OMV Romania Gas & Oil Future Drilling in Romania November 17, 2008


OMV to reduce investments in exploitation and production, least in Romania
Nine O’Clock – November 17, 2008

OMV will reduce investments in exploitation and in production, least in Romania, where there is significant potential in terms of discovering oil and gas, and more in other countries, as Helmut Langanger, member in the OMV executive board, recently said in a meeting with journalists, cited by Mediafax. “Less will be cut in Romania and more in other countries. Romania needs investments and it has the highest potential and significant reserves”, Langanger said, who is responsible for exploitation and production activities. “There is still much gas to be discovered in Romania, but also oil. Drilling in Romania will focus, over the next years, on high depths, where gas is rather to be found”, he said.

Within the group, the investments in exploitation and in production, the main revenues source of the group, will be reduced by one third, Langanger said. Consequently, the group revised downwardly the estimations related to the oil and gas production in 2010, from 400,000 barrels equivalent oil per day to 350,000 – 360,000 barrels equivalent oil per day. At the same time, the investments in exploitation and in production depend also on the price of the oil barrel. “If the price remains low, then the investment budget may reduce by EUR 100 M, for instance. If the barrel costs USD 80, then drilling may accelerate”, he said. Langanger added that the cut in investments might refer mainly to drilling new wells. “Each well may cost up to USD 10 M, you can always postpone them. Then, the price of certain equipment also went up, as they are produced only by a few companies in the world”, Langanger said.

The group informed that they would reduce the operational expenditures by EUR 300 M until 2010, including in Romania, and the investments scheduled for next year may decrease in order to reflect the diminished capital resulted from current activities.

In case of Romania, OMV plans announced previously were indicating, for the next years, the accomplishment of annual investments worth EUR 1.5 bln. Langanger added that Petrom would continue drilling in Kazakhstan, and apart from Romania, the group will focus on drilling and production in Norway, Libya, Australia, New Zealand and UK. According to OMV representative, the group will focus on activities in countries where they are already active, to the detriment of extending to other countries.

OMV: Investments at Petrobrazi to be delayed by one year

The investments in Petrobrazi refinery of Petrom company will be delayed by one year, because of the constraints on the investment budget, other projects being also put on hold, according to a recent announcement made by the Austrian group OMV, major shareholder in Petrom, Mediafax informs. “We do not have plans, at Arpechim, to change the situation of this refinery and a decision has not been made yet (editor note – related to its sale). Upgrading Petrobrazi is one of the key objectives for OMV”, as Wolfgang Ruttenstorfer, OMV president, said, cited by “Ziua”.

OMV will continue in the future investments for upgrading and increasing Petrobrazi refining capacity, to six million tones annually. OMV intends to extend to the countries neighbouring Romania, for natural gas.

According to the Austrian group, the demand for diesel in Romania and in Bulgaria advanced in the third quarter by 12 per cent compared to the same time period in 2007, whereas in Austria, it dropped by 2 per cent and in Turkey it advanced by 1 per cent. Petrom remains a good investment and the price paid for the acquisition of the Romanian company was a fair one, even if the oil price dropped, as Wolfgang Ruttenstorfer, said.

Current market conditions favour gas price alignment

The price of natural gas produced in Romania does not reflect the market level and they have to be aligned, a favourable time for this being the current interval, when the international prices dropped, according to those declared by the person responsible for gas and energy within the Austrian group OMV, Werner Auli, Mediafax informs. He mentioned that OMV has postponed the construction of a gas storage in Romania following the group decision to reduce investments. “The storage makes sense from the prospect of Nabucco construction and Romania connection with other countries, such as Hungary and Bulgaria in the future. For the time being, Romania has sufficient storage capacity as to cover the internal demand”, Auli added. According to him, the gas storage could have a capacity of 1 – 2 bln. cubic metres.

by Karina Lerintiu.