East European Energy

Romania's Energy Needs Persist Gao ID: NSIAD-92-257 August 4, 1992

Modernization of Romania's energy sector and increased production are crucial if that country is to achieve market reforms and reinvigorate its economy. Because the changing energy economies of Romania and other East European countries may open up new markets for Western energy technologies, this report provides information on (1) trends and problems linked to Romania's energy production and imports, (2) Romania's energy needs and the steps being taken or planned to address them, (3) factors that discourage U.S. trade with and investment in Romania's energy sector, and (4) U.S. government and international efforts to develop Romania's energy sector.

GAO found that: (1) the decrease of Romanian domestic and imported energy resources has created energy shortages; (2) Romanian electricity, oil, and gas production have experienced declines of up to 25 percent, which is attributable to the lack of modern extraction technology and depletion of energy reserves; (3) political disruptions in the mining community, a lack of mining equipment and technology, and insufficient investment capital resulted in a 53-percent decline in coal production; (4) as a result of the 1991 Persian Gulf War, Romania did not receive $1.7 billion in debt payments from Iraq in the form of crude oil shipments; (5) revitalization of Romania's oil, gas and coal industry requires foreign trade and investment; (6) solutions to the declines in energy production involve decentralizing state-owned oil and gas industries, joint exploration and production with western companies, and procurement of funds and related equipment; (7) reorganization of the electricity industry, development of power plant construction and modernization projects, diversification of foreign suppliers, and international joint ventures and capital investments are needed to revitalize the power generation and oil refining industries; and (8) U.S. and international efforts to assist Romania's energy sector include the Agency for International Development's $1.6-million energy improvement program, funding for power generation projects, a Department of Commerce liaison to facilitate business contacts, and international loans.

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