Acasă » General Interest » Răzvan Popescu, Romgaz: I don’t see a long-term problem with the financing of Neptun Deep

Răzvan Popescu, Romgaz: I don’t see a long-term problem with the financing of Neptun Deep

27 January 2023
General Interest

Romgaz will need a financing mix for the Neptun Deep project, which must be very carefully done, and it will not be a long-term financing problem, given the company’s dominant position on the Romanian market, said on Thursday the general manager of Romgaz, Răzvan Popescu.

“We will need to go to the market, we will need loans, but given, let’s say, the dynamism of the market, given the inflationary pressure as well as the increase in interest rates, this financing mix must be very, very carefully chosen and must, after all, be optimal for the financing of the Neptun Deep project. Thus, from the beginning, right from the moment of acquisition, we have since then made our plans regarding future financing. Based on all the information we had at that time, we took into account a financing mix through which we would also issue medium and long-term bonds, the currency to be evaluated later(…) Now, next we are looking at all the financing mixes, we are looking at the possible spreads that the bond issues could be against the related benchmark. No, I don’t necessarily see a long-term financing problem, given the company’s dominant position on the Romanian market and ultimately the profit generation which we have at the moment,” said Popescu, quoted by Agerpres.

He specified that, at this moment, Romgaz and OMV Petrom estimate, in total, investments of around 4 billion euros in Neptun Deep, and emphasized that the transaction through which Romgaz took over ExxonMobil’s participation in this project is a historic one for the Romanian state and it involved sustained work over a fairly long period of time.

“It stretched somewhere to more than a year and a half.(…) And this transaction was ultimately based on the company’s development strategy, which wanted to increase the portfolio of resources and reserves both onshore and offshore. This transaction was also caught in the government program and followed all the corporate approvals of both the Romanian state and the company. For a state company, I don’t think it was normal to put only the company’s employees to work, without any experience in M&A , and especially on such a transaction. So, the use of consultants and the help that we received from both tax consultants, financial consultants, legal consultants, were clearly defining for the transaction, as well as the hours of work and the effort put in. You have to let’s understand that for a year and a half a team from Romgaz worked more than 12-14 hours a day together with external consultants to be able to reach these results,” explained the director of Romgaz.

The director of Romgaz emphasized that, as far as the financing is concerned, it went very well, it was done in-house and during the financing the company had legal and financial consultancy.

“It was ultimately a competitive process, where each bank came up with the best offer.(…) The banks tried to offer the best interest rate to qualify, so there was clearly interest in financing. It was covered several times the amount with which we entered the market to be financed and the result is clear. But there was also a market context. We are talking about a market context where inflationary pressures had just appeared. We are talking about a market context where no the war had started and the market context was at that time favorable for financing. You know very well that market liquidity at the end of 2021 was much, much higher than it is now. Eurozone interest rates and Euribor were still negative. So, anyway, we were expecting a quasi-zero interest rate or close to the half-percent range,” added Răzvan Popescu.

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