Petrom remains the most profitable company in Romania


RON 4,821 M in 2013, up 22 pc, half of the OMV’s profit.

For the last year the oil company Petrom posts a net income attributable to stockholders (i.e. net income attributable to stockholders of the parent) amounting RON 4,821 M, 22 percent higher compared to 2012 (RON 3,953 M), according to a press release. Nevertheless, consolidated sales for 2013 decreased by 8 percent compared to 2012, to RON 24,185 M, largely due to lower crude and petroleum products sales, that more than offset higher sales of electricity. Refining and Marketing (R&M) represented 79 percent of total consolidated sales, Gas and Power (G&P) accounted for 16 percent and Exploration and Production (E&P) for approximately 5 percent.
“In 2013, Romania registered an economic growth better than expected, however consumption remained weak, while the fiscal burden increased further. In spite of the depressed demand in the gas and power sectors, lower refining margins and electricity prices, Petrom recorded another strong financial performance due to operational excellence, strict cost control initiatives as well as favourable crude price environment. On the operating side, we successfully increased our hydrocarbon production in Romania, offsetting the natural decline, and engaged in partnerships to unlock the onshore potential. In the Black Sea, we further pursued our exploration activities by completing the 3D seismic acquisition and prepared to resume the exploration campaign in mid-2014.”, said Mariana Gheorghe, CEO of OMV Petrom.
Petrom’s last year profit generated half of the OMV’s, compared to 38 percent in 2012, the Austrian group results were affected by lower sales of oil from Libya, increased exploration expenses and provisions.
She stressed that since privatization, Petrom has secured the growth of the company and the future of the hydrocarbon production, by reinvesting approx. 85 percent of the operating profits, to a cumulative level of EUR 10 bn. This is the first year-on-year increase of hydrocarbon production in Romania since privatization. In Romania, total oil, gas and NGL production increased to 62.5 million boe (barrel of oil equivalent), 0.26 percent higher compared to the previous year. Domestic crude oil production was 28.6 million bbl, stable versus 2012 as the projects and work over programs compensated the effects of natural decline. Domestic gas production reached 33.9 million boe, 1 percent higher compared to 2012. Oil and gas production in Kazakhstan decreased by 9 percent to 4.1 million boe, as an effect of technical constraints. Group sales volumes were similar to the 2012 level. Group oil, gas and natural gas liquids (NGL) production in 2013 totaled 66.64 million boe, similar to the 2012 level.
Clean EBIT declined by 53 percent compared to 2012, largely due to lower gas business contribution as the upside from gas price liberalization is reflected in E&P starting February 2013. Total gas consumption in Romania decreased by around 8 percent in 2013, while Petrom’s consolidated gas sales were slightly higher than in 2012 driven by the integrated gas supply to the gas fired power plant Brazi. Estimated Romanian gross electricity production decreased by 2 percent in 2013 versus 2012, while the estimated consumption decreased by 5 percent; Romania was therefore a net exporter of electricity in 2013. In 2013, the total net electrical output of Brazi power plant was 2.74 TWh, covering approximately 5 percent of Romania’s electricity production over the full year, with approximately 9 percent contribution to the balancing market.
Petrom expects the average Brent oil price to remain above USD 100/bbl and the Brent-Urals spread to stay relatively tight, said the financial report. The introduction of 7 cents per liter excise fuel will decrease the sales of petrol and diesel by 1 -3 percent, said CEO OMV Petrom, Mariana Gheorghe, in a press conference. She added that fuel sales would stagnate this year if excise duty would be applied.
In Romania, gas and power market demand is anticipated to remain under pressure. The gas price liberalization calendars foresee four domestic gas price increases to occur this year for both households and non-households. In the power market, prices are expected to be under pressure due to supply dynamics, according to Petrom, with additional capacity coming on stream from renewables, as well as low electricity demand, which reflects, in part, prospective energy efficiency measures.
Regarding R&M segment, total marketing sales volumes decreased by 6 percent compared to 2012, broadly in line with the market demand in our operating region. In retail, Group sales volumes were similar to the level of last year, while commercial sales volumes dropped by 15 percent; a negative trend reflected in all products except gasoline. To a relatively large extent, the decrease is also attributable to the completion of the Petrom LPG divestment.
Investment plan for 2014 of over EUR 1 bn
OMV Petrom management is considering an investment plan for 2014 of over EUR 1 bn, of which approx. 85 percent will be dedicated to E&P (drilling development wells, field redevelopment projects, workover activities/ subsurface operations and the Neptun Deep project) and intends to propose allocation of dividends for the 2013 financial year, both subject to further approval by the Supervisory Board and Annual General Meeting of Shareholders. Compared to the year-end 2012, total assets increased by RON 1,902 M, to RON 40,047 M. The change was mostly driven by the net increase of RON 1,995 M in property, plant and equipment and intangible assets, as investments exceeded depreciation and impairments.

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