BUCHAREST (Romania), December 17 (SeeNews) – Romanian top oil and gas group OMV Petrom said it has revised its investment plans for next year and intends to exit its chemical and petrochemical operations to adjust to challenging economic conditions.
“In an effort to enhance the value of integration in Petrom, we are exiting non-core businesses with the aim of preserving our future cash flows and in order to allocate our resources in the most profitable way,” OMV Petrom’s CEO Mariana Gheorghe said in a statement issued on Wednesday.
OMV Petrom, majority-owned by Austria's OMV, will divest its chemicals operation by the end of 2010 and until then will run the operations of its chemical plant Doljchim on an "as needed" basis and according to the company’s integration needs.
Talks over the sale of the petrochemical unit at the Arpechim refinery to its main customer, petrochemical group Oltchim, will continue, OMV Petrom said in the statement. The Arpechim bulk refinery, depending on the prevailing margin and supply conditions, will operate solely on an "as needed" basis until 2011.
The capacity of OMV Petrom’s Petrobrazi refinery will be adjusted to 4.2 million tones per year, a much more suitable size for processing domestic crude production. OMV Petrom will invest some 750 million euro ($1.1 billion) in the 2010-2014 period to upgrade and ensure the maintenance of Petrobrazi. The revision of the original investment plan will lead to an impairment of around 60 million euro relating to costs already incurred which will be booked in the last quarter of this year, the company said.
Initially, the company had planned to invest 1.5 billion euro into the refineries, with the goal of expanding the capacity of the Petrobrazi plant from current 4.5 million to 6.0 million tones per year until 2012, later postponed to 2013, Raiffeisen Capital & Investment (RCI) said in a note to investors.
RCI added that it was keeping its "Reduce" recommendation and target price of 0.24 lei ($0.082/0.057 euro) on Petrom, expecting a negative market reaction to OMV Petrom’s announcement.
OMV Petrom’s stock is part of the blue-chip index of the Bucharest bourse. It last traded 1.93% down at 0.254 lei on Thursday.
OMV Petrom also added that it does not rule out the possibility to seek access to fresh equity in the future and/or other financing options in order to sustain its financial position and continue to fund future investment needs.
($ = 0.6964 euro)