Romania is not only a country that many
associate with Transylvania and its famous inhabitant,
Count Dracula. Romania was one of the first countries
to produce oil. Already in the second half of the 19th
century Romania belonged to the vanguard of oil producers.
In 1857 this Southern European country produced 275 tons
of oil.
There are only two other European countries that have
more oil reserves than Romania: Norway and Great Britain
(50 and 26 percent, respectively, of all European oil
reserves). The oil in Norway and Great Britain is sea-based.
Romania’s 12 percent of the European oil reserves,
however, is land-based and, thus, easier to extract.
With such a long history of oil production, it should
not surprise anybody to discover that there is an oil
industry in Romania. Romania’s ten refineries
theoretically are capable of producing 504,000 barrels
of oil per day. Actual production figures, however,
are far lower. Due to a lack of financial resources,
all of these refineries are in need of major technological
upgrades. The oil production figures speak for themselves:
in 2002 Romania produced roughly 58 percent less oil
than in 1976.
There is reason to believe that Romanian oil production
could be increased very soon. The current privatization
wave may provide the necessary resources. It is no secret
that global oil companies such as Halliburton, Shell,
Total & Amco, Russian Gazprom, and Lukoil are interested
observers of and, in some cases, participants in the
process. At the same time, many political observers
agree that the Romanian privatization process, especially
with respect to the privatization of the oil industry,
is not exactly a picture book example of transparency.
In 2004, Transparency International, an international
watchdog group based in Berlin, called Romania a country
with “rampant corruption.”
There is an associated risk with that situation-assessment:
multinational oil conglomerates may see the present
levels of corruption in the public sector and lack of
political stability as major obstacles to their investment
plans. It remains to be seen how Romania’s decision
makers will address these internal challenges.
At this time, it is difficult to say whether or not
Romania will fully develop its oil producing potential.
On the one hand, oil production can be increased and
there are plans to build the 760-mile long Southeast
European Line (SEEL) pipeline which would connect the
Romanian Black Sea Port of Constanta with the Croatian
Port in Omisalj. By 2013, the SEEL pipeline theoretically
could be expanded up to Trieste in Italy. On the other
hand, whether or not there will be enough demand for
additional Romanian oil and for a new pipeline are open
questions. For example, Hungary’s demand for oil
has fallen by 13 percent since 1992. We simply do not
know how this region of Europe will develop.
If we assume that the hunger for oil in Southern Europe
will increase in the near future, Romania’s oil
reserves and their utilization may rapidly accelerate
the modernization of Romanian society and raise its
citizens’ standard of living to levels associated
with Western European countries. On the flip side, if
mishandled, increased production of Romanian oil could
further cement corruption and political cronyism.
