Page 19 - Euroil Week 28 2020

EurOil
NEWS IN BRIEF
EurOil
Fitch keeps Romanian gas
transport operator Transgaz
at BBB-
Fitch Ratings has a rmed the long term issuer default rating (IDR) of Romanian natural gas transport system operator Transgaz at BBB-, in line with the sovereign rating, but with a stable outlook compared to the negative sovereign outlook.
e IDR of Transgaz mainly re ects its solid business pro le as a concessionaire and operator of the gas transmission network in Romania, as well as expectations of a progressive contraction of its international gas transit business derived from traditional routes. e rating is supported by the country’s regulation for gas transmission and Fitch’s expectation that a signi cant current investment related to the Bulgaria-Romania-Hungary-Austria gas corridor (BRUA) will be added to Transgaz’s regulated asset base (RAB), supporting future earnings.
Neither COVID-19 nor a potential drop in consumption have a ected Transgaz’s soundness, Fitch commented. Transgaz’s business pro le is fairly resilient to the COVID-19 outbreak and related economic shock due to the dominant share of
gas transmission in Ebitda. Transgaz is remunerated in an asset base regime and the potential demand decline would a ect only 25% of its tari scheme, which further ensures full compensation in subsequent years.
e 6.39%+1% pre-tax real allowed weighted-average cost of capital granted in the fourth regulatory period (October 2019-September 2024) incentivises investment in the network, which at a cumulative gross RON3.2bn (€660mn) for 2020-2024, is ambitious and carries execution risk, Fitch commented.
However, in the medium- to long-
term, the rating agency expects operating cash ows from the pro table gas transit activities from Ukraine to the Bulgarian border to gradually contract by more than 60%, re ecting the expiry of the current “ship-or-pay” contracts. In 2020, a delayed renewal for one of the transit pipelines (T2)
is expected to shave more than RON100mn Ebitda compared with 2019, and in 2021 only half of the capacity is expected to be contracted until September, accelerating the downtrend.
Bulgaria’s parliament gives
green light to state fuel
company
Bulgaria’s parliament approved a government plan to set up a state-owned company that would store oil and be allowed to build filling stations and fuel warehouses in its second reading on July 9.
e idea was suggested in May as a way to force oil companies to lower their prices. e decision provoked many negative reactions by economists who claimed it would not resolve the problem but only shows the state is unable to deal with it.
According to the parliament’s decision, a state-run company - the State Oil Company – will be set up and cannot be privatised.
It will be in charge of handling the state reserves and will be allowed to set up companies that would sell oil products.
It will have to build 100 fuel retail stations throughout the country in order to in uence oil prices, according to the government’s original plan.
e idea was originally proposed by
the nance ministry, which suggested
it would secure the maximum level of competitiveness on the market as it
would operate fuel warehouses across the country where it would store fuel for other companies as well.
e proposal was made a er the CPC launched an investigation into suspected collusion among its members in setting fuel prices. Meanwhile, the government found out that fuel prices charged to buyers are higher than the prices at which the fuel is released from warehouses.
In May, CPC raided the o ces of the Bulgarian Oil and Gas Association as part of its investigation aiming to nd out how fuel prices are being set by several companies, including Lukoil Ne ochim Burgas, Lukoil Bulgaria, Saksa, Insa Oil, Rompetrol, Shell
Bulgaria, OMV Bulgaria, Petrol and several other companies.
Critics of the idea fear the state is intervening too much in the economy. Instead of investing BGM500mn in setting up an oil company, experts suggest that the state should put e orts into making the Commission for Protection of Competition (CPC) a strong and independent institution that would prevent collusion in the future.
Aker BP manages profit on record output
Aker BP booked a higher profit in the second quarter, thanks to record-high production despite lower income impacted by low oil prices and the coronavirus pandemic.
Total income for the second quarter amounted to $590mn, negatively impacted by low oil prices following the COVID-19 pandemic. In the second quarter of 2019, Aker BP’s income was $785mn.
Average realised liquids price was $29.9 per barrel, while the realised price for natural gas averaged $0.08 per cubic metre.
The sharp drop in oil prices caused an impairment charge of $654mn in the first quarter. Following the partial recovery in spot and forward oil prices observed in the second quarter, the company has reversed certain impairments amounting to $136mn
Overall, the company reported a net profit of $170mn for the quarter, compared to a net loss of $335 in the previous quarter and compared to a profit of $62mn in the second quarter of 2019.
The company’s net production in the second quarter was 209,800 barrels of oil equivalents per day compared to 127,300 boepd a year earlier.
Net sold volume was 232,000 boepd compared to 140,700 boepd a year before.
The production curtailments imposed by the Norwegian government have
been mitigated by strong operational performance and increased capacity
at Johan Sverdrup, hence the company maintains its full-year production estimate of 205-220,000 boepd.
Week 28 16•July•2020
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