OMV Petrom Bucharest, the largest company in Romania, saw its net profit decline by 19 percent in the first quarter of 2014, to RON 1.07 billion (EUR 242 million). The company’s sales were down by 9 percent, to RON 5.3 billion (EUR 1.19 billion).

“In Q1/14, our financial performance reflected the higher fiscal burden and weaker market environment. Depressed demand in the gas, power and fuels markets combined with lower refining margins were only partially compensated by the operational excellence and cost management initiatives across all divisions,” Mariana Gheorghe, CEO of Petrom said in a report sent to the Bucharest Stock Exchange.

OMV Petrom’s consolidated sales decreased mainly due to lower sales volumes of crude oil, gas and electricity and a lower crude price environment, although the gas price increased compared to Q1 2013. Refining & Marketing (R&M) represented 75 percent of total consolidated sales, Gas & Power accounted for 20 percent and Exploration & Production for 5 percent (sales in E&P being largely intra-group sales rather than third-party sales), the company’s report shows.

The Group’s EBIT amounted to RON 1.47 billion (EUR 330 million), 7 percent lower compared to the result recorded in the first quarter of 2013, mostly due to lower realized crude price, the introduction of the new tax on construction and lower refining margins. On the other hand, Q1 2014 was positively impacted by lower exploration expenses, as the Q1 2013 result reflected the intensive seismic acquisition campaign in the Black Sea and also included impairment of non-core assets in the G&P segment.

On the E&P segment, the group’s daily hydrocarbon production was 181,800 boe per day (barrel of oil equivalent) and total production stood at 16.4 million boe, slightly below that in the first three months of last year, reflecting the lower production in Kazakhstan. In Romania, total oil and gas production stood at 15.44 million boe, 1 percent above the Q1 2013 level, mostly supported by the new gas wells put on stream in the Totea and Mamu fields.

On the G&P segment, Petrom’s gas sales were down 18 percent reflecting the decline in gas consumption in Romania due to weaker demand from the industrial sector and milder winter weather. Petrom increased quantities of natural gas stored. The regulated domestic gas price was RON 72 per MWh for the non-household sector and RON 50.6 per MWh for households, while the estimated average import gas price based on ANRE assumptions was about RON 129 per MWh.

Energy production for the Brazi gas power plant was down 29 percent in the first quarter, to 0.55 TWh, which covered about 3 percent of Romania’s estimated energy production. The energy was sold mostly on the balancing markets.

Total group marketing sales volumes in the first quarter were 2% below the level in Q1 2013. Group retail sales, which amounted to 71 percent of total group marketing sales, were broadly flat thanks to higher volumes in Romania triggered by the increase in fuels taxation starting April 1. The commercial sales volumes dropped 8 percent compared to the same quarter last year, mostly affected by lower sales of fuel oil in Romania and Bulgaria, according to the group’s report.

OMV Petrom is part of Austrian group OMV, which owns a 51 percent majority stake in the company, while the Romania state has a 20.6 percent stake and Fondul Proprietatea holds 19 percent of the shares. The rest of the shares are held by private investors, as the company is listed on the Bucharest Stock Exchange (BVB). Petrom is the largest company in Romania by market capitalization, which is close to EUR 5.9 billion. Petrom shares are down 1.7 percent this year.

Andrei Chirileasa, andrei@romania-insider.com