November 28 (SeeNews) - Romanian natural gas producer Romgaz [BSE:SNG] will increase its output by the end of the year on the back of stepped-up pumping in the Caragele field, the company said on Wednesday.
The Caragele field currently supplies 700,000 cubic meters of gas per day to the system but production is expected to increase to one million cubic meters a day by mid-December, once the company completes and commissions a 16 km-long collector in the area, Romgaz said in a statement.
Caragele is the largest onshore natural gas field discovered in the last 30 years in Romania, with estimated reserves of 25-27 billion cubic meters of gas.
Romgaz plans to invest 45 million euro ($50.8 million) in Caragele to drill 15 wells and install surface technological equipment at 10 wells. The company believes that investments in the area could reach up to 100 million euro, mainly for boreholes meant to confirm or potentially increase the volume of the estimated reserves.
Depending on the results of research drilling, the estimated daily production at Caragele may increase to 1.7 million cubic meters per day, the company said.
"Romgaz's trend is to increase gas production to ensure a fair price for the final consumer. At the same time, we are considering replacing consumed reserves with new gas reserves. Fortunately, here the results are spectacular: at this moment the rate of replacement of reserves is over 70%, with the assumption that in 2019 it will approach 100% in conditions in which the world replacement rate is just 30%," Romgaz director general, Adrian Volintiru, said in the statement.
Romgaz delivers 15 million cubic meters of gas per day to the system, and gas production has increased this year above initial estimates. In the first nine months of this year, Romgaz produced about 4.0 billion cubic meters of gas, up 4.56% over the same period of 2017.
Romgaz's January-September net profit fell by 14% year-on-year to 1.02 billion lei ($248 million/220 million euro), as expenses increased.
Earlier this month, Romgaz said its board has approved a request from the energy ministry to distribute an additional dividend of 501 million lei for 2017. Romgaz will pay 1.3 lei per share as additional dividend for last year, according to the board decision. This adds to 1.9 billion lei or 4.99 lei per share in dividend for 2017 that Romgaz has already decided to distribute to its shareholders .
The company's majority shareholder is the Romanian state with a 70% stake, with the balance of 30% in free float on the Bucharest Stock Exchange.
Shares in Romgaz traded 0.42% higher at 35.5 lei lei by 1650 CET on Wednesday.
(1 euro=4.6580 Romanian lei)