Declining Turnovers for Prahova-based Oil & Gas Companies

The COVID-19 crisis has caused, in Prahova County, considered the county of ‘black gold’ in Romania, more than half of the companies to register a fall in turnover during the state of emergency, according to an analysis conducted by Prahova Chamber of Commerce and Industry (CCIPH). Of all the respondent companies, 17% are in the energy sector – oil & gas, 77% being in the industries sector and 23% in the sector of specialized services.

CCIPH analysis was conducted during April 23-29 based on a questionnaire made available to Prahova-based companies, respondents coming from the 7 representative areas of activity of the economy of the county – Industry (53%), Services (22.5%), Trade (10.3%), Construction (6.1%), Agriculture (4%), Tourism (2%) and Research-Development-High Tech (2%).

One of the conclusions is that in the areas of Industry, Services, Construction and Agriculture small and medium-sized companies are predominant, and in the areas of Trade, Tourism and Research – Development- High Tech the micro-enterprises and small companies are predominant. In the industrial field, where the number of employees is higher than in Services and Trade, staff reduction measures were adopted at a larger scale (61.5%) – by sending into technical unemployment or layoffs, 3.8% sending the entire staff into technical unemployment. In industry, in terms of export, for 87.5% of the companies the activity was affected at a rate of 10%-100% and 77.8% of the import activity was affected at 34.6% of the respondent companies in this field that make imports. Of total respondent companies, the perception was the following: 57.7% – moderately affected companies; 15.3% – very affected; 7.7% – the activity was stopped; 3.8% – not affected.

The main effects felt by companies in the industrial sector, from the onset of the state of emergency, were: difficulties with receipts – 61.5%; decrease in turnover and affected cash flow – 42.3%; delays in supply – 53.8%; technical unemployment – 42.3%; delays in paying suppliers – 42.3%; partial suspension of activity and layoffs – 19.2%; total suspension of activity – 11.5%.

 

How is the crisis seen in the oil & gas sector?

In the oil & gas sector, in terms of age of the respondent companies, 84.6% are more than 10 years old and 15.4% are 5-10 years old. Of the respondent companies, 15.4% are very large (over 1,000 employees); 7.7% are large (250-1,000 employees); 23% are middle-sized (50-250 employees) and 53.8% are small (10-50 employees).

In terms of turnover during the COVID-19 crisis, 31% of the companies did not register a decline in this indicator, and 69% recorded declines of 15%-78%.

Other two analysed indicators were sending the employees into technical unemployment: 38.5% YES; 61.5% NO and layoffs: 15.4% YES; 84.6% NO.

Among the surveyed companies, 61.5% make exports and among these, half are negatively affected, meaning that export fell by 10%-60%.

Moreover, the companies were affected by the COVID-19 crisis at the following rates: very affected -7.7%; moderately affected – 79.9%; little affected – 13.4%.

Among the most important reasons for concern of companies in the energy/oil & gas sectors the following were mentioned: recession after COVID-19 – 76.9%; financial impact – liquid assets and capital resources – 61.5%; difficulties in supply – 46.15%; layoffs – 38.5%.

 

Reasons for concern regarding the impact of COVID-19 crisis on companies

As all the respondent companies mentioned two, three or four reasons for concern regarding the current situation, the resulting rates show this situation cumulatively.

The main measures to be applied by the state required for companies in this economic context include: financing of SMEs with 0 interest rate, after the state of emergency ceases; refinancing or extending maturities for loans; supporting active companies by exempting them from the payment of social security contributions.

Among the surveyed companies, 92.3% agreed with granting non-reimbursable funds, and 7.7% did not agree with this measure.

The estimated duration for feeling the effects of the crisis was: 3-6 months – 7.7%; 7-12 months – 46.15%; over 1 year – 46.15%. As estimated term for the occurrence of problems: 1 month – 30.8%; 2 months – 15.4%; 3 months – 46.15%; not expecting any problem: 7.7%.

Relating to the conversion of activity, 46.15% of the respondent companies said there was no question of adopting such measure, and 53.85% said that, in principle, they targeted an adaptation of the activity, but were still analysing the situation.