Diapozitivul 1

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GHEORGHE RADU SNGN ROMGAZ SA Director
of Development Division
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GENERAL OVERVIEW OF ROMANIAN GAS INDUSTRY

• Natural gas is an important energy source
  worldwide and in Romania as well
• In Romania natural gas represents more than 40
  of the primary energy sources
• Romania is the first region in Europe where
  industrial gas consumption was recorded (113,000
  cm in 1913)
• Average natural gas consumption of Romania during
  the last 5 years was 17.5 18 billion cm.
• Internal natural gas production is of about 12
  bill. cm, out of which 6 bill. cm is Romgaz
  production .
• Annual import gas volumes (the source is Russia)
  are of 5.5 6 bill. cm.
• Gas demand has significant seasonal variations,
  the daily consumption during the cold season is
  approximately 2.5 times higher than during summer
  season.
• Underground storages share in the daily supply
  during the cold season is 30 from total
  consumption.

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STAGES IN THE DEVELOPMENT OF THE NATURAL GAS
EXTRACTION INDUSTRY IN ROMANIA

• period 1909-1950, natural gas accumulations with
  significant volumes were discovered, but the
  yearly gas productions were relatively small, up
  to 2 billion cm/year
• period 1950-1976, new reservoirs were discovered,
  and the volumes of reserves and annual
  productions recorded significant increase
• daily maximum over 116 million cm/day
• produced cumulative about 30 billion cm/year
• period 1976-2007, annual productions and the
  discovery of reserves have been in continuous
  decline, and the level of consumption from
  reserves much higher than the volumes of newly
  discovered reserves.

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NATURAL GAS IMPORTANCE ON THE ROMANIAN ENERGY
MARKET
Natural gas plays and it will continue to play
in the future an important role on the Romanian
energy market

• Factors that impact the share of natural gas in
  the balance of primary energy of Romania
• Presence of natural gas commercial resources at
  relatively high levels
• The natural gas production, transmission and
  distribution network is extended on the whole
  territory of the country
• Compared to other fossil fuels, natural gas has
  the lowest impact on the environment
• Favorable setting of Romania in the
  international transmission system of Central and
  Eastern Europe
• Connection to the East-European network and
  potential for interconnection of the
  Western-European system and with the gas
  resources from the Caspian Sea and Middle East
  region.
• Favorable location of the country between the
  Eastern sources -The Russian Federation Caspian
  Sea and the Middle East and North Africa.

NATURAL GAS SHARE IN THE PRIMARY ENERGY BALANCE
OF ROMANIA
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SNGN ROMGAZ S.A. ROLE IN THE ROMANIAN GAS SECTOR
NATIONAL TRANSMISSION SYSTEM

• INTERNAL GAS PRODUCERS
• SNGN ROMGAZ
• Petrom OMV

ELIGIBLE CONSUMERS
INDEPENDENT GAS PRODUCERS (BLOCK UNDER CONCESSION)
LICENSED AND AUTHORIZED DISTRIBUTION COMPANIES
POWER PRODUCERS
IMPORT GAS SUPPLIERS

CAPTIVE CONSUMERS
SNGN Romgaz S.A. is market leader, with a share
of supply of 40.5 on the internal gas market,
and the rest is supplied by OMV- Petrom, other
producers and import companies.
Operator of six underground gas storages with a
working capacity of about 3 billion cm/cycle and
a maximum withdrawal capacity of 20 mil cm/day
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MAIN ACTIVITIES PERFORMED BY ROMGAZ

• Geological research for discovery of
  hydrocarbons
• Gas and condensate production
• Gas underground storage
• Gas import
• Gas commercialization
• Workover and special operations in wells
• Research, reservoir engineering and
  technological engineering.

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ROMGAZ FIELD OF ACTIVITY

• Romgaz performs exploration petroleum operations
  in 8 blocks located in the Transylvanian Basin,
  Moldavia, East and Central Muntenia and Oltenia
  
• Development and production petroleum operations
  in 140 commercial gas reservoirs through about
  3300 wells and 20 compressor stations with
  nominal power of 160,000 kW
• The large gas reservoirs from Transylvanian basin
  which provide about 90 of Romgaz production,
  have the depletion rate over 70.

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ROMGAZ INTERNATIONAL COOPERATION RELATIONSHIPS

• Romgaz cooperates with companies of profile
  on the Romanian territory in
• the exploration, development and exploitation of
  some leased blocks
• WINTERSHALL - Association Agreement for
  development - exploitation of RG 03 Transylvania
  South Block - where the well 3 Sighisoara was
  drilled and put in operation. Currently well 4 is
  under production testing on the same structure,
  with positive results.
• FALCON OILGAS - Association Agreement for
  exploration of Brodina and Cuejdiu blocks. In
  Brodina block have been identified gas reservoirs
  through three wells that have already been put
  into production
• AMROMCO ENERGY LLC - Association Agreement for
  enhancement of production on 11 petroleum fields.
  
• SCHLUMBERGER LOGELCO INC - Association Agreement
  for enhancement of production on Laslau- Mare
  field by means of identifying new reserves.

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LEGAL AND INSTITUTIONAL FRAMEWORK

• The legal framework of the gas sector was
  elaborated in compliance with the alignment to
  the related Community legislation and with the
  international law for development and
  consolidation of a free competition market.
• Related to institutions, the primary legislation
  is promoted by the Ministry of Economy and
  Finance, Government and Parliament.
• Secondary legal frame for specific regulations in
  this area is provided by Energy National
  Regulatory Authority ANRE and National Agency
  for Mineral Resources ANRM.

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OPPORTUNITIES FOR ROMGAZ WITHIN THE EUROPEAN
ENERGY FRAMEWORK/CONTEXT

• Romania has a favourable geographical position
  which represents a strength in its participation
  in the development of pan European oil and gas
  major pipeline projects
• A large number of depleted gas fields gives the
  opportunity for converting them into UGSs both
  for internal as well as for external use.
• The existence of an institutional and legal
  frame, adapted to European Union legal frame
• The existence of physical and financial energy
  markets, as well as access to the gas and power
  regional markets with opportunities to develop
  the system services at regional and European
  level
• Total liberalization of the gas and energy
  market accomplished in 2007
• Increasing confidence in operation of the
  Romanian capital market, which allows a
  successful quotation on the stock market of the
  energy companies (Transelectrica 2006, 1st
  quarter of 2008 Transgaz)
• Investment opportunities in the energy domain in
  order to increase the energy efficiency and the
  renewable energy resources, not used until now.

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ROMGAZ STRATEGIC GOALS

• Strengthening the position as leader on the
  Romanian gas market by increasing the
  competitiveness on a free competitive market
  generated by the increasing number of gas
  producers in the country as well as the
  diversification of gas sources (sources from the
  Middle East, Caspian Sea and/or alternative
  sources LNG, LPG)
• Diversification of the gas resources and
  reserves portfolio by means of intensified
  geological research activity
• Ensuring safety, continuity and flexibility of
  the gas supply by developing the existing
  capacities, creating new capacities as well as
  diversification of storage services for the new
  consumption requirements
• Developing international cooperation
  relationships for exploration and production
  projects outside Romania
• Reducing the impact on the environment by
  upgrading the surface facilities for the
  petroleum activities performed by Romgaz and by
  its partners, involved in various projects
• Client satisfaction improvement by increasing
  the quality of the offered products and services
  (gas conditioning and gas metering in energy
  units).

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MEASURES TO ACHIEVE THE STRATEGIC GOALS
1. Geological research for the discovery of new
gas reserves

• In order to satisfy the production
  requirements, Romgaz shall enhance its geological
  research activities in order to discover new
  hydrocarbon resources/reserves by
• Acquisition and processing of 2D and 3D
  seismic profiles
• Performing magnetic, geochemical and
  gravimetric survey
• Geological research drilling (over 100,000 m)
  to check the hydrocarbon
• content in over 50 prospects of the eight
  exploration blocks in order to comply with the
  concession agreements with respect to the and to
  evaluate the resources from the new discovered
  structures.

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MEASURES TO ACHIVE THE STRATEGIC GOALS
2. Increasing the recovery factor and production
optimization

• Achieving these goals is made by a series
  of measures that shall regard
• Elaboration of evaluation and production
  behavior studies for all mature reservoirs by use
  of state of the art technologies for reservoir
  modeling-simulation, identifying gas saturated
  areas, well completion and stimulation methods
• Resizing and rehabilitation of the surface
  infrastructure in order to face the new condition
  and regulations with respect to safety of the
  exploitation process, gas quality and
  environmental protection
• Introducing a monitoring system of the
  production process on the entire technological
  flow in order to identify problems in real time
  (dispatching) of production capacities
• Rehabilitation of the production from the mature
  reservoirs by valuing the experience gained
  through partnerships with the field related
  companies and service companies
• Implementation of a complex management for
  operation of commercial gas reservoir.

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MEASURES FOR ACHIEVING THE STRATEGIC GOALS
3. Ensuring continuity, safety and flexibility in
the natural gas supply

• ROMGAZ can contribute to continuous, safe and
  flexible supply of natural gas by
• Development of the current storages in order to
  optimize the total and working capacity, as well
  as of the withdrawal capacity which has to cover
  the more and more fluctuant demand
• Selection and evaluation of new depleted gas
  reservoirs that should be converted into
  efficient UGSs for the domestic and regional
  market, and for the European regional market.

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ESTIMATE FOR THE EVOLUTION OF THE STORAGE
CAPACITY BETWEEN 2007 - 2013
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MEASURES FOR ACHIEVING THE STRATEGIC GOALS
4. Development of the international cooperation
Romgaz participation to gas exploration-production
projects outside Romania in order to increase
the gas resource/reserves portfolio and hereby
Romgaz passing into the category of the major
players on the regional market, and participation
to alternative projects in order to diversify the
energy sources for Romania. The current
regional context allows Romgaz to wish for the
important role as a contact bridge between the
Western European gas market and the important gas
resources area from the East Middle East,
Caspian Sea, Russian Federation and North Africa.

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MEASURES FOR ACHIEVING THE STRATEGIC GOALS
5. Consolidate the position as a leader for the
natural gas supply

• Actions
• Increasing the clients faithfulness by means of
  price policy and offered services, through long
  and medium term take or pay contracts
• Offering of attractive contractual conditions
  for the client with respect to payment methods
  and provision of securities
• Permanent contact with the clients in order to
  ensure all conditions for their satisfaction, for
  the entire contract term, and compliance with the
  assumed obligations in order to avoid loosing
  them in the hands of the competitors
• Establishing a consistent portfolio of suppliers
  which should cover an optimum segment of the
  retail gas market economic operators and
  residential consumers