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BUCHAREST (Romania), August 11 (SeeNews) - Romanian natural gas producer Romgaz [BSE:SNG] said on Friday its first-half net profit surged 41.1% year-on-year to 868 million lei ($222 million/190 million euro) on the back of higher gas and electricity sales and lower expenses.
The company’s financial performance was mainly helped by a 25.1% rise in gas sales to 1.79 billion lei in the first half of 2017 and by a 115% year-on-year jump of electricity sales to 264.9 million lei, the company said in its H1 2017 financial report submitted to the Bucharest Stock Exchange, BVB.
Total revenues rose 29.3% on the year in the six months through June, reaching 2.39 billion lei.
In the first half of 2017, electricity production increased by 95.8% on the year thanks to favourable market conditions. According to the data offered by power transmission system operator Transelectrica, the market share of Romgaz has increased to 3.13% in the first six months of 2017, the report showed.
Romgaz produced 2,559 million cubic meters of natural gas in the first quarter, up 16.5% on the year. During the first half of 2017, natural gas consumption rose 22% on the year in Romania, to 74.90 TWh. This allowed Romgaz to increase deliveries by 31.59% as compared to the previous period, to 32.03 TWh.
Total investments decreased by an annual 3% to nearly 222 million lei in the period under review, or 47% of the company's H1 investment plan of 471 million lei. Romgaz has scheduled total investments of 1.14 billion lei for 2017.
The value of achievements in the first half was lower compared to the similar period of 2016, Romgaz said. This was due to drilling costs, unclear legislation for providing access to well locations, delayed tenders on Romania's Electronic Public Procurement System SEAP and due to the impossibility to acquire necessary land use rights for setting up installations and gas collectors.
In 2016, Romgaz saw its net profit drop 14.2% year-on-year to 1.02 billion lei, mainly affected by a drop in domestic gas demand, a fall in gas prices and strong competition from imported gas.
In June, US-based multinational conglomerate corporation General Electric (GE) said it has been awarded an order from the consortium Duro Felguera - Romelectro for core technology in the Iernut power plant operated by Romgaz.
With a planned installed generation capacity of 430 megawatts (MW), the Iernut project in Mures county, in central Romania, will be Southeast Europe’s largest gas project in five years.
The project is Romania’s largest public investment in conventional power in 20 years with a total investment of 269 million euro ($301 million) from Romgaz, announced last year in November.
Also in June, shareholders of Romgaz decided to distribute a gross dividend of 3.82 lei ($0.93/0.83 euro) per share for 2016, up from 2.7 lei per share paid in 2015.
In April 2016, Romanian blue chip investment fund Fondul Proprietatea sold its entire remaining 5.85% stake in Romgaz for $137.2 million. The company's main shareholder now is the Romanian state with a 70% stake, while the balance of 30% is traded on the BVB.
Shares in Romgaz were traded flat at 29.3 lei lei by 1213 CET on Friday on the BVB.
(1 euro=4.5780 Romanian lei)