Page 9 - Euroil Week 48 2019

EurOil PERFORMANCE EurOil
Russian gas prices in Europe hit bottom
EUROPE
THE price Europe pays for Russian gas fell to its lowest level in 15 years, according to Rus- sian national gas company Gazprom’s accounts, released on December 3.
In the third quarter the average price per thousand cubic meters, taking into account excise tax and customs duties, amounted to $169.8. A year ago, during the same period, it exceeded $250. at is equivalent to a fall of a third (32%).
Prior to this result the last time gas was so cheap was in 2004 when gas cost $137.7, but the price rose again in 2005 to over $190.
e reason for the low price was is an excess of supply on the market, caused by rising com- petition from LNG. e cost of LNG in Asia has halved, prompting producers to begin sending excess LNG to Europe.
As bne IntelliNews reported, Gazprom posted a 45% year-on-year decline in net pro t
under IFRS in 3Q19 to RUB212bn ($3.3bn), attributed to the decline in export deliveries and lower gas prices in Europe. Gazprom saw total sales decline to RUB1.6 trillion in the report- ing quarter versus RUB1.9 trillion for the same quarter of 2019. Exports to European and non- CIS sales were down by 37% y/y, with prices of natural gas averaging to $169.8 per 1,000 cubic metres from $250.8 last year.
The company was only able to partially compensate for the losses by raising prices in the domestic market and for neighbouring countries.
Nevertheless, Gazprom was supported by the 5% q/q higher top line of its oil subsidiary Gaz- prom Ne thanks to strong downstream (re n- ing) performance. Another boost came from the $1.1bn revaluation gain associated with the recent treasury stock sales, which brought Gaz- prom’s net pro t in line with expectations.™
POLICY
OMV still ready to commit at Neptun Deep
ROMANIA
OMV Petrom has said it is still prepared to invest billions in the project
if the government improves Romania’s investment climate.
AUSTRO-ROMANIAN oil and gas group OMV Petrom is ready to invest billions in the Neptun Deep gas project in the Romanian section of the Black Sea once the new government li s regu- latory barriers that put the project on hold last year, the company told Reuters on December 2.
OMV Petrom’s partner in the project, US group ExxonMobil, is reportedly seeking to sell its stake, prompting concerns about the project’s fate.
ExxonMobil is understood to be expect- ing $250mn for its 50% stake in Neptun Deep, according to Reuters. e decision seems irre- versible since it is part of a broader regional strategy, but improving the investment climate in Romania after a change in government in Bucharest might encourage credible investors replace ExxonMobil.
“We’re prepared to start multi-billion-euro investments for Neptun Deep once all the barri- ers are removed,” OMV Petrom’s CEO Christina Verchere told Reuters in an email on December 2.
e statement comes as Romania’s new Lib- eral government is working on removing all the regulations with negative impact on key business sectors enacted by the Social Democrat major- ity last year. e new government promised to amend the emergency decree (OUG) 114/2018 that includes some of the obstacles mentioned
by OMV Petrom, such as caps on domestic gas prices, sales restrictions and an extra tax on turn- over. However, the Liberals have not mentioned changing the O shore Law yet, as amending this bill will likely require more negotiations among the partners of the parliamentary majority that supports the cabinet of PM Ludovic Orban.
The former Socialist government of PM Viorica Dancila already took rst steps toward amending the O shore Law to a form that was seen as promising by investors. e government published draft amendments to the Offshore Law for public debate on September 20.
The amendments are needed “to keep the Romanian offshore sector competitive and encourage foreign investors,” the authors of the bill explained.
e amendments that sweeten the O shore Law come just a month a er Romanian Presi- dent Klaus Iohannis and US President Donald Trump signed a joint statement in Washington that explicitly mentioned the need to change the investment law in Romania to make it more predictable.
“Romania and the United States will analyse ways to improve the investment climate in the eld of energy for the bene t of both countries,” according to the joint statement of the two pres- idents during Iohannis’ visit. ™
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