OMV Petrom: Romanian legal environment does not provide the necessary premises for an investment decision in the Black Sea

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The current legislative environment in Romania does not provide the necessary premises for an investment decision in the Black Sea, in the context in which a number of tax and regulatory initiatives have been discussed and/or implemented in recent months, which increases legislative volatility and influences the entire business environment, OMV Petrom representatives say in a statement on Wednesday posted on the Bucharest Stock Exchange website.

“A stable, predictable and investment-friendly fiscal and regulatory framework is an essential requirement for developing our future investments, both onshore and offshore. The Offshore Law has come into force in mid-November 2018. At the end of 2018, the Government approved the Emergency Ordinance no. 114, introducing measures affecting several sectors. Among the main issues affecting our business are the regulated gas and electricity prices for three years, as well as the increase in the financial contribution to the turnover of natural gas and electricity activities. We are currently assessing the impact on our operations, as the secondary legislation has not yet been issued,” the company’s release reads.

According to the quoted source, regarding the regulatory risk, the company is in dialogue with the Romanian authorities on issues relevant to the industry.

As far as the Black Sea deposits are concerned, according to OMV Petrom representatives, the current legal environment does not provide the ‘necessary premises for an investment decision worth several billion euros.

“We remain keen to see the developed Black Sea deposits and we will continue the dialogue with the authorities to understand the way ahead,” say the company’s representatives. They stress that: “the recent instability in the regulatory environment has led us to revise our growth investment plans, while we seek clarity about the investment climate in Romania. We plan investments of about RON 3.7 billion for 2019, mainly in Upstream. Our priority remains to maximize the current portfolio value in Upstream, and we estimate that we will limit the decline in average daily production to around 5% against 2018, excluding the portfolio optimization.

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