East European Energy:

Romania's Energy Needs Persist

NSIAD-92-257: Published: Aug 4, 1992. Publicly Released: Sep 9, 1992.

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Pursuant to a congressional request, GAO provided information on Romania's efforts to reform and modernize its energy sector, focusing on: (1) trends and problems related to energy production and imports; (2) energy needs and planned recourse steps; (3) factors inhibiting U.S. trade and investment in the Romanian energy sector; and (4) U.S. and international efforts to assist Romania in developing its 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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