Stable result with negative impact of regulatory constraints
- In terms of external environment, beginning of 2023 was marked by oil and gas prices stabilization and continuation of regulatory constraints, which had a negative impact on Q1 2023 result.
- Natural decline of production is at very favourable 2%, a strong result taking into consideration maturity of INA’s Exploration and Production portfolio.
- Offshore gas production increased 13%, as a result of the drilling campaign.
- Large investment cycle continues, including the execution of Rijeka Refinery Upgrade Project, which reached 74% completion in Q1 2023.
- Financial position remains robust with gearing below 10%.
Key figures:
- Net sales revenues amounted to EUR 760.8 mln
- CCS EBITDA amounted to EUR 23.2 mln
- CAPEX amounted to EUR 53 mln
Zagreb, 27 April 2023 – In terms of external environment beginning of 2023 was marked by prices stabilization and continuation of regulatory constraints. INA Group CCS EBITDA excl. special items in Q1 2023 amounted to EUR 23 million, stark contrast compared to Q1 2022 figure of EUR 130 million. On top of negative regulatory impact, this change is related primarily to stabilisation of price environment in Q1 2023.
EBITDA of Exploration and Production amounted to EUR 98 million, with result being combination of stable production and limited gas price for majority of production. Natural decline of production is at very favourable 2%, a strong result taking into consideration maturity of INA’s Exploration and Production portfolio. Offshore gas production increased 13%, following first results of the drilling campaign.
Refining and Marketing incl. Consumer services and Retail segment result remains negatively impacted by fuel price regulation which, combined with the investment activities (mainly the Rijeka Refinery Upgrade Project) and lower realized wholesale margins, resulted in negative cash flow of the segment. Also, Rijeka Refinery production will be started up in Q2 2023. Retail sales grew by 13% and the non-fuel margin growth continued. Large investment cycle continues in 2023 including the execution of Rijeka Refinery Upgrade Project, which reached 74% completion in Q1 2023.
Financial position remains robust with gearing below 10%.
Statement of Péter Ratatics, President of the Management Board of INA:
“After 2022, with its soaring energy prices, 2023 is marked with strong level of market regulation in many countries. Despite the external movements and heavily regulated environment, with sense of obligation we managed to deliver on our main strategic responsibility – to ensure continuous supply of our customers. At the same time, we are continuing with one of the most intensive investment periods at INA. Works on Rijeka Refinery maintenance continue as planned, with production startup during Q2 2023. Safe supply of the market was not endangered in any period, regardless of the refinery operations, but the production startup will further strengthen the supply possibilities.
Rijeka Refinery Upgrade Project achieved 74% completion in overall. Its completion will bring economic sustainability of refining business on the long run to a higher level. When discussing the investments, it should also be mentioned that offshore drilling campaign results are visible in the production, with the 13% increase in offshore gas production.
Exploration and Production continue its trend of moderating the natural production decline. Decrease of overall hydrocarbon production of just 2% is a strong result, taking into consideration the overall age of INA’s production portfolio, with many fields in production around or more than 40 years. With these efforts, security of gas supply is strong while on the other hand, volatility of hydrocarbon prices and regulation in place continue to bring level of uncertainty for future results. Refining and Marketing including Consumer Services and Retail operations are pressured by reduced margins.
As in 2023 hydrocarbon prices stabilized at lower levels, I believe operating on market-based principles in a deregulated pricing environment should be enabled. INA will continue to ensure safe market supply while aiming to provide the shareholders with profitable operations.”