OMV Petrom Calls into Question Black Sea Gas Exploitation
From ‘When’ to ‘If’
According to Christina Verchere, CEO of OMV Petrom, gas extraction from Neptun Deep Block in the Black Sea will be uncertain, if the Offshore Law is not amended. “Our activity is influenced by the market and regulations and we need an investment friendly legal framework, which is a key requirement for our future investments. We appreciate efforts for gas market liberalization, through GEO 1/2020 and statements regarding the amendment of the Offshore Law. But, in order to lift the barriers that stay in the way of development of Neptun Deep project, concrete steps must be taken to that direction in the following period. Neptun Deep is a discovery that ensures Romania’s energy security. The Black Sea is a chance for Romania, which only few countries have. In the context of Green Deal, we believe gas is part of solutions for Europe in transition towards clean energy,” Christina Verchere said on the occasion of presenting the financial results of the group.
“Stability, a liberalized gas market and existence of key infrastructure. GEO 1/2020 was a very important thing for investors to see progress towards returning to a liberalized market, so it is welcome. And we need amendments to the Offshore Law. We understand that it will go through a parliamentary process, and this is the next step we are looking to see. Black Sea gas resources are very important and many countries would envy Romania for such resources. It’s about time here. I have always stated that, regarding the Black Sea, the question was ‘when?’, as it is a discovered and evaluated resources and is the basis for Romania’s energy security,” Verchere mentioned. In her opinion, without amendments to the Offshore Law, Black Sea gas extraction is no longer a certainty. “But we see that the context is changing, pressure that comes on the environmental side is growing, we see the discussions on financing such projects. In absence of a change to the offshore law, I am afraid, for the first time, that we will move from ‘when’ to ‘if’, which would be a huge loss for Romania. We recommend authorities to make the changes we need, so that we can move forward, start this project and finally bring gas to Romania,” she also mentioned.
Net profit down 11% compared to 2018
OMV Petrom reported for 2019 revenues of RON 25.5bn, up 13% compared to 2018. Despite the advance recorded by revenues, the net profit fell by 11%, to RON 3.63bn y/y. Investments also fell, amounting to RON 4.2bn, amount representing a decline by 2% compared to the previous year.
With a Clean Operating Result of RON 2.84bn, by 12% lower y/y, the Upstream segment had a contribution of approximately two thirds in the Clean Operating Result of OMV Petrom. Production of OMV Group plunged 5% compared to 2018, mainly due to decline of natural gas production in Romania by 7%, as contribution from discoveries (4461 Totea South) offset only partially the sharp natural decline. The production cost of the Group was USD 10.90/boe, falling by 3% mainly due to the favourable exchange rate evolution.
Sales by 13% higher
Consolidated sales for 2019 amounted to RON 25,485mn, an increase of 13% compared to 2018, driven by higher sales volumes and prices for natural gas, higher sales volumes for petroleum products and higher prices for electricity, partially compensated by lower selling prices for petroleum products. Downstream Oil represented 72% of total consolidated sales, Downstream Gas accounted for 26% and Upstream for approximately 2%. Clean CCS Operating result decreased by 5% to RON 4,573mn, reflecting the unfavourable oil price environment and the decrease in refining margin. The Clean Group effective tax rate was 16% (2018:17%). Clean CCS net income attributable to stockholders was RON 3,863mn, 4% higher compared to 2018.
Gross dividend proposal: RON 0.031/share
Based on the preliminary results, as well as on the solid cash flow obtained in 2019, OMV Petrom’s Executive Board proposes a gross dividend of RON 0.031/share for the financial year 2019. This initial proposal was also submitted to the Audit Committee and is in line with the current dividend policy, as published on the website of the company, according to OMV Petrom. The final proposal of the Executive Board on dividend distribution for the financial year 2019 will be submitted to approval by the Ordinary General Meeting of Shareholders in April 2020, after approval by the Supervisory Board, following the review by the Audit Committee.
