Romania - Energy

Oil and Gas

With the largest petroleum reserves in Eastern Europe, Romania was a major oil producer and exporter throughout much of the twentieth century. The oil extraction industry, developed primarily by German, United States, British, and Dutch companies, was the forerunner of the country's belated industrialization. In 1950 oil satisfied nearly half of total energy needs. Peak production was reached in 1976, gradually declining in subsequent years, as many of the country's 200 oil fields began nearing depletion and discovery of new reserves waned. Increasingly large quantities of crude had to be imported, and in 1979 imports surpassed domestic production for the first time. Despite an accelerated exploration program, with average drilling depths increasing to 8,000 to 10,000 meters, oil output declined from 308 barrels per day in 1976 to 227 in 1986.

Beginning in the late 1970s, Romania became one of only ten countries producing offshore oil-drilling rigs. In 1988 seven such platforms were operating in the Black Sea under the supervision of the Constanta-based Petromar enterprise to develop hydrocarbon reserves in the continental shelf.

During the 1970s, Romania invested heavily in developing an outsized oil-refining industry just as domestic petroleum production was beginning to decline and the world market price for crude was skyrocketing. Some observers estimated that by 1980 the country was losing as much as US$900,000 per day by exporting oil products derived from imported crude. But because these products found a ready market in the West--they accounted for 40 percent of exports to the West in the late 1980s--Romania continued largescale processing of imported crude to earn hard currency. By 1988 domestic crude output had fallen to 9.4 million tons, while refining capacity stood at some 30 to 33 million tons annually. To keep the refineries running, ever larger volumes of crude had to be imported--first from members of the Organization of Petroleum Exporting Countries (OPEC), but after the outbreak of the Iran-Iraq War, from the Soviet Union. Soviet crude deliveries reached about 6 million tons in 1986. Under the terms of a barter arrangement, Romania was to receive at least 5 million tons of Soviet crude annually during the 1986-90 period in exchange for oil-drilling equipment and food products.

The natural gas industry was unable to offset depletion of known reserves, and output declined from 1,216 billion cubic feet in 1976 to 940 billion cubic feet in 1986. Some Western experts believed that Romanian reserves could be exhausted as early as 1990. After it had begun importing gas from the Soviet Union in the mid-1970s, Romania obtained incrementally larger shipments; in 1986 it imported 2.5 billion cubic meters of Soviet gas. For its participation in projects to develop Soviet gas resources, Romania was expected to receive shipments of at least 6 billion cubic meters annually after 1989. In addition, as payment for transit rights for a 200-kilometer gas pipeline across Dobruja to Bulgaria, Romania would be receiving an unspecified amount of Soviet gas for a twenty-five-year period.

More about the Economy of Romania.

Coal

The energy program of the 1970s and 1980s aimed for dramatic increases in coal output to compensate for the reduced role of oil and natural gas in power production. The use of oil and gas in electricity generation was projected to drop from 50 percent in 1981 to 5 percent in 1990. When Romania's energy vulnerability had been revealed by the stoppage of crude oil shipments from Iran in the late 1970s, Ceausescu launched a campaign to expand coal production rapidly. Because of labor unrest in the Jiu Valley, the primary coal-mining region, he decided to develop other coal fields. But the coal from the new mines turned out to be of poorer quality and had a lower caloric content. Although a total of thirty-five new open-pit and underground mines began operating during the 1982-85 period, the initial output target of 86 million tons annually by 1985 had to be revised to 64 million tons, and actual production amounted to just 44 million tons. Even as late as 1988, only 58.8 million tons were mined. Poor mine-development methods, numerous accidents, pit flooding, equipment failure, and high labor turnover were the principal causes of the industry's disappointing performance.

Coal production could not keep up with industrial needs. Nearly three-fourths of coal output was burned by large thermoelectric power plants located at or near the major coal basins. Large quantities of coking coal had to be imported from the Soviet Union. In 1989 Hancock Mining Company of Australia signed a contract to deliver up to 6 million tons of coking coal annually for a twelveyear period.

Energy

Despite significant energy resources and an extensive industry to exploit them, the sector performed poorly during the 1980s, seriously damaging economic performance as a whole and causing great hardship for the population. In 1986, for example, electricity production fell 2.6 percent below target; this poor performance resulted in an estimated 4.7 percent reduction in national income. Not only was the goal of energy self-sufficiency by 1990 not fulfilled, all trends indicated that in the 1990s Romania would be increasingly dependent on imported fuels and electricity--especially from the Soviet Union. The sector performed so poorly that Ceausescu issued a decree in 1985 militarizing the energy industry. That decree stated that a military commander and subordinate cadres would be assigned to each power plant to improve its efficiency and ensure uninterrupted operation.

The energy program for the 1980s called for drastically reducing reliance on oil and gas, while increasing the contribution of coal, hydroelectric power, nuclear power, and nonconventional sources. Romanian industry was among the world's least energy-efficient. Measures to reduce waste were largely unsuccessful, and the population bore the brunt of conservation, even though private households accounted for only about 6 percent of total consumption. During the 1980s, the government strictly rationed electricity, natural gas, gasoline, and other oil products, levying heavy fines for exceeding ration allotments.

Electric Power

Enormous investments made in the sector following World War II resulted in dramatic gains in capacity and output. Despite the impressive growth in output, averaging 8.3 percent annually between 1966 and 1985, however, the power industry did not keep pace with overall industrial growth, which averaged 9.5 percent annually during the same period. The result was an acute and worsening energy deficit.

Thermal power plants burning fossil fuels accounted for more than 80 percent of electricity output in the mid-1980s, and the development program envisioned an installed capacity of 16,518 megawatts at such plants by 1990. The largest thermal plants operating in the mid-1980s were located at Rovinari in Gorj judet, (1,720 megawatts), Turceni in Gorj judet, (1,650 megawatts), Braila (1,290 megawatts), Mintia in Hunedoara judet, (1,260 megawatts), Craiova (980 megawatts), Deva (840 megawatts), Ludus in Cluj judet, (800 megawatts), Borzesti in Botosani judet, (650 megawatts), Galati (320 megawatts), and Bucharest (300 megawatts). After 1965, thermal plants producing both heat and electricity were favored, and by 1984 their combined capacity exceeded 6,100 megawatts--roughly onethird of total installed capacity. A serious problem for thermal plants during the 1980s was the deteriorating quality of lignite fuel, which was damaging equipment and causing frequent shutdowns. At the start of the 1988-89 peak-demand season, only 45 to 50 percent of total installed generating capacity was operational.

Capitalizing on the country's considerable hydroelectric potential, the government built some 100 hydroelectric plants between 1965 and 1985, bringing total capacity to 4,421 megawatts. Nevertheless, it was estimated in early 1989 that only 35 percent of the technically feasible hydroelectric potential had been tapped. The most important project was the 2,100-megawatt Iron Gates I complex on the Danube. Built in collaboration with Yugoslavia, which operated a twin plant on the right bank, the project was completed in 1972. In 1977 the two countries began work on a much smaller Iron Gates II project (sixteen twenty-seven- megawatt generating units). Other important projects were the 220- megawatt Gheorghiu-Dej plant on the Arges River and a chain of fourteen smaller plants downstream with a combined capacity of 179 megawatts; the V.I. Lenin complex of twelve plants on the Bistrita River; a chain of plants along the 737-kilometer Olt River totalling more than 1,200 megawatts; a chain of sixteen plants on the Mare River with a total capacity of 536 megawatts; and numerous stations along the Buzau, Jiu, Prut, and other rivers.

To offset declining petroleum and gas reserves, the PCR pinned its hopes on nuclear power. But these hopes were partially frustrated by repeated setbacks in the construction of the first nuclear power plant at Cernavoda, which appeared unlikely to become operational before 1992. The Cernavoda plant would use five 660-megawatt Canadian-built reactors. The Canadians also had been engaged to build a nuclear station at Victoria-Brasov. In 1982 a contract was signed with the Soviet Union to build the Moldova nuclear plant, which would have three 1,000-megawatt reactors. And preparatory work began in March 1986 for construction of a nuclear plant at Piatra Neamt, to be equipped largely by the Soviet Union. As late as 1985, the government was anticipating that nuclear plants would be supplying 20 percent of the nation's electricity by 1990, when some 4,500 megawatts of capacity would be on line, but the long-range goal of building sixteen nuclear plants by 2000 appeared unattainable.

Geothermal, solar, wind, methane, and small hydroelectric installations produced the energy equivalent of nearly 450,000 tons of conventional fuel during the first three years of the Eighth Five-Year Plan (1986-90). The plan called for starting up some 240 alternative-energy installations during this period, including 125 solar and 70 methane plants. Methane accounted for over 80 percent of nonconventional energy production. In 1989 alternative energy sources were expected to double their output. The development program anticipated that such sources would contribute one-fifth of total energy capacity in 1995, when more than 60 percent of the geothermal, nearly 50 percent of the methane, and 63 percent of the small-stream hydroelectric potential would have been harnessed.

A transmission grid of 110-, 220-, and 400-kilovolt lines with a total length of about 27,000 kilometers in the mid-1980s distributed electricity throughout the country. Integrated into Comecon's Peace Unified Power System, the Romanian network was connected to the national grids of all neighboring states. In 1988 a 750-kilovolt transmission line built jointly with the Soviet Union and Bulgaria delivered some 5 billion kilowatt-hours of electricity to Romania from the South Ukraine Nuclear Power Station.

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