Petrom: Net profit up 34 pct, in 2009

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Oil company Petrom’s net profit surged 34 percent last year, up to 1.368 billion lei (some 321 million euros), mainly helped by the highly positive impact of the risk coverage instruments propped against the crude oil price, according to 2009 results of the company.

Petrom’s net turnover dipped 23 percent, in 2009 compared to the previous year, mainly because of the low price level and poor quantities sold, at year-end accounting for 12.842 billion lei (some 3 billion euros).
According to the company, 2009 results reflected the low level of prices for crude oil, the low level of refining margins and the fall of the gas and fuels markets, the latter getting even worse in the 3rd quarter of last year.

Romania’s reserve replacement rate was maintained at 70 percent, with total sales (leaving now aside sales of black oil) having dipped 6 percent in 2009 compared to 2008, mainly because of the lower export sales and unfavourable economic environment in Romania. ‘Despite the unfavourable economic conditions, 2009 marked the successful conclusion of some important stages for us.
There were finalized several key projects in Exploitation and Production. We inaugurated the new gas processing unit based in Midia, we began to exploit the Komsomolskoe deposit in Kazakhstan and also the two offshore wells in Romania and we managed to maintain the reserve replacement rate at 70 percent.

Moreover, we significantly improved the cost base and we are very near to reaching our objective set when we had acquired Petromservice, which will bring a cut in our production cost by 1.5 dollars / boe, due to the successful integration of the E&P Services division. As the gas and the fuels markets had continued to deteriorate in 2009, we acted promptly, adjusting our value chain and revising the strategy in refining and chemical products sectors.

Thus, we decided that Arpechim and Doljchim should stay functional only depending on the necessities and we also decided to finalize the formalities to shut Doljchim plant, by the end of this year. We will continue to focus on streamlining and restructuring measures, while in the same time resorting to new financing sources, in order to maintain sustainable business and reach our growth potential,’ Mariana Gheorghe, CEO of Petrom said. Petrom’s investments totalled 4.145 billion lei in 2009, down 35 percent compared to 2008, when the company had a record level of investments.

In the latest five years, Petrom invested approx. 1 billion euros on average per year, and it is targeting annual investments of 1.2-1.5 billion euros in Romania, in the following years.
The E&P investments amounted to 2.806 billion lei, that is a fall by 38 percent from 2008 level, due to the value of investments in 2008 including acquisition costs of Petromservice.

The crude oil and gas production of the Group slid 4 percent in 2009 against 2008, down to 68.3 billion boe (187,107 boe a day), following a drop in production in Romania, total production of crude oil and gas of Petrom SA standing in Romania at 66 million boe (minus 4 percent).
Petrom’s crude oil production in Romania reached 31.54 million barrels, a 3 percent fall from 2008. The fall was mainly caused by the low number of new wells drilled and by delays at key wells.

The natural gas production totalled 5.268 billion cu m, a 5 percent drop against 2008, caused mainly by a decreasing demand, and also on the background of delays recorded at the 4335 and 4338 Mamu wells, which were supposed to compensate for the natural decline in production.
On December 31, 2009, the total proved reserved of crude oil and gas of Petrom group stood at 854 million boe (823 million boe in Romania), while the level of the proved and probable crude oil and gas reserves was 1.254 billion boe (1.176 billion boe in Romania).

Exports dipped 35 percent in 2009 compared to 2008, following a fall in exports of black oil, diesel and gasoline. In the end of the year, Petrom SA owned 442 distribution station, while Petrom Group had 814, 546 in Romania and 268 outside borders: 113 in the Republic of Moldova, 96 in Bulgaria and 59 in Serbia.

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