Romgaz recorded a net profit of 1.4 billion lei in 2018, 22% less than in 2017, with a turnover of 5 billion lei (+9%) and a bigger volume of natural gas production by 3.39% (5.33 billion cubic meters). Investments in 2018 amounted to 1.15 billion lei (+47% compared to 2017), and exploration costs of 3D seismic services for the discovery of new reserves doubled to 98 million lei, compared to 48 million in 2017. The company maintains a high net profit margin to 28.6% in 2018.

Royalties, tax on additional income and cuttings in storage rates are the main factors that have contributed to the reduction of net profit, Romgaz explains in a preliminary report sent to the Bucharest Stock Exchange.

Expenses with royalties (445 million lei in 2018) increased by 51% compared to 2017 (294 million lei), as a result of the provisions of ANRM Order no. 32/2018 whereby the prices on the Vienna Stock Exchange were introduced as the reference price. The tax on the extra income obtained as a result of the deregulation of prices in the natural gas sector increased by 43% to 164 million lei. Income from natural gas storage decreased by 41%, estimated at 298 million lei, due to the decrease in the storage tariffs as approved by ANRE, despite the increase of the quantities of gas injected into, respectively withdrawn from deposits in 2018.

Another reason for smaller profits is the 30.6% reduction in revenue from selling electricity, following a 37.48% decrease in production, ” due to Hidroelectrica’s domination of the market, increased demand for natural gas consumption and storage”.

Romgaz also announces gas field assets impairment of 103.6 million lei “as a result of an internal analysis regarding their profitability”, and also a 54 million lei impairment of assets representing the current Iernut powerplant “as a consequence of forecasting termination of its activity in 2020”.