Petrom bets on natural gases for bigger profit

SNP (National Oil Company) Petrom relies on selling its natural gas portfolio for boosting the value of the company and improving profit, given the deregulation of this market, Petrom’s general manager Gheorghe Constantinescu says. Petrom’s share quote has to reflect the company’s value, which increased in 2003 from 2002, and the upward trend will maintain throughout this year due to investments made and to the increase in assets, Constantinescu adds.

“As a strategy, we set out to improve our cash flow and therefore our liquidity this year. We plan to achieve that by selling natural gases on the free market where Petrom is an active player, as well as to the captive consumers, by exporting oil and petrochemical products, and by sales through our distribution network,” Petrom’s head explains. He added Petrom would take the opportunities arising from the deregulation of the gas market, besides upping the gas output.

Petrom, whose yearly output reaches 6 billion cubic metres of natural gases could outrun Romgaz Medias, the leading gas producer in the Central and Eastern Europe within three years, a survey conducted by the National Agency for Mineral Resources (ANRM) shows. The domestic gas market is to open even further from 30% to 40% this year, with the full deregulation scheduled for 2007, when Romania could join the single European market.

The increase in the gas price for captive consumers (i.e. those in the regulated system buying gas at a single price set by the Gas Regulation Authority) pulls up the price for the free consumers, as well, with Romania now in the position to rally the prices to those in the European countries, which average 180-200 euros/1,000 cubic metres.

Petrom can attain its goal by increasing its own gas production and giving up imports, in addition to the rise in the natural gases price.

“Profit is important for our company, but making investments is more important. The expenses made for investments burden the profit, which was mainly affected by the gas imports in 2003,” Gheorghe Constantinescu explained. Gas imports were in excess of 30 million euros in 2003.

The company intends to invest 18,000bn ROL (some 440 million euros) in gas, oil, petrochemical and refining operations.

As for its productive operations in Kazakhstan, Petrom will take out a long-term loan worth about 50 million euros from the European Bank for Reconstruction and Development (EBRD) by mid this year.
adrian.mirsanu@zf.ro