Romanian gas producer decreases net profit by 14% in 2016, on falling output

The country’s largest gas producer Romgaz had its net profit down by 14.2% y/y to RON1bn (EUR228m) last year, the company announced in a release on the Bucharest Stock Exchange. The profit fall was triggered by a 15.8% y/y decrease of sales as the company’s production decreased by 24.1% y/y. Romgaz had to cut gas production last year due to more advantageous imports, as the gas price on international markets converged to the internally produced gas price. In addition, gas imports have a more favorable tax regime. Therefore, the state-controlled gas producer decreased its domestic sales by 17.8% y/y last year. Another hit on profitability came from a significant RON 498mn financial loss, mainly fuelled by a provision expense backing receivables from a big client in financial trouble, namely the state-owned thermal plant Electrocentrale Bucharest.

Romgaz invested less in gas exploitation and gas exploration associations in 2016. More precisely, the company cut its spending for investments in half to RON497.7m last year, due to unfavorable market conditions, changes and uncertainties in the legislative framework and infrastructure works in the gas distribution and transport network.

Romgaz is state controlled as the energy ministry holds more than 70% in the company’s equity. The rest is free-floated on BSE since November 2013. Romgaz and Petrom are the country’s major gas producers, ensuring about 92% of the national gas output. The cumulative gas production of both companies decreased by 12.5% y/y to 7.48 million tons last year, while gas imports from Gazprom jumped by 7.3 times to 1.18 million tons.

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