they determine, based on performed works, that no discovery potential exists. Such carve-outs are handed-over to the NAMR, free of any obligations.

As a rule, the titleholder will be held liable for the performance of the minimum work programme for the entire petroleum block.

Petroleum agreements also contain provisions regulating matters such as the titleholder’ liability for the costs relating to the abandonment and decommissioning and technology and know-how transfer obligations.

Liability and Risk

Joint liability is borne by all entities comprising the title holder of a concession.

Government Approval

According to the Petroleum Law, any direct or indirect transfer of the participating interest in a petroleum agreement must be notified to the NAMR. Following such notice, the government will either:

• confirm the validity of the petroleum agreement;
• amend the petroleum agreement; and/or
• unilaterally terminate the petroleum agreement.

In case two or more entities make-up the titleholder, the termination may operate only in relation to the entity under scrutiny.

Although the Petroleum Law is not entirely clear, it could be argued that the government may refuse to approve a transaction (i) only on grounds of national security and (ii) only in case of transfers to entities which are effectively controlled by legal entities outside the EU or by nationals of third countries outside of the EU. No timeframe for the close-out of this process is provided by law.

Supreme Council of National Defence Approval

Regardless of the requirement to obtain a competition clearance, as of 2013, transactions in the energy sector are subject to the scrutiny of the Supreme Council of National Defence (SCND). Thus, any direct or indirect transfer of the participating interest in a petroleum agreement must be approved by the SCND.

Although, there is no correlation between government approval under the Petroleum Law and SCND approval under the competition legislation, from a practical perspective, the approval granted by the government should be based on the endorsement of the SCND, since both procedures aim to authorise transactions on grounds of national security. No deadline for the close-out of this process is provided by law.

JOA Approvals

Other specific approvals by the joint titleholders may be provided in the JOAs for the transfer of titleholders’ participating interests, such as pre-emptive rights being provided in favour of the existing titleholders for acquiring the participating interest of the existing party.

No legal or regulatory restrictions are applicable to production rates in Romania.

The Romanian oil midstream sector is composed of the oil transmission system and of the oil terminal facilities.

A system of approximately 3,800 km of interconnected pipelines and the harbour terminals of Constanta and Midia make up the National Petroleum Transmission System (NTPS).

A public property of the state, the NTPS is operated by state-controlled company Conpet, pursuant to a concession agreement executed with the NAMR. In the limits of free capacity, Conpet has the legal obligation to grant free access to all authorised legal entities based on fair, non-discriminatory and transparent rules and to charge the transmission tariffs set by the NAMR.

The main operator of oil terminals is Oil Terminal, likewise a state-controlled company, which operates in Constanta harbour a high-capacity oil terminal, three oil deposits totalling 1.7 million cubic metres and transmission pipelines for loading/unloading petroleum and chemical products.

Rompetrol, a subsidiary of the KazMunayGas Group, also owns and operates an oil terminal on the Black Sea which is connected to the storage capacities (400,000 cubic metres) of Midia Refinery.

Gas Midstream

The Romanian natural gas midstream sector is represented by transmission, distribution and storage facilities.

Romania has a single natural gas transmission system (NTS), which is owned by the state and operated by the state-controlled TSO, Transgaz.

The NTS has a total network length of 13,110 km of pipelines and an annual transmission capacity of 30 billion cubic meters (1.05 trillion cubic feet).

In theory, private investors are allowed to build and operate their privately owned transmission systems. Such systems would be subject to a services concession agreement to be granted by the NAMR as well as the obtaining of authorisations and licences from NERA. However, no such private systems exist in Romania.

The natural gas distribution system is dominated by two large entities, operating approximately 85% of the country’s gas distribution network, namely E.ON (via Delgaz Grid), which operates a 20,000 km grid covering over 20 counties in the northern part of the country, and Engie (via Distributie Sud Retele), which operates a 20,000 km grid covering Bucharest and over 19 counties in the southern and central part of Romania. The other 15% of the distribution network is split between about 30 small companies.

Natural gas distribution services are a public utility service of general interest, being awarded by way of exclusive concession agreements granted by the NAMR in a natural monopoly regime – ie, the distribution services are ensured by a single operator in a given area.

Natural gas storage has a major role in ensuring the security of supply and in maintaining the optimal operating specs of the NTS. Storage is also a public utility service of general interest and, therefore, is awarded by way of a concession agreement granted by the NAMR.

The two existing storage system operators of Romania are the state-owned Romgaz (via Depogaz Ploiesti) and the privately-owned Depomures. The underground storage facilities have a total active capacity of 33,275 TWh/gas storage cycle and are public property of the state.

The NERA is in charge with the issuance of the various permits and licences required for gas distribution and gas storage.

Additionally, investments made in the oil and gas midstream activity are subject to the regulatory regime applicable to construction of infrastructure and the related operations.

Oil and Gas Downstream

The Romanian oil and gas industry was gradually privatised after 1989 and the downstream oil and gas market are currently open to competition, being dominated by private suppliers and distributors.

In Romania, four large refineries are in operation, all privately owned: Petrobrazi (OMV Petrom), Petromidia and Vega (Rompetrol) and Petrotel (Lukoil).

Third-party access rights are recognised both for gas transmission and distribution systems under a national and a natural monopoly. Following certain rules, the operators must ensure the access of third parties under non-discriminatory and transparency conditions consistent with EU internal market requirements and by applying regulated tariffs.

In a nutshell, access is regulated by the Electricity and Natural Gas Law, the secondary legislation issued by the NERA and by specific framework agreements.

While the regulated tariff for the access to the NTS is calculated on the basis of a capped revenue, the regulated tariff for the access to the natural gas distribution system is price-capped.

The rules regarding the third-party access to oil and gas infrastructure detailed in 3.10 Rules for Third-Party Access to Infrastructure also apply to national monopoly-type downstream activities.

Licences for transmission, distribution and storage activities are granted by the NERA for the term of the contract based on which the activity is carried out.

Such licences are granted to applicants following a thorough selection process based on technical and financial capabilities, and in accordance with the unbundling requirements set forth by the European legislation.

The construction of new infrastructure is subject to various authorisations and licences which must be obtained from the NERA and other central and local authorities.

The royalty system enacted by the Petroleum Law applies also to the oil and gas midstream sector, operators being subject to the following royalties:

• 10% of the gross income realised from oil transmission and transit operations through the NTPS and, respectively, from petroleum operations performed through oil terminals owned by the state;
• a quota computed pro rata from the gross income resulted from oil transmission operations through transmission systems, other than the NTPS and, respectively, from petroleum operations performed through oil terminals, others than those owned by the state; and
• a 3% quota of the gross income realised from gas underground storage operations.

Furthermore, the TSO owes an annual royalty for the concession of the NTS. As of 2020, the royalty was reduced from 10% to 0.4% of the gross income realised from the transmission and transit operations through the NTS. 

Gas distribution system operators owe in their turn royalties, which must be at least 1% of the natural gas distribution tariff. The royalties are proposed by the distribution operators in the tender proceedings for the concession of the distribution system and are determined pro rata with the total distributed quantities.

The oil refining, supply and distribution sectors are fully liberalised, prices and commercial terms being established freely between the contractual parties.

As a rule, gas distribution, transmission and storage services are supplied in exchange of regulated tariffs, approved for each operator based on the NERA’s methodologies, enacted for each regulatory period.

The transmission tariff system is composed of a set of tariffs for booking the capacity into entry/exit points in the NTS, as well as a volumetric tariff for usage of the system, in case of exit points.

The distribution tariff system comprises several types of tariffs, which are differentiated for each distribution system operator and by category of clients (based on the annual consumed volumes).

Storage activities are also regulated by the NERA, being established distinctly for each storage system operator.

Additionally, midstream and downstream operations subject to parafiscal tariffs and annual contributions due to the NERA.

Licensees must also pay to the NERA an annual contribution, computed by multiplying the volume of natural gas transported/stored/distributed/supplied (in MWh) with a fixed index, which differs depending on the type of licence and is updated annually by the NERA.

Income from midstream and downstream operations are subject to the standard 16% corporate tax.

National oil and gas companies do not benefit from any special rights.

No local content obligations apply to midstream/downstream operations.

The terms of midstream and downstream licences are determined by the NAMR and the NERA in accordance with the applicable law. Key terms may refer to mandatory obligations related to an effective use and operation of pipeline systems, non-discriminatory third-party access, tariffs, investments and other similar relevant information.

Downstream operators may also be subject to several obligations stipulated under the concession agreement. However, such agreements are confidential and cannot be reviewed by the public.

Oil Sector

Pursuant to its licence conditions, Conpet must ensure the quantitative and qualitative integrity of petroleum products through the transmission pipelines, making available a capacity reserve for the safe, flexible and efficient operation of the system. Also, it must regularly undertake investments for ensuring the maintenance and upgrading of the NPTS.

Gas Sector

The primary legislation provides various obligations which, as a rule, apply to all holders of licences in the natural gas sector, as follows: 

• internal accounting record systems must contain separate records in accordance with the type of activity carried out for each of the regulated activities;
• preparing, auditing and publishing yearly financial statements for each economic operator;
• providing periodically the required information for ensuring the access of third parties to the infrastructure;
• observing and complying with the validity conditions of the NERA authorisations and licences; and
• providing the NERA, upon request, with copies of contracts for acquisition/sale-purchase/supply of natural gas and transmission of natural gas.

The primary legislation also sets forth a broad range of obligations applicable to TSOs, such as:

• ensuring third parties’ access to the transmission system, within the limits of the existent transmission capacities; and
• connecting applicants to the NTS, within 180 days as of the date of issuance of the construction permit.

To adequately maintain, rehabilitate, upgrade and develop the NTS, Transgaz must develop and publish:

• the ten-year investment and NTS Development Plan – this is put forward every two years but may also be reviewed on a yearly basis;
• the five-year investment plan, structured by type of works and counties for each year of the considered timeframe; and
• the annual investment plan, prior to each following year.

The main obligations of gas storage operations include:

• to operate, maintain, rehabilitate and upgrade the above ground installations related to the storage facilities;
• to ensure the access of third parties to storage facilities, based on objective, transparent and non-discriminatory criteria;

• to publish the list of storage facilities that are available for access to third parties; and
• to prepare and submit with the NERA for approval, the investment plans based on perspective studies, performed for a minimum five-year period, in consultation with the transmission and system operator, and subject to obtaining the ME’s endorsement.

Pursuant to the law, natural gas distributor operators have the following main obligations:

• to operate, maintain, repair, modernise and develop the distribution system;
• to ensure the access of third parties to the distribution systems, under non-discriminatory conditions, within the limits of the available capacities;
• to connect all applicants to the distribution system, within 90 days from the date the construction permit is issued; and
• to elaborate and submit with the NERA for approval, the investment plans based on perspective studies, carried-out for a minimum period of five years, in consultation with TSO and the local authorities in the licensed areas.

To adequately operate, maintain, repair, upgrade and develop the distribution system, distribution operators must prepare (i) a five-year investment plan, detailing the investment value for each year of the regulatory period (operators distributing gas to more than 100,000 customers must also detail the value by categories of works and by counties for each year of the regulatory period); and (ii) the yearly investment plans, prior to each year of the regulatory period.

In case of termination of the distribution system concession, the assets in the ownership of the titleholder may be transferred to the authority which awarded the concession or to the new concessionaire, in exchange for a compensation. Correspondingly, the assets granted in concession by the authorities must be returned to the latter.

Moreover, irrespective of the grounds for terminating the concession, the concessionaire remains liable for any damages caused due to the works performed during the concession, regardless of whether such damages are revealed after termination.

Pursuant to the Electricity and Natural Gas Law, transmission and distribution operators benefit from an underground, above-ground, and surface easement right on the lands and other assets pertaining to public or private property of natural or legal persons for the performance of development, rehabilitation and upgrade works and of exploitation and maintenance activities.

Also, special land access rights are granted to the TSO for projects of national importance under specific laws (eg, Law No 185/2016).

Third-party access to upstream pipelines, the NTS, gas storage facilities and gas distribution system is performed under a specific regime regulated by the NERA and against payment of regulated tariffs.

As a rule, third-party access to available systems must observe the quality specifications and technological requirements, infrastructure safety, public service commitments and must avoid generating severe economic difficulties for the operator, on a take-or-pay principle. Failing to observe these conditions may trigger the refusal of the operator to offer access to the system.

Subject to observing the above conditions, distribution operators or the TSO may not refuse connection requests and must finance the works required for connecting consumers from the area where they provide the public distribution/transmission service. Consumers must be connected in a maximum 90 days from the date of obtaining the relevant construction permit.

On another note, new major natural gas infrastructure, such as interconnections and storage facilities, may benefit from a total or partial exemption from the third-party access rule, applicable temporarily, subject to certain conditions being met and based on the NERA's approval.

For more details regarding the conditions for third-party access to infrastructure see 3.2 Rights and Terms of Access to Any Downstream Operation Run by a National Monopoly.

Continuing the trend of introducing temporary product sale restrictions, against the background of rising global energy prices, new price caps and security of supply measures were enacted in March 2022. Notably (i) until end of the first quarter of 2023 producers have the obligation to sell quantities of gas at regulated prices to suppliers of household consumers (RON150/MWh) and to thermal energy producers and suppliers (RON 250/MWh), the related quantities being exempted from the application of the supplemental tax (see 2.3 Typical Fiscal Terms under Upstream Licences/Leases) while the gas release program introduced in October 2021 is suspended until 31 December 2022.

Also, for offshore and deep-onshore fields, the amendments brought in 2022 to the Offshore Law introduced the State’s right to (i) impose temporary restrictions on prices and sale operations concerning the gas quantities required for hose-hold clients thermal energy production and the fulfilment by Romania of its obligations under the EU solidarity mechanisms and (ii) pre-emption right for the purchase of gas quantities to be sold under bilateral agreements. These provisions are highly controversial and questionable from a constitutional and EU law perspective.

For more details regarding these measures, see 3.12 Laws and Regulations Governing Exports.

Prior to joining the EU, Romania imposed regulated prices for the supply of natural gas to end consumers. Such prices were established based on a basket of domestic and imported gas, in a structure established monthly by Transgaz, pursuant to the rules enacted jointly by the Ministry of Economy, the NERA and the NAMR. The declared purpose of these regulated prices was the ensure non-discriminatory access for all consumers to the gas from domestic production, until completing the convergence between prices of domestic production and imports.

In 2013 Romania assumed a liberalisation calendar towards the IMF and the European Commission. Initially, the deregulation was supposed to end in 2018, but the process was only completed in July 2020 when household consumers (the last category to benefit of regulated gas prices) began to pay fully liberalised prices for natural gas.

Since joining the EU, the domestic regulatory framework has been constantly updated to align with the requirements of a single energy market. Romania implemented the successive EU Energy Packages, aimed at ensuring the ever-growing integration and free competition on the European energy markets, in line with the four fundamental EU freedoms (ie, free movement of goods, capital, services and labour).

Although there are no explicit export restrictions (subject to ensuring fulfilment of certain public service obligations applicable to suppliers of natural gas), producers s of natural gas are required to offer until the end of 2022 minimum quantities of natural gas (ie, up to 40% of the quantities for sale) on the Romanian centralised wholesale exchanges and this obligation could be further extended.

Also, the State’s pre-emption right under the Offshore Law related to the purchase of gas produced by offshore and deep-onshore fields, is an effective export ban.

Currently, the import/export of natural gas is performed via several cross-border pipelines, connecting Romania to Hungary, Bulgaria, Ukraine and, more recently, Moldova. In terms of transmission infrastructure and interconnectivity, in recent years the TSO has undertaken a highly ambitious upgrading and development programme, with the Romanian sector of the BRUA pipeline and the NTS extensions for the takeover of offshore gas being the most important ones.

These developments appear to have contributed to Gazprom’s decision of April 2021 to switch its entire volume of gas exports in Romania from the Ukraine route to the Bulgarian corridor, using the TurkStream pipeline, crossing the Black Sea and delivering natural gas to Turkey and South-Eastern Europe.

Pursuant to the secondary legislation enacted by the NERA, midstream and downstream licence holders (transmission, distribution, storage and supply) are obliged to notify the authority with 120 days in advance if changes in their legal status occur (eg, merger, spin-off, transfer of assets used in the licensed activity to other persons). If the transfer of assets concerns the contracts for the concession of the transmission services, for underground storage operations or for gas distribution operations, the notification to the NERA must be made with six months in advance.

Following such notifications, the NERA may decide to amend, to withdraw or to transfer the relevant licences to the assignee.

For more details, regarding downstream licences please see 2.8 Other Key Terms of Each Type of Upstream Licence and 6.2 Liquefied Natural Gas (LNG) Projects.

Other than the local presence requirements and the Government’s/SCND’s prior approval requirements, detailed in 2.1 Forms of Allowed Private Investment in Upstream Interests and, respectively, the local content rules detailed in 2.6 Local Content Requirements Applicable to Upstream Operations, no particular foreign investment rules apply in the oil and gas sector.

Currently, Romania has no such restrictions.

The main regulatory authority in the environmental sector is the Ministry of Environment, Water and Forests, which acts directly via the local entities under its subordination. 

Given the significant importance attached to environmental protection, as this represents a general interest obligation, environmental authorities are seconded in their activity by various other central and local public authorities which are actively involved in the drafting of environmental regulations as well as in their implementation at national or local level, including with regard to the issuance of urban planning and construction documentation and permits.

The regulation of the environmental filed is governed by a consistent legislative framework which stretches from the Constitution all the way down to secondary legislation and local regulations. The main primary legislation framework is made up by:

• Emergency Government Ordinance No 195/2005 on environmental protection;
• Law No 292/2018 on the assessment of the impact of certain public and private projects on the environment (which transposed the new EIA Directive);
• Law No 211/2011 on the waste regime; and
• Law No 107/1996 on water protection.

Law No 292/2018 enacts the main rules on the performance of environmental impact assessments (EIA). An EIA is necessary in case of projects considered to have significant impact on one or several environmental features. The Law clearly provides which are the projects for which the EIA is mandatory and which are the ones where the regulator determines on a case-by-case basis that an EIA must be performed.

Additionally, Government Decision No 1076/2004 on the procedures for assessing the effect of certain plans and programmes on the environment and transposing the SEA Directive sets out the procedure for the strategic environmental assessment (SEA) applicable to plans and programmes likely to have a significant environmental impact. As a rule, the development of petroleum projects is subject to the prior performance of a SEA procedure.

In addition, in case of projects found within or in the vicinity of environmental protected areas, an appropriate assessment (AA) is required pursuant to secondary legislation.

Specific environmental obligations relating to all petroleum projects, onshore and offshore (eg, environment restoration obligations in case of abandonment, reporting obligations) are provided by the Petroleum Law. Moreover, extensive environmental obligations are provided by the Law No 165/2016 on the safety of offshore petroleum operations (the “Offshore Safety Law”) regarding offshore petroleum projects.

In case of petroleum projects having a potential impact regarding the management of water surfaces/courses, issuance of water management permits and authorisations (issued by the local or central entities) will also be required for the development and, respectively, the operation of the relevant project.

In 2013, the Directive on the safety of offshore oil and gas operations was adopted by the EU. The Directive applies to all existing and future offshore installations and was transposed in Romania by the Offshore Safety Law which enacted certain obligations in charge of operators of offshore petroleum operations and owners of installations (such as the preparation of the Safety Case) and established CAROPO, the regulatory authority responsible with the authorising, control and supervision from a safety perspective of all petroleum operations in the Romanian offshore territories. CAROPO is also involved in the AA, SEA and EIA regulatory processes under the co-ordination of the relevant environmental authority.

Pursuant to the provisions of the Petroleum Law, titleholders are required to prepare and submit with the NAMR for prior approval, abandonment plans of wells and of production facilities. These plans must be based on technical, economic, social and environmental data and must ground the well abandonment. The plans are also required to include measures for environmental rehabilitation and a financing plan for the cessation of operations up to decommissioning completion. 

Operators may relinquish petroleum concessions subject to providing the NAMR with the abandonment plan, the amounts covering the abandonment for operations performed up to the date of relinquishment and for the related post-closing environmental monitoring. The NAMR’s approval of the relinquishment is conditional upon the fulfilment of the environmental restoration plan endorsed by the environmental regulator.

Well suspension and abandonment is done in accordance with the standard technical instructions enacted by the NAMR and subject to the NAMR approving the related plans.

After joining the EU, in 2007 Romania started the implementation of the EU Emissions Trading Scheme aimed at reducing GHG emissions as well as other climate change-related actions promoted by the EU. For this, The National Strategy and Action Plans on Climate Change (NSAPCC) was approved. Starting from the NSAPCC, the government embarked on an effort to meet the requirements of undertakings ratified in 1994, namely the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol commitments, to limit GHG emissions and deal with climate change affects. Romania also ratified the Paris Agreement in 2017.

Further to the EU Clean Energy for All Package being adopted in 2019, the European Commission made recommendations in October 2020 to the current draft NSAPCC for 2021–30. Most notably, it requested a more ambitious target (at least 34% versus the proposed 30.7%) for 2030 regarding the quota of RES in the energy mix. This was captured in the revised NSAPCC and also included in the most recent draft Energy Strategy for 2019–30, with both mentioning an ambitious 37.6% target.

Furthermore, pursuant to the final draft National Recovery and Resilience Plan (the NRRP) submitted by Romania in the context of the EU-wide Resilience and Recovery Facility, implemented in the wake of the COVID-19 pandemic, the government planned over EUR200 million in subsidies for RES and for the development of natural gas combined with hydrogen distribution systems, with a view to achieve the Green Deal targets. 

Local authorities have no authority to interfere directly with or restrict petroleum operations, as these are authorised and supervised by the industry-specific bodies. However, they issue the required specific permits (certificate of urbanism, environmental permit, etc) and approve zoning and construction works (unless these are granted to a special authority). Therefore, given the significant role they have in the general permitting process, local authorities can significantly impact petroleum operations.

Romania does not have a distinct legal framework regarding the exploration, development and production of shale gas operations. This may be partly explained by the fact that the country’s potential for shale gas remains largely uncertain to date.

Other than a failed attempt of Chevron to develop shale gas in Romania in 2012–14, no further investment initiatives appeared in this sector.

Although several state-owned entities have expressed the intent to develop LNG production facilities, no such exist to date in Romania.

However, according to the NTS Development Plan (2019–28), Transgaz estimates that by 2026 Romania will develop an LNG receiving terminal on the Black Sea.

Although significant efforts are currently engaged at all levels to provide the best usage of existing oil and gas infrastructure to promote the energy transition, the legislative framework is still underdeveloped, providing minimal institutional set-up and lacking in certain procedures such as authorisation and monitoring.

At EU level, Romania is currently rated the second-highest producer of natural gas and fourth in terms of proven gas reserves.

More than 90% of the country’s gas consumption is covered by domestic production, with an average production in recent years of about 11 bcm/year. The country could export gas in the future – mainly due to the putting into production the Black Sea resources (estimated to amount to 200 bcm).

Crude oil production is on a downward slope, with a sub-unitary level of reserves replacement, due to the high degree of deposits reduction – only 2.778 million ton of oil equivalent (toe) in 2020.

Despite such favourable prospects, the government has proved rather inconsistent in its approach to the petroleum industry, being unable to ensure the stable and predictable fiscal framework required for large-scale and long-term investments. Many pieces of legislation regarding tax matters were enacted and repealed over the past years, leaving companies in a state of continuous uncertainty as to the real intentions of the government.

Having in mind the general safeguards enshrined in the international investment treaties ratified by Romania, especially the obligation to ensure a fair and equitable treatment for foreign investments, the legality of certain taxes is questionable. By way of example, in 2018 alone, a supplemental tax which was introduced in 2013 as a temporary tax (extended year-by-year afterwards) was made permanent, a new supplemental tax was enacted for offshore production and the annual fees payable by natural gas licence holders were increased to by 1000% (ie, to 2% of the annual turnover, compared to previously 0.1%) – currently repealed.

The Romanian gas industry was gradually deregulated after 1989, leading to a completely deregulated gas market as of 1 July 2020. Regarding the upstream and midstream sectors, the public policy focuses on supporting infrastructure projects on the Black Sea, developing the NTS and ensuing appropriate interconnections.

On another note, Romania’s NSAPCC for 2021–30 is aimed at reducing the internal GHG emissions and increasing RES consumption as well as improving energy efficiency.

The country’s main lines of action for ensuring a transition to low-carbon clean energy transition concern the phase-out of the coal industry, the decrease of fossil fuels by setting natural gas at the centre of the energy transition and, thus, encouraging complex infrastructure projects in the upstream gas sector, particularly the production of gas resources on the Black Sea, the increase of the nuclear energy percentage in the energy mix, promoting the production of green hydrogen and developing biogas projects.

Under the title "Development of natural gas networks mixed with hydrogen and green gases”, the final form of Romania’s NNRP – issued in the context of the EUR800 billion Recovery and Resilience Facility launched by the European Commission – provides a nationwide support programme for connecting end-users to intelligent gas networks. This project proposes the construction of an intelligent, hydrogen-ready, gas network, dedicated for transporting a mix of natural gas, hydrogen (up to 10%), and other non-carbonated gases (eg, bio-methane). The European Commission initially rejected the project, arguing that the development of new gas distribution systems and connection of households for heating purposes should not be encouraged in the future.