The volume of investment for such purposes stands at RON650 million in 2014, 50% higher than in 2013.
“The wells will become increasingly more difficult because we will drill deeper, which requires more money but the deposits will hold reserves to match our efforts,” Romgaz officials say.
“We plan to conduct 3D surveys on a 1,600 square kilometer area this year. We are also interested in leasing new blocks when ANRE (Romania’s energy market regulator i.e.) auctions them.”
The investments in finding new deposits are expected to go up to more than RON800 million by 2015 and RON1.1 billion in 2016.
Romgaz management hinted that the bold investment plans would not affect dividends, at least not in 2014.
The gas producer self-funded its RON848 million investments last year, while paying 94.7% of its profit as dividends.
The company had RON1.56 billion in cash at the end of last year.
“We have not started any shale gas project, but are not avoiding it. We will make a decision on it depending on the developments on the market,” said Virgil Metea, general manager of Romgaz.
Romgaz also plans to invest some RON250 million in production in 2014, again somewhat more than in the previous year, and over RON100 million in gas storage, the same amount as in 2013.
The investment should boost the gas storage capacity by more than 100 million cubic meters from the current 2.76 billion cubic meters. The storage facilities are used to meet demand in wintertime when the company’s production capacity cannot keep up.
Romgaz management believes this year will be a challenge and says gas demand at the start of 2014 was lower because of the very warm weather.
“Gas consumption fell by more than 8% last year and I estimate it might go down again by 5% this year. On the other hand, I expect the average gas sale price to rise by more than 20% year-on-year as a result of the hikes in the past year, which is why I think 2014 will look better for Romgaz than last year,” says Mihai Caruntu, head of the capital markets department of BCR.
“According to industrial consumers, Romgaz and Petrom have been charging a higher gas price as of April 1, RON89/MWh compared with the previous RON72/MWh.”
(English version by Loredana Fratila-Cristescu)