OMV Petrom to invest up to 1.2 billion euro per year in 2012-2014

by Kristina Belkina

Mariana Gheorghe,
OMV Petrom’s chief executive officer since 2006, joined the company in 2004 as representative of the European Bank for Reconstruction and Development (EBRD) on the board of directors. Since 1993, she has been working for EBRD as an Associate Banker and then as a Senior Banker for Southeast Europe and the Caucasus Region.

 

The rise in oil prices was one of the factors that helped the 71% rise in Petrom’s net profit in 2011. What are your expectations regarding the price environment this year?

The oil price is very volatile and difficult to estimate; for 2012 we expect the average Brent price to be above 100 U.S. dollars per barrel. The favorable oil price, which in 2011 reached a yearly average of 111.26 U.S. dollars per barrel for Brent crude – the highest yearly average price in recent times – was one of the factors contributing to our good financial results.

Another key factor was the operational improvements in the company, across all divisions and departments, which resulted from the massive investments performed in the past seven years, 7.7 billion euro. Therefore, the record net profit recorded in 2011 was a direct result of these investments.

The Romanian government plans to impose new taxes on exceptional earnings of energy companies. How will the introduction of new taxes impact the company’s investment plan?

The government plans to draft a package of tax, royalty and regulatory measures for the oil and gas sector by end-2012.

So far, there are no specific measures to be reported. We rely on a reasonable outcome of the consultations in order to stimulate investments in the energy sector, which is an important driver for economic growth.

Related to our investments, we have recently announced our strategy until 2021 with estimated investments of up to 1.2 billion euro per year in the next two-three years, in the conditions of an investment-friendly environment with predictable, fair and transparent fiscal and regulatory regimes.

Earlier this year, Petrom and ExxonMobil announced a potentially significant gas discovery at the Neptun block with new 3D seismic acquisition planned during 2012. Can you provide a timeframe and the estimated value of the planned investments in the further exploration and development of the well?

The deep water area of the Black Sea is a virtually unexplored basin and the Neptun project is a unique, unprecedented discovery in the Romanian sector of the Black Sea. The next step is further exploration work on the Neptun block. ExxonMobil and OMV Petrom plan new 3D seismic acquisition during 2012. It is too early to determine whether the Neptun block will ultimately prove to be commercially developable or not. However, should further work confirm the technical and commercial feasibility of deep water gas production, further investment during both the exploration and development phases could reach several billion U.S. dollars with the potential for first production towards the end of the decade.

Is OMV Petrom interested in participating in exploration projects outside Romania?

We recently participated in a joint bid for the offshore Skifska area in Ukraine along with ExxonMobil, Shell and Ukraine’s Nadra. The bid, led by ExxonMobil, was selected as the winner of the tender for the execution of a production sharing agreement for the development of the hydrocarbons within the offshore Skifska block. Our focus is now on successfully negotiating the production sharing agreement.

Do you plan to increase production from Tasbulat and Turkmenoi fields in Kazakhstan this year and by how much?

In Kazakhstan we had a very successful year in 2011, we had a 20% increase in oil and gas production, mainly due to increased gas production at the Tasbulat and Turkmenoi fields.

For 2012, in Kazakhstan we will pursue stabilisation of production volumes at the Komsomolskoe field and we will pursue a field re-development plan in the fields of TOC company, Tasbulat, Turkemenoi and Aktas, which is expected to contribute to the increase of production.

Is OMV Petrom interested in entering other segments of the renewables market after opening the Dorobantu wind park in Romania in October last year?

We are considering exploring opportunities in the field in the medium to long term; there are no specific plans for the near term.