Serinus Energy blames contractor and Transgaz for Romania delays

Serinus Energy updated the market on its operations on Thursday, reporting that the Moftinu gas plant in Romania was now completed and able to operate at pressure with sustained production, but was waiting for the installation of the ‘Low Temperature Separation’ (LTS) unit and the triethylene glycol (TEG) unit, as previously announced.

The AIM-traded firm said that since 21 August, it had been awaiting access codes from Romania's national pipeline operator, Transgaz, to start experimental commercial gas production during the commissioning of the gas plant, which Serinus described as “the legal right” of the company.

Transgaz had so far denied its gas production into the Transgaz system, the firm claimed, citing that its gas quality was not according to their network specifications due to minimal quantities of water.

“The company believes that the very high quality of gas, in excess of 90% methane, should be acceptable into the Transgaz system,” Serinus said in its statement.

“Transgaz has maintained that even the very small percentage of water, 0.21% maximum, means that this gas cannot be injected into the system and that until the units are in place, no gas sales can be accommodated.”

It was the company's view that Romanian law provided for such minor quality differentials during the proscribed experimental production phase, and as such it was “legally entitled” to provide that gas to the system.

The firm said it believed that the gas from the Moftinu wells was within the specifications that would allow Transgaz to accept the gas, with “no discernible impact” on the integrity of the Transgaz system.

“The company will continue to pursue the acceptance of this gas into the Transgaz system.

“Regardless, the company will be in a position to remove any minor residual water once the units are installed and there are no further issues that would prevent the company moving to full production.”

It said the latest timeline provided by the EPC contractor was that the factory acceptance tests for the units would be conducted at the manufacturing facility in Canada on or around 17 November, and the units would be loaded onto a freighter for shipment to Bremerhaven, Germany, on or around 22 November, with installation, commissioning and production anticipated for December.

Those units were being constructed by a subcontractor, AVAL Engineering of Calgary.

AVAL's delivery of the units was now expected to be more than 11 months after the original delivery date.

Serinus said AVAL had provided project progress reports to the EPC contractor, with reportedly six separate delivery dates over the last 11 months, all of which the firm said had been missed.

“The company has been required to send senior executives, alongside representatives from our EPC contractor to inspect the works completed by AVAL as the progress reports from AVAL were unreliable,” the board said.

“On consecutive visits, the Serinus team, alongside our EPC contractor have now been able to verify the progress and are now in a position to have confidence that work is progressing, and the current completion ex-works date can be met.

“Once the factory acceptance test is completed, the shipment of the units is estimated to take 10 days to reach Europe, followed by a three-day shipping time by truck to the site.”

Once the units are at the site, Serinus estimated that it would take up to two weeks to install and commission the units.

In Tunisia, Serinus said discussions with authorities had progressed, and the company believed that - subject to an administrative procedure settlement - it would be in a position to restart the Chouech Es Saida field in the first quarter of 2019.

The firm said it believed that progress had been “sufficient” that it could now take early steps to re-initiate production at the field.

“This field has been shut-in since February 2017 due to labour unrest.

“The company has started the tendering process for long lead time items and essential production support services.

“Prior to shut-in, the Chouech Es Saida field produced an average of 488 barrels of oil equivalent in the fourth quarter of 2016.”