Wolf Theiss is a full service law firm that opened its office in Romania in 2005. The firm has four core areas: banking and finance, corporate M&A, real estate and dispute resolution, all of which spill across the energy sector.
Can you provide a brief introduction to Wolf Theiss’ presence in Romania and your expertise tailored to the energy sector?
BJ: Wolf Theiss opened its office in Romania in 2005 and from the early days we have strived to be a full service law firm. We have four core areas: banking and finance, corporate M&A, real estate and dispute resolution, all of which cut across the energy sector. For example, we have worked on financings for upstream companies and we were the local lawyers in the acquisition of Rompetrol by KazMunayGas in 2007, where we provided a full due diligence for Rompetrol’s assets and operations in Romania.
We have also done significant work in the buying and selling of wind and solar parks, especially between 2008-2013 when the renewables sector was very active.
The renewables sector in Romania has undergone changes in leaps and bound over the past decade – how would you describe the current business climate?
BJ: There was a great deal of optimism initially, leading up to Law 220/2008 which created a very attractive investment climate and resulted in a "golden age" for renewables in Romania. Unfortunately, the legislation subsequently changed and the subsidies were scaled back which led to a real crash in the market - many projects were stopped and investments essentially lost. The current business plans no longer account for state subsidies, they are focused solely on the revenue that can be generated by sale of electricity.
FN: At present, there is a sense of cautious optimism prevailing in the market. Whereas two years ago most projects were in distress, now they are slowly starting to sell their energy as well as green certificates to a certain extent. Our clients are not building new projects but they are operating existing ones and their sense is that the changes brought in 2018 were beneficial. Namely, the draft of the National Energy and Climate Plan was published, which envisages a 27.9% share of renewable energy sources in energy consumption in 2030 and calls for EUR 22 billion in investments in power plants and the power grid in the next 10 years.
Romania is in a leading position in the region from a resource standpoint. How does it compare when the regulatory aspect if also factored in?
BJ: The regulatory environment in Romania is not particularly more onerous than other countries in the region and the existing regime is generally amenable. The richness in resources no doubt strengthens its position – for example, no matter how attractive the regulatory regime may be in a country like the Czech Republic, they are not going to be able to extract natural resources (e.g. oil and gas) that either don't exist or are simply not economically viable there.
FN: Last year there were some changes to the Energy and Oil & Gas Law which were interesting and position Romania in a truly strategic position in the region. In particular the amendments introduced the concept of trade of natural gas and enhanced the provisions regarding the distribution of natural gas and the administration of natural gas centralized markets. We also saw updates regarding the concept of the “prosumer” which is very positive and the state is also stepping up regarding the energy efficiency projects.
What is the vision for Wolf Theiss in Romania looking forward, particularly regarding your work in the energy and resources arena?
BJ: The energy sector remains very attractive for us, and is an industry where we are very well positioned to assist. Romania is blessed if we look at remaining available natural resources and there is a great deal of work yet to be done. Despite the negative press that Romania has received on occasion we are still witnessing significant investor interest in the country, generated in part by the fact that there are not many other neighboring destinations that are more attractive if you look at the current situation in countries like (for example) Turkey, Ukraine or even Poland. Romania needs to work through its issues surrounding the regulatory and legislative framework, but its fundamentals remain strong and attractive.
