OPINION: Romania’s centrist president, Klaus Iohannis, is keeping his job after he won the country’s recent presidential elections.
His victory potentially reignites oil and gas investors’ interest in the region as US supermajor ExxonMobil put a ‘for sale’ sign on its Black Sea gas asset.
The former physics professor won slightly more than 63% of the vote.
His opponent, Social Democrats (PSD) leader and former prime minister, Viorica Dancila, received the remaining 37%, the worst-ever result for her party, which has dominated post-communist Romania.
The outcome is mostly seen as confirming the pro-European trajectory of the eastern European Union member state.
The election was fought against a backdrop of deep resentment over controversial judicial reforms that were seen as beneficial to PSD politicians who were trying to avoid corruption sentences.
Hundreds of thousands of Romanians have protested against reforms proposed by the PSD, whose former chief, Liviu Dragnea, was jailed on corruption charges earlier this year.
After stepping up to fill the PSD leadership role, Dancila’s government collapsed in early November in a no-confidence vote and was replaced by a new Liberal (PNL) government led by Prime Minister Ludovic Orban.
Orban is widely viewed as being pro-business and an ally of Iohannis, who himself led PNL before becoming President in 2014.
During the presidential campaign, Iohannis said he hoped to turn Romania into a regional energy hub by reigniting investor appetite in the offshore sector and tackling legislation introduced at the end of 2018 to cover Black Sea exploration, a law strongly criticised for limiting offshore investment opportunities.
The law, which includes both regulatory and fiscal policies, was passed under the PSD government after severe delays as Dragnea and Iohannis could not agree on its final version.
The Romanian Black Sea Titleholders Association, which represents the interests of investors in offshore projects, criticised the law for introducing additional taxes and conditions on how production may be marketed, including requiring operators to trade at least 50% of resources on the Romanian market.
Soon after the law was introduced, a final investment decision on ExxonMobil’s high-profile Neptun Deep block, a 50/50 partnership with Austria’s OMV, was delayed.
In addition, reports emerged that ExxonMobil was looking to sell its 50% interest in the project.
The supermajor confirmed this week it is testing the market for a potential asset sale and interest has already been reported in the asset, including in Romania itself.
However, next year, Romanians are due to vote again, this time to elect a new government, meaning that political uncertainty has not gone away.
Current PM Orban has said his government will look for solutions to “unblock” exploration in the Black Sea, but his cabinet will be in place only until the next election.
Coming fresh off the presidential polls, national sentiment in Romania is one of dissatisfaction as most votes were against Dancila rather than in support of Iohannis.
The parliamentary elections are due to be held towards the end of 2020, but Iohannis and Orban have already said the goal is to have the election “as soon as possible”, likely in the first half of next year.
Under the constitution, Romania’s president is responsible for foreign affairs and approves laws promulgated by parliament, but the prime minister heads the government.
The relationship between the two is crucial for government decision-making and the business environment.
In terms of having a more industry friendly government with a longer-term mandate, Romania is only halfway there.
(This is an Upstream opinion article.)