Romanias OMV Petrom says royalties regime not preferential.

By bne IntelliNews May 30, 2012
Romania's OMV Petrom, controlled by Austrian group OMV, has not enjoyed a "preferential" royalties regime since it was privatised in 2004 and any taxation on the excess profit should not discourage investments, the company's public affairs and regulations director, Razvan Niculescu, told a press conference organised by news agency Mediafax. Insufficient investments in the energy sector, seen by the OMV Petrom official at EUR 60mn by 2030, will result in larger energy imports. We recall that the royalties' regime has to be maintained unchanged for ten years since the 2004 privatisation, under the privatisation bill, and a new royalties regime is expected to be enforced afterwards. High crude oil prices, which pushed up motor fuel prices and the profits of the oil companies have encouraged speculations about hikes of the royalties and possibly about a supplementary taxation on the energy companies' profits. The royalties for oil and gas extractions vary in Romania between 3.5% and 13.5%, with an average around 8%. The oil and gas companies pay the standard 16% corporate tax. Romania plans to use the revenue from a windfall profit tax expected to be levied on oil and gas companies to create a fund dedicated to vulnerable consumers, economy minister Daniel Chitoiu has said, as reported by news agency Agerpres. New oil and gas extraction royalties will be also introduced as part of a new bill that will be enforced after 2014, he added, implying that companies will pay more funds to the budget. OMV Petrom reported a net profit of EUR 318mn in Q1, and revenues of EUR 1.38mn [not including excises] - therefore a net profit margin of 23%. The group's RON 1,794bn Jan-March EBIT was mainly achieved in the exploration and production segment.
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