Christina Verchere, CEO OMV Petrom: We are at the core of the shift towards a low-carbon energy system

For many years now, the Romanian O&G market is taking one blow after another, as local legislation changed rapidly, and not only for the better, as European targets placed more and more burdens on the O&G sector, as the international prices varied from under 17 to over 74 dollars pe barrel. At the same time, new technologies helped the group to improve its operational performances; the wide and synergic activities, from Upstream, to Downstream, processing and power generation, allowed for stability and strong financials (the stocks gain over 50% since February 2016!). However, the biggest project for OMV Petrom was delayed for some years, and seems now closer than ever – the FID for Neptun Deep. Will 2021 be the year of OMV Petrom? We discussed with Mrs. Christina Verchere, CEO of OMV Petrom.

Dear Mrs. Christina Verchere, how much (or less) did the Romanian economy landscape change in recent years, from your perspective, as the leading O&G company in the region?

Two of the things that mattered to me three years ago, when I took the position in OMV Petrom, was the potential arising from Romania being a fast growing economy and the company’s role in the economy. If we look back, in the last five years, before the pandemic, Romania had a yearly GDP growth of 4.5%, and one of the lowest GDP per capita in EU. The pandemic led to a 3.9% economic contraction in 2020, however lower than the previous estimations.

At the same time, energy transition agenda increased tremendously in recent years and has opened new opportunities for economic prosperity. The European Union has made available funds for the period 2021-2027 that are designated to achieve the 2030 climate goals and to ensure a new model of economic development.

In addition, Romania has a unique opportunity to capitalize on its gas resources. Natural gas plays a fundamental role for the energy transition, as well as for the economic growth. In order to unlock the Black Sea gas, investments of up to USD 16 bn are required. If we look only at Neptun Deep, we invested already USD 1.5 bn, while for the development phase investments are estimated in the range of several billions. It would be the largest private investment project in the last 30 years. Romania is in front of a huge opportunity to reshape its infrastructure, its energy sector, the transportation sector and its economy, at a whole. The energy transition could open economic growth, ultimately reflected into better living standards.

Are there any untapped opportunities in Romania for OMV Petrom?

The climate change agenda has accelerated the shift towards a low-carbon energy system and as an energy company we are at the core of these transformations and we are committed to support the energy transition. It’s process that we have already started and which opens new opportunities for our business. Our business resilience depends on our capacity of adjusting our product lines and our business model to fit the changing demand of our customers.

Natural gas is a very important contributor, as it’s a key element to ensure a successful energy transition in Romania. It’s a cleaner and reliable solution with high applicability in numerous sectors from heating and electricity to transportation. If we look only in the power sector, we see a high potential for reducing the carbon emissions, as gas-fired power plants generates 2.5 times less carbon emissions than coal. That means that by switching to gas fired power plants we can generate an annual reduction of about 60% of CO2 emissions in the power sector. The science and technology open new areas for the utilization of natural gas, such as hydrogen, and we also look to understand the level of feasibility.

We also assess new business opportunities that complement our existing business such as PVs and electric cars charging stations.

Offshore Law aside, what are the most pressing needs a group as OMV Petrom feels the public authorities (the government, the Parliament) might answer to during this year?

We should look at these needs from two perspectives: the upcoming challenges of the energy transition and the future of the oil and gas industry in Romania.

As an energy company that is committed to contribute to a successful energy transition, we are preparing and investigating potential projects for producing clean energy. Some of these projects could benefit from the EU funding mechanisms for energy transition. To further asses such projects and to mature them, we need clear regulatory framework for the financing lines. Development of such projects would enable Romania to capitalize on its potential: natural gas resources and waste/feedstock coming from agriculture sector. It’s an opportunity that we shouldn’t miss, as other countries in the region could be more advanced in terms of submitted projects.

In addition, Romania is a longstanding oil and gas producer, with the upstream industry considerably weighting in the national economy. An industry that, to continue to generate value for the Romanian economy, the fiscal and regulatory framework should ensure competitive and reliable terms for investors and a liberalized gas market in line with EU legislation. Competition on the gas market is paramount for both producers and consumers.

Another important topic is the digitalization of the upstream sector and I refer especially to the classified data, for which we cannot use the cloud technology. While the industries in other countries progress on the back of digital, we lag far behind and risk to become obsolete. These data are valuable only if we can interpretate them using new specific technologies.

In times of crises, as were the last years, managers are expected to do more with less. When successful, their organization becomes fitter and more adapted. Are there any particular areas of concern for you if forced to continue with such an approach with OMV Petrom?

We have a track record of successfully managing crises and I believe that our 2020 results proved this once again. Of course, what we’ve seen in the last year doesn’t resemble with other crises that the industry faced, but we managed to keep up with the changing developments and to fulfill the expectations of all our stakeholders. It came with a tremendous effort from the OMV Petrom teams, effort that continues this year at the same intensity, to ensure the energy supply. People expect to have heat and electricity in their homes, they expect to be able to fuel their cars and we are here to provide these products.

I believe some of the new ways of working introduced last year are here to stay, including digitalization, flexible or remote working. We continuously look into solutions to adjust our skills to the new digital and agile era, but also to keep our people engaged. We have created a Digital Academy so that our people can have access to digital learning tools and we also brought external knowledge to better cope with remote working. Communication is essential during times of crisis and we have increased the number of webcasts and improved our internal communication tools so that people to be connected to the leadership team. We also have weekly meetings of the crisis management team so that we can closely follow all new developments and adjust accordingly on very short notice.

What are the most promising areas of development for OMV Petrom in the next decade? Are they part of the traditional core business or are there different activities that might transform OMV Petrom in something different (more focus on power, CCUS, hydrogen, e-mobility, retail in gas station…)?

Our strategy includes growth in the Black Sea and a stronger position in the regional energy market. The Black Sea region is very promising and our 40 years operating experience in the Romanian offshore represents a competitive advantage. We have consolidated our presence in the Black Sea region by entering exploration projects in Bulgaria and Georgia and we also signed a memorandum for cooperation in Ukraine.

We believe the answer to our customers’ mobility is a mix of fuels and alternative solutions combined with an improved experience in our filling stations. Therefore, we focus on projects that support achieving cleaner products – last year we increased the bio-blending capacity in our refinery, but also on responding to the changing demands of our customers. We started to implement electric recharging stations and we expect to have them in 40 filling stations by the end of this year. We have an ambitious upgrading program for the entire Petrom branded network: approximately 400 filling stations located in rural and urban areas of the country will be refurbished both inside and outside and will accommodate MyAuchan proximity stores. In addition, card and mobile payment solutions will be set up at the pump in five pilot stations, with fast lanes created for fueling.

As previously mentioned, we also asses new business opportunities that are complementing our business such as photovoltaics, bio-fuels and LNG and we look into new technologies such as CCS, CCU and hydrogen.

The EU seems determined to offer no help for gas as a transition fuel. What will this bring for the O&G industry in Romania and in Europe (higher prices, supply difficulties, more imports)?

As the public debate intensifies regarding the role of gas in the energy transition, we also have to take into account that we need customized local approaches due to regional differences, depending on the availability of the resources and on the carbon intensity in the power or heating grid.

We believe that natural gas has a key role for Romania’s successful transition to a cleaner and reliable energy system.

European Union policy has often proved effective in the midst of crises. For example, the concept of Energy Union has allowed the adoption of a robust legislation to create a liquid natural gas market and to finance key infrastructure projects, especially in Eastern Europe, and here I am referring to BRUA. Once the Southern Corridor will be completed, it will allow the interconnection of isolated and fragmented markets that depended on a single option of imported natural gas supply. The abundance of natural gas in the region means that gas was projected to have an essential contribution to energy security and for the energy transition.

Therefore, public policies have a key role in managing big challenges for the benefit of the consumers. A liquid gas market and a growing competition means good news for the consumers, because they have options



This interview firstly appeared in the printed edition of Energynomics Magazine, issued in March 2021.

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