Petrom's natural gas business breaks even

SNP Petrom’s natural gas business has become profitable this year, following the increase in the gas price at the end of last year. Actually, the company management expects profit to improve in 2004 precisely because of the natural gases portfolio of Petrom, which generated losses last year.

“Whereas Petrom was selling natural gases at a lower price in 2003, the rise in prices in late last year practically led to us making up to $10 profit for every 1,000 cubic metres of natural gases sold, ” Gheorghe Constantinescu, SNP Petrom general manager said.

The gas tariffs were raised by approximately 60% from $82.5/1,000 cubic metres in March last year through the last quarter of 2003, following the commitments of the Romanian authorities before the IMF. The IMF requested the deregulation of the natural gases and energy prices in order to remove distortions in the economy.

The increase of the natural gas price in view of rallying it to the European market level has continued in 2004, as well, with the tariff for individual consumers reaching approximately $135/1,000 cubic metres as of April 1, which will boost Petrom’s gas-related revenues.

Natural gases in 2003 ate into the profit of the oil company as Petrom had to import about $30 million’s worth at a time when quotations on the international market were rather high, ranging between $140-$160/1,000 cubic metres. This move lowered Petrom’s profitability, but the repeated increases in the tariff on the domestic market are turning natural gases from a stream of losses into the main stream of profit.

Petrom is not the only player on the Central and Eastern European market to have had trouble with the low natural gas price, as Hungary’s oil group had a similar experience. MOL’s natural gas division has made losses in the past few years, due to the low prices on the Hungarian market and was even on the verge of being sold to international investors.
adrian.mirsanu@zf.ro