Petrom is therefore trying to make the best of the competitive edge its current corporate structure provides, while bracing itself for a cautious 2015 with an about 30% lower investment budget, which will make a negative impact on its hydrocarbon output.
“Looking forward to 2015 we are cutting back on our investment plans and stepping up cost optimization programs in all business segments, to be ready for a volatile market and a likely continuation of the worsened market conditions, while also keeping all the Black Sea projects with growth potential,” says Mariana Gheorghe, Petrom’s chief executive officer, in the annual report.
Petrom is cautious because it expects average oil price to be about $50 to $60 per barrel, while demand on the natural gas market should continue decline and output should shrink, as well. Moreover, its net profit fell 56% to 2 billion lei (EUR451 million), while sales by 11% to RON21 billion.
With the market as it is now, the company will focus on operational security, on managing cash flow and optimizing portfolio. As a result, it cut its investment program by prioritizing projects and activities and reallocating investments and drilling programs. The 2015 investment program is estimated at about EUR0.8 billion to EUR1.1 billion, about 85% of which will go towards exploration and production projects, the report of the company reads.
Petrom expects a new difficult year on the natural gas segment, where demand shrank by 4% last year and a relatively stable demand for electricity. Under the circumstances, it says it will sell electricity and power together to consumers.
Its priority on the gas segment is to preserve its position as the leader of the competitive natural gas market, while diversifying the offers to its customers so they include electricity and natural gas, the reports reads.
As for fuel sales, Petrom believes the lower prices induced by the decline in oil price might lead to rebound in demand. Moreover, it says it will continue to pursue the development of the ‘store within a store’ concept, under which the space in its gas stations is developed as service space.
“On the retail segment, the company will explore partnership options such as the continuation of the implementation of the ‘store within a store’ concept,” Petrom’s annual report reads.
(English version by Loredana Fratila-Cristescu)