Raffles Energy: Pioneering gas-to-power solutions

Raffles Energy SRL, a wholly owned subsidiary of the London based Raffles Energy Group, is now a well-established player in the Romanian energy sector. The company is a natural gas producer and supplier, titleholder of several petroleum licences and a petroleum industry operator conducting complex exploration and production activities. More recently, Raffles Energy developed also into an electricity producer and supplier, operating its own gas-to-power facilities in Romania.

Until a few years ago, the core business of Raffles Energy SRL was exclusively in the exploration and production of hydrocarbons, a very much upstream company producing and selling natural gas. This was premised on the fact that hydrocarbons, and particularly the natural gas, are going to be needed by the local markets for a long time to come. Nevertheless, the company realized the benefits of adopting a new business approach, and monetized stranded natural gas reserves through the company’s expansion into midstream power generation and commercial operations. As such, by pioneering gas-to-power solutions to develop stranded natural gas discoveries in Romania, Raffles Energy made a decisive move into the electricity production and supply via the establishment of a new business segment – power generation.

The company’s first gas-to-power facility at Dornesti Suceava has initiated the electricity supplies to the national grid in December 2014. Dornesti represents the first natural gas field in Romania put directly into production via the on-site gas-to-power solution. This was followed six months later by the start-up of the second facility at Lilieci Bacau gas field.

“We are proud to have pioneered in Romania the gas-to-power solution as an effective way to put into production commercially marginal discoveries. The success of the operations at our first two gas-to-power facilities in Romania reveals Raffles’ capability to master the full-cycle project execution and commercial delivery across the gas-to-power value chain. In recognition for this achievement, Raffles was awarded in 2016 the prestigious prize for “Electricity Generation Project of the Year”. Our staff is excited to have complemented Raffles’ original upstream oil and gas expertise with the technical, project management and commercial skillset required to also become an electricity producer for the Romanian energy market. At the Board level, we are happy that our company–changing strategic decision proved to be right and added a valuable new dimension to our growing business,” states Dr. Doru Morariu, CEO of Raffles Energy Group.

Breakthrough of 2019

For Raffles Energy, a significant achievement in 2019 was the completion of the experimental production for Bainet gas development and its commissioning into full scale commercial production operations. Bainet field represents the second greenfield commercial gas discovery made by Raffles in Suceava Concession over the recent years. This is a noteworthy accomplishment on its own right, considering that there are very few other new discoveries made recently in Romania.

The fast-track development of Bainet gas project, in under eleven months from discovery to production start-up, evidenced Raffles team’s technical and managerial capabilities to master the full cycle project execution and commercial delivery across the gas-to-market value chain. Raffles confirmed its credentials as a reputable petroleum operator by maximising the use of existing infrastructure. This was realised via implementation of a “satellite development” concept, coupled with fit-for-purpose planning and permitting, by innovative drilling and completion design, the selection of cost-effective contracting and procurement solutions, as well as the pro-active management and supervision of contractors.

Bainet gas development confirms the hydrocarbon potential of the Suceava licence as a proven conventional shallow gas play and opens new directions for further hydrocarbon exploration programs in the Northern sector of the Moldavian Platform. The momentum generated by Bainet gas development is likely to attract further investment and stimulate more exploration activity in Suceava area. Thanks to a progressive and reliable regulatory environment and the “can-do” attitude of Raffles’ team, Bainet development substantiates that small to medium scale but meaningful accumulations can be developed commercially to generate returns whilst providing attractive gas prices for both industrial and household end users in the local area. This approach represents a win-win business proposition for natural gas producers and Romanian customers.

“By pioneering gas-to-power solutions to develop stranded natural gas discoveries in Romania, Raffles Energy made a decisive move into the electricity production and supply via the establishment of a new business segment – power generation”

In recognition for the seamless execution of Bainet Gas Development from “reservoir to market” as a sustainable cleaner energy supply to meet local demand, Raffles Energy was awarded the prize for “Oil and Gas Project of the Year” at the Romanian Energy 2019 CEO Forum and Awards Gala.

2020: Doing something totally new and expand with green energy projects 

The ability to strongly influence the operations in terms of technical excellence and sustainable development, coupled with adherence to high safety and environment protection standards represent vital components of Raffles’ corporate culture. “As such, every year our foremost business objective is to conduct our operations safely, without hurting either people or the environment. We call this to do the basics right. If you look at Raffles’ track record in both petroleum and power generation operations, I am proud to say that we did always get those basics right,” Doru Morariu states.

“For 2020, in addition to getting the basics right, we have also set two very ambitious business objectives. The first one is to “do more of what we are already doing well” and relates to the finalisation of the construction works for a new gas-to-power facility. This state-of-the-art development, which we are conducting in partnership with SNGN Romgaz SA, will enable our project venture to put into production Voitinel gas discovery via an on-site gas-to-power solution,” Doru Morariu says.

The company’s second business objective for 2020 represents an aspirational target aiming to lead Raffles into “doing something totally new”. “Over the recent years, we are becoming increasingly interested to complement our business portfolio and expand our investments into renewable energy. We are therefore pursuing now several business opportunities in the areas of photovoltaics and wind power generation. We hope that in the next couple of years Raffles would be also known as a supplier of energy from renewable sources,” Doru Morariu adds.

Converting the challenges to opportunities

According to Raffles Energy’s CEO, the business community crosses a period marked by changes and uncertainty. Delivering during challenging times requires financial discipline alongside with the ability to transform the challenges into business opportunities. For Raffles that has always meant discipline in operational and capital expenditure, as well as a successful program of portfolio management and the ramping up of new projects. With the drive for sustainability, and in the face of uncertain petroleum prices and fiscal regimes, Raffles’ management is focusing on operational efficiency, asset optimization and financial returns, by applying innovations in the geosciences, drilling, completions and enhanced recovery, while maintaining an overarching priority on safety, environmental performance and emissions reduction.

Securing Romania’s energy needs of tomorrow requires constant innovation in the upstream sector to maximise output from existing fields and find new petroleum resources. Ongoing research and significant investments are needed to develop game-changing technologies to meet these supply challenges. Technology and innovation drive almost every aspect in Raffles’ business from the identification of gas-bearing reservoirs via complex tri-dimensional imaging, to fully automated production facilities and remote monitoring of flowline systems to the points of delivery to national grid.

Growing technical complexities, coupled with economic uncertainties, command our industry to improve performance, optimize costs, and reduce risks through partnerships and collaboration. From design to contracting and from financing to execution, partnerships in the energy industry must evolve towards better alignment, integration and collaboration. “Based on our positive experience with a broad variety of joint-venture partners, and especially with SNGN Romgaz SA and Prospex Oil and Gas, the partnerships can encourage exploration and development of increasingly complex resources while improving the assets performance. In the context of such partnerships, Raffles Energy-led initiatives to develop natural gas discoveries and implement new energy related projects in Romania received valuable contributions from the National Agency for Mineral Resources (ANRM) and the National Energy Regulatory Authority (ANRE), which provided constructive support and advice,” Doru Morariu states.

The past, a catalyst for the future

Given the dynamics and multi-faceted business environment in Romania, it is not surprising that the lessons from the past act as a catalyst for the future, as stated by Raffles Energy’s CEO. “As investors in the energy sector, we are always looking at the business opportunities with open mind, screening them with the expectation of a long-term predictable and stable legal and fiscal framework. The extreme ranges of uncertainty in the technical evaluation of petroleum projects and the particular challenges of the low probability of success in the exploration phase are summed up by the renowned Levorsen’s axiom ‘a trap is a trap whether or not it has a mouse on it’. However, this contrasts substantially with the perspective of the investor that is founded on the truism that ‘a trap is a trap only if it effectively catches the mice’ delivering value. Recent changes in the business environment invite us to stay alert, maintain optimism and be opportunity-minded,” Doru Morariu adds.

According to the CEO, over the recent years, the company’s challenge was to mitigate the energy price and specific energy taxation uncertainties, “which I believe will continue in short-term. This may lead to a reduction of the investment levels and/or a deferral of execution schedule for the already sanctioned projects. However, the hard truth of the upstream industry is that we cannot escape taking risks. Consequently, Raffles approach was and it will remain a pragmatic one. We are planning for the certainty of the uncertainty in a rapidly changing business environment. For Raffles, the risks represent an integral part of the oil and gas value creation process. We believe that narrowing down the uncertainty and mitigating the exposure will substantially improve our ability to control and influence positively the value-drivers, de-risk the opportunities and ultimately ensure that we are creating value. So far, this approach proved to be a successful one,” Doru Morariu completes.

Joining forces in dealing with the climate change

Raffles Energy’s professed mission statement and vision is to deliver sustainable energy solutions that protect the environment. “Consequently, my message to our peers as well as to our customers is an appeal to join forces to deal with climate change issues. Changing the mix of energy products in the energy system can make a big difference and help tremendously to progressively decarbonise the energy use sectors. We can and should develop a strong partnership and learn from each other in order to identify better ways for each business segment of the energy sector to deliver an effective response to climate change by building a sustainable energy system that is both affordable and environmentally responsible, fully in line with Paris Agreement,” Doru Morariu says.

According to Raffles’ CEO, the world currently seems to lag behind a swift and satisfactory resolution of the climate change conundrum. The way energy is generated and used causes most of the world’s greenhouse gas emissions. I sincerely hope our sense of purpose is echoed on both the supply and the demand sides of the ‘clean energy equation’ and succeeds to keep it in a good balance,” the CEO concludes.

(From the print edition)