OMV Petrom reduced natural gas sales by 20% in Q1

The sales of natural gas to third parties of Romania’s leading oil and gas company, OMV Petrom, dropped by more than 19% in the first quarter (Q1) of 2019 compared to the same period last year (year-on-year), to 9.79 TWh, according to company’s Trading Update.

The company used more gas to fire its power plant, and the Brazi power plant generated 1.08 TWh of electricity compared to only 0.89 TWh in the first quarter of 2018.

The company also reported a further drop in natural gas production in the first quarter of this year. The natural gas output decreased by 7.8% year-on-year to 82,000 barrels of oil equivalent (boe) per day, according to company data. As regards the oil output, the decline was softer: 2.7% year-on-year to 71,000 boe per day.

The developments are consistent with the expectations prompted by the emergency ordinance (OUG) 114/2018, in its original form, which stipulated capped prices for natural gas producers and additional taxation (2% turnover tax). Such regulations are discouraging investments (hence production), energy companies’ representatives warned.

Under the revised version, OUG 114 lifted the cap for the natural gas sold to non-residential consumers, removing part of the pressure on the gas producers. But in the absence of a predictable and fair regulatory environment, the onshore gas production naturally decreases as mature fields deplete. Imports are predictably likely to rise. Offshore investments are still on ice and depend on government revising the offshore law and, in broader terms, re-gaining investors’ confidence.