In 2008, turnover generated by the biggest oil companies domestically topped 10bn euros, up around 22% from 2007, largely because of the high oil prices. On the other hand, though, most companies saw their profit plummet, with the slump at market level revolving around 60% from almost half a billion euros in 2007.
Domestic oil firms will be facing major challenges in 2009, too, with analysts projecting decline of financial results compared with 2008, as oil prices are put at around 50-54 dollars.
The first signs heralding an extremely difficult year are to be found in the financial reports of the two biggest players domestically for the last quarter of 2008. Analysts say 2009 will be even tougher given that the most upbeat estimates regarding oil prices do not go beyond 54 dollars per barrel. "(...) We expect Petrom to log weak results in the first quarter of this year amid an ongoing oil price decrease," says Philipp Chladek, an analyst with Raiffeisen Centrobank.
Should oil prices hit 30 dollars, the situation will become critical, at least for Petrom. "As regards Petrom, I estimate a critical level around the value of 30-32 dollars per barrel. As regards Rompetrol Rafinare, oil prices are irrelevant, what matters is the difference between oil product quotes and oil prices," says Tamas Pletser, petroleum and gas sector analyst with ING.
"On average, I believe oil prices will revolve around 54 dollars. We believe the focus on the market will shift to the supply side, rather than demand, and supply will not meet demand as all the major companies will save as regards investment plans related to production," Chladek believes.
According to him, oil product demand will stay at last year's level, with small variations, while growth rates similar to those of previous years are ruled out.
The main challenges the two analysts see for oil companies are continuation of investment programmes amid a tighter cost control. "Companies will undoubtedly have to slash costs and turn investments into a priority, choosing to finance only those projects that can be profitable and that can bring added value in a hostile environment. Most elements are external ones and therefore they cannot be influenced," Tamas Pletser concludes.
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