The impact of the COVID – 19 crisis on Energy security

The panel “The impact of the COVID – 19 crisis on Energy security” united senior European and Romanian officials, business energy professionals and academics and aimed at analyzing how the pandemic has affected the energy system.

Due to its geographical position and natural potential, Romania has the occasion to play an important role in the regional energy balance, both by connecting its own resources and by taking a leading position in the balanced redistribution of energy resources coming from the Caspian Sea, the Middle East and the Eastern Mediterranean to the European market.
 
KMG International representative tackled the situation of the oil & gas sector prior and during the pandemic, the challenges and opportunities in the sector during the tough times, as well as the role the Group plays in the context of European energy security.


 
  • Prior to COVID Romania was importing around 8 million tons of crude. 5,5 million tons was supplied by KMGI, a Group with refining capacities of around 6 million tons per year. Basically our Petromidia and Vega refineries are capable of covering up to 70% of the local demand of fuel produced from Kazakh crude.
 
  • What we have seen since the start of the pandemic is a sharp drop in demand. From March to May the demand dropped by 30-40%, it has not fully recovered, being still below the pre-COVID times. There are several reasons for that, including the lock downs and the subsequent oversupply of products to the market.
 
  • The Group completed a successful turnaround of the refinery during the pandemic lockdown and moved into 4 year turn around cycle. It was completed in 45 days with no COVID cases due to unprecedented safety measures.
 
  • Currently we have adjusted to the current market reality and are running the refinery at around 80% capacity but are still witnessing a negative refinery margins. Most of the European refineries are running at reduced capacities. We supply almost 4 million tons of crude (80% from Kazakhstan) and are seeking to produce around 4,6 million tons of oil products this year.
 
  • Europe is a region with excessive market capacities and on the short-term - we won’t face any issues with the supply of oil products.
 
  • We have taken the challenge of the pandemic in order to answer the need of the community - our petrochemical division developed a special type of polypropylene dedicated to protective medical masks. It is used for the middle layer of the mask, the most important layer for filtering and protecting against pathogens.
 
  • At the same time, even in this challenging period, we continue to invest, we have an agreement with the Romanian state formalized under the Kazakh - Romanian Investment Fund for national development projects – agreed upon in 2013 and established in 2018 - which translates into energy-related projects of up to $1bn.
 
  • One of the most important projects of the Fund is the cogeneration plant, amounting about 148 million USD, and the estimated term for the commissioning of the new plant being in the first half of 2023. The new plant will have a major role in stabilizing the production and distribution of electricity in the Dobrogea region, by ensuring the energy needs of the platform, but also by injecting the surplus electricity into the national system.
 
Romania does have the power to shape its energy destiny and become a catalyst for energy and economic integration across Europe, even during these harsh times. The assets and advantages of location and supply to bridge East and West are there.
Working together in partnerships, as the one we have through the Investment Fund, we can in the near future make greater progress towards energy security.