Adrian Volintiru: Romgaz to Plan Largest Investments of the Past 10 Years

Romgaz is the main natural gas producer and supplier in Romania, having the Romanian State as main shareholder (70%). The remaining 30% stake is traded on the Bucharest Stock Exchange and the London Stock Exchange (LSE). In 2013, Romgaz expanded its main scope of activity by taking over Iernut power plant, thereby becoming an electricity producer and supplier. Currently, the company is implementing the largest investment made in the energy sector in the past 10 years. Adrian Volintiru, Romgaz CEO, gave us an interview where he discussed the company’s investment plans.

 

What investment projects does Romgaz perform currently?

Adrian Volintiru: We are in the process of completing a first investment in power plants, at Iernut, where the installed capacity will be 430 MW. For the second gas-fired power plant, at Mintia – Hunedoara County, the prefeasibility study is completed and the feasibility study is in progress. The new investment at Iernut is EUR 269 million, VAT excluded, being the most important investment made in the energy sector in the past 10 years.

When completed, Iernut and Mintia power plants shall increase Romgaz revenue by 8%, provided the current structure is maintained. Iernut power plant completion deadline is H1 2020 and the feasibility study for Mintia power plant will be completed in September-October. The works procurement process will be initiated in Q1 2020.

Also, a market study assessing the potential of the Romanian chemical and petrochemical industry is close to completion, as we are also interested in this sector.

 

Are you interested in making procurements in the chemical and petrochemical sector?

Adrian Volintiru: We look for a value increase along the gas chain, because the content of methane in the Romanian gas is high and would rather suit the consumption of the chemical and petrochemical industry, which would increase the value of the molecule along the chain.

 

What investments are planned for the Black Sea?

Adrian Volintiru: Where possible, we have studied the data bases and our geologists are identifying investment opportunities. We discuss large investments, which we perform together with Lukoil.

Currently, the company’s degree of indebtedness is zero and we plan to select an international financial rating firm to rate our company, which would increase the possibility to attract favourable financing possibilities, including through issuance of corporate bonds. Also, the company rating is helpful for the collaborations we would like to conclude with large companies willing to invest.

It is required to implement investment projects whose value exceeds in the medium and long term the resources provided by our budget. As such, for the future, the need arises to identify and access additional refundable external financing sources. In this respect, the annual rating provided by reputable international rating agencies sets the premises for obtaining new financial resources in favourable conditions which can be maintained at the initial state until the full repayment.

Romgaz requires rating assessment and establishment services because it initiates and maintains a continuous dialogue with rating agencies, enabling Romgaz to understand how it relates in terms of aspects and risks considered when assessing the rating.

 

As part of a big energy source diversification plan, Romgaz intends to bring to Romania LNG from a terminal to be built in Greece.

Adrian Volintiru: We have been constantly preoccupied with the possibility to diversify sources and Alexandroupolis is a source diversification method. It is a project which creates a new entry gate for the liquefied natural gas to the European transmission system through Greece, respectively through Alexandroupolis, directly connected to the Southern Corridor. Romgaz is preoccupied with source diversification as a means to cover risk, to be increasingly competitive or to react in case of extreme situations and, in terms of import sources, we have always scouted for alternative import sources.

Furthermore, after the gas discoveries (in the Caspian Sea region) take effect as a source, we can use the transmission system to which the terminal has access as a possibility to bundle our gas with liquefied natural gas and to enter the markets of southern Europe. We see it as an opportunity and we are currently analysing, weighting the situation and making the most of this opportunity.

In September, Romgaz shareholders are convened to approve the purchase of 20% of the share capital in Gastrade, the Greek company developing the terminal near Alexandroupolis. The initial investment of SNG may be EUR 12.5 million. In addition, the investment that Romgaz has to make for the next two years, as long as the execution of the project lasts, amounts to an additional sum of EUR 12.5 million.