"We will continue to invest in the following years, based on strategic directions, to supply energy in a sustainable way," Verchere said in a recent interview with SeeNews.
OMV Petrom plans investments totalling 11 billion euro ($12.1 million) until 2030. Over 35% of these will be directed towards low and zero-carbon projects. The second strategic pillar involves the modernisation and decarbonisation of current operations. Investments in the Petrobrazi refinery are aimed at optimisation and preparing the plant for advanced biofuels and hydrogen projects. In July, OMV Petrom finalised the turnaround of the refinery, following investments totalling 400 million lei ($88.7 million/80.5 million euro). The third strategic direction of future investments targets the increase of the share of natural gas in hydrocarbon production to 70%, with the Neptun Deep offshore project playing a significant role.
Launched at the end of 2021, OMV Petrom’s strategy for 2030 has already reached milestones in all three directions. In the first nine months of the year, capital expenditure rose 48% year-on-year to 3.381 billion lei. Half of this amount was allocated to the Exploration and Production division to support the drilling of new wells and workovers, Verchere explained. The Refining and Marketing division was the recipient of 1.6 billion lei, which mainly supported the planned turnaround of the Petrobrazi refinery and modernisation projects including the installation of a new crude oil tank, a new aromatics plant, and the replacement of the coke drums during the third quarter.
In the first nine months of 2023, the company saw its net profit drop 72% on the year to 2.548 billion lei driven by significantly lower international energy prices and a deteriorated demand for gas set against last year’s unprecedented market conditions.
“In summary, we had good operational performance, which counterbalanced the significant drop in prices and the new taxes paid to the state budget,” Verchere commented.
"For the next period, we expect the volatility of commodity prices to persist, especially considering the geopolitical uncertainties," she added.
The planned turnarounds at the company’s Petrobrazi refinery and Brazi power plant also led to a lower internal output of fuels and electricity, she added. This was reflected in a 38% drop in the company’s clean CCS operating result, which amounted to 6.2 billion lei in the nine months through September.
“[…] a series of fiscal and regulatory measures were introduced in Romania, which are reflected in the company’s results,” Verchere said. OMV Petrom’s payment of a 2.355 billion lei solidarity contribution for windfall profits from refined crude oil processed for 2022 and 2023 was also reflected in the decline of its net result.
NEPTUN DEEP ON TRACK FOR GAS DELIVERIES IN 2027
OMV Petrom has awarded 80% of the execution agreements for its Black Sea offshore project Neptun Deep and is on track to safely start drilling in 2025, with first gas deliveries expected in 2027, according to Verchere.
“The Neptun Deep project is progressing according to plan, and this is very important for all of us from the perspective of access to natural gas, but also from an economic perspective […] Recently we secured the drilling rig and the integrated drilling services, with contracts signed with Transocean, and respectively Haliburton Energy Services Romania and Newpark Drilling Fluids Eastern Europe, for a cumulated value of almost 0.5 billion euro,” Verchere said.
After receiving regulatory approval in August, the development of the Neptun Deep gas project kicked off under a 1.6 billion euro contract with Italian multinational oilfield services company Saipem and its Romanian unit. Saipem is to ensure the development of the main offshore installations, executing engineering, procurement and construction works.
Together with natural gas producer Romgaz [BSE:SNG], OMV Petrom has earmarked 4 billion euro for the development stage of Neptun Deep, which is estimated to generate 100 billion cm of natural gas, Verchere noted.
With 3.7 billion euro allocated to projects with low and zero carbon emissions, OMV Petrom is “working to develop a greener and more diversified portfolio through investments in renewables, biofuels, alternative mobility and new technologies,” Verchere noted.
The company has set its sights on a solar power portfolio with an installed capacity of approximately 1 GW. A partnership with state-owned electricity producer Complexul Energetic Oltenia (CE Oltenia) promises to deliver photovoltaic (PV) parks with a cumulative capacity of 450 MW for 400 million euro. The execution works will start once the contract is awarded, with latest assessments projecting electricity supply to the grid by 2025.
A purchase agreement with Danish energy projects developer Jantzen Renewables for several PV parks in Teleorman county will also expand OMV Petrom’s solar portfolio by an additional 710 MW. According to Verchere, the transaction is estimated to conclude by the second quarter of 2024, once the projects reach the ready-to-build phase. Construction is projected to last between 18 to 24 months, with the projects becoming operational in 2026.
Biofuels are planned to slice a share of 15% in OMV Petrom’s fuel production by 2030.
“Romania has a high potential in this regard, thanks to the country’s large agricultural sector,” Verchere explained.
“We have already taken important steps to increase the share of biofuels. In 2022, Petrobrazi became the first certified refinery in the country capable of producing SAF (sustainable aviation fuel) and HVO (hydrotreated vegetable oil) by co-processing biological feedstocks. We also consider expanding the production capacity to produce sustainable fuels from a wide range of residual feedstocks, such as used cooking oil,” she added.
In November, OMV Petrom also signed an agreement to acquire 50% of Respira Verde, a local company collecting used cooking oil, in a move to facilitate access to reliable sources of raw materials for biodiesel and sustainable aviation fuel. The transaction is expected to be completed in the first quarter of 2024, pending the fulfilment of certain conditions, including clearance from regulatory bodies, the company said in a press release at the time.
The company is monitoring developments on the biofuels market and is open to other opportunities aligned with its sustainable strategy, Vercere went on to say.
OMV Petrom shares changed hands 0.53% higher at 0.566 lei as at 1506 CET on Friday on the Bucharest stock exchange.
