Romania's Romgaz Steps Up Conventional Gas

Romania's biggest gas producer Romgaz does not plan to tap shale gas exploration in the next few years, but will invest heavily in conventional wells using its existing financial resources, it said on Tuesday.

"We always stressed our base activity is conventional exploration, there are many things to do here, on the other hand as a perspective, it would be good to find out (the country's) non-conventional potential," Romgaz's General Director, Virgil Metea, told the Reuters East European Investment Summit.

"Let's say in the medium term, up to five years, we do not plan shale gas (exploration). This is our current stance."

U.S. oil major Chevron Corp said earlier this year it had given up shale gas exploration plans in Romania, after an assessment showed the Black Sea state "does not compete favourably" with other investment opportunities.

Metea said Romgaz has an overall gas production potential of about 5.6 billion cubic metres this year, when the company plans to invest 1.3 billion lei ($333 million) from its own resources, with more than half earmarked for exploration work.

"From the point of view of production we can meet this. A problem is (if) we see a fall in consumption ... which can affect output."

The company does not plan to resort to foreign capital markets for now, he said, adding that no Eurobond issuance plans are on the cards in the next 2-3 years.

Romgaz reported a net profit of 767 million lei for the first half, down 12 percent on the year and hurt by around a 6 percent drop in demand for its natural gas due in part to a slump in output in the agro-chemical sector.

(Editing by Susan Fenton)