Business Forum • 4 February, 2025 at 12:39 PM
OMV Petrom Group posted a net profit up 4% last year to RON 4.2 billion, but operating profit excluding special items fell 52% to RON 5.7 billion, amid lower commodity prices and a negative impact of the regulatory environment on the gas and power business.
The decrease in operating profit was due to lower electricity margins impacted by legislative changes, lower natural gas margins and a high base effect due to the reversal of a provision in 2023, according to financial results report.
The lower contribution from Exploration & Production was primarily driven by lower volumes sold and lower prices, while the contribution from the Refining and Marketing segment was broadly similar.
”Our operational performance was very good in 2024: hydrocarbon production was above plan, with the smallest decline in 7 years, and the refinery and power plant operated at high capacity. Thus, we contributed significantly to the Romanian energy market, with about one third of fuel demand, one third of gas demand and 10% of electricity production. In 2024, the operating result at current supply costs excluding special items decreased to RON 5.7 billion, in a lower-priced environment and negatively impacted by regulatory changes introduced for gas and electricity, which led to a negative Gas and Power result in the second and fourth quarters of last year,” says OMV Petrom CEO, Christina Verchere.
According to her, a sum of RON 7.2 billion was invested last year for the development of the Neptun Deep project, renewable energy projects and the expansion of the electro-mobility network.
”We expect 2025 to be a difficult and volatile year with fiscal and regulatory challenges. Under a predictable and competitive fiscal and regulatory environment, we expect to reach a record level of investments of around RON 8 billion, which will contribute to Romania's energy security and the country's economy,” says Verchere.
In the Exploration and Production segment, the operating result excluding special items was RON 3 billion, down by 29%, mainly driven by low oil and gas prices and lower hydrocarbon sales volumes. Production was above expectations, at 109,000 boe/d, up from 113,000 boe/d, a decrease of 3.8%, the lowest in the last 7 years. This was due to good capital repair and drilling results partially offsetting the natural decline, the company says. Cost of production increased 2% to $16.2/boe due to lower available-for-sale production.
In the Refining and Marketing segment, operating income excluding special items was RON 2.4 billion, marginally lower compared to RON 2.5 billion in 2023, reflecting lower refining margins largely offset by the performance of sales channels
OMV Petrom's refining margin indicator of $9.2/bbl, lower by 34%, as a result of weaker differentials for diesel and gasoline. Refinery utilization rate of 97% compared to 80% in 2023 as 2023 was impacted by the planned turnaround.
Total sales of refined products were 6% higher while retail sales in Romania increased by around 4%, supported by increased demand.
In the Gas and Power segment, operating income excluding special items of around RON 400 million, compared with RON 2.1 billion in 2023. According to the group, despite the good operating performance, results were strongly affected by legislative changes and market dynamics. Natural gas sales volumes were 7% lower, due to lower volumes to wholesalers and end consumers.
Brazi power plant's net electricity generation increased to 4.9 TWh from 4.2 TWh in 2023, accounting for 10% of Romania's electricity production. This was the second highest level of production reached by the power plant since the start of operations, after the record set in 2022, the cited source points out.
In terms of regional gas development, OMV Petrom recalls that Neptun Deep has progressed according to plan, with 90% of the budget already contracted. The construction of the production platform has advanced at Saipem's sites located in Indonesia and Italy and the drilling rig has arrived in Romania.
The group also acquired TotalEnergies' stake in the offshore Han Asparuh block in Bulgaria, where OMV Petrom is the operator, and entered into a partnership with NewMed Energy to continue the exploration of this field.
On the renewable energy side, the company has closed deals with Renovatio and Janzten Renewables for total solar and wind capacities of about 1.9 GW and together with the announced partnership with CE Oltenia and its own photovoltaic project at Ișalnița form a portfolio of 2.4 GW.
”The final investment decision has been taken for the construction of a SAF/HVO unit and two green hydrogen units, positioning Petrobrazi to become the first major producer of sustainable fuels in South East Europe. The company also took steps to secure raw materials for the production of sustainable fuels: it signed contracts to purchase vegetable oil from Expur and acquired a 50% stake in Respira Verde, the largest collector and processor of used cooking oil in the country. The deal closed with Renovatio contributes to OMV Petrom having the largest electric vehicle charging network in Romania, with around 900 charging points by the end of 2024,” tshows the report.
The OMV Petrom Group also announced the optimization of traditional activities through the launch of a new automated drilling technology in Romania and the commissioning of the largest crude oil storage tank in the country at the Petrobrazi refinery. At the same time, OMV Petrom expanded its natural gas supply activities in Bulgaria, targeting end customers.
On the social projects supported directly and through the OMV Petrom Foundation, the group invested €26 million last year in health, education and environmental projects.
The Austrian group OMV Aktiengesellschaft owns 51.156% of OMV Petrom shares and the Romanian state, through the Energy Ministry - 20.698%, according to data as of June 30, 2024, posted by the Bucharest Stock Exchange.