OMV Petrom to pay more after Romania's Govt. links oil royalties to Brent quotations

Companies that extract oil from Romania will pay royalties calculated based on Brent quotation, according to an order issued by the president of the National Agency for Mineral Resources (ANRM) and published on May 10 in the Official Journal.

“The owners of the oil agreements will calculate the royalty due to the state every month, by applying the percentage quotas agreed upon by the oil agreement to the gross oil production achieved,” the ANRM order also states, local Economica.netreported. The fee will be paid every quarter until the 20th of the first month of the next quarter.

Until now, the royalties were calculated as a share (3.5% to 13.5% depending on the category of deposit) of the price realized (charged) by the oil companies, typically lower than Brent quotations in the past.

Last year, Brent crude oil prices averaged USD 71.06 per barrel while OMV Petrom reported a USD 62.06 average price realized on a group basis. The production cost reported by the company was, however, only USD 11.18 per barrel. The total oil output in the year was 26.8 million barrels. For this year, OMV Petrom projected USD 65 per barrel average Brent quotations. OMV Petrom is the main, but not the sole, crude oil producer in Romania.

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