OMV Petrom sees upstream turnover soar in first quarter
OMV Petrom on April 29 said its upstream oil and gas division generated CCS earnings of 1.1bn leu ($234.5mn) in the first quarter, more than trebling its CCS haul in January to March 2021.
A string of European IOCs are reporting favourable financials for the first time this year, buoyed by soaring oil and gas prices amid market speculation in the wake of the Ukraine war and rebounding consumption as economies open up post-COVID. Gazprom, CNOOC and TotalEnergies all reported huge profits on April 28.
OMV Petrom's upstream result fed into an overall CCS operating result of 2.2bn leu in the first quarter, up from 653mn leu year/year. It also reported strong gas storage margins and a four-fold CCS earnings increase at its gas and electricity production segment.
Following the sale of its production assets in Kazakhstan in 2021, OMV Petrom's average upstream output in the quarter fell by around 12.7% year/year to 129,400 barrels of oil equivalent/day. The company disposed of 100% stakes in four oil and gas fields onshore Kazakhstan, picked up by local investment vehicle Magnetic Oil.
OMV Petrom's core portfolio mainly comprises mature onshore oil and gas fields, which require work to contain declining yields. OMV Petrom has 193 commercial fields in Romania, Bulgaria and Georgia. Romanian output dipped by around 7.6% yr/yr to around 129,000 boe/d in the first quarter, and OMV Petrom says optimisation work should help limit the decline to 7% this year.
The upside for OMV Petrom lays in monetising a share of Romania's sizeable offshore gas riches, with an estimated 200bn m3 in gas resources thought to be located in Romanian Black Sea waters. OMV Petrom and ExxonMobil have poured upwards of $2bn into developing their flagship Romanian deepwater project, Neptun Deep, despite a challenging regulatory environment. The project is currently expected on stream in 2026-2027, and would completely reverse OMV Petrom's output decline by adding 50% to production by 2030.
Neptun faces the highest effective tax rate in the EU for offshore drilling. Further proposed changes to the legislative framework have repeatedly delayed a final investment decision. An FID is expected in the first half of 2023, but will depend on the "final content" and "timing" of Bucharest's revised offshore law. In all, OMV Petrom expects to invest $12.4bn in Romania's energy sector until 2030, with the funding split across regional gas development, decarbonisation work and optimisation activities.