OMV Petrom reports higher earnings in Jan-Mar, defers offshore production

OMV Petrom, Romania's largest local oil and gas producer, controlled by Austrian group OMV, increased its revenues by 11% year-on-year to RON 5.4 billion (EUR 1.14 bln) in the first quarter (Q1). The net profit surged by 35% to RON 1.15 billion (EUR 240 mln), due to higher oil and fuel prices.

The company's preliminary estimates show that the impact of the government ordinance (OUG) 114/2018, amended by OUG 19/2019, is about EUR 40 million per year. The company says OUG 19 is "a much-needed development towards the return to a liberalized gas market" implying that further steps are desirable.

"The value of consolidated sales increased by 11%, supported by higher market prices expressed in local currency and higher volumes of sales of electricity and petroleum products partially offset by smaller volumes of natural gas sales. Downstream Oil sales accounted for 70% of total sales, while Downstream Gas sales accounted for 28%," the company's report said.

As regards the continuation of works at its Black Sea offshore fields the company said that the current legal framework hinders the making of a final investment decision for Neptun Deep project, the Black Sea perimeter where OMV Petrom and ExxonMobil have already invested over USD 1 billion. Postponing the investment decision for Neptun Deep comes as OMV Petrom's gas production in Q1 2019 dropped steeply by 8% over the same period last year.

"The current regulatory environment does not provide the necessary premises for an investment decision worth several billion. We are keen to see the deposits of the Black Sea developed and we will continue the dialogue with the authorities to understand the way forward," OMV Petrom's quarterly report reads.

(Photo source: OMV Petrom)