Consolidated
Board of
Directors’ Report
2022
Consolidated Board of Directors’ Report 2022
Tabel of Contents
Tabel of Contents
I. 2022 ROMGAZ GROUP OVERVIEW
2
3
1.1. ROMGAZ Group in Figures ................................................................................................................... 3
1.2. Significant Events ................................................................................................................................. 8
II. Parent company at a glance
12
2.1. Identification Data ............................................................................................................................. 12
2.2. Company Organisation....................................................................................................................... 12
2.3. Mission, Vision and Goal .................................................................................................................... 14
2.4. Strategic Objectives, Strategic Options and Secondary Objectives ................................................... 14
III. Review of ROMGAZ GROUP business
16
3.1. Business Segments ............................................................................................................................. 16
3.2. Brief History ....................................................................................................................................... 20
3.3. Mergers and Reorganisations, Acquisitions and Divestments of Assets ........................................... 21
3.4. Group’s Business Performance .......................................................................................................... 21
3.4.1. Overall Performance .................................................................................................................................... 21
3.4.2. Sales ............................................................................................................................................................. 24
3.4.3. Prices and Tariffs ......................................................................................................................................... 26
3.4.4. Human Resources ........................................................................................................................................ 27
3.4.5. Environmental Aspects ................................................................................................................................ 30
3.4.6. Occupational Safety and Health .................................................................................................................. 32
3.4.7. Litigations .................................................................................................................................................... 33
3.4.8. Legal Acts concluded under GEO 109/2011 Art. 52 ................................................................................... 34
IV. Group’s tangible assets
35
4.1. Main Production Capacities ............................................................................................................... 35
4.2. Investments ........................................................................................................................................ 38
V. Securities market
45
5.1. Dividend Policy ................................................................................................................................... 47
VI. Company management
49
6.1. Board of Directors .............................................................................................................................. 49
6.2. Executive Management ..................................................................................................................... 50
VII. Consolidated financial – accounting information
53
7.1. Statement of Consolidated Financial Position ................................................................................... 53
7.2. Statement of Consolidated Comprehensive Income ......................................................................... 55
7.3. Statement of Consolidated Cash Flows ............................................................................................. 57
VIII. Corporate Governance
IX. Performance of director agreements and mandate contracts
58
72
Signatures: ................................................................................................................................................ 73
Page 2 of 73
Consolidated Board of Directors’ Report 2022
I. 2022 ROMGAZ GROUP OVERVIEW
1.1. ROMGAZ Group in Figures
Romgaz Group1 recorded in 2022 a revenue of RON 13,359.65 million, higher by 128.26%, RON 7,506.73
million, respectively, as compared to 2021 revenue (RON 5,852.93 million).
Net profit of RON 2,546.71 million was higher by RON 631.72 million (+32.99%) than the net profit of
2021.
Following factors influenced Romgaz Group performances for the year ended December 31, 2022:
Revenue increase as compared to the previous year triggered by following factors:
o
revenue from natural gas sales for 2022 is RON 11.31 billion, increasing by 124.20% as
compared to the previous year. Quantity of natural gas sold (including gas purchased for resale)
was by 4.54% lower in 2022 as compared to 2021; in Q4 2022 revenue from gas sales increased
by 28.36% as compared to the previous quarter (+17.07% from a quantitative point of view);
in 2022, storage activities recorded an increase by 80.51% of the revenue Group-wide, following
60.18% higher booking services (RON +115.06 million), by 249.53% higher injection services
(RON +84.36 million) and by 28.29% higher withdrawal services (RON +9.90 million). As for
Depogaz, revenue from these services increased by 51.85%;
revenue from electricity sales increased by 313.75% as compared to last year (RON +1.01 billion)
against a 73.52% rise in production as compared to last year. The revenue is due to the high prices
on centralised markets where the Group is active, following the conflict in Ukraine. However, the
electricity generation and sale activity recorded a RON 49.95 million loss due to overtaxing
income from this activity;
o
o
Government Emergency Ordinance2 (GEO) No.27, as subsequently amended and supplemented,
issued in 2022, setts certain obligations with respect to gas deliveries and sale prices, summarised as
follows:
o
o
for the period April 2022 – March 2023, the price of gas sold to household suppliers was set at
RON 150/MWh; the period was extended until March 31, 2025;
for the period April 2022 – August 2022, the price of gas sold to suppliers of heat producers or
directly to heat producers, as the case may be, only for the gas quantity used for heat production
in cogeneration plants and in power plants, for consumption of population, was set at RON
250/MWh; as of September 2022, for the period between September 2022 – March 2025 for this
client category, the sale price is set at RON 150/MWh;
o quantities sold at the above mentioned prices were established in accordance with the procedure
included in GEO 27/2022;
o generally, Romgaz concludes natural gas sales contracts for the gas year (October – September).
Therefore quantities available to be sold under GEO 27/2022 until September 31, 2022
represented approximately 30% from the deliveries of the period and after October 1, 2022, 90%
of the gas quantity delivered by Romgaz, was sold at RON 150/MWh;
o
for the entire year 2022, deliveries under GEO 27/2022 represented 33.3% of total deliveries
and since enforcement of GEO 27/2022 until the end of 2022, 53.5% deliveries were made at a
regulated price;
Petroleum royalty expenses (including royalty for storage activities) in amount of RON 1,640.08
million, increased by RON 890.67 million as compared to the previous year, namely by 118.85%,
mainly as a result of an increased reference price considered for calculating royalty. Royalty
1 Romgaz Group consists of SNGN Romgaz SA (“the Company”/”Romgaz”) as parent company and the subsidiaries SNGN
Romgaz SA - Filiala de Înmagazinare Gaze Naturale Depogaz Ploiești SRL (“Depogaz”) and Romgaz Black Sea Limited, both
owned 100% by Romgaz.
2 Government Emergency Ordinance No. 22 of March 18, 2022 on measures applicable to end customers from the electricity and
gas market during April 1, 2022-March 31, 2023, as well as to amend and supplement certain pieces of legislation in the energy
field.
Page 3 of 73
Consolidated Board of Directors’ Report 2022
expenses decreased significantly in Q4 2022 (-88.71% as compared to Q3 2022), as over 90% of the
deliveries were sold at RON 150/MWh (subject to GEO 27/2022 the royalty price for these quantities
is RON 150/MWh, and not the reference price). The chart below shows the evolution of the reference
price as communicated by the National Agency for Mineral Resources (“NAMR”) for the period
2020 – 2023;
Windfall tax on the gas production sales increased in 2022 by RON 3.65 billion (289.81%) reaching
RON 4.90 billion, as compared to 2021. Windfall tax decreased significantly in Q4 2022 (-96.61%
compared to Q3 2022) due to delivering over 90% of the sold quantities at RON 150 /MWh (according
to GEO 27/2022, windfall tax does not apply to such quantities);
A new windfall tax was introduced in 2022 for electricity producers, on electricity sales/a
contribution to the Energy Transition Fund. The value of both taxes was RON 403.80 million. The
Group expects the value of the windfall tax to be insignificant in 2023 following the obligation set by
GEO 27/2022, to sell electricity at RON 450 /MWh;
As of 2022, a solidarity contribution was introduced for gas producers, as Council Regulation (EU)
2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices was
implemented in the Romanian legislation. The tax for 2022 is RON 1.00 billion and is reflected at income
tax expenses.
The table below shows the petroleum royalty, the windfall tax and the solidarity contribution compared
to revenues from sales of natural gas from the Group’s production and from electricity sales:
Indicator
unit
Revenue from sale of gas and electricity
production
Petroleum royalty from gas production
Windfall tax
Windfall tax on electricity
sales/contribution to the Energy Transition
Fund
Contribution to the Solidarity Fund
% from revenue
Q4
2021
Q4
2022
2021
2022
2,207.46
2,346.7
5,034.4
12,622.9
400.03
894.0
143.5
153.7
740.0
1,258.0
1,625.8
4,903.8
RON mln
RON mln
RON mln
RON mln
-
109.9
-
403.8
RON mln
%
-
58.62
1,002.8
60.08
-
39.69
1,002.8
62.87
In August 2022, Romgaz finalised the acquisition of ExxonMobil Exploration and Production
Romania Limited shares (currently Romgaz Black Sea Limited) which holds 50% of the rights and
obligations under the Petroleum Agreement for the eastern area, deep water zone of Neptun XIX
Page 4 of 73
Consolidated Board of Directors’ Report 2022
offshore block in the Black Sea. The final acquisition price was RON 5,118.99 million, the acquisition
was financed from Romgaz own sources and a bank loan of RON 1,606.5 million (EUR 325 million).
Net profit per share was RON 6.60, increasing by 32.99% as compared to the previous year.
The achieved margins of the consolidated net profit (19.06%), consolidated EBIT (29.81%) and
consolidated EBITDA (33.93%) decreased as compared to 2021 (32.72%, 35.86% and 47.58% respectively)
mainly following overtaxing the Group’s business. As regards Q4, EBIT and EBITDA increased as
compared to Q4 2021 by 71.13% and 55% respectively, due to lower petroleum royalties and a lower
windfall tax on gas production; the net profit margin dropped by 62.32% due to the contribution to the
solidarity fund.
Investments made by Romgaz Group in 2022 amount to RON 5,627.12 million, higher by RON 5,167.8
million, respectively 1,125.1%, as compared to 2021.
Natural gas consumption in Romania for 2022 recorded a 16% decrease, from 130.12 TWh to 109.50 TWh,
according to company’s estimations and ANRE3 reports.
Natural gas production reached in 2022 4,935.9 million m3, namely a 1.8% decline related to 2021
production, such decline is in line with the strategic target of 2.5%.
According to estimates, this production ensured Romgaz a market share of approx. 49.41% of deliveries in
the total consumption of Romania, increasing by 7% as compared to 2021.
In 2022, Romgaz electricity production was 1,110.456 GW, by 73.51% higher as compared to the production
of 2021. This evolution is strongly related to the energy demand, the evolution of prices on competitive
markets, fuel quantity allocated for electricity generation. According to preliminary data published by
Transelectrica, Romgaz market share was 2.05%.
Operational Results
The table below shows a summary of the main production, royalty and storage services indicators:
Q4
2021
Q3
2022
Q4
2022
1,322
1,172.4
1,248.5
5,027
5,030
5,240
94
84
89
213.9
294.8
271.0
Δ Q4
(%)
-5.6
4.2
-5.3
26.7
Main indicators
2021
2022
Gas production (million m3)
5,029
4,936
Condensate production (tons)
24,420
20,878
Petroleum royalty (million m3)
Electricity production (GWh)
355
348
640.0
1,110.5
Δ ‘22/’21
(%)
-1.8
-14.5
-2.1
73.5
663.3
12.3
620.1
-6.5
192.1
1,185.8
483.3
151.6
Invoiced UGS withdrawal services
(million m3)
Invoiced UGS injection services
(million m3)
2,109.2
1,722.5
-18.3
1,821.9
2,450.2
34.5
Natural gas quantities produced, delivered, injected into and withdrawn from gas storages are shown in the
table below (million m3):
Item
No.
0
1. Gross gas production
Specifications
1
2.
3.
4.
5.
Technological consumption
Net internal gas production (1.-2.)
Internal gas volumes injected into UGS
Internal gas volumes withdrawn from UGS
2020
2021
2022
Ratios
2
4,519.7
3
5,028.5
4
4,935.9
5=4/3x100
98.2%
63.7
69.9
73.6
105.3%
4,456.0
4,958.6
4,862.3
98.1%
225.9
367.8
487.9
422.2
84.6
283.9
17.3%
67.2%
3 Consumption and market share is estimated as, at the date hereof, ANRE did not publish the report on the natural
gas market for December 2022.
Page 5 of 73
Consolidated Board of Directors’ Report 2022
Item
No.
0
6.
Specifications
2020
2021
2022
Ratios
Difference from conversion to Gross Calorific Value
1
2
6.4
3
8.6
4
2.7
5=4/3x100
31.4%
7.
Volumes supplied from internal production (3.-4.+5.-6.)
4,591.6
4,884.3
5,058.9
106.3%
Gas supplied to CTE Iernut and Cojocna from Romgaz gas
8.
9. Gas supplied from internal production to the market (7.-
277.2
4,314.4
192.5
4,691.8
338.8
4,720.1
176.0%
100.6%
8.)
10. Gas from partnerships – Amromco (50%)*)
11.
12.
Purchased internal gas volumes (including commodity gas
and imbalances)
Sold internal gas volumes (9.+10.+11.)
91.4
0.4
35.4
239.5
19.3
1.9
54.5%
0.8%
4,406.1
4,966.7
4,741.3
95.5%
13.
Supplied internal gas volumes (8.+12.)
4,683.3
5,159.2
5,080.1
98.5%
Supplied import gas volumes
14.
15. Gas supplied to CTE Iernut and Cojocna from other sources
(including imbalances)
0.0
4.7
0.0
8.4
0.0
0.1
-
1.2%
16. Total gas supplies (13.+14.+15.)
4,688.1
5,167.6
5,080.2
98.3%
*
*
Invoiced UGS withdrawal services
Invoiced UGS injection services
1,816.7
2,109.2
1,722.5
81.7%
1,115.1
1,821.9
2,450.2
134.5%
Note: the information is not consolidated; these include the transactions between Romgaz and Depogaz.
*) The produced gas is reflected in Romgaz revenue, according to the participating interest share in the partnership.
Production level of 2022 was supported by ongoing production rehabilitation projects of main mature fields,
performance of capitalizable repair works and well recompletion works and by streaming into production
new wells.
Evolution of natural gas production between 2000-2022 is shown below:
8.4
8
7.3
7
6.6
6.3 6.2
m
c
b
9
8
7
6
5
4
3
2
1
0
5.9 5.9 5.8 5.8 5.6 5.7 5.7 5.7 5.6
5.2 5.3 5.3
5.0 4.9
4.5
4.2
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
The table below shows the quarterly electricity production for 2022, as compared to 2021:
*MWh*
2021
2022
2
202,073
1,010
222,989
213,930
640,001
3
345,337
199,323
294,806
270,991
1,110,456
Variation
(%)
4=(3-2)/2x100
70.90
19,636.95
32.21
26.67
73.51
1
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Year total
Page 6 of 73
Consolidated Board of Directors’ Report 2022
Romgaz is one of the largest gas suppliers in Romania. The evolution of gas supplies4 between 2013-2022
is shown below:
310
81
33
181
3
7
53
0
0
0
0
5304
5529
5055
5623
5422
4223
5079
4683
5159.2
5159.2
5061.7
6000
5000
4000
3000
2000
1000
0
3
m
n
o
i
l
l
i
m
2013
2014
2015
2016
2017
2018
2019
2020
2021
2021
2022
Gas from internal production
Import gas
Relevant Consolidated Financial Results
*RON million*
Q4
2021
2,356.4
2,428.6
1,620.9
0.1
807.8
49.2
758.6
787.8
977.3
1.97
32.19
Q3
2022
3,316.5
3,449.3
2,838.2
1.4
612.5
100.6
511.9
561.9
712.4
1.33
15.43
Q4
2022
Δ Q4
(%)
Main indicators
2021
2022
2,547.1
2,604.3
1,120.5
0.7
1,484.5
1,175.6
308.9
1,457.2
1,637.3
0.80
12.13
8.09 Revenue
7.23
Income
-30.87 Expenses
840.00 Share of profit of associates
83.76 Gross profit
Income tax expense
2,288.68
-59.28 Net profit
84.98 EBIT
67.54 EBITDA
-59.28 Earnings per share EPS (RON)
-62.32 Net profit
ratio
(%
from
5,852.9 13,359.7
6,156.5
13,658.1
3,999.4
9,506.2
0.1
2.4
2,157.3
4,154.2
242.3
1,607.5
1,915.0
2,546.7
2,098.9
3,982.3
2,784.6
4,532.4
4.97
6.6
32.72
19.06
Δ ‘22/’21
(%)
128.26
121.85
137.69
2,664.71
92.57
563.55
32.99
89.74
62.76
32.99
-41.74
33.43
41.47
16.94
21.48
57.21
64.28
Revenue)
71.13 EBIT Ratio (% from Revenue)
55.00 EBITDA Ratio
Revenue)
(%
from
35.86
47.58
29.81
33.93
-16.88
-28.69
5,863
5,909
5,971
1.84 Number of employees at the end
5,863
5,971
1.84
of the period
Figures in the above table are rounded; therefore, small differences may result upon reconciliation.
Note 1: Income and Expenses do not include those related to in-house production of non-current assets.
Romgaz on the Stock Exchange
Since November 12, 2013, company’s shares have been traded on the regulated market governed by BVB
(Bucharest Stock Exchange) under the symbol “SNG” and the GDRs on the regulated market governed by
LSE (London Stock Exchange) under the symbol “SNGR”.
Performance of Romgaz shares compared to the evolution of BET index (Bucharest Exchange Trading) from
listing to December 31, 2022 is shown below:
4 include gas from internal production, including gas supplied to CTE Iernut and Cojocna
Page 7 of 73
Consolidated Board of Directors’ Report 2022
60
50
40
30
20
10
0
e
r
a
h
s
/
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R
3
1
0
2
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2
1
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4
1
0
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1
0
6
1
.
November 12, 2013 - December 31, 2022
5
1
0
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0
2
/
1
5
1
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8
1
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3
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2
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SNG
BET
16000
14000
12000
10000
8000
6000
4000
2000
0
.
4
1
0
2
9
0
7
1
.
.
4
1
0
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.
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.
.
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1
.
.
4
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0
7
1
.
1.2. Significant Events
January 6, 2022
Company’s shareholders approve by Resolution No. 1 the extension of board members mandates, by two
months from the expiration date, in line with the provisions of art. 64^1, paragraph (5) of GEO No. 109/2011
on corporate governance of public enterprises.
February 28, 2022
Company’s shareholders appoint by Resolution No. 2, the following persons as board members, for a
4-month term interim mandate, starting with March 14, 2022:
Drăgan Dan Dragoş
Jude Aristotel Marius
Batog Cezar
Simescu Nicolae Bogdan
Balazs Botond
Sorici Gheorghe Silvian.
March 22, 2022
The Board of Directors appoints Mr. Jude Aristotel Marius as Chief Executive Officer for a 4-month term,
as of April 16, 2022 until August 16, 2022.
The Board of Directors appoints Mr. Popescu Răzvan as Chief Financial Officer for a 4-month term, as of
April 17, 2022 until August 17, 2022.
March 22, 2022
Romgaz Board of Directors endorsed conclusion of the sale-purchase agreement of all shares issued by
(representing 100% of the share capital of) ExxonMobil Exploration and Production Romania Limited
(EMEPRL) which holds 50% of the rights and obligations under the Petroleum Agreement for the eastern
area, deep water zone of Neptun XIX offshore Block in the Black Sea.
The contract shall be signed following the approval of the Extraordinary General Meeting of Shareholders
called for April 28, 2022, transaction completion is conditioned upon fulfilling the conditions precedent
included in the contract. The acquisition price is USD 1,060,000,000 and may be adjusted in compliance
with the mechanisms provided in the share sale-purchase agreement.
Page 8 of 73
Consolidated Board of Directors’ Report 2022
March 30, 2022
Romgaz signed a financing agreement of EUR 325 million with Raiffeisen Bank SA for partial financing of
the acquisition price to be paid for all shares issued by EMEPRL. The loan has a maturity of five years.
April 28, 2022
Company’s shareholders approve by Resolution No.4 the conclusion of the sale-purchase agreement of
shares issued by EMEPRL.
May 3, 2022
Romgaz signed the sale-purchase agreement of shares issued by EMEPRL. Transaction completion was
conditioned by fulfilment of conditions precedent provided in the contract.
May 25, 2022
The Board of Directors appoints Mr. Metea Virgil Marius as interim non-executive board member, as of
May 25, 2022 until the date of the first meeting of the Ordinary General Meeting of Shareholders that shall
take place after the OGMS meeting called for June 8, 2022.
June 2, 2022
An important investment was carried out, which is included in the priority Project Onshore Snagov, part of
the Development Strategy 2021-2030, namely Cosereni gas dehydration station was commissioned. The
investment amounted to roughly RON 31 million; the station treats 230 thousand m3 natural gas/day,
production obtained after streaming in production three new wells, following that until the end of Q1 2023,
to stream in production in phases, other new wells, increasing the dehydration capacity up to 800 thousand
m3 /day.
June 8, 2022
The National Energy Regulatory Authority (ANRE), extended at Romgaz request, the validity of the Permit
to initiate the construction of the new power plant with combined cycle gas turbines, until June 30, 2023
(Decision of ANRE President No.907).
June 27, 2022
Romgaz shares trading price on Bucharest Stock exchange reached a new historic maximum of 51.70
RON/share, this value represents the highest share price recorded since listing on Bucharest Stock Exchange
(November 2013).
June 28, 2022
Romgaz – as debtor and Raiffeisen Bank S.A. and Banca Comercială Română S.A. (BCR) – as lenders,
signed Addendum No.1 to the bank loan agreement no. 37843/30.03.2022 (facility agreement), whereby the
parties agree with BCR to join the facility agreement as lender and agree to transform the facility agreement
from a bilateral agreement into a syndicated loan agreement, without any additional costs for Romgaz.
June 29, 2022
Romanian Government Decision No. 834 issued the following provisions with impact on Romgaz:
Art.11 para.(3): “Investments funded by grants have to be put in operation until December 31, 2023 the
latest […]”;
Art.12 para.(5): “Beneficiaries of investments provided for in annex no. 3 receive a grant for the
investments from the National Investment Plan made after June 25, 2009, put into operation or in
progress at the time of concluding the financing contracts, related to expenses invoiced and paid after
June 25, 2009. Reimbursement of such expenses shall be made by instalments until June 30, 2024,
according to the financing contract”.
June 30, 2022
Concluded Addendum No.6 to Financing Agreement no.4/07.12.2017 for the investment “Combined Cycle
Gas Turbine – Iernut”, for amending the contract term until March 31, 2024, related to financing, as well as
amending the schedule for carrying out the investment provided by the contract.
Page 9 of 73
Consolidated Board of Directors’ Report 2022
July 8, 2022
Company’s shareholders appoint by Resolution No.6, Mr. Metea Virgil Marius as interim board member, as
of July 9, 2022 until September 14, 2022 and approve to extend the mandate of interim board members
appointed by OGMS Resolution No. 2 of February 28, 2022, by two months from the expiration date, namely
from July 14, 2022 until September 14, 2022.
July 12, 2022
The Company concluded the Addendum to Financing Contract No.4/07.12.2017 for the investment
“Combined cycle gas turbines” – Iernut, for amending the contract term until June 30, 2024 with respect to
financing, and for amending the investment completion schedule provided in the contract.
August 1, 2022
Romgaz announces completion of the acquisition and the transfer of all shares issued by EMEPRL,
successfully fulfilling all conditions precedent provided in the contract.
August 12, 2022
The Board of Directors appoints by Resolution No.57 for a 4-month term starting with August 17, 2022 until
December 17, 2022:
Mr. Popescu Răzvan as Chief Executive Officer;
Mr. Jude Aristotel Marius as Deputy Chief Executive Officer;
Mr. Bobar Andrei as Chief Financial Officer.
September 13, 2022
Company shareholders appoint by Resolution No.7 as interim board members for a 4-month term, starting
with September 15, 2022 until January 15, 2023, the following persons:
Drăgan Dan Dragoş
Jude Aristotel Marius
Batog Cezar
Metea Marius Virgil
Simescu Nicolae Bogdan
Balazs Botond
Sorici Gheorghe Silvian.
September 22, 2022
Company shareholders decide by Resolution No.9 to change the name from ExxonMobil Exploration and
Production Romania Limited to Romgaz Black Sea Limited.
September 30, 2022
Mr. Drăgan Dan Dragoș was elected Chairman of the Board of Directors; establishing the composition of
the advisory committees of the Board of Directors as follows:
Nomination and Remuneration Committee:
Mr. Sorici Gheorghe Silvian – chairman
Mr. Batog Cezar – member
Mr. Drăgan Dan Dragoș – member
Audit Committee:
Mr. Sorici Gheorghe Silvian – chairman
Mr. Batog Cezar – member
Mr. Simescu Nicolae Bogdan – member
Strategy Committee:
Mr. Balazs Botond – chairman
Page 10 of 73
Consolidated Board of Directors’ Report 2022
Mr. Drăgan Dan Dragoș – member
Mr. Jude Marius Aristotel – member
Mr. Metea Virgil Marius – member
Mr. Sorici Gheorghe Silvian – member
October 7, 2022
Finalize procedures to change the name of ExxonMobil Exploration and Production Romania Limited into
Romgaz Black Sea Limited.
October 19, 2022
Romgaz and SOCAR, national oil company of the Republic of Azerbaijan, sign in Bucharest a Memorandum
of Understanding formalising the intention to jointly develop a liquefied natural gas project at the Black Sea.
November 17, 2022
Company shareholders approve by OGMS Resolution No. 10:
the profile of board members;
candidate profile for the position as board member;
S.N.G.N. Romgaz S.A. electricity sales strategy for 2023–2026.
November 23, 2022
The Board of Directors appoints by Resolution No. 78, for a 4-month term, as of December 18, 2022 until
April 18, 2023:
Mr. Popescu Razvan as Chief Executive Officer;
Mr. Jude Aristotel Marius as Deputy Chief Executive Officer.
November 28, 2022
Company shareholders approve by Resolution No. 18, the Natural Gas Sale-Purchase Contract
No.VG55/2022 concluded between Romgaz and S Electrocentrale București S.A.
December 8, 2022
Company shareholders, approve by Resolution No.12:
to increase the loan facility limit for issuing letters of bank guarantee by RON 70 million, namely
from RON 350 million to the limit of RON 420 million;
to extend by 1 year the loan facility contract concluded with Banca Comercială Română S.A. for
issuing warranty instruments as letters of bank guarantee and irrevocable stand-by letters of credit,
to the limit of RON 420 million;
to issue the bank guarantee letter in amount of EUR 89,228.00, at the Lender’s (Romgaz) order, in
favour of the beneficiary Floreasca Business Park for securing the rent payment obligation for the
building where Romgaz Black Sea Limited performs its activities.
December 16, 2022
Romgaz and SOCAR Trading signed the first individual contract for the delivery of Azeri gas in Romania.
The individual contract allows planned gas deliveries as of January 1, 2023.
December 20, 2022
The Board of Directors appoints Mrs. Trânbițaș Gabriela, as Chief Financial Officer, by Resolution No.85,
for a 4-month term, as of December 20, 2022 until April 20, 2023.
Page 11 of 73
Consolidated Board of Directors’ Report 2022
II. Parent company at a glance
2.1. Identification Data
Name: Societatea Naţională de Gaze Naturale “ROMGAZ” SA
Main scope of activity: natural gas production
Address: Medias, 4 Constantin I. Motas Square, 551130, Sibiu County
Trade Registry registration number: J32/392/2001
Fiscal registration number: RO14056826
LEI Code: 2549009R7KJ38D9RW354
Legal form of establishment: joint-stock company
Subscribed and paid in share capital: RON 385,422,400
Number of shares: 385,422,400 each having a nominal value of RON 1
Regulated market where the company’s shares are traded: Bucharest Stock Exchange (shares) and London
Stock Exchange (GDRs)
Phone: 0040 374 401020
Fax: 0040 269 846901
Web: www.romgaz.ro
E-mail: secretariat@romgaz.ro
Bank accounts opened at: Banca Comerciala Romana, BRD-Groupe Société Générale, Citibank Europe,
Patria Bank, Raiffeisen Bank, Banca Transilvania, ING Bank, Eximbank, CEC Bank.
Shareholder Structure
On December 31, 2022 the shareholder structure was the following:
Shares
269,823,080
115,599,320
%
70.0071
29.9929
96,125,570
19,473,750
24.9503
5.0526
385,422,400
100.0000
Romanian State5
Free float – total, out of
which:
*legal persons
*natural persons
Total
Free float
30%
The
Romanian
State
In financial year 2022 the Company neither performed transactions with own shares nor held own shares
on December 31, 2022.
2.2. Company Organisation
5 the Romanian State through the Ministry of Energy
Page 12 of 73
Consolidated Board of Directors’ Report 2022
Romgaz organization structure is a hierarchy-functional type, with the following hierarchy levels from
company’s shareholders to execution personnel:
General Meeting of Shareholders
Board of Directors
Chief Executive Officer, Deputy Chief Executive Officer (with mandate), Chief Financial
Officer (with mandate)
managers without contract of mandate
heads of functional and operational departments subordinated to managers
execution personnel
The duties of the Board of Directors are detailed both in the Company’s Articles of Incorporation as well as
in the Terms of Reference of the Board of Directors.
The Chief Executive Officer, the Deputy Chief Executive Officer, the Chief Financial Officer, as well as
managers without contract of mandate are key people in the structure and operation of the company. The
heads of compartments (branches/departments/directions/offices etc.) representing the connection between
the upper structure and the employees of the respective compartment are directly subordinated to the afore-
mentioned.
Each compartment has its own duties well-defined in the company’s Rules of Organization and Operation
and all these elements work as a whole.
The tasks, duties and responsibilities of the execution personnel are included in the job descriptions of each
position.
The company has six branches, set up based on the specific of the activities performed and on the specific
of the region (natural gas production branches) as follows:
Sucursala Medias (Medias Branch) having its office in Medias, 5 Garii Street, postal code 551025,
Sibiu County, territorially organized in 8 sections;
Sucursala Targu Mures (Targu Mures Branch) having its office in Targu Mures, 23 Salcamilor
Street, postal code 540202, Mures County, territorially organized in 9 sections;
Sucursala de Interventii, Reparatii Capitale si Operatii Speciale la Sonde Medias (SIRCOSS –
Branch for Well Workover, Recompletions and Special Well Operations) having its office in
Medias, 5 Soseaua Sibiului Street, postal code 551009, Sibiu County, territorially organized in 3
sections and 5 workshops;
Sucursala de Transport Tehnologic si Mentenanta Targu Mures (STTM – Technological Transport
and Maintenance Branch) having its office in Targu Mures, 6 Barajului Street, postal code 540101,
Mures County, territorially organized in 5 sections and one laboratory;
Sucursala de Productie Energie Electrica Iernut (SPEE – Iernut Power Generation Branch) having
its office in Iernut, 1 Energeticii Street, postal code 545100, Mures County, organised in 7 sections;
Sucursala Drobeta-Turnu Severin (Drobeta-Turnu Severin Branch), having its office in Drobeta-
Turnu Severin, 27 Aurelian Street, Mehedinti County.
As of April 1, 2018 Sucursala Ploiesti ceased its activity and SNGN Romgaz SA – Filiala de Înmagazinare
Gaze Naturale Depogaz Ploieşti SRL (hereinafter “Depogaz”) became operational, managing the natural
gas underground storage activity.
Therefore, subject to EC Directive No. 73/2009 implemented by the Electricity and Natural Gas Law
123/2012 (art. 141), the storage activity is unbundled from SNGN Romgaz SA and performed by a storage
operator, namely a subsidiary, where SNGN Romgaz SA is sole associate.
The subscribed and paid in share capital of the company is RON 66,056,160, divided in 6,605,616 shares,
with a nominal value of RON 10/share.
The Subsidiary took over the operation of the underground storages licensed by SNGN Romgaz SA, the
operation of assets that contribute to performing the storage activity and the entire personnel performing
storage activities.
Information about Filiala Depogaz can be found at: https://www.depogazploiesti.ro
Page 13 of 73
Consolidated Board of Directors’ Report 2022
On August 1, 2022 Romgaz completed the transaction to acquire and the transfer of all shares issued by
(representing 100% share capital of) ExxonMobil Exploration and Production Romania Limited (currently
Romgaz Black Sea Limited), which holds 50% of the rights acquired and the obligations under the
Petroleum Agreement for the deep water zone of XIX Neptun offshore block in the Black Sea.
Romgaz Black Sea Limited is a company operating in compliance with the laws of the Commonwealth of
the Bahamas and which operates through its Romanian branch, Romgaz Black Sea Limited Nassau
(Bahamas), București subsidiary.
Whereas:
(i) Provisions of art.21 (“Debranding and Separation”) of the sale-purchase agreement of all shares issued
by (representing 100% share capital of) (hereinafter referred to “SPA”) ExxonMobil Exploration and
Production Romania Limited signed on May 3, 2022, by which Romgaz as buyer, has the obligation
after transaction completion, to change the name of the purchased company as well as its brand within
the terms provided in the SPA upon transaction completion, namely:
(a) to undertake, but not later than 90 (ninety) business days from completion all practical, legal,
regulatory, and administrative formalities to record and give effect to the change of Company’s
corporate, trade, company and all other business names of the Company; and
(b) to discard, but not later than 60 (sixty) business days from completion, all brand and visual
elements that are similar with those used by the Sellers and their affiliates, as well as all colour
combinations substantially identical with those used by the Sellers and their affiliates, and to
cease to use any domain names or URLs which include or resemble the words “Exxon”,
“Mobil”, “ExxonMobil”, or “Esso”, or any name which may be confused with or is similar to
such names;
(ii) Completion of the transaction to acquire EMEPRL shares on August 1, 2022;
(iii) Board of Directors Resolution No.56 of August 11, 2022;
(iv) Extraordinary General Meeting of Shareholders No.9 of September 22, 2022 approving:
(a) to change the name of the company from ExxonMobil Exploration and Production Romania
Limited to ROMGAZ BLACK SEA LIMITED;
(b) to amend Art. 1 of the Articles of Association of ExxonMobil Exploration and Production
Romania Limited as follows: “The name of the company is ROMGAZ BLACK SEA
LIMITED”,
SNGN Romgaz SA, the sole associate, decided on September 30, 2022, to change the name of ExxonMobil
Exploration and Production Romania Limited to Romgaz Black Sea Limited, as well as to amend Art. 1 of
the Articles of Association of ExxonMobil Exploration and Production Romania Limited as follows: “The
name of the company is Romgaz Black Sea Limited”
2.3. Mission, Vision and Goal
Mission
Sustainable increase of added value for the company, employees and shareholders, resilient over the long
term.
Vision
Gaining profit by producing and trading hydrocarbons and electricity, including electricity from renewable
sources, under efficiency and low emission conditions.
Goal
Future ambition to reach NetZeRomGAZ in our business. Romgaz plans to develop its business and to
reach net zero CO2 emissions by 2050.
2.4. Strategic Objectives, Strategic Options and Secondary Objectives
Page 14 of 73
Consolidated Board of Directors’ Report 2022
Strategic Objectives
Minimum 10% reduction of carbon, methane and other gas emissions (10-10-10). Reduction is set
for the validity term of the strategy (2021-2030) having 2020 as reference year;
Annual natural gas production decline below 2.5%;
EBITDA margin between 25-40%;
ROACE equal to or higher than 12%.
Strategic options and secondary objectives
We continue to develop the portfolio of resources focused on mitigating climate changes effects, centred
on resilient hydrocarbons and on operational safety and reliability:
Maximize the recovery factor of hydrocarbon reserves under safety, reliability and sustainable
development conditions;
Increase of onshore and offshore (Black Sea) hydrocarbon resources and reserves portfolio;
Electricity and energy with low CO2 emissions with large scale use of renewable energy sources, seeking
opportunities on the hydrogen market and developing a portfolio of gas clients to complete such low
CO2 emission energy:
Production of sustainable energy;
Minimum 10% reduction of carbon, methane and other gas emissions (10-10-10);
Digital transformation of the company and supporting innovations to approach new customer interaction
methods, to increase efficiency and to support new development directions;
Company digitalization;
Increase of market share and portfolio diversification;
Create long-term relationships with equal profitability for both the market and social environment:
Training human resources to embrace future trends in the field of sustainable energy;
Citizens in a green society.
Page 15 of 73
Consolidated Board of Directors’ Report 2022
III. Review of ROMGAZ GROUP business
3.1. Business Segments
Romgaz Group undertakes business in the following segments:
natural gas exploration and production (carried out at Romgaz and Romgaz Black Sea Limited);
UGS activity (carried out at Filiala Depogaz);
natural gas supply;
special well operations and services;
maintenance and transportation services;
electricity generation;
natural gas distribution.
Exploration
Since October 1997, the exploration activity is carried out in 8 blocks located in Transylvania,
Muntenia-Oltenia and Moldova, subject to the Concession Agreement approved by Government Decision
No. 23/2000.
Currently, exploration activities are performed under Addendum No. 6
(approved by GD
No.1011/22.09.2021 to the Concession Agreement for petroleum exploration-development-production
approved by GD No.23/2000, with a validity term of 6 years (10.10.2021 – 9.10.2027). The approved
minimum work program includes 36 wells with a total length of 92,000 m and 1,000 km2 3D seismic for all
eight blocks, with the total value of the program of USD 195 million.
Main works performed in 2022 are:
exploration drilling:
four wells are finalised, out of which one is in conservation, testing gas;
surface facilities in progress for one well;
procurement of drilling works for one well;
preparatory works for initiating procurement of drilling works for 27 wells;
two projects related to 3D seismic data acquisition and processing in exploration-development-
production blocks RG 07 Muntenia Centru and RG 06 Muntenia Nord-Est, covering an area of
approx. 650 km2.
Exploration works are designed and prioritised based on technical-economic principles, in order to increase
the hydrocarbon resources and reserves portfolio and to maximise the prospective potential of the eight
exploration-development-production blocks licensed by Romgaz.
The table below shows the evolution of the reserves replacement ratio between 2013-2022:
100.00
94.40
80.00
70.20
102.00
82.00
60.00
%
40.00
20.00
0.00
63.00
69.50
55.94
55.85
42.00
40.75
2013
2014
2017
Reserves replacement ratio is influenced by the improvement of the final recovery factor, by promoting
probable and possible reserves and by investments in the infrastructure necessary for streaming in
experimental production of new exploration discoveries.
2016
2019
2020
2015
2021
2018
2022
Page 16 of 73
Consolidated Board of Directors’ Report 2022
Production
The 2022 annual program for petroleum operations took into account the
gas demand dynamics, reactivation, recompletion and workover
operations, bringing into production new wells and exploration wells; the
program focused also on maintenance programs of compressor stations
and of dehydration stations.
2022 natural gas production was 4,935.9 million m3, by 93 million m3 lower than last year’s production,
representing a production decline of 1.8%.
Whereas most operational commercial fields are mature, in an advanced stage of energy depletion, keeping
the production decline below the committed level of 2.5% was possible mainly due to the following:
1. measures implemented to optimise gas field production;
2. investments to extend production infrastructure and to connect new wells to this infrastructure;
3. continuous production rehabilitation of the main mature gas fields: Filitelnic, Delenii, Laslău,
Sădinca, Copşa Mică, Nadeş-Prod-Seleuş, Roman, Corunca Sud, Târgu Mureş, Grebeniş, Bazna,
Cetatea de Baltă, Mărgineni, Corunca Nord, Iclănzel Vaideiu, Sărmăşel;
4. performing capitalisable repair works and well recompletion operations for inactive or low production
wells.
Underground Gas Storage
Currently, there are six operational UGSs in depleted gas reservoirs in Romania.
Romgaz owns and operates through Filiala Depogaz five UGSs with a total
capacity of 3.965 bcm and a working gas volume of 2.770 bcm.
Nationally, the ratio between the working gas volume and the annual consumption was about 25% in 2022.
This level ranks in the first upper half of the European values chart.
In 2022 the ratio between stored gas volumes and working volume of the UGSs was 99.39%.
The Romanian Government issued Emergency Ordinance No. 106/2020 amending Gas and Electricity Law
No. 123/2012 ruling deregulation of storage activities. Therefore, after the withdrawal cycle 2020-2021, the
storage activity is no longer regulated.
Natural Gas Supply
After a thorough restructuring, the Romanian natural gas sector is currently split
into independent activities. The Romanian natural gas market includes a National
Transmission System operator - NTS (Transgaz), producers (Romgaz and Petrom
holding together 97% of national production), underground gas storage operators,
companies for the distribution and supply of gas to captive customers, and
suppliers on the wholesale market.
.
In 2022, considering the international context generated by the increase of prices on energy markets, in order
to ensure a rigorous discipline on the national market and to ensure high economic and social customer
protection, the Government approved GEO 27/2022 on measures applicable to end users on the gas and
electricity market during April 1, 2022 – March 31, 2023, as well as to amend and supplement certain
enforcement guidelines in the energy sector. Enforceability of GEO 27/2022 was subsequently extended
until March 31, 2025.
Therefore, as of April 2022 there was a significant regulation of households and heat producers, both as
regards prices and contracted quantities.
In terms of supply, Romgaz held, between 2015-2022, a national market share ranging between 37%-49%:
Page 17 of 73
Consolidated Board of Directors’ Report 2022
National consumption
Romgaz traded volumes
(domestic + import)
Romgaz market share
unit
bcm
bcm
%
2015
2016
2017
2018
2019
2020
2021
2022
11.6
5.1
11.8
4.4
12.3
5.7
12.3
5.6
11.5
5.1
12.0
4.7
12.3
5.2
10.4
5.1
44.0
37.1
46.3
45.5
44.1
39.1
42.4
49.41
The above quantities include gas from own internal production, including technological consumption,
domestic gas purchased from third parties, 100% gas from Schlumberger joint venture (until 2018) and
import gas. Deliveries include gas delivered to Iernut and Cojocna for electricity production.
Well Workover, Recompletion and Special Operations
SIRCOSS was set up in 2003 in accordance with GSM Resolution No. 5/June 13, 2003. SIRCOSS performs
two main types of activities:
well workover, recompletion operations and production tests;
special well operations.
All well workover, recompletion operations and production tests are performed by means of rig installations.
The second main activity consists of special well operations, namely services supplied by means of different
transportable equipment for downhole or surface operations.
The operations performed in 2022 were characterised by an upward consolidation of volumes both in terms
of workover, recompletion operations and in terms of services supplied as special operations, thus
performing 7,793 operations.
As regards well reactivation works for 2022, 171 well operations were planned and 216 works were
performed.
The table below shows a comparison between planned and achieved recompletion operations and
capitalizable repairs for 2022:
Mediaș
Branch
82
105
23
Târgu Mureș
Branch
89
111
22
TOTAL
Romgaz
171
216
45
Planned
Achieved
Difference
Transportation and Maintenance
STTM was established in October 2003, by taking over the means of transportation from Medias, Targu-
Mures and Ploiesti branches.
The branch’s scope of activity is transportation of goods and people, specific technological transportation,
and maintenance activities for the benefit of the company and of third parties.
STTM car fleet includes various motor vehicles and machinery for the following transportation services:
passenger carriers: cars, minibuses, buses and large buses;
mixt transportation with utility vehicles < 3.5 t and utility vehicles ˃ 3.5 t;
technological transportation with trucks, platforms, dumpers, dump trucks, tankers, self-trailers and crane
trucks;
transport and machinery: tractors, bulldozers, front loaders, earth-moving machinery, excavators
Maintenance of the car fleet is carried out in own car services. STTM holds at the four sections (Târgu Mureṣ,
Mediaṣ, Ploieṣti and Roman), services authorised by the Romanian Automobile Register, with specialised
personnel for the maintenance of STTM vehicles and machinery.
As regards the maintenance activity, the various services are provided by specialized teams in the mechanical,
electrical and automation fields.
Page 18 of 73
Consolidated Board of Directors’ Report 2022
Electricity Generation
CTE Iernut is an important junction point of the NPG (National Power Grid), located in the centre of the
country, in Mures County, on the left bank of Mures River, between towns Iernut and Cuci, with gas and
industrial water sources and power discharge facilities.
CTE Iernut is operated by Romgaz through Sucursala de Productie Energie Electrica (SPEE).
CTE Iernut has an installed power of 800 MW and comprises 6 power units: 4 100 MW units of
Czechoslovakian manufacturing and 2 200 MW units of Soviet manufacturing. These units were
commissioned between 1963 and 1967. Taking in consideration the start of investment works at the 430 MW
CCGT Power Plant and the requirement to ensure appropriate conditions for the execution of works at the
related cooling circuit, unit 6 of 200 MW was decommissioned in November 2019.
In January 2019, units 2 and 3 of 100 MW were decommissioned followed by unit 1 (of 100 MW) in
November 2019; all units were decommissioned on the grounds of non-compliance with the environmental
conditions.
In 2022, SPEE Iernut operated with power unit 5 of 200MW, power unit 4 of 100 MW was decommissioned
due to non-compliance with NOx emission limits, provided by effective regulations. Therefore, at the end
of 2022, SPEE Iernut held the commercial operating licence for one power unit.
Natural Gas Distribution
The natural gas distribution activity is regulated, carried out in Ghercesti and Piscu Stejari areas. Romgaz
has concession agreements with the Ministry of Economy and Trade for Ghercesti area and with Piscu Stejari
Town Hall for Piscu Stejari distribution. The activity is carried out by Targu-Mures Branch.
Page 19 of 73
Consolidated Board of Directors’ Report 2022
3.2. Brief History
Societatea Nationala de Gaze Naturale “ROMGAZ” SA is Romania’s
most important natural gas producer and supplier. The company’s
experience in the field of gas exploration and production exceeds 100
years. Its history began in 1909 when the first natural gas commercial
reservoir was discovered, in the Transylvanian Basin, upon drilling of
well Sarmasel-2.
The most important historic benchmarks are:
• Natural gas discovery in Sarmasel (Transylvanian Basin)
• First gas production recorded in Romania (113,000 m3)
• On November 26, Societatea Ungară de Gaz Metan is established, receiving the right for gas
exploration and production from Transylnavia's richest gas fields
• Setting up the National Gas Company "SONAMETAN"
• First underground gas storage in Romania, at Ilimbav, Sibiu County
• Use of compressors in the course of production
• Maximum gas production obtained by Romgaz (29,834 million m3)
• Import gas from the Russian Federation
1909
1913
1915
1925
1958
1972
1976
1979
1991
• Centrala Gazului Metan was reorganized, by Government decision, to Regia Autonoma
"ROMGAZ" RA
1998
2000
2001
2013
2015
2018
2022
• "ROMGAZ" RA becomes Societatea Naţională de Gaze Naturale "ROMGAZ" SA
• SNGN "ROMGAZ" SA was reorganized in five independent companies (SC "Exprogaz" SA
Mediaş, SNDSGN "Depogaz" SA Ploieşti, SNTGN "Transgaz" SA Mediaş, SC "Distrigaz Sud"
SA Bucureşti şi SC "Distrigaz Nord" SA Tîrgu-Mureş
• The current SNGN "ROMGAZ" SA Medias was established
• Company shares are traded on Bucharest Stock Exchange and London stock Exchange (GDR's)
• Unbundling the underground gas storage activity by setting up Filiala de Înmagazinare Gaze
Naturale Depogaz SRL Ploieşti
• As of April 1, 2018 Filiala de Înmagazinare Gaze Naturale Depogaz SRL Ploieşti became
operational
• Acquisition of all shares issued by ExxonMobil Exploration and Production Romania Limited,
which holds 50% of the rights and obligations under the Petroleum Agreement for the eastern
area, deep water zone, of Neptun XIX offshore block in the Black Sea.
Page 20 of 73
Consolidated Board of Directors’ Report 2022
3.3. Mergers and Reorganisations, Acquisitions and Divestments of Assets
Changes to the organisational structure
-
-
-
BoD Resolution No. 16 of March 22, 2022 amended the organisational structure as follows:
set up the Corporate Governance, Capital Market and Investor Relation Direction;
changed the Corporate Governance Department into Corporate Governance Office subordinated to
the Corporate Governance, Capital Market and Investor Relation Direction;
subordinated the Capital Market Department to the Corporate Governance, Capital Market and
Investor Relation Direction;
set up the Reporting Department and the Social Responsibility and Statistics Office subordinated to
the Corporate Governance, Capital Market and Investor Relation Direction;
subordinated the Headquarters Monitoring Office to the Technical Direction;
subordinated the Electricity Trading and Self-Supply Department to the Electricity Market
Development Department;
dissolved the Investment Compartment within Iernut Power Plant and established the Development-
Investment Department;
-
-
-
-
Decision No. 1659/08.12.2022 amended the organisational chart, by setting up the Department Supply
of Last Resort within the Energy Trading Department.
No mergers of the company took place in financial year 2022.
3.4. Group’s Business Performance
The Group’s revenues are generated mainly from gas production and deliveries (own gas production and
delivery, gas produced by joint ventures, import gas deliveries and gas deliveries from other domestic
producers), from supply of underground gas storage services, from production and supply of electricity and
from other specific services.
Financial Results
Item
No.
0
1
2
3
4
5
6
7
Description
1
Total Income, out of which:
*operating income
*financial income
Revenue
Expenses – total, out of which:
*operating expenses
*financial expenses
Share of associates’ result
Gross Profit
Income tax
Net Profit
2021
2
6,156,535
6,098,082
58,453
5,852,926
3,999,369
3,982,298
17,071
2022
3
13,658,095
13,438,793
219,302
13,359,653
9,506,196
9,433,625
72,571
*RON thousand*
Ratio
(2022/2021)
4=(3/2-1)x100
121.85%
120.38%
275.18%
128.26%
137.69%
136.89%
325.11%
85
2,350
2,664.71%
2,157,251
4,154,249
(242,264)
(1,607,537)
1,914,987
2,546,712
92.57%
563.55%
32.99%
The total income of 2022 was higher by 121.85% as compared to 2021.
Below are the compared economic-financial indicators for 2021 and 2022 and their detailed structure split
by activity:
Page 21 of 73
Consolidated Board of Directors’ Report 2022
Description
Indicators split by activities – 2021 (restated*)
Gas
production
and
deliveries
3
2021,
out of
which:
2
TOTAL
1
Underground
Gas Storage
Electricity
*RON thousand*
Other
activities
Settlement
between
segments
4
313,456
(2)
534
(7,995)
-
5
458,656
(33,901)
7
(95)
(12,593)
6
408,161
(753)
85,823
28,804
(51)
7
(813,833)
-
(28,094)
6,273
-
5,852,926
(281,589)
58,403
23,388
349,989
5,486,486
(246,933)
133
(3,599)
362,633
74,787
(81,146)
73,538
(43,135)
-
(21,606)
25
(208,174)
1,224
(13,705)
-
205,474
(685,772)
(580,293)
(8,506)
(7,102)
(25,877)
(63,994)
(766,639)
(16,739)
(1,197)
85
(2,539,086)
169,841
2,157,251
(242,264)
1,914,987
(453,144)
(14,829)
(1,197)
-
(2,644,595)
41,036
1,976,101
-
1,976,101
(72,325)
(1,387)
-
-
(169,101)
274
33,342
(2,835)
30,507
(47,959)
-
-
-
(259,850)
126,909
15,923
-
15,923
(193,221)
(553)
-
85
(74,442)
2,071
217,566
(239,429)
(21,863)
10
30
-
-
608,902
(449)
(85,681)
-
(85,681)
Revenue
Cost of commodities sold
Investment Income
Other gains and losses
Net losses from impairment of
trade receivables
Changes in inventories
Raw materials and
consumables
Depreciation, amortization
and impairment
Employee benefit expense
Finance cost
Exploration Expenses
Share of associates’ result
Other Expenses
Other Income
Profit before tax
Income tax expense
Profit for the year
*) In 2022, Romgaz main decision-maker decided to change the manner of reporting gas and electricity deliveries
between its branches. In the past, these deliveries were accounted as costs. As of 2022, these deliveries are accounted
at the market price or at regulated price, as the case may be. The change, allows the management to have a better view
on performance of its business segments. Following this change, the compared indicators split by activities for 2021
were restated. Neither Romgaz nor the Group’s results are affected by this change.
Indicators split by activities – 2022
Description
1
Revenue
Cost of commodities sold
Investment Income
Other gains and losses
Net losses from impairment of
trade receivables
Changes in inventories
Raw materials and
consumables
Depreciation, amortization
and impairment
Employee benefit expense
Finance cost
Exploration Expenses
Share of associates’ result
Other Expenses
Other Income
Profit before tax
Income tax expense
Profit for the year
TOTAL
2022,
out of
which:
2
Gas
production
and
deliveries
3
13,359,653
(183,578)
176,979
(9,441)
(55,166)
12,355,984
(15,009)
609
257,414
(44,137)
Underground
Gas Storage
Electricity
*RON thousand*
Other
activities
Settlement
between
segments
4
475,989
(3)
2,547
(2,417)
-
5
1,646,783
(167,405)
40
(291)
(1,510)
6
438,097
(1,161)
187,755
(265,940)
(9,519)
7
(1,557,200)
-
(13,972)
1,793
-
(2,197)
(118,037)
(3,272)
(83,127)
-
(43,925)
16
(732,422)
1,059
(17,691)
-
759,128
(550,076)
(426,336)
(12,329)
(10,160)
(25,470)
(75,781)
(846,001)
(27,295)
(59,714)
2,350
(7,613,296)
80,068
4,154,249
(1,607,537)
2,546,712
(491,677)
(19,942)
(59,714)
-
(7,308,009)
66,750
4,229,534
(1,002,428)
3,227,106
(75,505)
(1,861)
-
-
(226,757)
28
115,767
(15,948)
99,819
(49,262)
-
-
-
(736,940)
1,199
(49,952)
-
(49,952)
(229,557)
(5,563)
-
2,350
(140,095)
12,500
(53,235)
(589,161)
(642,396)
-
71
-
-
798,505
(409)
(87,865)
-
(87,865)
Page 22 of 73
Consolidated Board of Directors’ Report 2022
Revenue
The table below shows the compared revenue and the revenue share on activity segments:
Description
2020
2021
2022
Gas production and delivery
UGS activity
Electricity generation and delivery
Other activities
Settlement between branches
TOTAL Revenue
RON
mln
3,690.2
333.9
261.1
376.9
-587.3
4,074.9
%
Revenue
90.56
8.19
6.41
9.25
-14.41
100.00
RON
mln
%
RON
mln
Revenue
5,486.5 93.74% 12,356.0
476.0
5.36%
1,646.8
7.84%
438.1
6.97%
-1,557.2
-13.90%
100.00 13,359.7
313.5
458.7
408.2
-813.8
5,852.9
%
Revenue
92.49%
3.56%
12.33%
3.28%
-11.66%
100.00
Financial income
The financial income is higher by 275.18 % than recorded in the previous year. Financial income consists
mainly of interests from cash in bank deposits and in state bonds.
Expenses
Description
1
Operating expenses
Financial expenses
Total expenses
Year 2021
Year 2022
(2022/2021)
Ratio
(RON
thousand)
2
3,982,298
17,071
3,999,369
(RON
thousand)
3
9,433,625
72,571
9,506,196
4=(3-2)/2x100
136.89%
325.11%
137.69%
Financial expenses
Financial expenses incurred in 2022 are higher by 325.11% as compared to the previous year.
Chapter 7 shows a detailed split of different expenses categories and a comparative assessment thereof.
Economic-Financial Results
Compared economic-financial results are shown in the table below (RON thousand):
Description
1
Operating results
Financial results
Share of associates’ result
Gross result
Income tax
Net result
2021
2
2,115,784
41,382
85
2,157,251
(242,264)
1,914,987
2022
Ratio
3
4,005,168
146,731
2,350
4,154,249
(1,607,537)
2,546,712
(2022/2021)
4=(3-2)/2x100
89.30%
254.58%
2,664.71%
92.57%
563.55%
32.99%
Gross result for January – December 2022 in amount of RON 4,154,249 thousand is by 92.57% higher than
the gross result of 2021.
Financial Performance is also emphasized by the evolution of indicators presented in the table below:
Indicators
1
Working capital (WC)
Working capital requirements (WCR)
Net cash
Formula
2
Clt-Af =
E+Lnc+Pr+Si-Af
M.U.
3
RON mln
2021
4
4,223
2022
5
1,398
(Ast-L+Pp) -
(Lcrt-Crst+Idf)
RON mln
639
164
WC-WCR = L-
Crst
RON mln
3,584
1,562
Page 23 of 73
Consolidated Board of Directors’ Report 2022
Indicators
1
Economic Rate of Return (ERR)
Return on Equity
Return on Sales
Return on Assets
EBIT
EBITDA
ROCE
Current liquidity
Asset Solvency
where:
Formula
2
Pg/Cltx100
Pn/Ex100
Pg/Rx100
Pn/Ax100
Pg+Exi-Ir
EBIT+Am
M.U.
3
%
%
%
%
RON mln
RON mln
EBIT/Cempx100
Ac/Lc
E/Lx100
%
-
%
2021
4
22.04
21.32
36.86
16.96
2.099
2.785
21.44
3.81
79.53
2022
5
35.15
25.27
31.10
17.77
3.983
4.532
33.70
1.56
70.33
Clt
Af
E
Lnc
Pr
Si
Ast
L
Pp
Crst
Idf
long-term capital;
non-current assets;
equity;
non-current liabilities;
provisions;
investment subsidies;
short term assets;
liquidity position;
Prepayments;
short-term credit;
deferred income
Pg
Pn
R
A
Exi
Ir
Am
Cemp
Ac
Lc
L
gross profit;
net profit;
revenue;
total assets;
interest expense;
interest income
amortization and impairment;
capital employed (total assets–current liabilities)
Current assets
Current liabilities
total liabilities
Sales Evolution and Perspectives
The table below shows the evolution of delivered gas quantities, by splitting gas quantities delivered to third
parties and quantities used for electricity production in own plants:
Description
Delivered gas
Sales to third parties
Gas for electricity production in
own power plant
unit
mil. m3
mil. m3
mil. m3
2020
4,688.1
4,406.2
277.2
2021
5,167.6
4,966.7
192.5
2022
5,061.7
4,722.0
339.7
2021/2020 2022/2021
+10.2%
+12.7%
-30.6%
-2.0%
-4.9%
+76.5%
Description
Delivered gas
Sales to third parties
Gas for electricity production in own
power plant
unit
TWh
TWh
TWh
2021
54.141
52.018
2.123
2022
53.277
49.701
3.576
2022/2021
-2.0%
-4.9%
+76.5%
The entire gas quantity traded by Romgaz was sold on the domestic market. Romgaz traded gas quantities
both on the regulated market and on the free market, both by bilateral negotiation as well as on the centralised
market managed by the Romanian Commodities Exchange (BRM).
The quantity of 49.70 TWh was delivered to the market, to third parties, as follows:
Gas delivered under contracts concluded on centralised markets (GRP and other contracts concluded
on the centralised market): 11.46 TWh (23.08%);
Gas delivered under GEO 27/2022: 16.68 TWh (33.56%);
Gas delivered under bilateral negotiated contracts: 21.55 TWh (43.36%), out of which:
to Electrocentrale Bucureşti and Electrocentrale Constanța: 9.41 TWh (18.94%).
o
Page 24 of 73
Consolidated Board of Directors’ Report 2022
As compared to 2021, Romgaz recorded a 2% drop of both production and delivered volumes. Gas deliveries
from own production increased by 3.4% as compared to 2021.
Gas delivered to third parties decreased by 4.9%. We state that in 2022 no import gas quantities were traded.
Gas quantities used at CTE Iernut increased by 68.64% as compared to 2021.
As regards gas trading on Romanian centralised markets, Romgaz share was about 27% from the total gas
traded on these markets (forward and SPOT) with delivery in 2022 until enforcement of GEO 27/2022. With
respect to quantities, Romgaz traded 11.46 TWh with delivery in 2022 on centralised markets, out of 42.7
TWh that represented all transactions on these markets with the same delivery period.
Until enforcement of GEO 27/2022, Romgaz was active on the SPOT market – on the day ahead market, the
intraday market, on one hand in order to optimise sales and on the other hand to balance the portfolio, the
quantities sold on such markets are approximately 0.45 TWh.
2023 gas sales perspectives are characterized by:
high delivery prices given the domestic and international gas market context, characterised by the
instability of supply sources, but below the prices of 2022;
according to GEO 27/2022, we estimate that a significant gas quantity from Romgaz internal
production will be traded at regulated prices.
Competition and Market Share of Romgaz Products and Services
The evolution of the gas market was significantly influenced by two factors:
-
-
surging domestic and international gas prices within the geopolitical situation that limited gas sources
from the Russian Federation and their partial replacement with LNG;
enforcement of GEO 27/2022 and subsequent acts to protect households and heat producers by
distributing gas from internal production at a capped price for the above mentioned customer categories;
The cumulated impact of these conditions led to a 16% decrease of national consumption, as several
production facilities were closed due to increased gas prices and implementation of energy efficiency
measures.
In this context, Romgaz traded gas at regulated prices to household suppliers, to suppliers of heat producers
and directly to heat producers approximately 33.3% of the total gas sold in 2022. Following extension of
GEO 27/2022 applicability, Romgaz had to sell an insignificant gas quantity on the competitive market, with
delivery in 2023, until the Transmission System Operator - TSO (SNTGN Transgaz SA) allocated the
quantities to be sold at regulated price.
According to company’s estimates, national gas consumption decreased by approximately 16% as compared
to 2021. Romgaz share in the national consumption increased by 7% as compared to 2021.
According to preliminary data of the system operator, national electricity production reached 54,193,070
MWh in 2022. Romgaz share on the wholesale electricity market was 2.05%, higher than last year by
91.59%.
Annual evolution of electricity production and market share:
Description
2020
2021
2022
National production
Romgaz production
Romgaz market share
(MWh)
55,519,195
937,500
1.69
(MWh)
58,560,986
640,001
1.07
(MWh)
54,193,070
1,110,456
2.05
2021/2020
(%)
5.48
-31.73
-35.50
2022/2021
(%)
-7.46
73.51
91.59
As regards electricity generation sources, in 2022, these were as follows6 :
30% hydro;
18% coal;
19% nuclear;
16% gas;
6 Approximate levels - Source ANRE, market reports. Note: on the date of preparing the Report, ANRE did not publish the annual
report containing the energy label.
Page 25 of 73
Consolidated Board of Directors’ Report 2022
17% renewable sources and other producers.
Market Dependence
The Romanian gas market situation allowed the company to have an extended customer portfolio both on
centralized markets and as regards contracts by direct negotiation. Moreover, the company has a balanced
portfolio as regards the ratio between the end user market (especially power plants) and the wholesale market
where it sells gas to suppliers.
Law No. 123/2012 sets the regulatory framework for natural gas production, transmission, distribution,
supply and storage, for organization and operation of the gas sector, for market access as well as criteria and
procedures for granting authorizations and/or licenses in the natural gas sector.
In 2022, Romgaz Group activated both on the regulated market carrying out distribution activities and on
the free market, carrying out gas and electricity production and supply activities and underground storage
activities.
Underground Gas Storage
By GEO 106/2020 on amending Electricity and Gas Law 123/2012, the Romanian Government decided that
gas storage activities will no longer be regulated. Therefore, after the withdrawal cycle 2020-2021, storage
activities are no longer regulated.
Taking into account GEO 106/2020 and Law No. 155/2020 on amending and supplementing Law 123/2012,
starting with April 1, 2021 the price and tariffs system for storage activities is no longer set by the National
Energy Regulatory Authority.
As a result, storage tariffs for the two compared periods were approved by ANRE Order No.24 of March 23,
2020 (01.04.2020-31.03.2021), Depogaz Board of Directors Resolution 3/2021 (01.04.2021-31.03.2022)
and Depogaz Board of Directors Resolution 1/2022 (01.04.2022-31.03.2023).
The table below shows the storage tariffs:
Tariff component
unit
Volumetric component for gas injection
Fixed component for capacity reservation
Volumetric component for gas withdrawal
RON/MWh
RON/MWh/storag
e cycle
RON/MWh
Tariff
(01.04.2020-
31.03.2021)
3.67
7.58
Tariff
(01.04.2021-
31.03.2022)
2.29
9.31
2.03
1.74
Tariff (as of
01.04.2022)
4.50
11.44
3.48
Natural Gas Supply
Romgaz average gas supply price increased significantly in 2022, by 210% higher than the average price of
2020 and by 135% higher than the average price of 2021, taking into account that most of the gas sold in
2022 was at regulated price, together with invoicing some gas quantities at a capped price, according to GEO
27/2022.
The table below shows the average gas supply prices between 2020-2022:
Description
1
Average supply price for gas from internal
production7
unit
2
RON/1000 m3
RON/MWh
2020
3
751.3
73.3
2021
4
1,019.66
96.66
2022
5
2,392.06
227.27
Natural Gas Distribution
Regulated distribution tariffs valid for the reviewed period are approved by ANRE Orders, as follows:
Order 56/2020 on setting the unitary tariff for regulated supply services between January 1- June 30,
2020 and on approving regulated gas prices for Societatea Naţională de Gaze Naturale "ROMGAZ"
- S.A. Medias (as of January 1, 2020);
7 Including commodity gas, less storage costs.
Page 26 of 73
Consolidated Board of Directors’ Report 2022
Order 122/2020 on approving regulated tariffs applicable to distribution services for Societatea
Naţională de Gaze Naturale "ROMGAZ" - S.A. Medias (as of July 1, 2020);
Order 77/2021 on approving regulated tariffs applicable to distribution services for Societatea
Naţională de Gaze Naturale "ROMGAZ" - S.A. Medias (as of July 1, 2021);
Order 57/2022 on amending Order 77/2021 on approving regulated tariffs applicable to distribution
services for Societatea Naţională de Gaze Naturale "ROMGAZ" - S.A. Medias (as of April 1, 2022);
Tariffs are shown in the table below:
Description
01.01.’20-
30.06.’20
01.07.’20-
30.06.’21
01.07.’21-
31.03.’22
01.04.’22-
today
Distribution tariffs (RON/MWh)
*C1 consumption up to 280 MWh
*C2 annual consumption between 280 and 2.800 MWh
*C3 annual consumption between 2.800 and 28.000
MWh
52.87
0.00
50.00
52.52
46.17
41.29
48.19
42.37
37.91
49.31
43.35
38.79
On December 31, 2022, Romgaz Group had 5,971 employees and SNGN Romgaz SA 5,453 employees.
The table below shows the evolution of employees’ number during January 1, 2020 – December 31, 2022:
Description
2020
2021
2022
1
Employees at the beginning of the
year
Newly hired employees
Employees who terminated their
labour relationship with the company
Employees at the end of the year
Romgaz
Group
3
6,251
Romgaz Romgaz
Group
3
6,188
4
5,738
Romgaz Romgaz
Group
5
5,863
4
5,673
198
261
177
242
179
504
157
467
354
246
Romgaz
6
5,363
315
225
6,188
5,673
5,863
5,363
5,971
5,453
The structure of SNGN Romgaz SA employees at the end of 2022 was the following:
a) by level of education
University
Secondary education
Foreman education
Vocational school
Middle school
26.63 %
30.90 %
2.20 %
31.41 %
8.86 %
b) by age
under 30 years
30-40 years
40-50 years
50-60 years
over 60 years
c) by activities
gas production
production tests/well special operations
health
transportation
electricity production
5.76 %
13.08 %
29.30 %
44.97 %
6.90 %
71.43 %
11.66 %
1.61 %
9.02 %
6.27 %.
Page 27 of 73
Consolidated Board of Directors’ Report 2022
Distribution of Romgaz employees by headquarters and by branches is shown in the figure below:
Iernut Power
Plant 6%
STTM
9%
SIRCOSS
12%
Headquarters
12%
Medias …
Targu Mures
Branch
29%
Distribution of Romgaz employees by headquarters and by branches is shown in the figure below:
Entity
Workers
Foremen
Headquarters
Mediaş Branch
Targu-Mures Branch
SIRCOSS
STTM
Iernut Branch
Drobeta Turnu Severin Branch
TOTAL
40
1,366
1,270
473
370
225
3,744
84
53
49
15
30
231
Administrative
employees
635
292
241
114
107
87
2
1,478
Total
675
1,742
1,564
636
492
342
2
5,453
In 2022, professional training courses were meant to increase competitiveness and to improve professional
performance.
Thus, the following were taken into account:
training of administrative employees in various areas of activity, in cooperation with national
training suppliers;
authorization/re-authorization, according to their specialization and position;
skills improvement and vocational training of workers through internal training courses.
A number of 1,450 employees were trained in 2022 and expenses incurred amount to RON 904 thousand
(44.48% out of RON 2,033 thousand – total amount allocated for 2022).
The annual training program was implemented as follows:
1,450 persons participated in professional training programs on job related subject matters;
403 persons participated in training courses to obtain authorization and re-authorization in
accordance with their position;
217 persons participated in internal training courses;
As regards the number of participants, the 2022 professional training plan was fulfilled 81.32%. This was
caused partly by the SARS-CoV2 pandemic and by implementing in the first part of 2022 a procedure related
to procurement of training services.
The program „ROMGAZ SCHOLARSHIPS” was initiated in 2022 and it focuses on identifying young
professionals and future employees of our company. Therefore, the company concluded framework
agreements with Universitatea Lucian Blaga Sibiu – Facultatea de Inginerie, Universitatea Babeș-Bolyai
Cluj-Napoca – Facultatea de Biologie și Geologie, Universitatea Petrol-Gaze Ploiești, Universitatea
Alexandru Ioan Cuza Iași – Facultatea de Geografie și Geologie and Universitatea Politehnica București –
Facultatea de Energetică.
The scholarships in amount of 1,500 RON/month are intended for students in their third, fourth study year
and/or master students major in the following:
Hydrocarbon Transmission, Storage and Distribution (students) and Engineering and Gas Management
(master students) - Universitatea Lucian Blaga Sibiu;
Page 28 of 73
Consolidated Board of Directors’ Report 2022
Petroleum Engineering, Geological Engineering and Hydrocarbon Transmission, Storage and
Distribution (students) and Well Drilling, Hydrocarbon Transmission, Storage and Distribution
Technologies, Reservoir Engineering (master students ) - Universitatea Petrol-Gaze Ploiești;
Geological Engineering (students) and Applied Geology (master students) - Universitatea Babeș-Bolyai
Cluj-Napoca;
Geological Engineering (students) and Well Geology (master students) - Universitatea Alexandru Ioan
Cuza Iași;
Thermal energetics, Energy Management, Energetics and Fluid Engineering (students) and Energetic
Services, Energetic Efficiency, Hydro-Informatics and Fluid Engineering, Energy System management
(master students) - Universitatea Politehnica București – Facultatea de Energetică.
In 2022, 12 scholarships were awarded following application and interview session, as follows:
4 scholarships – Universitatea Lucian Blaga Sibiu: three students and one master student – the latter was
employed in May 2022 at Medias Branch as engineer at Delenii Rehabilitation Project Unit;
6 scholarships – Universitatea Petrol-Gaze Ploiești: five students and one master student;
2 scholarships – Universitatea Alexandru Ioan Cuza Iași – two students.
As of 2018, the company concluded partnership contracts for dual education with Colegiul Școala Națională
de Gaz Mediaș (2018-2021 and 2022-2025) and with Liceul Tehnologic Iernut (2020-2023, 2021-2024 and
2022-2025). 65 individual training contracts were signed in 2022 with students who chose to follow this
study programme. These students receive a monthly scholarship of RON 200.
The training areas are the following:
Colegiul Școala Națională de Gaz Mediaș:
o 14 high-school students (9th grade – class of 2022-2025) – gas production, treatment and
distribution;
Liceul Tehnologic Iernut:
o 9 high school students (9th grade – class of 2022-2025) – electro mechanic, professional
qualification as boiler, steam turbine, auxiliary and heating plant operator;
o 8 high school students (9th grade – class of 2022-2025) – electrical, professional
qualification as electrician operating power plants, stations and electrical networks;
o 8 high school students (10th grade – class of 2021-2024) – electrical, professional
qualification as electrician operating power plants, stations and electrical networks;
o 9 high school students (10th grade – class of 2021-2024) – electro mechanic, professional
qualification as boiler, steam turbine, auxiliary and heating plant operator;
o 7 high school students (11th grade – class of 2020-2023) – electrical, professional
qualification as electrician operating power plants, stations and electrical networks;
o 10 high school students (11th grade – class of 2020-2023) – electro mechanic, professional
qualification as boiler, steam turbine, auxiliary and heating plant operator.
In 2022, part of the graduates of the first dual education class of Colegiul Școala Națională de Gaz Mediaș
(2018-2021) were employed on positions according to their studies at Medias, Targu Mures and SIRCOSS
Branches. Out of the 18 graduates of Colegiul Școala Națională de Gaz Mediaș, 14 were employed (78%).
Romgaz Group has two trade unions:
“Sindicatul Liber din cadrul S.N.G.N. Romgaz S.A.”, consisting of 5,392 members, out of the 5,453
employees, resulting a ratio of 98.88% union members;
“Sindicatul Filiala Inmagazinare DEPOGAZ”, consisting of 379 members.
Relationship between manager and employees: on May 31, 2022 the parties concluded a new Collective
Labour Agreement for SNGN Romgaz SA, registered at Sibiu Labour Inspectorate under no.
8075/31.05.2022, valid as of June 1, 2022 until May 31, 2024, inclusive.
There were no conflicts between the management and the trade union in 2022.
Page 29 of 73
Consolidated Board of Directors’ Report 2022
In 2022, the environmental protection activity continued to focus on ensuring compliance with the Group’s
obligations in this respect. Another aim was meeting specific objectives related to:
increasing awareness on compliance with legal requirements;
monitor drafting of all reports required by the effective environmental legislation, by centralizing the
information required and reported by Romgaz Branches and submitting it to competent authorities;
efficiency of environmental protection activities which support the management process.
In 2022 environmental protection activities focused on:
complying with legal and regulatory requirements, operating in an environmentally responsible manner;
actions to reduce the consumption of utilities, materials and the level of polluting emissions;
reducing the consumption of process water, technological gas and triethylene glycol (used in gas
conditioning);
reducing the consumption of compressor parts and compressed gas cooling components;
controlled disposal of hazardous substances treating cooling water;
integrating environmental aspects in all decision making processes;
communication and cooperation with all suppliers and stakeholders, to minimise the impact of their
operations on the environment;
maintaining compliance with the provisions of regulations (environmental and water management
permits/agreements/authorisations) issued for the activities;
promoting respect for the environment in balance with economic growth in every strategic decision.
daily updating the Register of environmental regulatory acts applicable to all activities, thus ensuring
the Group's permanent compliance;
conducting environmental protection training, at least annually, for Romgaz employees and service/work
providers operating on the company's locations;
compliance with permitting requirements:
complying with legal requirements related to environmental permits for all 119 units. Thus, the company
took the following steps: required and obtained review of permits for 9 units; re-authorisation was
requested and obtained for 6 units; the annual endorsement was filed for 26 units; the annual
endorsement was obtained for 71 units, submitted required documents for temporary ceasing activities
at 7 units; submitted required documents for ceasing activity at 3 units;
complying with legal requirements regarding water management permits, for:
83 units for water use, mentioning that for 18 units the company submitted
authorisation/reauthorisation documents;
40 units related to reservoir water injection systems/wells.
A company-wide application is under development to monitor environmental/water/injection permits,
permanently analysing and continuously supervising compliance with legal requirements on environment
protection;
Management of waste generated from own activities, according to the legal requirements in force.
Activities related to waste management are performed in compliance with environmental protection laws
that reflect the requirements of national and European laws. In 2022, the company recycled and co-
incinerated 845.978 tons of waste (769.978 tons were recycled and 76 tons were co-incinerated), disposal
of 2,047.726 tons waste (by incineration 0.128 tons and by storage 2,047.598 tons).
Page 30 of 73
Consolidated Board of Directors’ Report 2022
AMOUNT OF WASTE MANAGED IN 2022 (2,893.704 tons)
0,128
845,978
2.047,598
3 000
2 000
1 000
Quantity disposed by storage
Quantity recycled and co-incinerated
Quantity disposed by incineration
In 2022, the “Program for Preventing and Reducing Waste Generated by S.N.G.N. Romagaz S.A.” focused
on the accomplishment of the measures thereunder; the program can be accessed at the following link
https://www.romgaz.ro/ro/content/program-de-prevenire-si-reducere-cantitatilor-de-deseuri.
The Program aims at continuously identifying the objectives, targets and action policies the company is
required to comply related to waste management in order to fulfil the country’s strategic objectives.
Moreover, it sets the framework for ensuring a sustainable waste management to achieve objectives and
targets;
Monitoring compliance with legal requirements on environment protection. In 2022 Romgaz did not
exceed the limits permitted by regulations in force;
In 2022, Romgaz continued to monitor compliance with permanent or multiannual measures of
implementation provided in the Remedial Report (maintenance of the perchlorethylene consumption
under 1 tonne/year, for each location, to comply with the provisions of GD No. 699/2003 on establishing
certain measures for decreasing emissions of volatile organic compounds resulting from the use of
organic solvents in certain activities and installations, locating industrial units at safe distances from
protected receivers;
Reducing fugitive emissions in the areas with calibration tanks, metallic tanks and concrete reservoirs
for temporary storage of reservoir waters – by equipping the tanks with ecologic dispersion systems;
Periodic payment of the contribution towards the “Closing Fund”, until reaching the mandatory
provision, for Ogra specific waste facility, supervising the annual monitoring frequency for
Dumbravioara drilling waste facility, closed in 2003;
Planning and organizing the internal environmental inspection activity in order to verify compliance
with the legal requirements applicable to inspected activities.
Inspectors planned in 2022 – 39 internal environmental inspections at locations belonging to Romgaz
branches. Romgaz activity complies with the applicable legal environmental requirements, with a 96%
compliance identified following implementation of an assessment procedure, representing a very good
value indicating potential for reaching 100%;
Assessing the compliance with environmental protection requirements and contractual requirements of
contractors and subcontractors of drilling works contracted by Romgaz in 2022;
Accomplishing actions/measures programs for prevention and/or limitation of the impact on the
environment for 2022, as follows:
procurement/modernisation of reservoir water storage tanks and hydrocarbon decanter-
separators;
waste water measuring and discharge facility;
procurement of products for preventing pollution and for interventions in case of accidental
install waste water systems;
transform abandoned wells into reservoir water injection wells;
pollution;
Page 31 of 73
Consolidated Board of Directors’ Report 2022
laboratory analyses to monitor and measure environmental factors, required by regulatory
documents. In this respect, the company publishes quarterly a Measuring-Monitoring Register
of environmental factors, which can be viewed at https://www.romgaz.ro/factori-de-mediu ;
landslide stabilisation;
install anti-pollution backflow systems on well groups;
install sound absorbing panels;
reduce noise levels;
waste management compliance from activities;
compliance with CO2 emissions from SPEE Iernut combustion facilities;
making all payments required by the applicable environmental legislation (environmental fund,
environmental/water authorisation/re-authorisation fees, provisions, water consumption
subscriptions, etc.);
Monitoring one of Romgaz strategic objectives included in SNGN ROMGAZ SA Strategy for 2021-2023,
namely “Minimum 10% reduction of carbon, methane and other gas emissions (10-10-10)” having 2020 as
reference year. Therefore, CO2 emissions were determined in 2022, through an inventory of emission
sources, resulting the following:
879,204.771 tons, from mobile and immobile sources and
871,025.126 tons, from immobile sources.
In 2022, the Environmental Guard, the Water Basins Administrations and Environmental Protection
Agencies carried out 26 inspections at Romgaz locations. The company did not receive any fine.
CO2 Certificates - SPEE Iernut
By GD No. 1096/2013 on approving the mechanism for the free of charge transitory allocation of greenhouse
gas emissions certificates to electric power producers for 2013-2020, including the National Investment Plan
(NIP), the Romanian Government intends to finance replacement of old thermoelectric installations from a
fund supplied from sales of greenhouse gas emissions certificates, investments receiving a non-reimbursable
funding of 25% of the value of eligible expenses based on financing contracts, within available funds,
according to the order of financing request and approval.
By means of Annexes:
Annex No. 1: provides the eligible installations for free of charge transitory allocation and the
number of annually allocated certificates for 2013-2020;
Annex No. 3: National Investment Plan beneficiaries,
Romgaz is included in the above mentioned annexes and, in 2017, launched the investment from the National
Investment Plan.
Therefore, pursuant to Annex No.1 of the Order, free of charge transitory allocation of certificates is made
for the period between 2016 - June 30, 2019, while in 2020 free of charge transitory certificates are no longer
allocated.
In order to comply with the legal requirements of GD 780/2006, updated (article 8, letter e) the requirement
to reimburse, by April 30 of the year following the year for which greenhouse gas emissions were monitored,
a number of greenhouse gas emission certificates equal to the total number of emissions from such
installations. For 2022, CO2 emissions equal 640,740 tons which is equivalent to 640,740 certificates. By
the end of 2022, SPEE Iernut holds in the National CO2 Emissions Register 81,000 CO2 certificates. In
order to comply with legal requirements, SPEE Iernut has to purchase at least the difference required for
compliance. The acquisition has to be finalized until April 26, 2022.
In 2022 the company concluded the subsequent contract no.2 to the framework agreement for purchasing
additional voluntary health insurances for all employees.
Moreover, the company concluded subsequent contracts to the framework agreements for personal protective
equipment (PPE), necessary for the working personnel, namely 53 types of protective equipment.
Page 32 of 73
Consolidated Board of Directors’ Report 2022
Internal controls were carried out at the workplaces at the headquarters and branches, verifying the training
of staff in occupational health and safety, the provision and use of PPE, the existence of PPE stocks in branch
stores, hygiene conditions at workplaces, the provision of hygienic and sanitary materials, the existence and
provision of medical first aid kits, etc.
Other activities carried out in this field:
development of the annual training-testing programme and establish training topics;
preparing the annual internal control chart;
drawing up identification sheets of occupational risk factors for new employees and for those who
have changed positions;
occupational health and safety training for new employees;
drafting of occupational safety and health requirements related to the procurement of
products/services/works in accordance with internal operational procedures;
prepare self-assessment questionnaire on the state of implementation of internal/managerial control
standards;
monitoring the situation of Romgaz employees infected with SARS-CoV-2;
testing of all employees in accordance with the training-testing programme in the field of
occupational safety and health;
elaborate the procedure for the reassessment of risks of occupational injury and illness for Romgaz
employees.
SARS-CoV2 infections at Romgaz
The company has paid and continues to pay particular attention to measures to combat the SARS-CoV2
virus, developing and implementing the necessary measures and procedures to minimise the impact on the
company, as well as carrying out ongoing inspections to verify their implementation.
For the period 01.01 – 31.12.2022, there were 477 SARS-CoV2 cases. The chart below show the evolution
of COVID-19 cases at Romgaz in 2022.
Evolution of COVID-19 cases at Romgaz,
January - December 2022
168
180
200
150
100
50
0
s
e
s
a
c
f
o
r
e
b
m
u
N
21
14
0
2
42
31
11
4
4
0
The summarized breakdown of litigations in which Romgaz is involved as of December 31, 2022 is the
following:
A total number of 137 litigations are recorded in company’s records, out of which:
59 cases where Romgaz is plaintiff;
74 cases where Romgaz is defendant;
2 cases where Romgaz is civil party/injured party;
2 cases garnishee;
the total (approximate) value of litigations is RON 151,857,202.09;
Page 33 of 73
Consolidated Board of Directors’ Report 2022
the (approximate) total value of the files where Romgaz is plaintiff is RON 99,176,700.01;
the (approximate) total value of the files where Romgaz is defendant is RON 52,869,012.66;
the (approximate) total value of the files where Romgaz is civil party is RON 53.750;
the (approximate) total value of the files where Romgaz is garnishee is RON 0.
The detailed list of litigations can be viewed on Romgaz website www.romgaz.ro Investor Relations
Annual Reports 2022.
According to the provisions of Article 52 paragraph (6) of GEO no.109/2011 "The half-year and annual
reports of the Board of Directors ... shall mention, in a special chapter, the legal acts concluded under
paragraphs (1) and (3), ...".
Paragraphs (1) and (3) provide as follows:
“(1) The Board of Directors ... shall convene a general meeting of shareholders to approve any
transaction if it has, individually or in a series of transactions concluded, a value greater than 10%
of the value of the net assets of the public company or greater than 10% of the revenue of the public
company according to the last audited financial statements, with the directors or managers or, as
the case may be, members of the supervisory board or of the management board, employees, with
shareholders controlling a company or with a company controlled by them.
(3) The Board of Directors … informs the shareholders, in the first general meeting of shareholders
following conclusion of the legal document, on any transaction concluded by the public company
with:
……………………………………………………………………………………………
b) another public enterprise or with the public supervisory authority, if the transaction has a value,
individually or in a series of transactions, of at least the equivalent in RON of EUR 100,000”.
Art. 82 paragraph (1) of Law 24/20178 provides that “Directors of issuers whose securities are traded on a
regulated market have to report immediately any legal act concluded by the issuer with board members,
employees, shareholders that control, as well as with persons involved with them, the aggregate value of
which is at least the equivalent in RON of EUR 50,000".
Therefore, Romgaz prepares current reports whenever it concludes legal acts such as to above mentioned,
the reports are sent to Bucharest Stock Exchange and published on their website.
Romgaz financial auditor elaborates half-yearly an “Independent Report for limited assurance on the
information included in current reports issued by SNGN Romgaz SA in line with the requirements of Law
24/2017 (article 82) and of Regulation 5/2018 of the Financial Supervisory Authority” this report is sent to
BVB and published on the company’s website.
The current reports prepared by the company in compliance with Law 24/2017 art. 82, also include legal
acts concluded in compliance with GEO 109/2011, art. 52.
Taking into account that the above mentioned current reports are public on Bucharest Stock Exchange
website, and that, the company publishes on its website half year current reports on the legal acts concluded
in each semester, reports audited by the company’s financial auditor. For details related to legal acts
concluded please see the company’s website at www.romgaz.ro Investors News and Events Current
Reports Contracts (posted as “Auditor Report – H1 2022 Contracts” on July 27, 2022 and “Auditor Report
– Contracts H2 2022” on January 25, 2023).
8 Law No.24 of March 21, 2017 on issuers of financial instruments and market operations.
Page 34 of 73
Consolidated Board of Directors’ Report 2022
IV. Group’s tangible assets
4.1. Main Production Capacities
The occurrence and thereafter the development and gradual diversification of what was truly going to be the
Romanian natural gas infrastructure has an important benchmark, year 1909, when the first gas reservoir
was discovered by drilling well 2 Sarmasel (Mures County).
During the immediately following years, a gas infrastructure unique in Europe for those times started to
outline at a small scale, consisting of the following assets:
gas transmission pipeline, the first of this kind in Europe, built in 1914, connecting towns Sarmasel and
Turda (Cluj County), and
gas compressor station from Sarmasel; built in 1927- the first one in Europe.
It is notable that the country’s large gas structures were discovered after 1960 and in parallel, a complex
infrastructure started to be developed, at national scale, dedicated exclusively to the gas extraction process
and later to the injection and underground storage process. These large gas structures located in the
Transylvanian basin supply considerable gas quantities even today.
Exploitation of Natural Gas Reservoirs
The infrastructure related to exploitation of natural gas reservoirs is a particularly complex system today that
needs to ensure continuous gathering, transmission, conditioning and metering of gas produced by wells
ensuring continuously the quality parameters provided in applicable regulations.
As a whole, the infrastructure of the company developed continuously upon discovery and exploitation of
new reservoirs. The maximum intensity of the rate of development of production capacities was reached
between 1970-1980, when the annual production was extremely high both due to the consumption demand
in those times and to the great volumes of resources and reserves in most of the newly discovered gas fields.
Production capacities of company’s infrastructure are summarized as follows:
1. natural gas production wells and wells for reservoir water injection;
2. gathering pipelines connecting wells and well clusters;
3. collecting pipelines connecting well clusters and the NTS (National Transmission System);
4. Gas heaters (radiators);
5. Underground and surface gas separators;
6. Flow metering panels (for technological and fiscal metering located at the interface with the NTS);
7. Gas dehydration (conditioning) stations;
8. Gas compressor units:
low capacity portable compressors installed at the well head or at the well cluster;
booster compressors for one or more gas fields;
gas compressor stations, usually consisting of two or more high capacity compressor units,
which can be intermediate or final compressor stations (entry in the NTS);
9. Industrial or reservoir water pumping stations;
10. Other facilities (buildings, workshops, storehouses, electric lines, well access roads etc.).
Utilisation of production capacities depends on gas sales volume, generally being close to 100%.
In order to keep these production capacities in operation, under safety and efficiency conditions, Romgaz
carries out extensive and continuous efforts focused on workover and special operations in wells,
maintenance and rehabilitation of pipes, maintenance and modernisation of gas compressor stations and
dehydration stations as well as of commercial (fiscal) gas delivery panels.
In 2022, Romgaz carried out petroleum operations in 137 gas fields out of which 124 are well defined blocks
and 13 are considered gas fields with experimental production.
Production from these fields is obtained through more than 2,900 wells and through almost the same number
of surface facilities consisting mainly of gathering pipelines, gas heaters (where applicable), liquid separators
and gas flow technological metering panels.
Page 35 of 73
Consolidated Board of Directors’ Report 2022
Pressure and flow rate limits of production wells are maintained by 16 compressor stations (in which 83
compressor units are installed), 17 booster compressors and 20 well cluster compressors.
One technical demand required by applicable laws is the quality of gas, which is 100% fulfilled by means of
64 gas dehydration stations.
Underground Gas Storage
Depogaz holds Licence No. 1942/2014 for the operation of five underground gas storages, developed in
depleted gas fields, their aggregate capacity representing about 90.5 % of the total storage capacity of
Romania.
The capacity of the underground gas storages operated by Depogaz, by storages, is shown in the table below:
UGS
Active capacity
Withdrawal capacity
Injection capacity
[mil.Scm/cycle]
[TWh/cycle]
[mil.Scm/cycle]
[GWh/day]
[mil.Scm/cycle]
[GWh/day]
Bălăceanca
Bilciurești
Ghercești
Sărmășel
Urziceni
Total
50
1,310
150
900
360
2,770
0,535
14,017
1,605
9,630
3,852
29,639
1,200
14,000
2,000
7,500
4,500
29,200
12,840
149,800
21,400
80,250
48,150
312,440
1,000
10,000
2,000
6,500
3,000
22,500
10,700
107,000
21,400
69,550
32,100
240,750
1. Balaceanca UGS
Balaceanca UGS is located at approximately 4 km from Bucharest.
The fixed assets contributing to the storage process are as follows:
24 wells of which 21 injection/withdrawal wells and 3 piezometric wells;
surface infrastructure includes:
Balaceanca gas compressor station;
8.73 km collecting pipelines;
1.07 km gathering pipelines;
4 separators;
4 technological gas metering panels;
dehydration station;
15 gas heaters;
communication system and fibre-optic data acquisition system;
1 bi-directional fiscal metering system.
2. Bilciuresti UGS
Bilciuresti UGS is located in Dambovita County, approximately 40 km W-NW of Bucharest.
The fixed assets contributing to the storage process are as follows:
61 wells of which 57 injection/withdrawal wells, 3 piezometric wells, 1 waste water injection well;
surface infrastructure includes:
Butimanu gas compressor station;
4 gas dehydration stations;
26.6 km gathering pipelines for 57 injection/withdrawal wells;
31.7 km gathering pipelines and fittings;
50 gas heaters;
14 impurities separators;
14 technological gas metering panels;
37.5 km gathering pipelines;
bi-directional fiscal metering system;
waste-water injection station.
Page 36 of 73
Consolidated Board of Directors’ Report 2022
Following the call for proposals of CEF Energy (Connecting Europe Facility) on projects of common interest
in the energy field, the European Commission announced on December 9, 2022 the projects of common
interest that will benefit from European financing in the following period.
The investment from Bilciuresti UGS “Increase of daily withdrawal capacity at Bilciuresti UGS –
Modernisation of the gas storage system infrastructure” promoted by Depogaz, is one of the projects
supported by CEF Energy, receiving a grant in a mount of EUR 37,962.
3. Ghercesti UGS
Ghercesti UGS is located in Dolj County, near Craiova.
The fixed assets contributing to the storage process are as follows:
85 wells, out of which 79 active wells and 6 piezometric wells;
surface infrastructure includes:
1 gas dehydration station;
135.7 km gathering pipelines for 79 injection/withdrawal wells;
22.7 km gathering pipelines;
13 impurities separators;
12 technological gas metering facilities;
communication system and fibre-optic data acquisition system;
bi-directional fiscal metering system.
4. Sarmasel UGS
Sarmasel UGS is located near Sarmasel, approximately 35 km NW of Targu-Mures, 35 km north of Ludus
and 48 km east of Cluj-Napoca.
The fixed assets contributing to the storage process are as follows:
63 wells, out of which 63 active wells;
surface infrastructure includes:
Sarmasel gas compressor station;
3 dehydration stations;
26.9 km gathering pipelines for 63 wells;
15.8 km gathering pipelines;
59 impurities separators;
bi-directional fiscal metering system.
5. Urziceni UGS
Urziceni UGS is located in Ialomita County approximately 50 km NE of Bucharest.
The fixed assets contributing to the storage process are as follows:
32 wells of which 30 injection/withdrawal wells and 2 piezometric wells;
surface infrastructure includes:
Urziceni gas compressor station;
20.7 km of collecting pipelines for 30 injection/withdrawal wells;
3.3 km of collecting pipelines;
6 technological gas metering facilities;
30 gas heaters;
1 gas dehydration station;
optic fibre data acquisition system;
bi-directional fiscal metering system.
Workover and Special Operations
Well workover, recompletions and well production tests represent all the services performed with workover
rigs, as well as equipment for specific support operations such as: cement plug drilling installations, mud
Page 37 of 73
Consolidated Board of Directors’ Report 2022
tank equipped with agitator, sand control-sand blender, DST- cased hole testing of productive layers, shale
shaker, mud pumps.
Special Well Operations are performed with the following equipment: cementing unit, slickline, wireline,
coiled tubing unit, liquid nitrogen converter, liquid nitrogen tank truck, cement container, filter unit,
equipment for discharge and measurement with two-phase separation, equipment for discharge and
measurement with three-phase separation, equipment for tubing investigation, echometer, tubing cutting,
packer assembling device, hydraulic packer recovery tool, well fire-fighting equipment.
Future well workover and special well operations are required in order to stop production decline, taking
into consideration the continuous need for such works and the large number of works performed in the past.
Transportation and Maintenance
On December 31, 2022, the car fleet of STTM consists of 718 motor vehicles, as follows:
passenger carriers: cars 92, minibuses 14, buses 2 and large buses 2;
passengers and goods utility cars - 212 < than 3.5 t, and 12 > than 3.5 t;
vehicles for goods transportation: dumpers 22, cesspit emptier 46, platform trucks 28, tank trucks 3;
vehicles for heavy transportation: truck-tractors 2 and semitrailer trucks 19;
lifting and handling machinery: auto cranes 25 and hook and ladder trucks 5;
other special vehicles: mobile laboratory for equipment testing and checking 1;
heavy machinery: bulldozers 10, caterpillar shovels 2, tyre shovels 2, wheel loaders 15, motor grader 3,
compactor 3, front end loaders 11;
other machinery: tractor trucks 95, fork lift trucks 11, motorized cleaning vehicles 3;
other vehicles: trailers for heavy transportations, trailers and semitrailers for tractors 77.
Considering the dynamics of gas exploration – production activities performed by Romgaz, in order to
achieve the activities on medium term (approx. 5 years) the perspective to develop STTM has to be achieved
by permanently determining methods and measures resulted by carrying out quality services and in terms of
economic efficiency.
Out of the 718 vehicles existing in STTM fleet on December 31, 2022:
60 motor vehicles were approved to be put out of service;
6 motor vehicles are proposed to be put out of service.
Electricity Generation
CTE Iernut is an important junction point of the NPG (the National Power Grid), located in the centre of
the country, in Mures County, on the left bank of Mures River, between towns Iernut and Cuci, with gas and
industrial water sources and power discharge facilities.
CTE Iernut is operated by Romgaz through Sucursala de Productie Energie Electrica (SPEE).
CTE Iernut has an installed power of 800 MW and comprises 6 power units: 4 100 MW units of
Czechoslovakian manufacturing and 2 200 MW units of Soviet manufacturing. These units were
commissioned between 1963 and 1967. Taking in consideration the start of investment works at the 430 MW
CCGT Power Plant and the necessity to ensure appropriate conditions for the execution of works at the
related cooling circuit, the 200 MW unit 6 was decommissioned in November 2019.
In January 2019, units 2 and 3 of 100 MW were decommissioned, followed by unit 1 (of 100 MW) in
November 2019; all units were decommissioned due to non-compliance with environmental conditions.
In 2022, SPEE Iernut operated with power unit 5 of 200MW, energy group 4 of 100 MW was
decommissioned due to non-compliance with NOx emission limits required by effective regulations.
Therefore, at the end of 2022, SPEE Iernut held the commercial operating licence for one power unit.
4.2. Investments
Investments play an important part in maintaining production decline which is achieved both by discovering
new reserves and by improving the current recovery rate through rehabilitation, development and
modernization of existing facilities.
Page 38 of 73
Consolidated Board of Directors’ Report 2022
In 2022, Romgaz Group invested RON 5,627.12 million, 1,125.1% (RON 5,167.8 million) higher than 2021
investments representing approximately 97.61 % of the scheduled investments.
The Company invested RON 8.62 billion during 2018-2022, as follows:
Year
2018
2019
2020
2021
2022
Total
Amount
(RON thousand)
1,150,349
866,218
601,800
417,658
5,584,823
8,620,848
For 2022, Romgaz forecasted the achievement of an investment program with a total budget of RON 5,720
million, based mostly on objectives aiming to compensate natural decline and to generate electricity, such
as:
Romgaz acquisition of all shares representing 100% of ExxonMobil Exploration and Production
Romania Limited share capital, which holds 50% participating interest in the deep water zone of Neptun
XIX offshore block in the Black Sea (hereinafter referred to as “Neptun Deep”);
keep the current participating interest in EX-30 Trident Block, in the Black Sea, in partnership with
Lukoil (12.2% Romgaz share)
continue geological research works by performing new exploration drillings for the discovery of new
gas reserves (drilling 9 exploration wells with a total depth of 36,000 m; exploration works in partnership
with Lukoil in EX-30 Trident Block;
production development by adding new facilities on existing structures (production drilling in 3 wells,
38 surface facilities, 7 dehydration stations, 3 gas compressor stations, 4 collecting pipelines);
develop electricity generation capacities from natural gas by continuing and finalising the works to build
the Combined Cycle Gas Turbine Power Plant – Iernut;
construction of a Solar Park with 60 MW power output;
modernization and revamping equipment and facilities used for well workover and special operations,
recompletion operations/well reactivation-capitalizable repairs at 200 wells, revamping dehydration s
and compressor stations;
purchase of new high-performance equipment and installations specific to the core activity (equipment
for discharge and measurement with three phase separator 700 bar; cementing units ACF 700; well
parameter metering device; lab on wheels; nitrogen convertor; crane truck; 30 TF and 50 TF intervention
equipment; online process gas chromatographs for fiscal metering points etc.);
procurement of specific machinery to ensure the technological transportation and maintenance of core
activities, maintaining gas fields road infrastructure in good conditions (trucks, crane trucks, tractor
units, bulldozers, road tractors, dump trucks, dumpers, wheel loaders etc.);
In figures, the investment costs for 2022 reached RON 5,584.823 thousand, representing:
1,337.17% as compared to 2021 achievements;
97.64% of scheduled investments.
The investments were financed as follows:
-
-
exclusively from own sources for investments related to onshore gas production and Lukoil partnership;
own sources and sources obtained from the National Investment Plan (approx. 22% from eligible
expenses) for “The Development of CTE Iernut Power Plant by Building a New Combined Cycle Gas
Turbine Power Plant”;
own sources and loans for the acquisition of EMEPRL shares.
-
As regards physical investments, following were achieved for the analysed period: completion of investment
objectives initiated in the previous; preparatory works were carried out (design, obtaining lands, approvals,
agreements, authorizations, acquisitions); works for part of the new objectives and modernisation works and
repairs that can be capitalized at producing wells.
Table below shows the investments made in 2022 as compared to those scheduled and accomplished in 2021,
similar to Annex 4 to the Income and Expenditure Budget:
*RON thousand*
Page 39 of 73
Consolidated Board of Directors’ Report 2022
Item
No.
0
Investment Chapter
1
1.
Investments in progress – total, out of which:
1.1 Natural gas exploration, production works
1.2 Environmental protection works
2.
New investments – total, out of which:
2.1 Natural gas exploration, production works
2.2 Environmental protection works
2021
2
78,688
76,854
1,834
65,462
64,767
695
2022
Program
3
Achieved
4
160,872
121,438
%
’22/’21
5=4/2x10
0
154.33
159,326
120,052
156.21
1,546
71,589
71,417
172
1,386
32,357
32,320
75.57
49.43
49.90
37
5.32
3.
4.
5.
*
Investment in existing tangible assets
222,957
274,028
247,154
110.85
Equipment (other acquisitions of tangible assets)
Other investments (studies, licenses, software,
financial assets etc.)
46,415
4,136
70,384
5,143,127
51,311
5,132,563
110.55
124.10
TOTAL
417,658
5,720,000
5,584,823
1,337.17
Table below shows the achieved investments according to Romgaz Investment Program for 2022:
Investment Chapter
I. Geological exploration works to discover new gas reserves
1
Program
2022
2
125,379
*RON thousand*
Achieved
%
on
December
31, 2022
3
94,296
4=3/2x100
75.21%
II. Exploitation drilling works, putting into production of wells,
infrastructure and utilities and electricity generation
IV. Environmental protection works
V. Retrofitting and revamping of installation and equipment
105,364
58,046
55.12%
1,718
274,028
1,423
247,154
82.81%
90.19%
VI. Independent equipment and machinery
VII. Expenses related to studies and projects
TOTAL
70,384
5,143,127
51,311
5,132,563
72.90%
99.79%
5,720,000
5,584,823
97.64%
A summary of outcomes shows that, to a large extent, investments were completed.
Item
No.
1.
Main physical objectives
Performance of exploration drilling
Planned
9 wells
2.
Drilling design
3.
Performance of production drilling
23 wells
3 wells
4.
Surface infrastructure – construction
of technological installations at
successfully tested gas wells to be
Construction of 38
technological installations to
bring into production 47
Results
4 wells completed
1 well drilling in progress
3 wells drilling works procurement
in progress
3 wells drilling works procurement
in preparation
20 wells design/redesign
progress
1 well completed
7 wells drilling works procurement
in progress
2 wells design in progress
-
9
completed;
technological
installations
in
Page 40 of 73
Consolidated Board of Directors’ Report 2022
Item
No.
Main physical objectives
Planned
Results
tied-in/; collecting pipes;
compression stations; dehydration
stations
successfully tested gas wells
to be tied-in; 4 collecting
pipes; 2 gas dehydration
stations
5.
Well recompletion operations,
reactivation and capitalizable repairs
6.
Acquisition of high-performance
equipment and installations specific
to core activity
approx. 160 wells, correlated
with the annual program
agreed by ANRM
Nitrogen tank truck; 700 bar
three-phase gas discharge,
metering and separation
system; ACF 700 cementing
units; Well parameters
automatic measurement
equipment; 30 TF and 50 TF
workover installation; utility
vehicles;
Tractor unit; crane trucks;
cesspool emptier; bulldozer-
excavator; 6x6 dump truck;
platform truck with lift arm;
bulldozer etc.
technological
technological
technological
- 9 technological installations in
progress;
- 4
installations
procurement of construction works
in progress;
- 7
installations
obtaining approvals and land in
progress to bring 11 wells into
production;
- 7
installations
preparation of feasibility studies or
technical projects in progress to
bring 8 wells into production;
- collecting pipe DN 200 mm-Dn
300 mm, L = 8.2 km, Fulga-
Adâncata was put into operation
(Prahova County section);
- collecting pipe DN 400 mm, L =
17 km, Adâncata - SU Coşereni
was put into operation (Ialomiţa
County section);
- construction works at Coşereni
Gas Dehydration Station were
accepted
Workovers in 215 wells, works
performed in-house by SIRCOSS
The following were accepted:
Electrical compressor, semitrailer,
tractor, cesspool emptier, laboratory
on wheels, fuel tank truck, nitrogen
tank truck, mechanical jar, IF 2 7/8
drilling rods, digital tachographs,
700 bar three-phase gas discharge,
metering and separation system,
infrared spectrometer,
laboratory
glass fiber tanks, priming pumps,
video-conference
equipment,
complete solution for migrating,
the
upgrading
infrastructure and data
storage
of Exchange and
protection
security
SharePoint
equipment
Server
licenses, underground
Manager
metal pipe locator, 1 cubic meter
calibration tank, foaming system,
tubing
metallic
tanks,
nozzle,
cleaning with
wastewater treatment plants
systems,
(Firewall),
coiled
jetting
improving
and
7.
Electricity generation
8.
Partnerships/Associations
Works continue at CTE Iernut The procedure for procurement
(negotiation) of remaining works
and completion of the investment is
currently in progress.
Interpretation
seismically
of
reprocessed data and of seismic
of
inversion
LUKOIL OVERSEAS:
results,
update
Page 41 of 73
Consolidated Board of Directors’ Report 2022
Item
No.
Main physical objectives
Planned
Results
- drilling and well safety in
preparation in 30 EX Trident
block
Amromco
-
Permits and
authorizations; well
abandonment
geological model and estimation of
reserves were carried out. Works
have begun to establish the outpost
well and its final trajectory.
Preliminary design works were
performed and approvals were
obtained for wells planned to be
drilled; abandonment works were
carried out for wells
that had
ANRM’s approval and demolition
works at facility groups, drilling
locations and access
to
abandoned wells
roads
Achievement of investment objectives which were not carried out or which were delayed in 2022 will
continue in 2023.
Development of CTE Iernut
One of Romgaz main strategic directions, provided in “The Development Strategy for 2015-2025”, is
consolidation of the company’s position on the energy supply markets. In this case, in the field of electricity
generation, Romgaz planned to have “a more efficient activity by making investments to increase the
efficiency of Iernut Thermoelectric Power Plant to a minimum of 55%, complying with the environmental
requirements (NOx, CO2) and increasing operational safety”.
Therefore, a very important objective is “The Development of CTE Iernut by building a new combined cycle
gas turbine power plant”, with a deadline for completion the end of 2020.
In 2021, pursuant to the notice of termination no. 10872/April 02, 2021, Romgaz terminated the Contract of
Works no.13384/October 31, 2016 between Romgaz and DURO FELGUERA S.A. and ROMELECTRO
S.A Consortium, considering the continuous breach of contractual obligations undertaken by the Consortium
which failed to finalise works within the deadline established under Addendum No. 15/May 26, 2020,
namely December 26, 2020.
Romgaz further undertook all necessary steps to identify optimum solutions to finalise remaining works:
Protocol no.11418/April 08, 2021 and addenda no. 1-4 thereto successively suspending the effects of the
notice of termination until June 16, 2021;
Actual termination of the Contract of Works following failed negotiations between the parties as of June
17, 2021;
Decision no. 833/August 08, 2021 appointing a Project Management Team (PMT) to finalise this
complex project establishing the specific tasks of the PMT as well as other necessary and useful tasks
Page 42 of 73
Consolidated Board of Directors’ Report 2022
for the Completion of Combined Cycle Gas Turbine Power Plant SNGN ROMGAZ – SPEE Iernut
project (managing all necessary activities, partial acceptance of works performed under Contract No.
133843/October 31, 2016, drawing up the Tender Book and the tender documents for awarding the
Consultancy, Project Management and Supervision Services Contract, identification of procurement
procedures, drafting all documents and documentations necessary to finalize remaining works).
Romgaz Project Management Team analysed and assessed a “Draft Court Settlement and a Draft Out-Of-
Court Settlement” – sent by the Consortium on November 17, 2021. The answer provided that Romgaz
cannot accept the financial claims raised by the Consortium, for the same reasons for which they could not
be accepted before the termination of the Works Contract.
Therewith, a “Draft Agreement” sent on January 28, 2022 to continue works with the Consortium was
rejected by Romgaz for the same reasons.
Other actions/milestones:
On April 21, 2022, GEO No.54/2022 on amending Law No. 99/2016 on sector specific procurement was
published in the Official Gazette, namely article 117^1 that provides: by way of exception to the
provisions of Article 117, the contracting entity has the right to apply the negotiated procedure without
prior invitation to a competitive tendering procedure for the award of sectoral contracts for the
execution of the remainder to be executed for the construction and development of electricity generating
capacities, where this represents less than 40% of the physical stage of the investment objective;
Using this legal provision, on July 13, 2022 the invitation to participate in a negotiated procedure without
prior publication was sent to Duro Felguera SA regarding completion of works and commissioning of:
“Development of CTE Iernut by building a new combined cycle gas turbine power plant investment
project”. In this regard, the link was made available to access the tender documentation and all
information regarding the negotiation procedure was specified;
Until the deadline for submitting the offer established in the tender documentation, namely August 03,
2022, at 10:00, the evaluation/negotiation commission found that, the potential provider - Duro Felguera
SA did not submit an offer. Accordingly, the evaluation commission decided to cancel the procurement
procedure as no offers were submitted until the deadline for submission of the offer;
Subsequently, the procurement procedure was reinitiated, with September 13, 2022 as deadline for
submission of the offer. This time Duro Felguera SA submitted the offer on time and it was assessed
internally;
By analysing the offer and related documents, several conditions resulted which, both in the negotiation
phase and during performance of works, if commenced, may create problems, such as:
o The offer provides for a framework agreement structured on two distinct documents: the
Settlement Agreement and a new Works Contract, noting that the Consortium requires the
Settlement Agreement to be concluded in order to conclude the Works Contract;
o Payment to Duro Felguera SA of retentions related to the old contract represents a condition
precedent to start works;
Page 43 of 73
Consolidated Board of Directors’ Report 2022
Despite all these discrepancies and conditions, finalizing works as soon as possible and under legal
conditions is the main interest of Romgaz; as such, reasonable efforts were taken to conclude the above
mentioned contracts covering the works remaining to be finalized and commissioning as well as the
mutual concessions of the parties, understanding the importance of the project for the stability of the
national energy system;
Negotiations between the parties continue at the date hereof.
In 2022, Filiala Depogaz had an approved investment program of RON 45,000 thousand and achieved
investments of RON 42,297 thousand, representing 93.99% as follows:
Item
No.
1.
2.
3.
4.
5.
*
Description
Program
Results
Gas fields and UGSs exploitation, infrastructure and utilities in fields and
underground storages
Underground gas storage activities
Modernisation and upgrading of installations and equipment, surface
facilities, utilities
Independent equipment and machinery
Costs with consultancy, studies and projects, software, licences and patents
etc.
TOTAL
24,859
22,651
405
14,505
3,865
1,366
390
14,078
3,825
1,353
45,000
42,297
The investments were financed entirely from own sources.
For the reporting period, fixed assets were commissioned in amount of RON 8,160 thousand.
The main objectives recording achievements in 2022 were:
Drilling of Bilciureşti wells;
Modernisation of 12 wells Sărmăşel;
Modernisation of gas metering system, Bilciureşti UGS;
Automation of suction and discharge manifold, Butimanu Compressor Station;
Modernisation of cooling towers M3 Butimanu module;
Data storage unit.
In 2022, Romgaz Black Sea Limited and OMV Petrom SA submitted the commercial discovery statement
for the natural gas exploitation project in Neptun Deep block.
Page 44 of 73
Consolidated Board of Directors’ Report 2022
V. Securities market
Romgaz – company listed on Bucharest Stock Exchange and London Stock Exchange
Government Decision No. 831/20109 approved “the sale by secondary initial public offering of shares
representing 15% of S.N.G.N. Romgaz S.A. share capital by the Ministry of Economy, Trade and Business
Environment, through the State Ownership and Privatization in Industry Office”.
On November 12, 2013, Romgaz was listed on Bucharest Stock Exchange (BVB) and on London Stock
Exchange (LSE). As of this date, the shares of the company have been traded on the regulated market
governed by BVB, under the symbol “SNG”, and on the regulated market governed by LSE, as GDRs, issued
by the Bank of New York Mellon (1 GDR = 1 share) under the symbol “SNGR”.
Table below shows the evolution of a series of specific indicators, the number of shares being the same from
listing to present, namely 385,422,400:
Description
Item
No.
1. Market capitalization10
*million RON
*million EUR
2. Maximum price (RON)
3. Minimum price (RON)
Year-end price (RON)
4.
Net profit per
5.
(RON)
Gross dividend per share
(RON)
Dividend yield
(6./4.x100)
Exchange
(RON/EUR)
share
rate
8.
6.
7.
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
13,178
2,952
14,018
3,127
10,483
2,315
35.60
33.80
34.19
2.58
36.37
32.41
35.36
3.66
36.55
26.30
27.20
3.10
9,636
2,122
27.55
21.60
25.00
2.66
12,064
2,589
10,714
2,297
14,299
2,992
10,830
2,224
15,031
3,038
33.95
25.10
31.30
4.81
38.20
27.80
27.80
3.53
38.40
27.35
37.10
2.83
37.70
25.75
28.10
3.24
39.00
28.35
39.00
4.97
14,550
2,941
51.70
34.05
37.75
6.61
2.57
3.15
2.70
5.761)
6.852)
4.172)
1.614)
1.795)
3.806)
3.427)
7.5%
8.9%
9.9%
23.0%
21.9%
15.0%
4.3%
6.4%
9.7%
9.1%
4.4639
4.4834
4.5285
4.5411
4.6597
4.6639
4.7785
4.8694
4.9481
4.9474
1) The gross dividend per share of RON 5.76 is composed of the gross dividend per share for financial year 2016 (RON 2.40 per
share), the additional gross dividend (RON 1.42 per share) resulted from the distribution of retained earnings and the additional
dividend (RON 1.94 per share) assigned under the provisions of Article II and III of Government Emergency Ordinance No.29/2017,
distributed from the company’s reserves, representing own financing sources.
2) The gross dividend per share of RON 6.85 is composed of the gross dividend per share for financial year 2017 (RON 4.34 per
share), the additional gross dividend (RON 0.65 per share) resulted from the distribution of retained earnings and the additional
dividend (RON 1.86 per share) assigned under the provisions of Article II and III of Government Emergency Ordinance No. 29/2017,
distributed from the company’s reserves, representing own financing sources.
3) The gross dividend per share of RON 4.17 is composed of the gross dividend per share for financial year 2018 (RON 3.15 per
share), the additional gross dividend (RON 0.08 per share) resulted from the distribution of retained earnings and the additional
dividend (RON 0.94 per share) assigned under the provisions of Article 43 of Government Emergency Ordinance No 114/2018.
4) The gross dividend per share of RON 1.61 is composed of the gross dividend per share for financial year 2019 (RON 1.39 per
share) and the additional gross dividend (RON 0.22 per share) resulted from the distribution of retained earnings.
5) The gross dividend per share of RON 1.79 is composed of the gross dividend per share for financial year 2020 (RON 1.63 per
share) and the additional gross dividend ( RON 0.16 per share) resulted from the distribution of retained earnings.
6) The gross dividend per share of RON 3.80 is composed of the gross dividend per share for financial year 2021 in amount of RON
3.62 per share and the additional gross dividend of RON 0.18 per share resulted from the distribution of retained earnings.
7) The gross dividend per share of RON 3.42 is composed of the gross dividend per share for financial year 2022 in amount of RON
3.3 per share and the additional gross dividend of RON 0.12 per share resulted from the distribution of retained earnings.
In 2022, the average trading prices of ROMGAZ securities (shares and global depositary receipts – GDR)
were RON 41.85/share, USD 8.89/GDR (the equivalent of RON 41.70/GDR) respectively. The minimum
prices of the period were recorded on March 07, 2022 for shares (RON 34.05) and November 01, 2022 for
9 Government Decision No.831 of August 4, 2010 on approving the privatization strategy through public offering of
Societăţii Naţionale de Gaze Naturale “Romgaz” – S.A. Mediaş and the mandate of the public institution involved in
this process.
10 Calculated based on the closing price on the last trading day of that year and on the exchange rate announced by BNR
and valid in the last trading day of that year, respectively
Page 45 of 73
Consolidated Board of Directors’ Report 2022
GDRs (USD 7.05 RON 32.69) while the maximum prices were reached in the same day, June 27, 2022
both for shares (RON 51.70) and for GDRs (USD 11.20 RON 52.34).
The oscillating evolution of trading prices which had a similar trend for shares and GDRs during the year,
was determined by important external and internal factors, such as: the events in Ukraine (which conditioned
the evolution of natural gas price on the global market), the conclusion of the transaction concerning the
acquisition of ExxonMobil Exploration and Production Romania Limited shares, the distribution of 2021
dividends with a yield of 7.3%, the favourable financial results achieved by the company in the 1st half and
3rd quarter 2022, the oscillation of stock indices on the international stock markets and implicitly on the
Romanian capital market, the adoption by the Romanian Government of legal regulations with impact on
energy companies, the adoption by the European Commission of a set of measures to manage the crisis in
the energy market through consumption reduction and additional charges11.
On the last trading day of the year, December 30, 2022, the share prices recorded a value of RON 37.75,
3.21% lower than the one recorded at the end of 2021 and GDRs were traded at a value of USD 8 (the
equivalent of RON 37.07), 2.44% lower than the end of the previous year in USD, but 3.45% higher in RON
(due to the ascending trend of the RON/USD exchange rate during 2022: +6.04%).
Noteworthy is that the end of 2022 was marked by an event that caused the trading values of shares and
GDRs to drop. Thus, if ROMGAZ shares were among the best performing shares included in the BET index
in the first 11 months of 2022, ROMGAZ being one of the four BET issuers recording increases during this
period12, during December 27-30, 2022, the value of the share decreased by 5.62% considering that the
Romanian Government announced the discussion of a draft emergency ordinance on surcharging the profits
of energy companies in accordance with European directives13. GDRs were also traded at a price down by
5% during the same period. However, at the beginning of 2023, the prices of shares and GDRs returned to
the level of those recorded before December 28, 2022.
Since the listing day up to present, Romgaz has been considered an attractive company for investors and
holds a significant position in the top of local issuers, being included in BVB trading indices by the end of
2022, as follows:
- Second place by market capitalization in the top of Premium BVB issuers. With a market
capitalization amounting to RON 14,550, EUR 2,941 million respectively, on December 31, 2022,
Romgaz is the second largest listed company in Romania, being preceded by OMV Petrom with a
capitalization of RON 26,170.90 million (EUR 5,289.82 million);
- Fifth place as regards the total amount of transactions in 2022 in the top of Premium BVB issuers
(RON 616.34 million), after BRD - Groupe Societe Generale, Banca Transilvania, Fondul
Proprietatea and OMV Petrom;
- Weight of 9.42% and 9.64% in BET index (top 15 issuers) and BET-XT (top 25 issuers),
respectively, 29.22% in BET-NG index (energy and utilities) and 9.42% in BET-TR index (BET
Total Return).
Performance of Romgaz shares compared to BET index between listing and December 31, 2022, is shown
below:
11 Source: Ziarul Bursa #Piaţa de Capital 06.10.2022
12 Source: Ziarul Financiar 02.12.2022
13 Source: Ziarul Financiar 28.12.2022
Page 46 of 73
Consolidated Board of Directors’ Report 2022
60
50
40
30
20
10
0
e
r
a
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s
/
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e
r
a
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0
November 12, 2013 - December 31, 2022
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7
SNG
7
1
0
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9
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0
2
/
6
1
/
2
1
2
2
0
2
/
6
1
/
2
2
2
0
2
/
5
1
/
4
2
2
0
2
/
7
1
/
6
2
2
0
2
/
6
1
/
8
2
2
0
2
/
2
1
/
0
1
2
2
0
2
/
2
1
/
2
1
January 2, 2022 - December 31, 2022
2
2
0
2
/
3
/
1
2
2
0
2
/
0
1
/
1
2
2
0
2
/
7
1
/
1
2
2
0
2
/
5
2
/
1
2
2
0
2
/
1
/
2
2
2
0
2
/
8
/
2
2
2
0
2
/
5
1
/
2
2
2
0
2
/
2
2
/
2
2
2
0
2
/
1
/
3
2
2
0
2
/
8
/
3
2
2
0
2
/
5
1
/
3
2
2
0
2
/
2
2
/
3
2
2
0
2
/
9
2
/
3
2
2
0
2
/
6
/
4
2
2
0
2
/
3
1
/
4
2
2
0
2
/
0
2
/
4
2
2
0
2
/
9
2
/
4
2
2
0
2
/
6
/
5
2
2
0
2
/
3
1
/
5
2
2
0
2
/
0
2
/
5
2
2
0
2
/
7
2
/
5
2
2
0
2
/
6
/
6
2
2
0
2
/
4
1
/
6
2
2
0
2
/
1
2
/
6
2
2
0
2
/
8
2
/
6
2
2
0
2
/
5
/
7
2
2
0
2
/
2
1
/
7
2
2
0
2
/
9
1
/
7
2
2
0
2
/
6
2
/
7
2
2
0
2
/
2
/
8
2
2
0
2
/
9
/
8
2
2
0
2
/
7
1
/
8
2
2
0
2
/
4
2
/
8
2
2
0
2
/
1
3
/
8
2
2
0
2
/
7
/
9
2
2
0
2
/
4
1
/
9
2
2
0
2
/
1
2
/
9
2
2
0
2
/
8
2
/
9
2
2
0
2
/
5
/
0
1
SNG
BET
2
2
0
2
/
2
1
/
0
1
2
2
0
2
/
9
1
/
0
1
2
2
0
2
/
6
2
/
0
1
2
2
0
2
/
2
/
1
1
2
2
0
2
/
9
/
1
1
2
2
0
2
/
6
1
/
1
1
2
2
0
2
/
3
2
/
1
1
2
2
0
2
/
2
/
2
1
2
2
0
2
/
9
/
2
1
2
2
0
2
/
6
1
/
2
1
2
2
0
2
/
3
2
/
2
1
16000
14000
12000
10000
8000
6000
4000
2000
0
16000
14000
12000
10000
8000
6000
4000
2000
0
5.1. Dividend Policy
The General Meeting of Shareholders determines the value of dividends to be distributed to shareholders
considering the specific legal provisions.
Therefore, Government Ordinance No. 64/200114 approved by Law No. 769/2001 as subsequently
amended and supplemented, provides at Article 1, paragraph (1), letter f) that the accounting profit after
deduction of profit tax is distributed in proportion of minimum 50% as dividends.
State-owned companies are required, according to the provisions of Government Ordinance No.64/2001, to
pay the due dividends to the shareholders within 60 days from the legal deadline for the submission of the
annual financial statements to the competent fiscal authorities.
14 Government Ordinance No. 64/August 30, 2001 on distribution of profit in majority state-owned companies as well
as in autonomous government-owned enterprises.
Page 47 of 73
Consolidated Board of Directors’ Report 2022
According to Government Emergency Ordinance No. 29/201715:
“The amounts distributed in the previous years to other reserves under the provisions of Article 1
paragraph (1) letter (g) of Government Ordinance No.64/2001 [...], existing at the date of entry into
force of this Emergency Ordinance, can be redistributed as dividends [...]” – Article II;
“After the approval of the financial statements of 2016, the entities provided in Article 1, paragraph
(1) of the Government Ordinance No.64/2001, [...], the retained earnings existing in the balance
account on December 31 of each year, can be distributed as dividends” – Article III paragraph (1).
Table below shows the status of dividends for years 2020-2022:
Description
Dividends
Gross dividend per share
(RON/share)
Dividend distribution rate (%)
Number of shares
2020
689,906,096
1.79**)
55.29
385,422,400
2021
2022 Proposal
1,464,605,120
3.80**)
1,318,144,608
3.42***)
71.61
385,422,400
51.76
385,422,400
*) The gross dividend of RON 1.79 is composed of the gross dividend per share for financial year 2020 in amount of
RON 1.63 per share and the additional gross dividend of RON 0.16 per share resulted from the distribution of retained
earnings representing the impairment value of fixed assets and the value of fixed assets and abandoned investment
projects in the reporting year that were financed from “the share of expenses necessary for the development and
modernization of gas production” according to GD No.168/1998, as subsequently amended and supplemented.
**) The gross dividend of RON 3.80 is composed of the gross dividend per share for financial year 2021 in amount of
RON 3.62 per share and the additional gross dividend of RON 0,18 per share resulted from the distribution of retained
earnings representing the impairment value of fixed assets and the value of fixed assets and abandoned investment
projects in the reporting year that were financed from “the share of expenses necessary for the development and
modernization of gas production” according to GD No.168/1998, as subsequently amended and supplemented.
***) The proposed gross dividend per share of RON 3.42 is composed of the gross dividend per share for financial year
2022 in amount of RON 3.3 per share and the additional gross dividend of RON 0.12 per share resulted from the
distribution of retained earnings representing the impairment value of fixed assets and the value of fixed assets and
abandoned investment projects in the reporting year that were financed from “the share of expenses necessary for the
development and modernization of gas production” according to GD No.168/1998, as subsequently amended and
supplemented.
The internal regulation “Dividend Policy” was approved by the company’s Board of Directors in March
2017 and is currently published on company’s webpage www.romgaz.ro at “Investors – Corporate
Governance – Reference Documents”.
15 Government Emergency Ordinance No.29 of March 30, 2017 amending Article 1 paragraph (1) letter g) of
Government Ordinance No. 64/2001 on the distribution of profit in national companies, and trading companies with
full or majority state capital, as well as in autonomous government-owned enterprises, and amending Article 1
paragraph (2) and (3) of Government Emergency Ordinance no.109/2011 on corporate governance of public enterprises.
Page 48 of 73
Consolidated Board of Directors’ Report 2022
VI. Company management
6.1. Board of Directors
The company is governed by a Board of Directors which, on December 31, 2022 has the following structure:
Item
No.
1
Last name and first name Position in
the Board
chairman
Drăgan Dan Dragoş
2
3
4
5
6
Jude Aristotel Marius
member
Simescu Nicolae Bogdan
member
Batog Cezar
Balazs Botond
member
member
Sorici Gheorghe Silvian
member
7 Metea Virgil Marius
member
Status*)
non-executive
non-independent
executive
non-independent
non-executive
non-independent
non-executive
independent
non-executive
non-independent
non-executive
independent
non-executive
non-independent
Professional
Qualification
Economist
Institution of
Employment
Ministry of Energy
MBA Legal
Adviser
Engineer
Economist
Legal Adviser
SNGN Romgaz SA
SNGN Romgaz SA
Publicis Groupe
Romania
SNGN Romgaz SA
Economist
SC Sobis Solutions SRL
Engineer
SNGN Romgaz SA
*) - members of the Board of Directors submitted the independent statements in compliance with the provisions of
Romgaz Code of Corporate Governance.
The Curricula Vitae of
http://www.romgaz.ro/consiliu-administratie.
the Board members are
to be
found on company’s webpage:
During January 1 – March 13, 2022 the Board of Directors had the following structure:
Item
No.
1
Last name and first name
Drăgan Dan Dragoş
Position in
the Board
chairman
2
3
4
5
6
7
Jude Aristotel Marius
member
Simescu Nicolae Bogdan
member
Stan-Olteanu Manuela-
Petronela
Niculescu Sergiu George
Balazs Botond
member
member
member
Sorici Gheorghe Silvian
member
Status
non-executive
non-independent
executive
non-independent
non-executive
non-independent
non-executive
non-independent
non-executive
non-independent
non-executive
non-independent
non-executive
independent
Professional
Qualification
Economist
Institution of
Employment
Ministry of Energy
MBA Legal
Adviser
Engineer
SNGN Romgaz SA
SNGN Romgaz SA
Legal Adviser
Hidroelectrica SA
Legal Adviser
Ministry of Energy
Legal Adviser
SNGN Romgaz SA
Economist
SC Sobis Solutions SRL
Starting with March 14, 2022 the structure of the Board of Directors changed, only 6 members being
appointed:
Item
No.
1
Last name and first name Position in
the Board
chairman
Drăgan Dan Dragoş
2
3
Jude Aristotel Marius
member
Simescu Nicolae Bogdan
member
Status
non-executive
non-independent
executive
non-independent
non-executive
non-independent
Professional
Qualification
Economist
Institution of
Employment
Ministry of Energy
MBA Legal
Adviser
Engineer
SNGN Romgaz SA
SNGN Romgaz SA
Page 49 of 73
Consolidated Board of Directors’ Report 2022
Item
No.
4
Last name and first name Position in
the Board
member
Batog Cezar
5
6
Balazs Botond
member
Sorici Gheorghe Silvian
member
Status
non-executive
independent
non-executive
non-independent
non-executive
independent
Professional
Qualification
Economist
Legal Adviser
Institution of
Employment
Publicis Groupe
Romania
SNGN Romgaz SA
Economist
SC Sobis Solutions SRL
On May 25, 2022, Mr. Metea Virgil Marius joined the Board of Directors, initially being appointed by the
Board of Directors pursuant to Resolution No. 34 until the date of the first Ordinary General Meeting of
Shareholders and subsequently being appointed by the company shareholders during the meeting dated July
8, 2022 pursuant to OGMS Resolution No. 6.
According to the information supplied by each director, there is no agreement, understanding or family
relationship between them and another person that contributed to their appointment as directors.
On December 31, 2022, the following directors hold shares in the company:
Item
No.
0
1
2
3
Last name and first
name
1
Drăgan Dan Dragoş
Simescu Nicolae Bogdan
Balasz Botond
Number of
shares held
2
18,757
30
11
Weight in the share
capital (%)
3
0.00486661
0.00000778
0.00000285
6.2. Executive Management
Chief Executive Officer (CEO)
SNGN Romgaz SA Board of Directors gathered in a meeting on November 2, 2021, appointed Mr. Jude
Aristotel Marius as Chief Executive Officer pursuant to Resolution No. 67 for a period of 4 months, from
December 15, 2021 to April 15, 2022.
Pursuant to Resolution No.17 of March 22, 2022, the Board of Directors appointed Mr. Jude Aristotel Marius
as Chief Executive Officer for a period of 4 months, from April 16, 2022 to August 16, 2022.
Pursuant to Resolution No.57 of August 12, 2022, the Board of Directors appointed Mr. Popescu Răzvan as
Chief Executive Officer for a period of 4 months, from August 17, 2022 to December 17, 2022.
Pursuant to Resolution No. 78 of November 23, 2022, the Board of Directors appointed Mr. Popescu Răzvan
as Chief Executive Officer for an interim mandate of 4 months, from December 18, 2022 to April 18, 2023.
Deputy Chief Executive Officer (Deputy CEO)
Pursuant to Resolution No.57 of August 12, 2022, the Board of Directors appointed Mr. Jude Aristotel
Marius as Deputy Chief Executive Officer for a period of 4 months, from August 17, 2022 to December 17,
2022.
Pursuant to Resolution No.78 of November 23, 2022, the Board of Directors appointed Mr. Jude Aristotel
Marius as Deputy Chief Executive Officer for an interim mandate of 4 months, from December 18, 2022 to
April 18, 2023.
Chief Financial Officer (CFO)
Pursuant to Resolution No. 68 of November 2, 2021, the Board of Directors appointed Mr. Popescu Răzvan,
as Chief Financial Officer, for a period of 4 months, from December 16, 2021 to April 16, 2022.
Pursuant to Resolution No.18 of March 22, 2022, the Board of Directors appointed Mr. Popescu Răzvan as
Chief Financial Officer for a period of 4 months, from April 17, 2022 to August 17, 2022.
Page 50 of 73
Consolidated Board of Directors’ Report 2022
Pursuant to Resolution No. 57 of August 12, 2022, the Board of Directors appointed Mr. Bobar Andrei as
Chief Financial Officer for a period of 4 months, from August 17, 2022 to December 17, 2022.
Pursuant to Resolution No.85 of December 20, 2022, the Board of Directors appointed Ms. Trânbițaș
Gabriela as Chief Financial Officer for an interim mandate of 4 months, from December 20, 2022 to April
20, 2023.
Other persons holding management positions without being delegated management powers by the Board of
Directors, on December 31, 2022:
Last name and first name
Position
ROMGAZ - headquarters
Chircă Robert Stelian
Foidaş Ion
Grecu Marius Rareş
Veza Marius Leonte
Bobar Andrei
Păunescu Octavian Aurel
Sasu Rodica
Sandu Valentin Mircea
Boiarciuc Adrian
Lupă Leonard Ionuţ
Chertes Viorel Claudiu
Moldovan Radu Costică
Ioo Endre
Mareş Adrian Alexandru
Antal Francisc
Hațegan Gheorghe
Mediaş Branch
Totan Constantin Ioan
Achimeţ Teodora Magdalena
Veress Tudoran Ladislau Adrian
Man Ioan Ştefan
Târgu Mureş Branch
Baciu Marius Tiberiu
Boșca Mihaela
Rusu Graţian
Roiban Claudiu
Iernut Branch
Balazs Bela Atila
Hăţăgan Olimpiu Sorin
Oprea Maria Aurica
Bircea Angela
SIRCOSS
Rotar Dumitru Gheorghe
Bordeu Viorica
Gheorghiu Sorin
STTM
Lucaci Emil
Ilinca Cristian Alexandru
Exploration-Production Department Director
Production Department Director
Human Resources Director
Accounting Department Director
Finance Department Director
Exploration-Appraisal Department Director
Exploration-Production Support Department Director
Drilling Department Director
Information Technology Department Director
Procurement Department Director
Regulations Department Director
Energy Trading Department Director
Legal Department Director
Strategy, International Relations, European Funds Director
Quality, Environment, Emergency Situations and Infrastructure
Department
Technical Department Director
Branch Director
Economic Director
Production Director
Technical Director
Branch Director
Economic Director
Production Director
Technical Director
Branch Director
Economic Director
Commercial Director
Technical Director
Branch Director
Economic Director
Technical Director
Branch Director
Economic Director
Page 51 of 73
Consolidated Board of Directors’ Report 2022
Last name and first name
Position
Grosu Adrian Doru
Drobeta Branch
Săceanu Constantin
Technical Director
Branch Director
The members of the executive management, except for the mandated managers (Chief Executive Officer,
Deputy Chief Executive Officer and Chief Financial Officer), are employees of the company having an
individual employment contract for an indefinite period.
In compliance with the powers delegated by the Board of Directors, the Chief Executive Officer employs,
promotes and dismisses the management and operating personnel.
Table below shows the number of company shares held by the members of the executive management on
December 31, 2022:
Item
No.
0
1
2
3
Last name and first
name
1
Dincă Ispasian Ioan
Andrea Nicolae
Balasz Bela Atila
Number of
shares held
2
1,048
200
38
Weight in the
share capital (%)
3
0.00027191
0.00005189
0.00000986
According to the information supplied, there is no agreement, understanding or family relationship
between the above nominated members of the executive management and another person that contributed
to their appointment as member of the executive management.
Information on the Board of Directors and the executive management of Depogaz is available on the website:
https://www.depogazploiesti.ro/ro/despre-noi/conducere.
Therewith, from Depogaz executive management the following members hold shares in the company: Mr.
Cârstea Vasile – 412 shares, representing a weight of 0.00010690% in the share capital and Mr. Gîrlicel
Victor Cristian – 125 shares, representing a weight of 0.00003243% in the share capital.
To the best of our knowledge, the persons mentioned at 6.1 and 6.2 above, have not been involved in
litigations or administrative proceedings related to their activity in Romgaz in the last 5 years, nor in
proceedings related to their capacity of fulfilling the duties within Romgaz, except for the litigations under
File No. 1596/85/2018*, no. 229/85/2019 (please see the “Litigations” published on Romgaz website at
www.romgaz.ro Investors Annual Reports 2022) and File No. 2041/85/2018 which was finally
settled in 2021.
Page 52 of 73
Consolidated Board of Directors’ Report 2022
VII. Consolidated financial – accounting information
7.1. Statement of Consolidated Financial Position
The consolidated financial statements of Romgaz Group were prepared in accordance with the provisions of
the International Financial Reporting Standards (IFRS) as adopted by the European Union and the provisions
of the Ministry of Finance Order No. 2844/2016. For the purposes of preparing these consolidated financial
statements, the functional currency of the Group is deemed to be the Romanian Leu (RON). IFRS, as adopted
by the EU, differ in certain respects from IFRS as issued by the IASB. However, the differences have no
significant impact on the Group’s consolidated financial statements for the years presented.
The consolidated financial statements have been prepared on the basis of business as a going concern
principle in accordance with the historical cost convention.
Table below presents a summary of the statement of consolidated financial position as of December 31,
2020, December 31, 2021 and December 31, 2022:
Indicator
0
31.12.2020
(thousand
RON)
1
31.12.2021
(thousand
RON)
2
31.12.2022
(thousand
RON)
3
Variance
(2022/2021)
4=(3-2)/2*100
ASSETS
Non-current assets
Property, plant and equipment
Other intangible assets
Investments in associates
Deferred tax assets
Other financial assets
Right of use asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Contract costs
Other financial assets
Other assets
Current tax receivable
Cash and cash equivalents
Total current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
Non-current liabilities
Retirement benefit obligation
Provisions
Deferred income
Borrowings
Lease liability
5,613,122
5,240,697
5,039,314
-3.84%
14,774
26,102
16,133
26,187
28,537
5,140,425
31,762.80%
275,328
269,645
199,016
5,378
7,915
5,616
7,128
5,616
8,766
5,942,619
5,565,406 10,421,674
244,563
592,875
305,241
1,352,345
284,007
1,373,664
651
483
3
1,995,523
417,923
99,597
68,023
-
67,962
3,201
265,232
-
416,913
3,580,412
1,883,882
3,318,548
5,727,567
3,906,385
9,261,167
11,292,973 14,328,059
385,422
385,422
385,422
2,251,909
2,998,975
3,579,274
5,149,919
5,596,756
6,111,869
7,787,250
8,981,153 10,076,565
128,690
538,931
136,308
-
7,845
156,420
412,846
230,438
168,830
210,838
230,419
-
1,125,534
7,211
7,499
8.97%
-26.19%
0.00%
22.98%
87.26%
-6.96%
1.58%
-99.38%
-76.17%
290.27%
n/a
-47.38%
-31.80%
26.88%
0.00%
19.35%
9.20%
12.20%
7.93%
-48.93%
-0.01%
n/a
3.99%
Total non-current liabilities
811,774
806,915
1,743,120
116.02%
Page 53 of 73
Consolidated Board of Directors’ Report 2022
Indicator
0
31.12.2020
(thousand
RON)
1
31.12.2021
(thousand
RON)
2
31.12.2022
(thousand
RON)
3
Variance
(2022/2021)
4=(3-2)/2*100
Current liabilities
Trade payables and other liabilities
Contract liabilities
Current tax liabilities
Deferred income
Provisions
Lease liability
Borrowings
Other liabilities
Total current liabilities
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
89,132
81,318
59,831
10,899
71,317
204,384
110,006
263,340
54.25%
28.85%
52,299
1,177,498
2,151.47%
49
11
156,415
237,144
321,489
767
-
810
-
263,781
938,902
2,181
321,581
312,268
662,143
1,504,905
2,508,374
1,473,917
2,311,820
4,251,494
9,261,167
11,292,973 14,328,059
-77.55%
35.57%
169.26%
n/a
-66.74%
66.68%
83.90%
26.88%
NON-CURRENT ASSETS
Total non-current assets increased by 87.26%, namely RON 4.86 billion during the reviewed period. The
increase was caused by the acquisition of ExxonMobil Exploration and Production Romania Limited, the
cost of the acquisition being RON 5.12 billion. The company has been consolidated in Romgaz Group as of
the acquisition date (August 1, 2022).
CURRENT ASSETS
Current assets decreased by RON 1.82 billion on December 31, 2022, because of the decrease in cash, cash
equivalents and other financial assets by RON 2.01 billion.
Inventories
At the end of 2022, natural gas inventories decreased by RON 60.4 million compared to the end of 2021.
During 2022, 84.60 million m3 of gas were injected in underground gas storages while 283.90 million m3 of
gas were withdrawn. Quantitatively, the Group’s gas inventory in UGSs decreased by 45% compared to the
previous year.
Cash and cash equivalents. Other financial assets
Cash, cash equivalents and other financial assets (bank deposits and state bonds purchased) reached RON
1,983.48 million on December 31, 2022, as compared to RON 3,998.34 million at the end of 2021 (-RON
2,014.86 million). This decrease was mainly generated by the acquisition of ExxonMobil Exploration and
Production Romania Limited, as shown in the consolidated statement of cash flows.
Other assets
On December 31, 2022, other assets include RON 182.3 million representing the windfall tax from natural
gas and electricity paid in excess. This amount will be recovered in 2023.
NON-CURRENT LIABILITIES
At the end of 2022, non-current liabilities increased by 116.02% compared to the same period of 2021 mainly
as a result of contracting a loan in amount of RON 1,606.5 million (the equivalent of EUR 325 million)
required to partially finance the acquisition of ExxonMobil Exploration and Production Romania Limited.
CURRENT LIABILITIES
Current liabilities increased by RON 1,003.5 million, from RON 1,504.90 million, recorded on December
31, 2021, to RON 2,508.37 million at the end of 2022, mainly as a result of a solidarity contribution in
amount of RON 1,002.79 million.
Contract liabilities
These liabilities represent advances collected from clients on December 31, 2022 for deliveries to take place
in 2023.
Page 54 of 73
Consolidated Board of Directors’ Report 2022
Provisions
On December 31, 2022, short term provisions recorded an increase of 35.57% as compared to December 31,
2021. This increase is mainly due to the provision for greenhouse gas emission certificates (RON 228.13
million on December 31, 2022, the equivalent of 560,586 certificates, compared to RON 154.90 million on
December 31, 2021, the equivalent of 377,905 certificates). The increase in the number of certificates that
need to be acquired in 2023 for 2022 compliance is caused by the increase in electricity generation compared
to the previous year which required higher gas consumption consequently generating an increase in the CO2
emissions.
Other liabilities
Other liabilities recorded a decrease by 66.74% compared to the end of 2021. Most of these liabilities are
represented by the petroleum royalty due for Q 4 (RON 147.0 million on December 31, 2022, compared to
RON 400.3 million on December 31, 2021). Decrease of liabilities with royalty was due to the decrease in
the price of royalty for certain clients in accordance with GEO 27/2022.
The Group did not issue bonds or other debt instruments in financial year 2022.
7.2. Statement of Consolidated Comprehensive Income
The Group profit and loss account summary for the period January 1 – December 31, 2022, as compared to
the similar period of the years 2020 and 2021, is shown below:
Indicator
0
Year 2020
(thousand
RON)
1
Year 2021
(thousand
RON)
2
Year 2022
(thousand
RON)
3
Variance
(2022/2021)
4=(3-2)/2*100
Revenue
Cost of commodities sold
Investment income
Other gains and losses
Net impairment gains/(losses) on trade
receivables
Changes in inventories
Raw materials and consumables used
Depreciation, amortization and net
impairment expenses
Employee benefit expense
Finance costs
Exploration expense
Share of associates’ result
Other expenses
Other income
Profit before tax
Income tax expense
Profit for the period
4,074,893
(18,617)
47,845
(6,534)
17,551
(16,151)
(58,282)
(672,063)
(767,251)
(17,000)
(26,509)
1,330
(1,158,143)
25,439
1,426,508
(178,604)
1,247,904
5,852,926
(281,589)
58,403
23,388
349,989
74,787
(81,146)
(685,772)
(766,639)
(16,739)
(1,197)
85
(2,539,086)
169,841
2,157,251
(242,264)
1,914,987
13,359,653
(183,578)
176,979
(9,441)
(55,166)
(2,197)
(118,037)
(550,076)
(846,001)
(27,295)
(59,714)
2,350
(7,613,296)
80,068
4,154,249
(1,607,537)
2,546,712
128.26%
-34.81%
203.03%
n/a
n/a
n/a
45.46%
-19.79%
10.35%
63.06%
4,888.64%
2,664.71%
199.84%
-52.86%
92.57%
563.55%
32.99%
Revenue
In 2022, Romgaz recorded consolidated revenues of RON 13.4 billion, as compared to RON 5.9 billion
achieved in 2021.
The increase resides in a 124.20% increase of revenue from sales of gas produced by Romgaz and of gas
purchased for resale, as well as 313.75% increase of revenue from sales of electricity and 80.51% increase
of consolidated revenues from storage services.
Investment Income
Investment income is represented by the interests obtained from placing cash in bank deposits and state
bonds. The increase in income resides from the increase of interest rates.
Page 55 of 73
Consolidated Board of Directors’ Report 2022
Cost of Commodities Sold
In 2022, cost of commodities sold is mainly represented by the cost of imbalances in the electricity sales
business (RON 167.41 million in 2022). During periods in which electricity production was stopped, in order
to meet the delivery contractual obligations, the Group had to acquire from the market the amount of energy
needed.
Net Gains/Losses from Impairment of Trade Receivables
The Group calculates impairments for trade receivables depending on non-collection risk. Thus, for clients
undergoing bankruptcy procedures the Group records losses from impairment for the entire non-collected
amount; the same policy is applied to old debts.
In 2022, the Group recorded a net loss from impairment of receivables of RON 55.2 million.
Changes in Inventories
In 2022, the gas quantity injected by Romgaz in storages was lower by 70.20% than the quantity withdrawn
from storages, thus generating negative changes in inventories. The quantity of gas injected in/withdrawn
from storages by the Company in 2022 compared to 2021 decreased by 82.66%, and 32.76% respectively.
The decrease in gas quantity injected in storages was caused by the allocation of non-contracted production
to deliveries towards destinations provided under GEO 27/2022.
Raw Materials and Consumables Used
Increase of expenses with raw materials and consumables is mainly due to a 70.63% higher technological
consumption for the reviewed period of 2022 as compared to 2021 (+57% from a quantitative point of view
for gas and electricity production) and the increase of expenses with spare parts used in current repairs.
Depreciation, Amortization and Net Impairment
The depreciation, amortization and net impairment expenses decreased by 19.79% due to the decrease by
11.83% of depreciation and amortization expenses generated by the full amortization of certain assets during
previous periods and due to a low level of investment in the recent period. Moreover, net impairment of non-
current assets decreased by 36.41%.
Taking into consideration the current market conditions, the Group considered that there was no need to
update the impairment test of assets used in gas production activity.
Financial Cost
The increase of finance cost by 63.06% was generated by the interest cost related to the bank loan in amount
of EUR 325 million contracted for the acquisition of ExxonMobil Exploration and Production Romania
Limited shares (RON 5.04 million) and the increase of the discount rate used for calculating the well
decommissioning provision.
Exploration Expenses
Exploration expenses recorded in 2022 of RON 59.71 million, increased from RON 1.20 million recorded
in the same period of the previous year. Government Decision No.1011 of September 22, 2021 approved
Addendum No. 6 to the Concession Agreement concluded between ANRM and Romgaz extending the
exploration period for eight petroleum blocks until October 2027. Pursuant to this addendum, Romgaz
undertook to perform a certain minimum 3D seismic program that will result in increased exploration
expenses.
Other expenses
Other expenses increased by 199.84% in 2022 as compared to 2021. The increase of RON 5.07 billion is
mainly due to a higher windfall tax expense on gas sales, a higher windfall tax/contribution to the Energy
Transition Fund on electricity sales, royalty expenses as shown in the introductory section of this report.
Other income
Other income decreased by 52.86% in the year ended December 31, 2022 as compared to the same period
of 2021. Mostly, these include interest and late payment penalties invoiced to clients for failure to pay in due
time or to suppliers for delays in providing works.
Page 56 of 73
Consolidated Board of Directors’ Report 2022
7.3. Statement of Consolidated Cash Flows
Statements of cash flows recorded in the period 2020-2022 are shown in the table below:
INDICATOR
2020
2021
2022
*RON thousand*
Cash flow from operating activities
Net profit for the year
Adjustments for:
Income tax expense
Share from associates’ result
Interest expense
Unwinding of decommissioning provision
Interest revenue
(Gain)/loss on disposal of non-current assets
Change in decommissioning provision recognized in profit or loss,
other than unwinding
Change in other provisions
Net impairment of exploration assets
Exploration projects written-off
Net impairment of non-current assets
Foreign exchange differences
Depreciation and amortization
Amortization of contract costs
(Gains)/losses on financial investments evaluated at fair value through
profit or loss
Net losses/(gains) from trade receivables and other receivables
Net impairment of inventories
Income from liabilities written off
Income from subsidies
Cash generated from operations before movement in working
capital
Movements of working capital
((Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other liabilities
Cash generated from operational activities
Interest paid
Income tax paid
Net cash generated by operating activities
Cash flows from investing activities
Investments in other entities
Bank deposits set up and acquisition of state bonds
Bank deposits and state bonds matured
Interest received
Proceeds from sale of non-current assets
Proceeds from disposal of other investments
Acquisition of non-current assets
Acquisition of exploration assets
Net cash used in investment activities
Cash flows from financing activities
Borrowings received
Repayment of borrowings
Dividends paid
Subsidies received
Repayment of lease liability
Subsidies reimbursed
Net cash used in financing activities
Net increase/(decrease) in net cash and cash equivalents
Net cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
1,247,904
1,914,987
2,546,712
178,604
(1,330)
593
16,407
(47,845)
7
24,273
66,467
97,695
836
125,997
-
448,371
795
10
(19,700)
8,427
(368)
(7)
242,264
(85)
557
16,182
(58,403)
(321)
(20,750)
68,578
37,046
33
184,943
-
463,783
1,626
10
(378,352)
5,014
(810)
(9)
1,607,537
(2,350)
5,627
21,668
(176,979)
451
(75,652)
111,564
66,447
16
74,726
(453)
408,903
773
-
55,765
5,438
(512)
(7)
2,147,136
2,476,293
4,649,674
58,516
38,311
17,600
2,261,563
(3)
(224,796)
2,036,764
(64,913)
(400,838)
790,347
2,800,889
(3)
(233,084)
2,567,802
21,731
(276,839)
(526,915)
3,867,651
(5,040)
(410,976)
3,451,635
-
(2,964,757)
2,060,925
38,601
1,733
-
(547,215)
(66,516)
(1,477,229)
(250)
(3,896,521)
5,463,332
58,340
513
2
(340,695)
(91,865)
1,192,856
-
(3,355,306)
3,669,504
181,067
1,033
-
(5,529,611)
(96,500)
(5,129,813)
-
-
(620,346)
115,027
(1,196)
(50)
(506,565)
52,970
363,943
416,913
-
-
(690,027)
1,606,475
(158,907)
(1,463,984)
94,148
(1,280)
-
(597,159)
3,163,499
416,913
3,580,412
-
(1,936)
-
(18,352)
(1,696,530)
3,580,412
1,883,882
Page 57 of 73
Consolidated Board of Directors’ Report 2022
VIII. Corporate Governance
Corporate governance accommodates continuously to the requirements of a modern economy, to increasing
globalization of social life and to investors and interested parties need for information on companies
business.
As a national company Romgaz has to comply with GEO No. 109 of November 30, 2011 on corporate
governance of public enterprises, as subsequently amended and supplemented (the “Ordinance”), approved
by Law 111/2016 and Government Decision no. 722 of September 28, 2016 on Methodological Norms for
establishing the financial and nonfinancial performance indicators and variable component of remuneration
of Board members, or if applicable, of the supervisory board members, and of managers and members of the
directorate.
The Ordinance sets up a number of principles and provisions to ensure their application.
The provisions of the Ordinance are observed by the company, and are included in the Company’s Articles
of Incorporation, as amended and approved by the company’s shareholders in resolutions no. 19 of October
18, 2013, no. 5 of July 30, 2014, no. 8 of October 29, 2015, no.9 of October 28, 2016 and no.4 of August 9,
2017 (latest update of the Articles of Incorporation).
The updated Company’s Articles of Incorporation is published on the webpage www.romgaz.ro, at
“Investors – Corporate Governance – Reference Documents”.
Since November 12, 2013, Romgaz shares have been traded on the regulated market governed by BVB,
under the symbol “SNG”, as well as on London Stock Exchange (where GDRs are traded) under the symbol
“SNGR”.
On January 5, 2015, after the Financial Supervisory Authority approved the proposals to amend BVB’s
regulations, Romgaz was admitted into the PREMIUM category of BVB regulated market.
As issuer of securities traded on the regulated market, Romgaz has to fully comply with the corporate
governance standards provided by applicable national regulations, namely the Code of Corporate
Governance of BVB, published on the internet webpage www.bvb.ro, at “Investors – Regulations - BVB
Regulations”.
The Corporate Governance system of the company was and will be continuously improved according to the
rules and recommendations applicable to companies listed on Bucharest Stock Exchange and on London
Stock Exchange.
Some of the already implemented measures include:
drafting a new Code of Corporate Governance, in accordance with the new Code of Corporate
Governance of BVB applicable since January 4, 2016 – the document was approved by Romgaz Board
of Directors by Resolution no.2/January 28, 2016. The Code of Corporate Governance was updated and
will be submitted for approval to the Board of Directors.
The Company’s Code of Corporate Governance is posted on the webpage www.romgaz.ro, at “Investors
– Corporate Governance”;
Board of Directors approval of the Internal Rules of the advisory committees on March 24, 2016 and
their subsequent revision and approval by S.N.G.N. Romgaz S.A Board of Directors: The Internal Rules
of the Nomination and Remuneration Committee on August 28, 2018 and on August 11, 2022, the
Internal Rules of the Audit Committee on May14, 2018 and October 10, 2022 and the Internal Rules of
the Strategy Committee on March 23, 2017 and October 27, 2022;
Update of the Terms of Reference of the Board of Directors to include the latest legal changes on
corporate governance. The Terms of Reference were approved by the Board of Directors on March 23,
2017 and subsequently updated in January 2018 and in February 2019;
Approval of the Policy related to the assessment of the Board of Directors during March 12, 2019
meeting;
Approval of the Policy related to remuneration of Board members and managers by the OGMS during
April 28, 2022;
Approval of Romgaz Policy related to transactions with affiliates and the draft statement on Board of
Directors commitment to develop and implement the internal management control system and the risk
management policy on February 24, 2022;
Page 58 of 73
Consolidated Board of Directors’ Report 2022
Drafting/updating a series of internal regulations/policies in compliance with BVB Code of Corporate
Governance;
Inclusion in the Board of Directors Annual Report of a chapter dedicated to corporate governance. This
chapter presents a series of elements regarding corporate governance, such as: the applicable Code of
Corporate Governance, the duties of the corporate management bodies and of the three advisory
committees of the Board of Directors (the Nomination and Remuneration Committee, the Audit
Committee and the Strategy Committee), aspects related to remuneration of members of the Board and
of managers, measures to improve corporate governance, aspects related to internal control and risk
management system, internal audit and aspects related to social responsibility;
Incorporation in the Board of Directors Annual Report of a section referring to compliance with the
provisions of BVB Code of Corporate Governance (Annex 1);
Diversification of communication with shareholders and investors by posting on the website press
releases addressed to market players, half year and quarterly financial statements, annual reports,
procedures to follow for access and participation to GMS, and by setting up an “Infoline” for
shareholders/investors to respond to their requirements and/or questions;
Setting up a specialized department dedicated to investor and shareholder relations;
Conclusion of professional liability insurance contract for members of the Board and managers with
mandate, starting with October 1, 2022;
Continuation of the necessary steps for the implementation of 2021-2025 National Anti-corruption
Strategy in 2022. In this regard, the Commission responsible for the implementation of the strategy
drafted and submitted to the Ministry of Energy – Antifraud, Integrity and Inspection Department the
Narrative Report on the status of implementation of the measures provided in the NAS, the Inventory of
institutional transparency and corruption prevention measures as well as evaluation indicators for 2022.
Among the measures to be implemented, we mention:
Revision of the Remuneration Policy for the members of the Board and managers with mandate and
submission to shareholders for approval, after completion of the selection procedure for members of the
Board and managers;
Quarterly assessment of the fulfilment of financial and non-financial performance indicators approved
by the General Meeting of Shareholders ;
Continue required actions to align with the new 2021-2025 National Anti-Corruption Strategy, approved
by Government Decision No. 1269/December 17, 2021;
Drafting the organizational integrity agenda and company integrity plan in compliance with NAS 2021-
2025.
Aspects related to shareholders
The shareholders structure is presented within Chapter II “Parent Company at a Glance”.
Romgaz respects and protects the rights and legitimate interests of all shareholders, constantly informing
them on the rules and procedures governing the General Meeting of Shareholders, on decisions concerning
corporate changes and significant events within the company. Rights of minority shareholders are also
protected in accordance with the legal provisions in force and with the Articles of Incorporation.
All relevant information on exercising all legitimate rights of shareholders are to be found on company’s
website, www.romgaz.ro, under “Investors”.
General Meeting of Shareholders
The General Meeting of Shareholders is convened by the Board of Directors, whenever necessary, in
accordance with the legal provisions. The convening notices and afterwards, the GMS resolutions, are sent
to Bucharest Stock Exchange, London Stock Exchange and to the Financial Supervisory Authority in
compliance with the regulations of the capital market and are published on the company’s website at
“Investors – General Meeting of Shareholders”.
The Ordinary General Meeting of Shareholders has the following main competencies:
a)
to approve the company’s strategic objectives;
Page 59 of 73
Consolidated Board of Directors’ Report 2022
b) to discuss, approve or amend, as the case may be, the annual financial statements of the company based
on the reports submitted by the Board of Directors and the financial auditor, and to set the dividend;
to discuss, approve or request, as the case may be, supplementation or review of the company’s
governance plan, under legal provisions;
c)
d) to set the income and expenditure budget for the following financial year;
e)
to appoint and revoke Board members and to set their remuneration;
f)
to decide upon the governance of the Board of Directors;
g) to appoint and to dismiss the financial auditor and to set the minimum term of the financial audit contract;
h) to approve the contracting of bank loans, the value of which exceeds, individually or cumulatively with
i)
other bank loans in progress, over a financial year, the equivalent in RON of EUR 100 million;
to approve conclusion of documents establishing guarantees, other than guarantees for the company’s
non-current assets, the value of which exceeds, individually or cumulatively with other guarantees in
progress, other than guarantees for the company’s non-current assets, over a financial year, the
equivalent in RON of EUR 50 million.
to change company’s legal form;
The Extraordinary General Meeting of Shareholders has the following main competencies:
a)
b) to move the headquarters;
c)
d) to establish companies, as well as conclude or amend incorporation documents of the companies where
to change the Company’s scope of activity;
Romgaz is associate;
to conclude or amend joint venture contracts where the company is contracting party;
to increase the share capital;
e)
f)
g) to reduce the share capital or to restore it by issuing new shares;
h) to merge with other companies or to spin-off the company;
i)
j)
k) to convert one category of bonds into another one or in shares;
l)
m) to conclude documents related to the acquisition of non-current assets the value of which exceeds,
individually or cumulatively, during a financial year, 20% of the total non-current assets of the company,
except for receivables;
the anticipated winding up of the company;
to convert shares from a category into the other;
to issue bonds;
n) to conclude the documents related to disposal, exchange or set up of guaranties referring to non-current
assets the value of which exceeds, individually or cumulatively, during a financial year, 20% of the total
non-current assets, except for receivables;
o) to conclude the documents related to rental of tangible assets to the same contractors or to persons
involved or acting together, for a period longer than 1 (one) year, the value of which exceeds,
individually or cumulatively, 20% of the total non - current assets, except for receivables at the document
conclusion date;
p) any other change in the Articles of Incorporation or any other resolution that requires the approval of
the extraordinary general meeting of shareholders.
Board of Directors
Romgaz is a joint-stock company governed under a one-tier system.
The Board of Directors consists of 7 (seven) members elected by the Ordinary General Meeting of
Shareholders, in compliance with applicable legal provisions and with the Articles of Incorporation and one
of its members is appointed Chairman of the Board.
Board of Directors composition complies with the legal criteria/conditions on the share of non-executive and
independent members, studies and competencies, experience and gender diversity (criteria detailed in the
Board of Directors Terms of Reference.
Page 60 of 73
Consolidated Board of Directors’ Report 2022
Board of Directors componence on December 31, 2022 is presented in Chapter VI “Company management”.
According to the statements of independency sent to the company, two board members declared to be
independent and five declared to be non-independent. The independence of Board members is determined
based on the criteria detailed in Romgaz Code of Corporate Governance (art.6).
Aspects on board members’ rights, obligations and competencies, as well as aspects related to Board
meetings are detailed in the Articles of Incorporation and in the Board of Directors Terms of Reference.
Until December 31, 2022, the Board of Directors did not make a self- assessment for 2022.
Advisory Committees
The activity of the Board of Directors is supported by three advisory committees, namely: the Nomination
and Remuneration Committee, the Audit Committee and the Strategy Committee.
The Audit Committee has legal duties provided in Article 65 of Law No. 162/201716 consisting mainly in
monitoring the financial reporting process, the internal control systems, the internal audit and risk
management systems within the company, as well as in supervising the statutory audit activity related to
annual financial statements and in managing the relationship with the external auditor.
The Nomination and Remuneration Committee has, basically, the competence to set the procedures for
selecting the candidates for the board members and manager positions, and to make proposals for the
position as board member and to get involved in the selection and recruitment procedure of managers, and
to make proposals for their remunerations. During the financial year, the committee has also the obligation
to elaborate an annual report on the remuneration and other benefits awarded to directors and managers.
The main scope of the Strategy Committee is to coordinate drafting/updating and monitoring of the
company’s development strategies, correlated with the national and European energy strategy, to analyse the
implementation of such strategies and the measures needed to reach the objectives set, and to monitor the
business diversification projects by carrying out some investment objectives.
The detailed presentation of duties and responsibilities of each advisory committee can be found in their
respective Internal Rules published on the company’s webpage www.romgaz.ro at “Investors– Corporate
Governance – Reference Documents”.
On December 31, 2022, the advisory committees’ structure was the following:
I) Nomination and Remuneration Committee:
Sorici Gheorghe Silvian (chairman)
Batog Cezar
Drăgan Dan Dragoș
II) Audit Committee
Sorici Gheorghe Silvian (chairman)
Batog Cezar
Simescu Nicolae Bogdan
III) Strategy Committee
Balazs Botond (chairman)
Drăgan Dan Dragoş
Jude Aristotel Marius
Metea Virgil Marius
Sorici Gheorghe Silvian.
Information regarding the Board of Directors’ meetings and the Advisory Committees meetings held in 2022
The Board of Directors held in 2022 a number of 43 meetings, in compliance with the legal and statutory
provisions, out of which:
36 meetings with physical attendance of board members and
7 electronic vote meetings.
16 Law No. 162 of July 15, 2017 on the statutory audit of annual financial statements and of annual consolidated financial
statements and on amending pieces of legislation
Page 61 of 73
Consolidated Board of Directors’ Report 2022
The attendance at the Board of Directors meetings:
Last name and first name
Number of meetings
during mandate
P
PA
NP
No. %
No. %
No. %
Stan Manuela Petronela
Niculescu George
Drăgan Dan Dragoş
Jude Aristotel Marius
Balazs Botond
Simescu Nicolae Bogdan
Sorici Gheorghe Silvian
Batog Cezar
Metea Marius Virgil
where:
P = participation;
PA = power of attorney;
NP = non-participation
8
8
43
43
43
43
43
35
22
8
8
43
43
42
43
40
31
22
100.0
100.0
100.0
100.0
97.67
100.0
93.02
88.57
83.33
1
3
4
5
2.33
6.98
11.43
16.67
Board members’ attendance at Advisory Committee meetings:
Nomination and Remuneration Committee: 10 meetings
Last name and first name
Ciobanu Romeo Cristian
Drăgan Dan Dragoș
Jude Aristotel Marius
Sorici Gheorghe Silvian
Audit Committee: 12 meetings
Last name and first name
Stan Manuela Petronela
Simescu Nicolae Bogdan
Sorici Gheorghe Silvian
Batog Cezar
Strategy Committee: 2 meetings
Last name and first name
Drăgan Dan Dragoș
Jude Aristotel Marius
Niculescu George Sergiu
Simescu Bogdan Nicolae
Metea Marius Virgil
Sorici Gheorghe Silvian
Balazs Botond
Physical attendance
8/9
10/10
1/1
10/10
Physical attendance
2/2
12/12
12/12
9/10
Physical attendance
1/2
2/2
0/1
1/1
1/1
1/1
2/2
Chief Executive Officer
In compliance with the company’s Articles of Incorporation “Board of Directors shall assign, in whole or
in part, management competencies of the Company to one or more managers, appointing one of them as
Chief Executive Officer” -Article 24, paragraph (1), the term “manager” meaning “the person to whom the
Board of Directors delegated authority to manage the Company” -Article 24, paragraph (12).
According to Resolution No. 67 of November 2, 2021, the Board of Directors appointed Mr. Jude Aristotel
Marius as Chief Executive Officer of Romgaz for a 4-month term mandate, starting with December 15, 2021
until April 15, 2022.
Page 62 of 73
Consolidated Board of Directors’ Report 2022
By Resolution No. 17 of March 22, 2022, the Board of Directors appointed Mr. Jude Aristotel Marius as
Chief Executive Officer of Romgaz for a 4-month term mandate, starting with April 16, 2022 until August
16, 2022.
By Resolution No. 57 of August 12, 2022, the Board of Directors appointed Mr. Popescu Razvan as Chief
Executive Officer of Romgaz for a 4-month term mandate, starting with April 17, 2022 until December 17,
2022.
By Resolution No. 78 of November 23, 2022, the Board of Directors appointed Mr. Popescu Razvan as Chief
Executive Officer of Romgaz for a 4-month term interim mandate, starting with December 18, 2022 until
April 18, 2023.
Until August 17, 2022 powers delegated to the CEO by the Board of Directors according to Resolution no.
47 of June 30, 2021 modified by Resolution No. 54 of August 12, 2021 were the following:
a) Approval of employment, promotion and dismissal of employees;
b) Approval of work duties and tasks of employees;
c) Approval of bonuses and sanctions of employees;
d) Approval of material operations (technical, economic, commercial etc. actions or processes) that
are required and useful to fulfil Romgaz scope of business;
e) Approval of operations with the scope of concluding/issuing legal documents:
Up to RON 400 million, concluded on centralized markets (stock exchange) or based
on sector-specific procurement law;
Up to RON 400 million, concluded outside centralized markets or outside the scope of
sector-specific procurement law (by means of internal procedures);
f) Approval of sponsorship and patronage contracts;
g) Approval of Romgaz Rules of Organization and Operation;
h) Change and appointment of managers (with individual employment contract);
i) Any other duty, except for those not assigned pursuant to the above mentioned BoD Resolution;
j) Fulfilment of any ancillary duties, material acts and operations required and useful to perform
the duties under a) – i).
Among the duties not delegated to the interim Chief Executive Officer, the Board of Directors established:
a) Approval of Romgaz organizational chart;
b) Approval of operations with the scope of concluding/issuing legal acts other than those provided
at article 2) letter e);
c) Management powers which cannot be delegated to company managers pursuant to legal
provisions and to the Articles of Incorporation.
Starting with August 17, 2022, according to Board of Directors Resolution no. 57, the Chief Executive
Officer as legal representative of Romgaz exercises all management competencies except for the
competencies delegated to the Deputy CEO and the CFO.
Deputy Chief Executive Officer
By Resolution No. 57 of August 12, 2022, the Board of Directors appointed Mr. Jude Aristotel Marius as
Deputy Chief Executive Officer for a 4-month term from August 17, 2022 to December 17, 2022.
By Resolution No. 78 of November 23, 2022, the Board of Directors appointed Mr. Jude Aristotel Marius
as Deputy Chief Executive Officer for an interim 4-month term from December 18, 2022 until April 18,
2023.
By Resolution No. 57, the Board of Directors delegated to the Deputy Chief Executive Officer the following
duties:
Planning, approval and coordination of required and useful operations for Romgaz scope of activity and
which fall within the competence expressly given by the Board of Directors in accordance with the
company’s Rules of Organization and Operation and the law;
Coordination of activities performed by Romgaz in connection with Neptun Deep project.
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Chief Financial Officer
By Resolution No. 68 of November 2, 2021, the Board of Directors appointed Mr. Popescu Razvan as Chief
Financial Officer for a 4-month term from December 16, 2021 until April 16, 2022.
By Resolution No. 18 of March 22, 2022, the Board of Directors appointed Mr. Popescu Razvan as Chief
Financial Officer for a 4-month term from April 17, 2022 until August 17, 2022.
By Resolution No. 57 of August 12, 2022 the Board of Directors appointed Mr. Bobar Andrei as Chief
Financial Officer for a 4-month term from August 17, 2022 until December 17, 2022.
By Resolution No. 85 of December 20, 2022, the Board of Directors appointed Mrs. Tranbitas Gabriela as
Chief Financial Officer for a 4-month term from December 20, 2022 until April 20, 2023.
The competency of the Chief Financial Officer established by Board of Directors Resolution No. 57 consists
of planning, approval and coordination of operations required and useful for performing Romgaz scope of
activity, in accordance with the law and the company’s Rules of Organization and Operation, within the
competencies of the Economic Department.
The Board of Directors delegates the management competence to the three managers acting by mandate,
who were appointed by Board of Directors Resolution No. 57, except for the following competencies:
a. Competencies to manage Romgaz which cannot be delegated by the Board of Directors according to
provisions of article 19, par. (3) of the company’s Articles of Incorporation;
b. Concluding/issuance of legal acts exceeding RON 300 million.
The Chief Executive Officer, the Deputy Chief Executive Officer and the Chief Financial Officer have the
obligation to inform the Board of Directors periodically on how the assigned duties were implemented, and
the right to request and to obtain instructions on the manner of exercising the assigned duties.
Internal Audit
Internal audit activity is organised and conducted in compliance with Law No. 672/2002 on the public
internal audit, as subsequently amended and supplemented.
From an organisational perspective the Internal Public Audit Department is subordinated to the Chief
Executive Officer and from a functional perspective it is subordinated to Romgaz Board of Directors through
the Audit Committee.
Based on Law No. 672/2002, the general scope of the internal audit in public entities is the improvement of
their management mainly by:
-
assurance activities that represent objective examinations of evidence, carried out in order to provide
public entities with an independent assessment of risk management, control and governance processes,
and
-
advisory activities aimed at adding value and improving governance processes in public entities.
In order to achieve its objectives, the Public Internal Audit Department drafts the Multi-Annual Public
Internal Audit Plan for a period of 3 years, and based on this, it also drafts the Annual Public Internal Audit
Plan.
The draft plan is prepared based on the assessment of risk associated with the different activities,
programs/projects or operations, as well as by taking the suggestions of the Chief Executive Officer, Board
of Directors and of recommendations made by the Romanian Court of Accounts.
In order to observe and to meet the above mentioned conditions and subject to the 2022 Activity Plan of the
Public Internal Audit Department, No. 40668/November 11, 2021, endorsed by the Audit Committee and
approved by the Chief Executive Officer, the audit activity consisted of 8 audit missions for assurance
purposes aimed at confirming regularity/conformity of procedures and operations with the regulatory
framework, by comparing reality with the established reference system. In 2022, the annual audit plan was
updated pursuant to Report No. 34392/September 14, 2022, and 1322/January 11, 2023.
Therefore, a total of 8 audit missions were performed in 2022:
8 planned missions, in accordance with 2022 annual plan;
2 ad-hoc missions;
The missions were performed in the following fields:
financial-accounting;
public procurement;
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legal;
entity specific functions;
internal management control system;
health and wellness;
human resources – Ethics Adviser.
The accomplishment degree of the 2022 internal audit plan was 100%. Against this context, during 2022,
52 recommendations were made being implemented by the audited structure.
Internal auditing is conducted permanently in order to provide an independent assessment of operational,
control and management processes, to evaluate potential risk exposure of various business segments (asset
security, compliance with laws and contracts, integrity of operational and financial information etc.) to make
recommendations for improving the systems, controls and procedures to ensure efficiency and effectiveness
of operations and to monitor proposed corrective actions and results.
As a general note, Romgaz focused on compliance with internal integrity rules and on continuous self-
assessment of the implementation level of internal anti-corruption mechanisms, as described in the 2020 –
2025 National Anti-Corruption Strategy and other subsequent documents (Order No.600/2018 on approving
the Internal Management Control Code of public entities).
Risk Management and Internal Control
Policies and Objectives related to Risk Management
Risk management is a complex process of identification, analysis and response to possible company risks
through a documented approach which uses material, financial and human resources to meet the objectives,
aiming at reducing exposure to losses.
One major concern of the management is to raise awareness of the organisation on the objectives of the risk
management process, on the necessity to be directly involved in the risk management process, and on the
alignment to the latest field-specific practices complying with the applicable law, standards and norms
related to such process.
In March 2019, the Board of Directors approved the draft BoD Statement on the commitment to develop and
implement the internal management control system and the risk management policy.
The company’s risk management system is implemented in accordance with:
Government Ordinance No.119/1999 on internal/management control and preventive financial
control, republished, as subsequently amended and supplemented;
Emergency Ordinance No. 109/2011 on corporate governance of public enterprises;
Law No. 111/2016 for the approval of Government Emergency Ordinance No. 109/2011 on
corporate governance of public enterprises;
Order of the General Secretary of the Government No. 600/2018 for the approval of the Code of
Internal Management Control of public entities;
Methodology to implement the internal control standard Risk Management – 2018;
BVB Code of Corporate Governance
SNGN Romgaz S.A. Code of Corporate Governance
Considering that the risk management standard is unanimously accepted in EU, being one of the important
standards of the internal management control system (SCIM) in risk management, the company
systematically reviews risks associated with its objectives and activities, drafts appropriate control plans
towards limiting the possible consequences of such risks and establishes responsibilities related to their
implementation.
The main benefit of the risk management process is the improvement of company’s performance by
identifying, analysing, assessing and managing all risks of the company, in order to minimize the negative
risk consequences or to increase the positive risk consequences, as the case may be.
A risk management department has been established for an efficient assessment of the company’s risks. One
major task of this department is drafting the company’s documents in terms of risk management (Risk
Register, Risk Report, Plan for Implementing Measures and Risk Profile), and managing and developing the
risk management system through the following means:
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Implementation of audit and control recommendations contained in reports generated by competent
entities;
Continuous improvement of the information application developed by the company, following
periodic reviews and feedback given by the heads of organisational units;
Permanent counselling of the heads of organisational units and constant support for risk
identification and fulfilment of requirements;
Developing personnel’s competence level in terms of understanding and managing risks through
methodological guidance.
Three role levels are set up in the risk management system:
base level, represented by risk identifiers and by risk responsible persons (head of each
organizational unit) who are responsible for preparing risk management documents of their
organizational unit;
middle level, represented by the company’s middle management which together with the heads of
the organizational units make up the Risk Management Commission that facilitates and coordinates
the risk management process within the respective direction/department/division;
high level, represented by the executive upper management in the Monitoring Commission that
approves the company’s risk appetite and risk profile in accordance with its objectives.
The Company’s general objectives regarding the risk management activity are:
1. setting a general and single framework for risk identification, analysis and management;
2. providing the appropriate tool for controlled and efficient risk management;
3. providing a description of the manner in which control measures are set and implemented to prevent
negative risks occurrence.
Some of the assessed risk categories are: financial risks, market risks, occupational health and safety risks,
personnel risks, IT systems related risks, legal and regulatory risks. All risks are assessed from the following
perspectives:
the specific objective addressed by the risk;
causes of risk occurrence;
consequences further to risk materialization;
probability of occurrence;
risk materialization impact;
risk exposure;
risk response strategy;
recommended control (treatment) measures;
residual risks remaining after handling initial risks.
Financial and Commercial Risk Exposure
The Company is exposed to a variety of financial risks: market risk (which includes currency risk, inflation
risk, interest rate risk), credit risk, liquidity risk. The Company’s risk management program is focused on
the unpredictability of financial markets and seeks to minimize, within some limits, the potential negative
consequences on the Company’s financial performance. However, this approach does not prevent losses
outside these limits in case of significant variations on the market. The Company does not use derivatives to
cover the exposure to certain risks.
The Company faces currency risks following the exposure to different foreign currencies. The currency risk
arises from future commercial transactions and from recorded receivables and payables.
Financial assets exposing the Group to a potential credit risk are mainly trade receivables. The Group’s
policies provide for gas sales to clients with low credit risk. Moreover, sales have to be secured either by
advanced payments or by letters of bank guarantee. The net value of receivables following the adjustment
for impairment of doubtful debts, represents the maximum value exposed to credit risk.
Even though collection of receivables might be influenced by economic factors, the management believes
that there is no significant risk of loss for the Group, besides the impairment of doubtful debts, already
established.
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The final responsibility for the liquidity risk lies with the company’s management, which established a
suitable framework for liquidity risk management for the Company’s short, medium and long-term financing
and for complying with requirements concerning liquidity risk management. The Company manages
liquidity risk by maintaining an adequate level of reserves by continuous monitoring forecasts and current
cash flows and by connecting maturity profile of financial assets with financial debts.
The risk management system continuously evaluates the commercial risks faced by the Company. Currently,
commercial risks are reduced considering accepted payment method (mainly advance payments or payment
deadline securing the payment by means of letter of bank guarantee), existing natural gas demand securing
sales and sales prices significantly exceeding production costs.
Internal Control
For an optimum management of the activity, the company performs several types of internal controls:
preventive financial control;
work quality control;
legal control of documents and transactions concluded by the company;
internal control regarding the compliance with legal requirements in the field of labour health and
security and of environment protection;
internal cost control etc.
As such, the internal management control provides reasonable assurance on understanding, interpretation
and implementation of specific regulations, being supported and consolidated by the company’s internal
control.
The internal management control system implemented in the company operates through different procedures,
means, actions targeting every aspect of activity. The management implements such system to attain a better
control over the company’s general operation and over each activity/operation. The internal management
control system (IMCS) secures the implementation of all management functions and is a process carried out
by the personnel irrespective of the level of employment, i.e. Board of Directors, Chief Executive Officer,
Deputy Chief Executive Officer, heads of functional and operational compartments subordinated to the Chief
Executive Officer, to the Deputy Chief Executive Officer and to the Chief Financial Officer, execution
personnel.
IMCS increases the probability to meet objectives by means of systematic implementation (objectives,
indicators, risks, duties, organisation, procedures etc.). Also, it reduces errors, risk of fraud, losses,
inefficiency, assistance in compliance with regulations, issuance of truthful reporting. In case IMCS is not
implemented, risks can be generated which may threaten the existence or even the continuity of the
organisation.
Main objectives of IMCS developed and implemented by Romgaz are:
-
compliance with legal regulations, with internal rules, with contracts, and administrative and
jurisdictional decisions applicable to the company’s activity;
fulfilment of Romgaz objectives under effectiveness, economy and efficiency conditions;
protection of Romgaz patrimony against losses caused by errors, waste, fraud or abuse;
development and maintenance of collection, storage, processing, updating and distribution of financial
and management data and information, as well as of proper systems/procedures to inform the public.
The internal management control system is drafted, implemented, developed and assessed in compliance
with the provisions of Government Ordinance No. 119/1999 and with the standards provided by SGG17
Order No. 600/2018.
Below are some of the development/improvement actions of the internal management control system during
2022:
-
in order to consolidate the knowledge on regulations in the field of IMCS, during January 5 to 19, 2022
methodological guiding on the implementation of IMCS was carried out;
at company level, in order to raise awareness among employees, the company made available a Guideline
on internal rules related to each internal control standard and the actions required to be undertaken by
every head of organizational unit in order to implement the standards;
-
-
-
-
17 General Secretariat of the Government
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Consolidated Board of Directors’ Report 2022
-
-
-
-
guidance for the employees of the headquarters and the branches in order to identify sensitive positions
and to establish risk exposure for these positions;
assessment and identification of sensitive positions (December 1, 2021-March 15, 2022) for each
organisational unit pursuant to PS-16 Inventory of Sensitive Positions (procedure). Risks identified
following the assessment were centralised and submitted to the monitoring commission which, following
debates and final vote, drafted the inventory of sensitive positions and the list of persons holding such
positions no.5647 of February 14, 2022;
during 2022, the Risk Management Methodology (including corruption related risks) was
drafted/updated and is pending approval;
during October 17-November 29, 2022 the representatives of the Court of Accounts verified the
company conducting also an assessment on compliance with requirements for the implementation of
internal control standards. Following the verification, several recommendations were issued on the
implementation of internal management control system.
As a result of the self-assessment action regarding the IMCS implementation for 2022, Romgaz IMCS is
partially compliant having 15 implemented standards and 1 partially implemented standard, namely
Standard 16 Internal Audit.
Romgaz is constantly preoccupied to implement and develop anticorruption and anti-bribery instruments.
Actions implemented in 2022 by the Internal Management Control Department, as secretary to the
Committee for the implementation of the 2016-2020 and 2021-2025 National Anticorruption Strategy
(NAS), are:
-
Statement for the assumption of an organizational integrity agenda and Romgaz 2022-2025 Integrity
Plan according to Decision No. 1269/December 17, 2021 approving the 2021-2025 National
Anticorruption Strategy;
- Self-assessment of 2016-2020 National Anticorruption Strategy for 2021 – “Narrative on
implementation degree of measures provided in NAS” and Annex 3 to GD No. 583/2016 regarding 2016-
2020 National Anticorruption Strategy “Inventory of institutional transparency and corruption
prevention measures, and assessment indicators” sent to Anti-Fraud, Integrity and Inspection Direction
under the Ministry of Energy.
- Anti-Fraud, Integrity and Inspection Direction under the Ministry of Energy together with Romgaz
executive management and the ethics advisor carried out a corruption prevention activity in May 11,
2022;
- During October 25-27, 2022, the Anti-Fraud, Integrity and Inspection Department of the Ministry of
Energy performed an anti-fraud and anticorruption verification at Romgaz.
Corporate Social Responsibility (CSR)
Romgaz activities in the field of social responsibility are performed voluntarily, beyond the legal
responsibilities, the company being aware of its role in society.
Social responsibility means for Romgaz a business culture including business ethics, customer rights,
economic and social equity, environmental friendly technologies, fair treatment of workforce, transparent
relationship with public authorities, moral integrity and investment in the community.
Moreover, Romgaz supports a sustainable development of the society and community, through financial
support/ total or partial sponsorship for some actions and initiatives in the following main fields: education,
social, sport, health and environment.
Granting partial or total financial support/ sponsorship for actions and initiatives, within the budgeted limits,
Romgaz has shown a pro-active attitude of social responsibility and increased the awareness of the parties
involved regarding the importance and benefits of social responsibility actions.
In 2022, Romgaz supported, totally or partially, actions and initiatives stipulated in Government Emergency
Ordinance (“GEO”) No.2/2015, complying with the budget, as follows:
Expenses/activities
Total of sponsorship expenses, out of which:
Expenses with sponsorships in medical and health fields - art. XIV letter a)
Achieved
(RON thousand)
24,216
12,500
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Expenses with sponsorships in education and sport fields - art. XIV letter b) –
total, out of which:
o For sports clubs
Sponsorship for other actions and activities - art. XIV letter c)
9,966
6,059
1,750
The detailed description of the projects regarding sponsorship provided in GEO No.2/2015 is included in the
2022Annual Report on Social Responsibility and Patronage published on www.romgaz.ro at “Investor
Relations - Corporate Governance - Social Responsibility”.
The projects carried out in 2022 had, besides the positive impact on the environment and community, an
important benefit for the company by inspiring the organisational culture and the goodwill being a
responsible employer, and also an involved social partner, promotor of a transparent and open relationship.
This is positively reflected in Romgaz image, domestically and internationally, both for investors,
government and local authorities, and for other stakeholders.
When supporting/performing projects, actions, social responsibility initiatives, Romgaz took into
consideration the provisions of 2022 Sponsorship Policy and Sponsorship Guide published on the company’s
website at Social Responsibility. (https://www.romgaz.ro/en/content/social-responsibility-0).
Remuneration Policy and Criteria of the Executive and Non-Executive Members of the Board of
Directors and of Managers
Legal Framework
Remuneration policy and criteria of executive and non-executive members of the Board of Directors are
based on the following norms:
Law No. 31/1990 on trading companies, as subsequently amended and supplemented;
GEO No. 109/2011 on corporate governance of public enterprises, as subsequently amended and
supplemented, approved by Law No.111/2016;
Company’s Articles of Incorporation approved by the Extraordinary General Meeting of Shareholders
No. 9/October 28, 2016 and No. 4/August 9, 2017 (latest update of the Articles of Incorporation);
SNGN Romgaz SA Remuneration Policy, endorsed by the Board of Directors by Resolution No. 20 of
March 28, 2022 and approved by the OGMS by Resolution No. 3 of April 28, 2022;
Resolution No. 7/ September 9, 2021 of the Ordinary General Meeting of Shareholders whereby the
shareholders appoint the interim Board of Directors members for a 4-month term from September 13
2021 to January 13,2021, approve the form of the mandate contract and establish the fixed gross monthly
allowance;
Board of Directors Resolution No. 67/ November 2, 2021 appointing Romgaz CEO for a 4-month term
from December 15, 2021 until April 15 2022, and signing the mandate contract and the fixed gross
monthly allowance;
Board of Directors Resolution No. 68/ November 2, 2021 appointing Romgaz CFO for a 4-month term
from December 16, 2021 until April 16 2022, and signing the mandate contract and the fixed gross
monthly allowance;
Resolution No. 1/ January 6, 2022 of the Ordinary General Meeting of Shareholders whereby the
shareholders approve a 2-month extension of BoD members mandate term starting with the mandate
expiration date, and the form of addendum to the mandate contract;
Resolution No. 2/ February 28, 2022 of the Ordinary General Meeting of Shareholders whereby the
shareholders appoint BoD interim members for a 4-month term from March 14, 2022, establish the fixed
gross monthly allowance and approve the form of the mandate contract;
Board of Directors Resolution No. 17/ March 22, 2022 appointing Romgaz CEO for a 4-month term
from April 16, 2022 until August 16, 2022 and establishing the fixed gross monthly allowance;
Board of Directors Resolution No. 18/ March 22, 2022 appointing Romgaz CFO for a 4-month term
from April 17, 2022 until August 17, 2022 and establishing the fixed gross monthly allowance;
Board of Directors Resolution No. 33/ May 25, 2022 approving the mandate contract for the CEO and
the CFO;
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Consolidated Board of Directors’ Report 2022
Board of Directors Resolution No. 34/ May 22, 2022 appointing a new interim Romgaz board member
starting with May 25, 2022 until the date of the first Ordinary General Meeting of Shareholders;
Board of Directors Resolution No. 36/ June 17, 2022 approving the mandate contract for the interim
board member;
Resolution No.6/ July 8, 2022 of the Ordinary General Meeting of Shareholders whereby the
shareholders appoint BoD interim members, establish the mandate term, the fixed gross allowance, the
form of mandate contract, and approve the 2-month extension of mandate term from the date of
expiration for the interim board members appointed by Ordinary General Meeting of Shareholders No.
2/February 28, 2022, and the form of addendum to the mandate contract;
Board of Directors Resolution No. 57/ August 12, 2022 appointing Romgaz CEO, Deputy CEO and
CFO for a 4-month term from August 17, 2022 until December 17, 2022, and approving the monthly
gross fixed allowance;
Board of Directors Resolution No. 60/ August 31, 2022 approving the mandate contract of the CEO;
Board of Directors Resolution No. 61/ August 31, 2022 approving the mandate contract of the Deputy
CEO;
Board of Directors Resolution No. 62/ August 31, 2022 approving the mandate contract of the CFO;
Resolution No.7/ September 13, 2022 of the Ordinary General Meeting of Shareholders whereby the
from
shareholders appoint BoD
September15/2022 until January 15, 2023, the gross monthly allowance and the form of mandate
contract;
interim members, establish
the 4-month mandate
term
Board of Directors Resolution No. 78/ November 23, 2022 appointing the CEO and Deputy CEO for a
4-month term from December 18, 2022 until April 18, 2023, and approving the monthly gross fixed
allowance;
Board of Directors Resolution No. 85/ December 20, 2022 approving the mandate contract of the CEO
and Deputy CEO, appointing Romgaz CFO for a 4-month term from December 20, 2022 until April 20,
2023, and approving the monthly gross fixed allowance;
Board of Directors Resolution No. 90/ December 29, 2022 approving the mandate contract of the CFO;
For compliance with the requirements of BVB Code of Corporate Governance, GEO No. 109/2011 and Law
No.24/2017 on issuers of financial instruments and market operations as amended and supplemented by Law
No. 158/2020, the Policy on Remuneration was revised and approved by the Ordinary General Meeting of
Shareholders by Resolution No. 3/April 28, 2022.
Structure of the remuneration granted to non-executive members of the Board of Directors
The fixed monthly remuneration was established in accordance with the applicable legal provisions (detailed
in 2022 Annual Report on Remuneration and Other Benefits Granted to Members of the Board and Managers
of SNGN Romgaz SA) and provided in the Director Agreement of each board member, as approved by the
applicable GMS resolutions.
The fixed monthly remuneration for 2022 was established at a gross monthly allowance equal to twice the
average of the gross monthly average salary over the last 12 months for the activity carried out pursuant to
the company’s main business, at the level of class of activity, in accordance with the classification of
activities in the national economy, as communicated by the National Institute of Statistics prior to
appointment.
The variable remuneration will be established and granted depending on the achievement of the objectives
included in the governance plan and of the financial and non-financial performance indicators approved by
the General Meeting of Shareholders. The variable component as well as the conditions to revise the
objectives and performance indicators will be subject to an addendum to the director agreement.
Director agreements do not include key financial and non-financial performance indicators, therefore
members of the Board of Directors do not benefit from a variable allowance.
The structure of the remuneration granted to the executive members of the Board of Directors, namely
the Chief Executive Officer/Deputy Chief Executive Officer
The Interim Chief Executive Officer/Deputy Chief Executive Officer, who is also an executive member of
the Board of Directors, concluded a director agreement as member of the Board of Directors and a mandate
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Consolidated Board of Directors’ Report 2022
contract as Chief Executive Officer/Deputy Chief Executive Officer. The Chief Executive Officer/ Deputy
Chief Executive Officer was strictly entitled to receive remuneration pursuant to the mandate contract.
The structure of remuneration granted to managers
The fixed monthly remuneration, was granted under the applicable legal provisions (detailed in the 2022
Annual Report on the Remuneration and Other Benefits Granted to Members of the Board and Managers of
SNGN Romgaz SA), being provided in the contract of mandate concluded with each manager and approved
by Board resolutions.
The fixed monthly remuneration for 2022 was set at a gross monthly allowance of up to 6 times the average
of the gross monthly average salary over the last 12 months for the work carried out in accordance with the
company’s main business as communicated by the National Institute of Statistics prior to appointment. The
fixed allowance is updated at the beginning of each year based on the data provided by the National Institute
of Statistics. In 2022, the Chief Executive Officer and the Deputy Chief Executive Officer had a fixed
monthly remuneration of 6 times the average, for the interim Chief Financial Officer the fixed monthly
remuneration was set to 6 respectively 5 times this average.
The variable remuneration established depending on the fulfilment of objectives and of approved financial
and non-financial performance indicators will be reflected in an addendum to the mandate contract. In 2022,
the Chief Executive Officer, the Deputy Chief Executive Officer and the Chief Financial Officer did not
benefit from a variable remuneration.
NON-FINANCIAL STATEMENT
Romgaz prepares a separate report for 2022 financial year, that will be public on the company’s website by
the end of June 2023, according to the Order of the Ministry of Public Finance No. 2844/201618 (chapter 7,
item 42, paragraph (1)).
18 Order of the Ministry of Public Finances no.2844 of December 12, 2016 on approving Accounting Regulations
compliant with the International Financial Reporting Standards.
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Consolidated Board of Directors’ Report 2022
IX. Performance of director agreements and mandate contracts
Mandate Contracts of Board Members
In 2022, Romgaz Board members performed their activity based on mandate contracts approved in terms of
form and content by the General Meeting of Shareholders.
Until completion of selection process initiated by Resolution No. 9/October 27, 2021 of the Ordinary General
Meeting of Shareholders the Board members’ mandates are interim with an initial term of 4 months and a
maximal term of 6 months, following their extension. The interim Board members’ contracts do not include
performance indicators and criteria.
By Resolution No. 7/ September 9, 2021 of the Ordinary General Meeting of Shareholders the shareholders
appoint the interim Board of Directors members for a 4-month term from September 13, 2021 to January 13,
2021, establish the fixed gross allowance and approve the form of the mandate contract.
By Resolution No. 1/ January 6, 2022 of the Ordinary General Meeting of Shareholders the shareholders
approve a 2-month extension of BoD members mandate term starting with the mandate expiration date, and
the form of addendum to the mandate contract.
By Resolution No. 2/ February 28, 2022 of the Ordinary General Meeting of Shareholders the shareholders
appoint BoD interim members for a 4-month term from March 14, 2022, establish their fixed gross allowance
and approve the form of the mandate contract.
By Board of Directors Resolution No. 34/ May 22, 2022 the Board appoints a new interim board member
starting with May 25, 2022 until the date of the first Ordinary General Meeting of Shareholders;
By Board of Directors Resolution No. 36/ June 17, 2022 the Board of Directors approves the mandate
contract for the interim board member appointed by the Board.
By Resolution No.6/ July 8, 2022, the Ordinary General Meeting of Shareholders appoints one BoD interim
member, starting with July 9, 2022 until September 14, 2022, establishes the mandate term, the monthly
gross allowance, and the form of mandate contract, approves the 2-month extension of mandate term from
the date of expiration for the interim board members appointed by Ordinary General Meeting of Shareholders
Resolution No. 2/February 28, 2022, and the form of addendum to the mandate contract regarding the
extension.
By Resolution No.7/ September 13, 2022, the Ordinary General Meeting of Shareholders appoints BoD
interim members, for a 4-month mandate term from September15/2022 until January 15, 2023, establishes
the gross monthly allowance and the form of mandate contract.
The director agreement does not include key financial and non-financial performance indicators, therefore
the board members do not benefit from the variable component.
Mandate Contracts of Managers
During the reporting period, the Chief Executive Officer, Deputy Chief Executive Officer and for the Chief
Financial Officer performed their activity based on mandate contracts approved in terms of form and content
by the Board of Directors.
During the reporting period, Romgaz managers’ mandates were interim having a maximum term of 6 months
per mandate contract.
By Resolution No. 67, Romgaz Board of Directors convened on November 2, 2021, appoints Mr. Jude
Aristotel Marius as Romgaz CEO starting with December 15, 2021 for a 4-month term interim mandate,
establishes the fixed gross monthly allowance and approves the signing of the mandate contract in the form
previously approved by the Board of Directors for the mandate ending on December 14, 2021.
By Resolution No. 68, Romgaz Board of Directors convened on November 2, 2021, appoints Mr. Popescu
Razvan as Romgaz CFO starting with December 16, 2021 until April 16, 2022 for a 4-month term interim
mandate, establishes the fixed gross monthly allowance and approves the signing of the mandate contract in
the form previously approved by the Board of Directors for the mandate ending on December 14, 2021.
By Resolution No. 17, Romgaz Board of Directors convened on March 22, 2022, appoints Mr. Jude Aristotel
Marius as Romgaz CEO starting with April 16, 2022 until August 16, 2022 for a 4-month term interim
mandate, and establishes the fixed gross monthly allowance.
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Consolidated Board of Directors’ Report 2022
By Resolution No. 18, Romgaz Board of Directors convened on March 22, 2022, appoints Mr. Popescu
Razvan as Romgaz CFO starting with April 17, 2022 until August 17, 2022 for a 4-month term interim
mandate, and establishes the fixed gross monthly allowance.
By Resolution No. 33/ May 25, 2022, the Board of Directors approves the mandate contract for the CEO and
the CFO.
By Resolution No. 57/ August 12, 2022, the Board of Directors appoints Mr. Popescu Razvan as Romgaz
CEO, Mr. Jude Aristotel Marius as Romgaz Deputy CEO and Mr. Bobar Andrei as Romgaz CFO for a 4-
month term from August 17, 2022 until December 17, 2022, and establishes the monthly gross fixed
allowance.
By Resolution No. 60/ August 31, 2022, the Board of Directors approves the mandate contract of the CEO.
By Resolution No. 61/ August 31, 2022, the Board of Directors approves the mandate contract of the Deputy
CEO.
By Resolution No. 62/ August 31, 2022, the Board of Directors approves the mandate contract of the CFO.
By Resolution No. 78/ November 23, 2022 the Board of Directors appoints Mr. Popescu Razvan as Romgaz
CEO and Mr. Jude Aristotel Marius as Romgaz Deputy CEO for a 4-month term from December 18, 2022
until April 18, 2023, and approves their monthly gross fixed allowance.
By Resolution No. 85/ December 20, 2022, the Board of Directors approves the mandate contract of the
CEO and Deputy CEO, appoints Mrs. Tranbitas Gabriela as Romgaz CFO for a 4-month term from
December 20, 2022 until April 20, 2023, and approves the monthly gross fixed allowance.
By Resolution No. 90/ December 29, 2022, the Board of Directors approves the mandate contract of the
CFO.
The mandate contracts concluded with the Chief Executive Officer, the Deputy Chief Executive Officer and
the Chief Financial Officer, respectively, do not include performance indicators and criteria.
Signatures:
Chairman of the Board of Directors,
DAN DRAGOŞ DRĂGAN
……………………………………
Chief Executive Officer,
RĂZVAN POPESCU
Chief Financial Officer,
GABRIELA TRÂNBIŢAŞ
……………………………………
……………………………………
Page 73 of 73
Board of Directors’ Consolidated Report 2022
Annex 1
Table on compliance with BVB Code of Corporate Governance
BVB CGC Provisions
Compliance
A.1
A.2
A.3
A.4
A.5
A.6
A.7
A.8
1
All companies should have in place Regulations of
the Board of Directors to include the terms of
reference / the responsibilities of the Board and the
company’s key management positions, and which
apply, among others, the General Principles in
section A.
The BoD Regulations shall include provisions for
the management of conflict of interest. The
members of the Board should notify the Board on
any conflicts of interest which have arisen or may
arise and should refrain from taking part in the
discussion (including by absence, except where
such absence prevents quorum to be attained) and
from voting on the adoption of a resolution on the
issue which gives rise to such a conflict of interest.
The BoD should comprise at least five members.
The majority of the BoD members should be non-
executive. The number of
independent non-
executive BoD members shall not be less than two.
Each independent BoD member shall submit a
statement upon his/her nomination for election or
re-election, as well as whenever a change in his/her
status occurs, indicating the elements on which
he/she is deemed independent in terms of his/her
character and his/her judgment.
A BoD member’s other relatively permanent
professional commitments and engagements,
including executive and non-executive Board
positions
non-profit
organizations, shall be disclosed to shareholders
and
to his/her
nomination and during his/her mandate.
investors prior
to potential
companies
and
in
Any BoD member shall submit to the Board
information on any relationship with a shareholder
who holds, directly or
shares
representing more than 5% of all voting rights. This
also applies to any relationship which may affect
the member's position on matters decided by the
Board.
indirectly,
The company shall appoint a Board secretary
responsible for supporting the work of the BoD.
The Corporate Governance Statement shall inform
on whether an evaluation of the Board has taken
place under the leadership of the chairperson or the
nomination committee and,
it shall
summarize key action points and changes resulting
from it.
if so,
2
x
x
x
x
x
x
x
x
Noncompliance
/
Partial
compliance
3
Reason for
noncompliance/
Explanation on
compliance
4
As of March 14, 2022
(OGMS Resolution No. 2/
February 28, 2022), two
non-executive
BoD
members are independent.
The Corporate
Governance Statement
informs on the 2022 BoD
evaluation.
Board of Directors’ Consolidated Report 2022
BVB CGC Provisions
Compliance
2
x
x
x
x
x
x
x
A.9
A.10
A.11
1
The company should have a policy/ guidelines on
the BoD evaluation, containing the purpose, criteria
and frequency of the evaluation process.
The Corporate Governance Statement shall contain
information on the number of meetings of the
Board and the committees during the past year,
attendance by directors (personally and in their
absence) and a report of the Board and committees
on their activities.
The Corporate Governance Statement shall contain
information on
the
independent members of the Board of Directors.
the precise number of
The BoD shall set up a nomination committee
comprised of non-executives, which will lead the
nomination process for new Board members and
make recommendations to the Board.
The majority of the members of the nomination
committee shall be independent.
B.1
The Board shall set up an Audit Committee, and at
least one member should be an independent non-
executive.
The Audit Committee shall comprised at least three
members and the majority shall be independent.
relevant
including
The majority of members,
the
chairperson, shall have proven an adequate
qualification
functions and
to
responsibilities of the Committee. At least one
member of the Audit Committee shall have a
proven and appropriate auditing and/or accounting
experience.
the
B.2
B.3
B.4
The Chairperson of the Audit Committee shall be
an independent non-executive member.
Among its responsibilities, the Audit Committee
shall perform an annual assessment of the internal
control system.
The assessment mentioned in section B.3 shall
consider the effectiveness and scope of the internal
audit function, the adequacy of risk management
and internal control reports submitted to the BoD
Audit Committee, the executive management’s
responsiveness and effectiveness in dealing with
the failures and weak points identified during the
internal control, and submission of relevant reports
to the Board.
Noncompliance
/
Partial
compliance
3
Reason for
noncompliance/
Explanation on
compliance
4
As of March 14, 2022
(BoD Resolution No.
13/2022),
two non-executive
members of the
Nomination and
Remuneration Committee
are independent.
As of March 14, 2022
(BoD Resolution No.
13/2022),
two non-executive
members of the Audit
Committee are
independent.
Page 2 of 6
Board of Directors’ Consolidated Report 2022
BVB CGC Provisions
Compliance
1
2
B.5
The Audit Committee shall review conflicts of
related party
interests
transactions of the company and its subsidiaries.
in connection with
Noncompliance
/
Partial
compliance
3
x partially
B.6
B.7
B.8
B.9
B.10
The Audit Committee
the
effectiveness of the internal control system and the
risk management system
shall evaluate
The Audit Committee shall monitor the application
of statutory and generally accepted standards of
internal auditing. The reports of the internal audit
team shall be submitted to the Audit Committee,
which shall evaluate such reports.
The Audit Committee shall report periodically (at
least annually) or adhoc to the BoD with regard to
the
the
reports or analyses undertaken by
committee.
No shareholder may be given undue preference
over other shareholders with regard to transactions
and agreements made by the company with
shareholders and their related parties.
The BoD shall adopt a policy ensuring that any
transaction of the company with any of the
companies in close relationship amounting to at
least 5% of the company’s net assets (as stated in
the latest financial report) is approved by the Board,
based on a mandatory opinion of the Audit
Committee, and it is fairly disclosed to the
shareholders and potential investors, to the extent
such transactions are events which are subject to
reporting requirements.
B.11
The internal audits shall be carried out by a separate
structural division (internal audit department)
within the company or by hiring an independent
third-party entity.
x
x
x
x
x
x
Reason for
noncompliance/
Explanation on
compliance
4
This provision is already
mentioned in Article 8,
par. 2 of Romgaz CCG.
The Audit Committee
the
Rules approved by
BoD in the meeting of
May 14, 2018, revised and
approved on October 10,
2022, includes provisions
on such obligation.
Moreover, a Policy on
related party transactions
by
developed
was
Romgaz, and it obtained
BoD approval on March
20, 2019.
Following approval it was
published
the
company’s website.
on
Page 3 of 6
Board of Directors’ Consolidated Report 2022
BVB CGC Provisions
Compliance
B.12
C.1
D.1
1
The Internal Audit Department shall functionally
report to the BoD via the Audit Committee. For
administration purposes and as part of
the
management obligations to monitor and mitigate
risks, the Internal Audit Department shall report
directly to the Director General.
formulated so as
The company shall publish the Remuneration
Policy on its website. The Remuneration Policy
should be
the
shareholders to understand the principles and
arguments underlying the remuneration of the BoD
members and the General Director. Any significant
change occurred in the Remuneration Policy shall
be posted in due time on the company's website.
to allow
The company shall include in its Annual Report a
statement on
the
Remuneration Policy during the annual period
under review.
implementation of
the
The Report on Remuneration shall present the
implementation of the Remuneration Policy for
persons identified in such Policy during the annual
period under review.
The company shall establish an Investors Relation
Department
the
responsible person/persons or the organizational
unit.
the public
indicating
to
-
Besides the information required by the legal
provisions, the company shall also include on its
website a dedicated Investor Relations section,
both in Romanian and English, with all the relevant
information of interest for investors, including:
D.1.1 Main corporate regulations:
the Articles of
Incorporation, procedures on general meeting of
shareholders;
D.1.2 Professional CVs of the members of the company’s
governing bodies, other professional commitments
of BoD members, including executive and non-
executive Board positions in companies and non-
profit organizations.
D.1.3 Current reports and periodic reports (quarterly,
semi-annual and annual reports) – at least those
specified at item D.8 - including current reports
with detailed information on non-compliance with
the Bucharest Stock Exchange Code of Corporate
Governance;
D.1.4
Information related to GMS: the agenda and
supporting materials; the Board of Directors
election procedure; the arguments in support of the
proposal of candidates to the Board of Directors
together with their professional CVs; shareholders’
questions related to the agenda and the company’s
answers, including decisions taken;
2
x
x
x
x
x
x
Noncompliance
/
Partial
compliance
3
Reason for
noncompliance/
Explanation on
compliance
4
x partially
Items on organizing the
to
GMS are presented
shareholders
each
meeting.
at
Page 4 of 6
Board of Directors’ Consolidated Report 2022
BVB CGC Provisions
Compliance
D.1.5
1
and
other
dividends
Information on corporate events (such as payment
to
of
shareholders, or other events leading to the
acquisition or limitation of rights of a shareholder)
including the deadlines and principles applicable to
such operations.
distributions
Such information shall be published within due
course of time so as to allow investors to take
investment decisions;
D.1.6 The names and contact data of the persons who
to provide knowledgeable
should be able
information upon request;
D.1.7 Corporate presentations (e.g. presentations for
investors, presentations on quarterly results, etc.),
financial
semi-annual,
annual), audit reports and annual reports.
statements
(quarterly,
D.2
D.3
D.4
D.5
D.6
D.7
The company shall have a policy for the annual
distribution of dividends or other benefits to
shareholders, proposed by the Director General and
adopted by the BoD as the company’s Guideline on
net profit distribution.
The principles of the policy on annual distribution
of dividends to shareholders shall be published on
the company’s website.
The company shall adopt a policy with respect to
forecasts, whether or not made public. The Policy
on forecasts shall determine the frequency, period
and content of the forecasts and shall be published
on the company’s website.
GMS rules should not restrict the participation of
shareholders in general meetings and should not
limit the exercise of their rights. The modification
of rules shall become effective no sooner than the
next shareholders’ meeting.
external
The
those
shareholders’ meetings where their reports are
presented.
auditors
attend
shall
The BoD shall submit to the GMS a brief
assessment of the internal control and significant
risk management systems, as well as opinions on
matters to be submitted to the GMS for decision.
Any professional, consultant, expert or financial
analyst may participate
the shareholders’
meeting upon prior invitation from the BoD.
Accredited journalists may also attend the GMS,
unless the Chairperson of the Board decides
otherwise.
in
2
x
x
x
x
x
x
x
x
x
Noncompliance
/
Partial
compliance
3
Reason for
noncompliance/
Explanation on
compliance
4
Page 5 of 6
Noncompliance
/
Partial
compliance
3
Reason for
noncompliance/
Explanation on
compliance
4
Board of Directors’ Consolidated Report 2022
BVB CGC Provisions
Compliance
D.8
D.9
D.10
1
The quarterly and semi-annual financial reports
shall include, in the Romanian and English
languages,
the key drivers
influencing the change in sales, operating profit,
net profit and other relevant financial indicators, on
a quarter-on-quarter and year-on-year basis.
information on
The company shall organize meetings/conference
calls with analysts and investors at least twice a
year. Information presented on such occasions shall
be published on the company’s website in the
Investors Relation section at the date of the
meetings/teleconferences.
sport
cultural
expression,
If the company supports various forms of artistic
activities,
and
educational or scientific activities, and considers
that their resulting impact on the innovativeness
and competitiveness of the company is part of its
business mission and development strategy, the
company shall publish the policy guiding its
activity in such field.
2
x
x
x
Abbreviations:
= General Meeting of Shareholders
GMS
BVB = Bucharest Stock Exchange
BoD
CCG
ROMGAZ CCG = Code of Corporate Governance of S.N.G.N. ROMGAZ S.A., as approved on January 28, 2016
CV
ToR
= Board of Directors
= Code of Corporate Governance
= Curriculum Vitae
= Terms of Reference
Page 6 of 6
Ernst & Young Assurance Services SRL
Bucharest Tower Center Building, 22nd Floor
15-17 Ion Mihalache Blvd., Sector 1
011171 Bucharest, Romania
Tel: +40 21 402 4000
Fax: +40 21 310 7193
office@ro.ey.com
ey.com
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of SNGN ROMGAZ S.A.
Report on the Audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of SNGN ROMGAZ S.A. (the Company) and its subsidiaries (together
referred to as “the Group”) with official head office in Medias, Piata Constantin I. Motas nr. 4, cod 551130, Sibiu county,
Romania, identified by sole fiscal registration number RO 14056826, which comprise the consolidated statement of financial
position as at December 31, 2022, and the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting
policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial
position of the Group as at December 31, 2022 and of its consolidated financial performance and its consolidated cash flows for
the year then ended in accordance with the Order of the Minister of Public Finance no. 2844/2016, approving the accounting
regulations compliant with the International Financial Reporting Standards, with all subsequent modifications and clarifications.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs), Regulation (EU) No. 537/2014 of the
European Parliament and of the Council of 16 April 2014 (“Regulation (EU) No. 537/2014“) and Law 162/2017 („Law
162/2017”). Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of
the Consolidated financial statements” section of our report. We are independent of the Group in accordance with the
International Code of Ethics for Professional Accountants (including International Independence Standards) as issued by the
International Ethics Standards Board for Accountants (IESBA Code) together with the ethical requirements that are relevant to
the audit of the financial statements in Romania, including Regulation (EU) No. 537/2014 and Law 162/2017 and we have
fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the “Auditor’s responsibilities for the audit of the consolidated financial
statements” section of our report, including in relation to these matters. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial
statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the
basis for our audit opinion on the accompanying consolidated financial statements.
Description of each key audit matter and our procedures performed to address the matter
Key audit matter
How our audit addressed the key audit matter
Estimation of gas reserves used in the calculation of depreciation and amortisation
The Group’s disclosures about estimation of gas reserves are included in Note 2 (Use of Estimates and “Exploration and
Appraisal Assets”) to the consolidated financial statements.
Estimation of the gas reserves is a focus area in our audit
because it has a significant impact on the consolidated
financial statements, as the reserves are the basis for unit of
production depreciation and amortization for the assets in the
Upstream segment.
The estimation of gas reserves requires the Group’s
management and engineers to make significant judgements
and assumptions and therefore it was considered to be a key
audit matter.
We assessed the management’s estimation process in the
determination of gas reserves. Specifically, our work
included, but was not limited to, the following procedures:
We performed a detailed understanding of the
Group’s internal process and related documentation
flow and key controls associated with the gas reserves
estimation process;
We analysed the certification process for technical
and commercial specialists who are responsible for
gas reserves estimation; we also assessed the
competence, capabilities and objectivity of
management specialists;
We tested whether significant increases or reductions
in gas reserves were made in the period in which the
new information became available and if the
adjustments were made in compliance with the
standards of the National Agency for Mineral
Resources (“ANRM”);
We compared, on a sample basis, the gas reserves
with the assumptions used in the accounting for
depreciation and amortization for the core assets in
the Upstream segment.
We further assessed the adequacy of the Group’s
disclosures about calculation of amortization.
2
Accounting for the acquisition of ExxonMobil Exploration and Production Romania Limited (“EMEPRL”) shares (currently
Romgaz Black Sea Limited) in the consolidated financial statements
The Group’s disclosures about the EMEPRL’s acquisition and its accounting treatment are included in note 30 to the
consolidated financial statements.
During the year, the Company acquired 100% of ExxonMobil
Exploration and Production Romania Limited (“EMEPRL”)
shares, an entity holding 50% of the acquired rights and
obligations under the Petroleum Agreement for the Deep-
Water Zone of Neptun XIX offshore Block in the Black Sea.
We assessed the management’s judgements and
assumptions about the acquisition of EMEPRL’s shares.
Specifically, our work included, but was not limited to, the
following procedures:
We have read the purchase agreement to gain an
The accounting for the acquisition of
ExxonMobil Exploration and Production Romania Limited
(“EMEPRL”) shares is a focus area in our audit because it has
a significant impact on the consolidated financial statements
and required Group’s management to make significant
judgements and assumptions in:
determining whether the transaction is a business
combination or an asset acquisition;
identifying acquired assets and allocating the
purchase price to the acquired assets.
understanding of the key terms and conditions; we
involved our internal IFRS specialists to assist us in
the evaluation of the accounting treatment used by
the management and its conformity with the
International Financial Reporting Standards
requirements;
We analysed and evaluated the management’s
assessment to determine the nature of transaction,
and in particular, we analysed the asset
concentration test assumptions;
The Group’s management, considered the asset concentration
test set out in IFRS 3 – Business Combinations to be met and
concluded that the transaction qualifies as an acquisition of
assets for the consolidated financial statements, thus
recognising a newly identified Intangible asset - mineral right
to exploit 50% of the reserves of the Neptun Deep perimeter -
and allocating the largest part of the consideration paid to
this asset.
For the purpose of the purchase price allocation, the relative
fair value of the newly recognized mineral right was
determined using the method of initial investment, that
required Group’s management to prepare discounted cash
flows in respect of the future natural gas resource
exploitation.
As result of significant judgements and assumptions involved,
the accounting for the acquisition of EMEPRL, was considered
a key audit matter.
We agreed with the supporting evidence (bank
statements) the consideration paid for the
acquisition of 100% of EMEPRL’s shares;
We assessed the competence of both internal and
external specialists used by the management in this
process and the objectivity and independence of
external specialists, to consider whether they were
appropriately qualified to carry out the valuation;
We evaluated the management’s assessment of the
a)
purchase price allocation performed based on the
relative fair values of assets acquired and liabilities
assumed;
In respect of the discounted cash flows model used
to compute the relative fair value of the mineral
right acquired, we:
tested the reasonability of future yearly production
volumes per field based on actual reports of the
National Agency for Mineral resources (“ANRM”) and
appendixes, that approves the production plan for
each field;
b) compared the main assumptions used in the
discounted cash flow test (future gas prices,
operating costs, capital expenditures, production
volumes, gas reserves and discount rate) with the
current and long-term forecasts approved by both
parties of the joint operation: the Group’s
management and the operator of the concession;
c) analysed the assumptions used in the cash flow
d)
projections;
involved our internal valuation specialists to assist
us in evaluating the key assumptions and
methodologies used by the Group for the valuation
of the mineral right (checked the mathematical
accuracy of the model, its conformity with the
3
requirements of the International Financial
Reporting Standards, the discount rates used, future
natural gas sales prices);
e) evaluated the management’s sensitivity analysis
over key assumptions in the future cash flow model
in order to assess the potential impact of possible
changes;
Inquired whether the Group has the ability to finance
50% of the investments necessary for the
exploitation of the Neptun Deep perimeter;
g) We also reviewed the Executive Board minutes of
f)
meetings for any indications about the lack of such
ability or intention and we checked that the
investment budget for the next year and beyond
includes funds for these investments.
We also assessed the adequacy of the Group’s disclosures
in the consolidated financial statements.
Estimation of decommissioning provisions
The Group’s disclosures about decommissioning obligations are included in Note 2 (Use of estimates) and Note 19
(Provisions) to the consolidated financial statements.
The Group’s core activities regularly lead to obligations
related to dismantling and removal of equipment and
installations, asset retirement and soil remediation activities.
The decommissioning provision is significant to our audit
because of its magnitude (carrying value of RON 236.49
million at 31 December 2022) and because management
makes estimates and judgments in determining the respective
provisions.
The key estimates and assumptions relate to the envisaged
future dismantling costs, forecasted inflation rates and
discount rates to determine the present value of the
obligations.
Our work in respect of management’s estimation of
decommissioning and restoration provisions included, but
was not limited to, the following procedures:
We performed a detailed understanding of the
Group’s estimation process and the related
documentation flow and assessed the design and
implementation of the controls within the process;
We compared the current estimates of
decommissioning costs with the actual costs incurred
in previous periods;
We reviewed the timing of works to be performed for
surface and subsurface decommissioning for wells;
We inspected supporting evidence for any material
revisions in cost estimates during the year;
We involved our valuation specialists to assist us in
performing industry bench marking and analysis over
discount rates and inflation rates;
We tested the mathematical accuracy of
management’s decommissioning provision
calculations;
We assessed the competence, capabilities and
objectivity of management specialists.
We also assessed the adequacy of the Group’s disclosures
in the consolidated financial statements relating to
decommissioning obligations.
Other information
The other information comprises the Annual Report (which includes the Directors' Consolidated Report, the Report on Payments
to Governments, the Corporate Governance Statement and the Remuneration Report), but does not include the consolidated
financial statements and our auditors’ report thereon. The Corporate responsibility and sustainability report will be published
separately at a later date. Management is responsible for the other information.
4
Our audit opinion on the consolidated financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
Responsibilities of Management and Those Charged with Governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance
with the Order of the Minister of Public Finance no. 2844/2016 approving the accounting regulations compliant with the
International Financial Reporting Standards, with all subsequent modifications and clarifications, and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group's financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout
the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's
internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
5
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
6
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and communicate to them all relationships and other matters that may reasonably be thought to bear
on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance
in the audit of the consolidated financial statements of the current period and are therefore the key audit matters.
Report on Other Legal and Regulatory Requirements
Reporting on Information Other than the consolidated financial statements and Our Auditors’ Report Thereon
In addition to our reporting responsibilities according to ISAs described in section “Other information”, with respect to the
Directors’ Consolidated Report and Remuneration Report, we have read these reports and report that:
a)
b)
c)
d)
in the Directors’ Consolidated Report we have not identified information which is not consistent, in all material
respects, with the information presented in the in the accompanying consolidated financial statements as at December
31, 2022;
the Directors’ Consolidated Report identified above includes, in all material respects, the required information
according to the provisions of the Ministry of Public Finance Order no. 2844/2016 approving the accounting
regulations compliant with the International Financial Reporting Standards, with all subsequent modifications and
clarifications, Annex 1 points 15 – 19 and 26-27;
based on our knowledge and understanding concerning the entity and its environment gained during our audit of the
consolidated financial statements as at December 31, 2022, we have not identified information included in the
Directors’ Consolidated Report that contains a material misstatement of fact;
the Remuneration Report identified above includes, in all material respects, the required information according to the
provisions of article 107 (1) and (2) from Law 24/2017 on issuers of financial instruments and market operations.
Other requirements on content of auditor’s report in compliance with Regulation (EU) No. 537/2014 of the European Parliament
and of the Council
Appointment and Approval of Auditor
We were appointed as auditors of the Group by the General Meeting of Shareholders on 06 October 2021 to audit the
consolidated financial statements for the financial year ended December 31, 2021, 2022 and 2023. Total uninterrupted
engagement period, including previous renewals (extension of the period for which we were originally appointed) and
reappointments for the statutory auditor, has lasted for five years, covering the years ended December 31, 2018 till December
31,2022.
Consistency with Additional Report to the Audit Committee
Our audit opinion on the consolidated financial statements expressed herein is consistent with the additional report to the Audit
Committee of the Group, which we issued on the same date as the issue date of this report.
Provision of Non-audit Services
No prohibited non-audit services referred to in Article 5 (1) of Regulation (EU) No. 537/2014 of the European Parliament and of
the Council were provided by us to the Group and we remain independent from the Group in conducting the audit.
In addition to statutory audit services and other audit related services, as disclosed in the consolidated financial statements, no
other services were provided by us to the Group and its controlled undertakings.
Report on the compliance of the electronic format of the consolidated financial statements, with the requirements of the ESEF
Regulation
7
We have performed a reasonable assurance engagement on the compliance of the electronic format of the consolidated
financial statements of SNGN Romgaz SA (the Company) and its subsidiaries (together referred to as “the Group”) for the year
ended December 31, 2022, included in the attached electronic file „2549009R7KJ38D9RW354-2022-12-31.zip “( identified
with the key 25f2479a8d872c99c5260809efee3c575ed8edb97b1766ef167dd688b0d4404c) with the
requirements of the Commission Delegated Regulation (EU) 2018 /815 of 17 December 2018 supplementing Directive
2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification
of a single electronic reporting format (the “ESEF Regulation). Our opinion is expressed only in relation to the electronic format of
the consolidated financial statements.
Description of the subject matter and the applicable criteria
The Management has prepared electronic format of consolidated financial statements of the Group for the year ended December
31, 2022 in accordance and to comply with ESEF Regulation requirements. The requirements for the preparation of the
consolidated financial statements in ESEF format are specified in the ESEF Regulation and represent, in our opinion, applicable
criteria for us to express an opinion providing reasonable assurance.
Responsibilities of the Management and Those Charged with Governance regarding the electronic format of the consolidated
financial statements
The Management of the Group is responsible for the compliance with the requirements of the ESEF Regulation in the preparation
of the electronic format of the consolidated financial statements in XHTML format. Such responsibility includes the selection and
application of appropriate iXBRL tags using the taxonomy specified in the ESEF Regulation, ensuring consistency between the
human-readable layer of electronic format of the consolidated financial statements and the audited consolidated financial
statements. The responsibility of Group’s Management also includes the design, implementation and maintenance of such
internal control as determined is necessary to enable the preparation of the consolidated financial statements in ESEF format
that are free from any material non-compliance with the ESEF Regulation.
Those charged with governance are responsible for overseeing the financial reporting process for the preparation of consolidated
financial statements of the Group, including the application of the ESEF Regulation.
8
Auditor’s Responsibility
Our responsibility is to express an opinion providing reasonable assurance on the compliance of the electronic format of the
consolidated financial statements with the requirements of the ESEF Regulation.
We have performed a reasonable assurance engagement in accordance with ISAE 3000 (revised) Assurance Engagements Other
Than Audits or Reviews of Historical Financial Information (ISAE 3000 (revised)). This standard requires that we comply with
ethical requirements, plan and perform our engagement to obtain reasonable assurance about whether the electronic format of
the consolidated financial statements of the Group is prepared, in all material respects, in accordance with the applicable
criteria, specified above. The nature, timing, and extent of the procedures selected depend on our judgment, including an
assessment of the risk of material non-compliance with the requirements of the ESEF Regulation, whether due to fraud or error.
Reasonable assurance is a high level of assurance, but it is not guaranteed that the assurance engagement conducted in
accordance with ISAE 3000 (revised) will always detect material non-compliance with the requirements when it exists.
Our Independence and Quality Management
We apply International Standard on Quality Management 1, Quality Management for Firms that Perform Audits and Reviews of
Financial Statements, and Other Assurance and Related Services Engagements, and accordingly, designs, implements and
operates a comprehensive system of quality management including documented policies and procedures regarding compliance
with ethical requirements, professional standards and applicable legal and regulatory requirements.
We have maintained our independence and confirm that we have met the ethical and independence requirements of the
International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards) (IESBA Code).
Summary of procedures performed
The objective of the procedures that we have planned and performed was to obtain reasonable assurance that the electronic
format of the consolidated financial statements is prepared, in all material respects, in accordance with the requirements of
ESEF Regulation. When conducting our assessment of the compliance with the requirements of the ESEF Regulation of the
electronic (XHTML) reporting format of the consolidated financial statements of the Group, we have maintained professional
skepticism and applied professional judgement. We have also:
obtained an understanding of the internal control and the processes related to the application of the ESEF Regulation
in respect of the consolidated financial statements of the Group, including the preparation of the consolidated
financial statements of the Group in XHTML format and its tagging in machine readable language (iXBRL);
tested the validity of the applied XHTML format;
checked whether the human-readable layer of electronic format of the consolidated financial statements (XHTML)
corresponds to the audited consolidated financial statements;
assessed the completeness of the tagging of information in the consolidated financial statements while using the
machine-readable language (iXBRL) under the requirements of the ESEF Regulation;
assessed the appropriateness of the applied iXBRL tags selected from the core taxonomy and the creation of
extensions to the elements in the extended taxonomy specified in the ESEF Regulation when there were no suitable
elements in the core taxonomy;
evaluated the anchoring of the taxonomy extensions to the elements in the extended taxonomy specified by the ESEF
Regulation.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion on the compliance of the electronic format of the consolidated financial statements with the requirements of the ESEF
Regulation
Based on the procedures performed, in our opinion, the electronic format of the consolidated financial statements of the Group
for the year ended 31 December 2022 is prepared, in all material respects, in accordance with the requirements of ESEF
Regulation.
9
On behalf of
Ernst & Young Assurance Services SRL
15-17, Ion Mihalache Blvd., floor 21, Bucharest, Romania
Registered in the electronic Public Register under No. FA77
Name of the Auditor / Partner: Verona Cojocaru
Registered in the electronic Public Register under No. AF1568
Bucharest, Romania
23 March 2023
10
S.N.G.N. ROMGAZ S.A. GROUP
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022
PREPARED IN ACCORDANCE WITH
THE ORDER OF THE MINISTRY OF PUBLIC FINANCE 2844/2016
CONTENTS:
PAGE:
Statement of consolidated comprehensive income
Statement of consolidated financial position
Statement of consolidated changes in equity
Statement of consolidated cash flow
Notes to the consolidated financial statements
1. Background and general business
2. Significant accounting policies
3. Revenue and other income
4. Investment income
5. Cost of commodities sold, raw materials and consumables
6. Other gains and losses
7. Depreciation, amortization and impairment expenses
8. Employee benefit expense
9. Finance costs
10. Other expenses
11. Income tax
12. Property, plant and equipment
13. Exploration and appraisal for natural gas resources
14. Other intangible assets. Right of use assets
15. Inventories
16. Accounts receivable
17. Share capital. Earnings per share
18. Reserves
19. Provisions
20. Deferred revenue
21. Trade and other current liabilities
22. Financial instruments
23. Related party transactions and balances
24. Information regarding the members of the administrative, management and
supervisory bodies
25. Investment in associates
26. Other financial investments
27. Segment information
28. Cash and cash equivalents
29. Interest bearing borrowings
30. Acquisition of ExxonMobil Exploration And Production Romania Limited
31. Other financial assets
32. Commitments undertaken
33. Commitments received
34. Contingencies
35. Joint arrangements
36. Auditor’s fees
37. Events after the balance sheet date
38. Approval of financial statements
1
2
4
5
7
7
7
19
20
20
20
21
21
21
21
22
25
27
27
28
28
30
31
31
33
34
35
37
38
39
40
41
44
44
44
45
45
46
46
47
47
47
47
S.N.G.N. ROMGAZ S.A. GROUP
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
Note
3
5
4
6
16
5
7
8
9
13
25
10
3
11
19 c)
11
Revenue
Cost of commodities sold
Investment income
Other gains and losses
Net impairment gains/(losses) on trade
receivables
Changes in inventory of finished goods
and work in progress
Raw materials and consumables used
Depreciation, amortization and
impairment expenses
Employee benefit expense
Finance cost
Exploration expense
Share of profit of associates
Other expenses
Other income
Profit before tax
Income tax expense
Profit for the year
Other comprehensive income
Items that will not be reclassified
subsequently to profit or loss
Actuarial gains/(losses) on post-
employment benefits
Income tax relating to items that will not
be reclassified subsequently to profit
or loss
Total items that will not be
reclassified subsequently to profit
or loss
Other comprehensive income for the
year net of income tax
Total comprehensive income for the
year
Basic and diluted earnings per share
17 b)
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
13,359,653
(183,578)
176,979
(9,441)
(55,166)
(2,197)
(118,037)
(550,076)
(846,001)
(27,295)
(59,714)
2,350
(7,613,296)
80,068
4,154,249
(1,607,537)
2,546,712
15,839
(2,534)
13,305
13,305
2,560,017
0.0066
5,852,926
(281,589)
58,403
23,388
349,989
74,787
(81,146)
(685,772)
(766,639)
(16,739)
(1,197)
85
(2,539,086)
169,841
2,157,251
(242,264)
1,914,987
(37,116)
5,938
(31,178)
(31,178)
1,883,809
0.0050
These financial statements were endorsed by the Board of Directors on March 23, 2023.
Răzvan Popescu
Chief Executive Officer
Gabriela Trânbițaș
Chief Financial Officer
1
S.N.G.N. ROMGAZ S.A. GROUP
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
ASSETS
Non-current assets
Property, plant and equipment
Other intangible assets
Investments in associates
Deferred tax asset
Right of use asset
Other financial assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Contract costs
Other financial assets
Other assets
Current tax receivable
Note
12
14 a)
25
11
14 b)
26
15
16 a)
31
16 b)
Cash and cash equivalents
28
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Reserves
Retained earnings
Total equity
Non-current liabilities
Retirement benefit obligation
Deferred revenue
Lease liability
Borrowings
Provisions
Total non-current liabilities
17 a)
18
19
20
29
19
December 31, 2022
'000 RON
December 31, 2021
'000 RON
5,039,314
5,140,425
28,537
199,016
8,766
5,616
10,421,674
284,007
1,373,664
3
99,597
265,232
-
1,883,882
3,906,385
5,240,697
16,133
26,187
269,645
7,128
5,616
5,565,406
305,241
1,352,345
483
417,923
67,962
3,201
3,580,412
5,727,567
14,328,059
11,292,973
385,422
3,579,274
6,111,869
10,076,565
168,830
230,419
7,499
1,125,534
210,838
1,743,120
385,422
2,998,975
5,596,756
8,981,153
156,420
230,438
7,211
-
412,846
806,915
2
S.N.G.N. ROMGAZ S.A. GROUP
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
Note
December 31, 2022
'000 RON
December 31, 2021
'000 RON
Current liabilities
Trade payables
Contract liabilities
Current tax liabilities
Deferred revenue
Provisions
Lease liability
Borrowings
Other liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
21
11
20
19
29
21
110,006
263,340
1,177,498
11
321,489
2,181
321,581
312,268
2,508,374
4,251,494
14,328,059
71,317
204,384
52,299
49
237,144
810
-
938,902
1,504,905
2,311,820
11,292,973
These financial statements were endorsed by the Board of Directors on March 23, 2023.
Răzvan Popescu
Chief Executive Officer
Gabriela Trânbițaș
Chief Financial Officer
3
S.N.G.N. ROMGAZ S.A. GROUP
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY
Balance as of January 1, 2022
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Allocation to dividends *)
Increase in legal reserves
Allocation to other reserves
Increase in reinvested profit reserves
Balance as of December 31, 2022
Balance as of January 1, 2021
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Allocation to dividends *)
Increase in legal reserves
Allocation to other reserves
Increase in reinvested profit reserves
Balance as of December 31, 2021
Share
capital
'000 RON
Legal
reserve
'000 RON
Other
reserves (note 18)
'000 RON
385,422
-
-
-
-
-
-
-
385,422
385,422
-
-
-
-
-
-
-
385,422
85,250
-
-
-
-
5,044
-
-
90,294
83,537
-
-
-
-
1,713
-
-
85,250
2,913,725
-
-
-
-
-
540,227
35,028
3,488,980
2,168,372
-
-
-
-
-
675,203
70,150
2,913,725
Retained
earnings **)
'000 RON
5,596,756
2,546,712
13,305
2,560,017
(1,464,605)
(5,044)
(540,227)
(35,028)
6,111,869
5,149,919
1,914,987
(31,178)
1,883,809
(689,906)
(1,713)
(675,203)
(70,150)
5,596,756
Total
'000 RON
8,981,153
2,546,712
13,305
2,560,017
(1,464,605)
-
-
-
10,076,565
7,787,250
1,914,987
(31,178)
1,883,809
(689,906)
-
-
-
8,981,153
*) In 2022 the Group’s shareholders approved the allocation of dividends of RON 1,464,605 thousand (2021: RON 689,906 thousand), dividend per share being RON 3.80 (2021: RON 1.79).
**) Retained earnings include the geological quota reserve set up in accordance with the provisions of Government Decision no. 168/1998 on the establishment of the expense quota for the development
and modernization of oil and natural gas production, refining, transportation and oil distribution. Following the Group’s transition to IFRS, the reserve existing as of December 31, 2012 was transferred to
retained earnings. This result is allocated based on the depreciation, respectively write-off of the assets financed using this source, based on decision of General Meeting of Shareholders. As of
December 31, 2022 the geological quota reserve is of RON 714,512 thousand (December 31, 2021: RON 806,840 thousand).
These financial statements were endorsed by the Board of Directors on March 23, 2023.
Răzvan Popescu
Chief Executive Officer
Gabriela Trânbițaș
Chief Financial Officer
4
S.N.G.N. ROMGAZ S.A. GROUP
STATEMENT OF CONSOLIDATED CASH FLOW
Cash flows from operating activities
Net profit
Adjustments for:
Income tax expense (note 11)
Share of associates’ result (note 25)
Interest expense (note 9)
Unwinding of decommissioning provision (note 9,
note 19)
Interest revenue (note 4)
Net loss on disposal of non-current assets (note 6)
Change in decommissioning provision recognized
in profit or loss, other than unwinding (note 19)
Change in other provisions (note 19)
Net impairment of exploration assets (note 7, note
13)
Exploration projects written off (note 13)
Net impairment of property, plant and equipment
and intangibles (note 7)
Foreign exchange differences
Depreciation and amortization (note 7)
Amortization of contract costs
Change in investments at fair value through profit
and loss (note 6)
Net receivable write-offs and movement in
allowances for trade receivables and other
assets
Net movement in write-down allowances for
inventory (note 6, note 15)
Liabilities written off
Subsidies income (note 20)
Movements in working capital:
(Increase)/Decrease in inventory
(Increase)/Decrease in trade and other receivables
Increase/(Decrease) in trade and other liabilities
Cash generated from operations
Interest paid
Income taxes paid
Net cash generated by operating activities
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
2,546,712
1,914,987
1,607,537
(2,350)
5,627
21,668
(176,979)
451
(75,652)
111,564
66,447
16
74,726
(453)
408,903
773
242,264
(85)
557
16,182
(58,403)
(321)
(20,750)
68,578
37,046
33
184,943
-
463,783
1,626
-
10
55,765
5,438
(512)
(7)
4,649,674
21,731
(276,839)
(526,915)
3,867,651
(5,040)
(410,976)
3,451,635
(378,352)
5,014
(810)
(9)
2,476,293
(64,913)
(400,838)
790,347
2,800,889
(3)
(233,084)
2,567,802
5
S.N.G.N. ROMGAZ S.A. GROUP
STATEMENT OF CONSOLIDATED CASH FLOW
Cash flows from investing activities
Investment in other entities
Bank deposits set up and acquisition of state bonds
Bank deposits and state bonds matured
Interest received
Proceeds from sale of non-current assets
Receipts from disposal of other financial
investments
Acquisition of non-current assets
Acquisition of exploration assets
Net cash (used in)/generated by investing
activities
Cash flows from financing activities
Borrowings received
Repayment of borrowings
Dividends paid
Repayment of lease liability
Subsidies received (note 20)
Net cash used in financing activities
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at the beginning of
the year
Cash and cash equivalents at the end of the
year
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
-
(3,355,306)
3,669,504
181,067
1,033
-
(5,529,611)
(96,500)
(5,129,813)
1,606,475
(158,907)
(1,463,984)
(1,936)
-
(18,352)
(1,696,530)
3,580,412
1,883,882
(250)
(3,896,521)
5,463,332
58,340
513
2
(340,695)
(91,865)
1,192,856
-
-
(690,027)
(1,280)
94,148
(597,159)
3,163,499
416,913
3,580,412
These financial statements were endorsed by the Board of Directors on March 23, 2023.
Răzvan Popescu
Chief Executive Officer
Gabriela Trânbițaș
Chief Financial Officer
6
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
BACKGROUND AND GENERAL BUSINESS
Information regarding S.N.G.N. Romgaz S.A. Group (the “Group”)
The Group is formed of S.N.G.N. Romgaz S.A. (”the Company”/"Romgaz"), as parent company and its fully owned
subsidiaries S.N.G.N. ROMGAZ S.A. - Filiala de Înmagazinare Gaze Naturale DEPOGAZ Ploiești S.R.L. (“Depogaz”)
and Romgaz Black Sea Limited.
Romgaz is a joint stock company, incorporated in accordance with the Romanian legislation.
The Company’s headquarter is in Mediaş, 4 Constantin I. Motaş Square, 551130, Sibiu County.
The Romanian State, through the Ministry of Energy, is the majority shareholder of S.N.G.N. Romgaz S.A. together
with other legal and physical persons (note 17).
The Group has as main activity:
1.
2.
3.
4.
5.
geological research for the discovery of natural gas, crude oil and condensed reserves;
operation, production and usage, including trading, of mineral resources;
natural gas production for:
ensuring the storage flow continuity;
technological consumption;
delivery in the transmission system.
underground storage of natural gas provided by Depogaz;
commissioning, interventions, capital repairs for wells equipping the deposits, as well as the natural gas
resources extraction wells, for its own activity and for third parties;
6.
electricity production and distribution.
2.
SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The consolidated financial statements (“financial statements”) of the Group have been prepared in accordance with
Ministry of Finance Order 2844/2016, with subsequent amendments, to approve accounting regulations in
accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (MOF
2844/2016). MOF 2844/2016, with subsequent amendments, is in accordance with the IFRS adopted by the
European Union.
For the purposes of the preparation of these financial statements, the functional currency of the Group is deemed to
be the Romanian Leu (RON).
Basis of preparation
The financial statements have been prepared on a going concern basis. The principal accounting policies are set out
below.
Accounting is kept in Romanian and in the national currency. Items included in these financial statements are
denominated in Romanian lei. Unless otherwise stated, the amounts are presented in thousand lei (thousand RON).
Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into
account the characteristics of the asset or liability if market participants would take those characteristics into account
when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in
these financial statements is determined on such a basis, except for measurements that have some similarities to fair
value but are not fair value, such as net realizable value in IAS 2 “Inventory” or value in use in IAS 36 “Impairment of
assets”.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on
the degree to which the inputs to the fair value measurements are observable and the significance to the Group of
the inputs to the fair value measurement, which are described as follows:
level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can
access at the measurement date;
7
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
level 3 inputs are unobservable inputs for the asset or liability.
Basis for consolidation
Subsidiaries
The Group controls an entity when it has power over the investee, is exposed, or has rights, to variable returns from
its involvement with the investee and has the ability to affect those returns through its power over the investee.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when it loses
control of that subsidiary.
Upon obtaining control of a newly acquired subsidiary, the Group assesses whether the acquisition constitutes an
acquisition of a business or an acquisition of assets.
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any
non-controlling interests in the investee. Acquisition-related costs are expensed as incurred.
The Group determines that it has acquired a business when the acquired set of activities and assets include an input
and a substantive process that together significantly contribute to the ability to create outputs. The acquired process
is considered substantive if it is critical to the ability to continue producing outputs, and the inputs acquired include an
organized workforce with the necessary skills, knowledge, or experience to perform that process or it significantly
contributes to the ability to continue producing outputs and is considered unique or scarce or cannot be replaced
without significant cost, effort, or delay in the ability to continue producing outputs.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date.
Goodwill is the excess of the aggregate of the consideration transferred and the amount recognized for non-
controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed.
Goodwill is initially measured at cost. If the fair value of the net assets acquired is in excess of the aggregate
consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all
of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the
acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the
aggregate consideration transferred, then the gain is recognized in profit or loss.
If the acquisition is not a business, it is accounted for as an acquisition of assets.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies
in line with those used by the Group. All intra-group assets and liabilities, income and expenses relating to
transactions between members of the Group are eliminated in full on consolidation.
Associated entities
An associate is a company over which the Group exercises significant influence through participation in decision
making on financial and operational policies of the entity invested in. Investments in associates are recorded using
the equity method of accounting. By this method, the investment is initially recognized at cost and adjusted thereafter
for the post-acquisition change in the Group’s share of the investee’s net assets. The Group’s profit or loss includes
its share of the investee’s profit or loss and the Group’s other comprehensive income includes its share of the
investee’s other comprehensive income.
Joint arrangements
A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant
activities require the unanimous consent of the parties sharing control.
A joint arrangement is either a joint operation or a joint venture.
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to
the assets, and obligations for the liabilities, relating to the arrangement. Those parties are called joint operators.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the
net assets of the arrangement. Those parties are called joint ventures.
8
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Joint operations
The Group recognizes in relation to its interest in a joint operation:
its assets, including its share of any assets held jointly;
its liabilities, including its share of any liabilities incurred jointly;
its revenue from the sale of its share of the output arising from the joint operation;
its share of the revenue from the sale of the output by the joint operation; and
its expenses, including its share of any expenses incurred jointly.
As joint operator, the Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint
operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.
If the Group participates in, but does not have joint control of, a joint operation it accounts for its interest in the
arrangement in accordance with the paragraphs above if it has rights to the assets, and obligations for the liabilities,
relating to the joint operation.
If the Group participates in, but does not have joint control of, a joint operation, does not have rights to the assets,
and obligations for the liabilities, relating to that joint operation, it accounts for its interest in the joint operation in
accordance with the IFRSs applicable to that interest.
Joint ventures
As a partner in a joint venture, in its financial statements, the Group recognizes its interest in a joint venture using the
equity method of accounting.
Standards and interpretations valid for the current period
The following standards and amendments or improvements to existing standards issued by the IASB and adopted by
the EU have entered into force for the current period:
Amendments to IFRS 3 “Business Combinations” (effective for annual periods beginning on or after January 1,
2022);
Amendments to IAS 16 “Property, Plant and Equipment” (effective for annual periods beginning on or after
January 1, 2022);
Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” (effective for annual periods
beginning on or after January 1, 2022);
Annual Improvements 2018-2020 (effective for annual periods beginning on or after January 1, 2022).
The adoption of these amendments, interpretations or improvements to existing standards has not led to changes in
the Group's accounting policies.
Standards and interpretations issued by IASB not yet endorsed by the EU
At present, IFRS endorsed by the EU do not significantly differ from IFRS adopted by the IASB except from
the following standards, amendments or improvements to the existing standards and interpretations, which were not
endorsed for use in EU as at date of publication of financial statements:
Amendments to IAS 1 “Presentation of Financial Statements: Classification of Liabilities as Current or Non-
current; Classification of Liabilities as Current or Non-current - Deferral of Effective Date; Non-current Liabilities
with Covenants” (effective for annual periods beginning on or after January 1, 2024);
Amendments to IFRS 16 “Leases: Lease liabilities in a sale and leaseback” (applicable to annual periods
beginning on or after 1 January 2024).
The Group is currently evaluating the effect that the adoption of these standards, amendments or improvements to
the existing standards and interpretations will have on the financial statements of the Group in the period of initial
application.
9
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Standards and interpretations issued by IASB and adopted by the EU, but not yet effective
At the date of issue of the financial statements, the following standards were adopted by the EU, but not yet
effective:
Amendments to IAS 12 “Income taxes: Deferred Tax related to Assets and Liabilities arising from a single
transaction” (effective for annual periods beginning on or after January 1, 2023);
Amendments to IFRS 17 “Insurance Contracts: initial application of IFRS 17 and IFRS 9 - comparative
information” (applicable to annual periods beginning on or after January 1, 2023);
Amendments to IAS 1 “Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of
Accounting policies” (effective for annual periods beginning on or after January 1, 2023);
Amendments to IAS 8 “Accounting policies, Changes in Accounting Estimates and Errors: Definition of
Accounting Estimates” (effective for annual periods beginning on or after January 1, 2023);
IFRS 17 “Insurance Contracts including Amendments to IFRS 17” (effective for annual periods beginning on or
after January 1, 2023). The Group does not issue contracts in scope of IFRS 17, thus the financial statements
will not be impacted by this standard.
The Group did not adopt these standards and amendments before their effective dates. The Group does not expect
these amendments to have a material impact on the financial statements.
Segment information
The information reported to the chief operating decision maker for the purposes of resource allocation and
assessment of segment performance focuses on the upstream segment, gas storage, electricity production and
distribution, and other activities, including headquarter activities. The Directors of the Group have chosen to organize
the Group around differences in activities performed.
Specifically, the Group is organized in the following segments:
upstream, which includes exploration activities, natural gas production and trade of gas extracted by Romgaz
or acquired from domestic production or import, for resale; these activities are performed by the head office,
Mediaș and Mureș branches and subsidiary Romgaz Black Sea Limited;
storage activities, performed by subsidiary Depogaz;
electricity production and distribution activities, performed by Iernut branch;
other activities, such as technological transport, operations on wells and corporate activities.
Transactions between the companies within the Group are at current market prices. Unrealized profits are
eliminated in the financial statements.
Gas and electricity deliveries between Group’s segments within the same company are accounted for at market
prices or at regulated prices, as the case may be. All other transactions between Group’s segments within the same
company are at cost.
Revenue recognition
a)
Revenue from contracts with customers
The Group recognizes customer contracts when all of the following criteria are met:
the parties to the contract have approved the contract and are committed to perform their respective obligations;
the Group can identify each party’s rights regarding the goods or services to be transferred;
the Group can identify the payment terms;
the contract has commercial substance;
it is probable that the Group will collect the consideration to which it will be entitled in exchange for the goods
delivered or the services provided.
Revenue from contracts with customers is recognized when, or as the Group transfers the goods or services to the
customer, respectively, the client obtains control over them.
Depending on the nature of the goods or services, revenues are recognized over time or at a point in time.
10
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revenue is recognized over time if:
the customer receives and consumes simultaneously the benefits provided by obtaining the goods and services
as the Group performs the obligation;
the Group creates or enhances an asset that the customer controls as the asset is created or enhanced;
the Group’s performance does not create an asset with an alternative use to the Group.
All other revenues that do not meet the above criteria are recognized at a point in time.
For revenue to be recognized over time, the Group assesses progress towards meeting the execution obligation,
using output methods or input methods, depending on the nature of the good or service transferred to the client.
Revenues are recognized only if the Group can reasonably assess the result of the execution obligation or, if it
cannot be estimated, only at the level of the costs it is expected to recover from the customer.
Revenue from contracts with customers mainly relates to gas sales, electricity supply and related services, storage
services. Revenue from these contracts are recognized at a point in time on the basis of the actual quantities at the
prices fixed in the contracts concluded.
Contracts concluded by the Group do not contain significant financing components.
b)
Other revenue
Rental revenue for operating lease contracts where the Group operates as lessor is recognized on an accrual basis
in accordance with the substance of the relevant agreements.
Interest income is recognized periodically and proportionally as the respective income is generated, on accrual basis.
Dividends are recognized as income when the legal right to receive them is established.
Contract liabilities
Contract liabilities are an obligation to transfer goods or services to a customer for which the Group has received
consideration (or an amount of consideration is due) from the customer. If a customer pays consideration, or the
Group has a right to an amount of consideration that is unconditional (ie. a receivable), before the Group transfers the
good or service to the customer, the Group presents the contract as a contract liability when the payment is made or
the payment is due (whichever is earlier).
Exploration expenses
The costs of seismic exploration, geological, geophysical and other similar exploration activities are recognized as
exploration expenses in the statement of comprehensive income in the period in which they arise.
Exploration expenses also include the carrying value of exploration assets that have not identified gas resources and
have been written-off.
Foreign currencies
The functional currency is the currency of the primary economic environment in which the Group operates and is the
currency in which the Group primarily generates and expends cash. The Group operates in Romania and it has the
Romanian Leu (RON) as its functional currency.
In preparing the financial statements of the Group, transactions in currencies other than the functional currency
(foreign currencies) are recorded at the exchange rates prevailing at the dates of the transactions. At each reporting
date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the reporting date.
Exchange differences are recognized in the statement of comprehensive income in the period in which they arise.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.
Employee benefits
Benefits granted upon retirement
In the normal course of business, the Group makes payments to the Romanian State on behalf of its employees at legal
rates. All employees of the Group are members of the Romanian State pension plan. These costs are recognized in the
statement of comprehensive income together with the related salary costs.
Based on the Collective Labor Agreement, the Group is liable to pay to its employees at retirement a number of gross
salaries, according to the years worked in the gas industry/electrical industry, work conditions etc. To this purpose,
the Group recorded a provision for benefits upon retirement. This provision is updated annually and computed
11
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
according to actuary methods based on estimates of the average salary, the average number of salaries payable
upon retirement, on the estimate of the period when they shall be paid and it is brought to present value using a
discount factor based on interest related to a maximum degree of security investments (government securities). As
the benefits are payed, the provision is reduced together with the reversal of the provision against income.
Gains or actuarial losses, are recognized in other comprehensive income. These are changes in the present value of
the defined benefit obligation as a result of statistical adjustments and changes in actuarial assumptions. Any other
changes in the provision are recognized in the result of the year.
The Group does not operate any other pension scheme or post-retirement benefit plan and, consequently, has no
obligation in respect of pensions.
Employee participation to profit
The Group records in its financial statements a provision related to the fund for employee participation to profit in
compliance with legislation in force.
Liabilities related to the fund for employee participation to profit are settled in less than a year and are measured at
the amounts estimated to be paid at the time of settlement.
Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events,
when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation,
and a reliable estimate of the amount of the obligation can be made.
Greenhouse gas provisions
The Group recognizes a provision for the deficit between actual CO2 emissions and certificates held, measured at the
best estimate of expenditure required to settle the obligation.
Provisions for decommissioning of wells
Liabilities for decommissioning costs are recognized due to the Group’s obligation to plug and abandon a well,
dismantle and remove a facility or an item of plant and to restore the site on which it is located, and when a reliable
estimate of that liability can be made.
The Group recorded a provision for decommissioning wells.
This provision was computed based on the estimated future expenditure determined in accordance with local
conditions and requirements and it was brought to present value using the interest rate on long term treasury bonds.
The rate and the estimated costs for decommissioning are updated annually.
The decommissioning provision is based on the economic life of the fields wells are located on, even if this is longer
than the period of the related concession agreements, as it is considered the period may be extended.
A corresponding item of property, plant and equipment of an amount equivalent to the provision is also recognized.
The item of property, plant and equipment is subsequently depreciated as part of the asset.
The Group applies IFRIC 1 “Changes in Existing Decommissioning, Restoration and Similar Liabilities” related to
changes in existing decommissioning, restoration and similar liabilities.
The change in the decommissioning provision for wells is recorded as follows:
a.
b.
c.
subject to b., changes in the liability are added to, or deducted from, the cost of the related asset in the current
period;
the amount deducted from the cost of the asset does not exceed its carrying amount. If a decrease in the
liability exceeds the carrying amount of the asset, the excess is recognized immediately in the statement of
comprehensive income;
if the adjustment results in an addition to the cost of an asset, the Group considers whether this is an
indication that the new carrying amount of the asset may not be fully recoverable. If it is such an indication, the
Group tests the asset for impairment by estimating its recoverable amount, and accounts for any impairment
loss.
Once the related asset has reached the end of its useful life, all subsequent changes of debt are recognized in the income
statement in the period when they occur.
The periodical unwinding of the discount is recognized periodically in the comprehensive income as a finance cost, as it
occurs.
12
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the
statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in
other periods and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognized on the differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the
balance sheet liability method.
Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are
generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be utilized. Such assets and liabilities are not
recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting
profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in associates
and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and
it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with such investments and interests are only recognized to the extent
that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary
differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively
enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or
settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current tax for the period is recognized as an expense in the statement of comprehensive income. Deferred tax for
the period is recognized as an expense or income in the statement of comprehensive income, except when they
relate to items credited or debited directly to equity, in which case the tax is also recognized directly in equity, or
where it arises from the initial accounting for a business combination. In the case of a business combination, the tax
effect is taken into account in calculating goodwill or in determining the excess of the acquirer’s interest in the net fair
value of the acquirer’s identifiable assets, liabilities and contingent liabilities over cost.
Property, plant and equipment
(1)
Cost
(i)
Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses.
The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing
the asset into the location and condition necessary for it to be capable of operating in the manner intended by
management and the initial estimate of any decommissioning obligation. The purchase price or construction cost is
the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
13
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ii)
Gas cushion
This is a quantity of natural gas constituted as a reserve at the level of gas storages, physically recoverable, which
ensures the optimum conditions necessary to maintain their technical-productive flow characteristics. The gas
cushion is recorded as an item of property, plant and equipment in the Storage segment.
(iii) Development expenditure
Expenditure on the construction, installation and completion of infrastructure facilities such as platforms, pipelines
and the drilling of development wells, including the commissioning of wells, is capitalized within property, plant and
equipment and is depreciated from the commencement of production as described below in the property, plant and
equipment accounting policies.
(iv) Maintenance and repairs
The Group does not recognize within the assets’ costs the current expenses and the accidental expenses for that asset.
These costs are expensed in the period in which they are incurred.
The cost for current maintenance are mainly labor costs and consumables and also small inventory items. The purpose of
these expenses is usually described as “repairs and maintenance” for property, plant and equipment.
The expenses with major activities, inspections and repairs comprise the replacement of the assets or other asset’s
parts, the inspection cost and major overhauls. These expenses are capitalized if an asset or part of an asset, which
was separately depreciated, is replaced and is probable that they will bring future economic benefits for the Group. If
part of a replaced asset was not considered as a separate component and, as a result, was not separately
depreciated, the replacement value will be used to estimate the net book value of the asset which is replaced and is
immediately written-off. The inspection costs associated with major overhauls are capitalized and depreciated over
the period until next inspection.
The cost for major overhauls for wells are also capitalized and depreciated using the unit of production depreciation
method.
All other costs with the current repairs and usual maintenance are recognized directly in expenses.
(2)
Depreciation
The depreciable amount of a tangible asset is the cost less the residual value of the asset. The residual value is the
estimated value that the Group would currently obtain from the disposal of an asset, after deducting the estimated
costs associated with the disposal if the asset would already have the age and condition expected at the end of its
useful life.
For directly productive tangible assets (natural gas resources extraction wells), the Group applies the depreciation
method based on the unit of production in order to reflect in the statement of comprehensive income, an expense
proportionate with the production obtained from the total natural gas reserve certified at the beginning of the period.
According to this method, the value of each production well is depreciated according to the ratio of the natural gas
quantity extracted during the period compared to the proved developed reserves at the beginning of the period.
Assets representing gas cushion are not depreciated, as the residual value exceeds their cost.
For indirectly productive tangible assets and storage assets, depreciation is computed using the straight–line method
over the estimated useful life of assets, as follows:
Asset
Specific buildings and constructions
Technical installations and machines
Other plant, tools and furniture
Years
10 - 50
3 - 20
3 – 30
Land is not depreciated as it is considered to have an indefinite useful life.
Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet
determined, are carried at historical cost, less any recognized impairment loss. Depreciation of these assets, on the
same basis as other property assets, commences when the assets are ready for their intended use.
Items of tangible fixed assets that are disposed of are eliminated from the statement of financial position along with
the corresponding accumulated depreciation and impairment. Any gain or loss resulting from such retirement or
disposal is included in the result of the period.
For items of tangible fixed assets that are retired from use, but not yet written off by the reporting date, an impairment
adjustment is recorded for the carrying value at the time of retirement.
14
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(3)
Impairment
Non-current assets must be recognized at the lower of the carrying amount and recoverable amount. If and only if the
recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset should be reduced
to be equal to its recoverable amount. Such a reduction represents an impairment loss that is recognized in the result
of the period.
Thus at the end of each reporting period, the Group assesses whether there is any indication of impairment of assets.
If such indication is identified, the Group tests the assets to determine whether they are impaired.
The Group’s assets are allocated to cash-generating units. The cash-generating unit is the smallest identifiable asset
group that generates independent cash inflows to a large extent from cash inflows generated by other assets or asset
groups. The Group considers each commercial field as a separate cash-generating unit.
All gas storages held by the Group are considered as part of a single cash-generating unit, as the tariffs are set by
analyzing the storage activity as a whole, not every single storage.
In 2022, no indications of impairment were observed for the Group’s assets.
Recoverable amount is the largest of the fair value of an asset or a cash-generating unit less costs associated with
disposal and its value in use. Considering the nature of the Group's assets, it was not possible to determine the fair
value of the cash-generating units, being determined only the value in use of the assets.
Exploration and appraisal assets
(1)
Cost
Natural gas exploration (other than seismic, geological, geophysical and other similar activities), appraisal and
development expenditure is accounted for using the principles of the successful efforts method of accounting.
Costs directly associated with an exploration well are initially capitalized as an asset until the drilling of the well is
complete and the results have been evaluated. These costs include employee remuneration, materials and fuel used,
drilling costs and payments made to contractors. If potentially commercial quantities of hydrocarbons are not found,
the exploration well is eliminated from the statement of financial position, by recording an impairment, until National
Agency for Mineral Resources (Agenția Națională pentru Resurse Minerale – ANRM) approvals are obtained in order
to be written off. If hydrocarbons are found and, subject to further appraisal activity, are likely to be capable of
commercial development, the costs continue to be carried as an asset. Costs directly associated with appraisal
activity, undertaken to determine the size, characteristics and commercial potential of a reservoir following the initial
discovery of hydrocarbons, including the costs of appraisal wells where hydrocarbons were not found, are initially
capitalized as an asset. All such carried costs are subject to technical, commercial and management review at least
once a year to confirm the continued intent to develop or otherwise extract value from the discovery. When this is no
longer the case, an impairment is recorded for the assets, until the completion of the legal steps necessary for them
to be written off. When proved reserves of natural gas are determined and development is approved by management,
the relevant expenditure is transferred to property, plant and equipment other than exploration assets.
(2)
Impairment
At each reporting date, the Group's management reviews its exploration assets and establishes the necessity for
recording in the financial statements an impairment loss in these situations:
the period for which the Group has the right to explore in the specific area has expired during the period or will
expire in the near future, and is not expected to be renewed;
substantive expenditure on further exploration for and evaluation of gas resources in the specific area is
neither budgeted nor planned;
exploration for and evaluation of gas resources in the specific area have not led to the discovery of
commercially viable quantities of gas resources and the Group has decided to discontinue such activities in
the specific area;
sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the
carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful
development or by sale.
Elements similar to the above are also considered when determining impairment losses for producing assets.
15
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other intangible assets
(1)
Cost
Licenses for software, patents and other intangible assets are recognized at acquisition cost.
Intangible assets are not revalued.
(2)
Amortization
Patents and other intangible assets are amortized using the straight-line method over their useful life, but not
exceeding 20 years. Licenses related to the right of use of computer software are amortized over a period of 3 years.
Inventories
Inventories are recorded initially at cost of production, or acquisition cost, depending on the case. The cost of finished
goods and production in progress includes materials, labour, expense incurred for bringing the finished goods at the
location and in the existent form and the related indirect production costs. Write down adjustments are booked
against slow moving, damaged and obsolete inventory, when necessary.
At each reporting date, inventories are measured at the lower of cost and net realizable value. The net realizable
value is estimated based on the selling price less any completion and selling expenses. The cost of inventories is
assigned by using the weighted average cost formula.
Financial assets and liabilities
The Group’s financial assets include cash and cash equivalents, trade receivables, other receivables, bank deposits
and bonds with a maturity from acquisition date of over three months and other investments in equity instruments.
Financial liabilities include interest-bearing bank borrowings and overdrafts and trade and other payables.
For each item, the accounting policies on recognition and measurement are disclosed in this note.
Cash and cash equivalents include petty cash, cash in current bank accounts and short-term deposits with a maturity
of less than three months from the date of acquisition.
The Group recognizes a financial asset or financial liability in the statement of financial position when and only when
it becomes a party to the contractual provisions of the instrument. Upon initial recognition, financial assets are
classified at amortized cost or measured at fair value through profit or loss. The classification depends on the Group's
business model for managing the financial assets and their contractual cash flows.
The Group does not have financial assets measured at fair value through other comprehensive income.
On initial recognition, financial assets and financial liabilities are measured at fair value plus or minus, in the case of
assets measured at amortized cost, transaction costs that are directly attributable to the acquisition or issue of the
financial asset or financial liability.
Receivables resulting from contracts with customers represent the unconditional right of the Group to a consideration.
The right to a consideration is unconditional if only the passage of time is required before payment of the
consideration is due. These are measured at initial recognition at the transaction price.
The amortized cost of a financial asset or financial liability is the amount at which the financial asset or financial
liability is measured at initial recognition minus principal repayments plus or minus cumulative depreciation using the
effective interest method for each difference between the initial amount and the amount at maturity and, for financial
assets, adjusted for any impairment.
Any difference between the entry amount and the reimbursement amount is recognized in the income statement for
the period of the borrowings using the effective interest method.
Financial instruments are classified as liabilities or equity in accordance with the nature of the contractual
arrangement. Interest, dividends, gains and losses on a financial instrument classified as a liability are reported as
expense or income. Distributions to holders of financial instruments classified as equity are recorded directly in
equity.
Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either
on a net basis or to realize the asset and discharge the obligation simultaneously.
Impairment of financial assets
Financial assets, other than those at fair value through profit and loss, are assessed for indicators of impairment at
each reporting period.
16
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Except for trade receivables, the Group measures the loss allowance for a financial instrument at an amount equal to
the lifetime expected credit losses if the credit risk associated with the financial instrument, has increased significantly
since initial recognition. If, at the reporting date, the credit risk for a financial instrument has not increased
significantly since the initial recognition, the Group measures the loss allowance for that financial instrument at a
value equal to 12-month expected credit losses.
The loss allowance on trade receivables resulting from transactions that are subject to IFRS 15 is measured at an
amount equal to lifetime expected credit losses. The Group considers the risk or probability of a default occurring,
reflecting the possibility of a default to occur or not to occur, even if the possibility of a credit loss is very low.
The Group measures the expected credit losses of a financial instrument in a manner that reflects reasonable and
supportable information that is available without undue cost or effort at the reporting date about past events, current
conditions and forecasts of future economic conditions.
The carrying amount of the financial asset, other than those at fair value through profit or loss, is reduced through the
use of an allowance account.
De-recognition of financial assets and liabilities
The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled
or they expire.
Reserves
Reserves include (note 18):
legal reserves, which are used annually to transfer to reserves up to 5% of the statutory profit, but not more
than 20% of the statutory share capital of the companies within the Group;
other reserves, which represent allocations from profit in accordance with Government Ordinance no. 64/2001,
paragraph (g) for the Company’s development fund;
reserves from reinvested profit, set up based on the Fiscal Code. The amount of profit that benefited from tax
exemption under the fiscal legislation less the legal reserve, is distributed at the end of the year by setting up
the reserve;
development quota reserve, non-distributable, set up until 2004. Development quota reserve set up after 2004
is distributable and presented in retained earnings. Development quota set up after 2004 is allocated together
with the profit allocation, as approved by the General Meeting of Shareholders, based on depreciation,
respectively write-off of the assets financed using the development quota;
other non-distributable reserves, set up from retained earnings representing translation differences recorded at
transition to IFRS. These reserves are set up in accordance with MOF 2844/2016.
Subsidies
Subsidies are non-reimbursable financial resources granted to the Group with the condition of meeting certain
criteria. In the category of subsidies are included grants related to assets and grants related to income.
Grants related to assets are government grants for whose primary condition is that the Group should purchase,
construct, or otherwise acquire long-term assets.
Grants related to income are government grants other than those related to assets.
Subsidies are not recognized until there is reasonable assurance that:
(a)
(b)
the Group will comply with the conditions attaching to it; and
subsidies will be received.
Grants related to assets are presented in the statement of financial position as “Deferred revenue”, which is then
recognized in profit or loss on a systematic basis over the useful life of the asset.
Grants related to income are recognized in the statement of profit or loss under "Other income", as the related
expenses are recorded. Until the time the expense occurs, the grant received is recognized as “Deferred revenue”.
17
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Use of estimates
The preparation of the financial information requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the end of reporting
date, and the reported amounts of revenue and expenses during the reporting period. Actual results could vary from
these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that
period, or in the period of the revision and future periods if the revision affects both current and future periods.
The following are the critical estimates that the management has made in the process of applying the Group’s
accounting policies, and that have the most significant effect on the amounts recognized in the financial statements.
Estimates related to impairment losses on trade receivables
At each period end, the Group evaluates the risks attached to current and overdue receivables and the probability of
such risks to materialize. The Group’s receivables are generally due in maximum 30 days from the date of issue.
However, the Group may be forced by court decisions to sell gas to insolvent clients deemed “captive” according to
insolvency legislation. Invoices issued to these clients for gas delivered are due in 90 days from the date of issue.
Based on the information available at period end related to such clients and previous experience, the Group
estimates the lifetime expected credit loss of receivables, both current and overdue, and records appropriate
impairment losses (note 16).
Estimates related to the exploration expenditure on undeveloped fields
If field works prove that the geological structures are not exploitable from an economic point of view or that they do
not have hydrocarbon resources available, an impairment is recorded. The impairment assessment is performed
based on geological experts’ technical expertise (note 7).
Estimates related to the developed proved reserves
The Group applies the depreciation method based on the unit of production in order to reflect in the income statement
an expense proportionate with the production obtained from the total natural gas reserve at the beginning of the
period. According to this method, the value of each production well is depreciated according to the ratio of the natural
gas quantity extracted during the period compared to the gas reserve at the beginning of the period. The gas
reserves are updated annually according to internal assessments that are based on certifications of ANRM (note 7).
Estimates related to the decommissioning provision
Liabilities for decommissioning costs are recognized for the Group’s obligation to plug and abandon a well, dismantle
and remove a facility or an item of plant and to restore the site on which it is located, and when a reliable estimate of
that liability can be made.
This provision is computed based on the estimated future expenditure determined in accordance with local conditions
and requirements and it is brought to present value using the interest rate on long term treasury bonds. The rate and
estimated decommissioning costs are updated annually (note 19).
Estimates related to the retirement benefit obligation
Under the Collective Labor Agreement, the Group is obliged to pay to its employees when they retire a multiplicator
of the gross salary, depending on the seniority within the gas industry/electricity industry, working conditions etc. This
provision is updated annually and calculated based on actuarial methods to estimate the average wage, the average
number of employees to pay at retirement, the estimate of the period when they will be paid and brought to present
value using a discount factor based on interest on investments with the highest degree of safety (government bonds)
(note 19).
The Group does not operate any other pension plan or retirement benefits, and therefore has no other obligations
relating to pensions.
Contingencies
By their nature, contingencies end only when one or more uncertain future events occur or not. In order to determine
the existence and the potential value of a contingent element, is required to exercise the professional judgment and
the use of estimates regarding the outcome of future events (note 34).
Fair value of financial instruments
Management believes that the estimated fair values of financial instruments approximate their carrying amounts.
18
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Comparative information
For each item of the statement of financial position, the statement of comprehensive income and, where is the case,
for the statement of changes in equity and for the statement of cash flows, for comparative information purposes is
presented the value of the corresponding item for the previous period ended, unless the changes are insignificant. In
addition, the Group presents an additional statement of financial position at the beginning of the earliest period
presented when there is a retrospective application of an accounting policy, a retrospective restatement, or a
reclassification of items in the financial statements, which has a material impact on the Group.
3.
REVENUE AND OTHER INCOME
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Revenue from gas sold - own production *)
11,234,160
4,685,389
Revenue from gas sold – other arrangements
Revenue from gas acquired for resale **)
Revenue from storage services-capacity
reservation ***)
Revenue from storage services-extraction
Revenue from storage services-injection ***)
Revenue from electricity ****)
Revenue from services
Revenue from sale of goods
Other revenues from contracts
Total revenue from contracts with customers
Other revenues
Total revenue
Other operating income *****)
Total revenue and other income
58,153
14,654
306,245
44,910
118,172
1,330,607
173,137
70,472
496
13,351,006
8,647
13,359,653
80,068
13,439,721
27,456
330,309
191,184
35,006
33,809
321,596
166,270
53,959
413
5,845,391
7,535
5,852,926
169,841
6,022,767
*) The increase in revenue from sale of Group’s gas production is due to the increase of gas prices caused by the
war in Ukraine. Quantities sold in 2022 were close to the ones sold in 2021.
**) No import gas was acquired for resale in 2022. The 2022 revenue relates to gas imbalances.
***) The increase in revenue from gas storage services is generated by the crisis caused by the war in Ukraine, which
forced the market and authorities to find solutions to prevent shortages during the winter season.
****) The increase in electricity sales is the result of higher selling prices, also caused by the war in Ukraine, and
higher electricity production.
*****) In 2021, other operating income include, besides penalties charged to clients for late payment or non-fulfillment
of the obligation of taking the natural gas, the amount of RON 114,628 thousand representing the performance
guarantee set up for the construction of the 430 MW Iernut power plant, with combined cycle with gas turbines,
following the termination of the work contract signed for this purpose.
Revenue from contracts with customers is recognized as or when the Group satisfies a performance obligation by
transferring a promised good or service to a customer. A good or service is transferred when the customer obtains
control of that good or service. The transfer of control of goods sold by the Group usually coincides with title passing
to the customer and the customer taking physical possession.
Revenues from gas and electricity are recognized when the delivery has been made at the prices fixed in the
contracts with customers.
Revenues from storage services are recognized when they are provided at the rates in force during the storage cycle.
Usually, injection services are provided in the period April – October, and those for extraction in November – March.
The capacity reservation services are being provided each month of the storage cycle, which begins on April 1 and
ends on March 31 of the next year.
19
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In measuring the revenue from gas, electricity and storage services, the Group uses output methods. According to
these methods, revenues are recognized based on direct measurements of the value to the customer of the goods or
services transferred to date relative to the remaining goods or services promised under the contract. The Group
recognizes the revenue in the amount it has the right to charge.
The Group does not disclose information about the remaining performance obligations, applying the practical
expedient in IFRS 15, as contracts with customers are generally signed for periods of less than one year and the
revenues are recognized at the amount which the Group has the right to charge.
4.
INVESTMENT INCOME
Interest income
Total
Year ended
December 31, 2022
'000 RON
176,979
176,979
Year ended
December 31, 2021
'000 RON
58,403
58,403
Interest income is derived from the Group’s investments in bank deposits and government bonds. Interest rates saw
a significant increase in 2022, leading to higher income.
5.
COST OF COMMODITIES SOLD, RAW MATERIALS AND CONSUMABLES
Consumables used
Technological consumption
Cost of gas acquired for resale, sold (note 3)
Cost of electricity imbalance *)
Cost of other goods sold
Other consumables
Total
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
56,977
56,750
14,654
167,405
1,519
4,310
301,615
42,673
33,259
246,819
33,867
903
5,214
362,735
*) Cost of electricity imbalances increased in 2022 compared with 2021 due to unplanned shut-downs of the plant. In
order to meet contractual delivery obligations, the Group had to acquire electricity from the market.
6.
OTHER GAINS AND LOSSES
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Forex gain
Forex loss
Net gain/(loss) on disposal of non-current assets
Net allowances for other receivables (note 16 c)
Net write down allowances for inventory (note 15)
Net gain/(loss) on financial assets at fair value
through profit or loss
Losses from other debtors
Total
42,255
(45,208)
(451)
(599)
(5,438)
-
-
(9,441)
45
(317)
321
28,369
(5,014)
(10)
(6)
23,388
20
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7.
DEPRECIATION, AMORTIZATION AND IMPAIRMENT EXPENSES
Depreciation and amortization
out of which:
- depreciation of property, plant and equipment
- amortization of intangible assets
- amortization of right of use assets (note 14 b)
Net impairment of non-current assets
Total depreciation, amortization and impairment
8.
EMPLOYEE BENEFIT EXPENSE
Wages and salaries
Social security charges
Meal tickets
Other benefits according to collective labor contract
Private pension payments
Private health insurance
Total employee benefit costs
Less, capitalized employee benefit costs
Total employee benefit expense
9.
FINANCE COSTS
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
408,903
402,500
4,930
1,473
141,173
550,076
463,783
458,747
4,114
922
221,989
685,772
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
876,340
30,115
27,175
29,407
11,177
6,832
981,046
(135,045)
846,001
800,360
27,830
24,955
23,434
11,415
6,924
894,918
(128,279)
766,639
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Interest expense *)
Unwinding of the decommissioning provision (note
19)
Total
5,627
21,668
27,295
557
16,182
16,739
*) The increase in interest expense is due to the loan taken to finance the acquisition of the shares of ExxonMobil
Exploration and Production Romania Limited (note 29).
10. OTHER EXPENSES
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Energy and water expenses *)
Expenses for capacity booking and gas
transmission services
Expenses with other taxes and duties **)
(Net gain)/Net loss from provisions movement (note
19)
Other operating expenses ***)
Total
106,122
158,591
6,954,380
35,912
358,291
7,613,296
21
51,537
145,177
2,013,806
47,828
280,738
2,539,086
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
*) The increase in energy and water expenses is caused by the increase in electricity costs in the storage activity due
to higher electricity prices.
**) In the year ended December 31, 2022, the major taxes and duties included in the amount of RON 6,954,380
thousand (year ended December 31, 2021: RON 2,013,806 thousand) are:
RON 4,903,849 thousand representing windfall tax resulting from the deregulation of prices in the natural gas
sector according to Government Ordinance no. 7/2013 with the subsequent amendments for the implementation
of the windfall tax following the deregulation of prices in the natural gas sector (year ended December 31, 2021:
RON 1,257,998 thousand);
in 2022, electricity producers were charged with an 80% windfall tax on prices in excess of RON 450/MWh (April,
2022 – August, 2022) followed by a 100% contribution to the Energy Transition Fund on prices in excess of RON
450/MWh (September, 2022 to date); some deductions were allowed in determining the two taxes. These taxes
amount to RON 403,801 thousand. The Group expects the 2023 contribution to be minimal, due to a regulated
price of RON 450/MWh at which electricity produced by the Group must be sold;
RON 1,640,082 thousand representing royalty on gas production and storage activity (year ended December 31,
2021: RON 749,411 thousand).
***) The increase in other operating expenses compared to 2021 is mainly due to the increase in expenditure on
greenhouse gas emission certificates (RON 169,638 thousand in 2022, compared to RON 121,583 thousand in
2021). The expense of RON 169,638 thousand in 2022 was partially offset by releasing to income the provision set
up for these certificates on December 31, 2021 of RON 154,904 thousand (note 19) (2021: the expense of RON
121,583 thousand was offset by releasing to income the provision set up on December 31, 2020 of RON 81,217
thousand).
11.
INCOME TAX
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Current tax expense (note 11 a)
Deferred income tax (income)/expense (note 11 a)
Solidarity contribution (note 11 b)
Income tax expense
536,586
68,161
1,002,790
1,607,537
230,643
11,621
-
242,264
Current income tax liability
Solidarity contribution (note 11 b)
Current tax liability
December 31, 2022
'000 RON
December 31, 2021
'000 RON
174,708
1,002,790
1,177,498
52,299
-
52,299
22
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
a) Current and deferred income tax
The tax rate used for the reconciliations below for the year ended December 31, 2022, respectively year ended
December 31, 2021 is 16% payable by corporate entities in Romania on taxable profits.
The total charge for the period can be reconciled to the accounting profit as follows:
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Accounting profit before tax (after solidarity
contribution)
(Profit)/loss of activities not subject to income tax
Accounting profit subject to income tax
Income tax expense calculated at 16%
Effect of income exempt of taxation
Effect of expenses that are not deductible in
determining taxable profit
Effect of current income tax reduction, due to tax
facilities
Effect of tax incentive for reinvested profit
Effect of legal reserves
Effect of the benefit from tax credits, used to reduce
current tax expense
Effect of deferred tax relating to the origination and
reversal of temporary differences
Effect of the benefit from tax credits, used to reduce
deferred tax expense
Income tax expense
Components of deferred tax (asset)/liability:
3,151,459
8,157
3,159,616
505,538
(74,508)
202,939
(66,319)
(5,631)
(807)
23,304
49,716
(29,485)
604,747
2,157,251
3,806
2,161,057
345,769
(81,238)
20,649
(20,232)
(11,394)
(306)
30,452
(23,375)
(18,061)
242,264
December 31, 2022
December 31, 2021
Cumulative
temporary
differences
'000 RON
Deferred tax
(asset)/ liability
'000 RON
Cumulative
temporary
differences
'000 RON
Deferred
tax (asset)/
liability
'000 RON
Provisions
Property, plant and equipment
Exploration assets *)
Financial investments
Inventory
Trade receivables and other receivables
Right of use asset
Deferred revenue
Lease liability
(473,030)
(109,338)
(527,951)
(977)
(34,956)
(97,576)
328
28
(374)
(75,685)
(17,494)
(84,472)
(156)
(5,593)
(15,612)
52
4
(60)
(651,505)
(16,382)
(610,253)
(977)
(33,205)
(372,912)
388
1
(434)
(104,241)
(2,621)
(97,641)
(156)
(5,313)
(59,666)
62
-
(69)
Total
(1,243,846)
(199,016)
(1,685,279)
(269,645)
Change, out of which:
-
-
-
in current year’s result
in other comprehensive
income
acquisition of ExxonMobil
Exploration and Production
Romania Limited (note 30)
(70,629)
(68,161)
(2,534)
66
(5,683)
(11,621)
5,938
-
23
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
*) According to the Fiscal Code applicable in Romania, expenses related to location, exploration, development or any
preparatory activity for the exploitation of natural resources, which, according to the applicable accounting
regulations, are recorded directly in the result, are recovered in equal rates for a period of 5 years, starting with the
month in which the expenses are incurred. Also, for fixed assets specific to the exploration and production of gas
resources, the carrying tax value of fixed assets written-off is deducted using the tax depreciation method used
before their write-off for the remaining period. All of these costs are treated as assets only from a tax point of view
and generate a deferred tax asset.
b) Solidarity contribution
In 2022, a solidarity contribution was introduced in Romania as a result of Council Regulation (EU) 2022/1854 on an
emergency intervention to address high energy prices. The temporary solidarity contribution is calculated at a rate of
60% of taxable profits, as determined under national tax rules, in the fiscal years 2022 and 2023 which are above a
20% increase of the average of the taxable profits, as determined under national tax rules, in the four fiscal years
starting on or after 1 January 2018. The contribution for 2022 is of RON 1,002,790 thousand. The tax is due for
payment in June, 2023.
24
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12.
PROPERTY, PLANT AND EQUIPMENT
Land and
land
improvements
'000 RON
Buildings
'000 RON
Gas
properties
'000 RON
Plant,
machinery
and
equipment
'000 RON
Fixtures,
fittings and
office
equipment
'000 RON
Storage
assets
'000 RON
Tangible
exploration
assets
'000 RON
Capital
work in
progress
'000 RON
Total
'000 RON
Cost
As of January 1, 2022
118,012
939,504
7,146,399
1,148,535
124,027
1,745,093
335,940
1,973,717
13,531,227
Additions
Transfers
Disposals
227
1,147
(190)
2,381
8,328
(846)
1,175
252,661
(218,407)
-
50,447
(19,989)
66
4,214
(5,172)
99
4,599
(13,684)
96,504
(24,311)
(71,639)
423,703
(297,085)
524,155
-
(4,864)
(334,791)
As of December 31, 2022
119,196
949,367
7,181,828
1,178,993
123,135
1,736,107
336,494
2,095,471
13,720,591
Accumulated depreciation
As of January 1, 2022
Charge *)
Disposals
As of December 31, 2022
Impairment
-
-
-
-
388,597
4,652,369
27,574
(248)
262,236
(24,513)
415,923
4,890,092
773,022
69,841
(19,690)
823,173
92,043
8,004
(5,078)
94,969
749,708
60,887
-
810,595
-
-
-
-
-
-
-
-
6,655,739
428,542
(49,529)
7,034,752
As of January 1, 2022
8,255
59,530
649,714
82,908
1,211
367,328
161,085
304,760
1,634,791
Charge
Transfers
Release
-
-
-
2,910
4
(617)
50,668
43,787
(92,492)
3,040
956
(358)
As of December 31, 2022
8,255
61,827
651,677
86,546
91
-
(100)
1,202
566
-
(4)
66,466
-
(66,042)
79,558
(44,747)
(31,952)
203,299
-
(191,565)
367,890
161,509
307,619
1,646,525
Carrying value
As of January 1, 2022
109,757
491,377
1,844,316
292,605
30,773
628,057
174,855
1,668,957
5,240,697
As of December 31, 2022
110,941
471,617
1,640,059
269,274
26,964
557,622
174,985
1,787,852
5,039,314
*) The amounts include depreciation of tangible assets used in the production of other fixed assets, capitalized in their cost, amounting to RON 26,047 thousand.
25
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Land and
land
improvements
'000 RON
Buildings
'000 RON
Gas
properties
'000 RON
Plant,
machinery
and
equipment
'000 RON
Fixtures,
fittings and
office
equipment
'000 RON
Storage
assets
'000 RON
Tangible
exploration
assets
'000 RON
Capital
work in
progress
'000 RON
Total
'000 RON
117,671
916,115
7,103,831
1,090,625
114,700
1,722,484
333,606
1,914,999
13,314,031
78
263
-
237
23,295
(143)
9,205
149,970
(116,607)
799
61,421
(4,310)
-
9,327
1,596
34,144
91,862
359,094
462,871
-
(278,420)
-
-
(13,131)
(89,528)
(21,956)
(245,675)
Cost
As of January 1, 2021
Additions
Transfers
Disposals
As of December 31, 2021
118,012
939,504
7,146,399
1,148,535
124,027
1,745,093
335,940
1,973,717
13,531,227
Accumulated depreciation
As of January 1, 2021
Charge *)
Disposals
As of December 31, 2021
Impairment
As of January 1, 2021
Charge
Transfers
Release
-
-
-
-
8,255
-
-
-
358,880
4,325,133
29,753
(36)
327,414
(178)
388,597
4,652,369
41,588
1,857
16,500
(415)
553,625
101,784
21,675
(27,370)
703,906
73,394
(4,278)
773,022
84,136
7,908
(1)
92,043
705,426
44,282
-
749,708
-
-
-
-
-
-
-
-
6,177,481
482,751
(4,493)
6,655,739
83,098
1,205
366,335
213,398
255,924
1,523,428
422
-
(612)
17
-
(11)
993
-
-
38,035
-
(90,348)
125,111
(38,175)
(38,100)
268,219
-
(156,856)
As of December 31, 2021
8,255
59,530
649,714
82,908
1,211
367,328
161,085
304,760
1,634,791
Carrying value
As of January 1, 2021
109,416
515,647
2,225,073
303,621
29,359
650,723
120,208
1,659,075
5,613,122
As of December 31, 2021
109,757
491,377
1,844,316
292,605
30,773
628,057
174,855
1,668,957
5,240,697
*) The amounts include depreciation of tangible assets used in the production of other fixed assets, capitalized in their cost, amounting to RON 24,001 thousand.
26
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Impairment of property, plant and equipment
Note 2 contains information on the conditions under which impairment losses for individual assets are recognized.
Impairment of assets in the Upstream segment
The Group did not perform an impairment test as of December 31, 2022. Based on internal analyses, no impairment
indicators were identified. In addition to this, the Group considers the market to be too volatile in terms of prices and
regulations so that any impairment test performed under such conditions would not generate reliable results.
13.
EXPLORATION AND APPRAISAL FOR NATURAL GAS RESOURCES
The following financial information represents the amounts included within the Group’s totals relating to activity
associated with the exploration for and appraisal of natural gas resources. All such activities are recorded within the
Upstream segment.
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Exploration assets written off
Seismic, geological, geophysical studies
Total exploration expense
Net movement in exploration assets’ impairment
(net income)/net loss
Net cash used in exploration investing activities
16
59,698
59,714
66,447
(96,500)
33
1,164
1,197
37,046
(91,865)
December 31, 2022
'000 RON
December 31, 2021
'000 RON
Exploration assets (note 12)
Liabilities
Net assets
14. OTHER INTANGIBLE ASSETS. RIGHT OF USE ASSETS
a) Other intangible assets
Cost
As of January 1
Additions *)
Disposals
As of December 31
Accumulated amortization
As of January 1
Charge
Disposals
As of December 31
Carrying value
As of January 1
As of December 31
174,985
(13,218)
161,767
2022
'000 RON
169,595
5,129,199
(53,693)
5,245,101
153,462
4,930
(53,716)
104,676
16,133
5,140,425
174,855
(7,904)
166,951
2021
'000 RON
186,899
5,592
(22,896)
169,595
172,125
4,114
(22,777)
153,462
14,774
16,133
*) Additions of RON 5,129,199 thousand include RON 5,105,563 thousand representing mineral rights from the
ExxonMobil Exploration and Production Romania Limited acquisition (note 30).
27
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
b) Right of use assets
2022
'000 RON
2021
'000 RON
Cost
As of January 1
Effects of rent index updates
New contracts
Terminated Contracts
As of December 31
Accumulated amortization
As of January 1
Charge
Terminated contracts
As of December 31
Carrying value
As of January 1
As of December 31
15.
INVENTORIES
9,649
406
2,705
(89)
12,671
2,521
1,473
(89)
3,905
7,128
8,766
9,514
135
-
-
9,649
1,599
922
-
2,521
7,915
7,128
Spare parts and materials
Finished goods (gas)
Other inventories
Write-down allowance for spare parts and materials
Write-down allowance for other inventories
Total
16. ACCOUNTS RECEIVABLE
a)
Trade and other receivables
December 31, 2022
'000 RON
December 31, 2021
'000 RON
216,314
129,190
706
(62,187)
(16)
284,007
171,542
189,594
870
(56,674)
(91)
305,241
December 31, 2022
'000 RON
December 31, 2021
'000 RON
Trade receivables
Allowances for expected credit losses (note 16 c)
Accrued receivables
Allowances for expected credit losses on accrued
receivables (note 16 c)
Total
1,492,403
(724,386)
605,647
-
1,373,664
1,757,243
(924,030)
526,971
(7,839)
1,352,345
Trade receivables from gas deliveries are generally due within 30 days of invoice issue. These must be guaranteed
by customers through bank letters of guarantee. If customers do not provide such a guarantee, they must ensure that
natural gas is paid in advance.
The Group is forced by court orders to sell gas to insolvent clients considered “captive” by the insolvency law. These
clients provide no guarantees, do not pay for deliveries in advance and have a payment term of 90 days from invoice
issue date.
28
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Trade receivables from the sale of electricity are generally due within 7 days of the date of invoice transmission.
These must be guaranteed by customers through bank letters of guarantee. If customers do not provide such a
guarantee, they must ensure that electricity is paid in advance.
Trade receivables from storage services are due within 15 days of invoice issue. Customers must provide a 5%
guarantee for the services value.
b)
Other assets
Advances paid to suppliers
Joint operation receivables
Other receivables *)
Allowance for expected credit losses other
receivables (note 16 c) *)
Other debtors
Allowance for expected credit losses for other
debtors (note 16 c)
Prepayments
VAT not yet due
Other taxes receivable **)
Total
December 31, 2022
'000 RON
December 31, 2021
'000 RON
1,053
10,550
37,377
(172)
58,543
(50,055)
10,297
5,764
191,875
265,232
109
8,201
47,941
(186)
49,932
(49,442)
5,606
5,795
6
67,962
*) During the period December 2016 - April 2017 ANAF resumed the tax inspection on VAT for the period December
2010 – June 2011 and on income tax for the period January 2010 – December 2011, regarding the discounts granted
by Romgaz to interruptible clients for deliveries during 2010 - 2011. This status was attributed to companies by
Transgaz, the Romanian natural gas transmission operator. Following the tax inspection, additional tax obligations of
RON 15,284 thousand were determined, and also penalties and late payment charges in amount of RON 3,129
thousand. The tax decision and the tax inspection report were appealed to ANAF. Romgaz paid the additional tax
obligation and the late payment charges and based on the appeal, the Company recorded a receivable for which it
recorded an allowance. In 2021, the court ruled in favor of the Company, so that the related allowance was released
to income. The Company recovered this amount in 2023.
**) Other taxes receivable relate to gas and electricity windfall taxes (RON 142,234 thousand for gas, respectively,
RON 40,049 thousand for electricity). The Group expects to recover these in 2023.
c)
Changes in the allowance for expected credit losses for trade and other receivables and other assets
At January 1
Charge in the allowance for other receivables (note
6)
Charge in the allowance for trade receivables
Write-off against trade receivables *)
Release in the allowance for other receivables (note
6)
Release in the allowance for trade receivables
At December 31
2022
'000 RON
981,497
1,831
124,247
(262,649)
(1,232)
(69,081)
774,613
2021
'000 RON
1,359,855
1,402
32,529
-
(29,771)
(382,518)
981,497
*) In 2022, the Group wrote-off receivables of RON 262,649 thousand representing receivables not allowed by courts
in insolvency proceedings of the respective clients. The write-off had no impact on the 2022 results, as those
receivables were already impaired.
As of December 31, 2022, the Group recorded allowances for expected credit losses, of which Interagro RON
68,141 thousand (December 31, 2021: RON 264,529 thousand), GHCL Upsom of RON 0 thousand (December 31,
2021: RON 68,103 thousand), CET Iasi of RON 46,271 thousand (December 31, 2021: RON 46,271 thousand),
Electrocentrale Galati with RON 168,620 thousand (December 31, 2021: RON 192,342 thousand), Liberty Galați with
RON 85,261 thousand (December 31, 2021: RON 0 thousand), Electrocentrale Bucuresti with RON 243,547
thousand (December 31, 2021: RON 252,225 thousand), G-ON EUROGAZ of RON 14,848 thousand (December 31,
2021: RON 14,848 thousand) and Electrocentrale Constanta of RON 38,027 thousand (December 31, 2021: RON
60,766 thousand) due to existing financial conditions of these clients as well as ongoing litigating cases related to
these receivables or exceeding payment terms.
29
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
d)
Credit risk exposure for trade receivables
December 31, 2022
Current receivables, including accrued
receivables
less than 30 days overdue
30 to 90 days overdue
90 to 360 days overdue
over 360 days overdue
Total trade receivables
December 31, 2021
Current receivables, including accrued
receivables
less than 30 days overdue
30 to 90 days overdue
90 to 360 days overdue
over 360 days overdue
Total trade receivables
Gross carrying amount
'000 RON
Expected credit loss
rate
%
Lifetime expected
credit losses
‘000 RON
1,362,641
16,280
32,496
73,501
613,132
2,098,050
0.00
34.36
99.54
99.73
100.00
13
5,593
32,348
73,300
613,132
724,386
Gross carrying amount
'000 RON
Expected credit loss
rate
%
Lifetime expected
credit losses
‘000 RON
1,022,513
15,702
578
14,213
1,231,208
2,284,214
0.78
0.85
46.15
99.07
73.86
7,973
134
267
14,081
909,414
931,869
17.
SHARE CAPITAL. EARNINGS PER SHARE
a) Share capital
December 31, 2022
‘000 RON
December 31, 2021
‘000 RON
385,422,400 fully paid ordinary shares
Total
385,422
385,422
385,422
385,422
The shareholding structure as at December 31, 2022 is as follows:
No. of shares
Value
‘000 RON
Percentage
(%)
The Romanian State through the
Ministry of Energy
Legal persons
Physical persons
Total
269,823,080
96,125,570
19,473,750
385,422,400
269,823
96,125
19,474
385,422
70.01
24.94
5.05
100
All shares are ordinary and were subscribed and fully paid as at December 31, 2022. All shares carry equal voting
rights and have a nominal value of RON 1/share (December 31, 2021: RON 1/share).
30
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
b) Earnings per share
Profit for the year attributable to ordinary
shareholders (RON thousand)
Number of shares outstanding during the year
Earnings per share (RON thousand)
18.
RESERVES
Legal reserves
Other reserves, of which:
- Company’s development fund
- Reinvested profit
- Geological quota set up until 2004
- Other reserves
Total
19.
PROVISIONS
Decommissioning provision (note 19 a)
Retirement benefit obligation (note 19 c)
Total long term provisions
Decommissioning provision (note 19 a)
Litigation provision (note 19 b)
Other provisions *) (note 19 b)
Total short term provisions
Total provisions
Year ended
December 31, 2022
Year ended
December 31, 2021
2,546,712
385,422,400
0.0066
1,914,987
385,422,400
0.0050
December 31, 2022
'000 RON
December 31, 2021
'000 RON
90,294
3,488,980
2,586,687
396,180
486,388
19,725
3,579,274
85,250
2,913,725
2,046,460
361,152
486,388
19,725
2,998,975
December 31, 2022
'000 RON
December 31, 2021
'000 RON
210,838
168,830
379,668
25,652
6,620
289,217
321,489
701,157
412,846
156,420
569,266
24,792
3,554
208,798
237,144
806,410
*) On December 31, 2022, other provisions of RON 289,217 thousand include the provision for employee’s participation
to profit of RON 41,479 thousand (December 31, 2021: RON 38,677 thousand), the provision for taxes of RON 10,207
thousand (December 31, 2021: RON 7,161 thousand) and the provision for CO2 certificates of 228,126 thousand
(December 31, 2021: RON 154,904). The provision for CO2 certificates increased compared to 2021 due to a higher
electricity production (+73.5%) that needed higher gas consumption.
a)
Decommissioning provision
Decommissioning provision movement
At January 1
Additional provision recorded against non-current
assets
Unwinding effect (note 9)
Recorded in profit or loss
Decrease recorded against non-current assets
At December 31
2022
'000 RON
437,638
1,273
21,668
(75,652)
(148,437)
236,490
31
2021
'000 RON
560,958
10,808
16,182
(20,750)
(129,560)
437,638
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group makes full provision for the future costs of decommissioning natural gas wells on a discounted basis upon
installation. The provision for the costs of decommissioning these wells at the end of their economic lives has been
estimated using existing technology, at current prices or future assumptions, depending on the expected timing of the
activity, and discounted using a rate of 8.19% (year ended December 31, 2021: 5.14%). While the provision is based on
the best estimate of future costs and the economic lives of the wells, there is uncertainty regarding both the amount and
timing of these costs
The increase with 1 percentage point of the discount rate would decrease the decommissioning provision with RON
34,492 thousand. The decrease with 1 percentage point of the discount rate would increase the decommissioning
provision with RON 44,053 thousand.
The increase with 1 percentage point of the inflation rate would increase the decommissioning provision with RON
45,813 thousand. The decrease with 1 percentage point of the inflation rate would decrease the decommissioning
provision with RON 36,173 thousand.
b)
Other provisions
At January 1, 2022
Additional provision in period
Obligation acquired
Provisions used in the period
Unused amounts during the period, reversed
At December 31, 2022
At January 1, 2021
Additional provision in the period
Provisions used in the period
Unused amounts during the period, reversed
At December 31, 2021
c)
Retirement benefit obligation
Movement of the retirement benefit obligation
At 1 January
Interest cost
Cost of current service
Payments during the year
Actuarial (gain)/loss for the period
Cost of past service
At December 31
Litigation provision
‘000 RON
Other provisions
‘000 RON
3,554
4,124
-
(948)
(110)
6,620
208,798
321,531
170
(216,370)
(24,912)
289,217
Litigation provision
‘000 RON
Other provisions
‘000 RON
1,380
2,966
(439)
(353)
3,554
133,008
243,940
(166,346)
(1,804)
208,798
2022
'000 RON
156,420
7,600
9,677
(10,697)
(15,839)
21,669
168,830
Total
‘000 RON
212,352
325,655
170
(217,318)
(25,022)
295,837
Total
‘000 RON
134,388
246,906
(166,785)
(2,157)
212,352
2021
'000 RON
128,690
3,998
6,021
(19,405)
37,116
-
156,420
With the exception of actuarial gains/losses, all other movements in the retirement benefit obligation are recognized in
the result of the period.
In determining the retirement benefit obligation, the following significant assumptions were used:
No layoffs or restructurings are planned;
Average discount rate: 8.1% (2021: 5%);
Average inflation rate: 16.3% in 2022; 11.2% in 2023; 6.1% in 2024; 3.6% in 2025; 2.7% in the 2026; 2.5% in 2027-
2031 period, following a decreasing trend in the next years (2021: 5.9% in 2022; 3.2% in 2023; 3% in 2024; 2.8% in
2025; 2.5% in the 2026-2031 period, following a decreasing trend in the next years).
32
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Sensitivity analysis
The discount rate has a significant effect on the obligation. Isolated change in assumptions with 1 percentage point
would have the following effect on the obligation:
Average discount rate
Salaries’ growth rate
Maturity analysis of payment cash flows
Up to 1 year
1-2 years
2-5 years
5-10 years
Over 10 years
20.
DEFERRED REVENUE
Amounts collected from NIP (note 20 a)
Other deferred revenue
Other amounts received as subsidies
Total long term deferred revenue
Other amounts received as subsidies
Other deferred revenue
Total short term deferred revenue
Total deferred revenue
a) National Investment Plan
Increase of 1% in assumptions
'000 RON
Decrease of 1% in assumptions
'000 RON
(13,658)
15,584
16,601
(14,702)
Benefit payments
'000 RON
14,233
13,964
52,632
140,698
606,142
December 31, 2022
'000 RON
December 31, 2021
'000 RON
230,169
145
105
230,419
7
4
11
230,169
157
112
230,438
7
42
49
230,430
230,487
In Government Decision no. 1096/2013 approving the mechanism for free allocation of greenhouse gas emission
allowances to electricity producers for the period 2013-2020, Annex no. 3 "National Investment Plan", S.N.G.N.
ROMGAZ S.A. is included with the investment "Combined Gas Turbine Cycle".
For this investment, in 2017 Romgaz signed a financing agreement with the Ministry of Energy, whereby the Ministry of
Energy undertakes to grant a non-reimbursable financing of RON 320,912 thousand, representing a maximum of 25% of
the total value of eligible expenditure of the investment. By December 31, 2022 the Group collected RON 230,169
thousand. Amounts received under this contract will be transferred to income based on the depreciation rate of the
investment.
By Government Decision no. 834/2022 the deadline until the investments financed from the National Investment Plan
must be put into operation has been extended until December 31, 2023.
By December 31, 2022, the Group submitted two other reimbursement requests amounting to RON 62,150 thousand.
As the term of the work contract for the realization of the investment was not extended, the Group is negotiating the
terms for a new contract to complete the outstanding works.
b) Projects of Common Interest
Following the 2022 CEF Energy (Mechanism for the Interconnection of Europe) call for proposals regarding the projects
of common interest in the energy field, the European Commission announced on December 9, 2022, the projects of
common interest that will benefit from European funding in the next period.
33
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The investment project in the Bilciurești gas storage, "Increasing the daily extraction capacity in the Bilciurești gas
storage – Modernization of the infrastructure of the natural gas storage system", promoted by Depogaz, is one of the
projects that will receive support from CEF Energy, the amount of the non-reimbursable financing being of EUR 37,962
thousand.
By the date the financial statements were endorsed for issue, the financing agreement has not been signed.
At January 1, 2022
Amounts in revenue
At December 31, 2022
January 1, 2021
Received
Amounts in revenue
December 31, 2021
Amounts collected
from NIP
'000 RON
Other amounts
received as subsidies
'000 RON
230,169
-
230,169
119
(7)
112
Amounts collected
from NIP
'000 RON
Other amounts
received as subsidies
'000 RON
136,021
94,148
-
230,169
128
-
(9)
119
Total
'000 RON
230,288
(7)
230,281
Total
'000 RON
136,149
94,148
(9)
230,288
21.
TRADE AND OTHER CURRENT LIABILITIES
December 31, 2022
'000 RON
December 31, 2021
'000 RON
Accruals
Trade payables
Payables to fixed assets suppliers
Total trade payables
Payables related to employees
Royalties *)
Contribution to Energy Transition Fund
Joint operation payables
Social security taxes
Other current liabilities
VAT
Dividends payable
Windfall tax (see note 16 b)
Other taxes
Total other liabilities
Total trade and other liabilities
37,067
38,725
34,214
110,006
61,735
146,965
11,931
18,043
37,756
12,174
20,612
1,225
-
1,827
312,268
422,274
30,055
19,171
22,091
71,317
43,800
400,278
-
-
34,053
7,567
86,763
1,116
363,996
1,329
938,902
1,010,219
*) The decrease in royalty liability is due to changes in national legislation, according to which prices used to determine
the royalty in the fourth quarter of 2022 are capped at the level of prices the Group has the obligation to invoice some of
its clients.
34
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22.
FINANCIAL INSTRUMENTS
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, inflation risk, interest
rate risk), credit risk, liquidity risk. The Group’s overall risk management program focuses on the unpredictability of
financial markets and seeks to minimize potential adverse effects on the Group’s financial performance within certain
limits. However, the use of this approach does not prevent losses outside of these limits in the event of more significant
market movements. The Group does not use derivative financial instruments to hedge certain risk exposures.
(a) Market risk
(i)
Foreign exchange risk
The Group is exposed to currency risk as a result of exposure to various currencies. Foreign exchange risk arises from
future commercial transactions and recognized assets and liabilities.
The Group is mainly exposed to currency risk generated by EUR against RON as a result of the interest-bearing loan
described in note 29.
As of December 31, 2022, the official exchange rate was RON 4.9474 to EUR 1 (December 31, 2021: RON 4.9481 to EUR 1).
EUR
1 EUR =
4.9474
'000 RON
GBP
1 GBP =
5.5878
'000 RON
USD
1 USD =
4.6346
'000 RON
RON
1 RON
'000 RON
Total
'000 RON
December 31, 2022
Financial assets
Cash and cash equivalents
Other financial assets
Trade and other receivables
77,764
-
-
Total financial assets
77,764
Financial liabilities
Trade payables and other payables
Lease liability
Borrowings
(18)
(5,157)
(1,447,115)
Total financial liabilities
(1,452,290)
Net
December 31, 2021
Financial assets
Cash and cash equivalents
Other financial assets
Trade and other receivables
Total financial assets
Financial liabilities
Trade payables and other payables
Lease liability
Total financial liabilities
Net
(1,374,526)
EUR
1 EUR =
4.9481
'000 RON
311
-
-
311
(22)
(3,656)
(3,678)
(3,367)
3
-
-
3
-
-
-
-
3
8
-
-
8
(25)
-
-
(25)
(17)
1,806,107
1,883,882
90,000
768,017
90,000
768,017
2,664,124
2,741,899
(72,896)
(4,523)
-
(72,939)
(9,680)
(1,447,115)
(77,419)
(1,529,734)
2,586,705
1,212,165
GBP
1 GBP =
5.8994
'000 RON
USD
1 USD =
4.3707
'000 RON
RON
1 RON
'000 RON
Total
'000 RON
12
-
-
12
-
-
-
3,580,088
3,580,412
404,199
833,213
404,199
833,213
4,817,500
4,817,824
(41,226)
(4,365)
(41,262)
(8,021)
(45,591)
(49,283)
12
4,771,909
4,768,541
1
-
-
1
(14)
-
(14)
(13)
35
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group is mainly exposed to currency risk generated by EUR against RON. The table below details the sensitivity of
the Group to a 5% increase/decrease in the EUR exchange rate against the RON. The 5% rate is the rate used in
internal reports to management on foreign currency risk and represents management's assessment of reasonable
changes in the exchange rate. Sensitivity analysis includes only monetary items denominated in foreign currency in the
balance sheet, and considers the transfer at the end of the period to a modified rate of 5%.
RON weakening – loss
RON strengthening – gain
(ii)
Inflation risk
December 31, 2022
‘000 RON
December 31, 2021
‘000 RON
(68,726)
68,726
(168)
168
The official annual inflation rate in Romania for 2022 was 13.8% as provided by the National Commission for Statistics of
Romania. The cumulative inflation rate for the last 3 years was under 100%. This factor, among others, led to the conclusion
that Romania is not a hyperinflationary economy.
(iii)
Interest rate risk
The Group is exposed to interest rate risk, due to retirement benefit obligations, decommissioning provision and interest-
bearing loans. The Group’s sensitivity to changes in the discount rate is detailed in note 19.
An increase of 1% in the interest rate on the borrowings would lead to an increase of the interest expense of RON 4,325
thousand.
Bank deposits and treasury bills bear a fixed interest rate.
(b) Credit risk
Financial assets, which potentially subject the Group to credit risk, consist principally of trade receivables. The Group has
policies in place to ensure that sales are made to customers with low credit risk. Also, sales have to be secured either through
advance payments, either through bank letters of guarantee. The carrying amount of accounts receivable, net of bad debt
allowances, represents the maximum amount exposed to credit risk. The Group has a concentration of credit risk in respect of
its top three clients, which amounts to 86.60 % of net trade receivable balance at December 31, 2022 (its top client: 89.84% as
of December 31, 2021).
In spite of the policies described above, the Group is forced by court orders to deliver gas to insolvent clients deemed “captive”
by insolvency legislation. As these clients did not generate outstanding balances since the start of their insolvency
proceedings, the Group estimates lifetime expected credit losses to be zero.
Although collection of receivables could be influenced by economic factors, management believes that there is no significant
risk of loss to the Group beyond the bad debt allowance already recorded.
(c)
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in
order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure
to minimize the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the dividend policy, issue new shares or sell
assets to reduce debt.
The Group’s policy is to only resort to borrowing if investment needs cannot be financed internally. As such, in 2022 the
Group obtained a loan of EUR 325 million (note 29) to finance the acquisition of ExxonMobil Exploration and Production
Romania Limited.
The Group’s capital management aims to ensure that it meets financial covenants attached to the interest-bearing loans.
Breaches in meeting the financial covenants would permit the bank to immediately call borrowings. There have been no
breaches of the financial covenants of interest-bearing loans in the current period.
(d)
Fair value estimation
Carrying amount of financial assets and liabilities is assumed to approximate their fair values.
Financial instruments in the balance sheet include trade receivables and other receivables, cash and cash equivalents,
other financial assets, trade and other payables, interest-bearing borrowings. The estimated fair values of these
instruments approximate their carrying amounts. The carrying amounts represent the Group’s maximum exposure to
credit risk for existing receivables.
36
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
e)
Maturity analysis for financial assets and financial liabilities at amortized cost
The table below shows financial assets and financial liabilities of the Group on contractual maturities. The amounts
represent non-discounted future cash flows generated by financial assets and financial liabilities.
December
31, 2022
Trade
receivables
Bank deposits
Total
Due in
less than
a month
‘000 RON
589,135
5,000
594,135
Trade payables
(60,735)
Borrowings
Lease liabilities
-
(170)
Due in
1-3 months
‘000 RON
116,864
10,000
126,864
(12,204)
(84,892)
(476)
Due in
3 months
to 1 year
‘000 RON
62,018
75,000
137,018
-
Due in
1-5 years
‘000 RON
Due in over
5 years
‘000 RON
-
-
-
-
Total
‘000 RON
768,017
90,000
858,017
(72,939)
(1,490,421)
(9,680)
-
-
-
-
-
(253,397)
(1,152,132)
(1,534)
(3,371)
(4,129)
(60,905)
(97,572)
(254,931)
(1,155,503)
(4,129)
(1,573,040)
533,230
29,292
(117,913)
(1,155,503)
(4,129)
(715,023)
Total
Net
December
31, 2021
Trade
receivables
Bank deposits
Treasury bonds
Total
Total
Net
Trade payables
(37,989)
Lease liabilities
(64)
Due in
less than
a month
‘000 RON
441,119
293,629
92,010
826,758
(38,053)
Due in
1-3 months
‘000 RON
Due in
3 months
to 1 year
‘000 RON
Due in
1-5 years
‘000 RON
Due in over
5 years
‘000 RON
392,094
10,000
-
402,094
(3,238)
(155)
(3,393)
-
10,500
-
10,500
(35)
(591)
(626)
-
-
-
-
-
-
-
-
-
-
(3,322)
(3,322)
(3,889)
(3,889)
Total
‘000 RON
833,213
314,129
92,010
1,239,352
(41,262)
(8,021)
(49,283)
788,705
398,701
9,874
(3,322)
(3,889)
1,190,069
f)
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Group’s management, which has established an
appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term
funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, by
continuously monitoring forecast and current cash flows and by matching the maturity profiles of financial assets and
liabilities.
23.
RELATED PARTY TRANSACTIONS AND BALANCES
(i)
Sales of goods and services
Romgaz’s associates
Total
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
14,621
14,621
13,115
13,115
37
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group is controlled by the Ministry of Energy, on behalf of the Romanian State (note 17 a). As such, all companies
over which the Ministry of Energy has control or significant influence are considered related parties of the Group. No
other ministry or agency of the Romanian State has control or significant influence over the Group, therefore companies
over which the Romanian State has control or significant influence through organizations other than the Ministry of
Energy are not considered related parties of the Group.
The table below shows the transactions of the Group with companies over which the Ministry of Energy has control or
significant influence:
Year ended
Dec 31, 2022
'000 RON
Year ended
Dec 31, 2021
'000 RON
Companies controlled by the Ministry of
Energy
Electrocentrale Constanța SA
Electrocentrale București SA
Companies significantly influenced by the
Ministry of Energy
OMV Petrom SA
Engie România SA
E.On Energie România SA
Total
111,684
1,582,639
493,146
2,702,642
1,955,551
6,845,662
79,030
1,190,441
261,027
877,605
827,869
3,235,973
24.
INFORMATION REGARDING THE MEMBERS OF THE ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY
BODIES
The remuneration of executives and directors
The Group has no contractual obligations on pensions to former executives and directors of the Group.
During the years ended December 31, 2022 and December 31, 2021, no loans and advances were granted to
executives and directors of the Group, except for work related travel advances, and they do not owe any amounts to the
Group from such advances.
Salaries paid to executives (gross)
of which, bonuses and variable component
(gross)
Remuneration paid to directors (gross)
of which, variable component (gross)
Salaries payable to executives
Salaries payable to directors
Year ended
Dec 31, 2022
'000 RON
24,794
2,516
3,350
745
Year ended
Dec 31, 2021
'000 RON
18,622
1,406
3,035
711
December 31, 2022
'000 RON
December 31, 2021
'000 RON
754
154
666
116
In addition to the above, on December 31, 2022 the Group recorded a provision for bonuses for executives and directors
of RON 1,067 thousand (December 31, 2021: RON 1,299 thousand).
38
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25.
INVESTMENT IN ASSOCIATES
The Company’s investments in associates are accounted using the equity method. The shares are not quoted on the stock exchange. No dividends were received in the years
ended December 31, 2022, respectively, December 31, 2021.
The Company’s investment in Agri LNG Project Company is not material. The investment is fully impaired.
Name of associate
Main activity
Place of incorporation and
operation
SC Depomures SA Tg.Mures
SC Agri LNG Project Company
SRL
Storage of natural gas
Feasibility projects
Romania
Romania
Proportion of ownership interest and voting power held (%)
December 31, 2022
December 31, 2021
40
25
40
25
Name of associate
SC Depomures SA
Tg.Mures
SC Agri LNG
Project Company
SRL
Total
Cost as of
December 31, 2022
’000 RON
Impairment as of
December 31, 2022
’000 RON
Carrying value as of
December 31, 2022
’000 RON
Cost as of
December 31, 2021
’000 RON
Impairment as of
December 31, 2021
’000 RON
Carrying value as of
December 31, 2021
’000 RON
28,537
977
29,514
-
(977)
(977)
28,537
-
28,537
26,187
977
27,164
-
(977)
(977)
26,187
-
26,187
39
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Summarized financial information for significant investments in associates (Depomureş)
Non-current assets
Current assets, out of which:
- Cash and cash equivalents
Non-current liabilities, out of which:
- Long term financial liabilities
Current liabilities, out of which:
- Short term financial liabilities
Revenue
Interest income
Amortization and depreciation
Interest expense
Income tax expense
Net profit from continued operations
December 31, 2022
'000 RON
December 31, 2021
'000 RON
65,560
19,378
15,940
5,601
5,601
4,802
3,431
68,993
12,895
9,729
9,031
9,031
4,232
3,434
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
43,200
486
(3,919)
(447)
(1,087)
5,875
33,717
17
(3,939)
(584)
(153)
212
2021
'000 RON
26,102
85
26,187
Reconciliation of net book value for the significant investments in associates
January 1
Interest in the total comprehensive income of
significant investments in associates
December 31
26. OTHER FINANCIAL INVESTMENTS
2022
'000 RON
26,187
2,350
28,537
Other financial investments are measured at fair value through profit or loss.
Except for the investment in Patria Bank, which is a level 1 financial investment, all other investments are included in
level 3 category, according to IFRS 13.
Company
Principal activity
Place of
incorporation and
operation
Proportion of ownership interest and voting
power held (%)
December 31, 2022
December 31, 2021
Electrocentrale
București S.A.
Patria Bank S.A.
Mi Petrogas Services
S.A.
Lukoil association
Electricity and
thermal power
producer
Other activities –
financial
intermediations
Services related to oil
and natural gas
extraction,
excluding
prospections
Petroleum
exploration
operations
Non-governmental,
Romania
Romania
Romania
Romania
2.49
0.02
10
12.2
2.49
0.02
10
12.2
Electricity Producers
Association-
HENRO
non-profit,
independent
association
Romania
33.33
33.33
40
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Company
Electrocentrale București S.A.*)
Patria Bank S.A.**)
Mi Petrogas Services S.A.
Lukoil association
Electricity Producers Association-HENRO
Total
Fair value as of
December 31, 2022
’000 RON
Fair value as of
December 31, 2021
’000 RON
-
79
60
5,227
250
5,616
-
79
60
5,227
250
5,616
*) The fair value of the investment in Electrocentrale Bucuresti was reduced to zero after entering into insolvency.
The investment in Electrocentrale Bucuresti is not quoted. The company successfully concluded the restructuring
plan in February 2023. These financial statements do not include any adjustments related to this event.
**) In 2016, the Company's shareholders decided to withdraw Romgaz from the bank's shareholders, as a result of
the merger process in which Patria Bank was involved. In 2021, the approval of the BNR was obtained for the partial
redemption of the shares that the Company holds in Patria Bank. The shares of Patria Bank S.A. are listed, but
following the merger process, the price at which the redemption of the shares held by the shareholders who
requested the withdrawal from the shareholding was set to a fixed value. Thus, the investment is measured at this
redemption value.
27.
SEGMENT INFORMATION
a)
Segment assets and liabilities
December 31,
2022
Property, plant and
equipment
Other intangible
assets
Investments in
associates
Other financial
investments
Deferred tax asset
Other financial
assets
Inventories
Other assets
Trade and other
receivables
Contract costs
Cash and cash
equivalents
-
-
428
1
256,982
165,085
1,268,528
3
21,307
Right of use asset
Net investments in
leasing
1,643
-
Upstream
'000 RON
Storage
'000 RON
Electricity
'000 RON
Other
'000 RON
Consolidation
adjustments
'000 RON
Total
'000 RON
2,641,773
825,378
1,184,636
591,036
(203,509)
5,039,314
5,122,643
918
-
5,140,425
-
-
1,357
91,116
9,472
4,562
59,380
-
14,567
328
-
-
-
-
-
-
2,695
41,371
16,864
28,537
5,616
197,231
8,480
14,858
54,214
54,110
11,525
(19,879)
-
516
-
1,847,492
-
-
6,786
374
-
-
9
(374)
-
-
-
-
-
-
28,537
5,616
199,016
99,597
284,007
265,232
1,373,664
3
1,883,882
8,766
-
Total assets
9,478,393
1,007,078
1,283,328
2,783,013
(223,753)
14,328,059
41
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
Upstream
'000 RON
Storage
'000 RON
Electricity
'000 RON
Other
'000 RON
Consolidation
adjustments
'000 RON
Retirement benefit
obligation
Contract liabilities
Provisions
Trade payables
-
263,340
234,697
62,564
Current tax liabilities
1,002,790
Deferred revenue
Borrowings
Lease liability
Other liabilities
258
-
1,573
216,806
9,896
-
32,388
42,581
5,625
-
-
374
14,265
-
-
230,691
4,621
-
230,169
-
-
18,049
158,934
-
34,551
20,119
169,083
3
1,447,115
8,107
63,148
-
-
-
(19,879)
-
-
-
(374)
-
Total
'000 RON
168,830
263,340
532,327
110,006
1,177,498
230,430
1,447,115
9,680
312,268
Total liabilities
1,782,028
105,129
483,530
1,901,060
(20,253)
4,251,494
December 31, 2021 Upstream
'000 RON
Storage
'000 RON
Electricity
'000 RON
Other
'000 RON
Consolidation
adjustments
Total
'000 RON
Property, plant and
equipment
Other intangible
assets
Investments in
associates
Other financial
investments
Deferred tax asset
Other financial
assets
Inventories
Other assets
Trade and other
receivables
Contract costs
Cash and cash
equivalents
Right of use asset
Current tax
receivable
Net investments in
leasing
2,786,660
810,784
1,183,357
589,114
(129,218)
5,240,697
3,666
870
-
-
-
-
275,930
11,153
1,312,736
483
20,312
-
-
-
-
-
1,953
25,564
12,276
1,477
34,635
-
7,761
388
3,201
-
-
-
-
-
-
2,435
1,712
11,239
-
412
-
-
-
11,597
26,187
5,616
267,692
392,359
14,600
53,620
11,142
-
3,551,927
6,739
-
432
-
-
-
-
-
-
-
(17,407)
-
-
1
-
(432)
16,133
26,187
5,616
269,645
417,923
305,241
67,962
1,352,345
483
3,580,412
7,128
3,201
-
Total assets
4,410,940
898,909
1,199,155
4,931,025
(147,056)
11,292,973
Retirement benefit
obligation
Contract liabilities
Provisions
Trade payables
Current tax liabilities
Deferred revenue
Lease liability
204,384
418,997
51,647
-
276
-
Other liabilities
805,835
-
11,540
-
43,955
17,456
-
-
434
11,276
-
-
157,438
7,033
-
230,169
-
144,880
-
29,600
12,588
52,299
42
8,019
5,003
116,788
-
-
-
(17,407)
-
-
(432)
-
156,420
204,384
649,990
71,317
52,299
230,487
8,021
938,902
Total liabilities
1,481,139
84,661
399,643
364,216
(17,839)
2,311,820
42
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
b)
Segment revenues, results and other segment information
In 2022, the chief operating decision maker of Romgaz decided to change the way Romgaz reports for gas and
electricity deliveries between its branches. In the past, these deliveries were accounted for at cost. Starting 2022,
deliveries are accounted for at market prices or at regulated prices, as the case may be. This change allows the
management to have a better view of the performance of its business segments.
Due to this change, comparative segment information for the previous period was restated. The results of Romgaz or
the Group are not affected by the change.
Year ended
December 31, 2022
Revenue
Less: revenue
between
segments
Third party revenue
Interest income
Interest expense
Share of profit of
associates
Depreciation and
amortization *)
Impairment losses
recognized
during the
period in profit
or loss
Impairment losses
reversed during
the period in
profit or loss
Segment result
before tax
profit/(loss)
Upstream
'000 RON
Storage
'000 RON
Electricity
'000 RON
Other
'000 RON
Adjustment
and
eliminations
'000 RON
Total
'000 RON
12,355,984
475,989
1,646,783
438,097
(1,557,200)
13,359,653
(759,166)
11,596,818
609
(46)
(52,028)
423,961
2,547
-
(317,706)
1,329,077
40
-
(428,300)
9,797
174,172
(5,038)
1,557,200
-
(389)
44
-
13,359,653
176,979
(5,040)
-
-
-
2,350
-
2,350
(291,744)
(12,329)
(3,893)
(26,171)
(74,766)
(408,903)
(195,815)
61,221
-
-
(6,380)
(89)
(1,015)
(203,299)
114
791
-
62,126
4,229,534
115,767
(49,952)
(53,235)
(87,865)
4,154,249
*) The amount of RON 74,766 thousand representing adjustments of the depreciation and amortization expense
stands for depreciation of assets used in the storage segment. This depreciation expense is not recorded in the
accounting records of any of the Group’s companies, being a consolidation adjustment.
Year ended
December 31, 2021
(restated)
Revenue
Less: revenue
between
segments
Third party revenue
Interest income
Interest expense
Share of profit of
associates
Depreciation and
amortization
Impairment losses
recognized
during the
period in profit
or loss
Impairment losses
reversed during
the period in
profit or loss
Segment result
before tax
profit/(loss)
Upstream
'000 RON
Storage
'000 RON
Electricity
'000 RON
Other
'000 RON
Adjustment
and
eliminations
'000 RON
Total
'000 RON
5,486,486
313,456
458,656
408,161
(813,833)
5,852,926
(205,533)
5,280,953
133
(3)
(69,658)
243,798
534
-
(137,668)
320,988
7
-
(400,974)
7,187
57,759
-
-
-
-
85
813,833
-
(30)
-
-
-
5,852,926
58,403
(3)
85
(362,185)
(8,506)
(5,484)
(26,087)
(61,521)
(463,783)
(263,383)
45,275
-
-
(1,618)
(745)
(2,472)
(268,218)
-
954
-
46,229
1,976,101
33,342
15,923
217,566
(85,681)
2,157,251
43
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In the year ended December 31, 2022, the Group's three largest clients each individually represents more than 10%
of revenue, sales to these clients being of RON 2,564,071 thousand, RON 2,064,087 thousand, RON 1,783,998
thousand, (in the year ended December 31, 2021 the Group's three largest customers represented individually, over
10% of revenue, sales to these clients being of RON 1,013,764 thousand, RON 894,491 thousand, RON 834,420
thousand), together totaling 48.00% of total revenue (year ended December 31, 2021: 46.86%). Of the total revenue
generated by those three clients, 3.54% are shown in the "Storage" segment and 91.73% in the "Upstream" segment
(year ended December 31, 2021: 4.94% in the "Storage" segment, 95.06% in the "Upstream" segment).
28.
CASH AND CASH EQUIVALENTS
Current bank accounts *)
Petty cash
Term deposits
Restricted cash **)
Amounts under settlement
Total
December 31, 2022
'000 RON
December 31, 2021
'000 RON
122,559
50
1,759,683
1,584
6
1,883,882
78,542
48
3,500,288
1,534
-
3,580,412
*) Current bank accounts include overnight deposits.
**) At December 31, 2022 restricted cash refers to bank accounts used only for dividend payments to shareholders,
according to stock market regulations.
29.
INTEREST BEARING BORROWINGS
Interest rate
Maturity
EUR 325,000 thousand bank borrowing
EURIBOR 3M +
0.05% p.a.
June 30, 2027
Total
December 31,
2022
'000 RON
December 31,
2021
'000 RON
1,447,115
1,447,115
-
-
In March 2022, Romgaz signed a EUR 325 million financing deal with Raiffeisen Bank S.A. to finance part of the
purchase price of the shares of ExxonMobil Exploration and Production Romania Limited that holds 50% of the rights
and obligations for the Neptun Deep block (note 30).
In June 2022, an addendum to the facility contract was signed between Romgaz acting as borrower and Raiffeisen
Bank S.A. and Banca Comerciala Romana S.A. as lenders.
The facility’s final maturity is in five years from utilization. There are no borrowing costs other than interest. The loan is
repayable in quarterly installments. The loan is not secured.
The fair value of the loan approximates its carrying value as it was obtained recently and it carries a variable rate of
interest.
30. ACQUISITION OF EXXONMOBIL EXPLORATION AND PRODUCTION ROMANIA LIMITED
On August 1, 2022, Romgaz completed the acquisition of ExxonMobil Exploration and Production Romania Limited
(currently Romgaz Black Sea Limited). This company holds 50% of the acquired rights and obligations under the
Petroleum Agreement for the Deep Water Zone of Neptun XIX offshore Block in the Black Sea. Following this
transaction, Romgaz became the sole shareholder of the acquired company. Therefore Romgaz has control over
Romgaz Black Sea Limited.
According to the provisions of the shares’ acquisition agreement, the price paid by Romgaz was RON 5,126,347
thousand. Based on the acquisition agreement, this price was decreased by the end of 2022 with RON 7,352
thousand, based on the level of working capital of Romgaz Black Sea Limited at completion date. This amount was
received in 2023.
According to IFRS 3, the “concentration test” is an optional method used to perform a simplified assessment of
whether an acquisition is a business combination or an acquisition of assets. Based on the analysis of the provisions
of International Financial Reporting Standard 3 “Business Combinations”, the Group considers this transaction to be
an asset acquisition, the main asset acquired being the mineral right related to the 50% share of the reserves of the
44
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Deep Water Zone of Neptun XIX offshore Block in the Black Sea. At acquisition date the company acquired did not
have an organized workforce capable to apply the processes needed to generate outputs. As such, substantially all
of the fair value of the gross assets acquired is concentrated in a group of similar identifiable assets, namely the
mineral right.
Thus, the Group did not recognize a potential goodwill; instead it recognized assets acquired and liabilities assumed
in accordance with the applicable accounting standards based on a valuation carried out to allocate the acquisition
price.
The evaluation performed to allocate the purchase price on the assets acquired was based on the relative fair values
of the acquired assets. The relative fair value of the acquired mineral right was determined using the discounted cash
flow method and based on the following assumptions:
the inflation rate used was communicated by the National Commission for Strategy and Prognosis (2022: 10.1%,
2023: 5.4%, 2024: 3%; a constant inflation rate of 2.7% was considered for the following years);
gas selling prices were estimated at an average level of RON 221.98/MWh for the period 2027-2045;
the weighted average rate of capital used was 16.2%.
The Group recognized the following assets and liabilities on acquisition date:
ASSETS
Property, plant and equipment
Other intangible assets (note 14)
Deferred tax asset
Right of use assets
Cash and cash equivalents
Other assets
Total assets
LIABILITIES
Trade payables
Provisions
Lease liability
Other liabilities
Total liabilities
Price paid
August 1, 2022
‘000 RON
66
5,119,745
66
2,126
750
3,675
5,126,428
13
170
2,023
5,227
7,433
5,118,995
31. OTHER FINANCIAL ASSETS
Other financial assets represent mainly treasury bonds and deposits with a maturity of over 3 months, from
acquisition date. The Group did not identify any risk of loss for these assets, therefore it did not record any
impairment.
Treasury bonds in RON
Bank deposits in RON
Accrued interest receivable on bank deposits
Accrued interest on bonds
Total other financial assets
32. COMMITMENTS UNDERTAKEN
Endorsements and collaterals granted
Total
December 31, 2022
'000 RON
December 31, 2021
'000 RON
-
90,000
9,597
-
99,597
90,070
314,129
11,784
1,940
417,923
December 31, 2022
'000 RON
December 31, 2021
'000 RON
312,689
312,689
62,947
62,947
45
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In 2022, Romgaz signed an addendum to the credit agreement with BCR SA representing a facility for issuing letters
of guarantee, and opening letters of credit for a maximum amount of RON 420,000 thousand. On December 31, 2022
are still available for use RON 112,637 thousand.
As of December 31, 2022, the Group’s contractual commitments for the acquisition of non-current assets are of RON
396,551 thousand (December 31, 2021: RON 267,246 thousand).
33. COMMITMENTS RECEIVED
Endorsements and collaterals received
Total
December 31, 2022
'000 RON
December 31, 2021
'000 RON
2,127,764
2,127,764
1,255,235
1,255,235
Endorsements and collateral received represent letters of guarantee and other performance guarantees received
from the Group’s clients.
34.
CONTINGENCIES
(a)
Litigations
The Company is subject to several legal actions arisen in the normal course of business. The management of the
Company considers that they will have no material adverse effect on the results and the financial position of the
Company.
On December 28, 2011, 27 former and current employees were notified by DIICOT regarding an investigation related
to sale contracts signed with one of the Company’s clients for allegedly unauthorized discounts granted to this client
during the period 2005-2010. DIICOT mentioned that this may have resulted in a loss of USD 92,000 thousand for
the Company. On that sum, an additional burden to the state budget consists of income tax in amount of USD 15,000
thousand and VAT in amount of USD 19,000 thousand. The internal analysis carried out by the Company’s
specialized departments concluded that the agreement was in compliance with the legal provisions and all discounts
were granted based on Orders issued by the Ministry of Economy and Finance and decisions of the General
Shareholders’ Board and Board of Directors. The management of the Company believes the investigation will not
have a negative impact on the financial statements, to justify the registration of an adjustment. The Company is fully
cooperating with DIICOT in providing all information necessary. On March 18 2014, Romgaz received an address
from DIICOT, by which the investigators ordered an accounting expertise, indicating the objectives of the expertise.
Romgaz was notified that, as injured party, it may submit comments relating to objectives of the expertise
(additions/changes), and may appoint an additional expert to participate in the expertise.
Thus, Romgaz proceeded to identify and appoint an expert with accounting and financial expertise that can
participate to the expertise. After the report was completed, the parties could submit objections by November 2, 2015.
On March 16, 2016, DIICOT – Central Structure informed the persons involved in the cause about the start of legal
actions against them. At the request of investigators, the Company announced that in case of a prejudice being
established during the investigation, the Company will join the case as civil party.
In November 2016, DIICOT informed the Company the prejudice established in amount of RON 282,630 thousand.
Following this request, Romgaz announced that will join the case as a civil party for the amount of RON 282,630
thousand to recover this amount from the respective client and any other person that may be found guilty for causing
the prejudice.
In June 2017, DIICOT issued a press release announcing the referral to court of several persons involved in the
case. In January 2018, the High Court of Cassation and Justice ruled that the indictment prepared by DIICOT was
not legal. The Court issued a decision in December, 2022 stating there is no offence and the civil complaint filed by
Romgaz was left unresolved. Romgaz appealed the decision.
(b)
Taxation
The Romanian taxation system is undergoing a process of consolidation and harmonization with the European Union
legislation. However, there are still different interpretations of the fiscal legislation. In various circumstances, the tax
authorities may have different approaches to certain issues, and assess additional tax liabilities, together with late
payment interest and penalties. In Romania, tax periods remain open for fiscal verification for 5 years. The Group’s
management considers that the tax liabilities included in these financial statements are fairly stated.
(c)
Environmental contingencies
Environmental regulations are developing in Romania and the Group has not recorded any liability at December 31,
46
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2022 for any anticipated costs, including legal and consulting fees, impact studies, the design and implementation of
remediation plans related to environmental matters, except the amount of RON 236,490 thousand (December 31,
2021: RON 437,638 thousand), representing the decommissioning liability.
35.
JOINT ARRANGEMENTS
a) Joint arrangement with Amromco
In January 2002, Romgaz signed a petroleum agreement with Amromco for rehabilitation operations in order to
achieve additional production in 11 blocks, namely: Bibeşti, Strâmba, Finta, Fierbinți-Târg, Frasin-Brazi, Zătreni,
Boldu, Roșioru, Gura-Șuții, Balta-Albă and Vlădeni. For the base production, Romgaz holds a share of 100% and for
the additional production, Romgaz owns a share of 50% and Amromco Energy SRL - 50%. As the agreement was
signed to execute rehabilitation operations to obtain additional production, the mandatory work program is in
accordance with the studies approved by ANRM. Accordingly, the annual work program, which includes both works
provided in the studies and other works necessary and proposed by the partners, is approved annually by the Board
of the joint arrangement before the start of each year. The duration of the joint arrangement is in line with the time
frame of each individual concession agreement of the 11 perimeters stated above, which differs for each block.
b) Joint arrangement with OMV Petrom SA
In August 2022, the Group became a party to a joint arrangement with OMV Petrom SA (operator) for the offshore
block Neptun Deepwater in the Black Sea, through the acquisition of ExxonMobil Exploration and Production
Romania Limited, currently Romgaz Black Sea Limited. The joint arrangement is classified as joint operation. Each
party to the joint agreement has a 50% interest in the concession agreement for the Neptun Deepwater block.
Marketing and sales of hydrocarbons are not part of the joint arrangement.
All the rights and interests in and under the joint arrangement, all joint property and any hydrocarbons produced from
the Neptun Deepwater block is owned by each party in accordance with its participating interest.
As a general rule, all decisions of the operating committee require unanimity.
36. AUDITOR’S FEES
The fee charged by the Group’s statutory auditor, S.C. Ernst & Young Assurance Services S.R.L. for the statutory
audit of the 2022 annual financial statements is RON 435 thousand.
The fees charged for other assurance services in 2022 are RON 286 thousand.
37.
EVENTS AFTER THE BALANCE SHEET DATE
a)
b)
In 2023 Romgaz and Socar Trading, a subsidiary of the State Oil Company of the Republic of Azerbaijan, signed
a contract for gas deliveries from Azerbaijan to Romania. The contract ensures the possibility of gas deliveries
up to 1 billion cm until March 31, 2024 and shall enter in force on April 1st, 2023. According to the contract,
Romgaz has no obligation to buy the quantity contracted, but has to provide a bank letter of guarantee of EUR
30 million over the period of the contract.
In 2023, Romgaz Black Sea Limited and S.N.T.G.N. Transgaz S.A., the national gas transmission system
operator, signed a transmission framework agreement for transportation of natural gas to be produced from
Neptun Deep through the National Transmission System. According to the agreement, the required technical
capacity is booked for acceptance in the National Transmission System, allowing natural gas from Neptun Deep
block to enter the market. The agreement was concluded for September 2026 - September 2042. According to
the agreement, Romgaz Black Sea Limited has to provide a bank letter of guarantee of RON 209 million valid
until December 2023.
38. APPROVAL OF FINANCIAL STATEMENTS
These financial statements were endorsed by the Board of Directors on March 23, 2023.
Răzvan Popescu
Chief Executive Officer
Gabriela Trânbițaș
Chief Financial Officer
47
Societatea Naţională de Gaze Naturale Romgaz S.A. – Mediaş - România
No.12986/24.03.2023
STATEMENT
in accordance with the provisions of art. 65 (2) c) of Law No. 24/2017
regarding issuers of financial instruments and market operations
_______________________________________________________________________________
Entity: Societatea Nationala de Gaze Naturale ROMGAZ S.A.
County: 32--SIBIU
Address: MEDIAŞ, 4 C.I. Motaş Square, tel. +40374401020
Registration Number in the Trade Register: J32/392/2001
Form of Property: 26- Companies with both state and private capital foreign and domestic (State
capital >=50%)
Main activity (CAEN code and denomination): 0620—Natural Gas Production
Tax Identification Number: 14056826
The undersigned,
RAZVAN POPESCU as Chief Executive Officer and
GABRIELA TRANBITAS as Chief Financial Officer,
hereby confirm that according to our knowledge, the annual consolidated financial statements for
the year ended December 31, 2022, prepared in accordance with the International Financial
Reporting Standards, as adopted by the European Union, and Order of Ministry of Public Finance
no. 2844/2016 for the approval of Accounting regulations in accordance with International Financial
Reporting Standards, offer a true and fair view of the assets, liabilities, financial position, statement
of profit and loss of the Group and that the Board of Directors’ report comprises a fair analysis of
the development and performance of the Group, as well as a description of the main risks and
incertitudes specific to its activity. The Group is a going concern.
Chief Executive Officer,
RAZVAN POPESCU
Chief Financial Officer,
GABRIELA TRANBITAS
Capital social: 385.422.400 lei
CIF: RO 14056826
Nr. Ord.reg.com/an : J32/392/2001
RO08 RNCB 0231 0195 2533 0001 - BCR Mediaş
RO12 BRDE 330S V024 6190 3300 - BRD Mediaş
S.N.G.N. Romgaz S.A.
551130, Piața C.I. Motaş, nr.4
Mediaş, jud. Sibiu - România
Telefon: 004-0374 - 401020
Fax: 004-0269-846901
E-mail: secretariat@romgaz.ro
www.romgaz.ro
Ernst & Young Assurance Services SRL
Bucharest Tower Center Building, 22nd Floor
15-17 Ion Mihalache Blvd., Sector 1
011171 Bucharest, Romania
Tel: +40 21 402 4000
Fax: +40 21 310 7193
office@ro.ey.com
ey.com
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of SNGN ROMGAZ S.A.
Report on the Audit of the separate financial statements
Opinion
We have audited the separate financial statements of SNGN ROMGAZ S.A (the Company) with official head office in Medias,
Piata Constantin I. Motas nr. 4, code 551130, Sibiu county, Romania, identified by sole fiscal registration number
RO14056826, which comprise the statement of financial position as at December 31, 2022 and the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of
significant accounting policies and other explanatory information.
In our opinion, the accompanying separate financial statements give a true and fair view of the financial position of the Company
as at December 31, 2022 and of its financial performance and its cash flows for the year then ended, in accordance with the
Order of the Minister of Public Finance no. 2844/2016, approving the accounting regulations compliant with the International
Financial Reporting Standards, with all subsequent modifications and clarifications.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs), Regulation (EU) No. 537/2014 of the
European Parliament and of the Council of 16 April 2014 (“Regulation (EU) No. 537/2014“) and Law 162/2017 („Law
162/2017”). Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of
the Separate Financial Statements” section of our report. We are independent of the Company in accordance with the
International Code of Ethics for Professional Accountants (including International Independence Standards) as issued by the
International Ethics Standards Board for Accountants (IESBA Code) together with the ethical requirements that are relevant to
the audit of the financial statements in Romania, including Regulation (EU) No. 537/2014 and Law 162/2017 and we have
fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the separate
financial statements of the current period. These matters were addressed in the context of our audit of the separate financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the “Auditor’s responsibilities for the audit of the separate financial
statements” section of our report, including in relation to these matters. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the risks of material misstatement of the separate financial statements.
The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our
audit opinion on the accompanying separate financial statements.
Description of each key audit matter and our procedures performed to address the matter
Key audit matter
How our audit addressed the key audit matter
Estimation of gas reserves used in the calculation of depreciation and amortisation
The Company’s disclosures about estimation of gas reserves are included in Note 2 (“Use of estimates” and “Exploration and
appraisal assets”) to the separate financial statements.
Estimation of the gas reserves is a focus area in our audit
because it has a significant impact on the separate financial
statements, as the reserves are the basis for unit of
production depreciation and amortization for the assets in the
Upstream segment.
The estimation of gas reserves requires the Company’s
management and engineers to make significant judgement
and assumptions and therefore it was considered to be a key
audit matter.
We assessed the management’s estimation process in the
determination of gas reserves. Specifically, our work
included, but was not limited to, the following procedures:
We performed a detailed understanding of the
Company’s internal process and related
documentation flow and key controls associated with
the gas reserves estimation process;
We analysed the certification process for technical
and commercial specialists who are responsible for
gas reserves estimation; we also assessed the
competence, capabilities and objectivity of
management specialists;
We tested whether significant increases or reductions
in gas reserves were made in the period in which the
new information became available and if the
adjustments were made in compliance with the
standards of the National Agency for Mineral
Resources (“ANRM”);
We compared, on a sample basis, the gas reserves
with the assumptions used in accounting for
depreciation and amortization for the core assets in
the Upstream segment.
We also assessed the adequacy of the Company’s
disclosures about calculation of depreciation, and
amortization.
2
Estimation of decommissioning provisions
The Company’s disclosures about decommissioning obligations are included in Note 2 (”Use of estimates”) and Note 19
(“Provisions”) to the separate financial statements.
The Company’s core activities regularly lead to obligations
related to dismantling and removal of equipment and
installations, asset retirement and soil remediation activities.
The decommissioning provision is significant to our audit
because of its magnitude (carrying value of RON 208.8 million
at 31 December 2022) and because management makes
estimates and judgments in determining the respective
provision.
The key estimates and assumptions relate to the envisaged
future dismantling costs, forecasted inflation rates and
discount rates to determine the present value of the
obligations.
Our work in respect of management’s estimation of
decommissioning and restauration provisions included, but
was not limited to, the following procedures:
We performed a detailed understanding of the
Company’s estimation process and the related
documentation flow and assessed the design and
implementation of the controls within the process;
We compared the current estimates of
decommissioning costs with the actual costs incurred
in previous periods;
We reviewed the timing of works to be performed for
surface and subsurface decommissioning for wells;
We inspected supporting evidence for any material
revisions in cost estimates during the year;
We involved our valuation specialists to assist us in
performing analysis of discount rates and inflation
rates;
We tested the mathematical accuracy of
management’s decommissioning provision
calculations;
We assessed the competence, capabilities and
objectivity of management specialists.
We also assessed the adequacy of the Company’s
disclosures in the separate financial statements relating to
decommissioning obligations.
Other information
The other information comprises the Annual Report (which includes the Consolidated Directors' Report, the Report on Payments
to Governments, the Corporate Governance Statement and the Remuneration Report), but does not include the separate
financial statements and our auditors’ report thereon. The Corporate responsibility and sustainability report will be published
separately, at a later date. Management is responsible for the other information.
Our audit opinion on the separate financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the separate financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the separate financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed on the other
information obtained prior to the date of our auditor’s report we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the separate financial statements
Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with the
Order of the Minister of Public Finance no. 2844/2016 approving the accounting regulations compliant with the International
Financial Reporting Standards, with all subsequent modifications and clarifications, and for such internal control as
management determines is necessary to enable the preparation of separate financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the separate financial statements, management is responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
3
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor’s Responsibilities for the Audit of the Separate Financial Statements
Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout
the audit. We also:
Identify and assess the risks of material misstatement of the separate financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditors’ report to the related disclosures in the separate financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the separate financial statements, including the
disclosures, and whether the separate financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and communicate to them all relationships and other matters that may reasonably be thought to bear
on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance
in the audit of the separate financial statements of the current period and are therefore the key audit matters.
Report on Other Legal and Regulatory Requirements
Reporting on Information Other than the separate financial statements and Our Auditors’ Report Thereon
In addition to our reporting responsibilities according to ISAs described in section “Other information”, with respect to the
Consolidated Directors’ Report and Remuneration Report, we have read these reports and report that:
4
a)
b)
c)
d)
in the Consolidated Directors’ Report we have not identified information which is not consistent, in all material
respects, with the information presented in the accompanying separate financial statements as at December 31,
2022;
the Consolidated Directors’ Report identified above includes, in all material respects, the required information
according to the provisions of the Ministry of Public Finance Order no. 2844/2016 approving the accounting
regulations compliant with the International Financial Reporting Standards, with all subsequent modifications and
clarifications, Annex 1 points 15 – 19 and 26-28;
based on our knowledge and understanding concerning the entity and its environment gained during our audit of the
separate financial statements as at December 31, 2022, we have not identified information included in the
Consolidated Directors’ Report that contains a material misstatement of fact;
the Remuneration Report identified above includes, in all material respects, the required information according to
the provisions of article 107 (1) and (2) from Law 24/2017 on issuers of financial instruments and market
operations.
Other requirements on content of auditor’s report in compliance with Regulation (EU) No. 537/2014 of the European Parliament
and of the Council
Appointment and Approval of Auditor
We were appointed as auditors of the Company by the General Meeting of Shareholders on 06 October 2021 to audit the
separate financial statements for the financial years ended December 31, 2022, 2022 and 2023. Total uninterrupted
engagement period, including previous renewals (extension of the period for which we were originally appointed) and
reappointments for the statutory auditor, has lasted for five years, covering the years ended December 31, 2018 till December
31,2022.
Consistency with Additional Report to the Audit Committee
Our audit opinion on the separate financial statements expressed herein is consistent with the additional report to the Audit
Committee of the Company, which we issued on the same date as the issue date of this report.
Provision of Non-audit Services
No prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No. 537/2014 of the European Parliament and of
the Council were provided by us to the Company and we remain independent from the Company in conducting the audit.
In addition to statutory audit services and other audit related services as disclosed in the separate financial statements, no other
services were provided by us to the Company.
Report on the compliance of the electronic format of the separate financial statements, with the requirements of the ESEF
Regulation
We have performed a reasonable assurance engagement on the compliance of the separate financial statements presented in
XHTML format of SNGN ROMGAZ S.A (the Company) for the year ended December 31, 2022, with the requirements of the
Commission Delegated Regulation (EU) 2018 /815 of 17 December 2018 supplementing Directive 2004/109/EC of the
European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic
reporting format (the “ESEF Regulation).
These procedures refer to testing the format and whether the electronic format of the separate financial statements (XHTML)
corresponds to the audited separate financial statements and expressing an opinion on the compliance of the electronic format
of the separate financial statements of the Company for the year ended December 31, 2022 with the requirements of the ESEF
Regulation. In accordance with these requirements, the electronic format of the separate financial statements, included in the
annual report should be presented in XHTML format.
Responsibilities of the Management and Those Charged with Governance regarding the separate financial statements presented
in XHTML format
5
The Management of the Company is responsible for the compliance with the requirements of the ESEF Regulation in the
preparation of the electronic format of the separate financial statements in XHTML format and for ensuring consistency between
the electronic format of the separate financial statements (XHTML) and the audited separate financial statements.
The responsibility of the Management also includes the design, implementation and maintenance of such internal control as
determined is necessary to enable the preparation of the separate financial statements in ESEF format that are free from any
material non-compliance with the ESEF Regulation.
Those charged with governance are responsible for overseeing the financial reporting process for the preparation of separate
financial statements, including the application of the ESEF Regulation.
6
Auditor’s Responsibility
Our responsibility is to express an opinion providing reasonable assurance on the compliance of the electronic format of the
separate financial statements with the requirements of the ESEF Regulation.
We have performed a reasonable assurance engagement in accordance with ISAE 3000 (revised) Assurance Engagements Other
Than Audits or Reviews of Historical Financial Information (ISAE 3000 (revised)). This standard requires that we comply with
ethical requirements, plan and perform our engagement to obtain reasonable assurance about whether the electronic format of
the separate financial statements of the Company is prepared, in all material respects, in accordance ESEF regulation. The
nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risk of material
non-compliance with the requirements of the ESEF Regulation, whether due to fraud or error.
Reasonable assurance is a high level of assurance, but it is not guaranteed that the assurance engagement conducted in
accordance with ISAE 3000 (revised) will always detect material non-compliance with the requirements when it exists.
Our Independence and Quality Management
We apply International Standard on Quality Management 1, Quality Management for Firms that Perform Audits and Reviews of
Financial Statements, and Other Assurance and Related Services Engagements, and accordingly, designs, implements and
operates a comprehensive system of quality management including documented policies and procedures regarding compliance
with ethical requirements, professional standards and applicable legal and regulatory requirements.
We have maintained our independence and confirm that we have met the ethical and independence requirements of the
International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards) (IESBA Code).
Summary of procedures performed
The objective of the procedures that we have planned and performed was to obtain reasonable assurance that the electronic
format of the separate financial statements is prepared, in all material respects, in accordance with the requirements of ESEF
Regulation. When conducting our assessment of the compliance with the requirements of the ESEF Regulation of the electronic
reporting format (XHTML) of the separate financial statements of the Company, we have maintained professional skepticism and
applied professional judgement. We have also:
obtained an understanding of the internal control and the processes related to the application of the ESEF Regulation
in respect of the separate financial statements of the Company, including the preparation of the separate financial
statements of the Company in XHTML format
tested the validity of the applied XHTML format
checked whether the electronic format of the separate financial statements (XHTML) corresponds to the audited
separate financial statements
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
7
Opinion on the compliance of the electronic format of the separate financial statements with the requirements of the ESEF
Regulation
Based on the procedures performed, our opinion is that the electronic format of the separate financial statements is prepared, in
all material respects, in accordance with the requirements of ESEF Regulation.
On behalf of,
Ernst & Young Assurance Services SRL
15-17, Ion Mihalache Blvd., floor 21, Bucharest, Romania
Registered in the electronic Public Register under No. FA77
Name of the Auditor / Partner: Verona Cojocaru
Registered in the electronic Public Register under No. AF1568
Bucharest, Romania
23 March 2023
8
S.N.G.N. ROMGAZ S.A.
SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2022
PREPARED IN ACCORDANCE WITH
MINISTRY OF FINANCE ORDER 2844/2016
CONTENTS:
PAGE:
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flow
Notes to the financial statements
1. Background and general business
2. Significant accounting policies
3. Revenue and other income
4. Investment income
5. Cost of commodities sold, raw materials and consumables
6. Other gains and losses
7. Depreciation, amortization and impairment expenses
8. Employee benefit expense
9. Finance costs
10. Other expenses
11. Income tax
12. Property, plant and equipment.
13. Exploration and appraisal for natural gas resources
14. Other intangible assets. Right of use assets
15. Inventories
16. Accounts receivable
17. Share capital
18. Reserves
19. Provisions
20. Deferred revenue
21. Trade and other current liabilities
22. Financial instruments
23. Related party transactions and balances
24. Information regarding the members of the administrative, management and
supervisory bodies
25. Investment in subsidiaries and associates
26. Other financial investments
27. Cash and cash equivalents
28. Other financial assets
29. Interest bearing borrowings
30. Assets held for disposal and related liabilities
31. Commitments undertaken
32. Commitments received
33. Contingencies
34. Joint arrangements
35. Auditor’s fees
36. Events after the balance sheet date
37. Approval of financial statements
1
2
4
5
7
7
7
18
19
19
20
20
20
21
21
22
24
26
27
28
28
30
31
31
33
34
35
37
39
39
40
41
41
42
42
43
43
43
44
44
44
44
S.N.G.N. ROMGAZ S.A.
STATEMENT OF COMPREHENSIVE INCOME
Note
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Revenue
Cost of commodities sold
Investment income
Other gains and losses
Net impairment gains/(losses) on trade
receivables
Changes in inventory of finished goods and work
in progress
Raw materials and consumables used
Depreciation, amortization and impairment
expenses
Employee benefit expense
Finance cost
Exploration expense
Other expenses
Other income
Profit before tax
Income tax expense
Profit for the year
3
5
4
6
16
5
7
8
9
13
10
3
11
Other comprehensive income
Items that will not be reclassified
subsequently to profit or loss
Actuarial gains/(losses) on post-employment
benefits
19 c)
Income tax relating to items that will not be
reclassified subsequently to profit or loss
11
Total items that will not be reclassified
subsequently to profit or loss
Other comprehensive income for the year net
of income tax
Total comprehensive income for the year
13,071,969
(183,574)
188,404
(10,795)
(55,166)
(2,197)
(102,326)
(461,425)
(769,026)
(27,233)
(59,069)
(7,544,171)
78,503
4,123,894
(1,591,949)
2,531,945
14,096
(2,255)
11,841
11,841
2,543,786
5,725,214
(281,587)
85,963
18,838
349,989
74,787
(68,862)
(613,272)
(694,324)
(16,739)
(1,197)
(2,546,438)
169,567
2,201,939
(239,430)
1,962,509
(34,357)
5,496
(28,861)
(28,861)
1,933,648
These financial statements were endorsed by the Board of Directors on March 23, 2023.
Răzvan Popescu
Chief Executive Officer
Gabriela Trânbițaș
Chief Financial Officer
1
S.N.G.N. ROMGAZ S.A.
STATEMENT OF FINANCIAL POSITION
ASSETS
Non-current assets
Property, plant and equipment
Other intangible assets
Investments in subsidiaries
Investments in associates
Deferred tax asset
Net lease investment
Other assets
Right of use asset
Other financial investments
Total non-current assets
Current assets
Inventories
Trade and other receivables
Contract costs
Other financial assets
Other assets
Net lease investment
Cash and cash equivalents
Total current assets
Assets held for disposal
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Reserves
Retained earnings
Total equity
Non-current liabilities
Retirement benefit obligation
Deferred revenue
Lease liability
Borrowings
Provisions
Total non-current liabilities
December 31, 2022
'000 RON
December 31, 2021
'000 RON
4,387,058
19,735
5,185,051
120
217,073
286
27,722
6,786
5,616
4,559,588
15,263
66,056
120
288,087
354
-
6,739
5,616
9,849,447
4,941,823
274,531
1,334,163
3
8,481
250,922
88
1,867,570
3,735,758
677,634
292,966
1,335,118
483
392,359
66,485
78
3,572,651
5,660,140
693,035
14,262,839
11,294,998
385,422
3,492,228
6,191,538
10,069,188
158,934
230,419
7,090
1,125,534
186,778
1,708,755
385,422
2,920,174
5,684,411
8,990,007
144,880
230,438
7,211
377,157
759,686
Note
12
14
25 a)
25 b)
11
16 b)
14
26
15
16 a)
28
16 b)
27
30
17
18
19
20
29
19
2
S.N.G.N. ROMGAZ S.A.
STATEMENT OF FINANCIAL POSITION
Note
December 31, 2022
'000 RON
December 31, 2021
'000 RON
Current liabilities
Trade payables
Contract liabilities
Current tax liabilities
Deferred revenue
Provisions
Lease liability
Borrowings
Other liabilities
Total current liabilities
21
11
20
19
29
21
Liabilities directly associated with the assets held
for disposal
30
Total liabilities
Total equity and liabilities
86,903
263,340
1,171,873
11
312,867
1,017
321,581
279,797
2,437,389
47,507
4,193,651
14,262,839
71,268
204,384
52,299
49
228,877
809
927,625
1,485,311
59,994
2,304,991
11,294,998
These financial statements were endorsed by the Board of Directors on March 23, 2023.
Răzvan Popescu
Chief Executive Officer
Gabriela Trânbițaș
Chief Financial Officer
3
S.N.G.N. ROMGAZ S.A.
STATEMENT OF CHANGES IN EQUITY
Balance as of January 1, 2022
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Allocation to dividends *)
Allocation to other reserves
Increase in reinvested profit reserves
Balance as of December 31, 2022
Balance as of January 1, 2021
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Allocation to dividends *)
Allocation to other reserves
Increase in reinvested profit reserves
Balance as of December 31, 2021
Share
capital
'000 RON
385,422
-
-
-
-
-
-
Legal
reserve
'000 RON
77,084
-
-
-
-
-
-
Other
reserves
(note 18)
'000 RON
2,843,090
-
-
-
-
540,227
31,827
385,422
77,084
3,415,144
385,422
-
-
-
-
-
-
77,084
-
-
-
-
-
-
2,142,857
-
-
-
-
650,228
50,005
385,422
77,084
2,843,090
Retained
earnings **)
'000 RON
5,684,411
2,531,945
11,841
2,543,786
(1,464,605)
(540,227)
(31,827)
6,191,538
5,140,902
1,962,509
(28,861)
1,933,648
(689,906)
(650,228)
(50,005)
5,684,411
Total
'000 RON
8,990,007
2,531,945
11,841
2,543,786
(1,464,605)
-
-
10,069,188
7,746,265
1,962,509
(28,861)
1,933,648
(689,906)
-
-
8,990,007
*) In 2022 the Company’s shareholders approved the allocation of dividends of RON 1,464,605 thousand (2021: RON 689,906 thousand), dividend per share being RON 3.80 (2021: RON 1.79).
**) Retained earnings include the geological quota reserve set up in accordance with the provisions of Government Decision no. 168/1998 on the establishment of the expense quota for the development
and modernization of oil and natural gas production, refining, transportation and oil distribution. Following the Company’s transition to IFRS, the reserve existing as of December 31, 2012 was transferred
to retained earnings. This result is allocated based on the depreciation, respectively write-off of the assets financed using this source, based on decision of General Meeting of Shareholders. As of
December 31, 2022 the geological quota reserve is of RON 714,512 thousand (December 31, 2021: RON 806,840 thousand).
These financial statements were endorsed by the Board of Directors on March 23, 2023.
Răzvan Popescu
Chief Executive Officer
Gabriela Trânbițaș
Chief Financial Officer
4
S.N.G.N. ROMGAZ S.A.
STATEMENT OF CASH FLOW
Cash flows from operating activities
Net profit
Adjustments for:
Income tax expense (note 11)
Interest expense (note 9)
Income from dividends (note 4)
Unwinding of decommissioning provision (note 9,
note 19)
Interest revenue (note 4)
Net loss on disposal of non-current assets (note
6)
Change in decommissioning provision recognized
in profit or loss, other than unwinding (note
19)
Change in other provisions (note 19)
Net impairment of exploration assets (note 7, note
13)
Exploration projects written off (note 13)
Net impairment of property, plant and equipment
and intangibles (note 7)
Foreign exchange differences
Depreciation and amortization (note 7)
Amortization of contract costs
Change in investments at fair value through profit
and loss (note 6)
Net receivable write-offs and movement in
allowances for trade receivables and other
assets
Other gains and losses
Net movement in write-down allowances for
inventory (note 6, note 15)
Liabilities written off
Subsidies income (note 20)
Movements in working capital:
(Increase)/Decrease in inventory
(Increase)/Decrease in trade and other
receivables
Increase/(Decrease) in trade and other liabilities
Cash generated from operations
Interest paid
Income taxes paid
Net cash generated by operating activities
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
2,531,945
1,962,509
1,591,949
5,565
(13,583)
21,668
(174,821)
451
(75,629)
110,976
66,447
16
73,710
(453)
321,268
773
239,430
557
(28,065)
16,182
(57,898)
(321)
(20,646)
69,366
37,046
33
182,470
-
393,756
1,626
-
10
(378,352)
6,273
3,300
(810)
(9)
2,426,457
(65,944)
(412,742)
788,724
2,736,495
(4)
(226,210)
2,510,281
55,765
1,793
4,814
(512)
(7)
4,522,135
19,556
(232,183)
(573,356)
3,736,152
(5,040)
(404,171)
3,326,941
5
S.N.G.N. ROMGAZ S.A.
STATEMENT OF CASH FLOW
Cash flows from investing activities
Investment in other entities
Bank deposits set up and acquisition of state
bonds
Bank deposits and state bonds matured
Loans granted to subsidiaries
Interest received
Proceeds from sale of non-current assets
Receipts from disposal of other financial
investments
Dividends received
Acquisition of shares in ExxonMobil Exploration
and Production Romania Limited
Acquisition of non-current assets
Acquisition of exploration assets
Collection of lease payments
Net cash (used in)/generated by investing
activities
Cash flows from financing activities
Borrowings received
Repayment of borrowings
Dividends paid
Repayment of lease liability
Subsidies received (note 20)
Net cash used in financing activities
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at the beginning of
the year
Cash and cash equivalents at the end of the
year
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
-
(3,220,306)
3,599,005
(27,359)
179,571
1,033
-
13,583
(5,126,347)
(336,969)
(96,500)
105
(250)
(3,821,852)
5,394,162
-
57,854
513
2
28,065
-
(300,072)
(91,865)
105
(5,014,184)
1,266,662
1,606,475
(158,907)
(1,463,984)
(1,422)
-
(17,838)
(1,705,081)
3,572,651
1,867,570
-
-
(690,027)
(1,270)
94,148
(597,149)
3,179,794
392,857
3,572,651
These financial statements were endorsed by the Board of Directors on March 23, 2023.
Răzvan Popescu
Chief Executive Officer
Gabriela Trânbițaș
Chief Financial Officer
6
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
1.
BACKGROUND AND GENERAL BUSINESS
Information regarding S.N.G.N. Romgaz S.A. (the “Company”/“Romgaz”)
S.N.G.N. Romgaz S.A. is a joint stock company, incorporated in accordance with Romanian legislation.
The Company’s headquarter is in Mediaş, 4 Constantin I. Motaş Square, 551130, Sibiu County.
The Romanian State, through the Ministry of Energy is the majority shareholder of S.N.G.N. Romgaz S.A. together
with other legal and physical persons (note 17).
Romgaz has as main activity:
1.
2.
3.
geological research for the discovery of natural gas, crude oil and condensed reserves;
operation, production and usage, including trading, of mineral resources;
natural gas production for:
ensuring the storage flow continuity;
technological consumption;
delivery in the transmission system.
4.
commissioning, interventions, capital repairs for wells equipping the deposits, as well as the natural gas
resources extraction wells, for its own activity and for third parties;
5.
electricity production and distribution.
2.
SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The separate financial statements (“financial statements”) of the Company have been prepared in accordance with
the provisions of Ministry of Finance Order no. 2844/2016 to approve accounting regulations in accordance with
IFRS, as subsequently amended (MOF 2844/2016). For the purposes of the preparation of these financial
statements, the functional currency of the Company is deemed to be the Romanian Leu (RON).
Basis of preparation
The financial statements have been prepared on a going concern basis. The principal accounting policies are set out
below.
Accounting is kept in Romanian and in the national currency. Items included in these financial statements are
denominated in Romanian lei. Unless otherwise stated, the amounts are presented in thousand lei (thousand RON).
Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes
into account the characteristics of the asset or liability if market participants would take those characteristics into
account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure
purposes in these financial statements is determined on such a basis, except for measurements that have some
similarities to fair value but are not fair value, such as net realizable value in IAS 2 “Inventory” or value in use in IAS
36 “Impairment of assets”.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on
the degree to which the inputs to the fair value measurements are observable and the significance to the Company of
the inputs to the fair value measurement, which are described as follows:
level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
Company can access at the measurement date;
level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
level 3 inputs are unobservable inputs for the asset or liability.
7
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Subsidiaries
A subsidiary is an entity controlled by the Company. In establishing the existence of control, the Company analyses
the following:
if it has authority over the invested entity;
if it is exposed to, or has rights to variable returns from its involvement in the invested entity;
if it has the ability to use its authority over the invested entity to affect these returns.
The investment in a subsidiary is recognized at cost less accumulated impairment.
Associated entities
An associate is a company over which the Company exercises significant influence through participation in decision
making on financial and operational policies of the entity invested in. Investments are recorded at cost less
accumulated impairment.
Joint arrangements
A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant
activities require the unanimous consent of the parties sharing control.
A joint arrangement is either a joint operation or a joint venture.
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to
the assets, and obligations for the liabilities, relating to the arrangement. Those parties are called joint operators.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the
net assets of the arrangement. Those parties are called joint ventures.
Joint operations
The Company recognizes in relation to its interest in a joint operation:
its assets, including its share of any assets held jointly;
its liabilities, including its share of any liabilities incurred jointly;
its revenue from the sale of its share of the output arising from the joint operation;
its share of the revenue from the sale of the output by the joint operation; and
its expenses, including its share of any expenses incurred jointly.
As joint operator, the Company accounts for the assets, liabilities, revenues and expenses relating to its interest in a
joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.
If the Company participates in, but does not have joint control of, a joint operation it accounts for its interest in the
arrangement in accordance with the paragraphs above if it has rights to the assets, and obligations for the liabilities,
relating to the joint operation.
If the Company participates in, but does not have joint control of, a joint operation, does not have rights to the assets,
and obligations for the liabilities, relating to that joint operation, it accounts for its interest in the joint operation in
accordance with the IFRSs applicable to that interest.
Joint ventures
As a partner in a joint venture, in its financial statements, the Company recognizes its interest in a joint venture as
investment, at cost, if it has joint control.
Standards and interpretations valid for the current period
The following standards and amendments or improvements to existing standards issued by the IASB and adopted by
the EU have entered into force for the current period:
Amendments to IFRS 3 “Business Combinations” (effective for annual periods beginning on or after January 1,
2022);
Amendments to IAS 16 “Property, Plant and Equipment” (effective for annual periods beginning on or after
January 1, 2022);
8
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” (effective for annual periods
beginning on or after January 1, 2022);
Annual Improvements 2018-2020 (effective for annual periods beginning on or after January 1, 2022).
The adoption of these amendments, interpretations or improvements to existing standards has not led to changes in
the Company's accounting policies.
Standards and interpretations issued by IASB not yet endorsed by the EU
At present, IFRS endorsed by the EU do not significantly differ from IFRS adopted by the IASB except from
the following standards, amendments or improvements to the existing standards and interpretations, which were not
endorsed for use in EU as at date of publication of financial statements:
Amendments to IAS 1 “Presentation of Financial Statements: Classification of Liabilities as Current or Non-
current; Classification of Liabilities as Current or Non-current - Deferral of Effective Date; Non-current Liabilities
with Covenants” (effective for annual periods beginning on or after January 1, 2024);
Amendments to IFRS 16 “Leases: Lease liabilities in a sale and leaseback” (applicable to annual periods
beginning on or after 1 January 2024).
The Company is currently evaluating the effect that the adoption of these standards, amendments or improvements
to the existing standards and interpretations will have on the financial statements of the Company in the period of
initial application.
Standards and interpretations issued by IASB and adopted by the EU, but not yet effective
At the date of issue of the financial statements, the following standards were issued, but not yet effective:
Amendments to IAS 12 “Income taxes: Deferred Tax related to Assets and Liabilities arising from a single
transaction” (effective for annual periods beginning on or after January 1, 2023);
Amendments to IFRS 17 “Insurance Contracts: initial application of IFRS 17 and IFRS 9 - comparative
information” (applicable to annual periods beginning on or after January 1, 2023);
Amendments to IAS 1 “Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of
Accounting policies” (effective for annual periods beginning on or after January 1, 2023);
Amendments to IAS 8 “Accounting policies, Changes in Accounting Estimates and Errors: Definition of
Accounting Estimates” (effective for annual periods beginning on or after January 1, 2023);
IFRS 17 “Insurance Contracts including Amendments to IFRS 17” (effective for annual periods beginning on or
after January 1, 2023). The Company does not issue contracts in scope of IFRS 17, thus the financial
statements will not be impacted by this standard.
The Company did not adopt these standards and amendments before their effective dates. The Company does not
expect these amendments to have a material impact on the financial statements.
Segment information
The information reported to the chief operating decision maker for the purposes of resource allocation and
assessment of segment performance focuses on the upstream segment, electricity production and distribution, and
other activities, including headquarter activities. The Directors of the Company have chosen to organize the
Company around differences in activities performed.
Specifically, the Company is organized in the following segments:
upstream, which includes exploration activities, natural gas production and trade of gas extracted by Romgaz
or acquired from domestic production or import, for resale; these activities are performed by the head office,
and Mediaș and Mureș branches;
electricity production and distribution activities, performed by Iernut branch;
other activities, such as technological transport, operations on wells and corporate activities.
Gas and electricity deliveries between Company’s segments are accounted for at market prices or at regulated
prices, as the case may be. All other transactions between Company’s segments are at cost.
Considering the insertion of separate and consolidated financial statements in a single annual financial report, the
Company does not disclose segment information in the separate financial statements.
9
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Revenue recognition
a)
Revenue from contracts with customers
The Company recognizes customer contracts when all of the following criteria are met:
•
•
•
•
•
the parties to the contract have approved the contract and are committed to perform their respective
obligations;
the Company can identify each party’s rights regarding the goods or services to be transferred;
the Company can identify the payment terms;
the contract has commercial substance;
it is probable that the Company will collect the consideration to which it will be entitled in exchange for the
goods delivered or the services provided.
Revenue from contracts with customers is recognized when, or as the Company transfers the goods or services to
the customer, respectively, the client obtains control over them.
Depending on the nature of the goods or services, revenues are recognized over time or at a point in time.
Revenue is recognized over time if:
the customer receives and consumes simultaneously the benefits provided by obtaining the goods and
services as the Company performs the obligation;
the Company creates or enhances an asset that the customer controls as the asset is created or enhanced;
the Company’s performance does not create an asset with an alternative use to the Company.
All other revenues that do not meet the above criteria are recognized at a point in time.
For revenue to be recognized over time, the Company assesses progress towards meeting the execution obligation,
using output methods or input methods, depending on the nature of the good or service transferred to the client.
Revenues are recognized only if the Company can reasonably assess the result of the execution obligation or, if it
cannot be estimated, only at the level of the costs it is expected to recover from the customer.
Revenue from contracts with customers mainly relates to gas sales, electricity supply and related services. Revenue
from these contracts are recognized at a point time on the basis of the actual quantities at the prices fixed in the
contracts concluded.
Contracts concluded by the Company do not contain significant financing components.
b) Other revenue
Rental revenue for operating lease contracts where the Company operates as lessor is recognized on an accrual
basis in accordance with the substance of the relevant agreements.
Interest income is recognized periodically and proportionally as the respective income is generated, on accrual basis.
Dividends are recognized as income when the legal right to receive them is established.
Contract liabilities
Contract liabilities are an obligation to transfer goods or services to a customer for which the Company has received
consideration (or an amount of consideration is due) from the customer. If a customer pays consideration, or the
Company has a right to an amount of consideration that is unconditional (ie. a receivable), before the Company
transfers the good or service to the customer, the Company presents the contract as a contract liability when the
payment is made or the payment is due (whichever is earlier).
Exploration expenses
The costs of seismic exploration, geological, geophysical and other similar exploration activities are recognized as
exploration expenses in the statement of comprehensive income in the period in which they arise.
Exploration expenses also include the carrying value of exploration assets that have not identified gas resources and
have been written-off.
10
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Foreign currencies
The functional currency is the currency of the primary economic environment in which the Company operates and is
the currency in which the Company primarily generates and expends cash. The Company operates in Romania and it
has the Romanian Leu (RON) as its functional currency.
In preparing the financial statements of the Company, transactions in currencies other than the functional currency
(foreign currencies) are recorded at the exchange rates prevailing at the dates of the transactions. At each reporting
date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the reporting date.
Exchange differences are recognized in the statement of comprehensive income in the period in which they arise.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.
Employee benefits
Benefits granted upon retirement
In the normal course of business, the Company makes payments to the Romanian State on behalf of its employees at legal
rates. All employees of the Company are members of the Romanian State pension plan. These costs are recognized in the
statement of comprehensive income together with the related salary costs.
Based on the Collective Labor Agreement, the Company is liable to pay to its employees at retirement a number of
gross salaries, according to the years worked in the gas industry/electrical industry, work conditions etc. To this
purpose, the Company recorded a provision for benefits upon retirement. This provision is updated annually and
computed according to actuary methods based on estimates of the average salary, the average number of salaries
payable upon retirement, on the estimate of the period when they shall be paid and it is brought to present value
using a discount factor based on interest related to a maximum degree of security investments (government
securities).
As the benefits are payed, the provision is reduced together with the reversal of the provision against income.
Gains or actuarial losses, are recognized in other comprehensive income. These are changes in the present value of
the defined benefit obligation as a result of statistical adjustments and changes in actuarial assumptions. Any other
changes in the provision are recognized in the result of the year.
The Company does not operate any other pension scheme or post-retirement benefit plan and, consequently, has no
obligation in respect of pensions.
Employee participation to profit
The Company records in its financial statements a provision related to the fund for employee participation to profit in
compliance with legislation in force.
Liabilities related to the fund for employee participation to profit are settled in less than a year and are measured at
the amounts estimated to be paid at the time of settlement.
Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past
events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount of the obligation can be made.
Greenhouse gas provisions
The Company recognizes a provision for the deficit between actual CO2 emissions and certificates held, measured at
the best estimate of expenditure required to settle the obligation.
Provisions for decommissioning of wells
Liabilities for decommissioning costs are recognized due to the Company’s obligation to plug and abandon a well,
dismantle and remove a facility or an item of plant and to restore the site on which it is located, and when a reliable
estimate of that liability can be made.
The Company recorded a provision for decommissioning wells.
This provision was computed based on the estimated future expenditure determined in accordance with local
conditions and requirements and it was brought to present value using the interest rate on long term treasury bonds.
The rate and the estimated costs for decommissioning are updated annually.
11
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
The decommissioning provision is based on the economic life of the fields wells are located on, even if this is longer
than the period of the related concession agreements, as it is considered the period may be extended.
A corresponding item of property, plant and equipment of an amount equivalent to the provision is also recognized.
The item of property, plant and equipment is subsequently depreciated as part of the asset.
The Company applies IFRIC 1 “Changes in Existing Decommissioning, Restoration and Similar Liabilities” related to
changes in existing decommissioning, restoration and similar liabilities.
The change in the decommissioning provision for wells is recorded as follows:
a.
b.
c.
subject to b., changes in the liability are added to, or deducted from, the cost of the related asset in the current
period;
the amount deducted from the cost of the asset does not exceed its carrying amount. If a decrease in the
liability exceeds the carrying amount of the asset, the excess is recognized immediately in the statement of
comprehensive income;
if the adjustment results in an addition to the cost of an asset, the Company considers whether this is an
indication that the new carrying amount of the asset may not be fully recoverable. If it is such an indication, the
Company tests the asset for impairment by estimating its recoverable amount, and accounts for any
impairment loss.
Once the related asset has reached the end of its useful life, all subsequent changes of debt are recognized in the income
statement in the period when they occur.
The periodical unwinding of the discount is recognized periodically in the comprehensive income as a finance cost, as it
occurs.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the
statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in
other periods and it further excludes items that are never taxable or deductible. The Company’s liability for current tax
is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognized on the differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the
balance sheet liability method.
Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are
generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be utilized. Such assets and liabilities are not
recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting
profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in associates
and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with such investments and interests are only recognized to the
extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the
temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively
enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or
settle the carrying amount of its assets and liabilities.
12
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Company intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current tax for the period is recognized as an expense in the statement of comprehensive income. Deferred tax for
the period is recognized as an expense or income in the statement of comprehensive income, except when they
relate to items credited or debited directly to equity, in which case the tax is also recognized directly in equity, or
where it arises from the initial accounting for a business combination. In the case of a business combination, the tax
effect is taken into account in calculating goodwill or in determining the excess of the acquirer’s interest in the net fair
value of the acquirer’s identifiable assets, liabilities and contingent liabilities over cost.
Property, plant and equipment
(1)
Cost
(i)
Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses.
The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing
the asset into the location and condition necessary for it to be capable of operating in the manner intended by
management and the initial estimate of any decommissioning obligation. The purchase price or construction cost is
the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
(ii)
Gas cushion
This is a quantity of natural gas constituted as a reserve at the level of gas storages, physically recoverable, which
ensures the optimum conditions necessary to maintain their technical-productive flow characteristics.
(iii) Development expenditure
Expenditure on the construction, installation and completion of infrastructure facilities such as platforms, pipelines
and the drilling of development wells, including the commissioning of wells, is capitalized within property, plant and
equipment and is depreciated from the commencement of production as described below in the property, plant and
equipment accounting policies.
(iv) Maintenance and repairs
The Company does not recognize within the assets’ costs the current expenses and the accidental expenses for that asset.
These costs are expensed in the period in which they are incurred.
The cost for current maintenance are mainly labor costs and consumables and also small inventory items. The purpose of
these expenses is usually described as “repairs and maintenance” for property, plant and equipment.
The expenses with major activities, inspections and repairs comprise the replacement of the assets or other asset’s
parts, the inspection cost and major overhauls. These expenses are capitalized if an asset or part of an asset, which
was separately depreciated, is replaced and is probable that they will bring future economic benefits for the
Company. If part of a replaced asset was not considered as a separate component and, as a result, was not
separately depreciated, the replacement value will be used to estimate the net book value of the asset which is
replaced and is immediately written-off. The inspection costs associated with major overhauls are capitalized and
depreciated over the period until next inspection.
The cost for major overhauls for wells are also capitalized and depreciated using the unit of production depreciation
method.
All other costs with the current repairs and usual maintenance are recognized directly in expenses.
(2)
Depreciation
The depreciable amount of a tangible asset is the cost less the residual value of the asset. The residual value is the
estimated value that the Company would currently obtain from the disposal of an asset, after deducting the estimated
costs associated with the disposal if the asset would already have the age and condition expected at the end of its
useful life.
For directly productive tangible assets (natural gas resources extraction wells), the Company applies the depreciation
method based on the unit of production in order to reflect in the statement of comprehensive income, an expense
proportionate with the production obtained from the total natural gas reserve certified at the beginning of the period.
According to this method, the value of each production well is depreciated according to the ratio of the natural gas
quantity extracted during the period compared to the proved developed reserves at the beginning of the period.
13
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Assets representing the gas cushion are not depreciated, as the residual value exceeds their cost.
For indirect production tangible assets and other assets, depreciation is calculated at cost using the straight-line
method over the estimated useful life of the asset as follows:
Asset
Specific buildings and constructions
Technical installations and machines
Other plant, tools and furniture
Years
10 - 50
3 - 20
3 – 30
Land is not depreciated as it is considered to have an indefinite useful life.
Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet
determined, are carried at historical cost, less any recognized impairment loss. Depreciation of these assets, on the
same basis as other property assets, commences when the assets are ready for their intended use.
Items of tangible fixed assets that are disposed of are eliminated from the statement of financial position along with
the corresponding accumulated depreciation and impairment. Any gain or loss resulting from such retirement or
disposal is included in the result of the period.
For items of tangible fixed assets that are retired from use, and have not been written off at the data of financial
statements, an impairment adjustment is recorded for the carrying value at the time of retirement.
(3)
Impairment
Non-current assets must be recognized at the lower of the carrying amount and recoverable amount. If and only if the
recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset should be reduced
to be equal to its recoverable amount. Such a reduction represents an impairment loss that is recognized in the result
of the period.
Thus at the end of each reporting period, the Company assesses whether there is any indication of impairment of
assets. If such indication is identified, the Company tests the assets to determine whether they are impaired.
Company’s assets are allocated to cash-generating units. The cash-generating unit is the smallest identifiable asset
group that generates independent cash inflows to a large extent from cash inflows generated by other assets or asset
groups. The company considers each commercial field as a separate cash-generating unit.
All gas storages held by the Company leased to Depogaz are considered as part of a single cash-generating unit, as
the tariffs are set by analyzing the storage activity as a whole, not every single storage.
In 2022, no indications of impairment of the Company’s assets were identified.
Recoverable amount is the largest of the fair value of an asset or a cash-generating unit less costs associated with
disposal and its value in use. Considering the nature of the Company's assets, it was not possible to determine the
fair value of the cash-generating units, being determined only the value in use of the assets.
Assets held for disposal
Non-current assets classified as held for disposal are non-current assets whose carrying amount will be recovered
through a disposal rather than through continuing use. They are measured at the lower of its carrying amount and fair
value less costs to dispose.
Immediately before the initial classification of the assets as held for disposal, the carrying amounts of the assets are
measured in accordance with applicable IFRSs.
Non-current assets classified as held for disposal are no longer depreciated.
In the 2022 financial statements, assets held for disposal are the assets used in the storage activity which will be
transferred to increase Depogaz’ share capital.
Exploration and appraisal assets
(1)
Cost
Natural gas exploration (other than seismic, geological, geophysical and other similar activities), appraisal and
development expenditure is accounted for using the principles of the successful efforts method of accounting.
Costs directly associated with an exploration well are initially capitalized as an asset until the drilling of the well is
complete and the results have been evaluated. These costs include employee remuneration, materials and fuel used,
drilling costs and payments made to contractors. If potentially commercial quantities of hydrocarbons are not found,
the exploration well is eliminated from the statement of financial position, by recording an impairment, until National
14
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Agency for Mineral Resources (Agenția Națională pentru Resurse Minerale – ANRM) approvals are obtained in order
to be written off. If hydrocarbons are found and, subject to further appraisal activity, are likely to be capable of
commercial development, the costs continue to be carried as an asset. Costs directly associated with appraisal
activity, undertaken to determine the size, characteristics and commercial potential of a reservoir following the initial
discovery of hydrocarbons, including the costs of appraisal wells where hydrocarbons were not found, are initially
capitalized as an asset. All such carried costs are subject to technical, commercial and management review at least
once a year to confirm the continued intent to develop or otherwise extract value from the discovery. When this is no
longer the case, an impairment is recorded for the assets, until the completion of the legal steps necessary for them
to be written off. When proved reserves of natural gas are determined and development is approved by management,
the relevant expenditure is transferred to property, plant and equipment other than exploration assets.
(2)
Impairment
At each reporting date, the Company's management reviews its exploration assets and establishes the necessity for
recording in the financial statements an impairment loss in these situations:
the period for which the Company has the right to explore in the specific area has expired during the period or
will expire in the near future, and is not expected to be renewed;
substantive expenditure on further exploration for and evaluation of gas resources in the specific area is
neither budgeted nor planned;
exploration for and evaluation of gas resources in the specific area have not led to the discovery of
commercially viable quantities of gas resources and the Company has decided to discontinue such activities in
the specific area;
sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the
carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful
development or by sale.
Elements similar to the above are also considered when determining impairment losses for producing assets.
Other intangible assets
(1)
Cost
Licenses for software, patents and other intangible assets are recognized at acquisition cost.
Intangible assets are not revalued.
(2)
Amortization
Patents and other intangible assets are amortized using the straight-line method over their useful life, but not
exceeding 20 years. Licenses related to the right of use of computer software are amortized over a period of 3 years.
Inventories
Inventories are recorded initially at cost of production, or acquisition cost, depending on the case. The cost of finished
goods and production in progress includes materials, labour, expense incurred for bringing the finished goods at the
location and in the existent form and the related indirect production costs. Write down adjustments are booked
against slow moving, damaged and obsolete inventory, when necessary.
At each reporting date, inventories are measured at the lower of cost and net realizable value. The net realizable
value is estimated based on the selling price less any completion and selling expenses. The cost of inventories is
assigned by using the weighted average cost formula.
Financial assets and liabilities
The Company’s financial assets include cash and cash equivalents, trade receivables, other receivables, loans, bank
deposits and bonds with a maturity from acquisition date of over three months and other investments in equity
instruments.
Financial liabilities include interest-bearing bank borrowings and overdrafts and trade and other payables.
For each item, the accounting policies on recognition and measurement are disclosed in this note.
Cash and cash equivalents include petty cash, cash in current bank accounts and short-term deposits with a maturity
of less than three months from the date of acquisition.
15
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
The Company recognizes a financial asset or financial liability in the statement of financial position when and only
when it becomes a party to the contractual provisions of the instrument. Upon initial recognition, financial assets are
classified at amortized cost or measured at fair value through profit or loss. The classification depends on the
Company's business model for managing the financial assets and their contractual cash flows.
The Company does not have financial assets measured at fair value through other comprehensive income.
On initial recognition, financial assets and financial liabilities are measured at fair value plus or minus, in the case of
assets measured at amortized cost, transaction costs that are directly attributable to the acquisition or issue of the
financial asset or financial liability.
Receivables resulting from contracts with customers represent the unconditional right of the Company to a
consideration. The right to a consideration is unconditional if only the passage of time is required before payment of
the consideration is due. These are measured at initial recognition at the transaction price.
The amortized cost of a financial asset or financial liability is the amount at which the financial asset or financial
liability is measured at initial recognition minus principal repayments plus or minus cumulative depreciation using the
effective interest method for each difference between the initial amount and the amount at maturity and, for financial
assets, adjusted for any impairment.
Any difference between the entry amount and the reimbursement amount is recognized in the income statement for
the period of the borrowings using the effective interest method.
Financial instruments are classified as liabilities or equity in accordance with the nature of the contractual
arrangement. Interest, dividends, gains and losses on a financial instrument classified as a liability are reported as
expense or income. Distributions to holders of financial instruments classified as equity are recorded directly in equity.
Financial instruments are offset when the Company has a legally enforceable right to set off and intends to settle
either on a net basis or to realize the asset and discharge the obligation simultaneously.
Impairment of financial assets
Financial assets, other than those at fair value through profit and loss, are assessed for indicators of impairment at
each reporting period.
Except for trade receivables, the Company measures the loss allowance for a financial instrument at an amount
equal to the lifetime expected credit losses if the credit risk associated with the financial instrument, has increased
significantly since initial recognition. If, at the reporting date, the credit risk for a financial instrument has not
increased significantly since the initial recognition, the Company measures the loss allowance for that financial
instrument at a value equal to 12 month expected credit losses.
The loss allowance on trade receivables resulting from transactions that are subject to IFRS 15 is measured at an
amount equal to lifetime expected credit losses. The Company considers the risk or probability of a default occurring,
reflecting the possibility of a default to occur or not to occur, even if the possibility of a credit loss is very low.
The Company measures the expected credit losses of a financial instrument in a manner that reflects reasonable and
supportable information that is available without undue cost or effort at the reporting date about past events, current
conditions and forecasts of future economic conditions.
The carrying amount of the financial asset, other than those at fair value through profit or loss, is reduced through the
use of an allowance account.
De-recognition of financial assets and liabilities
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire,
or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity.
The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged,
cancelled or they expire.
Reserves
Reserves include (note 18):
legal reserves, which are used annually to transfer to reserves up to 5% of the statutory profit, but not more
than 20% of the statutory share capital of the Company;
other reserves, which represent allocations from profit in accordance with Government Ordinance no. 64/2001,
paragraph (g) for the Company’s development fund;
16
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
reserves from reinvested profit, set up based on the Fiscal Code. The amount of profit that benefited from tax
exemption under the fiscal legislation less the legal reserve, is distributed at the end of the year by setting up
the reserve;
development quota reserve, non-distributable, set up until 2004. Development quota reserve set up after 2004
is distributable and presented in retained earnings. Development quota set up after 2004 is allocated together
with the profit allocation, as approved by the General Meeting of Shareholders, based on depreciation,
respectively write-off of the assets financed using the development quota;
other non-distributable reserves, set up from retained earnings representing translation differences recorded at
transition to IFRS. These reserves are set up in accordance with MOF 2844/2016.
Subsidies
Subsidies are non-reimbursable financial resources granted to the Company with the condition of meeting certain
criteria. In the category of subsidies are included grants related to assets and grants related to income.
Grants related to assets are government grants for whose primary condition is that the Company should purchase,
construct, or otherwise acquire long-term assets.
Grants related to income are government grants other than those related to assets.
Subsidies are not recognized until there is reasonable assurance that:
(a)
the Company will comply with the conditions attaching to it; and
(b) subsidies will be received.
Grants related to assets are presented in the statement of financial position as “Deferred revenue”, which is then
recognized in profit or loss on a systematic basis over the useful life of the asset.
Grants related to income are recognized in the statement of profit or loss under "Other income", as the related
expenses are recorded. Until the time the expense occurs, the grant received is recognized as “Deferred revenue”.
Use of estimates
The preparation of the financial information requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the end of reporting
date, and the reported amounts of revenue and expenses during the reporting period. Actual results could vary from
these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that
period, or in the period of the revision and future periods if the revision affects both current and future periods.
The following are the critical estimates that the management has made in the process of applying the Company’s
accounting policies, and that have the most significant effect on the amounts recognized in the financial statements.
Estimates related to impairment losses on trade receivables
At each period end, the Company evaluates the risks attached to current and overdue receivables and the probability
of such risks to materialize. The Company’s receivables are generally due in maximum 30 days from the date the
invoice is issued. However, the Company may be forced by court decisions to sell gas to insolvent clients deemed
“captive” according to insolvency legislation. Invoices issued to these clients for gas delivered are due in 90 days
from the date of issue. Based on the information available at period end related to such clients and previous
experience, the Company estimates the lifetime expected credit loss of receivables, both current and overdue, and
records appropriate impairment losses (note 16).
Estimates related to the exploration expenditure on undeveloped fields
If field works prove that the geological structures are not exploitable from an economic point of view or that they do
not have hydrocarbon resources available, an impairment is recorded. The impairment assessment is performed
based on geological experts’ technical expertise (note 7).
Estimates related to the developed proved reserves
The Company applies the depreciation method based on the unit of production in order to reflect in the income
statement an expense proportionate with the production obtained from the total natural gas reserve at the beginning
of the period. According to this method, the value of each production well is depreciated according to the ratio of the
natural gas quantity extracted during the period compared to the gas reserve at the beginning of the period. The gas
reserves are updated annually according to internal assessments that are based on certifications of ANRM (note 7).
17
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Estimates related to the decommissioning provision
Liabilities for decommissioning costs are recognized for the Company’s obligation to plug and abandon a well,
dismantle and remove a facility or an item of plant and to restore the site on which it is located, and when a reliable
estimate of that liability can be made.
This provision is computed based on the estimated future expenditure determined in accordance with local conditions
and requirements and it is brought to present value using the interest rate on long term treasury bonds. The rate and
estimated decommissioning costs are updated annually (note 19).
Estimates related to the retirement benefit obligation
Under the Collective Labor Agreement, the Company is obliged to pay to its employees when they retire a
multiplicator of the gross salary, depending on the seniority within the gas industry/electricity industry, working
conditions etc. This provision is updated annually and calculated based on actuarial methods to estimate the average
wage, the average number of employees to pay at retirement, the estimate of the period when they will be paid and
brought to present value using a discount factor based on interest on investments with the highest degree of safety
(government bonds) (note 19).
The Company does not operate any other pension plan or retirement benefits, and therefore has no other obligations
relating to pensions.
Contingencies
By their nature, contingencies end only when one or more uncertain future events occur or not. In order to determine
the existence and the potential value of a contingent element, is required to exercise the professional judgment and
the use of estimates regarding the outcome of future events (note 32).
Fair value of financial instruments
Management believes that the estimated fair values of financial instruments approximate their carrying amounts.
Comparative information
For each item of the statement of financial position, the statement of comprehensive income and, where is the case,
for the statement of changes in equity and for the statement of cash flows, for comparative information purposes is
presented the value of the corresponding item for the previous period ended, unless the changes are insignificant. In
addition, the Company presents an additional statement of financial position at the beginning of the earliest period
presented when there is a retrospective application of an accounting policy, a retrospective restatement, or a
reclassification of items in the financial statements, which has a material impact on the Company.
3.
REVENUE AND OTHER INCOME
Revenue from gas sold - own production *)
Revenue from gas sold – other arrangements
Revenue from gas acquired for resale **)
Revenue from electricity ***)
Revenue from services
Revenue from sale of goods
Other revenues from contracts
Total revenue from contracts with customers
Revenues from rental activities (see below)
Total revenue
Other operating income ****)
Total revenue and other income
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
11,260,645
58,153
14,654
1,330,630
224,970
70,461
459
12,959,972
111,997
13,071,969
78,503
13,150,472
18
4,693,949
27,456
330,309
321,611
186,716
53,955
384
5,614,380
110,834
5,725,214
169,567
5,894,781
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
*) The increase in revenue from sale of Company’s gas production is due to the increase of gas prices caused by the
war in Ukraine. Quantities sold in 2022 were close to the ones sold in 2021.
**) No import gas was acquired for resale in 2022. The 2022 revenue relates to gas imbalances.
***) The increase in electricity sales is the result of higher selling prices, also caused by the war in Ukraine, and
higher electricity production.
****) In 2021, other operating income include, besides penalties charged to clients for late payment or non-fulfillment
of the obligation of taking the natural gas, the amount of RON 114,628 thousand representing the performance
guarantee set up for the construction of the 430 MW Iernut power plant, with combined cycle with gas turbines,
following the termination of the work contract signed for this purpose.
Revenue from contracts with customers is recognized as or when the Company satisfies a performance obligation by
transferring a promised good or service to a customer. A good or service is transferred when the customer obtains
control of that good or service. The transfer of control of goods sold by the Company usually coincides with title
passing to the customer and the customer taking physical possession.
Revenues from gas and electricity are recognized when the delivery has been made at the prices fixed in the
contracts with customers.
In measuring the revenue from gas and electricity, the Company uses output methods. According to these methods,
revenues are recognized based on direct measurements of the value to the customer of the goods or services
transferred to date relative to the remaining goods or services promised under the contract. The Company recognizes
the revenue in the amount it has the right to charge.
The Company does not disclose information about the remaining performance obligations, applying the practical
expedient in IFRS 15, as the contracts with the customers are generally signed for periods of less than one year and
the revenues are recognized at the amount which the Company has the right to charge.
Revenues from rental activities mainly includes the revenue from renting the fixed assets used in the storage activity
by Depogaz and Depomureș.
4.
INVESTMENT INCOME
Income from dividends
Interest income
Total
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
13,583
174,821
188,404
28,065
57,898
85,963
Interest income is derived from the Company's investments in bank deposits and government bonds. Interest rates
saw a significant increase in 2022, leading to higher income. 2022 interest income include RON 363 thousand on the
loan granted to Romgaz Black Sea Limited to support its operational and investment activities (note 16 b).
5. COST OF COMMODITIES SOLD, RAW MATERIALS AND CONSUMABLES
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Consumables used
Technological consumption
Cost of gas acquired for resale, sold
Cost of electricity imbalance *)
Cost of other goods sold
Other consumables
Total
49,788
48,951
14,654
167,405
1,515
3,587
285,900
37,406
26,817
246,819
33,867
901
4,639
350,449
*) Cost of electricity imbalances increased in 2022 compared with 2021 due to unplanned shut-downs of the plant. In
order to meet contractual delivery obligations, the Company had to acquire electricity from the market.
19
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
6.
OTHER GAINS AND LOSSES
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Forex gain
Forex loss
Net gain/(loss) on disposal of non-current assets
Net allowances for other receivables (note 16 c)
Net write down allowances for inventory (note 15)
Net gain/(loss) on financial assets at fair value
through profit or loss
Other gains and losses
Losses from other debtors
Total
41,862
(45,000)
(451)
(599)
(4,814)
-
(1,793)
-
(10,795)
45
(308)
321
28,369
(3,300)
(10)
(6,273)
(6)
18,838
7.
DEPRECIATION, AMORTIZATION AND IMPAIRMENT EXPENSES
Year ended
December 31, 2022
Year ended
December 31, 2021
Depreciation and amortization
out of which:
- depreciation of property, plant and equipment
- amortization of intangible assets
- amortization of right-of use assets (note 14 b)
Net impairment of non-current assets
Total depreciation, amortization and
impairment
8.
EMPLOYEE BENEFIT EXPENSE
Wages and salaries
Social security charges
Meal tickets
Other benefits according to collective labor
contract
Private pension payments
Private health insurance
Total employee benefit costs
Less, capitalized employee benefit costs
Total employee benefit expense
'000 RON
321,268
315,708
4,649
911
140,157
461,425
'000 RON
393,756
389,070
3,851
835
219,516
613,272
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
808,084
28,091
24,621
26,655
10,227
6,393
904,071
(135,045)
769,026
735,649
25,880
22,829
21,302
10,454
6,479
822,593
(128,269)
694,324
20
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
9.
FINANCE COSTS
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Interest expense *)
Unwinding of the decommissioning provision (note
19)
Total
5,565
21,668
27,233
557
16,182
16,739
*) The increase in interest expense is due to the loan taken to finance the acquisition of the shares of ExxonMobil
Exploration and Production Romania Limited (note 29).
10. OTHER EXPENSES
Energy and water expenses
Expenses for capacity booking and gas
transmission services
Expenses with other taxes and duties *)
(Net gain)/Net loss from provisions movement
(note 19)
Gas storage services
Other operating expenses **)
Total
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
26,915
158,591
6,940,057
35,347
52,028
331,233
7,544,171
19,010
145,177
2,004,377
48,720
69,658
259,496
2,546,438
*) In the year ended December 31, 2022, the major taxes and duties included in the amount of RON 6,940,057
thousand (year ended December 31, 2021: RON 2,004,377 thousand) are:
RON 4,903,849 thousand representing windfall tax resulting from the deregulation of prices in the natural gas
sector according to Government Ordinance no. 7/2013 with the subsequent amendments for the implementation
of the windfall tax following the deregulation of prices in the natural gas sector (year ended December 31, 2021:
RON 1,257,998 thousand);
in 2022, electricity producers were charged with an 80% windfall tax on prices in excess of RON 450/MWh (April,
2022 – August, 2022) followed by a 100% contribution to the Energy Transition Fund on prices in excess of RON
450/MWh (September, 2022 to date); some deductions were allowed in determining the two taxes. These taxes
amount to RON 403,801 thousand. The Company expects the 2023 contribution to be minimal, due to a
regulated price of RON 450/MWh at which electricity produced by the Company must be sold;
RON 1,625,804 thousand representing royalty on gas production (year ended December 31, 2021: RON
740,008 thousand).
**) The increase in other operating expenses compared to 2021 is mainly due to the increase in expenditure on
greenhouse gas emission certificates (RON 169,638 thousand in 2022, compared to RON 121,583 thousand in
2021). The expense of RON 169,638 thousand in 2022 was partially offset by releasing to income the provision set
up for these certificates on December 31, 2021 of RON 154,904 thousand (note 19) (2021: the expense of RON
121,583 thousand was offset by releasing to income the provision set up on December 31, 2020 of RON 81,217
thousand).
21
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
11.
INCOME TAX
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Current tax expense (note 11 a)
Deferred income tax (income)/expense (note 11 a)
Solidarity contribution (note 11 b)
Income tax expense
520,955
68,204
1,002,790
1,591,949
228,911
10,519
-
239,430
Current income tax liability
Solidarity contribution (note 11 b)
Current tax liability
a) Current and deferred income tax
December 31, 2022
'000 RON
December 31, 2021
'000 RON
169,083
1,002,790
1,171,873
52,299
-
52,299
The tax rate used for the reconciliations below for the year ended December 31, 2022, respectively year ended
December 31, 2021 is 16% payable by corporate entities in Romania on taxable profits.
The total charge for the period can be reconciled to the accounting profit as follows:
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Accounting profit before tax (after solidarity
contribution)
(Profit)/loss activities not subject to income tax
Accounting profit subject to income tax
Income tax expense calculated at 16%
Effect of income exempt of taxation
Effect of expenses that are not deductible in
determining taxable profit
Effect of current income tax reduction, due to tax
facilities
Effect of tax incentive for reinvested profit
Effect of the benefit from tax credits, used to
reduce current tax expense
Effect of deferred tax relating to the origination and
reversal of temporary differences
Effect of the benefit from tax credits, used to
reduce deferred tax expense
Income tax expense
3,121,104
4,790
3,125,894
500,143
(105,545)
220,398
(64,388)
(5,092)
23,367
49,761
(29,485)
589,159
2,201,939
3,806
2,205,745
352,919
(112,807)
39,260
(19,906)
(8,001)
30,505
(24,479)
(18,061)
239,430
22
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Components of deferred tax (asset)/liability:
December 31, 2022
December 31, 2021
Cumulative
temporary
differences
'000 RON
(430,452)
(297,761)
(494,982)
(977)
(34,956)
(97,576)
(1,356,704)
151,676
Deferred tax
(asset)/ liability
'000 RON
(68,873)
(47,642)
(79,197)
(156)
(5,593)
(15,612)
(217,073)
24,268
Cumulative
temporary
differences
'000 RON
(596,010)
(187,193)
(610,253)
(977)
(33,205)
(372,912)
(1,800,550)
167,077
(27,666)
(4,427)
(39,598)
124,010
(1,232,694)
127,479
(1,673,071)
19,841
(197,232)
(70,459)
(68,204)
(2,255)
Deferred
tax (asset)/
liability
'000 RON
(95,361)
(29,951)
(97,640)
(156)
(5,313)
(59,666)
(288,087)
26,732
(6,336)
20,396
(267,691)
(5,023)
(10,519)
5,496
Provisions
Property, plant and equipment
Exploration assets *)
Financial investments
Inventory
Receivables and other assets
Total
Assets held for disposal
Liabilities directly associated with Assets
held for disposal
Total for assets held for disposal and
associated liabilities
Total General
Change, out of which:
-
-
In current year’s result
in other comprehensive
income
*) According to the Fiscal Code applicable in Romania, expenses related to location, exploration, development or any
preparatory activity for the exploitation of natural resources, which, according to the applicable accounting
regulations, are recorded directly in the result, are recovered in equal rates for a period of 5 years, starting with the
month in which the expenses are incurred. Also, for fixed assets specific to the exploration and production of gas
resources, the carrying tax value of fixed assets written off is deducted using the tax depreciation method used
before their write-off for the remaining period. All of these costs are treated as assets only from a tax point of view
and generate a deferred tax asset.
b) Solidarity contribution
In 2022, a solidarity contribution was introduced in Romania as a result of Council Regulation (EU) 2022/1854 on an
emergency intervention to address high energy prices. The temporary solidarity contribution is calculated at a rate of
60% of taxable profits, as determined under national tax rules, in the fiscal years 2022 and 2023 which are above a
20% increase of the average of the taxable profits, as determined under national tax rules, in the four fiscal years
starting on or after 1 January 2018. The contribution for 2022 is of RON 1,002,790 thousand. The tax is due for
payment in June, 2023.
23
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
12.
PROPERTY, PLANT AND EQUIPMENT
Land and
land
improvements
'000 RON
Buildings
'000 RON
Cost
As of January 1, 2022
96,815
708,494
Additions
Transfers
Disposals
37
576
-
2,381
8,265
(846)
Gas
properties
'000 RON
7,146,398
1,175
252,661
(218,407)
As of December 31, 2022
97,428
718,294
7,181,827
Accumulated depreciation
As of January 1, 2022
Depreciation *)
Disposals
As of December 31, 2022
Impairment
-
-
-
-
310,320
4,652,369
19,096
(248)
262,236
(24,513)
329,168
4,890,092
As of January 1, 2022
3,180
50,109
649,714
Charge
Transfers
Release
-
-
-
2,468
4
(617)
As of December 31, 2022
3,180
51,964
50,668
43,787
(92,492)
651,677
Carrying value
As of January 1, 2022
93,635
348,065
1,844,315
As of December 31, 2022
94,248
337,162
1,640,058
Plant,
machinery
and
equipment
'000 RON
Fixtures,
fittings and
office
equipment
Storage
assets
Tangible
exploration
assets
'000 RON
'000 RON
'000 RON
Capital
work in
progress
'000 RON
1,969,733
351,229
(288,695)
(4,864)
Total
'000 RON
11,549,235
451,331
-
(320,917)
213,387
-
-
-
335,940
96,504
(24,311)
(71,639)
213,387
336,494
2,027,403
11,679,649
7,767
-
-
7,767
-
-
-
-
-
-
-
-
5,734,721
341,754
(49,529)
6,026,946
2,101
161,085
304,760
1,254,926
-
-
(4)
66,466
-
(66,042)
79,558
(44,747)
(31,952)
202,284
-
(191,565)
2,097
161,509
307,619
1,265,645
203,519
174,855
1,664,973
4,559,588
203,523
174,985
1,719,784
4,387,058
970,774
-
48,895
(19,989)
999,680
681,169
54,315
(19,690)
715,794
82,794
3,033
956
(358)
86,425
206,811
197,461
107,694
5
2,609
(5,172)
105,136
83,096
6,107
(5,078)
84,125
1,183
91
-
(100)
1,174
23,415
19,837
*) The amounts include depreciation of tangible assets used in the production of other fixed assets, capitalized in their cost, amounting to RON 26,047 thousand.
24
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Land and
land
improvements
'000 RON
96,737
78
-
-
96,815
-
-
-
-
Cost
As of January 1, 2021
Additions
Transfers
Disposals
As of December 31, 2021
Accumulated depreciation
As of January 1, 2021
Depreciation *)
Disposals
As of December 31, 2021
Impairment
As of January 1, 2021
3,180
Charge
Transfers
Release
-
-
-
As of December 31, 2021
3,180
Carrying value
Buildings
'000 RON
689,051
237
19,349
(143)
Gas
properties
'000 RON
7,103,831
9,204
149,970
(116,607)
708,494
7,146,398
288,584
4,325,133
21,772
(36)
327,414
(178)
310,320
4,652,369
33,635
389
16,500
(415)
50,109
553,625
101,784
21,675
(27,370)
649,714
As of January 1, 2021
93,557
366,832
2,225,073
As of December 31, 2021
93,635
348,065
1,844,315
Plant,
machinery
and
equipment
'000 RON
914,291
799
59,994
(4,310)
970,774
627,603
57,844
(4,278)
681,169
82,995
411
-
(612)
82,794
203,693
206,811
Fixtures,
fittings and
office
equipment
'000 RON
99,461
-
8,233
-
107,694
77,057
6,040
(1)
83,096
1,178
16
-
(11)
1,183
21,226
23,415
Storage
assets
'000 RON
213,387
-
-
-
213,387
7,765
2
-
7,767
Tangible
exploration
assets
'000 RON
333,606
91,862
-
(89,528)
Capital
work in
progress
'000 RON
1,909,977
318,856
(237,546)
(21,554)
Total
'000 RON
11,360,341
421,036
-
(232,142)
335,940
1,969,733
11,549,235
-
-
-
-
-
-
-
-
5,326,142
413,072
(4,493)
5,734,721
2,101
213,398
255,924
1,146,036
-
-
-
38,035
-
(90,348)
125,111
(38,175)
(38,100)
265,746
-
(156,856)
2,101
161,085
304,760
1,254,926
203,521
120,208
1,654,053
4,888,163
203,519
174,855
1,664,973
4,559,588
*) The amounts include depreciation of tangible assets used in the production of other fixed assets, capitalized in their cost, amounting to RON 24,001 thousand.
25
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Impairment of property, plant and equipment
Note 2 contains information on the conditions under which impairment losses for individual assets are recognized.
Impairment of assets in the Upstream segment
The Company did not perform an impairment test as of December 31, 2022. Based on internal analyses, no
impairment indicators were identified. In addition to this, the Company considers the market to be too volatile in terms
of prices and regulations so that any impairment test performed under such conditions would not generate reliable
results.
13.
EXPLORATION AND APPRAISAL FOR NATURAL GAS RESOURCES
The following financial information represents the amounts included within the Company’s totals relating to activity
associated with the exploration for and appraisal of natural gas resources.
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
Exploration assets written off
Seismic, geological, geochemical studies
Exploration expenses
Net movement in exploration assets’ impairment
(net income)/net loss
Net cash used in exploration investing activities
16
59,053
59,069
66,447
(96,500)
33
1,164
1,197
37,046
(91,865)
Exploration assets (note 12)
Liabilities
Net assets
December 31, 2022
'000 RON
December 31, 2021
'000 RON
174,985
(13,218)
161,767
174,855
(7,904)
166,951
26
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
14. OTHER INTANGIBLE ASSETS. RIGHT OF USE ASSETS
a) Other intangible assets
Cost
As of January 1
Additions
Disposals
As of December 31
Accumulated amortization
As of January 1
Charge
Disposals
As of December 31
Carrying value
As of January 1
As of December 31
b) Right of use assets
Cost
As of January 1
Effects of rent index updates
New contracts
Terminated contracts
As of December 31
Accumulated amortization
As of January 1
Charge
Terminated contracts
As of December 31
Carrying value
As of January 1
As of December 31
2021
'000 RON
184,834
5,110
(22,803)
167,141
170,804
3,851
(22,777)
151,878
14,030
15,263
2021
'000 RON
8,887
132
-
-
9,019
1,445
835
-
2,280
7,442
6,739
2022
'000 RON
167,141
9,098
(53,693)
122,546
151,878
4,649
(53,716)
102,811
15,263
19,735
2022
'000 RON
9,019
380
578
(59)
9,918
2,280
911
(59)
3,132
6,739
6,786
27
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
15.
INVENTORIES
Spare parts and materials
Finished goods (gas)
Other inventories
Write-down allowance for spare parts and
materials
Write-down allowance for other inventories
Total
16. ACCOUNTS RECEIVABLE
a)
Trade and other receivables
December 31, 2022
'000 RON
December 31, 2021
'000 RON
203,094
129,190
700
(58,437)
(16)
274,531
156,144
189,594
867
(53,548)
(91)
292,966
December 31, 2022
'000 RON
December 31, 2021
'000 RON
Trade receivables
Allowances for expected credit losses (note 16 c)
Accrued receivables
Allowances for expected credit losses on accrued
receivables (note 16 c)
Total
1,471,250
(724,386)
587,299
-
1,334,163
1,747,458
(924,030)
519,529
(7,839)
1,335,118
Trade receivables from gas deliveries are generally due within 30 days of invoice issue. These must be guaranteed
by customers through bank letters of guarantee. If customers do not provide such a guarantee, they must ensure that
natural gas is paid in advance.
The Company is forced by court orders to sell gas to insolvent clients considered “captive” by the insolvency law.
These clients provide no guarantees, do not pay for deliveries in advance and have a payment term of 90 days from
invoice issue date.
Trade receivables from the sale of electricity are generally due within 7 days of the date of invoice transmission.
These must be guaranteed by customers through bank letters of guarantee. If customers do not provide such a
guarantee, they must ensure that electricity is paid in advance.
b)
Other assets
Loans to subsidiaries *)
Interest on loans to subsidiaries
Total other assets (long term)
Advances paid to suppliers
Joint operation receivables
Other receivables **)
Allowance for expected credit losses other
receivables (note 16 c) **)
Other debtors
Allowances for expected credit losses for other
debtors (note 16 c)
Prepayments
VAT not yet due
Other taxes receivable ***)
Total other assets (short term)
December 31, 2022
'000 RON
December 31, 2021
'000 RON
27,359
363
27,722
-
10,550
36,921
(172)
58,487
(50,055)
9,829
3,072
182,290
250,922
28
-
-
-
109
8,201
47,103
(186)
49,922
(49,442)
5,368
5,404
6
66,485
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
*) In 2022 the Company acquired 100% of shares in ExxonMobil Exploration and Production Romania Limited
(currently Romgaz Black Sea Limited), becoming a fully owned subsidiary (note 25 a). As Romgaz Black Sea Limited
does not generate any revenue, it needs full support from the Company to finance its operational and investment
activities. The Company and Romgaz Black Sea Limited signed a finance agreement for a total amount of RON
123,630 thousand at an interest rate of 12M ROBOR + 1.74%. The loan is due on June 30, 2028. Amounts are drawn
on an as-needed basis.
**) During the period December 2016 - April 2017 ANAF resumed the tax inspection on VAT for the period December
2010 – June 2011 and on income tax for the period January 2010 – December 2011, regarding the discounts granted
by Romgaz to interruptible clients for deliveries during 2010 - 2011. This status was attributed to companies by
Transgaz, the Romanian natural gas transmission operator. Following the tax inspection, additional tax obligations of
RON 15,284 thousand were determined, and also penalties and late payment charges in amount of RON 3,129
thousand. The tax decision and the tax inspection report were appealed to ANAF. Romgaz paid the additional tax
obligation and the late payment charges and based on the appeal, the Company recorded a receivable for which it
recorded an allowance. In 2021, the court ruled in favor of the Company, so that the related allowance was released
to income. The Company recovered this amount in 2023.
***) Other taxes receivable relate to gas and electricity windfall taxes (RON 142,234 thousand for gas, respectively,
RON 40,049 thousand for electricity). The Company expects to recover these in 2023.
c)
Changes in the allowance for expected credit losses for trade and other receivables and other assets
At January 1
Charge in the allowance for other receivables
(note 6)
Charge in the allowance for trade receivables
Write-off against trade receivables *)
Release in the allowance for other receivables
(note 6)
Release in the allowance for trade receivables
At December 31
2022
'000 RON
981,497
1,831
124,247
(262,649)
(1,232)
(69,081)
774,613
2021
'000 RON
1,359,855
1,402
32,529
-
(29,771)
(382,518)
981,497
*) In 2022, the Company wrote-off receivables of RON 262,649 thousand representing receivables not allowed by
courts in insolvency proceedings of the respective clients. The write-off had no impact on the 2022 results, as those
receivables were already impaired.
As of December 31, 2022, the Company recorded allowances for doubtful debts, of which Interagro RON 68,141
thousand (December 31, 2021: RON 264,529 thousand), GHCL Upsom of RON 0 thousand (December 31, 2021:
RON 68,103 thousand), CET Iasi of RON 46,271 thousand (December 31, 2021: RON 46,271 thousand),
Electrocentrale Galati with RON 168,620 thousand (December 31, 2021: RON 192,342 thousand), Liberty Galați
with RON 85,261 thousand (December 31, 2021: RON 0 thousand), Electrocentrale Bucuresti with RON 243,547
thousand (December 31, 2021: RON 252,225 thousand), G-ON EUROGAZ of RON 14,848 thousand (December 31,
2021: RON 14,848 thousand) and Electrocentrale Constanta of RON 38,027 thousand (December 31, 2021: RON
60,766 thousand), due to existing financial conditions of these clients as well as ongoing litigating cases related to
these receivables or exceeding payment terms.
29
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
d)
Credit risk exposure for trade receivables
December 31, 2022
Current receivables, including accrued
receivables
less than 30 days overdue
30 to 90 days overdue
90 to 360 days overdue
over 360 days overdue
Total trade receivables
December 31, 2021
Current receivables, including accrued
receivables
less than 30 days overdue
30 to 90 days overdue
90 to 360 days overdue
over 360 days overdue
Total trade receivables
17.
SHARE CAPITAL
Gross carrying amount
'000 RON
Expected credit loss
rate
%
Lifetime expected
credit losses
‘000 RON
1,333,424
6,130
32,362
73,501
613,132
2,058,549
0.00
91.24
99.96
99.73
100.00
13
5,593
32,348
73,300
613,132
724,386
Gross carrying amount
'000 RON
Expected credit loss
rate
%
Lifetime expected
credit losses
‘000 RON
1,010,199
10,789
578
14,213
1,231,208
2,266,987
0.79
1.24
46.19
99.07
73.86
7,973
134
267
14,081
909,414
931,869
December 31, 2022
‘000 RON
December 31, 2021
‘000 RON
385,422,400 fully paid ordinary shares
Total
385,422
385,422
The shareholding structure as at December 31, 2022 is as follows:
The Romanian State through the
Ministry of Energy
Legal persons
Physical persons
Total
No. of shares
269,823,080
96,125,570
19,473,750
385,422,400
Value
‘000 RON
269,823
96,125
19,474
385,422
385,422
385,422
Percentage (%)
70.01
24.94
5.05
100
All shares are ordinary and were subscribed and fully paid as at December 31, 2022. All shares carry equal voting
rights and have a nominal value of RON 1/share (December 31, 2021: RON 1/share).
30
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
18.
RESERVES
Legal reserves
Other reserves, of which:
- Company’s development fund
- Reinvested profit
- Geological quota set up until 2004
- Other reserves
Total
19.
PROVISIONS
Decommissioning provision (note 19 a)
Retirement benefit obligation (note 19 c)
Total long term provisions
Decommissioning provision (note 19 a)
Litigation provision (note 19 b)
Other provisions *) (note 19 b)
Total short term provisions
Total provisions
December 31, 2022
'000 RON
December 31, 2021
'000 RON
77,084
3,415,144
2,543,502
365,529
486,388
19,725
3,492,228
77,084
2,843,090
2,003,275
333,702
486,388
19,725
2,920,174
December 31, 2022
'000 RON
December 31, 2021
'000 RON
186,778
158,934
345,712
22,046
6,620
284,201
312,867
658,579
377,157
144,880
522,037
20,882
3,554
204,441
228,877
750,914
*) On December 31, 2022, other provisions of RON 284,201 thousand include the provision for employee’s
participation to profit of RON 38,094 thousand (December 31, 2021: RON 35,777 thousand), the provision for taxes
of RON 10,207 thousand (December 31, 2021: RON 7,161 thousand) and the provision for CO2 certificates of RON
228,126 thousand (December 31, 2021: RON 154,904 thousand). The provision for CO2 certificates increased
compared to 2021 due to a higher electricity production (+73.5%) that needed higher gas consumption.
a)
Decommissioning provision
(i) Decommissioning provision movement for non-current assets
At January 1
Additional provision recorded against non-current
assets
Unwinding effect (note 9)
Recorded in profit or loss
Change recorded against non-current assets
At December 31
2022
'000 RON
398,039
1,175
19,834
(75,471)
(134,753)
208,824
2021
'000 RON
511,022
9,209
14,825
(20,588)
(116,429)
398,039
The Company makes full provision for the future cost of decommissioning natural gas wells on a discounted basis
upon installation. The provision for the costs of decommissioning these wells at the end of their economic lives has
been estimated using existing technology, at current prices or future assumptions, depending on the expected timing
of the activity, and discounted using a rate of 8.19% (year ended December 31, 2021: 5.14%). While the provision is
based on the best estimate of future costs and the economic lives of the wells, there is uncertainty regarding both the
amount and timing of these costs.
31
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
The increase with 1 percentage point of the discount rate would decrease the decommissioning provision (including
the decommissioning provision for assets held for disposal) with RON 34,492 thousand. The decrease with 1
percentage point of the discount rate would increase the decommissioning provision (including the decommissioning
provision for assets held for disposal) with RON 44,053 thousand.
The increase with 1 percentage point of the inflation rate would increase the decommissioning provision (including
the decommissioning provision for assets held for disposal) with RON 45,813 thousand. The decrease with 1
percentage point of the inflation rate would decrease the decommissioning provision (including the decommissioning
provision for assets held for disposal) with RON 36,173 thousand.
(ii) Decommissioning provision movement for assets held for disposal
At January 1
Additional provision recorded against assets held
for disposal
Unwinding effect (note 9)
Recorded in profit or loss
Change recorded against assets held for disposal
At December 31
b)
Other provisions
At January 1, 2022
Additional provision recorded in the result
of the period
Provisions used in the period
Unused amounts during the period,
reversed
At December 31, 2022
At January 1, 2021
Additional provision recorded in the result
of the period
Provisions used in the period
Unused amounts during the period,
reversed
At December 31, 2021
c)
Retirement benefit obligation
Movement for retirement benefit obligation
At January 1
Interest cost
Current service cost
Payments during the year
Actuarial (gain)/loss of the period
Past service cost
At December 31
2022
'000 RON
39,598
149
1,834
(158)
(13,757)
27,666
Litigation provision
‘000 RON
Other provisions
‘000 RON
3,554
4,124
(948)
(110)
6,620
204,441
316,565
(211,893)
(24,912)
284,201
Litigation provision
‘000 RON
Other provisions
‘000 RON
1,380
2,966
(439)
(353)
3,554
128,340
239,608
(161,703)
(1,804)
204,441
2022
'000 RON
144,880
7,044
8,921
(9,484)
(14,096)
21,669
158,934
32
2021
'000 RON
49,935
1,702
1,357
(58)
(13,338)
39,598
Total
‘000 RON
207,995
320,689
(212,841)
(25,022)
290,821
Total
‘000 RON
129,720
242,574
(162,142)
(2,157)
207,995
2021
'000 RON
119,432
3,721
5,547
(18,177)
34,357
-
144,880
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
With the exception of actuarial gains/losses, all other movements in the retirement benefit obligation are recognized
in the result of the period.
In determining the retirement benefit obligation, the following significant assumptions were used:
No layoffs or restructurings are planned;
Average discount rate: 8.1% (2021: 5%);
Average inflation rate: 16.3% in 2022; 11.2% in 2023; 6.1% in 2024; 3.6% in 2025; 2.7% in the 2026; 2.5% in
2027-2031 period, following a decreasing trend in the next years (2021: 5.9% in 2022; 3.2% in 2023; 3% in 2024;
2.8% in 2025; 2.5% in the 2026-2031 period, following a decreasing trend in the next years).
Sensitivity analysis
The discount rate has a significant effect on the obligation. Isolated change in assumptions with 1 percentage point
would have the following effect on the obligation:
Average discount rate
Salaries’ growth rate
Maturity analysis of payment cash flows
Up to 1 year
1-2 years
2-5 years
5-10 years
Over 10 years
20.
DEFERRED REVENUE
Amounts collected from NIP (note 20 a)
Other deferred revenue
Other amounts received as subsidies
Total long term deferred revenue
Other amounts received as subsidies
Other deferred revenue
Total short term deferred revenue
Increase of 1% in assumptions
'000 RON
Decrease of 1% in assumptions
'000 RON
(12,848)
14,662
15,645
(13,851)
Benefit payments
'000 RON
12,882
13,325
50,085
130,845
565,833
December 31, 2022
'000 RON
December 31, 2021
'000 RON
230,169
145
105
230,419
7
4
11
230,169
157
112
230,438
7
42
49
Total deferred revenue
230,430
230,487
a) National Investment Plan
In Government Decision no. 1096/2013 approving the mechanism for the free allocation of greenhouse gas emission
allowances to electricity producers for the period 2013-2020, Annex no. 3 "National Investment Plan" (NIP) at Item
22, S.N.G.N. ROMGAZ S.A. is included with the investment "Combined Gas Turbine Cycle".
For this investment, in 2017 Romgaz signed a financing agreement with the Ministry of Energy, whereby the Ministry
of Energy undertakes to grant a non-reimbursable financing of RON 320,912 thousand, representing a maximum of
25% of the total value of the eligible expenditure of the investment. By December 31, 2022 the Company collected
RON 230,169 thousand. Amounts received under this contract will be transferred to income based on the
depreciation rate of the investment.
33
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
By Government Decision no. 834/2022 the deadline until the investments financed from the National Investment Plan
must be put into operation has been extended until December 31, 2023.
By December 31, 2022, the Company submitted two other reimbursement requests amounting to RON 62,150
thousand.
As the term of the work contract for the realization of the investment was not extended, the Company is negotiating
the terms for a new contract to complete the outstanding works.
At January 1, 2022
Amounts in revenue
At December 31, 2022
At January 1, 2021
Received
Amounts in revenue
At December 31, 2021
Amounts collected
from NIP
'000 RON
Other amounts
received as subsidies
'000 RON
230,169
-
230,169
119
(7)
112
Amounts collected
from NIP
'000 RON
Other amounts
received as subsidies
'000 RON
136,021
94,148
-
230,169
128
-
(9)
119
Total
'000 RON
230,288
(7)
230,281
Total
'000 RON
136,149
94,148
(9)
230,288
21.
TRADE AND OTHER CURRENT LIABILITIES
December 31, 2022
'000 RON
December 31, 2021
'000 RON
Accruals
Trade payables
Payables to fixed assets suppliers
Total trade payables
Payables related to employees
Royalties *)
Contribution to Energy Transition Fund
Social security taxes
Other current liabilities
VAT
Dividends payable
Windfall tax (see note 16 b)
Other taxes
Total other liabilities
Total trade and other liabilities
20,688
40,868
25,347
86,903
56,624
142,651
11,931
34,896
11,635
19,048
1,225
-
1,787
279,797
366,700
28,123
23,830
19,315
71,268
39,487
397,887
-
31,668
7,413
84,764
1,116
363,996
1,294
927,625
998,893
*) The decrease in royalty liability is due to changes in national legislation, according to which prices used to
determine the royalty in the fourth quarter of 2022 are capped at the level of prices the Company has the obligation to
invoice some of its clients.
34
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
22.
FINANCIAL INSTRUMENTS
Financial risk factors
The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, inflation risk,
interest rate risk), credit risk, liquidity risk. The Company’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial
performance within certain limits. However, the use of this approach does not prevent losses outside of these limits in
the event of more significant market movements. The Company does not use derivative financial instruments to
hedge certain risk exposures.
(a) Market risk
(i)
Foreign exchange risk
The Company is exposed to currency risk as a result of exposure to various currencies. Foreign exchange risk arises
from future commercial transactions and recognized assets and liabilities.
The Company is mainly exposed to currency risk generated by EUR against RON as a result of the interest-bearing
loan described in note 29.
As of December 31, 2022, the official exchange rate was RON 4.9474 to EUR 1 (December 31, 2021: RON 4.9481 to EUR
1).
EUR
1 EUR =
4.9474
'000 RON
GBP
1 GBP =
5.5878
'000 RON
USD
1 USD =
4.6346
'000 RON
RON
1 RON
'000 RON
Total
'000 RON
December 31, 2022
Financial assets
Cash and cash equivalents
Loans to subsidiaries
Trade and other receivables
Total financial assets
Financial liabilities
77,760
-
-
77,760
Trade payables and other payables
Lease liability
Borrowings
(18)
(3,584)
(1,447,115)
Total financial liabilities
(1,450,717)
Net
December 31, 2021
Financial assets
Cash and cash equivalents
Other financial assets
Trade and other receivables
Total financial assets
Financial liabilities
Trade payables and other payables
Lease liability
Total financial liabilities
Net
(1,372,957)
EUR
1 EUR =
4.9481
'000 RON
311
-
-
311
(22)
(3,656)
(3,678)
(3,367)
3
-
-
3
-
-
-
-
3
8
-
-
8
(25)
-
-
(25)
(17)
GBP
1 GBP =
5.8994
'000 RON
USD
1 USD =
4.3707
'000 RON
12
-
-
12
-
-
-
1
-
-
1
(14)
-
(14)
(13)
35
1,789,799
27,722
746,864
1,867,570
27,722
746,864
2,564,385
2,642,156
(66,172)
(4,523)
-
(66,215)
(8,107)
(1,447,115)
(70,695)
(1,521,437)
2,493,690
1,120,719
RON
1 RON
'000 RON
Total
'000 RON
3,572,327
3,572,651
378,699
823,428
378,699
823,428
4,774,454
4,774,778
(43,109)
(4,364)
(43,145)
(8,020)
(47,473)
(51,165)
12
4,726,981
4,723,613
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
The Company is mainly exposed to currency risk generated by EUR against RON. The table below details the
sensitivity of the Company to a 5% increase/decrease in the EUR exchange rate against the RON. The 5% rate is the
rate used in internal reports to management on foreign currency risk and represents management's assessment of
reasonable changes in the exchange rate. Sensitivity analysis includes only monetary items denominated in foreign
currency in the balance sheet, and considers the transfer at the end of the period to a modified rate of 5%.
RON weakening - loss
RON strengthening - gain
(ii)
Inflation risk
December 31, 2022
‘000 RON
December 31, 2021
‘000 RON
(68,648)
68,648
(168)
168
The official annual inflation rate in Romania for 2022 was 13.8% as provided by the National Commission for Statistics of
Romania. The cumulative inflation rate for the last 3 years was under 100%. This factor, among others, led to the
conclusion that Romania is not a hyperinflationary economy.
(iii)
Interest rate risk
The Company is exposed to interest rate risk, due to retirement benefit obligations, the decommissioning provision and
interest-bearing loans. The Company’s sensitivity to changes in the discount rate is detailed in note 19.
An increase of 1% in the interest rate on the borrowings would lead to an increase of the interest expense of RON 4,325
thousand.
Bank deposits and treasury bills bear a fixed interest rate.
(b)
Credit risk
Financial assets, which potentially subject the Company to credit risk, consist principally of trade receivables. The Company
has policies in place to ensure that sales are made to customers with low credit risk. Also, sales have to be secured, either
through advance payments, either through bank letters of guarantee. The carrying amount of accounts receivable, net of
bad debt allowances, represents the maximum amount exposed to credit risk. The Company has a concentration of credit
risk in respect of its top three clients, which amounts to 89.72% of net trade receivable balance at December 31, 2022 (its
top client: 90.91% as of December 31, 2021).
In spite of the policies described above, the Company is forced by court orders to deliver gas to insolvent clients deemed
“captive” by insolvency legislation. As these clients did not generate outstanding balances since the start of their insolvency
proceedings, the Company estimates lifetime expected credit losses to be zero.
Although collection of receivables could be influenced by economic factors, management believes that there is no
significant risk of loss to the Company beyond the bad debt allowance already recorded.
(c)
Capital risk management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to minimize the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the dividend policy, issue new shares or
sell assets to reduce debt.
The Company’s policy is to only resort to borrowing if investment needs cannot be financed internally. As such, in
2022 the Company obtained a loan of EUR 325 million (note 29) to finance the acquisition of ExxonMobil Exploration
and Production Romania Limited.
The Company’s capital management aims to ensure that it meets financial covenants attached to the interest-bearing
loans. Breaches in meeting the financial covenants would permit the bank to immediately call borrowings. There have
been no breaches of the financial covenants of interest-bearing loans in the current period.
(d)
Fair value estimation
Carrying amount of financial assets and liabilities is assumed to approximate their fair values.
Financial instruments in the balance sheet include trade receivables and other receivables, cash and cash
equivalents, loans, other financial assets, trade and other payables, interest-bearing borrowings. The estimated fair
values of these instruments approximate their carrying amounts. The carrying amounts represent the Company’s
maximum exposure to credit risk for existing receivables.
36
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
e)
Maturity analysis for financial assets and financial liabilities at amortized cost
The table below shows financial assets and financial liabilities of the Company on contractual maturities. The
amounts represent non-discounted future cash flows generated by financial assets and financial liabilities.
December
31, 2022
Loans to
subsidiaries
Trade
receivables
Total
Trade
payables
Borrowings
Lease
liabilities
Total
Net
December
31, 2021
Trade
receivables
Bank deposits
Treasury
bonds
Total
Trade
payables
Lease
liabilities
Total
Net
Due in
less than
a month
‘000 RON
Due in
1-3 months
‘000 RON
-
-
557,735
557,735
127,111
127,111
Due in
3 months
to 1 year
‘000 RON
-
62,018
62,018
Due in
1-5 years
‘000 RON
Due in over
5 years
‘000 RON
-
-
-
27,722
-
27,722
Total
‘000 RON
27,722
746,864
774,586
(54,096)
-
(77)
(54,173)
503,562
Due in
less than
a month
‘000 RON
420,823
288,629
92,010
801,462
(39,874)
(63)
(39,937)
761,525
(12,119)
(84,892)
-
(253,397)
-
(1,152,132)
-
-
(66,215)
(1,490,421)
(191)
(748)
(2,962)
(97,202)
(254,145)
(1,155,094)
29,909
(192,127)
(1,155,094)
(4,129)
(4,129)
23,593
(8,107)
(1,564,743)
(790,157)
Due in
1-3 months
‘000 RON
Due in
3 months
to 1 year
‘000 RON
Due in
1-5 years
‘000 RON
Due in over
5 years
‘000 RON
402,605
-
-
402,605
(3,236)
(155)
(3,391)
399,214
-
-
-
-
(35)
(591)
(626)
(626)
-
-
-
-
-
-
-
-
-
-
(3,322)
(3,322)
(3,322)
(3,889)
(3,889)
(3,889)
Total
‘000 RON
823,428
288,629
92,010
1,204,067
(43,145)
(8,020)
(51,165)
1,152,902
f)
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Company’s management, which has established
an appropriate liquidity risk management framework for the management of the Company’s short, medium and long-
term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate
reserves, by continuously monitoring forecast and current cash flows and by matching the maturity profiles of
financial assets and liabilities.
23.
RELATED PARTY TRANSACTIONS AND BALANCES
i.
Sales of goods and services
Subsidiaries *)
Associates
Total
Year ended
Dec 31, 2022
'000 RON
136,278
24,368
160,646
Year ended
Dec 31, 2021
'000 RON
116,086
21,858
137,944
*) Of RON 136,278 thousand representing revenue obtained from transactions with subsidiaries, RON 103,351
thousand relate to rental revenues (2021: RON 103,300 thousand).
37
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
The Company is controlled by the Ministry of Energy, on behalf of the Romanian State (note 17 a). As such, all
companies over which the Ministry of Energy has control or significant influence are considered related parties of the
Company. No other ministry or agency of the Romanian State has control or significant influence over the Company,
therefore companies over which the Romanian State has control or significant influence through organizations other
than the Ministry of Energy are not considered related parties of the Company.
The table below shows the transactions of the Company with companies over which the Ministry of Energy has
control or significant influence:
Year ended
Dec 31, 2022
'000 RON
Year ended
Dec 31, 2021
'000 RON
Companies controlled by the Ministry of
Energy
Electrocentrale Constanța SA
Electrocentrale București SA
Companies significantly influenced by the
Ministry of Energy
OMV Petrom SA
Engie România SA
E.On Energie România SA
Total
ii.
Purchase of goods and services
Subsidiaries
Total
iii.
Interest income
Subsidiaries
Total
iv.
Trade receivables
Subsidiaries
Total
v.
Net lease investment
Subsidiaries
Total
vi.
Loans granted
110,748
1,549,292
430,287
2,581,062
1,883,418
6,554,807
Year ended
Dec 31, 2022
'000 RON
52,028
52,028
Year ended
Dec 31, 2022
'000 RON
363
363
79,030
1,186,844
226,109
792,479
777,395
3,061,857
Year ended
Dec 31, 2021
'000 RON
69,658
69,658
Year ended
Dec 31, 2021
'000 RON
-
-
December 31, 2022
'000 RON
December 31, 2021
'000 RON
16,018
16,018
11,131
11,131
December 31, 2022
'000 RON
December 31, 2021
'000 RON
374
374
432
432
38
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Subsidiaries
Total
vii.
Trade payables
Subsidiaries
Total
December 31, 2022
'000 RON
December 31, 2021
'000 RON
27,359
27,359
-
-
December 31, 2022
'000 RON
December 31, 2021
'000 RON
3,861
3,861
5,663
5,663
24.
INFORMATION REGARDING THE MEMBERS OF THE ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY
BODIES
The remuneration of executives and directors
The Company has no contractual obligations on pensions to former executives and directors of the Company.
During the years ended December 31, 2022 and December 31, 2021, no loans and advances were granted to
executives and directors of the Company, except for work related travel advances, and they do not owe any amounts
to the Company from such advances.
Salaries paid to executives (gross)
of which, bonuses (gross)
Remuneration paid to directors (gross)
of which, variable component (gross)
Salaries payable to executives
Salaries payable to directors
Year ended
December 31, 2022
'000 RON
Year ended
December 31, 2021
'000 RON
21,361
2,298
1,670
-
15,728
1,191
1,580
-
December 31, 2022
'000 RON
December 31, 2021
'000 RON
644
87
616
80
25.
INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES
a)
Investment in subsidiaries
Subsidiaries’ name
Main activity
SNGN ROMGAZ SA –
Filiala de
Înmagazinare Gaze
Naturale DEPOGAZ
Ploiesti SRL
Natural gas storage
Romgaz Black Sea
Gas exploration and
Limited
production
Country of
residence and
operations
Romania
Country of
incorporation –
Bahamas
Country of
operations –
Romania
Percentage of interest held (%)
December 31, 2022
December 31, 2021
100
100
100
-
SNGN ROMGAZ SA – Filiala de Înmagazinare
Gaze Naturale DEPOGAZ Ploiesti SRL
66,056
66,056
Cost at
December 31, 2022
’000 RON
Cost at
December 31, 2021
’000 RON
39
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Romgaz Black Sea Limited *)
Total
5,118,995
5,185,051
-
66,056
*) On August 1, 2022, Romgaz completed the acquisition of ExxonMobil Exploration and Production Romania Limited
(currently Romgaz Black Sea Limited). This company holds 50% of the acquired rights and obligations under the
Petroleum Agreement for the Deep Water Zone of Neptun XIX offshore Block in the Black Sea. Following this
transaction, Romgaz became the sole shareholder of the acquired company. Therefore Romgaz has control over
Romgaz Black Sea Limited.
According to the provisions of the shares’ acquisition agreement, the price paid by Romgaz was RON 5,126,347
thousand. Based on the acquisition agreement, this price was decreased by the end of 2022 with RON 7,352
thousand, based on the level of working capital of Romgaz Black Sea Limited at completion date. This amount was
received in 2023.
b)
Investment in associates
Name of associate
Main activity
Place of
incorporation
and operation
SC Depomures SA
Storage of natural
Tg.Mures
SC Agri LNG Project
Company SRL
gas
Romania
Feasibility projects
Romania
Proportion of interest held (%)
December 31, 2022
December 31, 2021
40
25
40
25
Name of
associate
SC
Depomures
SA Tg.Mures
SC Agri LNG
Project
Company
SRL
Total
Cost
as of
December
31, 2022
Impairment
as of
December
31, 2022
Carrying
value as of
December
31, 2022
Cost
as of
December
31, 2021
Impairment
as of
December
31, 2021
Carrying
value as of
December
31, 2021
’000 RON
’000 RON
’000 RON
’000 RON
’000 RON
’000 RON
120
-
120
120
-
120
977
1,097
(977)
(977)
-
120
977
1,097
(977)
(977)
-
120
26.
OTHER FINANCIAL INVESTMENTS
Other financial investments are measured at fair value through profit or loss.
Except for the investment in Patria Bank, which is a level 1 financial investment, all other investments are included in
level 3 category, according to IFRS 13.
Company
Principal activity
Electrocentrale
București S.A.
Patria Bank S.A.
Mi Petrogas
Services S.A.
Lukoil
association
Electricity
Producers
Association-
HENRO
Electricity and thermal
power producer
Other activities –
financial
intermediations
Services related to oil
and natural gas
extraction, excluding
prospections
Petroleum exploration
operations
Non-governmental, non-
profit, independent
association
Place of
incorporation and
operation
Proportion of ownership interest and voting
power held (%)
December 31, 2022
December 31, 2021
Romania
Romania
Romania
Romania
2.49
0.02
10
12.2
2.49
0.02
10
12.2
Romania
33.33
33.33
40
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Company
Electrocentrale București S.A. *)
Patria Bank S.A.**)
Mi Petrogas Services S.A.
Lukoil association
Electricity Producers Association-HENRO
Total
Fair value as of
December 31, 2022
’000 RON
Fair value as of
December 31, 2021
’000 RON
-
79
60
5,227
250
5,616
-
79
60
5,227
250
5,616
*) The fair value of the investment in Electrocentrale Bucuresti was reduced to zero after entering into insolvency.
The investment in Electrocentrale Bucuresti is not quoted. The company successfully concluded the restructuring
plan in February 2023. These financial statements do not include any adjustments related to this event.
**) In 2016, the Company's shareholders decided to withdraw Romgaz from the bank's shareholders, as a result of
the merger process in which Patria Bank was involved. In 2021, the approval of the BNR was obtained for the partial
redemption of the shares that the Company holds in Patria Bank. The shares of Patria Bank S.A. are listed, but
following the merger process, the price at which the redemption of the shares held by the shareholders who
requested the withdrawal from the shareholding was set to a fixed value. Thus, the investment is measured at this
redemption value.
27.
CASH AND CASH EQUIVALENTS
Current bank accounts *)
Petty cash
Term deposits
Restricted cash **)
Amounts under settlement
Total
December 31, 2022
'000 RON
December 31, 2021
'000 RON
106,252
45
1,759,683
1,584
6
1,867,570
70,784
46
3,500,287
1,534
-
3,572,651
*) Current bank accounts include overnight deposits.
**) At December 31, 2022 restricted cash refers to bank accounts used only for dividend payments to shareholders,
according to stock market regulations.
28. OTHER FINANCIAL ASSETS
Other financial assets represent mainly treasury bonds and deposits with a maturity of over 3 months, from
acquisition date. The Company did not identify any risk of loss for these assets, therefore it did not record any
impairment.
Treasury bonds in RON
Bank deposits in RON
Accrued interest receivable on bank deposits
Accrued interest on bonds
Total other financial assets
December 31, 2022
'000 RON
December 31, 2021
'000 RON
-
-
8,481
-
8,481
90,070
288,629
11,720
1,940
392,359
41
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
29.
INTEREST BEARING BORROWINGS
Interest rate
Maturity
EUR 325,000 thousand bank borrowing
EURIBOR 3M +
0.05% p.a.
June 30, 2027
Total
December 31,
2022
'000 RON
December 31,
2021
'000 RON
1,447,115
1,447,115
-
-
In March 2022, Romgaz signed a EUR 325 million financing deal with Raiffeisen Bank S.A. to finance part of the
purchase price of the shares of EMEPRL that holds 50% of the rights and obligations for the Neptun Deep block (note
25 a).
In June 2022, an addendum to the facility contract was signed between Romgaz acting as borrower and Raiffeisen
Bank S.A. and Banca Comerciala Romana S.A. as lenders.
The facility’s final maturity is in five years from utilization. There are no borrowing costs other than interest. The loan is
repayable in quarterly installments. The loan is not secured.
The fair value of the loan approximates its carrying value as it was obtained recently and it carries a variable rate of
interest.
30. ASSETS HELD FOR DISPOSAL AND RELATED LIABILITIES
As of April 1 2018, natural gas storage was transferred from Romgaz to SNGN ROMGAZ SA – Filiala de
Înmagazinare Gaze Naturale DEPOGAZ Ploiesti SRL.
The transfer of activity occurred as a result of the Company's legal obligation to achieve separation of natural gas
storage activity from natural gas production and supply in accordance with Directive 2009/73 / EC of the European
Parliament and of the Council of July 13, 2009 and the provisions of art. 141 align (1) of Law 123/2012.
The transfer involved the transfer of the license to the storage subsidiary, transfer of employees and the transfer of
the unfinished acquisitions until 31 March 2018. The transfer did not involve a sale. As a result of the transfer of
activity, the fixed assets were not transferred and they were leased to Depogaz.
At the end of 2018, the shareholders of the Company approved, in principle, to increase the share capital of Depogaz
with the assets used in the storage activity. Based on this decision, in 2019 the Company’s assets were measured in
order to determine the value of the share capital increase. In December 2019, the Company’s majority shareholder
called for a meeting to take a final decision on the increase; the final decision was taken in January 2020. Based on
the call of the majority shareholder in December 2019, the assets to be transferred, according to the Company’s
Board of Directors’ decision in February 2020, together with other related assets and liabilities were classified as held
for disposal as of December 31, 2022 and December 31, 2021. The transfer of assets has not been completed until
the date of approval of the financial statements, as all legal formalities have not been completed.
The major classes of assets and liabilities classified as held for disposal are:
December 31, 2022
'000 RON
December 31, 2021
'000 RON
Property, plant and equipment
Other intangible assets
Assets held for disposal
Provisions
Deferred tax liabilities
Liabilities directly associated with the assets
held for disposal
Net assets directly associated with the
disposal group
677,619
15
677,634
27,666
19,841
47,507
630,127
42
693,020
15
693,035
39,598
20,396
59,994
633,041
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
31.
COMMITMENTS UNDERTAKEN
Endorsements and collaterals granted
Total
December 31, 2022
'000 RON
December 31, 2021
'000 RON
312,689
312,689
62,947
62,947
In 2022, Romgaz signed an addendum to the credit agreement with BCR SA representing a facility for issuing letters
of guarantee, and opening letters of credit for a maximum amount of RON 420,000 thousand. On December 31, 2022
are still available for use RON 112,637 thousand.
As of December 31, 2022, the Company’s contractual commitments for the acquisition of non-current assets are of
RON 181,936 thousand (December 31, 2021: RON 264,129 thousand).
32.
COMMITMENTS RECEIVED
Endorsements and collaterals received
Total
December 31, 2022
'000 RON
December 31, 2021
'000 RON
2,124,357
2,124,357
1,251,309
1,251,309
Endorsements and collateral received represent letters of guarantee and other performance guarantees received
from the Company’s clients.
33.
CONTINGENCIES
(a)
Litigations
The Company is subject to several legal actions arisen in the normal course of business. The management of the
Company considers that they will have no material adverse effect on the results and the financial position of the
Company.
On December 28, 2011, 27 former and current employees were notified by DIICOT regarding an investigation related
to sale contracts signed with one of the Company’s clients for allegedly unauthorized discounts granted to this client
during the period 2005-2010. DIICOT mentioned that this may have resulted in a loss of USD 92,000 thousand for the
Company. On that sum, an additional burden to the state budget consists of income tax in amount of USD 15,000
thousand and VAT in amount of USD 19,000 thousand. The internal analysis carried out by the Company’s
specialized departments concluded that the agreement was in compliance with the legal provisions and all discounts
were granted based on Orders issued by the Ministry of Economy and Finance and decisions of the General
Shareholders’ Board and Board of Directors. The management of the Company believes the investigation will not
have a negative impact on the financial statements, to justify the registration of an adjustment. The Company is fully
cooperating with DIICOT in providing all information necessary. On March 18 2014, Romgaz received an address
from DIICOT, by which the investigators ordered an accounting expertise, indicating the objectives of the expertise.
Romgaz was notified that, as injured party, it may submit comments relating to objectives of the expertise
(additions/changes), and may appoint an additional expert to participate in the expertise.
Thus, Romgaz proceeded to identify and appoint an expert with accounting and financial expertise that can
participate to the expertise. After the report was completed, the parties could submit objections by November 2, 2015.
On March 16, 2016, DIICOT – Central Structure informed the persons involved in the cause about the start of legal
actions against them. At the request of investigators, the Company announced that in case of a prejudice being
established during the investigation, the Company will join the case as civil party.
In November 2016, DIICOT informed the Company the prejudice established in amount of RON 282,630 thousand.
Following this request, Romgaz announced that will join the case as a civil party for the amount of RON 282,630
thousand to recover this amount from the respective client and any other person that may be found guilty for causing
the prejudice.
In June 2017, DIICOT issued a press release announcing the referral to court of several persons involved in the case.
In January 2018, the High Court of Cassation and Justice ruled that the indictment prepared by DIICOT was not legal.
The Court issued a decision in December, 2022 stating there is no offence and the civil complaint filed by Romgaz
was left unresolved. Romgaz appealed the decision.
43
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
(b)
Taxation
The Romanian taxation system is undergoing a process of consolidation and harmonization with the European Union
legislation. However, there are still different interpretations of the fiscal legislation. In various circumstances, the tax
authorities may have different approaches to certain issues, and assess additional tax liabilities, together with late
payment interest and penalties. In Romania, tax periods remain open for fiscal verification for 5 years. The
Company’s management considers that the tax liabilities included in these financial statements are fairly stated.
(c)
Environmental contingencies
Environmental regulations are developing in Romania and the Company has not recorded any liability at December
31, 2022 for any anticipated costs, including legal and consulting fees, impact studies, the design and implementation
of remediation plans related to environmental matters, except the amount of RON 236,490 thousand (December 31,
2021: RON 437,637 thousand), representing the decommissioning liability.
34.
JOINT ARRANGEMENTS
In January 2002, Romgaz signed a petroleum agreement with Amromco for rehabilitation operations in order to
achieve additional production in 11 blocks, namely: Bibeşti, Strâmba, Finta, Fierbinți-Târg, Frasin-Brazi, Zătreni,
Boldu, Roșioru, Gura-Șuții, Balta-Albă and Vlădeni. For the base production, Romgaz holds a share of 100% and for
the additional production, Romgaz owns a share of 50% and Amromco Energy SRL - 50%. As the agreement was
signed to execute rehabilitation operations to obtain additional production, the mandatory work program is in
accordance with the studies approved by ANRM. Accordingly, the annual work program, which includes both works
provided in the studies and other works necessary and proposed by the partners, is approved annually by the Board
of the joint arrangement before the start of each year. The duration of the joint arrangement is in line with the time
frame of each individual concession agreements of the 11 perimeters stated above, which differs for each block.
35.
AUDITOR’S FEES
The fee charged by the Company’s statutory auditor, S.C. Ernst & Young Assurance Services S.R.L. for the statutory
audit of the 2022 annual financial statements is RON 360 thousand.
The fees charged for other assurance services in 2022 are RON 272 thousand.
36.
EVENTS AFTER THE BALANCE SHEET DATE
In 2023 Romgaz and Socar Trading, a subsidiary of the State Oil Company of the Republic of Azerbaijan, signed a
contract for gas deliveries from Azerbaijan to Romania. The contract ensures the possibility of gas deliveries up to 1
billion cm until March 31, 2024 and shall enter in force on April 1st, 2023. According to the contract, Romgaz has no
obligation to buy the quantity contracted, but has to provide a bank letter of guarantee of EUR 30 million over the
period of the contract.
37.
APPROVAL OF FINANCIAL STATEMENTS
These financial statements were endorsed by the Board of Directors on March 23, 2023.
Răzvan Popescu
Chief Executive Officer
Gabriela Trânbițaș
Chief Financial Officer
44
Societatea Naţională de Gaze Naturale Romgaz S.A. – Mediaş - România
No. 12455/24.03.2023
STATEMENT
in accordance with the provisions of art. 65 (2) c) of Law No. 24/2017
regarding issuers of financial instruments and market operations
_______________________________________________________________________________
Entity: Societatea Nationala de Gaze Naturale ROMGAZ S.A.
County: 32--SIBIU
Address: MEDIAŞ, 4 C.I. Motaş Square, tel. +40374401020
Registration Number in the Trade Register: J32/392/2001
Form of Property: 26- Companies with both state and private capital foreign and domestic (State
capital >=50%)
Main activity (CAEN code and denomination): 0620—Natural Gas Production
Tax Identification Number: 14056826
The undersigned,
RAZVAN POPESCU as Chief Executive Officer and
GABRIELA TRANBITAS as Chief Financial Officer,
hereby confirm that according to our knowledge, the annual financial statements for the year
ended December 31, 2022, prepared in accordance with the International Financial Reporting
Standards, as adopted by the European Union, and Order of Ministry of Public Finance no.
2844/2016 for the approval of Accounting regulations in accordance with International Financial
Reporting Standards, offer a true and fair view of the assets, liabilities, financial position, statement
of profit and loss of the Company and that the Board of Directors’ report comprises a fair analysis
of the development and performance of the Company, as well as a description of the main risks
and incertitudes specific to its activity. The Company is a going concern.
Chief Executive Officer,
RAZVAN POPESCU
Chief Financial Officer,
GABRIELA TRANBITAS
Capital social: 385.422.400 lei
CIF: RO 14056826
Nr. Ord.reg.com/an : J32/392/2001
RO08 RNCB 0231 0195 2533 0001 - BCR Mediaş
RO12 BRDE 330S V024 6190 3300 - BRD Mediaş
S.N.G.N. Romgaz S.A.
551130, Piața C.I. Motaş, nr.4
Mediaş, jud. Sibiu - România
Telefon: 004-0374 - 401020
Fax: 004-0269-846901
E-mail: secretariat@romgaz.ro
www.romgaz.ro