As a CEO of an oil trading company, I understand the critical importance of a reliable and efficient supply chain. Romania, which is EU’s 12th largest economy with a strategic location given its many inland ports along the Danube river and a maritime border with Turkey and the Black Sea, has traditionally been a significant energy producer and player in global maritime trade and commerce, but the country’s significant diesel energy shortage recently has resulted in numerous logistical issues.
Romania’s largest Black Sea port of Constanta plays a crucial role in our industry – being a multi-purpose seaport, it acts as a central hub for trade with excellent connection and one of the major gateways for oil and gas products entering Romania and other parts of Eastern Europe. The port handles a significant portion of the country’s diesel fuel imports, with over 2.2 million tons of diesel passing through it each year.
However, the current capacity of the port is insufficient to meet the growing regional demand for diesel fuel, which is essential to power cars, trucks, ships, trains and facilitate manufacturing, farming and construction. Sanctions against Russia, which before the war was supplying 10 percent of Europe’s total diesel needs, now add to further difficulties as EU is switching to new suppliers from elsewhere.
Considering this, Constanta port is already working at full capacity, and the growing demand for diesel fuel is putting a strain on the system. There is a lack of the marine infrastructure and a need for additional upgrade of current structures. What the port is trying to do right now is create more space and more jetties in order to accommodate all the cargo – mainly oil, coal and particularly grains. The government is also constantly attempting to create new linkages with the Caspian area in order to attract new types of cargo. However, unfortunately in the port of Constanța availability of free land is very scarce. Together with the Ministry of Transportation the port is thus trying to find solutions to reclaim more land from the sea, in order to create more space for private initiatives but it will take time.
MasterChemOil has a long-term lease with the port and we have access to a deep-water jetty. In the future when the port expands we plan to connect to more jetties in order to increase the volumes. But for now, our team believes that without an additional terminal, Romania faces the risk of a severe shortage of diesel fuel, which could have serious consequences for the local economy and the population, and which could in turn spill over to the wider European region.
As a result, we are now focusing on creating the logistics, because there are no logistics in Romania available to be adapted to the new reality. Due to the latest geopolitical changes, resulting in massive shift of flows and a new shortage of diesel in Ukraine, we must adapt fast. We need to secure train and wagon availability as well as locomotives availability in order to smooth the whole supply chain.
We are already in a situation where Romania does not actually have enough diesel. Romania was short on diesel in the last 15-20 years because the refineries are producing less diesel and more gasoline. There is a gap that we need to cover for the diesel. If you look at the Romanian development in the last 10-15 years, the economy was always growing and also the need for diesel was increasing, but at the same time refinery capacity was stagnant. As of today, there is no project for a new refinery. On the contrary, there is a risk that due to the sanctions against Russia we might face Lukoil’s Romanian refinery shut down, which the country cannot afford.
To address these issues, as a company we want to take proactive steps to invest in the much-needed modern infrastructure and high-throughput technologies. We believe that the existing terminal as a concept and installation is obsolete and is very difficult to operate in this environment. We were looking for a solution and now having found it – we created a project and have to start building. We plan to build a new terminal in the Constanta port within the next 2-3 years, with a lifetime of 30-40 years. Based on our project, this new terminal would not only increase the capacity of the port but also improve the safety and sustainability of overall operations.
Obviously, this is a complex task and we are open to partnerships. We invite industry stakeholders and also financial sector players like investment funds to support the construction of this new maritime terminal at the port of Constanta. We understand this will be a significant investment, but the long-term benefits will far outweigh the costs. A new terminal will not only secure the supply of diesel fuel for the country and the region, support local industries, but also maintain economic stability for the years to come. We are committed to working with the government and other partners to make this project a reality.
Dan Berendel
CEO of MasterChemOil