Sponsored briefing: Navigating Romania’s dynamic energy landscape: an overview of M&A activity and trends

Lawyers from Suciu Popa (SPA) provide an overview of the energy M&A market in Romania

Market overview

Romania’s energy sectors have experienced significant growth and transformation in recent years, driven by a combination of technological advancements, policy changes, and geopolitical factors.

This dynamic landscape has given rise to numerous M&A transactions, with both domestic and international players eager to participate in the country’s burgeoning energy market. As a leading Romanian law firm, Suciu Popa has been at the forefront of these developments, providing expert legal advice and assistance in a part of such high-profile deals.

According to the most recent public data, the total value of M&A transactions in Romania in 2022 reached a record high of €5.5bn, despite a slowdown in activity during the latter part of the year. The energy, oil and gas, and renewables sectors were among the most active, accounting for a substantial portion of the market value.

Key deals

In the oil and gas sector, the most significant deal was the acquisition of ExxonMobil’s 50% stake in the Neptun Deep offshore gas project by SNGN ROMGAZ SA. This deal, worth approximately $1bn, is expected to significantly increase Romania’s domestic gas production and reduce its reliance on gas imports. Suciu Popa provided legal assistance to SNGN ROMGAZ SA in this transaction, advising on various aspects of the deal, including regulatory and environmental issues.

In the renewables sector, one of the most significant deals was the acquisition of by Rezolv Energy of a 1,000 MW solar park in Arad from Monsson Group. The project is planned to be the largest of this kind in Europe. It is emphasised that construction works will begin by June 2023, and the photovoltaic park will start producing in 2025 when it is planned to cover the energy needs of some 1 million people.

In addition to these primary deals, several other noteworthy M&A transactions occurred in Romania’s energy sector in 2022. These include Mass Global Energy’s acquisition of the Mintia thermal power plant and acquisitions made by Enel Green Power and Premier Energy in the renewables sector. Furthermore, Enel, a major player in Romania’s energy sector, recently agreed to sell its Romanian operations to PPC. The agreement entails the sale of Enel Group’s equity stakes in Romania to PPC for a total consideration of around €1,260m.

These deals demonstrate the increasing interest of investors in Romania’s energy sector, which is expected to grow significantly in the coming years.

Legislation and policy changes

The Romanian legislator introduced several significant legislative and policy changes in the energy and renewables sectors during 2022-2023, including:

• The adoption of a new energy strategy for 2022-2030, aimed at increasing energy efficiency, reducing greenhouse gas emissions, and promoting renewable energy sources.
• The implementation of the offshore law, which regulates the exploration and production of oil and gas resources in Romania’s exclusive economic zone in the Black Sea.
• The introduction of a revised support scheme for renewable energy, providing more incentives for the development of solar and wind projects.

Geopolitical trends influencing the M&A sector

Several geopolitical trends have influenced the M&A sector in Romania in 2022 and are expected to continue shaping the landscape in 2023. These include:

• European Green Deal: EU climate goals drive M&A activity towards renewable energy and sustainable technologies, making Romania’s wind, solar, and hydropower sectors attractive targets.
• Supply chain resilience: global trade tensions and pandemic-related disruptions have increased interest in regional self-sufficiency, boosting M&A opportunities in Romania’s manufacturing and logistics industries.
• Digitalisation and technology adoption: the growing tech sector and skilled IT talent in Romania make it an appealing market for investors pursuing innovative tech companies through M&A.
• Energy diversification and security: given the ongoing geopolitical tensions surrounding energy supplies, particularly in the wake of the Russia-Ukraine crisis, European countries are seeking greater energy diversification and security. Romania’s domestic resources and its strategic location make it a potential energy hub, attracting M&A interest in the oil and gas sector, as well as investments in infrastructure projects.

These geopolitical trends will continue to shape the M&A sector in Romania in 2023, presenting opportunities for businesses and investors across various industries, particularly in the energy, technology, and manufacturing sectors.

Looking forward

It is challenging to forecast how the macroeconomic trends will unfold in 2023 however, we envisage that the importance of implementing an energy transition shall persist as a crucial agenda item for investors and management teams not just in the immediate future, but for a considerable duration thereafter. As a result, we anticipate that there shall be a notable deployment of capital towards M&A activity and other capital projects focused on Romania’s energy, renewables, and critical minerals sectors. Thus, it is an opportune time for interested parties to consider investment opportunities in these areas.

About us

At Suciu Popa, we have significant experience advising clients on M&A transactions in a variety of sectors with a focus on energy sector. Our team of lawyers has a deep understanding of the legal and regulatory framework governing the sector and can provide clients with the advice and support they need to navigate complex transactions. We have advised on several high-profile deals in the sector, including some of the ones highlighted above, and are well-positioned to help clients take advantage of the opportunities presented by Romania’s rapidly evolving energy landscape.

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