Romania: Romanian Oil And Gas Laws

Last Updated: 6 October 2017
Article by Buzescu Ca

Updated September 2015

The relevant Romanian oil and gas laws and regulations are:

  • Petroleum Law no. 238 of 2004, as amended and consolidated ("Petroleum Law")

    Note: Under Petroleum Law the definition of "petroleum" covers both oil, and gas.
  • Methodological Norms for the Application of Petroleum Law ("Norms")
  • Technical instructions, and other regulations issued by the National Agency for Mineral Resources
  • Electricity and Natural Gas Law no. 123 of 2012 ("Electricity and Natural Gas Law")
  • Natural Gas Permitting and Licensing Regulations
  • Natural Gas Network Code, and other regulations issued by the Romanian Energy Regulatory Authority ("RERA")

Romania was one of the pioneering countries in the oil and gas sector. The recent commercial discoveries gave an impetus to investment in this sector. The legal framework of the petroleum industry is comprehensive and continues to be updated in line with the relevant European Directives and Regulations and international practice.

Regulatory Authorities

National Agency for Mineral Resources ("NAMR")

NAMR has the following attributions:

  1. it acts not only as a regulatory authority, but it is also a party to the concession agreements;
  2. it manages the petroleum resources which are the property of the State;
  3. it is in charge of the storage and management of petroleum data and information, and the upkeep of the Petroleum Books for the petroleum blocks;
  4. it has the power to issue mandatory norms, rules, and technical instructions for the application of the Petroleum Law;
  5. it approves the work programs, drilling of exploration wells, well conservation and abandonment, re-entry, field commerciality, development plans, annual production plans, and assignments;
  6. it certifies the technical competence of individuals or legal entities conducting petroleum operations, including operators under concession agreements;
  7. it verifies compliance with laws and regulations.

NAMR may apply fines for failure to comply with the laws and regulations.

Romanian Energy Regulatory Authority ("RERA")

RERA regulates licensing and permitting for gas-related activities.

In relation to the surface, storage, transmission, transit, dispatching, and distribution facilities, RERA issues the following permits:

  1. facility set up permit;
  2. facility operation permit; and
  3. facility alteration permit.

RERA also issues the following licenses:

  1. natural gas supply license;
  2. natural gas transmission license;
  3. natural gas storage license;
  4. natural gas dispatching license;
  5. natural gas distribution license; and
  6. natural gas transit license.

Ownership of petroleum resources

The definition of petroleum provided by Romanian Petroleum Law includes crude oil, condensate, and gas.

The title holder is defined as a party to a petroleum agreement concluded with the competent authority, i.e. NAMR.

The Petroleum Law provides that the underground petroleum resources are public property of the State.

The concession owners have the right to dispose of the oil and gas produced in the perimeters under concession.

Therefore, a question arose with regard to the transfer of petroleum resources to the title holders. The law is silent on this issue. This issue is resolved by including in the agreements clauses which provide that the transfer of the petroleum resources to the title holders takes place at well head.

NAMR is in charge of the management of the petroleum resources.

All data and information regarding petroleum resources are considered as the property of the State. The companies carrying out petroleum operations may use the relevant data and information for the duration of their operations. The transfer to third parties of data and information regarding petroleum resources must be approved by NAMR.

The works for the development and exploitation of the petroleum resources may be carried out only in relation to the reserves confirmed by NAMR. The documentation for the calculation of the reserves must be prepared by the title holder in accordance with the technical norms issued by NAMR.

Petroleum concession

The petroleum concession is the legal vehicle for the access of investors to petroleum resources.

The initial term of the concession may be of up to 30 years, and it may be extended for a period of up to 15 years.

The concessions for the exploration and production of petroleum resources are awarded through competitive tenders organized by NAMR.

A foreign company which was awarded a concession has the obligation to set up a branch or a subsidiary in Romania within 90 days from the effective date of the petroleum agreement.

The interested parties may initiate the concession award process. It is worth noting that an interested party may apply for non-exclusive exploration permit for a term of up to three years. As mentioned above, if the findings are satisfactory the respective party may initiate the concession award process.

The winning bidder will sign a concession agreement with NAMR. The concession agreement must be further approved by the Government and comes into effect on the date of such approval.

The title holder may assign the concession agreement with the prior approval of NAMR. The change of certain terms of the concession upon assignment may be negotiated with NAMR. In case of the restructuring of the company which is title holder of the concession agreement the concession will be transferred to the successor entity by an order of NAMR President.

Pursuant to Petroleum Law, the transfer of the rights and obligations to an area of a block covered by a concession agreement is possible. Thus, the title holder can transfer:

  1. a quota of its rights and obligations under the concession agreement with regard to the entire block;
  2. a quota of its rights and obligations under the concession agreement with regard to a petroleum area;
  3. all rights and obligations under the concession agreement with regard to a petroleum area.

Further to the receipt of an application regarding the delimitation of petroleum areas within a block and regarding the approval of a partial transfer with regard to such petroleum area, NAMR determines whether the delimitation of the petroleum area is acceptable, and informs accordingly the applicants.

Partial relinquishment of the concession is possible, and is governed by the concession agreement.

The concession agreement terminates upon the expiry of the term of the agreement, and at the request of the title holder in case of force majeure.

Early termination at the request of the title holder is possible. The title holder will have to pay the amount representing the value of the minimum program works which were not performed, and if that is the case, the amount representing the value of the abandonment works which were not performed. Also, the title holder must submit to NAMR a certificate issued by the environmental agency which will attest the performance of the works for remediation of the damages caused to the environment. If the title holder complied with the above described obligations, and NAMR refuses to approve the termination, the title holder may take legal action in the court of competent jurisdiction.

In specific situations provided for by the Petroleum Law, NAMR may suspend the concession, or initiate the termination of the concession agreement.

Title holder's rights

Petroleum Law provides that the concessionaire has the following main rights:

  1. access to and use of the land;
  2. access to petroleum pipelines, harbours, terminals, and other necessary installations;
  3. use of surface waters;
  4. laying of the pipelines and construction of petroleum production and transportation facilities;
  5. extension of the block to adjacent areas;
  6. access to data re relevant petroleum operations;
  7. to designate the Operator and the Operator's duties;
  8. to dispose of its share of the petroleum production, including the right to export its petroleum share.

Title holder's obligations

Petroleum Law provides that the concessionaire has the following main obligations:

  1. compliance with the laws, regulations, and the provisions of the petroleum agreement;
  2. preparation of the technical and economic studies re the envisaged petroleum operations and submission thereof to NAMR;
  3. reporting of all data re petroleum operations, and the controlling actions of the environment, and labour safety authorities to NAMR;
  4. keeping confidential the petroleum agreement, and the data received from the Romanian authorities;
  5. unitization, if required by NAMR;
  6. training of Romanian personnel, and technology transfer;
  7. payment of petroleum royalty.

Extension of the term of the work phases, change of work programs

NAMR must approve:

  1. changes to the initial work programs, and extensions of the exploration, development, and production phases;
  2. extension of the block to free adjacent areas; and
  3. change of the estimation of petroleum reserves.

In our experience NAMR was flexible regarding the above matters.

Stabilization clauses

The stability of the petroleum agreement is an important principle for the investors in the oil and gas sector. The goal is to guarantee that the terms and conditions of the petroleum agreement in effect on the date of the signing will stay the same over the life of the agreement.

The principle of the stability of the petroleum agreement is incorporated by the Petroleum Law. Thus, the law provides that the terms of the petroleum agreement remain in effect for the duration of the agreement, save for the enactment of legal provisions that are more favourable to the title holder.

However, the law provides that the parties can amend the petroleum agreement by mutual agreement in case of occurrence of unforeseen circumstances.

Usually, in our experience, the petroleum agreements also include stabilization clauses.

Petroleum Royalties

The Concession Agreement is a royalty based contract.

The Petroleum Law provides for scaled royalties based on gross production. For crude oil the royalty ranges from 3.5% to 13.5%. For natural gas the royalty ranges from 3.5% to 13%.

The royalty is payable for each commercial field. The commerciality of the field is approved by NAMR. Production is allowed solely from reserves approved by NAMR.

The reference price for the calculation of the royalty is set by NAMR. The royalty is payable quarterly.

The fiscal legislation provides for the payment of penalties in case of delay of royalty payments. A delay for more than six months is a ground of termination of the concession agreement by NAMR.

Settlement of disputes

The petroleum agreements may provide for the settlement of disputes by the local courts of law, by arbitration in Romania, or by international arbitration.

Foreign investors in general want to resort to international arbitration.

Farmout/Farmin Agreement, Joint Operating Agreement

Any assignment of a working interest in a concession must be approved by NAMR. The parties must submit a joint application which will mention the interest quotas, the corporate approvals, and proof that the transferee is in good standing, and has adequate financial and technical capabilities to perform the petroleum operations.

On the date of the filing of the application the transferor must have complied with the obligations assumed under the petroleum agreement. If that is not the case, the transferee must assume the obligation to be responsible for the transferor's outstanding obligations as well.

The Farmout/Farmin Agreement and related documentation, e.g. Joint Operating Agreement, Instrument of Transfer, Novation, etc. do not have to be submitted to NAMR.

Access to land for petroleum operations

The Petroleum Law and the Electricity and Natural Gas Law create legal easements regarding access to land needed for petroleum operations and installations in favour of the title holders.

The Petroleum Law provides that the title holder must pay an annual rent to the land owner. If the parties fail to agree on the amount of the rent the dispute must be referred to the court of competent jurisdiction. The law provides that any damages claimed by a landlord will be estimated function of the value of the affected crop, or the market value of the land.

The Electricity and Natural Gas Law provides that the title holders have the following rights:

  1. the right of use in relation to the necessary works for the rehabilitation of the gas production installations;
  2. the right of use in relation with the normal operation and maintenance of the gas production installations;
  3. the legal underground, surface, and air right of way for the installation of pipelines, power lines, or other equipment related to the gas production installations, and for the access to the location of such ancillary equipment;
  4. the right to obtain the reduction or cease of activities which would endanger the gas installations, and the public safety, such like obtaining interdictions to build, to dig trenches, and to deposit materials in the protected zone, or to carry out any works which would affect the gas production installations, and the related pipelines;
  5. right of access to utilities.

The statutory protection of the land easements for gas production operations was confirmed by court practice.

It is important to note that in addition to establishing a statutory easement for operations related to gas production, the law also gives the right to the concessionaire to demand the reduction or cease of activities of third parties in the vicinity of the gas installation, which could endanger the operation of the gas installations and equipment. The Electricity and Natural Gas Law spells out the interdictions to build, to dig trenches, and to deposit materials in the safety area, or to carry out any works which would affect the gas production installation, and the related pipelines, and equipment.

Furthermore, the Electricity and Natural Gas Law provides that the statutory easements for gas production are granted for the life of the gas production installation.

The Electricity and Natural Gas Law provides adequate legal basis for the statutory land easements related to gas production, and for their enforcement.

Petroleum transportation system

The National Petroleum Transportation System is public property of the State.

The systems for the transportation of oil and gas are operated by two state-owned companies, Conpet, and Transgaz respectively.

The above operators have the obligation to provide equal access to the interested parties. The Petroleum Law, and the Electricity and Natural Gas Law specify the cases in which the operators may deny access to the transportation systems. The party whose access to the transportation system was denied may file a complaint with the competent authority.

The access to the natural gas transmission system is regulated in accordance with the provisions of the EU Regulation no. 715 of 2009 regarding the Conditions of Access to the Gas Transmission Systems, and with the Romanian regulations.

The access to the National Gas Transmission System ("NTS") has three stages:

  1. the inquiry to the operator of the NTS re the possibility to access the NTS in a specific area;
  2. the booking by the respective applicant of capacity within the NTS;
  3. the connection to the NTS.

The access to the upstream feeding pipelines is arranged in accordance with the provisions of the Romanian regulations and is granted by the respective operator of the upstream feeding pipeline.

The rules for the access to the storage facilities are provided by Romanian regulations.

The access is provided based on classes of priority, and according to the rule "first come, first served", within the same class of priority.

The tariffs regarding gas transmission services and gas storage are regulated by RERA.

Attestation and authorization of the technical competence

According to NAMR Order no. 122 of 2006, the companies and the professionals working in the oil and gas sector must obtain certificates of attestation of the technical competence. The certificates are issued by a Commission of Attestation set up by an order issued by NAMR. The above Order lists the documents which must be appended to the application for the issuance of the certificate of attestation. The documentation must include a memorandum regarding the relevant petroleum operations carried within three years prior to the submission, documents attesting the technical qualifications of the personnel, and documents regarding the financial capacity of the applicant.

According to RERA Order no. 98 of 2015, the companies and the professionals which perform activities regarding project design, execution, and operation of installations for the production, underground storage, transportation, distribution, and utilization of natural gas must be authorized by commissions appointed by RERA. The above Order no. 98 enumerates the documents which must be appended to the application for the issuance of the certificate of attestation.

Centralized Markets for Natural Gas

Currently there are two Centralized Markets for Natural Gas in Romania:

  1. The Centralized Market for Natural Gas operated by OPCOM;
  2. The Centralized Market for Natural Gas operated by the Romanian Commodities Exchange.

Both OPCOM and the Romanian Commodities Exchange issued procedures regarding the registration and participation of the participants to the Centralized Markets for Natural Gas, which were approved by RERA.

Starting with July 2014, RERA regulated the obligation of natural gas producers and suppliers to conclude transactions through the Centralized Markets for Natural Gas.

Thus, according to the Order no. 118 of 2014 of the President of RERA, in 2016 the natural gas producers have the obligation to sell on the Centralized Markets for Natural Gas at least 30% of the natural gas of their internal production for the internal consumption of the competition market, while in 2017 at least 25% of their internal production. The minimum amount to be sold on the Centralized Markets for Natural Gas is to be determined by RERA pursuant to the information provided by the natural gas producers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions