Consolidated Board of
Directors’ Report
2023
Consolidated Board of Directors’ Report 2023
Con t en t
I. 2023 ROMGAZ GROUP OVERVIEW .............................................................................. 3
1.1. Romgaz Group in Figures ......................................................................................... 3
1.2. Significant Events .................................................................................................. 7
II. Parent Company at a Glance ................................................................................. 12
2.1. Identification Data ............................................................................................... 12
2.2. Company Organization ........................................................................................... 13
2.3. Mission, Vision and Goal ......................................................................................... 14
2.4. Strategic Objectives, Strategic Options and Secondary Objectives ..................................... 14
III. Review of Romgaz Group Business ........................................................................ .18
3.1. Business Segments ................................................................................................ 18
3.2. Brief History ....................................................................................................... 22
3.3. Mergers and Reorganisations, Acquisitions and Divestments of Assets ................................. 23
3.4. Group’s Business Performance ................................................................................. 24
3.4.1. Overall Performance ........................................................................................ 24
3.4.2. Sales ........................................................................................................... 27
3.4.3. Prices and Tariffs ............................................................................................ 29
3.4.4. Human Resources ............................................................................................ 31
3.4.5. Environmental Aspects ..................................................................................... 35
3.4.6. Prevention and Firefighting, Civil Protection and Critical Infrastructure ......................... 37
3.4.7. Occupational Health and Safety .......................................................................... 38
3.4.8. Litigations ..................................................................................................... 39
3.4.9. Legal Acts Concluded under GEO No.109/2011 Article 52 ........................................... 40
IV. Group’s Tangible Assets ...................................................................................... 41
4.1. Main Production Capacities ..................................................................................... 41
4.2. Investments ........................................................................................................ 44
V. SECURITIES MARKET ............................................................................................ 53
5.1.
.................................................................................................... 56
VI. Company management ........................................................................................ 57
6.1. Board of Directors ................................................................................................ 57
6.2. Executive Management .......................................................................................... 58
VII. Consolidated Financial – Accounting Information ...................................................... 64
7.1. Statement of Consolidated Financial Position ............................................................... 64
7.2. Statement of Consolidated Comprehensive Income ........................................................ 66
7.3. Statement of Consolidated Cash Flows ....................................................................... 68
VIII. Corporate Governance ...................................................................................... 70
IX. Performance of Mandate Contracts ........................................................................ 86
Page 2 of 99
Consolidated Board of Directors’ Report 2023
I. 2023 ROMGAZ GROUP OVERVIEW
1.1. Romgaz Group in Figures
Romgaz Group 1 recorded in 2023 a revenue of RON 9,001.87 million, down by 32.62%, namely RON
4,357.77 million, as compared to 2022 revenue (RON 13,359.65 million).
Net profit of RON 2,812.10 million, higher by RON 265.39 million than the net profit recorded in 2022
(+10.42%).
Romgaz Group performances for the year ended December 31, 2023, were mainly influenced by the
following factors:
Total revenue is lower in 2023 by RON 4,295.4 million, recording a drop of 31.45% due to the
following factors:
o decrease of revenues from natural gas sales (RON 7,766.97 million in 2023 as
compared to RON 11,306.97 million in the previous year); the obligation enforced by
GEO No. 27/2022 had a significant impact that led to the drop of 31.31% of revenues
from gas sales, therefore Romgaz sold most of production at the regulated price of
RON 150/MWh (86.43% of deliveries);
o electricity revenues also dropped (RON 406.98 million in 2023 as compared to RON
1,330.61 million in the previous year). According to GEO No.27/2022, as of 2023,
Romgaz sold almost all electricity production at RON 450/MWh;
o
revenue from underground storage activities increased by 17.66% (RON 552.19 million
in 2023, as compared to RON 469.33 million in 2022), mainly due to the increase of
capacities booked by clients for underground gas storage;
Total expenses decreased by 54.77% as compared to last year, mainly due to the decrease of
windfall tax on revenues from natural gas (RON -4,014.05 million) and royalty expenses
(RON -1,039.56 million). The Group recorded in January-December 2022 expenses of RON
403.80 million with the windfall tax on electricity sales, which became subsequently a
contribution to the energy transition fund; taking into account that 90% electricity was sold
at 450 RON/MWh, this contribution is insignificant for the reviewed period;
Increase of the consolidated gross profit by 21.98% as compared to the similar period of the
previous year was offset by the profit tax. Profit tax includes the solidarity contribution
introduced at the end of 2022, for 2022-2023. In 2023, the expense recorded with this
contribution is RON 1,687.37 million, an increase by RON 684.58 million as compared to the
previous year;
Achieved net consolidated profit margins (31.24%), consolidated EBIT (54.41%) and EBITDA (59.70%)
strengthened as compared to 2022 (19.06%; 29.81% and 33.93% respectively). The increase is due to lower
royalty expenses (RON 600.52 million in 2023 as compared to RON 1,640.08 million in 2022) and to lower
expense with the windfall tax from gas sales (RON 889.80 million in 2023 as compared to RON 4,903.85
million in 2022), as a result of enforcing provisions of GEO No. 27/2022. According to this ordinance,
natural gas quantities sold at RON 150/MWh are exempted from payment of windfall tax, and royalty is
calculated and paid at this price, and not at the reference price communicated monthly by the National
Agency for Mineral Resources.
Net profit per share rose by 10.42% as compared to the previous year, reaching RON 7.30.
Investments made by Romgaz Group in 2023 amounted to RON 1,214.15 million.
As regards quantities, Romgaz Group natural gas sales (including gas acquired for resale) decreased in
2023 by 4.57%.
Natural gas consumption in Romania for 2023 recorded a decrease of roughly 6.52%, from 109.50 TWh
to 102.45 TWh, according to company’s estimations and ANRE2 reports.
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 (former ExxonMobil
Exploration and Production Romania Limited), both owned 100% by Romgaz.
2 Consumption and market share is estimated as, at the date hereof, ANRE did not publish the report on the natural gas market for
December 2023.
Page 3 of 99
Consolidated Board of Directors’ Report 2023
Natural gas production reached in 2023, a volume of 4,788.5 million m3, namely a 3.00% decline related
to 2022 production.
According to estimates, this production ensured Romgaz a market share of approx. 50% of deliveries in
the total consumption of Romania, increasing by 1% as compared to 2022.
In 2023, Romgaz electricity production was 962.6 GW, by 13.32% lower as compared to the production
of 2022. 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 is 1.72%.
Operational results
The table below shows a summary of the main indicators related to production (gas, condensate,
electricity), royalty and storage services:
Q4
2022
Q3
2023
Q4
2023
Δ Q4
(%)
Main indicators
2022
2023
1,248.5
1,131.7 1,273.5
5,240
89
271.0
5,544
79.2
143.9
6,232
103.4
321.1
2.0 Gas production (million m3)
18.9 Condensate production (tons)
16.2 Petroleum royalty (million m3)
18.5 Electricity production (GWh)
4,935.9 4,788.5
20,878
22,715
348
1,110.5
349.7
962.6
Δ‘23/’22
(%)
-3.0
8.8
0.5
-13.3
620.1
3.2
582.2
-6.1
483.3
841.5
204.2
-57.7
Invoiced UGS withdrawal services
(million m3)
Invoiced UGS injection services
(million m3)
1,722.5 1,742.8
1.2
2,450.2 1,905.5
-22.2
Natural gas quantities produced, delivered, injected into and withdrawn from gas storages are shown in
the table below (million m3):
Item
No.
0
1.
2.
3.
4.
5.
6.
7.
Specifications
2021
2022
2023
Ratios
Gross gas production
Technological consumption
1
2
3
4
5=4/3x100
5,028.5
4,935.9
4,788.5
97.0%
69.9
73.6
71.6
97.3%
Net internal gas production (1.-2.)
4,958.6
4,862.3
4,716.9
97.0%
Internal gas volumes injected in storages
Internal gas volumes withdrawn from storages
5.1.
Gas sold in storage
Differences resulting from GCV
487.9
422.2
0.0
8.6
84.6
93.3
110.3%
283.9
144.5
50.9%
0.0
2.7
22.7
2.5
92.6%
Volumes supplied from internal production (3.-4.+5.+5.1.-6.)
4,884.3
5,058.9
4,788.3
94.7%
8.1.
Gas supplied to CTE Iernut and Cojocna from Romgaz gas
192.5
338.8
286.5
84.6%
8.2.
Self-supplied gas
0.5
9.
10.
11.
Gas supplied from internal production to the market (7.-8.1.-8.2)
4,691.8
4,720.1
4,501.3
95.4%
Gas from partnerships – total, out of which:
Amromco (50%)*)
Purchased internal gas volumes (including commodity gas and
imbalances)
35.4
35.4
239.5
19.3
19.3
1.9
15.3
15.3
79.3%
79.3%
8.0
421.1%
12.
Sold internal gas volumes (9.+10.+11.)
4,966.7
4,741.3
4,524.6
95.4%
13.
Supplied internal gas volumes (8.1.+8.2.+12.)
5,159.2
5,080.1
4,811.6
94.7%
14.
15.
Supplied internal gas volumes
Gas supplied to CTE Iernut and Cojocna from other sources (including
imbalances)
0.0
8.4
0.0
0.1
0.0
0.4
400.0%
16.
Total gas supplied (13.+14.+15.)
5,167.6
5,080.2
4,812.0
94.7%
Page 4 of 99
Consolidated Board of Directors’ Report 2023
Item
No.
0
*
*
Specifications
2021
2022
2023
Ratios
1
2
3
4
5=4/3x100
Invoiced UGS withdrawal services – represent gas quantities for
withdrawal services invoiced by Depogaz
Invoiced UGS injection services – represent gas quantities for
injection services invoiced by Depogaz
2,109.2
1,722.5
1,742.8
101.2%
1,821.9
2,450.2
1,905.5
77.8%
Note: the information is not consolidated; it also includes the transactions between Romgaz and Depogaz.
*) The produced gas is reflected in Romgaz revenue, according to the interest share held in the partnership.
2023 production 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 2013-2023 is shown below:
5.7
5.7
5.6
5.2
5.3
5.3
4.2
5.0
4.9
4.8
4.5
m
c
b
6
5
4
3
2
1
0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
The table below shows the quarterly electricity production for 2023, as compared to 2022:
2022
2023
Variation (%)
*MWh*
1
2
3
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Year total
345,337
199,323
294,806
270,991
1,110,456
323,037
174,542
143,887
321,132
962,598
4=(3-2)/2x100
-6.46
-12.43
-54.24
18.50
-13.32
Page 5 of 99
Consolidated Board of Directors’ Report 2023
Romgaz is one of the largest gas suppliers in Romania. The evolution of gas supplies 3 between 2013-2023
below:
is
shown
310
81
3
7
33
181
53
0
0
0
0
0
5304
5529
5055
5623
5422
4223
5079
4683
5159.2 5159.2 5080.1 4811.6
6000
5000
4000
3000
2000
1000
0
3
m
n
o
i
l
l
i
m
2013
2014
2015
2016
2017
Gas from internal production
2018
2019
2020
2021
Import gas
2021
2022
2023
Relevant Consolidated Financial Results
Q4
2022
Q3
2023
Q4
2023
Δ Q4
(%)
Main indicators
2022
2023
Δ ‘23/’22
(%)
(RON million, if not stated otherwise)
2,547.1
2,604.3
1,120.5
1,913.0 2,191.6
2,065.7 2,171.4
1,025.3 1,153.3
-13.96 Revenue
-16.62
Income
2.93 Expenses
0.7
1,484.5
1,175.6
308.9
1,457.2
1,637.3
0.80
1.7
1.6
1,042.1 1,019.6
376.2
559.0
643.4
483.1
1,007.7
991.4
1,114.9 1,099.7
1.7
1.3
12.13
57.21
64.28
25.25
52.68
58.28
29.36
45.23
50.18
5,971
5,951
5,980
Income tax expense
128.57 Share of profit of associates
-31.32 Gross profit
-68.00
108.29 Net profit
-31.97 EBIT
-32.83 EBITDA
108.29 Earnings per share EPS (RON)
142.04
Net profit
Revenue)
ratio
(%
from
-20.94 EBIT Ratio (% from Revenue)
-21.94 EBITDA Ratio (% from Revenue)
Number of employees at the
end of the period
0.15
13,359.7
13,658.1
9,506.2
9,001.9
9,362.7
4,300.1
2.4
4,154.2
1,607.5
2,546.7
3,982.3
4,532.4
6.6
4.9
5,067.5
2,255.4
2,812.1
4,897.6
5,374.2
7.3
19.06
29.81
33.93
31.24
54.41
59.70
-32.62
-31.45
-54.77
104.17
21.98
40.30
10.42
22.98
18.57
10.61
63.90
82.52
75.95
5,971
5,980
0.15
Figures in the above table are rounded; therefore, small differences may result upon reconciliation.
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 on the main market for financial instruments
traded on LSE (London Stock Exchange) as Global Depository Receipts (GDR) issued by the Bank of New
York Mellon - under the symbol “SNGR”.
Romgaz is considered an attractive company for investors as regards dividends paid to shareholders,
stability and development perspectives, such being reflected in the evolution of Romgaz securities prices
in the reviewed period.
Performance of Romgaz shares compared to the evolution of BET index (Bucharest Exchange Trading) from
listing to December 31, 2023 is shown below:
3 Include gas from internal production, including gas supplied to CTE Iernut and Cojocna.
Page 6 of 99
Consolidated Board of Directors’ Report 2023
Trading price for SNG shares and BVB BET Index between 2013 - 2023
(RON)
50.0000
45.0000
40.0000
35.0000
30.0000
25.0000
20.0000
3
1
0
2
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6
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6
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7
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8
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8
1
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2
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1
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8
1
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8
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8
1
0
2
/
8
2
/
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8
1
0
2
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2
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9
1
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2
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1
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9
1
0
2
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1
/
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9
1
0
2
/
3
/
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9
1
0
2
/
6
2
/
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9
1
0
2
/
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1
/
8
9
1
0
2
/
0
1
/
0
1
9
1
0
2
/
3
/
2
1
0
2
0
2
/
9
2
/
1
0
2
0
2
/
3
2
/
3
0
2
0
2
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4
1
/
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0
2
0
2
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/
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0
2
0
2
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2
/
8
0
2
0
2
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2
/
0
1
0
2
0
2
/
4
1
/
2
1
1
2
0
2
/
8
/
2
1
2
0
2
/
1
/
4
1
2
0
2
/
5
2
/
5
1
2
0
2
/
6
1
/
7
1
2
0
2
/
8
/
9
1
2
0
2
/
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/
1
1
1
2
0
2
/
3
2
/
2
2
2
0
2
/
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1
/
2
2
2
0
2
/
8
/
4
2
2
0
2
/
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/
6
2
2
0
2
/
5
2
/
7
2
2
0
2
/
5
1
/
9
2
2
0
2
/
8
/
1
1
3
2
0
2
/
3
/
1
3
2
0
2
/
4
2
/
2
3
2
0
2
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1
/
4
3
2
0
2
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2
1
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3
2
0
2
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3
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1
Pret actiune
Indice BET
18,000.00
16,000.00
14,000.00
12,000.00
10,000.00
8,000.00
6,000.00
4,000.00
2,000.00
0.00
1.2. Significant Events
January 12, 2023
By Resolution No.1, company’s shareholders approve extension of interim board members mandates
appointed by Resolution of the Ordinary General Meeting of Shareholders No.7/September 13, 2022, by
two months from the expiration date.
February 3, 2023
Romgaz and Socar Trading, a subsidiary of the State Oil Company of the Republic of Azerbaijan, signed
a new individual contract for gas deliveries from Azerbaijan to Romania. By signing this contract, both
companies continue and consolidate the good cooperation and the contractual relationship based on a
framework agreement concluded in November 2022 for an unlimited term. The contract provides the
possibility of gas deliveries up to 1 billion m3 until March 31, 2024, this new contractual arrangement
ensures the strategic objectives of security of supply and diversification of gas sources.
March 14, 2023
By Resolution No.5, company’s shareholders appoint the following persons as board members, for a 4-year
term of mandate, as of March 16, 2023:
Dragan Dan Dragos
Jude Aristotel Marius
Nut Marius-Gabriel
Brasla Razvan
Sorici Gheorghe Silvian
Balazs Botond
Stoian Elena-Lorena.
March 16, 2023
Romgaz Black Sea Ltd. concluded the transmission framework agreement for transportation of natural
gas to be produced from Neptun Deep through the National Transmission System (NTS). The transmission
Page 7 of 99
Consolidated Board of Directors’ Report 2023
framework agreement was signed with the national gas transmission operator, SNTGN Transgaz SA,
following the successful completion of an incremental capacity booking process in compliance with
procedures approved by the National Energy Regulatory Authority (ANRE).
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.
March 20, 2023
By Resolution No. 28, the Board of Directors appoints Mr. Dragan Dan Dragos as chairman of the Board of
Directors.
March 23, 2023
By Resolutions No. 32, 33 and 34, the Board of Directors:
-
-
-
approves to extend the mandate of Romgaz Chief Executive Officer, Mr. Razvan Popescu, for a
2-month term, starting with April 19, 2023 until June 19, 2023;
approves to extend the mandate of Romgaz Deputy Chief Executive Officer, Mr. Aristotel Marius
Jude, for a 2-month term, starting with April 19, 2023 until June 19, 2023;
approves to extend the mandate of Romgaz Chief Financial Officer, Mrs. Gabriela Tranbitas, for a
2-month term, starting with April 21, 2023 until June 21, 2023;
March 28, 2023
By Resolution No. 35, the Board of Directors approves to initiate the procedure for selection of the chief
executive officer, deputy chief executive officer and chief financial officer, in line with the provisions
of GEO No. 109/2011, as subsequently amended and supplemented.
March 29, 2023
By Resolutions No. 36 and 37, the Board of Directors:
a) agrees with the conclusion of the Procurement Contract for “Completion of works and commissioning
of the investment objective: Development of CTE Iernut by building a new combined cycle gas
turbine power plant”, with Duro Felguera S.A.;
b) endorsed conclusion of the Settlement Agreement between Romgaz and Duro Felguera S.A., for
solving some disputes between the parties and completing the remaining works to be executed at
CTE Iernut. The agreement shall become effective within 5 days from fulfilling all conditions
precedent, one condition would be the approval of Romgaz General Meeting of Shareholders.
April 3, 2023
Romgaz concludes with Duro Felguera S.A., the Procurement Contract No. 40928/03.04.2023 for:
“Completion of works and commissioning of the investment objective: Development of CTE Iernut by
building a new combined cycle gas turbine power plant”.
April 20, 2023
By Resolution No. 6, Company’s shareholders:
-
-
approve the increase of the credit facility limit, provided in the Credit Facility Contract No.
201812070225, by RON 210 million, namely from RON 420 million to RON 630 million;
approve the issue of guarantee instruments for the guaranteed third party, namely for Romgaz
Black Sea Limited, acting through its subsidiary from Romania, Romgaz Black Sea Limited Nassau
(Bahamas) Sucursala Bucuresti.
May 15, 2023
By Resolution No.55, the Board of Directors:
-
appoints Mr. Popescu Razvan, as Chief Executive Officer, for a 4-year term, starting with May
16, 2023 until May 16, 2027;
Page 8 of 99
Consolidated Board of Directors’ Report 2023
-
-
appoints Mr. Jude Aristotel Marius, as Deputy Chief Executive Officer, for a 4-year term, starting
with May 16, 2023 until May 16, 2027;
appoints Mrs. Tranbitas Gabriela as Chief Financial Officer, for a 4-year term, starting with May
16, 2023 until May 16, 2027;
May 17, 2023
To implement the project PCI 6.20.7 – “Daily withdrawal capacity increase - Bilciuresti UGS” Depogaz
signed the Grant Agreement – Project 101103289 - 6.20.7-RO-W-M-22-Bilciuresti UGS with the European
Climate, Infrastructure and Environment Executive Agency (CINEA). The grant value is EUR
37,962,111.95. The project aims to increase the daily gas delivery capacity at Bilciuresti UGS from 14
million Sm3/day up to 20 million Sm3/day, together with an increase of storage capacity of 108 million
Sm3/cycle. The total estimated investment value is EUR 123,657 thousand. Implementation of Bilciuresti
project ensures a high degree of security of supply and market integration by increasing transmission
flows and diversifying natural gas resources, both in Romania and in South-Eastern Europe, as well as by
providing flexibility in natural gas network balancing operations and services, supporting renewable
energy production.
May 18, 2023
Romgaz informs shareholders and investors on the conclusion of a Market Making service contract for the
Issuer, with Raiffeisen Bank International AG, for a 24-month term. The contract is concluded in
compliance with the provisions set by Bucharest Stock Exchange on the Issuer’s Market-Maker, included
in BVB Code – Market Operator and envisages to increase the liquidity of company’s shares.
June 20, 2023
The Board of Directors agreed on Romgaz Black Sea Limited Sole Partner decision, related to Romgaz Black
Sea Limited approving, in compliance with the Joint Operating agreement for XIX Neptun Deep block, the
following:
a) Domino Structure Development Plan (geological resources and oil reserves assessment study);
b) Pelican South Structure Development Plan (geological resources and oil reserves assessment
study);
c) submission of the development plans mentioned at items a) and b) above to the National Agency
for Mineral Resources.
June 21, 2023
Romgaz, through its subsidiary, Romgaz Black Sea Limited submits together with OMV Petrom SA (OMV
Petrom) for confirmation to the National Agency for Mineral Resources, the Development Plan of two
commercial fields in Neptun Deep Block.
June 30, 2023
Publication of Romgaz Group Sustainability Report for 2022.
July 24, 2023
In compliance with the Settlement Agreement No. 40924/03.04.2023, between Romgaz and Duro Felguera
SA, the conditions precedent were fulfilled in order to settle the disputes between the parties and to
create the conditions necessary to complete the remaining works at Iernut Power Plant.
July 27, 2023
The Ordinary General Meeting of Shareholders, approved by Resolution No.10 conclusion of a loan
agreement between SNGN Romgaz SA (as lender) and Romgaz Black Sea Limited by Romgaz Black Sea
Limited Nassau (Bahamas), Bucuresti Subsidiary (as borrower) in maximum amount of RON 2.1 billion
(equivalent value of USD 454 million), to ensure the financing required by Romgaz Black Sea Limited for
the period between the signing date of the loan agreement until May 2024. The interest rate shall be
ROBOR 12 months + 1.74%.
The Extraordinary General Meeting of Shareholders approved by Resolution No.11 Romgaz withdrawal from
the “Joint Operating Agreement referring to Bilca Gas Project Area from EIII-1 Brodina Block”.
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Consolidated Board of Directors’ Report 2023
August 1, 2023
Iernut Electricity Production Branch issued the order related to the start of works for “Development of
CTE Iernut by building a new combined cycle gas turbine power plant” and handed over the location to
the Constructor Duro Felguera to start the works. The completion deadline is 16 months from the date of
the works start order, with the possibility to extend the term, according to contractual provisions.
August 3, 2023
The development plan for Domino and Pelican Sud commercial fields was confirmed by the National
Agency for Mineral Resources. This represents the starting point of the development stage, namely drilling
works and building the infrastructure necessary for gas production and trading.
September 11, 2023
Romgaz Ordinary General Meeting of Shareholders approved by Resolution No.12:
the financial and non-financial key performance indicators resulted from the Governance Plan;
the annual variable component of non-executive board members remuneration;
the maximum limit of remuneration for managers and/or executive board members (consisting of
the monthly fixed allowance and the annual variable component).
October 18, 2023
S.N.G.N. Romgaz S.A. Board of Directors approves by Resolution No.94 to set up a new advisory committee
of the Board of Directors, namely the Risk Management Committee, consisting of 3 members:
Mr. Marius Gabriel NUT – president
Mr. Botond BALAZS – member
Mr. Razvan BRASLA - member
October 19, 2023
The Board of Directors approved by Resolution No. 93/18.10.2023, to set up the production branch Buzau
– Caragele having as main business activity natural gas extraction. Buzau Branch was added on the
company’s organisational chart on the last days of last year, by Resolution No.1441/December 27, 2023.
The branch was set up in 2024.
November 27, 2023
Company shareholders approve by Resolution No.15 correction of some errors of financial and
non-financial performance indicators resulted from Romgaz Governance Plan.
December 12, 2023
Neptun Deep project records important progresses – more than 80% of main infrastructure and drilling
contracts were awarded – progress recorded due to the commitments made, i.e. the award of contracts
for the drilling rig and integrated drilling services, including the main contract for offshore infrastructure
development concluded in August 2023 (estimated value of roughly EUR 1.6 billion, ROMGAZ BLACK SEA
LIMITED interest share is 50%).
December 12, 2023
For the project “Daily withdrawal capacity increase – Bilciuresti UGS” with a total value of EUR 121,654
thousand, Depogaz Ploiesti contracted, besides the grant from the European Climate, Infrastructure and
Environment Executive Agency and own sources, a bank financing in amount of EUR 50,000 thousand. The
financing contract was signed with Banca Transilvania.
December 18, 2023
The Extraordinary General Meeting of Shareholders approves by Resolution No.17, the increase of S.N.G.N.
Romgaz S.A. share capital with RON 3,468,801,600 by issuing 3,468,801,600 shares with a nominal value
of RON 1/share, each shareholder registered on the registration day received 9 free shares for each share
held. The total value of the share capital shall increase in 2024 from RON 385.422.400 to RON
3,854,224,000. The share capital was increased to support the current activity of the company.
Page 10 of 99
Consolidated Board of Directors’ Report 2023
December 27, 2023
Government Decision no. 1.118/November 16, 2023 amended Government Decision no. 1.096/2013,
approving the mechanism for the transitional free allocation of greenhouse gas emission allowances to
electricity producers for the period 2013 - 2020, including the National Investment Plan (NIP). By
Government Decision no. 1.118/November 16, 2023, the following deadlines are extended: the completion
and commissioning term of investments that received a grant from the National Investment Plan account
- until December 31, 2024, the deadline for reimbursement - until June 30, 2025, as well as other related
deadlines.
Therefore, the Ministry of Energy submitted Addendum No. 9 to the Financing Contract No.4/ December
7, 2017, for the investment "Combined cycle gas turbines" - Iernut, signed by both parties, registered at
S.N.G.N. ROMGAZ S.A. on December 27, 2023. The scope of the addendum is to amend the contract term
until December 31, 2024, for financing, as well as to amend the completion schedule of the investment
provided by the contract.
The completion term of the investment, confirmed by its commissioning, shall not exceed December 31,
2024.
Page 11 of 99
Consolidated Board of Directors’ Report 2023
II. Parent Company at a Glance
2.1. Identification Data
Name: Societatea Nationala 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, Banca Româneasca, CEC Bank.
Shareholder Structure
On December 31, 2023, the shareholder structure was the following:
Romanian State4
Free float – total, out of which:
*legal persons5
*natural persons
Shares
269,823,080
115,599,320
95,343,630
20,255,690
%
70.0071
29.9929
24.7374
5.2555
Total
385,422,400
100.0000
Free float
30%
Romanian
State
70%
The company did not perform transactions with own shares in financial year 2023, and on December
31, 2023 it does not hold own shares.
4 The Romanian State through the Ministry of Energy
5 Including the Bank of New York Mellon, GDR’s depositary
Page 12 of 99
Consolidated Board of Directors’ Report 2023
2.2. Company Organization
The organization of the company is of hierarchy-functional type with six hierarchical levels reaching from
the company’s shareholders to the execution personnel, as follows:
General Meeting of Shareholders
Board of Directors
Chief Executive Officer (with mandate), Deputy Chief Executive Officer (with mandate), Chief
Financial Officer (with mandate)
directors without contract of mandate
heads of functional and operational departments subordinated to directors
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
directors 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 had on December 31, 2023, 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.
SNGN Romgaz SA - Filiala de Înmagazinare Gaze Naturale Depogaz Ploiești SRL (Depogaz)
Subject to Directive 2009/73/EC concerning common rules for the internal market in natural gas and
repealing Directive 2003/55/EC, implemented in the Romanian laws by Law No. 123/2012 (Electricity and
Gas Law), SNGN Romgaz SA as vertically integrated economic operator had the obligation to perform the
legal and functional unbundling of the underground gas storage activity from the gas production and supply
activity, at least as regards the legal status, organization and the decision making process.
To perform the legal unbundling of the storage activity, SNGN Romgaz SA approved to set up a new limited
liability company, with Sole Associate, a subsidiary held 100% by SNGN Romgaz SA, namely SNGN ROMGAZ
SA - Filiala de Înmagazinare Gaze Naturale Depogaz Ploiești SRL (hereinafter “Depogaz”). The subsidiary
performs specific underground storage activities, independent from gas production and supply activities.
As of April 1, 2018 Sucursala Ploiesti ceased its activity and SNGN Romgaz SA – Filiala de Înmagazinare
Gaze Naturale Depogaz Ploieşti SRL became operational, managing the natural gas underground storage
activity.
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Consolidated Board of Directors’ Report 2023
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.
Depogaz 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 Depogaz can be found at: https://www.depogazploiesti.ro
Filiala Romgaz Black Sea Limited (RBS)
On August 1, 2022, Romgaz as Buyer, concluded the sale-purchase agreement of all shares issued by
ExxonMobil Exploration and Production Romania Limited (“EMEPRL”) with ExxonMobil Exploration and
Production Romania Holdings Limited, ExxonMobil Exploration and Production Romania (Domino) Limited,
ExxonMobil Exploration and Production Romania (Pelican South) Limited, ExxonMobil Exploration and
Production Romania (Califar) Limited and ExxonMobil Exploration and Production Romania (Nard) Limited,
as Sellers.
By Resolution No.9/September 22, 2022 of Romgaz Extraordinary General Meeting of Shareholders,
EMEPRL was renamed ROMGAZ BLACK SEA LIMITED (RBS).
RBS is a company operating in compliance with the laws of the Commonwealth of the Bahamas.
RBS holds 50% from the rights and obligations under the Petroleum Agreement for petroleum exploration,
development and production for the Deep Water Zone of XIX Neptun offshore block in the Black Sea. OMV
Petrom S.A. holds the remaining 50% of such rights and obligations and as of August 1, 2022, OMV Petrom
is operator of the block.
The subsidiary Romgaz Black Sea Limited does not own any assets or interests and is not a party to any
joint operating agreement, production agreement, production sharing agreement or any similar
agreement, besides the Petroleum Agreement for petroleum exploration, development and production for
the Deep Water Zone of XIX Neptun offshore block in the Black Sea (Neptun Deep Project).
The activity of the project is carried out through Romgaz Black Sea Limited Nassau (Bahamas) Bucharest
branch. Currently, Neptun Deep block is in the development phase of commercial reservoirs, namely
drilling works and building the infrastructure necessary for gas production and trading.
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
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 41-42%;
ROACE equal to or higher than 12%.
Strategic options:
We continue to develop the portfolio of resources focused on mitigating climate changes effects,
centred on resilient hydrocarbons and on operational safety and reliability;
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Consolidated Board of Directors’ Report 2023
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;
Create long-term relationships with equal profitability for both the market and social environment;
Digital transformation of the company and supporting innovations to approach new customer
interaction methods, to increase efficiency and to support new development directions;
Main objectives for the period 2023-2027, derived from the strategic objectives, are the following:
Increase of hydrocarbon resources and reserves portfolio (onshore and offshore Black Sea):
o Exploration-development-production activities in concessioned reservoirs;
o Concession new blocks;
o Acquire petroleum rights and obligations.
Maximise the hydrocarbon reserves recovery factor under safety, reliability and sustainability
conditions by:
o Extending the exploitation term of mature gas reservoirs;
o Reduce emissions and streamline surface facilities related to hydrocarbon reservoirs.
To maximise the gas reserves recovery factor, to obtain an annual production decline within
controlled limits (maximum 2.5%/year), to obtain reserves replacement ratios of over 50% and to
achieve annual production programs. Related to production activities, following measures and
actions are foreseen, with implementation/achievement deadlines:
o Stream in production capacities at major onshore projects, provided in Romgaz
Development Strategy 2021-2030;
o Perform well workover works;
o
Investments in gas transmission, compression and dehydration:
Natural gas compression activities. Measures and actions for 2023-2027 provide
for investments in new compressor stations in the most important commercial
delivery-take over points, to ensure security of supply, installation of field
compressors and procurement of compression services (rental of gathering
compressors);
Natural gas dehydration activities. Measures and actions for 2023-2027 provide for
investments in new gas dehydration stations for continuous assurance of natural
gas quality requirements (compliance) at commercial gas delivery-take over
points (National Transmission System) and investments in gas measurement
systems/facilities for ensuring gas quality;
Natural gas transmission activities. For the period 2023-2027 several measures and
actions are foreseen for the safe operation of natural gas pipelines that are part
of the surface production infrastructure;
o Development, implementation and monitoring of a strategy for exploitation and
optimisation of natural gas production capacities for the period 2023-2027 in order to
maximise the recovery of reserves in technically and economically efficient conditions
and monitoring the results of the implementation. The purpose of this strategy is to ensure
the optimal and efficient framework for planning, execution and monitoring of all works
necessary for the achieving the gas production which will ultimately lead to achieving the
objective of maximizing natural gas reserves and maintaining an annual production
decline of less than 2.5%;
o Continue mature gas reservoir rehabilitation projects.
Consolidate the position on gas and energy supply markets/extend Romgaz activities
nationally/take all opportunities for growth and diversification of activities, both nationally and
regionally and to identify new opportunities;
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Consolidated Board of Directors’ Report 2023
o Permanently adapt the gas and electricity trading policy taking into account the internal
and external context, to maximise the added value;
o Permanently adapt the energy trading business model, including by implementing
partnerships;
o Adapt the electricity trading policy so as to ensure a significant portfolio of final household
and non-household clients, in line with applicable laws;
o Develop the trading activity;
Complete the investment in the new 430 MW power plant (CTE Iernut) and commission the plant
to generate electricity;
Economic efficiency of Romgaz activities;
Produce sustainable energy – electricity and energy with low carbon dioxide emissions;
Minimum 10% reduction of carbon, methane and other gas emissions;
o Decarbonisation of exploration-production activities, by:
Using electric driven drilling rigs;
Reduce greenhouse gas emissions during well testing operations;
NOx emission management during exploration activities;
Implement a program to detect and reduce fugitive emissions within the
management system, related to integrity pf production equipment;
Reduce the execution time for developing production infrastructure to reduce
energy consumption, and emissions respectively;
Use non-polluting closed discharge systems at well clusters;
Reduce emissions at compressors stations;
Reduce transportation of liquids resulted from production activities;
Reduce technological gas quantities, flared in a controlled manner, by
implementing methane capture and recovery solutions;
o Reduce emissions and making hydrocarbon surface facilities more efficient by upgrading
facilities and equipment and finding solutions to capture methane;
o Modernise of the existing car fleet and making it more efficient – the target is to have 80%
of the car fleet to run on low emission fuels by 2030;
Romgaz digitalisation:
o Technology and digital support and improvement of exploration/production activities;
o
Improve the decision-making process and simplify the administrative process by
digitalisation;
o Digital integration – unify and standardise hardware and software infrastructure;
Underground gas storage (Depogaz);
Training of human resources for the transition to future trends in sustainable energy, by:
o a more efficient organisation and functioning of the company, in order to develop human
resources through professional training and career development of employees in order to
achieve strategic, derived and specific objectives (i.e. management by objectives);
o Adapting to future trends of sustainable energy, to elaborate and implement a human
resources strategy (attract, train and retain personnel);
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Consolidated Board of Directors’ Report 2023
o Continue, and as the case may be, to develop partnerships with the academic and pre-
university environment through specific programs to attract students/recent graduates to
Romgaz;
Romgaz corporate governance:
o
Internal Management Control System - the main objective is to increase the
acknowledgement so that its functionality within the company reaches an appropriate
level of understanding, application and monitoring. The degree of implementation of
Internal Management Control System standards is checked annually through self-
assessment. For each standard, where appropriate, improvement measures and actions
are included, with deadlines for implementation/accomplishment;
o
Integrated Management System – provides for 2023-2027 actions related to management
of the system;
o National Anticorruption Strategy 2021-2025 – continues specific actions to fulfil the
provisions of the anticorruption strategy. In this respect, the Ethics and Integrity Code is
permanently reviewed, there are also information, awareness-raising and counselling
sessions for employees, annual perception surveys, briefings to promote the role of the
ethics counsellor and to promote the system of values and principles contained in the
Ethics and Integrity Code;
o
Implementation of standard SR ISO 37001:2017 (anti-bribery management systems);
o Ongoing monitoring of progress in achieving objectives, indicators (including performance
indicators);
o Relationship with the capital market and with investors;
o Compliance with corporate governance principles provided by applicable national
regulations, namely Bucharest Stock Exchange Corporate Governance Code;
Active participation in corporate social responsibility activities. The social responsibility policy
will be Romgaz's voluntary and conscious choice to promote a transparent business climate and to
integrate social responsibility concerns and business objectives into a coherent strategy to achieve
economic success in an ethical manner, with respect for the community and the environment;
Achieve investment programs (to fulfil objectives).
Page 17 of 99
Consolidated Board of Directors’ Report 2023
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 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 2023 are:
drilling exploration wells:
two wells are finalised, both in conservation, testing gas;
o
o one well tested and abandoned after tests;
o
two exploration wells awarded by tender procedure and another six wells in progress to
procure drilling works;
thirty four wells in various stages of preparation for drilling procurement;
o
ongoing procurement and processing of 3D seismic data for exploration-development-production
blocks RG.01 Transilvania Nord and RG.02 Transilvania Centru, covering an area of approximately 700
km2.
Exploration works are designed and prioritised based on technical-economic principles, to increase the
hydrocarbon resources and reserves portfolio and to maximise the potential of the eight exploration-
development-production blocks licensed by Romgaz.
The table below shows the evolution of the reserves replacement ratio between 2013-2023:
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.
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Consolidated Board of Directors’ Report 2023
Production
The 2023 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.
2023 natural gas production was 4,788.5 million m3, by 147.4 million m3
lower than the production of the previous year, representing a 3.0%
production decline.
Whereas most operational commercial fields are mature, in an advanced stage of energy depletion,
keeping the production under control was possible mainly due to the following:
1. measures implemented to optimise gas field production;
investments to extend production infrastructure and to connect new wells to this infrastructure;
2.
3. continue and extend rehabilitation projects of the main mature gas fields: Filitelnic, Delenii,
Laslau, Sadinca, Copsa Mica, Nades-Prod-Seleus, Roman, Corunca Sud, Targu Mures, Grebenis,
Bazna, Cetatea de Balta, Margineni, Corunca Nord, Iclanzel Vaideiu, Sarmasel;
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 4.065 bcm and a working gas volume of 2.870 bcm.
Nationally, the ratio between the working gas volume and the annual
consumption was about 29.5% in 2023. This level ranks in the first upper half
of the European values chart.
In 2023 the ratio between stored gas volumes and working volume of the UGSs was 102.81%.
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 are the most important producers), 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 2016-2023, a national market share ranging between 37%-50%:
national
Total
consumption
Romgaz traded volumes
(domestic + import)
Romgaz market share
Unit
bcm
2016 2017 2018 2019 2020 2021 2022 2023
11.8
12.3
12.3
11.5
12.0
12.3
10.4
9.7
bcm
4.4
5.7
5.6
5.1
4.7
5.2
5.1
4.8
%
37.1
46.3
45.5
44.1
39.1
42.4 49.41
50.0
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Consolidated Board of Directors’ Report 2023
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 and snubbing units.
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 2023 were higher both in terms of workover, recompletion operations and in
terms of services supplied as special operations, thus performing 8,572 operations.
As regards well reactivation works for 2023, 191 well operations were planned and the same number of
works were performed.
The table below shows a comparison between planned and achieved recompletion operations and
capitalizable repairs for 2023:
Medias Branch
Targu Mure
Branch
TOTAL Romgaz
Planned
Achieved
Difference
81
88
109%
110
103
94%
191
191
100%
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,
car repairs and maintenance activities for the benefit of the Group and of third parties.
STTM car fleet includes various motor vehicles and machinery for the following transportation services:
a) passenger carriers: cars, minibuses, buses and large buses;
b) mixt transportation with utility vehicles < 3.5 t and utility vehicles ˃ 3.5 t;
c) technological transportation with trucks, platforms, dumpers, dump trucks, tankers, self-trailers and
crane trucks;
d) 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
Mureș, Mediaș, Ploiești 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.
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 units of 100 MW of
Czechoslovakian manufacturing and 2 units of 200 MW of Soviet manufacturing. These units were
commissioned between 1963 and 1967. Taking in consideration the start of investment works at the 430
Page 20 of 99
Consolidated Board of Directors’ Report 2023
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, and unit 4 in June 2020; all units were decommissioned on the grounds of non-compliance
with the environmental conditions.
In 2023, SPEE Iernut operated with power unit 5 of 200MW.
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 21 of 99
Consolidated Board of Directors’ Report 2023
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 110
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
•"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.
2022
Page 22 of 99
Consolidated Board of Directors’ Report 2023
3.3. Mergers and Reorganisations, Acquisitions and Divestments of Assets
Changes to the organisational structure
By Resolution No.185/February 16, 2023 amended the organisational structure as follows:
-
-
-
-
Trading Department was set up, subordinated to the Energy Trading Direction;
The Development, Electricity Market Office and the Electricity Trading and Self-Supply Office
were transferred from the headquarters to Iernut Electricity Production Branch, subordinated
to the Trading Director;
The Strategic Development and International Relations Office subordinated to the Strategy,
International Relations, European Funds Department - headquarters - was dissolved;
The department Monitoring, Implementation of Strategic Objectives subordinated to the
Strategy,
into
Identification of Strategic Projects and International Relations;
The office Debt Recovery, subordinated to the Legal Direction was transferred to the Chief
Executive Officer;
The Legal Department was dissolved, therefore the Legal Office from the headquarters was
subordinated directly to the Chief Executive Officer, all other legal departments were
subordinated to their respective branch managers;
The Department Governance, Relation with the Capital Market and Investors was dissolved
and all subordinated departments were transferred to the Chief Executive Officer;
Resolution No.517/April 28, 2023, amended the organisational structure as follows, namely the GMS
International Relations, European Funds Department was renamed
-
-
-
and BoD Secretariat Office was changed into Department;
Resolution No.636/May 30, 2023 amended the organisational structure of the headquarters and of
SPEE Iernut, as follows:
-
-
Bratislava Branch was excluded from S.N.G.N. Romgaz S.A. organisational chart,
headquarters;
S.P.E.E. Iernut Branch organisational chart was amended, namely the Compartment Electricity
Trading and Self-Supply subordinated to the Electricity Market Development Department was
transferred to the Trading Director of SPEE Iernut;
Resolution No.1441/December 27, 2023, amended the organisational structure of the headquarters,
as follows:
-
-
Buzau Branch was added to the organizational chart of the headquarters;
The Internal Public Audit Department, subordinated to Chief Executive Officer was transferred
to the Board of Directors;
STTM Tg. Mures Branch and SIRCOSS Medias Branch subordinated to the Chief Executive
Officer, were transferred to the Deputy Chief Executive Officer;
Set up the Control Department, subordinated to the Chief Executive Officer, and
consequently:
-
-
the Financial Management Control Department was subordinated to this Department;
the Internal Control Office was subordinated to the Control Department;
Set up the Antifraud and Ethics Office subordinated to the Control Department.
-
Set up the Investment Project Management Direction subordinated to the Deputy Chief
Executive Officer, and consequently:
The Patrimony Office was subordinated to the Investment Project Management
Department;
The Investment Project Management Department was renamed into Investment
Department and subordinated to the Investment Project Management Direction;
Project Management Office was dissolved and a new office was established namely
Strategic Projects Office;
A new office was set up Projects for Renewable Energy Sources subordinated to the
Investment Project Management Department.
-
The Sustainability Standards -EGS Office was set up, subordinated to the Chief Executive
Officer;
Page 23 of 99
Consolidated Board of Directors’ Report 2023
-
-
-
The Compartment Personal Data Protection was set up, subordinated to the Chief Executive
Officer;
The department for Methane Emissions Management was set up within the Exploration-
Production Division, subordinated to the Division Director;
The compartment for Legal Analysis and Endorsement was set up, subordinated to the Legal
Office.
No mergers of the company took place in financial year 2023.
3.4. Group’s Business Performance
3.4.1. Overall 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
2022
2023
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
2
13,658,095
13,438,793
219,302
13,359,653
9,506,196
9,433,625
72,571
2,350
4,154,249
(1,607,537)
2,546,712
3
9,362,688
9,120,060
242,628
9,001,878
4,300,099
4,199,220
100,879
4,873
5,067,462
(2,255,353)
2,812,109
*RON thousand*
Ratio
(2023/2022)
4=(3/2-1)x100
-31.45
-32.14
10.64
-32.62
-54.77
-55.49
39.01
107.36
21.98
40.30
10.42
The total income of 2023 was lower by 31.45% as compared to 2022.
Below are the compared economic-financial indicators for 2022 and 2023 and their detailed structure split
by activity:
Indicators split by activities – 2022
Description
TOTAL 2022,
out of
which:
Gas
production
and
deliveries
*RON thousand*
Underground
Gas Storage
Electricity
Other
activities
Settlement
between
segments
1
2
3
4
5
6
7
Revenue
Cost of commodities sold
Investment Income
Other gains and losses
Net losses from impairment
of trade receivables
Changes in inventories
13,359,653
12,355,984
475,989
1,646,783
438,097
(1,557,200)
(183,578)
176,979
(15,009)
609
(3)
2,547
(167,405)
40
(1,161)
187,755
-
(13,972)
(9,441)
(5,228)
(2,417)
(291)
(3,298)
1,793
(55,166)
(2,197)
(44,137)
(3,272)
-
-
(1,510)
16
(9,519)
1,059
-
-
Page 24 of 99
Consolidated Board of Directors’ Report 2023
Description
1
materials
Raw
consumables
and
Depreciation, amortization
and impairment
Employee benefit expense
Taxes and duties
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:
Gas
production
and
deliveries
Underground
Gas Storage
Electricity
Other
activities
Settlement
between
segments
2
3
4
5
6
7
(118,037)
(83,127)
(43,925)
(732,422)
(17,691)
759,128
(550,076)
(846,001)
(6,954,380)
(27,295)
(426,336)
(491,677)
(6,532,607)
(19,942)
(59,714)
(59,714)
(12,329)
(75,505)
(14,318)
(1,861)
-
(10,160)
(49,262)
(404,846)
-
(25,470)
(229,557)
(2,609)
(5,563)
-
-
2,350
(658,916)
80,068
-
(775,402)
66,750
-
(212,439)
28
-
(332,094)
1,199
2,350
(137,486)
12,500
(75,781)
-
-
71
-
-
798,505
(409)
4,154,249
(1,607,537)
2,546,712
3,966,892
(1,002,428)
2,964,464
115,767
(15,948)
99,819
(49,952)
-
(49,952)
209,407
(589,161)
(379,754)
(87,865)
-
(87,865)
Indicators split by activities – 2023
Description
TOTAL
2023,
out
which:
of
Gas
production
and
deliveries
Underground
Storage
Gas
Electricity
*RON thousand*
Other
activitie
s
Settlement
between
segments
1
2
3
4
5
6
7
Revenue
Cost of commodities sold
Investment Income
Other gains and losses
9,001,878
8,398,731
550,278
588,609
464,701
(1,000,441)
(107,130)
213,008
(20,327)
1,192
(70)
7,648
(85,507)
95
(1,226)
271,963
-
(67,890)
(17,748)
(13,482)
436
(111)
(3,296)
(1,295)
from
trade
of
losses
Net
impairment
receivables
Changes in inventories
Raw materials
consumables
and
(57,546)
(5,767)
(71,190)
(7,396)
-
-
12,711
3
933
1,626
-
-
(109,441)
(76,407)
(45,269)
(304,259)
(15,467)
331,961
Depreciation,
amortization
impairment
Employee
expense
Taxes and duties
and
benefit
Finance cost
Exploration Expenses
of
Share
result
associates’
(476,568)
(373,363)
(13,253)
(18,787)
(43,015)
(28,150)
(914,054)
(531,541)
(90,094)
(53,213)
(239,206)
(1,495,473)
(62,003)
(84,640)
(1,476,356)
(17,230)
(84,640)
(17,036)
(1,994)
-
438
(18)
-
(2,519)
(43,729)
-
-
-
968
-
4,873
-
-
-
4,873
-
Page 25 of 99
Consolidated Board of Directors’ Report 2023
Description
TOTAL
2023,
out
which:
of
Gas
production
and
deliveries
Underground
Storage
Gas
Electricity
Other
activitie
s
Settlement
between
segments
1
2
3
4
5
6
7
Other expenses
Other Income
Profit before tax
Income tax expense
Profit for the year
(944,191)
122,264
(812,151)
127,406
5,067,462
5,043,246
(2,255,353)
(1,558,442)
2,812,109
3,484,804
(218,32
4)
139
172,46
1
(23,302)
149,15
9
(454,999)
(11,114)
(326,152)
-
(127,716)
6,259
668,999
(426)
274,181
(96,274)
(673,609)
-
(326,152)
(399,428)
(96,274)
Revenue
The table below shows the compared revenue and the revenue share on activity segments:
Description
Gas production and delivery
UGS activity
Electricity generation and
delivery
Other activities
Settlement
branches
TOTAL Revenue
2022
RON mln
2023
RON mln
%
Revenue
%
Revenue
12,356.0
92.49%
8,398.7
93.30%
476.0
3.56%
550.3
6.11%
1,646.8
438.1
12.33%
3.28%
-11.66%
588.6
464.7
(1,000.4)
6.54%
5.16%
-11.11%
between
(1,557.2)
13,359.7
100.00
9,001.9
100.00
Financial Income
The financial income is higher by 10.64% than the one recorded in the previous year. Financial income
consists mainly of interests from cash in bank deposits and in state bonds.
Expenses
Description
Year 2022
Year 2023
Ratio
(RON
thousand)
(RON
thousand)
(2023/2022)
1
2
3
4=(3-2)/2x100
Operating expenses
Financial expenses
Total expenses
9,433,625
72,571
9,506,196
4,199,220
100,879
4,300,099
-55.49%
39.01%
-54.77%
Financial Expenses
Financial expenses incurred in 2023 are higher by 39.01% as compared to 2022 mainly as a result of the
interest related to the loan contracted by Romgaz in 2022.
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):
Page 26 of 99
Consolidated Board of Directors’ Report 2023
Description
2022
2023
Ratio
(2023/2022)
1
2
3
4=(3-2)/2x100
Operating results
Financial results
Share of associates’ results
Gross result
Income tax
Net result
4,005,168
146,731
2,350
4,154,249
(1,607,537)
2,546,712
4,920,840
141,749
4,873
5,067,462
(2,255,353)
2,812,109
22.86%
-3.40%
107.36%
21.98%
40.30%
10.42%
Gross result for January – December 2023 in amount of 5,067,462 thousand is by 21.98% higher than the
gross result of 2022.
Financial Performance is also emphasized by the evolution of indicators presented in the table below:
Indicators
1
Working capital (WC)
Formula
2
Cp-Ai =
UM
3
2022
4
2023
5
Working capital requirements (WCR)
Net cash
Economic Rate of Return (ERR)
Return on Equity (ROE)
Return on Sales
Return on Assets
EBIT
EBITDA
ROCE
Current liquidity
Asset Solvency
where:
Cp
Ai
Cpr
Dtl
Pr
Si
Ac
D
Chav
Crts
Vav
long-term capital;
non-current assets;
equity;
non-current liabilities;
provisions;
investment subsidies;
short term assets;
liquidity position;
prepayments;
short-term credit;
deferred income;
3.4.2. Sales
Sales Evolution and Perspective
Cpr+Dtl+Pr+Si-Ai
(Ac-D+Chav) -
(Dcrt-Crts+Vav)
WC-WCR = D-Crts
Pb/Cpx100
Pn/Cprx100
Pb/CAx100
Pn/Ax100
Pb+Chd-Vd
EBIT+Am
EBIT/Cangx100
Acrt/Dcrt
Cpr/Px100
RON
mln
RON
mln
RON
mln
%
%
%
%
RON
mln
RON
mln
%
-
%
1,398
1,911
164
1,700
1,562
212
35.15
25.27
31.10
17.77
3,983
38.06
24.32
56.29
17.1
4,898
4,532
5,374
33.70
1.56
70.33
36.79
1.61
70.21
Pb
Pn
CA
A
Chd
Vd
Am
Cang
Acrt
Dcrt
P
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.
Page 27 of 99
Consolidated Board of Directors’ Report 2023
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, out of which:
Sales to third parties
Gas for electricity production in
own power plant
MU
TWh
TWh
TWh
2022
2023
2023/2022
53.277 50.444
49.701 47.406
-5.32%
-4.62%
3.576
3.033
-15.18%
Self-supply
TWh
-
0.005
-
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
centralized market governed by the Romanian Commodities Exchange (BRM).
The quantity of 47.406 TWh was delivered to the market, to third parties, as follows:
Gas delivered under contracts concluded on centralized markets (BRM+GRP and other contracts
concluded on the centralized market + SPOT market): 3.417 (7.21%);
Gas delivered under GEO No. 27/2022: 40.973 TWh (86.43%);
Gas delivered under bilateral negotiated contracts: 2.219 TWh (4.68%),
Gas delivered as supplier of last resort: 0.796 TWh (1.68%).
As compared to 2022, Romgaz natural gas production recorded a 3.0% drop and the volumes delivered in
2023 recorded a 5.32% drop. Gas deliveries from own production decreased by 4.75% compared to 2022.
Gas delivered to third parties decreased by 4.62%. It is worth mentioning that in 2023 no import gas
quantities were traded. Concurrently, gas quantities used at CTE Iernut decreased by 15.18% compared
to 2022.
As regards gas trading on Romanian centralized markets, Romgaz share was about 18.2% of the total gas
traded on these markets (forward and SPOT) with delivery in 2023. With respect to quantities, Romgaz
traded 3.417 TWh on centralized markets, with delivery in 2023, out of 18.76 TWh that represented all
transactions on these markets with the same delivery period.
Out of the total gas traded on centralized markets, 2.38 TWh are quantities sold on SPOT market – on the
day ahead market and intraday market.
2024 gas sales perspectives are characterized by:
A decrease of natural gas sales prices compared to 2023 prices;
according to GEO No. 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 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 No. 27/2022 and subsequent acts to protect household consumers and heat
producers by distributing gas from internal production at a capped price for these customer
categories.
The cumulated impact of these conditions led to a 7% decrease of national consumption, as several
production facilities were closed as they reached below the profitability threshold due to increased gas
prices and implementation of energy efficiency measures.
In this context, Romgaz sold approximately 86.43% of the total gas sold in 2023, at regulated prices, to
suppliers of household costumers, to suppliers of heat producers and to heat producers as well as to
network operators and, following the extension of the applicability of GEO No. 27/2022, sold an
insignificant gas quantity on the competitive gas market, with delivery in 2024, until the allocation by the
Transmission System Operator – TSO (SNTGN Transgaz SA) of the obligation to sell at regulated price.
According to company estimates, national gas consumption decreased by approximately 7% as compared
to 2022. Romgaz share of deliveries in the national consumption increased by 1% as compared to 2022.
Page 28 of 99
Consolidated Board of Directors’ Report 2023
According to preliminary data of the system operator, national electricity production reached 55,864,971
MWh in 2023.
Annual evolution of electricity production and market share:
Description
2021
(MWh)
2022
(MWh)
2023
(MWh)
2022/2021
(%)
2023/2022
(%)
National production
Romgaz production
Romgaz market share
58,560,986
54,193,070
55,864,871
640,001
1,110,456
1.07
2.05
962,598
1.72
-7.46
73.51
91.59
3.08
-13.32
-16.10
National electricity production sources in 20236:
33% hydroelectric power plants;
30% power plants;
19% nuclear;
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 heat power plants) and the
wholesale market where it sells gas to suppliers.
3.4.3. Prices and Tariffs
Law No. 123/20127 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.
Romgaz Group activates 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
The table below shows the storage tariffs:
Tariff component
MU
component
Volumetric component for gas injection
Fixed
reservation
Volumetric
withdrawal
component
for
for
capacity
gas
RON/MWh
RON/MWh/stora
ge cycle
RON/MWh
Tariff
(01.04.2021
-
31.03.2022)
2.29
9.31
Tariff
(01.04.2022
-
31.03.2023)
4.50
11.44
1.74
3.48
Tariff (as of
01.04.2023)
7.27
9.82
5.94
Natural Gas Trading
Romgaz gas trading policy is based on principles governed by transparency, competition, equal and non-
discriminatory treatment, efficiency and effectiveness.
In the context of the trading policy and considering the specific regulations, natural gas marketing is
carried out by using 2 sales channels: trading on centralized market governed by the Romanian
Commodities Exchange and bilateral negotiations.
In 2023 natural gas trading was influenced to a certain extent, from the point of view of both quantity
and pricing, by two specific regulations:
1. GRP (Gas Release Program)
6 Approximate levels - Source: CNTEE Transelectrica SA Preliminary Report 2023. Note: at the date of the Report ANRE annual report
containing the energy label is not published.
7 Electricity and Gas Law No. 123, July 10, 2012, as subsequently amended and supplemented.
Page 29 of 99
Consolidated Board of Directors’ Report 2023
Pursuant to Article 177 paragraph 3^16 of Law No. 123/2012, between July 1, 2020 – December 31, 2022,
natural gas producers whose annual production in the previous year exceeds 3,000,000 MWh have the
obligation to annually offer the sale of 40% of the natural gas production with delivery between July 1,
2020 – December 31, 2022, in a transparent, public and non-discriminatory manner, on centralized markets
in accordance with the regulations issued by ANRE.
The prices in the initiating offers through which gas quantities from GRP are offered must be ”lower by
at least 5% compared to the weighted average prices for the offered products” pursuant to the provisions
of ANRE Order No.143/20208.
The natural gas quantities representing Romgaz obligation to offer pursuant to GRP are presented in the
following table (MWh):
Obligations to offer
12,434,563
17,537,059
19,704,757
2020
2021
2022
2023
0
In 2023, the natural gas quantity delivered by Romgaz within the GRP was 46.8 GWh, 99.99% lower than
the quantity delivered in the similar period of the previous year when a quantity of 10,854.31 GWh was
delivered.
In accordance with the provisions of GEO No. 27/2022, the implementation of Article 177 paragraph (3^15)
– (3^17) of Law No.123/2012 – on GRP, extends to December 31, 2024, noting that, during the application
period of the emergency ordinance, the quantities relating to the fulfilment of the delivery obligation by
the natural gas producers will be sold pursuant to Article 12 of the ordinance.
2. GEO No. 27/2022
2.1 Supply of Natural Gas at Regulated Price
Pursuant to this regulation, the Transmission System Operator (SNTGN Transgaz SA), based on the
information sent by the natural gas producers on one hand and the suppliers of household customers,
suppliers of heat producers, directly by the heat producers and by the transmission and distribution
network operators, established and sent to each producer the natural gas quantities representing the
contracting obligation for April 1, 2022 – March 31, 2023, April 1, 2023 – March 31, 2024 and April 1, 2024
– March 31, 2025 at regulated prices, namely at 150 RON/MWh (until August 31, 2022 the price for heat
producers and suppliers of heat producers was 250 RON/MWh).
The natural gas quantities established by the TSO as a delivery obligation for Romgaz are as follows (TWh):
For the period April 1, 2022 – March 31, 2023: 28,839,939 MWh;
For the period April 1, 2023 – March 31, 2024: 41,256,848 MWh;
For the period April 1, 2024 – March 31, 2025, the quantities will be communicated by the TSO.
Quantities delivered pursuant to GEO No. 27/2022 are as follows:
In 2022, in which gas was delivered only beginning with May: 16,678,014.51 MWh, out of which:
o Suppliers of household costumers: 14,099,961.86 MWh;
o Suppliers of heat producers and heat producers: 2,628,052.65 MWh;
In 2023: 40,973,459.99 MWh, out of which:
o Suppliers of household costumers: 32,644,345.74 MWh;
o Suppliers of heat producers and heat producers: 7,223,962.40 MWh;
o Network operators: 1,105,151.85 MWh.
2.2 Natural Gas Supply at Capped Price
Pursuant to Article 1 paragraph (2) ”for the consumption achieved between April 1, 2022 – March 31,
2025, the final price invoiced by the natural gas suppliers is:
a) maximum 0.31 RON/kWh, including VAT, for household costumers;
b) maximum 0.37 RON/kWh, including VAT, for non-household costumers whose annual gas
consumption in 2021 at the consumption place is maximum 50,000 MWh, as well as for heat
producers”.
8 Order No.143 of July 17, 2020 on the obligation of natural gas producers to offer gas on centralized markets if their annual
production in the previous year exceeds 3,000,000.MWh.
Page 30 of 99
Consolidated Board of Directors’ Report 2023
The natural gas quantity invoiced at capped price in 2023 is 1,191,485.61 MWh, and the quantity for 2022
is 53,513.72 MWh.
The natural gas quantity sold in 2023 was 47,405.3 GWh, 2,295.4 GWh lower than the quantity sold in
2022 (49,700.6 MWh) and 1,912.2 GWh, namely 4.2%, higher than the quantity scheduled to be sold.
From the quantity sold in 2023, 40,973.5 GWh, representing 86.43%, is gas delivered pursuant to GEO No.
27/2022.
The average gas supply prices between 2020 – December 2023 are shown in the following table:
Description
1
UM
2
2020
3
2021
4
2022
5
2023
6
Average supply price for
gas
internal
from
production9
RON/1000
m3
RON/MWh
751.3
1,019.66
2,392.06
1,729.10
73.3
96.66
227.27
163.85
Natural Gas Distribution
Regulated distribution tariffs valid for the reviewed period are approved by ANRE Orders, as follows:
Order No. 122/2020 on approving regulated tariffs applicable to distribution services for
Societatea Nationala de Gaze Naturale "ROMGAZ" - S.A. Medias (as of July 1, 2020);
Order No. 77/2021 on approving regulated tariffs applicable to distribution services for Societatea
Nationala de Gaze Naturale "ROMGAZ" - S.A. Medias (as of July 1, 2021);
Order No. 57/2022 on amending Order 77/2021 on approving regulated tariffs applicable to
distribution services for Societatea Nationala de Gaze Naturale "ROMGAZ" - S.A. Medias (as of April
1, 2022);
Order No. 45/2023 on the approval of regulated tariffs applicable to distribution services for
Societatea Nationala de Gaze Naturale "ROMGAZ" - S.A. Medias (as of April 1, 2023);
Tariffs are shown in the table below:
Description
01.07.’20-
30.06.2021
01.07.’21-
31.03.2022
01.04.’22-
31.03.2023
01.04.’23-
present
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
52.52
46.17
48.19
42.37
49.31
43.35
74.05
65.13
41.29
37.91
38.79
58.29
3.4.4. Human Resources
On December 31, 2023, Romgaz Group had 5,980 employees and SNGN Romgaz SA 5,462 employees.
The table below shows the evolution of employees’ number between January 1, 2021 – December 31,
2023:
Specifications
2021
2022
2023
Group
SNGN
Romgaz SA
Group
SNGN
Romgaz SA
Group
SNGN
Romgaz SA
Employees at the beginning of the year
6,188
5,673
5,863
5,363
5,971
5,453
Newly hired employees
179
157
354
315
274
238
Employees who terminated their labour
relationship with the company
504
467
246
225
265
229
9 Including commodity gas, less storage costs.
Page 31 of 99
Consolidated Board of Directors’ Report 2023
Specifications
2021
2022
2023
Group
SNGN
Romgaz SA
Group
SNGN
Romgaz SA
Group
SNGN
Romgaz SA
Employees at the end of the year
5,863
5,363
5,971
5,453
5,980
5,462
The structure of SNGN Romgaz SA employees at the end of 2023, was the following:
a) by level of education
University
Secondary education
Foreman education
Vocational school
Various general studies
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
27.48 %
31.27 %
2.11 %
30.50 %
8.64 %
5.77 %
13.57 %
27.85 %
45.42 %
7.40 %
71.40 %
11.64 %
1.61%
8.97 %
electricity production
6.37 %
Distribution of Romgaz employees by headquarters and by branches is shown in the figure below:
STTM
9%
SIRCOSS
12%
Iernut
Power Plant
6
Headquarter
s
12%
Medias
Branch
32%
Targu-Mures
Branch
29%
Distribution of Romgaz employees by headquarters and by branches is shown in table below:
Entity
Workers
Foremen
Administrative
employees
Headquarters
Medias Branch
Targu-Mures Branch
SIRCOSS
STTM
Iernut Branch
Drobeta Turnu Severin Branch
40
1,360
1,257
464
366
217
84
49
48
19
31
638
296
262
124
105
100
2
Total
678
1,740
1,568
636
490
348
2
Page 32 of 99
Consolidated Board of Directors’ Report 2023
TOTAL
3,704
231
1,527
5,462
In 2023, 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.
Subsequently, 2,499 employees were trained in 2023 and the expenses incurred amount to RON 1,965
thousand (81.26% out of RON 2,418 thousand – total amount allocated for 2023).
The annual training program was implemented as follows:
846 persons participated in professional training programs on job related subject matters carried
out by training courses providers;
699 persons participated in courses to obtain authorization and re-authorization in accordance
with their position;
954 persons participated in in-house training courses.
As regards the number of participants, the 2023 professional training plan was fulfilled 118.38%. This was
caused by the participation of several employees higher than planned in trainings held by Romgaz
employees.
„ROMGAZ SCHOLARSHIPS” Program continued in 2023 the focus of which is to identify young professionals,
the future employees of the company. In this regard, in 2023, the second edition was completed (for 2022-
2023 academic year) and the third edition of the program was started for 2023-2024 academic year.
Pursuant to the collaboration framework agreements concluded with Lucian Blaga University in Sibiu –
Faculty of Engineering, Babeș-Bolyai University in Cluj-Napoca – Faculty of Biology and Geology, Ploiești
Oil and Gas University – Faculty of Petroleum Engineering, Bucharest University – Faculty of Geology and
Geophysics, Alexandru Ioan Cuza University in Iași – Faculty of Geography and Geology, „George Emil
Palade” Medicine, Pharmacy, Science and Technology University in Târgu Mureș – Faculty of Engineering
and Information Technology and Politehnica University in Bucharest – Faculty of Energy Engineering, the
conditions for the contest were set which resulted in the Scholarship Rules/Guidelines. The scholarships,
in amount of 1,500 RON/month, are intended for students in the third, and fourth year of study and/or
for master students majoring in:
Hydrocarbon Transmission, Storage and Distribution (students) and Gas Engineering and Management
(master students)– for Lucian Blaga University in Sibiu;
Petroleum Engineering, Geological Engineering and Hydrocarbon Transmission, Storage and
Distribution (students) and Well Drilling, Hydrocarbon Transmission, Storage and Distribution
Technology, Reservoir Engineering (master students)– Oil and gas University in Ploiești;
Geological Engineering (students) and Applied Geology (master students) – Babeș-Bolyai University in
Cluj-Napoca;
Geological Engineering (students) and Well Geology (master students) – Alexandru Ioan Cuza University
in Iași;
Geophysics and Geological Engineering (students) and Assessment of Sedimentary Basins and Mineral
Resources, Applied Geophysics and Geological Engineering and Ambient Geotehnique (master
students) – Bucharest University – Faculty of Geology and Geophysics;
Energy Engineering and Information Technology (students) and Energy Systems Management (master
students) – “George Emil Palade” Medicine, Farmacy, Science and Technology University in Târgu
Mureș – Faculty of Engineering and Information Technology;
Thermoenergetics, Energy Management, Energy Engineering and Fluid Engineering (students) and
Energy Services, Energy Efficiency, Hydroinformatics and Fluid Engineering, Energy Systems
Management (master students) – Politehnica University in Bucharest – Faculty of Energy Engineering.
In 2023, following application and interview session, 25 scholarships were awarded:
6 scholarships – Lucian Blaga University in Sibiu: five students and one master students (third edition,
2023-2024 academic year);
5 scholarships – Oil and Gas University in Ploiești: four students and one master student (third edition,
2023-2024 academic year);
Page 33 of 99
Consolidated Board of Directors’ Report 2023
2 scholarships - Babeș-Bolyai University in Cluj-Napoca: one student and one master student (third
edition, 2022-2023 academic year);
6 scholarships – Bucharest University: 5 students and 1 master student (2 in the second edition, 2022-
2023 academic year and 4 students in the third edition, 2023-2024 academic year);
4 scholarships – Alexandru Ioan Cuza University in Iași – 4 students (third edition, 2023-2024 academic
year);
1 scholarship – “George Emil Palade” Medicine, Farmacy, Science and Technology University in Târgu
Mureș (third edition, 2023-2024 academic year);
1 scholarship – Politehnica University in Bucharest (second edition, 2022-2023 academic year).
During 2023, 12 scholars were employed, selected in the first and second edition of Romgaz Scholarships
Program. Two of them were employed at Medias Branch (Nadeș – Prod – Seleuș Rehabilitation Project Unit
and Extraction Technologies and Reservoir Engineering Department), three at Târgu Mureș Branch
(Corunca Sud Rehabilitation Project Unit, Gas Quality Office and South Production Office) and seven at
the headquarters (Portfolio and Opportunities Assessment Department, Exploration and Appraisal
Department, Gas Quality and Metering Department, Resources and Reserves Assessment Department and
Caragele Project Unit).
In 2023, the partnerships with Colegiul Școala Nationala de Gaz Mediaș (2022-2025) and with Liceul
Tehnologic Iernut (2020-2023, 2021-2024 and 2022-2025) for dual education continued. These students
were awarded a monthly scholarship in amount of RON 300, proportional to the theoretical and practical
training period.
The training areas are the following:
Colegiul Școala Nationala de Gaz Mediaș:
o 14 high school students (9th grade – class of 2022-2025) – gas production, treatment and
distribution operator;
Liceul Tehnologic Iernut:
o 9 high school students (10th grade – class of 2022-2025) – electro mechanic, professional
qualification as boiler, steam turbine, auxiliary and heating plant operator;
o 8 high school students (10th grade – class of 2022-2025) – electric, professional qualification
as electrician operating power plants, stations and electrical networks;
o 8 high school students (11th grade – class of 2021-2024) – electric, professional qualification
as electrician operating power plants, stations and electrical networks;
o 9 high school students (11th grade – class of 2021-2024) – electro mechanic, professional
qualification as boiler, steam turbine, auxiliary and heating plant operator;
In 2023, part of the graduates of the dual education class of Liceului Tehnologic Iernut (2020-2023) were
employed in vacant positions according to their studies in Iernut Power Plant . Out of the 15 graduates of
Liceului Tehnologic Iernut 6 were employed (40%).
Romgaz Group has two trade unions:
“Sindicatul Liber din cadrul S.N.G.N. Romgaz S.A.”, consisting of 5.383 members, out of the
5.459, employees, resulting a ratio of 98.61% union members;
„Sindicatul Filiala de Înmagazinare Gaze Naturale DEPOGAZ Ploiesti”, with 403 members and 92
members pertaining to „Sindicatul Liber din cadrul SNGN Romgaz SA”, out of the 509 employees,
resulting a ratio of 97.25% union 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.
Beginning with June 1, 2022 Depogaz has a new Collective Labour Contract following negotiations with
”Sindicatul Filiala de Înmagazinare Gaze Naturale DEPOGAZ Ploiești”, the representative trade union of
the subsidiary. The Collective Labour Contract is valid for June 1, 2022 – May 31, 2024.
There were no conflicts between the management and the trade union in 2023.
Page 34 of 99
Consolidated Board of Directors’ Report 2023
3.4.5. Environmental Aspects
In 2023, 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:
monitor drafting of all reports required by the effective environmental legislation, by centralizing the
increasing awareness on compliance with legal requirements;
information required and reported by Romgaz Branches and submitting it to competent authorities;
efficiency of environmental protection activities which support the management process.
In 2023 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;
implementation of the environmental and ecology program which had the following actions planned:
installing petroleum products separators;
installing concrete tanks;
upgrading hydrocarbon separators at compressor stations;
-
-
-
- works to reduce noise level at compressor stations;
installing wastewater disposal equipment;
-
- mounting polistif-type tanks at well clusters;
- works to capture casing and cellar emissions in gas wells;
- mounting well injection pipes;
stabilization of landslides;
-
connections for wastewater evacuation;
-
- mounting secondary drums for condensation tanks;
- mounting gathering-storage systems for reservoir water from intake gas;
- mounting wastewater injection systems;
- mounting anti-pollution discharge systems at well clusters.
controlled disposal of hazardous substances used for treating cooling water;
communication and cooperation with all suppliers and stakeholders, to minimize the impact of their
integrating environmental aspects in all decision making processes;
operations on the environment;
maintaining compliance with the provisions of regulations (environmental and water management
permits/agreements/authorizations) issued for the execution of works/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 120 units. Thus,
revision of permits was requested for 2 units, permits were reviewed for 6 units,
reauthorization was requested and obtained for 4 units, documentation for obtaining the
annual endorsement was submitted for 14 units, the annual endorsement was obtained for 79
units, new permits were obtained for 3 units, the term of validity was extended for 3 units;
complying with legal requirements regarding water management permits, for:
62 units for water use, mentioning that for 4 units the company submitted
reauthorization documents;
is
36 units related to reservoir water injection systems/wells.
to monitor
development
under
application
company-wide
environmental/water
A
management/wastewater injection authorizations, 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 2023, the company recycled and
co-incinerated 1,495.381 tons of waste (1,471.116 tons were recycled and 24.265 tons were co-
Page 35 of 99
Consolidated Board of Directors’ Report 2023
incinerated), disposed 1,785.079 tons of waste (0.102 tons were incinerated and 1,784.977 tons were
stored).
AMOUNT OF WASTE MANAGED IN 2022 (3,280.460 tons)
4 000 000
3 000 000
2 000 000
1 000 000
0.128
1,495.381
1,785.079
Quantity disposed by storage
Quantity recycled and co-incinerated
Quantity disposed by incineration
of
the
monitoring
implementation
measures/actions
In 2023, the “Program for Preventing and Reducing Waste Generated by S.N.G.N. Romgaz S.A.” focused
on the accomplishment of the measures thereunder; the program can be accessed at the following link
https://www.romgaz.ro/program-de-prevenire-si-reducere-cantitatilor-de-deseuri.
The Program aims at identifying the SMART objectives, establishing targets with performance indicators
waste
and
prevention/reduction/minimization of waste generation/reduce waste harmfulness as well as the
recorded progress in order to fulfil the country’s strategic objectives.
Moreover, it sets the framework for ensuring sustainable waste management to achieve proposed
objectives and targets.
Monitoring compliance with legal requirements on environment protection. In 2023 Romgaz recorded
an exceeding of limits permitted by the regulations in force, namely an accidental pollution caused
by heavy precipitations, a spill of petroleum products from the rainwater discharge pipe at FPGN
Frasin, intervening urgently in the contaminated area with biodegradable absorbents. Following this
environmental incident the company incurred a civil fine in amount of RON 35,000;
In 2023, Romgaz continued to monitor compliance with a permanent measure namely maintaining the
perchloroethylene consumption under 1 ton/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;
regarding
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.
In 2023, 41 internal environmental inspections were planned at authorized locations belonging to Romgaz
branches. Romgaz activity complies with the applicable legal environmental requirements, with a 99.27%
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 2023;
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;
compliance of CO2 emissions from SPEE Iernut combustion facilities;
making all payments required by the applicable environmental legislation (environmental fund,
consumption
authorization/reauthorization
provisions, water
fees,
environmental/water
subscriptions, etc.);
Page 36 of 99
Consolidated Board of Directors’ Report 2023
Monitoring one of Romgaz strategic objectives included in SNGN ROMGAZ SA Strategy for 2021-2030,
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 2023, through an inventory of
emission sources, resulting the following:
Item
BRANCH
1.
2.
3.
4.
5.
6.
STTM Targu Mures
SIRCOSS Medias
SPEE Iernut
Targu Mures Branch
Medias Branch
Romgaz Headquarters
Total
QUANTITY OF EMISSIONS
FROM IMMOBILE
SOURCES
by fuel consumption
QUANTITY OF
EMISSIONS FROM
MOBILE SOURCES
by fuel consumption
444.130
1,418.630
614,295.810
36,422
107,775.982
317.351
760,673.903
5,998.790
2,727.720
18.280
114,720
108.116
102.921
123,675.827
*tCO2*
QUANTITY OF
EMISSIONS FROM
MOBILE SOURCES
by pollution standard
1,113.140
18.430
12.287
69.920
40.310
167.980
1,422.067
Total Romgaz emissions from immobile and mobile sources (by fuel consumption): 884,349.730
Total Romgaz emissions from immobile (by fuel consumption) and mobile (by pollution standard) sources:
762,095.970
In 2023, the Environmental Guard, the Water Basins Administrations /Water Management System carried
out 16 inspections at Romgaz locations. The company received one civil fine in amount of RON 35,000.
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 finances 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.
Romgaz is among the beneficiaries of the above-mentioned government decision and, in 2017, launched
the investment “The Development of CTE Iernut Power Plant by Building a New Combined Cycle Gas
Turbine Power Plant” with NIP funds.
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 starting with 2020 free of charge transitory
certificates are no longer allocated.
In order to comply with the legal requirements of GD No. 780/2006, updated (article 8, letter e) Romgaz
has the obligation 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 2023, CO2 emissions equal 543,772.9 tons which is equivalent to
543,772.9 certificates.
3.4.6. Prevention and Firefighting, Civil Protection and Critical Infrastructure
Emergency Situations and Critical Infrastructure Department carries out its activity pursuant to the
updated GEO No. 21/2004 on the Emergency Situations Management System, the updated Law No.
307/2006 on fire protection, Law No. 481/2004 republished in 2023 on civil protection, GEO No. 98/2010
on the identification, designation and protection of critical infrastructure as well as pursuant to other
specific legislative acts.
In 2023, 2 legislative acts were issued concerning emergency situations which were brought to the
attention of company personnel:
Order No. 135/2023 for the approval of Technical Rules on using, checking, recharging, repairing
and taking out of use fire extinguishers.
Order No. 2.061 dated September 20, 2023 for the approval of the Regulation on the management
of emergency situations generated by earthquakes.
Page 37 of 99
Consolidated Board of Directors’ Report 2023
Prevention of emergency situations represents an integrated set of specific technical and operational
actions, planned and carried out in order to reduce the risk of emergency situations and mitigate their
consequences in order to protect life, environment and property against the negative effects of such.
In accordance with the legal provisions in effect and pursuant to the approved activity plan an internal
control was performed on the prevention and compliance with firefighting rules, requirements and
measures.
It is well known that, in the prevention and firefighting/civil protection field, prevention is less expensive
than interventions and removing the effects of an event.
The prevention activity consists in verifying, planning, organizing, coordinating, intervening, guiding and
controlling the rules in the area of competence:
Internal control/inspection – on compliance with the law, targeted and collective (Emergency
Situations and Critical Infrastructure Department);
external control/inspection carried out by the County Inspectorates for Emergency Situations– on
compliance with the law and targeted;
Verification of specific authorizations, documents, plans, equipment, rules, training, instructions,
etc.;
Measures are taken to promptly remedy the irregularities found or the findings are hierarchically
communicated in order to set deadlines for remediation.
In 2023, the control activity carried out within internal/external inspections is summarized below:
Medias Branch
Targu Mures Branch
STTM Targu Mures
SIRCOSS Mediaș
SPEE Iernut
County Inspectorates for
Emergency Situations
Emergency Situations and
Critical Infrastructure
Department
2
2
0
0
2
23
15
5
5
9
By carrying out preventive controls, the employees became aware of the legal requirements, how to
behave in emergency situations and the importance of training in emergency situations.
Training of employees in emergency situations is mandatory and permanent and is carried out during the
production process and at the work place in accordance with the training level of employees and with the
specifics of their activity.
In 2023, the personnel working within the Emergency Situations and Critical Infrastructure Department
carried out the General Introduction Training for Emergency Situations for 307 employees and 128
students.
Opinions and Protocols were drafted in the field of emergency situations and were annexed to the works
contracts concluded with third parties.
In order to perform works with third party personnel, specific training was carried out and collective
training forms were drawn up for the employees who perform their activity within company premises
based on a contract or order.
Students who carried out their activity (internship) within company premises were trained in accordance
with the legislation in force and the internal rules.
In 2023, 86 firefighting exercises were planned and carried out including the evacuation of personnel.
In the field of critical infrastructure protection, in 2023, by hiring a liaison officer, the specific documents
were updated pursuant to the requirements sent by the competent public authority – Ministry of Energy.
3.4.7. Occupational Health and Safety
In 2023 internal controls were carried out at work places within headquarters and branches, during which
the following were checked: personnel training in the field of occupational health and safety, provision
and use of the personal protective equipment, the existence of personal protective equipment stocks in
the storages of branches, validity of the medical certificates of fitness issued by the occupational
physician, the hygiene conditions at work places, provision of sanitary hygienic materials, the existence
and equipping of first aid medical kits, etc.
Other activities carried out in this field:
Page 38 of 99
Consolidated Board of Directors’ Report 2023
Drafting the annual training – testing program as well as the training topics in the field of
occupational health and safety for all 2023 training stages;
Drafting the annual internal controls schedule for 2023;
Drafting identification sheets for occupational risk factors for the new employees, for those
employees who changed their work place and for internship students;
the occupational health and safety
Occupational health and safety trainings for new employees and internship students;
Drafting
the acquisition of
products/services/works, Form: 02F-07 Act.3.1, in accordance with the operational procedure
“Establishing the requirements on occupational health and safety, emergency situations and
environmental protection when purchasing products, services and works”, code: 02PO-03, ed. 3,
rev. 2;
requirements
for
Drafting the self-assessment questionnaire on the implementation status of the internal
control/management control standards;
Completion of the acquisition procedure concerning the voluntary health insurance services for
Romgaz employees, resulting in the conclusion of a framework agreement for a period of two
years;
Following the acquisition of voluntary health insurance services, the Prevention and protection
Department prepared an employee information material on accessing medical services which was
brought to the attention on all employees;
Monthly update of the list of persons included in the voluntary health insurance policy;
A training and information material was drawn up with a view to prevent the occurrence of severe
events – this material was brought to the attention of all Romgaz workers;
The Prevention and Protection Plan for the headquarters was updated following the
announcement made by the World Health Organization on May 5, 2023 informing on the end of
the public health emergency of international interest caused by COVID-19;
A first aid course was organized in which 85 employees from the headquarters participated;
All employees at company headquarters were tested in accordance with the training – testing
program for 2023 in the field of occupational health and safety, code: 01F-101-Act.3.0. – testing
was made based on a 10-question multiple choice test;
Two events communication diagrams were prepared and approved within the Occupational Health
and Safety Committee, one for the headquarters and one for company branches;
The
Internal List of Personal Protective Equipment
for company employees was
amended/supplemented;
The Occupational Health and Safety Committee decided to provide transportation or to equip with
means of transportation those employees who supervise/maintain/operate/intervene at surface
technological facilities to the place where they are located if the presence of dangerous animals
(bears) was reported in those areas and if cars are available;
Steps were taken and subsequent contracts no. 4 and no. 5 relating to framework agreements for
the acquisition of personal protective equipment were signed for a total of 53 types of personal
protective equipment; the documentation relating to the acquisition of personal protective
equipment was drawn up for 4 (four) specification books containing 60 types of personal
preventive equipment – all four specification books were posted on S.I.C.A.P. electronic platform;
Two instructions were updated:
The occupational health and safety instruction for the provision and use of personal protective
equipment, code: 00IP-00-04;
Internal control in the field of occupational health and safety work instruction, code: 18IL-04.
3.4.8. Litigations
The summarized breakdown of litigations in which Romgaz is involved as of December 31, 2023 and their
value is the following:
A total number of 131 litigations are recorded in company records, out of which:
49 cases where Romgaz is plaintiff;
80 cases where Romgaz is defendant;
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Consolidated Board of Directors’ Report 2023
2 cases where Romgaz is civil party/injured party;
the total (approximate) value of litigations is RON 342,222,376;
the (approximate) total value of the files where Romgaz is plaintiff is RON 278,465,286;
the (approximate) total value of the files where Romgaz is defendant is RON 63,757,090;
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 2023.
3.4.9. Legal Acts Concluded under GEO No.109/2011 Article 52
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) provides as follows:
“The Board of Directors […] convenes the General Meeting of Shareholders for the approval of any
transaction if it has, individually or in a series of concluded transactions, a value higher than 10% of the
public enterprise net assets value or higher than 10% of the public enterprise revenue in accordance with
the last audited financial statements, with the Board members or the managers or, where appropriate,
with the members of the Supervisory Committee or the directorate, the employees, the shareholders
who have control over the company or with a company controlled by them”.
Paragraph (2): “the Board of Directors has the obligation to convene a meeting […] also in case of
transactions concluded with the spouse, relatives/affinity of fourth degree including the persons
mentioned in Paragraph (1)”.
Paragraph (3): “the Board of Directors […] informs the shareholders, during the first general meeting of
shareholders taking place after concluding the legal act, on any transaction concluded by the public
company with a) the persons mentioned in Paragraph (1) and (2), if the value of the transaction is below
the level established in Paragraph (1); b) another public company or with the public supervisory
authority, in case the transaction value, individually or in a series of transactions, of at least the
equivalent in RON of EUR 100,000”.
The transactions concluded under the provisions of Article 52 of GEO No. 109/2011 are published on
Romgaz website at www.romgaz.ro → Investors → Interim reports → 2023.
Romgaz financial auditor draws up, half-yearly, an „Independent Limited Assurance Report on the
information included in the current reports issued by SNGN Romgaz SA in accordance with the
requirements of Law No. 24/2017, as subsequently amended and supplemented and in accordance with
Regulation No. 5/2018 of the Financial Supervisory Authority”, report which is sent to BVB and published
on company website.
Considering that current reports of the above type are public, being posted on BVB website, as well as
that half-year current reports are posted on company website with the legal acts concluded in each
semester, reports audited by the financial auditor of the company, for details regarding concluded legal
acts please access company website at www.romgaz.ro Investors News and Events Current
Reports Contracts (under the name of “Auditor Report – H1 2023 Contracts” on July 25, 2023 and “Auditor
Report – H2 2023 Contracts” on January 25, 2023).
Page 40 of 99
Consolidated Board of Directors’ Report 2023
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, began to
emerge 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 hydrocarbon reservoirs is a particularly complex system today
that needs to ensure continuous gathering, transmission, conditioning and metering of gas produced by
wells and the quality parameters provided in applicable regulations.
Following the discovery and exploitation of new reservoirs, the infrastructure of the company developed
continuously. 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);
industrial or reservoir water pumping stations;
9.
10. other facilities (buildings, workshops, storehouses, electric lines, well access roads etc.).
Utilization 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
makes extensive and continuous efforts focused on workover and special operations in wells, maintenance
and rehabilitation of pipes, maintenance and modernization of gas compressor stations and dehydration
stations as well as of commercial (fiscal) gas delivery panels.
In 2023, Romgaz carried out petroleum operations in 124 reservoirs out of the 159 commercial reservoirs
under Romgaz concession, the rest of the reservoirs being depleted.
Also, during 2023, SNGN Romgaz SA carried out petroleum operations to exploit or build surface facilities
to bring into production 13 new reservoirs identified within the exploration-development-production
blocks.
Production from these fields is obtained through more than 2960 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 41 of 99
Consolidated Board of Directors’ Report 2023
Pressure and flow rate limits of production wells are maintained by 16 compressor stations (in which 90
compressor units are installed), 21 booster compressors and 22 cluster compressors.
One technical demand required by applicable laws is the quality of gas, which is 100% fulfilled by means
of 56 gas dehydration stations.
Underground Storage
Depogaz holds License No. 1942/2014 for the operation of five underground gas storages, developed in
depleted gas fields, their aggregate capacity representing about 90.54 % of the total storage capacity of
Romania.
The capacity of the underground gas storages operated by Depogaz as of January 1, 2023, 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]
Balaceanca
Bilciuresti
Ghercesti
Sarmasel
Urziceni
Total
50
1,310
250
900
360
2,870
0.535
14,017
2,675
9,630
3,852
20,709
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 approximately 4 km from Bucharest.
The fixed assets contributing to the storage process are as follows:
24 well of which 21 injection/withdrawal wells and 3 piezometric wells;
Surface infrastructure includes:
Balaceanca gas compressor station;
8,4 km collecting pipelines;
4 separators;
4 technological gas metering panels;
Dehydration station;
15 gas heaters;
Communication system and fiber-optic data acquisition system;
Bi-directional fiscal metering system.
2. Bilciurești 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:
65 wells of which 60 injection/withdrawal wells, 4 piezometric wells, 1 waste water injection well;
Surface infrastructure includes:
Butimanu gas compressor station;
4 gas dehydration stations;
26.5 km gathering pipelines for 60 injection/withdrawal wells;
37.5 km gathering pipelines and fittings;
50 gas heaters;
14 impurity separators;
14 technological gas metering panels;
Bi-directional fiscal metering system;
Waste-water injection station.
3. Ghercesti UGS
Ghercesti UGS is located in Dolj County, near Craiova.
Page 42 of 99
Consolidated Board of Directors’ Report 2023
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;
22.6 km gathering pipelines;
13 impurities separators;
12 technological gas metering facilities;
Communication system and fiber-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;
26.7 km gathering pipelines for 63 wells;
13.8 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:
31 wells out of which 30 injection/withdrawal wells and 1 piezometric well;
Surface infrastructure includes:
Urziceni gas compressor station;
19.5 km collecting pipelines for 31 injection/withdrawal wells;
3.3 km of collecting pipelines;
6 technological gas metering facilities;
29 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 tank equipped with agitator, sand control-sand blender, 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 assembly device, hydraulic packer recovery tool.
Future well workover and special well operations are required to stop production decline, taking into
consideration the continuous need for such works and the large number of works performed in the past.
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Consolidated Board of Directors’ Report 2023
Transportation and Maintenance
On December 31, 2023, the car fleet of STTM consists of 697 motor vehicles, as follows:
passenger carriers: cars 89, minibuses 14, buses 2 and large buses 2;
passengers and goods utility cars 207 < than 3.5 t and 6 > than 3.5 t;
vehicles for goods transportation: dumpers 20, cesspit emptier 40, platform trucks 24, tank trucks 4;
vehicles for heavy transportation: truck-tractors 2 and semitrailer trucks 18;
lifting and handling machinery: auto cranes 28 and hook and ladder trucks 4;
other special vehicles: mobile laboratory for equipment testing and checking 2;
heavy machinery: bulldozers 9, caterpillar shovels 2, tire shovels 2, wheel loaders 16, motor grader
3, compactor 4, front end loader 10;
other machinery: tractor trucks 94, forklift trucks 11, motorized cleaning vehicles 3;
other vehicles: trailers for heavy transportation, trailers and semitrailers for tractors 82.
Considering the dynamics of gas exploration – production activities performed by Romgaz, on medium
term (approx. 5 years), the perspective to develop STTM has to be achieved by permanently determining
methods and measures resulting from quality services and economic efficiency conditions.
Out of the 697 vehicles existing in STTM fleet on December 31, 2023, 6 motor vehicles were approved
to be put out of service.
Electricity Generation
CTE Iernut is an important junction point of the NEG (the National Energy 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 Productie Energie Electrica (SPEE) Branch.
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 into 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, and in June 2020 unit 4; all units were decommissioned due to non-compliance with
environmental conditions.
In 2023, SPEE Iernut operated with power unit 5 of 200MW.
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.
In 2023, Romgaz Group invested RON 1,214.15 million, investments representing approximately 58.20%
of the scheduled investments.
The Company invested RON 8.577 billion during 2019-2023, as follows:
Year
2019
2020
2021
2022
2023
Total
Amount
thousand)
(RON
866,218
601,800
417,658
5,584,823
1,106,161 8,576,660
For 2023, Romgaz forecasted the achievement of an investment program with a total budget of RON
1,973,900 thousand, based mostly on objectives aiming to compensate the natural decline of natural gas
at minimum level (under 2.5%), increasing the natural reserves and resources portfolio (onshore and
offshore) and electricity production, as follows:
Loans awarded by SNGN Romgaz SA to Romgaz Black Sea Limited Subsidiary to support current activity
and finance the Subsidiary’s investments;
Page 44 of 99
Consolidated Board of Directors’ Report 2023
Keep the current participation 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 6 exploration wells with a total depth of approx. 20,500 m; exploration works in
partnership with Lukoil in EX-30 Trident Block);
production development by adding new facilities on existing structures (7 drilling exploration wells,
39 surface facilities, 6 dehydration stations, 3 gas compressor stations and 5 collecting pipelines);
develop electricity production capacities from natural gas by continuing and finalizing the works to
build the Combined Cycle Gas Turbine Power Plant – Iernut;
modernization and revamping equipment and facilities used for well workover and special operations,
recompletion operations/well reactivation-capitalizable repairs at 160 wells, revamping dehydration
and compressor stations;
purchase of new high-performance equipment and installations specific to the core activity (ACF 700
cementing units; well parameters metering device; nitrogen convertor; well intervention equipment,
hydraulic activation keys, power generation units, field units, etc.;
procurement of specific machinery to ensure the technological transportation and maintenance of
core activities, maintaining gas fields road infrastructure in good conditions (platform tipper trucks,
crane trucks, 4x4 trucks, tractor trailers, bulldozers, road tractors, mini buses, backhoe loaders,
excavators, etc.).
The investments are intended to ensure on the one hand the sustainable development of the company
and on the other hand to achieve the strategic objectives for the period 2021-2030.
The investment costs of the Company amount RON 1,106,161 thousand, representing 56.04% of scheduled
investments.
The value of fixed assets put into service in 2023 was RON 658.4 million.
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 for financing the Romgaz Black Sea Limited (RBS) activity.
-
-
Regarding the physical achievements during the assessed period, the investment objectives initiated in
the previous year were completed; preparatory works were carried out (design, obtaining lands,
approvals, agreements, authorizations, acquisitions); works for part of the new objectives started and
modernization and capitalizable repairs of wells in production.
Table below shows the investments made in 2023 as compared to those scheduled and accomplished in
2022, similar to Annex 4 to the Income and Expenditure Budget:
Item.
No.
Investment Chapter
2022
2023
Program
Achieved
*RON thousand*
% achievements
2023/2022
2
3
4
5=4/2x100
0
1.
1.1
1.2
2.
2.1
2.2
3.
1
Investments in progress – total, out of
which:
Natural gas exploration, production
works
Environment protection works
New investments – total, out of which:
Natural gas exploration, production
works
Environment protection works
121,438
470,949
200,919
120,052
462,319
197,712
1,386
32,357
32,320
8,630
28,897
28,627
3,207
23,060
23,060
37
270
0
Investment in existing tangible assets
247,154
359,552
300,982
165.45%
164.69%
231.39%
71.27%
71.35%
0
121.78%
Page 45 of 99
Consolidated Board of Directors’ Report 2023
4.
5.
(other acquisitions of
Equipment
tangible assets)
Other investments (studies, licenses,
software, financial assets etc.)
TOTAL
51,311
159,235
74,376
144.95%
5,132,563
955,267
506,825
5,584,823 1,973,900 1,106,162
9.87%
19.81%
Table below shows the achieved investments according to Romgaz Investment Program for 2023:
Investment chapter
1
I. Geological exploration works to discover new gas
reserves
II. Exploitation drilling works, putting into production of
wells,
infrastructure and utilities and electricity
generation
*RON thousand*
Program
2023
on
Achieved
December 31, 2023
%
2
99,148
3
4=3/2x100
55,238
55.71%
391,798
16,534
42.25%
IV. Environment protection works
V. Retrofitting and revamping of
equipment
installation and
359,552
8,900
VI. Independent equipment and machinery
VII. Expenses related to studies and projects
159,235
955,267
3,207
300,982
74,376
506,825
36.03%
83.71%
46.71%
53.06%
TOTAL
1,973,900
1,106,162
56.04%
A summary of outcomes shows that, to a large extent, investments were completed.
Item
No.
Main physical objectives
Planned
Results
1. Exploration drilling
19 wells
3 completed wells out of which:
2. Production drilling
7 wells
3. Surface
infrastructure
–
execution of facilities at
gas wells;
Construction of 39
facilities to bring into
the
production
remaining gas wells.
4. Gathering pipes
5 gathering pipes.
2 wells drilled
1 well tested
6 wells drilling works procurement in
preparation
34 wells drilling works procurement in
preparation
3 wells completed;
2 wells drilling in progress;
3 wells with technical design prepared
for the procurement of drilling works;
1 well design in progress.
in progress for
14 surface facilities completed for
putting into production of 17 wells;
4 surface facilities
putting into production of 6 wells;
2 surface facilities procurement of
construction works in progress;
3 surface facilities obtaining approvals
and land in progress to bring 6 wells into
production.
gathering pipeline D20 between
Dehydration Station Tigmandru and
Compressor Station Tigmandru – in
progress, 80% completed;
Page 46 of 99
Consolidated Board of Directors’ Report 2023
Item
No.
Main physical objectives
Planned
Results
gathering pipeline between high
pressure collector Ø6" 106-17 Nades
Group and the collector Ø20" Nades
Brateiu – in-house design;
5. Gas dehydration stations
compressors
gas
and
stations
Pipelines
taken
from
Transgaz=>pipeline expertise services
were contracted;
over
6 gas dehydration
stations;
3
stations.
compressor
gas
Collector Caragele field – Damianca
phase I. – prepared for execution.
Gas compressor stations Delenii IV.,
Filitelnic III., Tigmandru II. – in
design;
Dehydration stations Frasin and
Daneș II. – in design;
Dehydration stations Giulesti and
Herepea – design procurement in
progress;
Gas dehydration station Galbenu III
and LTS (Low Temperature System) –
in
execution design procurement
progress.
6. Well capitalizable repairs,
operations
recompletion
and reactivation
approx. 160 wells,
correlated with the
program
annual
agreed by ANRM
Workovers at 191 wells, 88 related to
Medias Subsidiary and 103 to Tg Mures
Subsidiary, works performed in-house by
SIRCOSS
7. Acquisition
of
high-
performance
equipment
and installations specific
to core activity
Cementing units
ACF 700;
Well parameters
metering system;
Nitrogen
convertor;
Well intervention
rigs;
Hydraulic
activation keys;
Power generation
units;
Field units;
platform tipper
crane
4x4
tractor
trucks,
trucks,
trucks,
trailers,
bulldozers, road
tractors
,
minibuses,
backhoe loaders,
excavators, etc.
and
PSI,
3x10000
The following were accepted:
Compressor
wells
stations
separators, Radauti metering panel, well
parameter metering system, 30 tons
force rig – 3 items, cementing and
cracking units ACF 700 – 5 items, pressure
nitrogen
lubricator
convertor, GPS systems, flexible tubing
tools, vertical preventor – 1 item, 3
tachographs, 22 tractor trailers, road
roller, 5 truck cranes, cesspool emptier,
4x4 trucks – 4 items, 4x4 platform truck
with lift arm – 4 items, 1 electric forklift
truck, 1
semitrailer, computerized
diagnostic equipment for motor vehicles,
car air-conditioning system tester and
charger, megohmmeter,
three-phase
power generator, equipment for testing
the dielectric strength of oil, Pneumo-
hydraulic channel jack for trucks, water
and foam fire fighting vehicle, office
computers, portable computers (type I, II
laptop and ultra
laptop), graphic
stations, 22” and 27” monitors,
endpoints, water
videoconference
softening station, gas metering and
regulating unit, fixed metering pump for
injecting liquid foaming agent into the
wells, automatic sticks launchers in
productive wells, drones;
Page 47 of 99
Consolidated Board of Directors’ Report 2023
Item
No.
Main physical objectives
Planned
Results
8. Land acquisitions
9. Consultancy, studies and
software and
projects,
licenses
The electric cars charging station was
commissioned.
The office building in Bucharest Verii Str.
no. 1-3 was purchased.
AUTOCAD licenses, professional quote
licenses;
Software for sector procurements
management and contract follow-up;
design
services
MAIS, BI, Hyperion IT systems;
Technical
for
workovers at reservoir dam on Mures
river;
Technical
for
workovers at the natural draft cooling
tower no. 2 at CTE Iernut.
services
design
10. Electricity generation
Works continue at
CTE Iernut
Contract in progress „Completing and
commissioning
investment
objective Development of CTE Iernut
by building a new gas
turbine
combined cycled power plant”.
the
11. Partnerships/Associations
LUKOIL OVERSEAS:
- drilling and well
safety in preparation
in 30 EX Trident block
for
trajectory
In 2023 the location establishment
works were completed and the outpost
well
Lira block
discovery. Geomechanical modelling
works were completed and
the
assessment of the well bore stability
for establishing the outpost well
trajectory, flow dynamic modelling for
Lira block an well testing objectives
confirmation. 3 D seismic reprocessing
works were completed in September
seismic
2023,
interpretation/reinterpretation
are
estimated to be completed in January
2024.
and
the
Amromco:
Permits
-
authorizations;
well
abandonment
and
Preliminary
design works were
performed, and approvals were
obtained for wells planned for drilling;
4 well abandonment works were
performed for wells that had ANRM
approval and demolition works at
facility groups, drilling locations and
access roads to abandoned wells.
The main reasons for the lower rate of achievement of the investment objectives foreseen in the
investment program of Romgaz for 2023 are the following:
- Monthly credits awarded to Black Sea Limited Subsidiary, much lower than the ones initially
provided;
Completion of some procurement procedures was offset/delayed for different reasons;
Cancelation of some procurement procedures due to no offer being submitted, though the
estimated values were determined based on market consultation or cancelation of some
procedures because the estimated value has been exceeded;
Cancelation of some objectives by the Technical Economic Committee on economic efficiency
grounds;
Procurement at lower prices than the budgeted price;
-
-
-
-
Page 48 of 99
Consolidated Board of Directors’ Report 2023
- Delayed deliveries of some fixed assets;
-
Coming into force of the design and execution works contract for „Completion of works and
commissioning of the objective CTE Iernut Development by building a new combined cycle gas
turbine power plant” only on August 1, 2023.
The investment objective for which offsets/delays were recorded during 2023 will be carried out during
the investment year 2024.
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 the end of 2020 as deadline.
In 2021, pursuant to the notice of termination no. 10872/April 02, 2021, Romgaz terminated the Contract
of Works no.13384/October 31, 2016, executed 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 complete the works within the deadline established under Addendum No.
15/May 26, 2020, namely December 26, 2020.
Considering the new legal framework, Romgaz exploited all legal possibilities, including with the
Consortium, to complete the work and put into operation the new power plant, pursuing the completion
of works and the plant's contribution to the stability of the NEG (National Energy Grid).
The Romanian Government adopted Emergency Ordinance no.54 of April 21, 2022, supplementing Law
No.99/2016 on sectoral procurement, published in the Official Gazette of Romania No.393 of April 21,
2022, which provides as follows:
“Unique article:
Law no.99/2016 on sectoral procurement, published in the Official Gazette of Romania, Part I, no.391 of
23 May 2016, with subsequent amendments and additions, is supplemented as follows:
1. After Article 117, a new article is inserted, Article 117^1, with the following content:
Article 117^1
As an 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, having as object the execution of the remainder to be executed for the construction
and development of electricity generating capacity where this represents less than 40% of the physical
stage of the investment objective.
2. In Article 180, after paragraph (6) a new paragraph is inserted, paragraph (6^1), with the following
content:
Page 49 of 99
Consolidated Board of Directors’ Report 2023
(6^1) "Where contracts are awarded in accordance with the provisions of Article 117^1, the contracting
entity may decide not to exclude from the award procedure the economic operators referred to in
paragraph (1)(g)." Thus, the procurement procedure applied by Romgaz was negotiated without prior
invitation to a competitive bidding procedure, in accordance with the provisions of Article 117^1 of Law
99/2016.
The procurement procedure of the above mentioned work was carried out in compliance with Romgaz
internal procedures and the principles provided in Article 2, paragraph 2 of Law no.99/2016, namely: non-
discrimination, equal treatment, mutual recognition, transparency, proportionality and accountability.
The executive management recommended and Romgaz Board of Directors agreed to initiate the
procurement having as object “Completion and commissioning of the investment objective: Development
of CTE Iernut by building a combined cycle gas turbine power plant” – (Board of Directors Resolution
no.43/July 8, 2022).
The new Works Contract for CTE Iernut completion
As of March 31, 2023 the works contract having as object “Completion and putting into operation the
investment objective: Development of CTE Iernut by building a combined cycle gas turbine power
plant” was signed with the approval of Romgaz Board of Directors;
Execution term: Duro Felguera must complete all works within 16 months of the entry into force of
the contract (the works start order will be issued within 25 days of the entry into force of the
Settlement Agreement).
Settlement Agreement
As of May 10, 2023, Romgaz General Meeting of Shareholders approved the Settlement Agreement
between Romgaz and Duro Felguera SA (together with all its appendices);
The settlement was negotiated with regards to the entire legal situation generated by the conclusion
of the initial Works Contract, the occurrence of numerous unforeseeable problems during the works,
respectively the termination of this contract;
The Conditions Precedent for the Settlement enforcement are:
The Transfer Agreement between Duro Felguera and Romelectro to be in force, and Duro
Felguera to make prove of:
1. The prior approval of the Transfer Agreement between Duro Felguera and Romelectro by
the General Meeting of Romelectro Creditors;
2. The Transfer Agreement between Duro Felguera and Romelectro by the syndic judge;
3. Expiry of the deadline for appealing against the syndic judge confirmation, proved by
adequate means which are satisfying for Romgaz;
Provision by Duro Felguera of a valid resolution of the Board of Directors approving the
Settlement.
The enforcement period of the Settlement was 5 days as of meeting all the Precedent Conditions set by
the parties.
Page 50 of 99
Consolidated Board of Directors’ Report 2023
On June 24, 2023, the precedent conditions were met in compliance with the provisions of Settlement
Agreement no. 40924/April 3, 2023, between Romgaz and Duro Felguera SA, to settle disputes between
the parties and to create the conditions necessary for the completion of the remaining work to be carried
out at Iernut Power Plant.
Electricity Production Branch Iernut (CTE Iernut) issued the order to start the works at the investment’s
objective „Development of CTE Iernut by building a new combined cycle gas turbine power plant” on
August 1, 2023 and handed over the site to the contractor Duro Felguera SA for the commencement of
works on the project. The deadline for completion is 16 months, as of the date of the start order, with
the possibility of an extension according to the provisions of the contract.
Among the works performed during 2023 for the above mentioned contract the following are listed:
-
Platforms for low traffic were executed in the HRSG heat recovery steam generators area, in the
gas compressors areas and the chemical station, while the West platform works are ongoing;
- Normal traffic roads were built in the HRSG heat recovery steam generators area, the West area,
while in the gas compressors areas, the North area, the South area, the interconnection station
and in the water cooling pumps area the works are in execution phase and will continue during
2024;
Foundations were built around the HRSG heat recovery steam generators area and the gas
compressors area, while in the water cooling pumps area and in the turbines area the works are
still in execution phase;
Equipment and wiring in the electricity building are in execution phase;
For the electricity part civil works, ground outlets, high voltage transformers tests and the
grounding of cable routes were completed.
-
-
-
In 2023, DEPOGAZ had an approved investment program of RON 112,090 thousand and achieved
investments of RON 107,988 thousand, representing 96.34% as follows:
Item
No.
1.
2.
3.
4.
5.
*
Description
Gas fields and UGS exploitation, infrastructure and utilities in fields
and underground storages
Underground gas storage activities
Modernization and upgrading of installations and equipment, surface
facilities, utilities
Independent equipment and machinery
Costs with consultancy, studies and projects, software, licenses and
patents etc.
TOTAL
*RON thousand*
Program
Results
54,850
54,488
7,307
7,436
42,546
38,789
3,549
3,838
3,286
3,989
112,090
107,988
The investments were financed entirely from own Subsidiary sources.
For the reporting period, fixed assets were commissioned in amount of RON 76,979 thousand.
The main objectives recording achievements in 2023 were:
Drilling of Bilciuresti wells: RON 53,782 thousand;
Modernization of Sarmasel wells: RON 24,609 thousand;
Collectors’ systematization Butimanu-Bilciuresti at SC Butimanu: RON 7,044 thousand;
Modernization of gas metering system Bilciuresti-Butimanu: RON 5,926 thousand;
Drilling 6 wells Sarmasel: RON 1,182 thousand;
Natural gas compressor, dehydration, metering station for increasing the underground gas storage in
Ghercesti Deposit: RON 3,620 thousand;
TRSV control units: RON 875 thousand;
Ghercesti compressor station designing: RON 2,740 thousand;
Page 51 of 99
Consolidated Board of Directors’ Report 2023
Increasing the daily extraction capacity in Bilciuresti Deposit: RON 6,556 thousand, representing
design, taxes and permits related to authorization of works execution.
In 2023, ROMGAZ BLACK SEA LIMITED had an approved total investment program of RON 736,199 thousand
and achieved RON 548,903 thousand, representing 74.56%, as follows (RON thousand):
Item
No.
1.
2.
Description
Preparatory activities for the development phase
Exploration activities
TOTAL
Note: the values in the table do not comply with IFRS.
Program
2023
708,361
27,838
Results
2023
547,211
1,693
736,199
548,903
For Neptun Deep joint operations, the National Agency for Mineral Resources confirmed the Development
Plan of reservoirs, therefore more than 80% of execution contracts were awarded until the end of 2023,
steps have been taken to obtain approvals, to initiate construction works and to prepare drilling works.
Page 52 of 99
Consolidated Board of Directors’ Report 2023
V. SECURITIES MARKET
Romgaz – company listed on Bucharest Stock Exchange and London Stock Exchange
On November 12, 2023, S.N.G.N. Romgaz S.A. celebrated 10 years since its listing on the Bucharest Stock
Exchange (BVB) and the London Stock Exchange (LSE). The company’s shares are traded on the BVB under
the symbol „SNG”, and the global deposit receipts10 (GDR) on the LSE under the symbol „SNGR”.
During this time, respectively as of the initial publishing date in 2013 until the end of 2023, Romgaz
capitalization increased by 67%. The main indicators evolution is shown in the table bellow:
No.
Specification
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
1.
2.
3.
4.
5.
6.
7.
8.
Market capitalization11
*million RON
*million EUR
Maximum
(RON/share)
Minimum
(RON/share)
Year-end
(RON/share)
price
price
price
13,178
14,018
10,483
9,636
12,064
10,714
14,299
10,830
15,031
14,550
19,310
2,952
3,127
2,315
2,122
2,589
2,297
2,992
2,224
3,038
2,941
3,882
35.60
36.37
36.55
27.55
33.95
38.20
38.40
37.70
39.00
51.70
51.00
33.80
32.41
26.30
21.60
25.10
27.80
27.35
25.75
28.35
34.05
38.00
34.19
35.36
27.20
25.00
31.30
27.80
37.10
28.10
39.00
37.75
50.10
Net profit per share (RON)
2.58
3.66
3.10
2.66
4.81
3.53
2.83
3.24
4.97
6.61
7.3
Gross dividend per share
(RON) – Total,
out of which:
Option I
Option II
2.57
3.15
2.70
5.76
6.85
4.17
1.61
1.79
3.80
3.42
- annual dividend
2.57
3.15
2.70
2.40
4.34
3.15
1.39
1.63
3.62
3.30
Option I
Option II
- additional dividend
-
-
-
3.361)
2.512)
1.023)
0.224)
0.164)
0.184)
0.124)
Option I
Option II
Dividend yield (6./4.x100)
(%)
Option I
Option II
7.5
8.9
9.9
23.04
21.88
15.00
4.34
6.37
6.79
9.1
0.3561
0.1425
0.3397
0.1359
0.01644)
0.00664)
7.1
2.8
Exchange (RON/EUR)
4,4639
4,4834
4,5285
4,5411
4,6597
4,6639
4,7785
4,8694
4,9481
4,9474
4,9746
NOTE: The number of shares remained at the same level since the listing until December 31, 2023. By
EGMS Resolution no. 17/2023, the share capital increase was approved by issuing 9 new shares for each
share owned by the shareholders on payment date. Considering that the dividends payment date comes
after the payment date of the bonus shares (May 30, 2024, according to EGMS Resolution No. 17/2023),
the dividend per share was calculated for the increased shares number, respectively 3,854,224,000.
1) consisting of the dividend resulting from the distribution of retained earnings (RON 1.42/share) and the
additional dividend granted pursuant to the provisions of Articles II and III of GEO 29/2017, distributed
from the company's reserves representing own sources of financing (RON 1.94/share).
2) consisting of the dividend resulting from the distribution of retained earnings (RON 0.65/share) and the
additional dividend granted pursuant to the provisions of Articles II and III of GEO 29/2017, distributed
from the company's reserves representing own sources of financing (RON 1.86/share).
3) consisting of the dividend from the distribution of retained earnings (RON 0.08/share) and the additional
dividend granted pursuant to Article 43 of GEO No. 114/2018 (RON 0.94/share).
4) resulting from the distribution of retained earnings.
10 Global Deposit Receipts – GDR, issued by The Bank of New York Mellon, 1 GDR = 1 share
11 Calculated based on the closing price on the last trading day of the year in question, respectively on the basis of the exchange
rate communicated by BNR and valid on the last trading day of the year in question.
Page 53 of 99
Consolidated Board of Directors’ Report 2023
In 2023, the average trading prices of ROMGAZ securities (shares and global depositary receipts – GDR)
were RON 42.26/share, respectively USD 9.17/GDR (equivalent of RON 41.95/GDR). The minimum prices
of the period were recorded on March 24, 2023, for shares (RON 38) and May 19, 2023 for GDRs (USD
7.95/RON 36.63) while the maximum prices were reached in December 15, 2023 for shares (RON15),
respectively December 22, 2023 for GDRs (USD 11.20/RON 50.51).
Quarterly, the average share price having an upward trend from RON 40.10 in Q1 2023 to RON 40.17 in Q2
2023 (+0.18%) and, respectively, RON 41.31 in Q3 2023 (+2.83%) and RON 47.45 in Q4 2023 (+14.85%). The
GDRs average trading price decreased in Q2 compared to Q1 by 2.75% (USD 8.85 in T1 and USD 8.61 in
Q2), thereafter, the trend remained upward similar to shares: +8.37% in Q3 2023 (USD 9.33) and +6.30%
in Q4 2023 (USD 9.92).
The comparative evolution of share price and GDR price (in RON) during 2023 is illustrated in the following
graph:
The oscillating evolution of trading prices can be observed, influenced by the following main events that
led to sharp decreases and increases in 2023:
- in Q1 2023: approval by the Romanian Government of a memorandum for the distribution of at least 90%
of the net profit of state-owned companies in 2022 in the form of dividends (increase: beginning of March
2023), decrease of gas reference prices in Europe under the EUR 40 (USD 43) threshold for one MWh, as
mild weather in 2022/2023 winter decreased the demand12 (decrease: end of March 2023);
- in Q2 2023: increase in investors’ interest for the shares traded on the BVB as a result of the final decision
to invest in Neptun Deep project and approving the development plan by OMV Petrom and Romgaz, as
well as starting the listing process of Hidroelectrica (increase: end of June 2023);
- in Q3 2023: Ex-data dividends 2022 and publication of key indicators for Semester 1, 2023 highlight the
decrease of hydrocarbon production (decrease July 2023), sharp declines in the BVB indices in line with
the depreciation of European markets, as a result of global investors' fears about market developments 13
(decrease August 2023), good long term prospectives of the company, considering the natural gas
exploration project in the Black Sea14 and concluding an approximately RON 1 billion contract with E.ON
Energie Romania (increase September 2023);
- in Q4 2023: declines in indices on foreign markets, also reflected on the BVB due to the Middle East
conflict (decrease October 2023), proposal and approval of increasing Romgaz share capital (increase
November and December 2023)
12Source: Financial Intelligence, 20.03.2023
13 Source: Bursa Newspaper, 04.08.2023 and 21.08.2023
14 Source: Bursa Newspaper, 11.09.2023
Page 54 of 99
Consolidated Board of Directors’ Report 2023
Since the listing and until now, Romgaz is considered an attractive company for the investors and takes
an important place among the top local issuers. Romgaz was included in the BVB trading indices at the
end of 2023 as follows:
-
-
-
4th place by market capitalization among issuers in the BVB Premium category. With a market
capitalization on 31 December 2023 of RON 19,309.66 million, respectively EUR 3,881.65 million,
Romgaz is the fourth biggest company listed from Romania, being preceded by Hidroelectrica with
a capitalization of RON 57,574.72 million (EUR 11,573.73 million) OMV Petrom with a
capitalization of RON 35,798.05 million (EUR 7,196.16 million) and by Transilvania Bank with a
capitalization of RON 19,375.44 million (EUR 3,894.87 million).
5th place after the total value of the transactions from 2023 among the top issuers in the BVB
Premium category (RON 809.18 million) after Hidroelectrica, Fondul Proprietatea, Transilvania
Bank and OMW Petrom;
9.26% and 9.36% weights in the BET index (top 15 issuers) and respectively BET-XT (top 25 issuers),
17.10% in the BET-NG index (energy and utilities) and 9.26% in the BET-TR index (BET Total
Return).
The evolution of Romgaz share prices compared to the BET index, from the listing to the present and
during 2023, is shown in the following figures:
SNG shares trading price and BVB BET index for 2013 - 2023 - RON
50.0000
45.0000
40.0000
35.0000
30.0000
25.0000
20.0000
3
1
0
2
.
1
1
.
2
1
3
1
0
2
.
2
1
.
4
2
4
1
0
2
.
2
0
.
0
1
4
1
0
2
.
3
0
.
4
2
4
1
0
2
.
5
0
.
6
0
4
1
0
2
.
6
0
.
7
1
4
1
0
2
.
7
0
.
9
2
4
1
0
2
.
9
0
.
9
0
4
1
0
2
.
0
1
.
1
2
4
1
0
2
.
2
1
.
2
0
5
1
0
2
/
6
1
/
1
5
1
0
2
/
7
2
/
2
5
1
0
2
/
0
1
/
4
5
1
0
2
/
2
2
/
5
5
1
0
2
/
3
/
7
5
1
0
2
/
4
1
/
8
5
1
0
2
/
5
2
/
9
5
1
0
2
/
6
/
1
1
6
1
0
2
/
2
/
2
6
1
0
2
/
5
1
/
3
6
1
0
2
/
6
2
/
4
6
1
0
2
/
8
/
6
6
1
0
2
/
0
2
/
7
6
1
0
2
/
1
3
/
8
5
1
0
2
/
8
1
/
2
1
6
1
0
2
/
2
1
/
0
1
6
1
0
2
/
3
2
/
1
1
7
1
0
2
/
6
/
1
7
1
0
2
/
7
1
/
2
7
1
0
2
/
1
3
/
3
7
1
0
2
/
6
1
/
5
7
1
0
2
/
7
2
/
6
7
1
0
2
/
8
/
8
7
1
0
2
/
9
1
/
9
7
1
0
2
/
1
3
/
0
1
7
1
0
2
/
2
1
/
2
1
8
1
0
2
/
6
2
/
1
8
1
0
2
/
9
/
3
8
1
0
2
/
0
2
/
4
8
1
0
2
/
4
/
6
8
1
0
2
/
6
1
/
7
8
1
0
2
/
7
2
/
8
8
1
0
2
/
8
/
0
1
8
1
0
2
/
9
1
/
1
1
9
1
0
2
/
3
/
1
9
1
0
2
/
4
1
/
2
9
1
0
2
/
8
2
/
3
9
1
0
2
/
9
/
5
9
1
0
2
/
0
2
/
6
9
1
0
2
/
1
/
8
9
1
0
2
/
2
1
/
9
9
1
0
2
/
4
2
/
0
1
9
1
0
2
/
5
/
2
1
0
2
0
2
/
1
2
/
1
0
2
0
2
/
3
/
3
0
2
0
2
/
4
1
/
4
0
2
0
2
/
6
2
/
5
0
2
0
2
/
7
/
7
0
2
0
2
/
8
1
/
8
0
2
0
2
/
9
2
/
9
0
2
0
2
/
0
1
/
1
1
0
2
0
2
/
2
2
/
2
1
1
2
0
2
/
4
/
2
1
2
0
2
/
8
1
/
3
1
2
0
2
/
9
2
/
4
1
2
0
2
/
0
1
/
6
1
2
0
2
/
2
2
/
7
1
2
0
2
/
2
/
9
1
2
0
2
/
4
1
/
0
1
1
2
0
2
/
5
2
/
1
1
2
2
0
2
/
6
/
1
2
2
0
2
/
7
1
/
2
2
2
0
2
/
1
3
/
3
2
2
0
2
/
2
1
/
5
2
2
0
2
/
3
2
/
6
2
2
0
2
/
4
/
8
2
2
0
2
/
5
1
/
9
2
2
0
2
/
7
2
/
0
1
2
2
0
2
/
8
/
2
1
3
2
0
2
/
3
2
/
1
3
2
0
2
/
6
/
3
3
2
0
2
/
7
1
/
4
3
2
0
2
/
9
2
/
5
3
2
0
2
/
0
1
/
7
3
2
0
2
/
1
2
/
8
3
2
0
2
/
2
/
0
1
3
2
0
2
/
3
1
/
1
1
3
2
0
2
/
7
2
/
2
1
Pret actiune
Indice BET
15,500.00
13,500.00
11,500.00
9,500.00
7,500.00
5,500.00
Page 55 of 99
Consolidated Board of Directors’ Report 2023
55.00
53.00
51.00
49.00
47.00
45.00
43.00
41.00
39.00
37.00
35.00
SNG share price and BVB BET index in 2023 - RON
17,000.00
16,000.00
15,000.00
14,000.00
13,000.00
12,000.00
11,000.00
1/3/2023
2/3/2023
3/3/2023
4/3/2023
5/3/2023
6/3/2023
7/3/2023
8/3/2023
9/3/2023
10/3/2023
11/3/2023
12/3/2023
Preț actiuni
Indice BET
5.1.
The General Meeting of Shareholders determines the value of dividends to be distributed to shareholders
considering the specific legal provisions.
Therefore, Government Ordinance No. 64/2001 15 approved by Law No. 769/2001 as subsequently
amended and supplemented, provided in 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.
According to Government Emergency Ordinance No.29/201716:
“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).
The table below shows the status of dividends for years 2021-2023:
Description
2021
2022
Dividends
1,464,605,120
1,318,144,608
Option I
Option II - recommended by the
Board of Directors and
executive management
Gross dividend per share (RON/share)
Option I
3.80*)
3.42**)
2023
Proposal
1,372,489,166.40
586,998,315.20
0.3561***)
15 Government Ordinance no.64 of 30 August 2001 on the distribution of profits of companies with majority state capital and
autonomous companies.
16 Government Emergency Ordinance no.29 of 30 March 2017 amending Article 1(1)(g) of Government Ordinance no.64/2001 on the
distribution of profits of national companies, national companies and companies with full or majority state capital, as well as
autonomous regions and amending Article 1(2) and (3) of Government Emergency Ordinance no.109/2011 on corporate governance
of public enterprises.
Page 56 of 99
Consolidated Board of Directors’ Report 2023
Option II - recommended by
the Board of Directors and
executive management
Dividend distribution rate (%)
71.61
51.76
Option I
Option II - recommended by
the Board of Directors and
executive management
Number of shares
385.422.400
385.422.400
0.1425****)
51.81
20.73
3.854.224.000
*) The gross dividend of RON 3.80 per share 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 gross dividend of RON 3.42 per share is composed of the gross dividend per share for financial year
2022 in amount of RON 3.30 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 proposed gross dividend per share of RON 0.3561 per share is composed of the gross dividend per
share for financial year 2023 in amount of RON 0.3397 per share and the additional gross dividend of RON
0.0164 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, recommended by the Board of Directors and executive
management, of RON 0.1425 per share is composed of the gross dividend per share for financial year 2023
in amount of RON 0.1359 per share and the additional gross dividend of RON 0.0066 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.
EMGS Resolution No. 17/2023 approved the share capital increase by issuing 9 new shares for each share
held by the shareholders on the payment date. Considering that the dividend payment date will be after
the date of payment of the bonus shares (May 30, 2024, according to EGMS Resolution No. 17/2023), the
dividend per share was calculated for the increased number of shares, respectively 3,854,224,000.
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”.
VI. Company management
6.1. Board of Directors
The company is governed by a Board of Directors consisting of 7 members which, on December 31, 2023,
has the following structure:
Item
No.
Surname and
name
Position in
the Board
Status *)
Professional
Qualification
Institution of
Employment
1.
2.
Dragan
Dragos
Dan
chairman
Jude Aristotel
Marius
member
non-executive
non-independent
executive
non-independent
Economist
Ministry of Energy
MBA Legal Adviser
SNGN Romgaz SA
Page 57 of 99
Consolidated Board of Directors’ Report 2023
3.
4.
5.
6.
7.
Nut
Gabriel
Marius
member
Brasla Razvan
member
Sorici Gheorghe
Silvian
member
Balasz Botond
member
Stoian
Lorena
Elena
member
non-executive
independent
non-executive
independent
non-executive
independent
non-executive
independent
non-executive
independent
Economist
Economist
SC Sanex SA și SC
Lasselberger SA
SC
Blom
Management SRL
Project
Economist
SC Sobis Solution SRL
non-
Legal Adviser
SNGN Romgaz SA
Legal Adviser
SCA
Partners
Stoian
and
*) - members of the Board of Directors submitted the independent statements in compliance with the
provisions of Romgaz Code of Corporate Governance.
The company’s Board members were elected on the basis of OGMS Resolution No. 5 of March 14, 2023, for
a 4-year mandate, starting on March 16, 2023.
During January 1 – March 14, 2023, the Board of Directors had the following structure:
Item
No.
Surname and
name
Position in the
Board
Status *)
Professional
Qualification
Institution of
Employment
1
2
3
4
5
6
7
Dragan
Dragos
Jude
Marius
Dan
chairman
Aristotel
member
Simescu Nicolae
Bogdan
member
Batog Cezar
member
Balazs Botond
member
Sorici Gheorghe
Silvian
member
Metea
Marius
Virgil
member
non-executive
non-independent
executive non-
independent
non-executive
independent
non-executive
independent
non-executive
non-independent
non-executive
independent
non-executive
non-independent
Economist
Ministry of Energy
MBA Legal Adviser
SNGN Romgaz SA
Engineer
SNGN Romgaz SA
Economist
Publicis
Romania
Groupe
Legal Adviser
SNGN Romgaz SA
Economist
Engineer
SC Sobis Solutions
SRL
SNGN Romgaz SA
The Curricula Vitae of the Board members are to be
http://www.romgaz.ro/consiliu-administratie.
found on company’s webpage:
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.
On December 31, 2023, the following Board members hold shares in the company:
Item
No.
0
1
2
Surname and name
Number of
shares held
Weight in the
share capital (%)
1
Dragan Dan Dragos
Balasz Botond
2
18,757
11
3
0.00486661
0.00000285
6.2. Executive Management
Chief Executive Officer (CEO)
Page 58 of 99
Consolidated Board of Directors’ Report 2023
By Resolution no. 78 of November 23, 2022, the Board of Directors appointed MR. Popescu Razvan as Chief
Executive Officer for a period of 4 months, from December 18, 2022, until April 18, 2023.
By Resolution no. 32 of March 23, 2023, the Board of Directors approved the extension of Mr. Popescu
Razvan mandate as Chief Executive Officer, for a period of 2 months, from April 19, 2023, until June 19,
2023.
By Resolution no. 55 of May 15, 2023, the Board of Directors appointed Mr. Popescu Razvan as Chief
Executive Officer for a period of 4 years, from May 16, 2023, until May 16, 2027.
By Resolution no. 87 of September 19, 2023, the Board of Directors approved the conclusion of the
addendum to the mandate contract of Mr. Popescu Razvan related to the financial and nonfinancial
performance indicators underlying the establishment and granting of the variable component of the Chief
Executive Officer’s remuneration, determining the amount of the variable component of remuneration
and how it is calculated and paid.
By Resolution no. 115 of December 19, 2023, the Board of Directors approved the conclusion of the
addendum to the Chief Executive Officer’s mandate contract on the modification of financial and non-
financial performance indicators.
Deputy Chief Executive Officer (Deputy CEO)
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 mandate of 4 months starting from December 18, 2022, until
April 18, 2023.
By Resolution no. 33 of March 23, 2023, the Board of Directors approved the extension of Mr. Jude Aristotel
Marius mandate as Deputy Chief Executive Officer, for a period of 2 months, from April 19, 2023, until
June 19, 2023.
By Resolution no. 55 of May 15, 2023, the Board of Directors appointed Mr. Jude Aristotel Marius as Deputy
Chief Executive Officer for a period of 4 years, from May 16, 2023 until May 16, 2027.
By Resolution no. 87 of September 19, 2023, the Board of Directors approved the conclusion of the
addendum to the mandate contract of Mr. Jude Aristotel Marius related to the financial and nonfinancial
performance indicators underlying the establishment and granting of the variable component of the
Deputy Chief Executive Officer’s remuneration, determining the amount of the variable component of
remuneration and how it is calculated and paid;
By Resolution no. 115 of December 19, 2023, the Board of Directors approved the conclusion of the
addendum to the Chief Executive Officer’s mandate contract on the correction of financial and non-
financial performance indicators.
Chief Financial Officer (CFO)
By Resolution no. 85 of December 20, 2022, the Board of Directors appointed Mrs. Tranbitas Gabriela as
Chief Financial Officer for an interim mandate of 4 months, from December 20, 2022, until April 20, 2023.
By Resolution no. 34 of March 23, 2023, the Board of Directors approved the extension of Mrs. Tranbitas
Gabriela mandate as Chief Financial Officer, for a period of 2 months, from April 21, 2023 until June 21,
2023.
By Resolution no. 55 of May 15, 2023, the Board of Directors appointed Mrs. Tranbitas Gabriela as Romgaz
Chief Financial Officer, for a period of 4 years, from May16, 2023 until May 16, 2027.
By Resolution no. 87 of September 19, 2023, the Board of Directors approved the conclusion of the
addendum to the mandate contract of Mrs. Tranbitas Gabriela, related to the financial and nonfinancial
performance indicators underlying the establishment and granting of the variable component of the
Deputy Chief Financial Officer’s remuneration, determining the amount of the variable component of
remuneration and how it is calculated and paid.
By Resolution no. 115 of December 19, 2023, the Board of Directors approved the conclusion of the
addendum to the Chief Financial Officer’s mandate contract on the correction of financial and non-
financial performance indicators.
The other persons in management positions within the company, to whom the Board of Directors has not
delegated management powers, can be found on the company's website at the link below:
https://www.romgaz.ro/management.
Page 59 of 99
Consolidated Board of Directors’ Report 2023
Other persons holding management positions without being delegated management powers by the Board
of Directors, on December 31, 2023:
Surname and name
ROMGAZ - headquarters
Position
Chirca Robert Stelian
Exploration-Production Department Director
Foidas Ion
Grecu Marius Rares
Veza Marius Leonte
Zilahi Ioana Maria
Production Department Director
Human Resources Director
Accounting Department Director
Finance Department Director
Paunescu Octavian Aurel
Exploration-Appraisal Department Director
Sasu Rodica
Dinu Dorin
-
Exploration-Production Support Department Director
Drilling Department Director
Information Technology Department Director
Lupa Leonard Ionut
Procurement Department Director
Chertes Viorel Claudiu
Regulations Department Director
Moldovan Radu Costica
Energy Trading Department Director
Mares Gabriela Elena
Antal Francisc
Hategan Gheorghe
Medias Branch
Strategy, International Relations, European Funds Department
Director
Quality, Environment, Emergency Situations and Infrastructure
Department
Technical Department Director
Totan Constantin Ioan
Branch Director
Achimet Teodora Magdalena
Economic Director
Veress Tudoran Ladislau Adrian
Production Director
Popa Bogdan
Targu Mures Branch
Baciu Marius Tiberiu
Bosca Mihaela
Rusu Gratian
Roiban Claudiu
Iernut Branch
Balazs Bela Atila
Hatagan Olimpiu Sorin
Oprea Maria Aurica
Bircea Angela
SIRCOSS
Technical Director
Branch Director
Economic Director
Production Director
Technical Director
Branch Director
Economic Director
Commercial Director
Technical Director
Rotar Dumitru Gheorghe
Branch Director
Bordeu Viorica
Gheorghiu Sorin
STTM
Lucaci Emil
Ilinca Cristian Alexandru
Grosu Adrian Doru
Drobeta Branch
Economic Director
Technical Director
Branch Director
Economic Director
Technical Director
Page 60 of 99
Consolidated Board of Directors’ Report 2023
Surname and name
Position
Saceanu Constantin
Branch Director
The members of the executive management, except for the mandated officers (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.
The table below shows the number of company shares held by the members of the executive
management on December 31, 2023:
Item
no.
0
1.
2.
3.
4.
Surname and name
Number of
shares held
Weight in the
share capital (%)
1
MATEI Delia Gabriela
Andrea Nicolae
ZILAHI Ioana Maria
Balasz Bela Atila
2
233
225
60
38
3
0.00006045
0.00005837
0.00001556
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.
Depogaz Board of Directors
Depogaz is governed by the Board of Directors, consisting of 5 board members, selected and appointed by
the Sole Associate in compliance with the law.
Selection and appointment of Depogaz Board of Directors was made in compliance with GEO No. 109/2011
on corporate governance of public enterprises, as amended from time to time, and related enforcement
guidelines.
Thus, the appointment of members in the Board of Directors of SNGN Romgaz SA – Filiala de Înmagazinare
Gaze Naturale DEPOGAZ Ploiești SRL, was approved by Sole Associate Resolution No. 1/January 19, 2023,
for a 4 –year mandate term, for the period January 20, 2023 – January 20,2027, respectively, as follows:
No.
1.
2.
3.
4.
5.
Surname and name
Stanescu Nicolae Bogdan Codrut
Tarinda Ileana
Lazar George
Vasile Anna-Maria
Ciornea Anca-lsabela
Position in the BoD
chairman
member
member
member
member
*) – members of the Board of Directors submitted the independent statements in compliance with the
Internal Rules of the Board of Directors.
Status*)
independent non-executive
independent non-executive
independent non-executive
independent non-executive
independent non-executive
Executive Management of Depogaz
Director General
Mr. Carstea Vasile was appointed as interim Director General of SNGN Romgaz SA – Filiala de Inmagazinare
Gaze Naturale Depogaz Ploiesti SRL for 4 months, by Board of Directors Resolution No. 18 from November
21, 2022, with the possibility of extension up to 6 months or until the selection procedure is completed,
based on a contract of mandate, starting on November 11, 2022.
Page 61 of 99
Consolidated Board of Directors’ Report 2023
The procedure for recruiting DEPOGAZ Director General was approved by Board Resolution No. 2/January
20, 2023, in compliance with the provisions of GEO No. 109/2011 on corporate governance of public
enterprises, as amended.
Upon the completion of the recruiting procedure, Mr. Carstea Vasile was appointed Director General of
DEPOGAZ by Board of Directors Resolution No. 5/March 6, 2023, based on a Contract of Mandate concluded
for a term of 4 years, starting with March 6, 2023.
The Director General of the company has the duties provided in the Contract of Mandate, by the Internal
Rules of the Board of Directors and by the Articles of Association, supplemented by the applicable law.
Other persons holding management position during the reference period:
No. Surname and name
Position
1.
2.
3.
4.
5.
Alupei Valentin Lucian
Storage Director
Ionescu Viorica Mariana Economic Director
Girlicel Victor Cristian
Technical Director
Galea Paul
Commercial Director
Moise Sanda Madalina
Quality, Health, Safety, Environment Director
Also, members of Depogaz management holding Romgaz shares are: Mr. Carstea Vasile - 412 shares
representing 0.00010690% of the share capital and Mr. Girlicel Victor Cristian - 125 shares representing
0.00003243% of the share capital.
Board of Directors and Executive Management of RBS
RBS Subsidiary is governed by a Board of Directors consisting of 3 members who, starting with December
31, 2023, are:
No.
Name and surname
Position in
BD
Status
Rodica Sasu
chairman
non-executive
Professional
Qualification
geophysical
engineer
Employer Company
SNGN Romgaz SA
Robert Stelian Chirca
member
non-executive
engineer
SNGN Romgaz SA
Tiberiu Andrei Novac
member
non-executive
economist
SNGN Romgaz SA
1
2
3
Board members have been selected based on Sole Associate Resolution No. 230131-3 of January 31, 2023,
for a 4-month term mandate as of February 3, 2023. Further, the Board members mandates have been
extended by 2 months, by Resolution No. 230524-4 of May 24, 2023, from June 4, 2023, until August 4,
2023. Board members have been appointed for a 4-month mandate by the Sole Associate Resolution no.
14 of July 21, 2023, starting at August 5, 2023. Further, Board members have been appointed for a 5-month
term mandate by Resolution no. 25 of November 22, 2023, starting from December 6, 2023, until May 6,
2024.
Mr. Alin Alexandru Stirbu was appointed by Board Resolution No. 5 of February 3, 2023, as Director General
and legal representative of the company, Branch Director and legal representative of Romgaz Black Sea
Limited Nassau (Bahamas)- Bucuresti Branch for a 4-month term mandate starting from February 3, 2023,
until June3, 2023. The extension of Mr. Alin Alexandru Stirbu’s mandate by 2 months, from June 4, 2023,
until August 4, 2023, was approved by Board of Directors Resolution No. 23 of May 25, 2023.
The Board of Directors acknowledged by Resolution No. 29 of June 29, 2023, the resignation of Mr. Alin
Alexandru Stirbu from his position as Director General and legal representative of the company, Branch
Director and legal representative of Romgaz Black Sea Limited Nassau (Bahamas)- Bucuresti Branch.
The Board of Directors appointed by Board of Directors Resolution No. 30 of June 29, 2023, Mrs. Diana
Andreea Lupu as Director General and legal representative of the company, Branch Director and legal
representative of Romgaz Black Sea Limited Nassau (Bahamas)- Bucuresti Branch for a 4-month term
mandate starting from July 4, 2023 until November 4, 2023.
The Board of Directors appointed by Board of Directors Resolution No. 56 of October 26, 2023, Mrs. Diana
Andreea Lupu as Director General and legal representative of the company, Branch Director and legal
representative of Romgaz Black Sea Limited Nassau (Bahamas)- Bucuresti Branch for a 5-month term
mandate starting from November 5, 2023 until April 5, 2024.
Page 62 of 99
Consolidated Board of Directors’ Report 2023
We state that, to the best of our knowledge, the persons nominated at paragraphs 6.1. and 6.2. above
have not been involved in litigations or administrative procedures during the last 5 years, relating
to their activity performed in Romgaz, as well as those related to the respective persons capacity to
perform their duties in Romgaz, except for the litigations that are subject to files No. 1596/85/2018*,
nr.229/85/2019 (please see “Litigations” posted on Romgaz website at the address www.romgaz.ro
Investors Annual Reports 2023), and file No. 2041/85/2018, finally settled in 2021.
Page 63 of 99
Consolidated Board of Directors’ Report 2023
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 based on 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,
2021, December 31, 2022, and December 31, 2023:
Indicator
December
31, 2021
(thousand
RON)
December
31, 2022
(thousand
RON)
December
31, 2023
(thousand
RON)
Variation
(2023/2022)
0
1
2
3
4=(3-2)/2*100
ASSETS
Non-current assets
Property, plant and equipment
5,240,697
5,039,314
5,891,788
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
16,133
26,187
269,645
5,616
7,128
5,140,425
5,135,930
28,537
199,016
5,616
8,766
33,410
324,175
5,616
11,596
5,565,406 10,421,674 11,402,515
305,241
1,352,345
284,007
1,373,664
301,690
1,398,953
483
3
-
16.92
-0.09
17.08
62.89
0.00
32.28
9.41
6.23
1.84
n/a
417,923
99,597
2,505,463
2,415.60
67,962
3,201
265,232
321,799
-
-
3,580,412
1,883,882
535,210
5,727,567
3,906,385 5,063,115
11,292,973 14,328,059 16,465,630
385,422
385,422
385,422
2,998,975
3,579,274
4,971,109
5,596,756
6,111,869
6,204,783
8,981,153 10,076,565 11,561,314
156,420
412,846
230,438
168,830
210,838
230,419
-
1,125,534
7,211
7,499
189,314
373,536
370,941
808,373
10,450
21.33
n/a
-71.59
29.61
14.92
0.00
38.89
1.52
14.73
12,13
77.17
60.99
-28.18
39.35
Page 64 of 99
Consolidated Board of Directors’ Report 2023
Indicator
0
Total non-current liabilities
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
December
31, 2021
(thousand
RON)
December
31, 2022
(thousand
RON)
December
31, 2023
(thousand
RON)
Variation
(2023/2022)
1
806,915
2
1,743,120
3
1,752,614
4=(3-2)/2*100
0,54
71,317
204,384
110,006
263,340
146,111
153,723
52,299
1,177,498
1,766,637
49
11
7
237,144
321,489
121,732
810
-
938,902
2,181
321,581
312,268
2,579
323,349
637,564
1,504,905
2,508,374
3,151,702
2,311,820
4,251,494
4,904,316
32.82
-41.63
50.03
-36.36
-62.13
18.25
0.55
104.17
25.65
15.36
14.92
TOTAL EQUITY AND LIABILITIES
11,292,973 14,328,059 16,465,630
NON-CURRENT ASSETS
Total non-current assets recorded an increase of 9.41%, namely RON 980.84 million, from RON 10,421.67
million on December 31, 2022, to RON 11,402.52 million on December 31, 2023. The increase is generated
mainly by the investments made in 2023 in well rehabilitation and the investments in Neptun Deep Project.
The investment in Neptun Deep was RON 535.41 million. The investment related to Iernut power plant
was RON 56,026.32.
CURRENT ASSETS
Current assets increased by RON 1,156.73 million on December 31, 2023 mainly due to increase of cash,
cash equivalents and other financial assets by RON 1.06 billion. The main influences on current assets are
shown below.
Inventories
At the end of 2023, natural gas inventories decreased as compared to the end of 2022 by RON 38.60
million. During 2023 a gas quantity of 93.3 million m3 was injected in the underground gas storages, while
the withdrawn gas quantity was 144.5 million m3. In terms of quantity, the Group's gas inventories in
storage deposits decreased by 29.76% as compared to the previous year.
Cash and cash equivalents. Other financial assets
Cash, cash equivalents and other financial assets (bank deposits and purchased state bonds) were RON
3,040.67 million on December 31, 2023, as compared to RON 1,983.48 million at the end of 2022 (RON
(+1,057.19 million). The increase was mainly due to collections during 2023. In 2023, the Group received
RON 46.35 million from the National Investment Plan for the investment in the new power plant from
Iernut, and RON 94.19 million following conclusion of a grant agreement with the European Climate,
Infrastructure and Environment Executive Agency to increase daily withdrawal capacity at Bilciuresti UGS.
These amounts are also included in deferred income (non-current section).
Other assets
Other assets decreased on December 31, 2023 as compared to December 31, 2022 due to the receivables
recovered by Romgaz representing windfall tax (RON 142.23 million) and some receivables of RON 28.98
million generated by receiving favourable decisions in the disputes with the National Agency for Fiscal
Administration in the previous periods.
NON-CURRENT LIABILITIES
Non-Current liabilities increased by 0.54% at the end of 2023 as compared to the similar period of 2022.
Significant variations were recorded by the elements listed below.
Page 65 of 99
Consolidated Board of Directors’ Report 2023
Deferred income
The Group received in 2023 RON 46.35 million from the National Investment Plan for the investment in
the new Iernut power plant, and RON 94.19 million following conclusion of a grant agreement with the
European Climate, Infrastructure and Environment Executive Agency to increase daily withdrawal capacity
at Bilciuresti UGS.
Provisions
The increase of the decommissioning provision recorded for the Groups’ wells was determined by the
decrease of the discount rate considered.
CURRENT LIABILITIES
Current liabilities increased by RON 643.33 million, from RON 2,508.37 million recorded on December 31,
2022, to RON 3,151.70 million at the end of 2023. Main influences are shown below.
Current tax liabilities
Current tax liabilities on December 31, 2023 includes the profit tax liability of RON 79.72 million (RON
174.71 million on December 31, 2022) and the liability related to the solidarity contribution of RON
1,686.92 million (RON 1,002.79 million on December 31, 2022).
Provisions
The decrease of current provisions by RON 199.76 million as compared to December 31, 2022 is mainly
caused by using in 2023 the provision for CO2 certificates. Moreover, this year the Group purchased during
the year CO2 certificates required for compliance purposes, unlike previous years when the purchase took
place after the end of the calendar year. The costs related to these certificates are reflected at other
expenses.
Other liabilities
Other liabilities recorded an increase of 104.17% as compared to the end of 2022. Most of these liabilities
are related to the Group's obligation to return the CO2 certificates purchased in 2023 related to this year
in order to be entered in the Single Register of Greenhouse Gas Emissions in the amount of 208.62 million
lei, to petroleum royalties due for Q4 (RON 174.77 million on December 31, 2023, as compared to RON
146.96 million on December 31, 2022) and to amounts due to the operator for works performed to develop
Neptun Deep block.
In 2023 financial year, the Group did not issue bonds or other debt instruments.
7.2. Statement of Consolidated Comprehensive Income
The Group profit and loss account summary for the period January 1 – December 31, 2023, as compared
to the similar period of the years 2021 and 2022, is shown below:
Indicator
Year 2021
(thousand
RON)
Year 2022
(thousand
RON)
Year 2023
(thousand
RON)
Variation
(2023/2022)
0
1
2
3
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
Taxes and duties *)
5,852,926
(281,589)
58,403
23,388
349,989
74,787
(81,146)
(685,772)
13,359,653
(183,578)
176,979
(9,441)
(55,166)
(2,197)
(118,037)
(550,076)
9,001,878
(107,130)
213,008
(17,748)
(57,546)
(5,767)
(109,441)
(476,568)
(766,639)
-
(846,001)
(6,954,380)
(914,054)
(1,495,473)
-32.62
-41.64
20.36
87.99
4.31
162.49
-7.28
-13.36
8.04
-78.50
Page 66 of 99
Consolidated Board of Directors’ Report 2023
Indicator
0
Finance costs
Exploration expense
Share of associates’ result
Other expenses
Other income
Profit before tax
Income tax expense
Profit for the period
Year 2021
(thousand
RON)
Year 2022
(thousand
RON)
Year 2023
(thousand
RON)
1
(16,739)
(1,197)
85
(2,539,086)
169,841
2,157,251
(242,264)
1,914,987
2
(27,295)
(59,714)
2,350
(658,916)
80,068
4,154,249
(1,607,537)
2,546,712
3
(62,003)
(84,640)
4,873
(944,191)
122,264
5,067,462
(2,255,353)
2,812,109
Variation
(2023/2022)
4=(3-2)/2*100
127.16
41.74
107.36
43.29
52.70
21.98
40.30
10.42
*) Starting with 2023, the Group presents separately the taxes and duties for the related period.
Therefore year 2022 is represented. Year 2021 is presented in compliance with the consolidated financial
position issued for that year.
Revenue
In 2023, Romgaz recorded consolidated revenues of RON 9.0 billion, as compared to RON 13.4 billion
achieved in 2022.
The decrease of revenue is generated by a 31.31% decline in sale of gas produced by Romgaz and of gas
purchased for resale, as well as from decrease of revenue from sale of electricity by 69.41%. Consolidated
revenue from storage services increased by 17.66%.
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.
Cost of Commodities Sold
In 2023, cost of commodities sold decreased by 41.64% as compared to the similar period of 2022, mainly
due to the decrease of costs of imbalances in the electricity market.
Net Gains/Losses from Impairment of Trade Receivables
In 2023, the Group recorded a net loss from impairment of receivables of RON 57.5 million. During the
year, adjustments for impairment of receivables of RON 109.2 million were recorded, out of which RON
28.4 million for penalties invoiced but not collected, and RON 72.86 million penalties from a client for gas
contracted but not taken. In 2023 the Group recovered outstanding debts of RON 51.65 million.
Raw materials and Consumables Used
Decrease of expenses with raw materials and consumables is mainly due to a 33.22% lower technological
consumption for the reviewed period as compared to 2022.
Depreciation, Amortization and Net Impairment
The depreciation, amortization and net impairment expenses decreased by 13.36 % due to the decrease
by 3.73% of depreciation and amortization expenses generated by the full amortization of certain assets
during previous periods and due to lower production in 2023 as compared to the previous year. Moreover,
net impairment of non-current assets decreased by 41.28%.
Financial Cost
The increase of finance cost by 127.16% 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.
Exploration Expenses
Exploration expenses recorded in 2023 of RON 84.64 million, increased from RON 59.71 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 specific minimum 3D seismic program that will result in increased exploration
expenses.
Taxes and duties
Page 67 of 99
Consolidated Board of Directors’ Report 2023
The expense with taxes and duties decreased by 43.29% in the year ended December 31, 2023 as compared
to 2022. The drop of RON 5,458.91 million resides from lower expenses with the windfall tax and lower
royalty expenses. Royalty expenses (including royalty for storage activities) decreased by RON 1,039.56
million (-63.39%) as compared to 2022, and the windfall tax on natural gas decreased in 2023 by RON
4,014.05 million (-81.86%) as compared to 2022. The decrease of such taxes and duties was generated by
the provisions of Government Emergency Ordinance No. 27/2022 as subsequently amended, according to
which gas sold at regulated prices are not subject to windfall tax, and royalty is calculated at the regulated
price, lower than the reference price calculated and communicated by the National Agency for Mineral
Resources.
As regards electricity, windfall tax expenses and the contribution to the energy transition fund recorded
by the Group in 2022 were in amount of RON 403.80 million. In 2023, considering that most of electricity
produced was sold at the regulated price of RON 450/MWh, the Group recorded an insignificant expense
with these taxes. According to GEO No.27/2022, electricity producers that sell electricity at RON
450/MWh, have to receive from the Romanian state the positive difference between the value of CO2
certificates for the energy sold at this price, on one hand, and the contribution to the energy transition
fund, on the other hand. As this right cannot be exercised so far due to lack of legal provisions, it was
considered that the conditions for recognition of this subsidy were not met, and the Group did not record
any income in this respect. The amount to be recovered by the Group on December 31, 2023, is RON
167.74 million; representing a contingent asset at the end of 2023.
Other Expenses
In 2023, Romgaz shareholders approved conclusion of a settlement agreement with Duro Felguera to
unlock the investment in the new Iernut power plant. One of the clauses included in the transaction
agreement provided that Duro Felguera receives the value of executed performance bond upon
termination of the previous works contract, conditioned upon fulfilment of certain obligations. The
performance bond value of RON 114 million was paid in 2023.
Other Income
Other income increased by 52.70% in the year ended December 31, 2023 as compared to 2022. These
include mostly interests and late payment penalties invoiced to clients for late payment or for not taking
over the contracted gas quantities, and to suppliers for delays in providing works.
7.3. Statement of Consolidated Cash Flows
Comparative statements of cash flows recorded during 2021-2023 are shown in the table below:
INDICATOR
2021
2022
2023
*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
1,914,987
2,546,712
2,812,109
242,264
(85)
557
16,182
(58,403)
1,607,537
(2,350)
5,627
21,668
(176,979)
2,255,353
(4,873)
43,838
18,165
(213,008)
(321)
451
6,867
(20,750)
68,578
37,046
33
184,943
-
463,783
(75,652)
111,564
66,447
16
74,726
(453)
408,903
33,861
(196,640)
23,361
3
59,537
7,382
393,670
Page 68 of 99
Consolidated Board of Directors’ Report 2023
INDICATOR
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
movement in working capital
from operations before
Movements of working capital
(Increase)/decrease in inventories
(Increase)/decrease
receivables
trade
in
and
other
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
Grants received
Repayment of lease liability
Net cash used in financing activities
Net increase/(decrease) in net cash and cash
equivalents
Cash and cash equivalents at the beginning of
the year
Cash and cash equivalents at the end of the year
2021
2022
2023
1,626
773
10
-
(378,352)
5,014
(810)
(9)
55,765
5,438
(512)
(7)
59
-
53,523
5,647
(172)
(7)
2,476,293
4,649,674
5,298,675
(64,913)
21,731
(22,571)
(400,838)
790,347
(276,839)
(526,915)
(35,114)
122,199
2,800,889
(3)
(233,084)
3,867,651
(5,040)
(410,976)
5,363,189
(43,183)
(1,781,868)
2,567,802
3,451,635
3,538,138
(250)
-
-
(3,896,521)
(3,355,306)
(6,184,938)
5,463,332
58,340
513
3,669,504
181,067
1,033
2
(340,695)
(91,865)
-
(5,529,611)
(96,500)
3,790,236
201,844
1,684
-
(1,141,956)
(50,746)
1,192,856
(5,129,813)
(3,383,876)
-
-
(690,027)
94,148
(1,280)
(597,159)
1,606,475
(158,907)
(1,463,984)
-
(1,936)
(18,352)
-
(322,775)
(1,317,745)
140,541
(2,955)
(1,502,934)
3,163,499
(1,696,530)
(1,348,672)
416,913
3,580,412
1,883,882
3,580,412
1,883,882
535,210
Page 69 of 99
Consolidated Board of Directors’ Report 2023
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, approved by Law 111/2016
and amended by Law No. 187/2023, and GD No. 639/2023 for approval of methodological norms for
implementing Government Emergency Ordinance No. 109/2011 on corporate governance of public
enterprises replacing, starting of July 27, 2023, the Government Decision no. 722 of September 28, 2016
on enforcement guideline for establishing the financial and non-financial 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 several 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, No.4 of August 9,
2017, and No. 17/18 of December 2023 (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 “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 Code of Corporate Governance, in accordance with the 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 as follows:
a. The Internal Rules of the Nomination and Remuneration Committee on August 28, 2018,
on August 11, 2022, and on December 19, 2023;
b. The Internal Rules of the Audit Committee on May 14, 2018 and October 10, 2022 currently
in the process of updating;
c. The Internal Rules of the Strategy Committee on March 23, 2017, on October 27, 2022,
and on December 19, 2023;
Approval by the Board of Directors of S.N.G.N. Romgaz S.A on October 18, 2023, of the Internal
Rules of the Risk Management Committee, following the enforcement of the amendments imposed
by Law 187/2023;
Continuous 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,
currently in the process of alignment with the amendments of the Law No. 187/2023;
Approval of the Policy related to the assessment of the Board of Directors during March 12, 2019
meeting;
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Consolidated Board of Directors’ Report 2023
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;
Drafting Rules and Procedures of S.N.G.N. Romgaz General Meeting of Shareholders, approved by
the Board of Directors of S.N.G.N. Romgaz S.A. by Decision No. 54 of May 11, 2023, published on
the Company website at “Investors -General Meeting of Shareholders”;
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 four
advisory committees of the Board of Directors (the Nomination and Remuneration Committee, the
Audit Committee, the Risk Management Committee and the Strategy Committee), aspects related
to remuneration of Board members and of officers, 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 for access and participation to GMS, and by setting up an “Infoline” for
shareholders/investors to receive response 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 officers with
mandate, for the period October 2022 to October 2024;
Continue with necessary steps for the implementation of 2021-2025 National Anti-Corruption
Strategy in 2023. 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 2023.
The amendment of Art. 34 par. (2), no. 1 of the GEO No. 109/2011 by Law No. 187/2023 enforces
the obligation to setup the Risk Management Committee, which is meant to provide consistency
between control activities and the risks generated by control activities and processes, to identify,
analyse, assess, monitor and report identified risks, the risks mitigation and prediction plan, other
measures taken by the executive management. The Internal Rules of the Risk Management
Committee was approved on October 18, 2023.
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, following the amendments to the law;
Regular evaluation of the fulfilment of financial and non-financial performance indicators approved
by the General Meeting of Shareholders;
Drafting a new Corporate Governance Code in compliance with the amendments to the corporate
governance law issued in 2023;
Finalizing the update of the Internal Rules of the Audit Committee approved in May 14, 2018, and in
October 10, 2022, and submitting it for approval to the Board of Directors;
Finalizing the update of the Internal Rules of the Board of Directors in compliance with the latest
amendments to the corporate governance law;
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.
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Consolidated Board of Directors’ Report 2023
Aspects Related to Shareholders
The shareholders’ structure is presented at 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 is 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;
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;
c) to discuss, approve or request, as the case may be, supplementation or review of the company’s
governance plan, under legal provisions;
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)
g) to appoint and to dismiss the financial auditor and to set the minimum term of the financial audit
to decide upon the governance of the Board of Directors;
contract;
i)
h) to approve the contracting of bank loans, the value of which exceeds, individually or cumulatively
with 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.
The Extraordinary General Meeting of Shareholders has the following main competencies:
to change company’s legal form;
a)
b) to move the headquarters;
c)
d) to establish companies, as well as conclude or amend incorporation documents of the companies
to change the Company’s scope of activity;
where Romgaz is associate;
to conclude or amend joint venture contracts where the company is contracting party;
to increase the share capital;
to reduce the share capital or to restore it by issuing new shares;
to merge with other companies or to spin-off the company;
the anticipated winding up of the company;
to convert shares from one category into the other;
to convert one category of bonds into another one or in shares;
to issue bonds;
e)
f)
g)
h)
i)
j)
k)
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;
Page 72 of 99
Consolidated Board of Directors’ Report 2023
n) to conclude the documents related to disposal, exchange or set up of guarantees referring to non-
current assets of the company 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 and governed under a one-tier system.
The Board of Directors (BoD) comprises seven (7) members selected by the Ordinary General Meeting of
Shareholders, by complying with the legal applicable requirements of the Articles of Incorporation, where
one Director is appointed as chairman of the Board of Directors.
The BoD composition complies with the criteria/requirements of the legislation on proportion of non-
executive and independent directors, studies and balance of competences, experience, and gender
diversity (criteria detailed in the BoD Internal Rules).
The BoD composition as of December 31, 2023 is shown in Chapter VI “Company Management”. According
to the Declarations of Independence submitted to the Company, four of the Directors have declared
themselves as independent and three non-independent Directors. The independency of the Directors is
determined based on the criteria detailed in Romgaz Code of Corporate Governance (Article 6).
Details regarding rights, obligations, and competencies of the Directors, as well as details on conduct of
BoD meetings are described in the Articled of Incorporation and BoD internal Rules.
As of December 31, 2023, no self-assessment of the BoD for 2023 was performed.
Advisory Committees
The BOD is supported in its activity by the following four advisory committees: Nomination and
Remuneration Committee, Audit Committee, Risk Management Committee and Strategy Committee.
The Audit Committee fulfils the legal duties provided in Article 65 of Law 162/201717 consisting mainly in
monitoring the financial reporting process, the internal control, internal audit and risk management
systems within the Company, and in supervising the statutory audit of the annual financial statements and
in managing the relation with the external auditor.
The Nomination and Remuneration Committee organizes training sessions for board members, makes
proposals for remuneration of BoD members and Officers, by complying with the remuneration policy
transmitted by Agentia pentru Monitorizarea și Evaluarea Performantelor Intreprinderilor Publice (AMEPIP)
(The Agency for Monitoring and Performance Evaluation of Public Enterprises), and support the BoD in
evaluating its own performance as well as the performance of the executive management. The Committee
shall also prepare a yearly Report on remuneration and other benefits granted to Directors and Officers
during the financial year.
Risk Management Committee
Taking into account the amendment of GEO 109/2011 on corporate governance of public enterprises by
Law 187/2023, the BoD is required to set up a new advisory committee on:
ensuring that control activities are consistent with the risks arising from the activities and
processes subject to control;
identifying, reviewing, evaluating, monitoring and reporting on identified risks, mitigation or
anticipation action plan, other actions taken by the executive management;
measuring the solvency of the company by reference to its usual duties and obligations;
informing or, where appropriate, making proposals to the Board in this respect.
In case of public enterprises governed under a one-tier system, as is the case of Romgaz, the Risk
Management Committee may also comprise non-executive Directors. The chairman of the Risk
Management Committee shall be an independent Director in accordance with the Law.
A series of duties on internal control and risk management have been taken over by the Risk Management
Committee from the Audit Committee. Hence, the Internal Rules of the Audit Committee is going to be
17 Law 162 of July 15, 2017 on statutory audit of the annual financial statements and consolidated annual financial statements and
on amending several legal acts
Page 73 of 99
Consolidated Board of Directors’ Report 2023
reviewed accordingly. Article 14 of the BoD Internal Rules approved/amended on February 5, 2019 is also
going to be amended.
Besides the duties on internal control and risk managements, the Risk Management Committee shall be
also granted with duties on sustainability and ESG requirements, because of the importance of ESG factors
within the costs - revenues equation, the development opportunities and the structuring and implementing
way of any business strategy.
The Strategy Committee – its main activity is to coordinate the preparation/updating and monitoring of
the company’s development strategies, correlated with the national and European energy strategy, to
assess the stage of the implementation of these development strategies, as well as the measures required
to achieve the established objectives, and to monitor the company’s activity diversification projects by
implementing investment objectives.
The detailed presentation of the duties and responsibilities of each Advisory Committees is to be found in
the related Internal Rules, as published on the company’s website www.romgaz.ro , “Investors – Corporate
Governance – Reference Documents”.
As of December 31, 2023, the composition of the Advisory Committees was as follows:
I) The Nomination and Remuneration Committee:
Sorici Gheorghe Silvian (chairman)
Brasla Razvan
Dragan Dan Dragos
II) Audit Committee
Sorici Gheorghe Silvian (chairman)
Brasla Razvan
Nut Marius Gabriel
III) Risk Management Committee
Nut Marius Gabriel (chairman)
Balazs Botond
Brasla Razvan
IV) Strategy Committee
Balazs Botond (chairman)
Dragan Dan Dragos
Jude Aristotel Marius
Stoian Elena Lorena
Brasla Razvan.
Information on BoD and Advisory Committees meetings in 2023
In 2023, by compliance with the legal and statutory provisions, 52 BoD meetings were conducted, out of
which:
44 in-person meetings attended by board members, and
8 meetings by electronic vote.
Participation in BoD meetings:
Surname and Name
Batog Cezar
Simescu Nicolae Bogdan
Dragan Dan Dragos
Metea Virgil Marius
Sorici Gheorghe Silvian
Jude Marius Aristotel
Balazs Botond
Number of
meetings during
the mandate
P
PA
NP
No. %
No. %
No. %
12
12
52
12
52
52
52
11
12
49
11
50
50
50
91.6
100%
94.2
91.6
96.1
96.1
96.1
1
3
1
2
2
2
8.3
5.7
8.3
3.8
3,8
3.8
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Consolidated Board of Directors’ Report 2023
Stoian Elena Lorena
Brasla Razvan
Nut Marius Gabriel
40
40
40
40
40
40
100%
100%
100%
where:
P = participation;
PA = power of attorney;
NP = no participation.
Board members participation in the Advisory Committees meetings:
Nomination and Remuneration: 10 meetings
Surname and Name
Batog Cezar
Dragan Dan Dragos
Brasla Razvan
Sorici Gheorghe Silvian
Audit Committee: 13 meetings
Surname and Name
Batog Cezar
Simescu Nicolae Bogdan
Sorici Gheorghe Silvian
Nut Marius Gabriel
Stoian Lorena Elena
Brasla Razvan
In-person
participation
1/1
10/10
9/9
10/10
In-person
participation
3/3
3/3
13/13
10/10
8/8
2/2
Risk Management Committee: 0 meetings
Surname and Name
Nut Marius Gabriel
Balazs Botond
Brasla Razvan
Strategy Committee: 2 meetings
Surname and Name
Balazs Botond
Dragan Dan Dragos
Jude Marius Aristotel
Sorici Gheorghe Silvian
Metea Virgil Marius
Stoian Elena Lorena
Brasla Razvan
In-person
participation
0/0
0/0
0/0
In-person
participation
2/2
2/2
2/2
1/1
1/1
1/1
1/1
Chief Executive Officer
In accordance with the provisions of the Company’s Article of Incorporation “the Board of Directors shall
delegate, in whole or in part, the managing powers of the Company to one or more officers, where one
officer shall be appointed as Chief Executive Officer” – Article 24 paragraph (1),where officer means
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Consolidated Board of Directors’ Report 2023
“person to whom Company managing powers have been delegated by the Board of Directors” - Article 24
paragraph (12).
By Resolution No. 78 of November 23, 2022 the Board of Directors (BoD) appointed Mr. Popescu Razvan as
Chief Executive Officer for a provisional mandate of 4 months from December 18, 2022 to April 18, 2023.
The BoD, by Resolution No. 32 of March 23, 2023 approved the extension of the CEO’s mandate granted
to Mr. Popescu Razvan by two months, from April 19, 2023 to June 19, 2023.
By Resolution No 55 of May 15, 2023, BoD appointed Mr. Popescu Razvan as Romgaz CEO for a period of
four years, from May 16, 2023 to May 16, 2027.
The CEO powers pursuant to the BoD Resolution No. 55 of May 15, 2023 are the following:
exercises all managing powers of S.N.G.N. ROMGAZ S.A., except for the powers not delegated to
officers, and except for powers that have been delegated to the Chief Financial Officer and the
Deputy Chief Executive Officer;
coordinates/is responsible for the activities performed at S.N.G.N. ROMGAZ S.A in connection
with securing financing for ROMGAZ Group share in Neptun Deep Project;
in case of a positive power conflict between a CEO power and a Deputy CEO power or CFO power,
the power lies with Mr. Popescu Razvan, as CEO;
as CEO, Mr. Popescu Razvan is also the legal representative of S.N.G.N. ROMGAZ S.A., in
accordance with Article 143A2, paragraph (4) of the Company Law 31/1990;
as legal representative, the CEO is entitled to empower other natural persons, who are S.N.G.N.
ROMGAZ S.A. officers or employees, to represent S.N.G.N. ROMGAZ S.A. and/or the component
branches by 5 days’ notification given to the BoD prior to the issuance of the powers of attorney
document;
as legal representative, the CEO is entitled to delegate the representation of the Company and/or
the component branches, to one or more in-house legal advisors and/or persons having the status
of lawyer, without previous notification of the BoD.
Deputy Chief Executive Officer
By Resolution No.78 of November 23, 2022, BoD appointed Mr. Jude Aristotel Marius as Deputy Chief
Executive Officer for a provisional mandate of 4 months from December 18, 2022 to April 18, 2023.
The BoD, by Resolution No. 33 of March 23, 2023 approved the extension of the Deputy CEO’s mandate
granted to Mr. Jude Aristotel Marius by two months, from April 19, 2023 to June 19, 2023.
By Resolution No 55 of May 15, 2023, BoD appointed Mr. Jude Aristotel Marius as Romgaz Deputy CEO for
a period of four years, from May 16, 2023 to May 16, 2027.
The Deputy CEO powers pursuant to Article 6 of the BoD Resolution No. 55 of May 15, 2023 are the
following:
-
exercising managing powers of the Department of Strategy, International Relations, European
Funds, the Department for Regulations, the Energy Trade Department, the Department for
Quality, Environment, Emergency Situations and Critical Infrastructure, the IT Department, the
Department for Investments and Project Management, STTM Targu Mureș and SIRCOSS Medias;
coordinating the activities performed at S.N.G.N. ROMGAZ S.A. in connection with the Neptun
Deep Project, except for those activities related to securing financing for ROMGAZ Group share in
the Project;
planning, approving, and coordinating the performance of operations necessary and useful for the
Company’s business purposes, falling within the competence of the aforementioned organisational
units, in accordance with the Law and S.N.G.N. ROMGAZ S.A. Rules of Organisation and Operation.
-
-
Chief Financial Officer
By Resolution No. 85 of December 20, 2022, BoD appointed as Chief Financial Officer Mrs. Tranbitas
Gabriela for a provisional mandate of four months, from December 20, 2022 to April 20, 2023.
By Resolution No. 34 of March 23, 2023, the BoD approved the extension of the CFO mandate granted to
Mrs. Tranbitas Gabriela by two months, from April 21, 2023 to June 21, 2023.
By Resolution No. 55 of May 15, 2023, BoD appointed Mrs. Tranbitas Gabriela as Romgaz CFO for a period
of four years, from May 16, 2023 to May 16, 2027.
The CFO powers pursuant to Article 5 of the BoD Resolution No. 55 of May 15, 2023 are the following:
-
exercising managing powers of the Economic Department with its organizational structures as
provided in S.N.G.N. ROMGAZ S.A. Organisation Chart;
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Consolidated Board of Directors’ Report 2023
-
planning, approving, coordinating performance of the operations necessary and useful for the
Company’s business purposes, falling within the competence of the subordinated organisational
units of the Economic Department, in accordance with the Law and S.N.G.N. ROMGAZ S.A. Rules
of Organisation and Operation.
The BoD delegates management powers to the three officers appointed by Resolution No. 55/2023, except
for the following:
a. powers of managing Romgaz that may not be delegated by the BoD in accordance with the provisions
of Article 19 paragraph (3) of the Articles of Incorporation,
issuance/conclusion of legal acts with a value exceeding RON 300 million.
b.
Romgaz Officers shall periodically inform the BoD on performance of delegated powers, and they are
entitled to request instructions on performance of delegated powers.
The BoD empowers the Deputy CEO, in case the CEO is in a situation of conflict of interest in approving
and/or signing acts by S.N.G.N. ROMGAZ S.A. or acts to which S.N.G.N. ROMGAZ S.A. is a party, to approve
and/or sign for and on behalf of S.N.G.N. ROMGAZ S.A..
The BoD also empowers the CFO, in case both CEO and Deputy CEO are in a situation of conflict of interest
in approving and/or signing acts by S.N.G.N. ROMGAZ S.A. or acts to which S.N.G.N. ROMGAZ S.A. is a
party, to approve and/or sign for and on behalf of S.N.G.N. ROMGAZ S.A..
Public Internal Audit
The activity of public internal audit is organized and performed in accordance with the provisions of Law
672/2002 on internal public audit, republished, as subsequently amended and supplemented.
The Internal Public Audit Office is subordinated, from an administrative point of view, to Romgaz CEO
and, from an operating point of view, to Romgaz BoD through the Audit Committee.
Pursuant to the provisions of Law 672/2002, the general objective of the internal public audit in public
entities is to enhance the management of such, and the objectives may be achieved mainly by the
following:
assurance activities, representing objective examinations of evidence, performed with the
purpose to provide to public entities an independent evaluation of risk management, control, and
governance processes;
advisory activities, with the aim of adding value and enhancing the governance processes in public
entities.
In 2023, the activity on internal audit was performed under the Internal Public Audit Annual Plan,
endorsed by the Audit Committee, and approved by the CEO.
As a result, during the period January 01 – December 31, 2023, in accordance with the reviewed Internal
Public Audit Annual Plan, nine internal public audit missions were performed, where eight were planned
missions of regularity/conformity, and one was an ad-hoc internal public audit mission.
Such missions targeted the following domains:
financial – accounting, in two internal public audit missions;
public procurement, in one internal public audit mission;
human resources, in one internal public audit mission;
legal, in one internal public audit mission;
company specific positions, in two internal public audit missions;
other domains (health-spa, control and verification), in two internal public audit missions;
The internal public audit reports have been endorsed by the CEO and submitted to the Audit Committee.
For the audit activity performed in the year 2023, a report has been prepared and submitted to the
hierarchical superior body (The Ministry of Energy).
By the performed activities the internal public audit contributes to adding value within the Company, by
recommendations formulated under the performed audit missions. The quality of internal audit reports is
one of the main objectives of internal public audit within S.N.G.N. Romgaz S.A., such representing the
essence of internal public audit work, and reflect the professional capacity of internal auditors.
In 2023, a number of 46 recommendations were followed, with the following results:
-
-
33 implemented recommendations;
2 partially implemented recommendations (currently under implementation);
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Consolidated Board of Directors’ Report 2023
11 not implemented recommendations.
-
The Program for Quality Assurance and Enhancement was drawn up within the Internal Public Audit Office,
and the latest update was made in December, 11, 2023. Pursuant to the provisions of item 2.3.7. of GO
1086/2013 a Program for Quality Assurance and Enhancement shall be prepared within the internal public
audit structure, in all aspects of internal audit, to allow for a continuous control of its efficiency.
The Program for Quality Assurance and Enhancement of the internal public audit activity shall ensure that
the internal public audit activity is performed in compliance with the rules, instructions and the Code on
the Internal Auditor Ethical Behaviour, and to contribute to the enhancement of the activity of the internal
public audit structure.
In 2023, the internal public audit structure did not encounter any case of recommendations formulated
by audit reports not endorsed by the CEO and did not face any situation of constraints/particular problems.
Risk Management and Internal Control
Company Policies and Objectives on Risk Management
Risk Management is a process aiming to identify, assess, manage (including treatment) and setting up
Risk Mitigation Measures Plan, periodical reviewing, monitoring and determining responsibilities.
One of the major concerns of the Company’s management is raising awareness of the Company on the
objectives and the necessity of direct involvement in the risk management process, as well as aligning
with best practices in the filed by complying with the legislation in force, the standards and rules related
to such process.
The main legislative acts underlying the Risk Management (RM) regulation are the following:
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 entities;
Ordinance of the Secretary General of the Government No. 600/2018 on approving the Code for
Management Internal Control of Public Entities;
Methodology for risk management, prepared by the General Secretariat of the Government;
SR ISO 31000:2018 – Risk Management. Guidelines;
BVB Corporate Governance Code;
SNGN Romgaz S.A. Corporate Governance Code.
Taking into account that the risk management standard is unanimously accepted by the EU, and it is one
of the most important standards of the Internal Management Control System (IMCS) within the risk
management activity, the Company systematically reviews the risks related to its objectives and
activities, prepares appropriate plans on risk treatment as regards limitation of potential consequences
of such risks and determines the responsibilities in implementing such.
The main elements the risk management process depends on are the following:
existence of objectives/activities set for each organisational unit;
allocation of suitable resources to implement the risk management measures, with the aim of
reducing the possibility of failure to achieve the objective or activity;
use of information on risk management in decision-making (depending on the significant risks).
The benefits of the risk management process are enhancement of the Company’s performance by
identification of, analysing, assessing and managing all risks that may occur, with the aim of mitigating
the consequences of negative risks or, as the case may be, enhancing the effects of positive risks.
To efficiently assess the identified risks, an organisational unit is operating at Company level, dedicated
to risk management. Such organisational unit is responsible for preparing the main documents of risk
management, as well as managing and developing the risk management system by:
implementing the recommendations of the audit and control reports of the competent entities;
continuous improvement of the information application developed within the Company, as a result
of periodically performed analyses and the feedback from the heads of organisational units;
permanent advising of the heads of organisational units and ensuring the support in identifying
the risks and fulfilling the requirements;
Enhancing the competence level of the Company’s employees as regards the understanding and
management of risks by actions of methodological guidance.
General Objectives of the Risk Management Activity are the following:
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Consolidated Board of Directors’ Report 2023
1. Setting the uniform general framework for performing the risk management specific activities
(identification, analysis, and risk management);
2. Providing an instrument for risk management in a controlled and efficient manner;
Implementing a system with the role to maintain such risks to an acceptable level;
3.
Within the analysed risk categories, we would like to mention the following: financial risks, market risks,
risks related to labour protection, health and security, personnel risks, information system risks, risks
related to regulation. Please note that all risks are analysed in terms of:
Specific objective/activity the risks relates to;
Causes of risk occurrence;
Consequences due to risk materialization;
Risk probability;
Impact generated by risk materialization;
Risk exposure;
Risk response strategy;
Recommended control (treatment) measures;
Residual risks remaining after initial risk treatment.
Main Risk and Uncertainties
Exposure to Financial Risks
The Company is exposed to various financial risks: market risks (including foreign exchange risk,
inflationary risk, interest rate risk), credit risk, liquidity risk. The risk management programme at
Company level focuses on the unpredictability of financial markets and seeks to minimize the potential
adverse effects on the Company’s financial performance, within certain limits. However, such approach
does not prevent losses beyond such limits in case of significant variations in the market. The Company
does not use derivative instruments to cover exposure to certain risks.
The Company is exposed to foreign exchange risks as a result of the exposure to different foreign
currencies. The foreign exchange risk arises from future commercial transactions and recorded receivables
and payables.
Financial assets exposing the Group to a potential credit risk are mainly trade receivables. The Group’s
policies provide for sales to customers 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.
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 profiles of financial assets with financial debts.
The commercial risks the Company is exposed to are continuously evaluated under the risk management
system. Currently, commercial risks are reduced to minimum, considering the accepted payment methods
(mainly advance payment or payment when due, by secured payments by means of letter of bank
guarantee), and that there is a gas demand to secure sales, and the sales prices exceed the production
costs.
Operating Risks related to the Production of Hydrocarbon Reservoirs:
Failure to fully meet the natural gas production schedule (partial achievement) due to factors reducing
the production capacity such as:
Major defects occurred in the operation of dehydration facilities, compression facilities,
collectors, where the remedy of such defects implies a long period of time;
High pressures in the National Transmission System (SNT), adversely affecting the production
performances of production capacities;
Decrease of gas consumption in some subsystems within SNT, with adverse impact on deliveries
of gas from reservoirs captive on such consumption directions;
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Consolidated Board of Directors’ Report 2023
Reduction of production capacities utilisation as a result of adverse weather conditions (power
blackouts, landslides – pipeline damage);
Failure to comply with the performance schedule of works related to putting into operation new
production capacities (technological installation, collectors);
Lack of materials and spare parts for preventive and corrective maintenance works at the main
productive objectives of the Company (wells, dehydration facilities, compression facilities,
pipelines)
Amendments to/new national or European laws financially impacting the cost efficiency of
hydrocarbon reservoir production.
Investment Risks:
Failure to achieve the Investment Program, physically and in terms of value, in case of unforeseen
circumstances during performance;
Defective or late performance of investment works, as a result of noncompliance with the provisions
of the specifications books, the provisions of technical designs, and the performance schedules.
Risks related to Information Systems:
Occurrence of events that may affect the information security (cyber-attacks, data leakage,
malware intrusions, virus attacks, attack against romgaz.ro webpage, attacks against special
application types).
Risks on Labour Health and Security:
Epidemiologic risk – personnel getting sick from influenza and other viral respiratory infections.
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 environment protection;
internal cost control, etc.
As such, the internal management control provides a reasonable but not absolute assurance on
understanding, interpretation and implementation of specific regulations, and it is supported and
consolidated by the company’s internal control.
The internal management control system implemented in the company operates through different
procedures, means, actions, provisions targeting every aspect of the Company’s 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 performance of all
management functions and it 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, Chief
Financial Officer, heads of functional and operational compartments subordinated to the Chief Executive
Officer, the Deputy Chief Executive Officer and 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.). It also reduces errors, risk of fraud, losses,
inefficiency, and it assists in compliance with regulations, issuance of truthful reporting. In case IMCS was
not implemented, risks would have been generated which may have threatened the very existence or the
continuity of the organisation.
Main objectives of IMCS developed and implemented by Romgaz are:
-
compliance with legal regulations, internal rules, 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 systems for collecting, storing, processing, updating and distribution
of financial and management data and information, as well as of proper systems/procedures to inform
the public.
-
-
-
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Consolidated Board of Directors’ Report 2023
The internal management control system is drafted, implemented, developed and assessed in compliance
with the provisions of Government Ordinance No. 119/1999 and the standards provided by SGG18 Order
No. 600/2018.
The important development/improvement actions of the internal management control system performed
during 2023 are mentioned below:
-
in order to consolidate the knowledge on regulations in the field of IMCS, a methodological guiding on
IMCS implementation was carried out in January 2023;
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;
the action on annual inventory, centralization and management of sensitive positions within the
Company for 2024 started in December 2023 , and such action was approved by the CEO Decision No
1375/December 11, 2023;
guidance for the employees of the headquarters and the branches in order to identify sensitive
positions and to determine the risk exposure related to such positions.
-
-
-
As a result of an extensive self-assessment action regarding the IMCS implementation for 2023, the Internal
Management Control System is partially compliant having 15 implemented standards and 1 partially
implemented standard, namely Standard 16 Internal Audit.
During 2023, several system procedures have been drafted and implemented:
Prevention of potential conflict of interest, code: 00PO-171;
Early prevention of incompatibilities, code: 00PO-172;
Pantouflage prevention and management, code: 00PO-173;
Identification, analysis and management of corruption risks, code: 00PO-174;
Integrity incidents evaluation, code: 00PO-175;
Control of goods received free of charge with thew occasion of protocol actions, code:
00PO-176;
Reporting management and whistle-blower protection in the public interest, code: PS-17;
-
-
-
-
-
-
-
Romgaz is constantly preoccupied to implement and develop anticorruption and anti-bribery instruments.
Amongst actions implemented in 2023 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), the following are mentioned:
-
Self-assessment of the implementing progress of the 2016-2020 National Anticorruption Strategy for
the year 2022 - „The Narrative Report on the implementing progress of measures provided in SNA”
and Annex 3 to the GO 583/2016 on 2016-2020 National Anticorruption Strategy „The Inventory of
Institutional Transparency Measures and Corruption Prevention, as well as assessment indicators”
submitted to the Direction of Antifraud, Integrity and Inspection within the Ministry of Energy;
In June 2023, the Report No. 23509/15.06.2023 issued by the Ministry of Energy was received,
following the verification mission on implementation of the National Anticorruption Strategy, and
the S.N.G.N. Romgaz S.A. Integrity Plan was reviewed and updated. The Integrity Plan for the
period August – December 2023, in accordance with the 2021-2025 NAS, was approved by
Resolution 940/ August 16, 2023;
The Assessment of the measures implementation stage included in “S.N.G.N. Romgaz S.A.
Integrity Plan for the period August – December 2023” found that the measures were achieved
within the provided time-limits. Moreover, during August – December 2023, the measures provided
in the approved Integrity Plan have been monthly monitored/assessed in terms of implementation
stage;
In December 2023, the 2024 S.N.G.N. Romgaz S.A. Integrity Plan has been drawn up, in accordance
with the 2021-2025 National Anticorruption Strategy, approved by Resolution No. 1406/December
12, 2023;
18 General Secretariat of the Government
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Consolidated Board of Directors’ Report 2023
The Integrity Plans are published on the Company’ website, under “Ethics and Integrity”
https://www.romgaz.ro/strategia-nationala-anticoruptie;
Reporting management and whistle-blower protection in the public interest, code: PS-17;
During June 06 – August 25, 2023 an internal public audit was performed on “2023 Assessment of
the Corruption Prevention System”. The general objectives of the audit mission were the
following:
-
- Declaration of assets;
- Declaration of gifts;
-
-
Assessment of corruption risks;
Assessment of integrity incidents.
The internal public auditors have declared that all four preventive measures were implemented, and one
single recommendation has been formulated on publishing on the Company’s website the Annual Reports
on the assessment of integrity incidents.
Integrated Management System
Following the external audit performed in 2003 by the company SRAC-CERT for evaluation of compliance
with reference standards, SNGN Romgaz SA has maintained its certification for integrated management
system (IMS) for quality, health, environment and occupational health.
IMS certification provides the organization a range of benefits such as improved general performance,
through an efficient and integrated management of processes, resources and risks and enhanced
reputation and access to new markets and business opportunities.
The Integrated Management System coordinates the continuous maintenance and improvement of IMS to
ensure the conformity with the international reference standards.
Thus, in 2003, the following have been achieved in the Integrated management System:
Maintenance of updated integrated management system through coordination and cooperation for
the revision of the procedures and instructions as well as drafting of new documents;
Determination of environment issues arising from SNGN Romgaz SA activities and of associated
environment impact, in compliance with standard ISO 14001;
Internal audit of IMS which evaluated the system efficiency and identified deficiencies and
potential areas of improvement. The non-conformities have been recorded and recommendations
have been made.
Reporting of progress and results related to IMS performance in the analyses performed by the
management;
Provision of conformity evidence and support for the smooth conduct of the external audit for
survey.
Corporate Social Responsibility (CSR)
Social responsibility means for Romgaz a business culture including business ethics, customer rights,
economic and social equity, environmentally friendly technologies, fair treatment of workforce,
transparent relationship with public authorities, moral integrity and investment in the community, in
accordance with company development strategy.
Moreover, Romgaz is open to the initiatives of stakeholders on improvement of life quality and future
development of the current and future generations and provides financial support/ total or partial
sponsorship for some actions and initiatives in the following main fields: education, social, sport, health
and environment.
Romgaz activities in the field of social responsibility are performed voluntarily, beyond the legal
responsibilities, the company being aware of its role in society.
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 2023, Romgaz supported, totally or partially, actions and initiatives stipulated in Government
Emergency Ordinance (“GEO”) No.2/2015, complying with the budget, as follows:
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Consolidated Board of Directors’ Report 2023
Expenses/activities
Achieved (RON
thousand)
Total of sponsorship expenses, of which:
Expenses with sponsorships in medical and health fields - art. XIV letter
a)
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)
26,589
11,372
12,306
5,298
2,911
The detailed description of the projects of each sponsorship category provided in GEO No.2/2015 is
included in the 2023 Annual Report on Social Responsibility and Patronage published on www.romgaz.ro
at “Sustainability”.
The projects carried out in 2023 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 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 2023 Sponsorship Policy and Sponsorship Guide published on the company’s
website at Sustainability. (https://www.romgaz.ro/sponsorizari).
Remuneration Policy and Criteria of the Executive and Non-Executive members of the Board
of Directors and of Officers
Legal Framework
Remuneration policy and criteria of company executive and non-executive members of the Board of
Directors and of mandate officers 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. 17/18 of December, 2023 (latest update of the Articles of
Incorporation);
SNGN Romgaz SA Remuneration Policy, endorsed by the Board of Directors under Resolution No. 20 of
March 28, 2022 and approved by the OGMS under Resolution No. 3 of April 28, 2022;
According to SNGN Romgaz SA Remuneration Policy applicable in 2023, the remuneration of the Board
members approved by the Ordinary General Meeting of Shareholders and of the officers approved by the
Board of Directors, consists of:
a) fixed allowance and
b) variable component.
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, as
shown above, and provided in the contract of mandate of each board member, as approved by the
applicable GMS resolutions.
For the reference financial year, the fixed gross allowance was set by Romgaz shareholders under the
Resolution No. 7 of September 13, 2022, for interim board members and under the Resolution No. 5 of
March 14, 2023, for the Board of Directors members appointed for a 4-year mandate.
For the interim and for the final mandates, the non-executive board members received exclusively 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.
Page 83 of 99
Consolidated Board of Directors’ Report 2023
Variable Remuneration
The variable component of remuneration was not set and granted during the interim mandates, and the
members of the board of Romgaz received exclusively a fixed monthly allowance.
The variable component of remuneration of the non-executive board members was approved, in amount
of 12 fixed monthly allowances, after the board members were appointed for a 4-year mandate, the
2023 -2027 Governance Plan was approved by the Board of Directors under the Resolution No. 76 of August
1, 2023, and the financial and non-financial performance indicators were negotiated and approved by the
General Meeting of Shareholders under the Resolution No. 12 of September 11, 2023.
According to the methodology set in the addendum to the contract of mandate of the board members,
the annual variable remuneration is the product between the variable component of remuneration set in
the addendum to the contract of mandate and the total degree of achievement of the performance
indicators in the year when it is granted.
Depending on the total degree of achievement of the performance indicators (TDA) the variable
component is granted as follows:
TDA 100%, the variable component is fully granted;
50% TDA < 100%, the variable component is granted proportionally;
TDA < 50%, the board member could be revoked.
The indicators and the degree of achievement in 2023 are presented in chapter IX. Performance of
Mandate Contract
Structure of the remuneration granted to executive board members, namely of the Deputy CEO
The Deputy CEO is also executive member of the Board of Directors, therefore he concluded a contract of
mandate as executive member of the Board of Directors as well as a contract of mandate as officer. The
Deputy CEO is entitled strictly to receive the remuneration based on the contract of mandate as officer.
Structure of the remuneration granted to officers
The fixed monthly remuneration was established in accordance with the applicable legal provisions, as
shown above, and it was provided in the contract of mandate of each officer, approved by the resolutions
of the Board of Directors.
According to the provisions of GEO No. 109/2011 on corporate governance of public enterprises, as
amended, applied in the Remuneration Policy of S.N.G.N. Romgaz S.A., the fixed monthly allowance is
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.
For the financial year 2023 the fixed monthly allowance of the officers with mandate is set as follows: for
the CEO and Deputy CEO, at a gross monthly allowance of 6 times 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, and for the Chief Financial
Officer the fixed monthly remuneration was set to 5 times this average.
It corresponds to the limits set for the fixed monthly allowance approved by Romgaz shareholders under
the Resolution No. 12 of September 11, 2023.
Variable Remuneration
The variable remuneration was not set and granted during the interim mandates, and the officers received
exclusively a fixed monthly allowance.
The variable component of remuneration of the officers was approved by Romgaz’s Board of Directors
under Resolution No. 87 of September 19, 2023, after the officers were appointed for a 4-year mandate,
the 2023 -2027 Governance Plan was approved by the Board of Directors under Resolution No. 76 of August
1, 2023, and the financial and non-financial performance indicators were negotiated and approved, as
follows:
24 fixed gross monthly allowance for the CEO and the Deputy CEO,
12 fixed gross monthly allowances, for the CFO.
The remuneration policy does not provide for a limit of the amount of the variable allowance for Romgaz
Officers, and the limits were set by company shareholders under the Resolution No. 12 of September 11,
2023.
Page 84 of 99
Consolidated Board of Directors’ Report 2023
According to the methodology set in the addendum to the officers’ contract of mandate, the annual
variable remuneration is the product between the variable component of remuneration set in the
addendum to the contract of mandate and the degree of achievement of the performance indicators in
the year when it is granted.
Depending on the total degree of achievement of the performance indicators (TDA) the variable
component is granted as follows:
TDA 100%, the variable component is fully granted;
50% TDA < 100%, the variable component is granted proportionally;
TDA < 50%, the officer could be revoked.
The financial and non-financial performance indicators setting the variable remuneration of officers were
approved under GMS Resolution No. 12 of September 11, 2023.
The indicators and the degree of achievement in 2023 is presented in the chapter IX. Performance of
Mandate Contract.
Non-financial Statement
Romgaz prepares a separate report for 2023 financial year, that will be public on the company’s website
by the end of June 2024, according to the Order of the Ministry of Public Finance No. 2844/201619 (chapter
7, item 42, paragraph (1)).
19 Order of the Ministry of Public Finances no.2844 of December 12, 2016 on approving Accounting Regulations compliant with the
International Financial Reporting Standards.
Page 85 of 99
Consolidated Board of Directors’ Report 2023
IX. Performance of Mandate Contracts
Mandate Contracts of Board Members
In 2023, 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 in accordance with GEO no. 109/2011 regarding corporate
governance of public enterprises, Romgaz Board members’ mandates were interim with an initial term of
4 months, extended by 2 months, and their activity was performed based on the mandate contract
approved by Romgaz General Meeting of Shareholders.
After appointment of BoD members for a 4-year term mandate, namely after March 16, 2023, the basis of
their activity is, besides the mandate contract, also the 2023-2027 Governance Plan approved by BoD
Resolution no. 76 of August 1, 2023. The Governance Plan represents the working tool used by Romgaz
BoD members to achieve performance indicators approved by the General Meeting of Shareholders and
undertaken by signing an addendum to the mandate contract.
Main benchmarks contained in BoD members’ mandate contracts during the reporting period are:
September 13, 2022 – by Resolution no. 7, the Ordinary General Shareholders Meeting elects interim
BoD members and approves mandate contracts for a 4-month term starting with September 15, 2022;
January 12, 2023 - by Resolution no.1, the Ordinary General Shareholders Meeting approves the
addendum to extend by 2 months the mandate contract term of interim BoD members;
March 14, 2023 - by Resolution no. 5, the Ordinary General Shareholders Meeting elects the BoD
members and approves the mandate contract for a 4-year term starting with March 16, 2023;
September 11, 2023 – by Resolution no. 12, Romgaz shareholders approve financial and non-financial
performance indicators, and the addendum to the BoD members’ mandate contract for the
establishment and award of variable component of remuneration, relating calculation method and
payment method thereof.
November 27, 2023 – General Meeting of Shareholders approves the addendum having the scope of
correcting the errors identified in Annex 1 to the Addendum approved by BoD Resolution no. 12 of
September 11, 2023.
Mandate Contracts of Officers
During the reporting period, the Chief Executive Officer, Deputy Chief Executive Officer and the Chief
Financial Officer performed their activity based on mandate contracts approved by Romgaz BoD.
Until May 16, 2023, Romgaz officers’ mandates were interim, with a maximum term of 6-month per
mandate, their activity being performed based on the approved mandate contract.
After the appointment of officers for a 4-year term mandate, the basis of their activity is, besides the
mandate contract, also the 2023-2027 Governance Plan approved by BoD Resolution no. 76 of August 1,
2023. The management component of the plan was drafted by the officers in order to fulfil approved and
undertaken financial and non-financial performance indicators.
Main benchmarks contained in Romgaz Officers’ mandate contracts during the reporting period are:
November 23, 2022 – by Resolution 78, Romgaz BoD appoints the CEO and the Deputy CEO for a 4-
month mandate term;
December 20, 2022 - by Resolution 85, Romgaz BoD approves the mandate contracts of the CEO and
the Deputy CEO, and appoints the CFO for a 4-month term mandate starting with December 20, 2022;
December 29, 2022 - by Resolution 90, Romgaz BoD approves the mandate contract of the CFO;
March 23, 2023 – Romgaz Board members approve the concluding of addenda to the mandate
contracts of the CEO, Deputy CEO and CFO for the purpose of a 2-months extension;
May 15, 2023 - by Resolution 55, Romgaz BoD appoints CEO, Deputy CEO and CFO for a 4-year term
mandate starting with May 16, 2023 and approves such mandate contracts;
May 16, 2023 - by Resolution 57, Romgaz BoD approves the addenda for terminating by mutual
agreement the interim mandate contracts of Romgaz Officers starting with May 16, 2023;
September 19, 2023 - by Resolution 87, Romgaz BoD approves the conclusion of addenda to the
officers’ mandate contract for the establishment and award of variable component of remuneration,
relating calculation method and payment method thereof.
Page 86 of 99
Consolidated Board of Directors’ Report 2023
December 19, 2023 - by Resolution 115, Romgaz BoD approves the conclusion of addenda to the
officers’ mandate contract for correcting financial and non-financial performance indicators approved
by OGSM Resolution no. 12 of September 11, 2023.
Performance criteria and objectives established in the mandate contracts represent performance criteria
and objectives for the activity of BoD members and officers.
Main objectives of Romgaz for 2023-2027 derived from Romgaz strategic development objectives are
described in chapter 2.4 Strategic objectives, strategic options and secondary objectives of this
report.
Measures and actions to be followed in order to fulfil strategic objectives as established in the Governance
Plan will be annually monitored through several performance indicators:
Item.
No.
Performance indicators (KPI)
Objective
FINANCIAL INDICATORS
1
2
3
4
5
6
7
8
Revenue
EBITDA margin
Operating expenses
operating income
Reaching the target provided in the Budget
Undertaken minimum level
from RON 1,000
Maintain Budget level
Labour productivity (in value units)
Reaching the target provided in the Budget
CapEx
Reaching the minimum level provided in the
Budget
Ratio between net debt and EBITDA
Lower than 4.5
Operating income margin
Dividend payout ratio
Reaching the target provided in the Budget
Minimum level provided by regulations applicable
to Romgaz
NON-FINANCIAL INDICATORS
9
10
Natural gas production decline
Emissions in the application area 1t
Maintaining the annual maximum decline
Reduction/maintenance of CO2
electricity output)
(tCO2/MWh
11
Fulfilment of gas supply obligation
100% of the contracted gas quantity
12
13
14
15
16
17
18
19
20
21
22
Market share
Average number of training hours per
employee
Higher than 40%
Minimum 8
Number of safety trainings
100% of employees
Total frequency of recorded accidents
Maximum 0.8%
Score of client satisfaction
Minimum 75%
Rate of independent members in the BoD
Higher than 55%
Number of BoD meetings
Minimum 12/year
Attendance rate at BoD meetings
Minimum 90%
Number of Audit Committee meetings
Minimum 4/year
Rate of women in executive positions
Minimum 30%
reporting
company’s
Timely
performance indicators, in compliance with
financial calendar
of
Full compliance with reporting deadlines
Page 87 of 99
Consolidated Board of Directors’ Report 2023
23
Implementation
Corruption System
of
National
Anti-
Timely implementation of measures stipulated in
Romgaz Integrity Plan
For Romgaz officers, the financial and non-financial performance indicators resulting from the
Governance Plan, undertaken in the mandate contract with the scope of meeting Romgaz objectives, are
shown below:
Item
No.
Performance indicators (KPI)
Objective
FINANCIAL INDICATORS
1
2
3
4
5
6
7
8
Revenue
EBITDA margin
Operating expenses
operating income
Reaching the target provided in the Budget
Undertaken minimum level
from RON 1,000
Maintain Budget level
Labour productivity (in value units)
Reaching the target provided in the Budget
CapEx
Reaching the minimum level provided in the
Budget
Ratio between net debt and EBITDA
Lower than 4.5
Operating income margin
Dividend payout ratio
Reaching the target provided in the Budget
Minimum provided by regulations applicable to
Romgaz
NON-FINANCIAL INDICATORS
9
Natural gas production decline
Maintaining the annual maximum decline
10
Emissions in the application area 1t
Reduction/maintenance of CO2
electricity output)
(tCO2/MWh
11
Fulfilment of gas supply obligation
100% of the contracted gas quantity
12
13
Market share
Average number of training hours per
employee
Higher than 40%
Minimum 8
14
Number of safety trainings
100% of employees
15
Total frequency of recorded accidents
Maximum 0.8%
16
17
Score of client satisfaction
Minimum 75%
Number of full time equivalent employees Minimum 99% of average number of employees
18
Gender pay gap ratio
Lower or equal to zero
19
Timely reporting of company’s performance
indicators, in compliance with financial
calendar
Full compliance with reporting deadlines
Page 88 of 99
Consolidated Board of Directors’ Report 2023
20
Implementation of National Anti-Corruption
System
Timely implementation of measures stipulated in
Romgaz Integrity Plan
Below is a presentation of achievement degree of performance indicators for January-December 2023;
the mandate contracts of executive and of non-executive BoD members and of officers do not provide
interim targets, only annually target for the financial year.
I. Performance Indicators of Non-Executive BoD Members
a) Financial Indicators
Item
no.
1
2
3
4
5
6
7
8
Indicator
Objective
Weight
Degree of
achievement
Weight in
degree of
fulfilment
Revenue
Budget
EBITDA margin
Minimum 41%
Operating
from
operating income
RON
expenses
1,000
Maintain Budget level
Labour productivity (in
value units)
Budget
CAPEX
Minimum 70% Budget
Ratio between net
debt and EBITDA
<4.5
Operating
margin
income
Budget
Dividend payout ratio
Minimum provided by
the
applicable
regulations
4%
2%
3%
2%
3%
2%
2%
2%
1.02
1.91
1.13
1.06
0.80
2.07
1.3
1.02
4.07%
3.83%
3.38%
2.12%
2.40%
4.15%
2.61%
2.03%
Degree of achievement of financial indicators
20%
24.58%
b) Non-Financial Indicators
Indicator
Item
no.
Objective
Weight
1
2
3
4
5
6
7
8
Natural
production decline
gas
the
Emissions
application area 1t
in
Maintaining the annual decline
of maximum 2.5% as compared
to 2022
Reduction/maintenance of CO2
emissions directly generated by
electricity generation plant
Fulfilment of gas
supply obligation
100% of the contracted gas
quantity
Customer
satisfaction score
minimum 75%
Market share
Higher than 40%
Average number of
training hours per
employee
Number of safety
trainings
Total frequency of
recorded accidents
minimum 8
100% of the employees
maximum 0.8%
2%
3%
3%
10%
2%
3%
3%
4%
Degree of
achievement
Weight in
degree of
fulfilment
0.99
1.98%
1.01
3.03%
1.00
3.00%
1.33
13.30%
1.60
1.81
1.00
1.71
3.20%
5.43%
3.00%
6.84%
Page 89 of 99
Consolidated Board of Directors’ Report 2023
Item
no.
9
10
11
12
13
14
15
Indicator
Objective
Weight
Degree of
achievement
Weight in
degree of
fulfilment
of
Higher than 55%
5%
0.93
4.65%
Rate
independent
members
Board of Directors
in
the
Number of BOD
meetings
Attendance rate at
BOD meetings
Number of Audit
Committee
meetings
Rate of women in
executive positions
Timely reporting of
company
performance
indicators
Implementation of
the National Anti-
Corruption System
minimum 12
minimum 90%
minimum 4 per year
minimum 30%
full compliance with reporting
deadlines
7%
6%
6%
8%
9%
4.33
30.31%
1.08
6.48%
3.25
19.50%
1.11
1.00
8.88%
9.00%
timely implementation
9%
1.00
9.00%
Degree of achievement of non-financial indicators
DEGREE OF ACHIEVEMENT OF PERFORMANCE INDICATORS
FOR NON-EXECUTIVE BoD MEMBERS
80%
100%
127.60%
152.18%
II. Performance Indicators for Executive BoD Members and Officers
a) Financial Indicators
Item
no.
1
2
3
4
5
6
7
8
Indicator
Objective
Weight
Degree of
achievement
Weight in
degree of
fulfilment
Revenue
EBITDA margin
Budget
minim 41%
10%
5%
Operating
from
operating income
RON
expenses
1,000
Maintain Budget level
7.5%
Labour productivity (in
value units)
Budget
5%
CAPEX
minimum 70% Budget
7.5%
Ratio between net debt
and EBITDA
<4.5
Operating
margin
income
Budget
Dividend payout ratio
Minimum provided by
the
applicable
regulations
5%
5%
5%
1.02
1.91
1.13
1.06
0.80
2.07
1.30
1.02
10.17%
9.57%
8.46%
5.29%
6.00%
10.36%
6.51%
5.08%
Degree of achievement of financial indicators
50%
61.46%
Page 90 of 99
Consolidated Board of Directors’ Report 2023
b) Non-Financial Indicators
Indicator
Item
no.
Objective
Weight
1
2
3
4
5
6
7
8
9
10
11
12
Natural
production decline
gas
Emissions
the
application area 1t
in
Maintaining the annual decline
of maximum 2.5% as compared
to 2022
Reduction/maintenance of CO2
emissions directly generated by
electricity generation plant
Fulfilment of gas
supply obligation
100% of the contracted gas
quantity
Customer
satisfaction score
minimum 75%
Market share
Higher than 40%
minimum 8
100% of the employees
maximum 0.8%
Minimum 99% of average
number of employees
Lower or equal to zero
Full compliance with reporting
deadlines
Average number of
training hours per
employee
Number of safety
trainings
Total frequency of
recorded accidents
Number of full time
equivalent
employees
Gender pay gap
ratio
Timely reporting of
company’s
performance
indicators
Implementation of
National
Anti-
Corruption System
Degree of
achievement
Weight in
degree of
fulfilment
0.99
4.95%
1.01
3.03%
1.00
4.00%
1.33
13.30%
1.60
1.81
1.00
1.71
1.01
6.40%
5.43%
3.00%
5.13%
3.03%
1.00
3.00%
1.00
4.00%
5%
3%
4.0%
10%
4.0%
3%
3%
3%
3%
3%
4%
Timely implementation
5%
1.00
5.00%
Degree of achievement of financial indicators
DEGREE OF ACHIEVEMENT OF PERFORMANCE INDICATORS
FOR NON-EXECUTIVE BoD MEMBERS AND OFFICERS
50%
100%
60.27%
121.73%
Attached hereto are:
Table regarding the conformity with the Corporate Governance Code of Bucharest Stock Exchange;
Consolidated Financial Statements for the year ending on December 31, 2023, drafted in
accordance with the Order of Public Finance Minister no. 2844/2016 accompanied by the
Independent Auditor’s Report on the consolidated financial statements audit;
Individual Financial Statements for the year ending on December 31, 2023, drafted in accordance
with the Order of Public Finance Minister no. 2844/2016 accompanied by the Independent
Auditor’s Report on the individual financial statements audit.
Page 91 of 99
Consolidated Board of Directors’ Report 2023
CHAIRMAN OF THE BOARD OF DIRECTORS,
Dan Dragos DRAGAN
……………………………………
CEO,
Razvan POPESCU
Deputy CEO,
Aristotel Marius JUDE
CFO,
Gabriela TRANBITAS
……………………………………
……………………………………
……………………………………
Page 92 of 99
Consolidated Board of Directors’ Report 2023
Table on compliance with BVB Code of Corporate Governance
Annex no. 1
BVB CCG Provisions
Compliance
A.1
A.2
A.3
A.4
A.5
A.6
1
All companies should have in place a set of
Internal Rules of the Board of Directors that
provides terms of reference / 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.
Any BoD member’s other rather permanent
professional commitments and engagements,
including executive and non-executive Board
in companies and non-profit
positions
organizations,
to
shall be disclosed
shareholders and to potential investors prior
to his/her nomination and during his/her
mandate.
Any BoD member shall submit to the Board
information on any relationship with a
shareholder who, directly or indirectly, holds
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.
A.7
The company shall appoint a Board secretary
responsible for supporting the work of the
BoD.
2
x
x
x
x
x
x
x
Non-
compliance/
Partial
compliance
3
Reason for non-
compliance/
Explanation on
compliance
4
Page 93 of 99
Non-
compliance/
Partial
compliance
3
Reason for non-
compliance/
Explanation on
compliance
4
Consolidated Board of Directors’ Report 2023
BVB CCG Provisions
Compliance
A.8
A.9
A.10
A.11
B.1
B.2
B.3
1
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, if so, it shall summarize key action
points and changes resulting from
it.
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 precise number of
the independent members of the Board of
Directors.
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.
The Board shall set up an Audit Committee,
and at least one member should be an
independent non-executive.
The Audit Committee shall comprise at least
three members and the majority shall be
independent.
The majority of members, including the
chairperson, shall have proven an adequate
qualification relevant to the functions and
responsibilities of the Committee. At least
one member of the Audit Committee shall
have a proven and appropriate auditing
and/or accounting experience.
The Chairperson of the Audit Committee
shall be an
independent non-executive
member.
its
Among
Committee
assessment of the internal control system.
the Audit
responsibilities,
shall perform an annual
2
x
x
x
x
x
x
x
Page 94 of 99
Consolidated Board of Directors’ Report 2023
BVB CCG Provisions
Compliance
B.4
B.5
B.6
B.7
B.8
1
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
the BoD Audit
to
reports
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.
submitted
interests
The Audit Committee shall review conflicts
of
the
company’s related party transactions and
affiliates and the affiliated parties.
in connection with
The Audit Committee shall evaluate the
effectiveness of the internal control system
and risk management system
The Audit Committee shall monitor the
application of statutory and generally
accepted standards of internal auditing. The
Audit Committee shall receive and evaluate
the audit team’s reports.
Audit
The
report
Committee
periodically (at least annually) or adhoc to
the BoD with regard to the reports or
analyses initiated by the committee.
shall
2
x
x
x
x
Non-
compliance/
Partial
compliance
3
Reason for non-
compliance/
Explanation on
compliance
4
x partial
This provision is already
mentioned in Article 8,
par. 2 of Romgaz CCG.
The Audit Committee
Rules approved by the
BoD in the meeting of
May 14, 2018, revised
on
approved
and
October
2022,
10,
includes provisions on
such obligation.
Moreover, a Policy on
party
related
was
transactions
developed by Romgaz,
and
it obtained BoD
approval on March 20,
2019.
Following approval, it
was published on the
company’s website.
Page 95 of 99
Non-
compliance/
Partial
compliance
3
Reason for non-
compliance/
Explanation on
compliance
4
Consolidated Board of Directors’ Report 2023
BVB CCG Provisions
Compliance
2
x
x
x
x
x
B.9
B.10
B.11
B.12
C.1
1
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.
in
close
companies
The BoD shall adopt a policy ensuring that
any transaction of the company with any of
relationship
the
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 represent events which are
subject to reporting requirements.
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.
The
shall
Internal Audit Department
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.
shareholders
to understand
The company shall publish the Remuneration
Policy on its website. The Remuneration
Policy should be formulated so as to allow
the
the
principles and arguments underlying the
remuneration of the BoD members and the
Director General. Any significant change
occurred in the Remuneration Policy shall be
posted in due time on the company's
website.
The company shall include in its Annual
Report a statement on the implementation of
the Remuneration Policy during the annual
period under review.
The Report on Remuneration shall present
the implementation of the Remuneration
Policy for persons identified in such Policy
during the annual period under review.
Page 96 of 99
Consolidated Board of Directors’ Report 2023
BVB CCG Provisions
Compliance
1
D.1
The company shall establish an Investors
Relation Department - indicating to the
public the responsible person/persons or the
organizational unit.
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
general
procedures
on
Incorporation,
meeting of shareholders;
D.1.2 Professional CVs of the members of the
other
governing
company’s
professional commitments of BoD members,
including executive and non-executive Board
positions
in companies and non-profit
organizations.
bodies,
D.1.3 Current
reports
reports and periodic
(quarterly, half-year 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
D.1.5
Information related to GMS: the agenda and
supporting materials; the Board of Directors
election procedure;
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;
the arguments
Information on corporate events (such as
payment of dividends and other distributions
to shareholders, or other events leading to
the acquisition or limitation of rights of a
shareholder) including the deadlines and
principles applicable to such operations.
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
provide
be
who
knowledgeable information upon request;
should
able
to
2
x
x
x
x
x
x
x
Non-
compliance/
Partial
compliance
3
Reason for non-
compliance/
Explanation on
compliance
4
Page 97 of 99
Consolidated Board of Directors’ Report 2023
BVB CCG Provisions
Compliance
1
D.1.7 Corporate presentations (e.g. presentations
for investors, presentations on quarterly
results,
statements
(quarterly, half-year, annual), audit reports
and annual reports.
financial
etc.),
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.
rules
restrict
the
should not
GMS
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.
The external auditors shall attend those
shareholders’ meetings where their reports
are presented.
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 in the
shareholders’ meeting upon prior invitation
from the BoD.
Accredited journalists may also attend the
GMS, unless the Chairperson of the Board
decides otherwise.
2
x
x
x
x
x
x
x
Non-
compliance/
Partial
compliance
3
Reason for non-
compliance/
Explanation on
compliance
4
Page 98 of 99
Non-
compliance/
Partial
compliance
3
Reason for non-
compliance/
Explanation on
compliance
4
Consolidated Board of Directors’ Report 2023
BVB CCG Provisions
Compliance
2
x
x
x
D.8
D.9
D.10
1
The quarterly and half-year financial reports
shall include, in the Romanian and English
languages, information on 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.
shall
company
organize
The
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.
or
educational
If the company supports various forms of
artistic and cultural expression, sport
activities,
scientific
activities, and considers that the resulting
and
impact
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.
innovativeness
the
on
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,
= Board of Directors
= Code of Corporate Governance
CV
ToR
2016
= Curriculum Vitae
= Terms of Reference
Page 99 of 99
Ernst & Young Assurance Services SRL
Bucharest Tower Center Building, 21st 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, 2023, 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 notes to the consolidated financial
statements, including a summary of material accounting policy 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, 2023 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 (sections “Exploration
and Appraisal Assets” and respectively “Use of Estimates”) 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 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 in the consolidated financial
statements regarding the calculation of
depreciation and amortization.
2
Estimation of decommissioning provisions
The Group’s disclosures about decommissioning obligations are included in Note 2 (“Use of estimates”)
and Note 18 (“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 405.58 million at 31 December 2023) 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 and
the Corporate Governance Statement), the Report on Payments to Governments, and the Remuneration
Report), but does not include the consolidated financial statements and our auditors’ report thereon. We
obtained the Annual Report, the Report on Payments to Governments and the Remuneration Report prior
to the date of our auditor’s report, and we expect to obtain the Sustainability report, as part of a separate
report, after the date of our auditor’s report. Management is responsible for the other information.
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.
3
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 on this other information obtained before
the date of our audit 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 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.
4
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.
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.
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 independence threats or safeguards applied to reduce these threats.
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)
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, 2023;
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, 2023, we have not
identified information included in the Directors’ Consolidated Report that contains a material
misstatement of fact.
5
d)
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, 2023 and
2023. Total uninterrupted engagement period, including renewals (extension of the period for which we
were originally appointed) and previous reappointments as the auditors, has lasted for six years, covering
the years ended December 31, 2018 till December 31,2023.
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.
We did not provide the Company and the entities controlled by it other services than those of statutory
audit and other services associated with the audit services presented in the consolidated financial
statements.
Report 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 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, 2023, included in the attached electronic file
„Romgaz-2023-12-31-en.zip“( identified with the key
9b8be45c23c766d7138b5d807c44af19a74de078604687350bcf3ed0e2a11255) 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.
6
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, 2023 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
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.
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.
7
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,
which requires that we design, implement and operate a system of quality management, including policies
or 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.
8
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 2023 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
22 March 2024
9
S.N.G.N. ROMGAZ S.A. GROUP
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2023
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. Taxes and duties
11. Income tax
12. Property, plant and equipment
13. Exploration and appraisal for natural gas resources
14. Intangible assets. Right of use assets
15. Inventories
16. Accounts receivable
17. Share capital. Earnings per share
18. Provisions
19. Deferred revenue
20. Trade and other current liabilities
21. Financial instruments
22. Related party transactions and balances
23. Information regarding the members of the administrative, management and
supervisory bodies
24. Investment in associates
25. Other financial investments
26. Segment information
27. Cash and cash equivalents
28. Interest bearing borrowings
29. Other financial assets
30. Commitments undertaken
31. Commitments received
32. Contingencies
33. Joint arrangements
34. Auditor’s fees
35. Events after the balance sheet date
36. Approval of financial statements
1
2
4
5
7
7
7
19
20
20
20
21
21
21
22
22
25
27
28
29
29
31
31
33
34
35
38
38
40
41
42
45
45
45
46
46
46
47
47
48
48
S.N.G.N. ROMGAZ S.A. GROUP
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
13,359,653
(183,578)
176,979
(9,441)
(55,166)
(2,197)
(118,037)
(550,076)
(846,001)
(6,954,380)
(27,295)
(59,714)
2,350
(658,916)
80,068
4,154,249
(1,607,537)
2,546,712
15,839
(2,534)
13,305
13,305
2,560,017
0.0066
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
Taxes and duties
Finance cost
Exploration expense
Share of profit of associates
Other expenses
Other income
Profit before tax
Note
3
5
4
6
16
5
7
8
10 b)
9
13
24
10 a)
3
Income tax expense
11
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
9,001,878
(107,130)
213,008
(17,748)
(57,546)
(5,767)
(109,441)
(476,568)
(914,054)
(1,495,473)
(62,003)
(84,640)
4,873
(944,191)
122,264
5,067,462
(2,255,353)
2,812,109
18 c)
(10,970)
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
Basic and diluted earnings per share
17 b)
1,755
(9,215)
(9,215)
2,802,894
0.0073
These financial statements were endorsed by the Board of Directors on March 22, 2024.
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
Intangible assets
Investments in associates
Deferred tax asset
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
Cash and cash equivalents
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 liabilities
Borrowings
Provisions
Total non-current liabilities
Note
12
14 a)
24
11
14 b)
25
15
16 a)
30
16 b)
27
17 a)
18
19
28
18
December 31, 2023
'000 RON
December 31, 2022
'000 RON
5,891,788
5,135,930
33,410
324,175
11,596
5,616
5,039,314
5,140,425
28,537
199,016
8,766
5,616
11,402,515
10,421,674
284,007
1,373,664
3
99,597
265,232
1,883,882
3,906,385
14,328,059
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
301,690
1,398,953
-
2,505,463
321,799
535,210
5,063,115
16,465,630
385,422
4,971,109
6,204,783
11,561,314
189,314
370,941
10,450
808,373
373,536
1,752,614
2
S.N.G.N. ROMGAZ S.A. GROUP
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
Note
December 31, 2023
'000 RON
December 31, 2022
'000 RON
Current liabilities
Trade payables
Contract liabilities
Current tax liabilities
Deferred revenue
Provisions
Lease liabilities
Borrowings
Other liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
20
11
19
18
28
20
146,111
153,723
1,766,637
7
121,732
2,579
323,349
637,564
3,151,702
4,904,316
16,465,630
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
These financial statements were endorsed by the Board of Directors on March 22, 2024.
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, 2023
Profit for the year
Other comprehensive income for the year
Share
capital
'000 RON
385,422
-
-
Total comprehensive income for the year
-
Allocation to dividends *)
Allocation to development fund reserve
Increase in reinvested profit reserves
Balance as of December 31, 2023
Balance as of January 1, 2022
Profit for the year
Other comprehensive income for the year
-
-
-
385,422
385,422
-
-
Total comprehensive income for the year
-
Allocation to dividends *)
Increase in legal reserves
Allocation to development fund reserve
Increase in reinvested profit reserves
Balance as of December 31, 2022
-
-
-
-
385,422
Legal
reserve
'000 RON
Geological
quota
reserve**)
'000 RON
Development
fund reserve
'000 RON
Reinvested
profit reserve
'000 RON
Other
reserves
'000 RON
Retained
earnings ***)
'000 RON
90,294
-
-
-
-
-
-
90,294
85,250
-
-
-
-
5,044
-
-
90,294
486,388
-
-
-
-
-
-
486,388
486,388
-
-
-
-
-
-
-
486,388
2,586,687
-
-
-
-
1,315,735
-
3,902,422
2,046,460
-
-
-
-
-
540,227
-
2,586,687
396,180
-
-
-
-
-
76,100
472,280
361,152
-
-
-
-
-
-
35,028
396,180
Total
'000 RON
10,076,565
2,812,109
(9,215)
19,725
-
-
6,111,869
2,812,109
(9,215)
-
2,802,894
2,802,894
-
-
-
19,725
19,725
-
-
(1,318,145)
(1,315,735)
(76,100)
6,204,783
5,596,756
2,546,712
13,305
(1,318,145)
-
-
11,561,314
8,981,153
2,546,712
13,305
-
2,560,017
2,560,017
-
-
-
-
19,725
(1,464,605)
(5,044)
(540,227)
(35,028)
6,111,869
(1,464,605)
-
-
-
10,076,565
*) In 2023 the Group’s shareholders approved the allocation of dividends of RON 1,318,145 thousand (2022: RON 1,464,605 thousand), dividend per share being RON 3.42 (2022: RON 3.80).
**) The geological quota reserve was set up until 2004 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. The reserve cannot be distributed.
***) Retained earnings include the geological quota reserve set up after 2004 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, 2023 the geological quota reserve available for distribution is of RON 627,612 thousand (December 31, 2022: RON 714,512 thousand).
These financial statements were endorsed by the Board of Directors on March 22, 2024.
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 24)
Interest expense (note 9)
Unwinding of decommissioning provision (note 9,
note 18)
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
10,18)
Change in other provisions (note 10,18)
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
Net receivable write-offs and movement in
allowances for trade receivables and other
assets (note 16 c)
Net movement in write-down allowances for
inventory (note 6, note 15)
Liabilities written off
Subsidies income (note 19)
Cash generated from operations before
movements in working capital
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, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
2,812,109
2,546,712
2,255,353
(4,873)
43,838
18,165
(213,008)
6,867
33,861
(196,640)
23,361
3
59,537
7,382
393,670
59
53,523
5,647
(172)
(7)
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)
5,298,675
4,649,674
(22,571)
(243,732)
330,817
5,363,189
(43,183)
(1,781,868)
3,538,138
21,731
(276,839)
(526,915)
3,867,651
(5,040)
(410,976)
3,451,635
5
S.N.G.N. ROMGAZ S.A. GROUP
STATEMENT OF CONSOLIDATED CASH FLOW
Cash flows from investing activities
Bank deposits set up and acquisition of state bonds
Bank deposits and state bonds matured
Interest received
Proceeds from sale of non-current assets
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
Grants received (note 19)
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, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
(6,184,938)
3,790,236
201,844
1,684
(1,141,956)
(50,746)
(3,355,306)
3,669,504
181,067
1,033
(5,529,611)
(96,500)
(3,383,876)
(5,129,813)
-
(322,775)
(1,317,745)
(2,955)
140,541
(1,502,934)
1,606,475
(158,907)
(1,463,984)
(1,936)
-
(18,352)
(1,348,672)
(1,696,530)
1,883,882
535,210
3,580,412
1,883,882
These financial statements were endorsed by the Board of Directors on March 22, 2024.
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 condensate 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.
MATERIAL ACCOUNTING POLICIES
Statement of compliance
The consolidated financial statements (“financial statements”) of the Group are 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 purpose 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 are 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.
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.
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 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 IAS 12 “Income taxes: International Tax Reform – Pillar Two Model” (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
are not impacted by this standard.
The adoption of these amendments, interpretations or improvements to existing standards has not led to changes
in the Group's accounting policies. The Group management has reviewed the disclosures of accounting policies
through the lens of IAS 1 Amendments and concluded no significant changes are required.
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 for
the following standards, amendments or improvements to the existing standards and interpretations, which were
not endorsed for use in the EU as at date of publication of financial statements:
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier
Finance Arrangements (effective for annual periods beginning on or after January 1, 2024);
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (applicable
to annual periods beginning on or after 1 January 2025).
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 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 liability in a sale and leaseback (applicable to annual periods
beginning on or after 1 January 2024).
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 and related services, 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.
11
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Based on the Collective Labor Agreements applicable within the Group, 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 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 paid, 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.
CO2 certificates bought during the year CO2 emissions occurred that will be included in the Unique Registry of
Greenhouse Gas Emissions are recorded as current assets at the amount paid. Until the date certificates are included
in the Unique Registry, the Group records a current liability for this obligation at the amount paid when said
certificates were bought. At the date the certificates are included in the Unique Registry, the asset and liability are
derecognized.
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.
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;
12
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
c.
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 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 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.
13
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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. 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 costs 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 costs for major overhauls for wells are also capitalized and depreciated using the unit of production
depreciation method.
All other costs with 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 (ie. 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
14
Years
10 - 50
3 - 20
3 – 30
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
(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 2023, the Group conducted an impairment test in the Upstream segment (for onshore operations), as the
conditions existing when the previous test was conducted changed; the assumptions are presented in note 12. The
results of the impairment test are considered to be immaterial and were not recognized.
No impairment indicators were identified for the offshore operations of the Group.
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;
15
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
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, as the case may be. The cost of finished
goods and production in progress includes materials, labour, expenses incurred in bringing the finished goods at
the location and in the existent form, and 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 loss allowance impairment.
16
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Any difference between the initial amount and the amount at maturity is recognized in the statement of
comprehensive income 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 impairment at each
reporting period.
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:
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;
development fund reserves, which represent allocations from profit in accordance with Government
Ordinance no. 64/2001, paragraph (g);
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;
geological quota reserve, non-distributable, set up until 2004. Geological 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.
Grants
Grants are non-reimbursable financial resources given to the Group’ companies with the condition of meeting
certain criteria. In the category of grants 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.
17
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Grants related to income are government grants other than those related to assets.
Grants are not recognized until there is reasonable assurance that:
(a)
(b)
the Group will comply with the conditions attaching to it; and
grants 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”.
If a government grant becomes receivable as compensation for expenses or losses incurred in a previous period,
the Group recognizes such grant in the profit or loss of the period in which it becomes receivable.
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 grants related to income
Government Emergency Ordinance no. 27/2022 as subsequently amended (GEO 27) includes the obligation of the
Group to sell at a regulated price of RON 450/MWh the electricity it produces. According to GEO 27, electricity
producers must calculate a contribution to the Energy Transition Fund. If the value of the CO2 certificates related
to the energy sold at RON 450/MWh exceeds the contribution to the Energy Transition Fund, electricity producers
are entitled to receive the excess. Until December 2023, the legislation did not provide for the mechanism to
request these amounts from the Romanian State nor the competent authority for the settlement of such requests.
As such, the right to receive the grant is not enforceable.
The government does not act as a shareholder or a client of the Group in this matter. As such, the relevant
standard considered in the accounting of the grant is IAS 20.
By December 31, 2023 the Group should receive RON 167,743 thousand. Income recognized in previous financial
statements released by the Group in 2023 was reversed by December 31, 2023. Until the amount becomes a
receivable, the Group disclose the grant as a contingent asset.
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.
Based on information available at period end 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 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).
18
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 18).
Estimates related to retirement benefit obligations
Under the Collective Labor Agreements applicable within the Group, the Group must pay 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. It is 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 is brought to present value using a discount factor based on interest on investments with the
highest degree of safety (government bonds) (note 18).
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 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 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
Revenue from gas sold - own production
7,718,798
11,234,160
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
Revenue from gas sold – other arrangements
Revenue from gas acquired for resale
Revenue from storage services-capacity
reservation
Revenue from storage services-withdrawal
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
28,628
19,542
329,512
79,907
142,772
406,976
202,826
62,155
735
8,991,851
10,027
9,001,878
122,264
9,124,142
19
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
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The decrease in revenue is generated by the application of GEO 27. In 2023, the Group sold 86.43% of gas at
regulated prices, while in 2022 it sold 33.3% of gas under GEO 27. Over 90% of electricity in 2023 was sold under
GEO 27 at a price of RON 450/MWh; no such obligation was in force in 2022.
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 withdrawal 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.
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, 2023
'000 RON
213,008
213,008
Year ended
December 31, 2022
'000 RON
176,979
176,979
Interest income is derived from the Group’s investments in bank deposits and government bonds.
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
6.
OTHER GAINS AND LOSSES
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
66,107
37,899
20,291
85,477
1,362
5,435
216,571
56,977
56,750
14,654
167,405
1,519
4,310
301,615
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'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)
Losses from trade receivables
Other gains and losses
Total
28,775
(38,055)
(6,867)
4,029
(5,647)
(6)
23
(17,748)
20
42,255
(45,208)
(451)
(599)
(5,438)
-
-
(9,441)
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 (note 14 a)
- 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, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
393,670
384,624
6,227
2,819
82,898
408,903
402,500
4,930
1,473
141,173
476,568
550,076
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
939,278
33,230
38,150
33,469
11,253
10,753
1,066,133
(152,079)
914,054
876,340
30,115
27,175
29,407
11,177
6,832
981,046
(135,045)
846,001
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
Interest expense *)
Unwinding of the decommissioning provision (note
18 a)
Total
43,838
18,165
62,003
5,627
21,668
27,295
*) 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, currently Romgaz Black Sea Limited (note 28).
21
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. OTHER EXPENSES. TAXES AND DUTIES
a) Other Expenses
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
Energy and water expenses
Expenses for capacity booking and gas transmission
services
(Net gain)/Net loss from provisions movement
(note 18)
Other operating expenses *)
Total
104,340
171,197
(162,779)
831,433
944,191
106,122
158,591
35,912
358,291
658,916
*) In 2023 Romgaz resumed the works on the new Iernut power plant with the former contractor. Disputes between
Romgaz and the contractor were settled through a transaction agreement approved by Romgaz’ shareholders. The
agreement stipulates the reimbursement by Romgaz of the performance guarantee executed in 2021 when the
former works contract was terminated. The amount paid by Romgaz was of RON 114,628 thousand and is included
in other operating expenses.
Other operating expenses also include the cost of CO2 certificates acquired during the year (RON 470,926
thousand; 2022 RON 169,638 thousand). In 2023, the Group acquired the CO2 certificates related to the year. The
certificates related to 2022 were also acquired in 2023; the cost of the 2022 certificates was offset against the
provision released to income.
b) Taxes and duties
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
Royalties *)
Windfall tax (gas) *)
Energy transition fund/windfall tax (electricity) **)
Other taxes and duties
Total
600,514
889,799
(1,546)
6,706
1,495,473
1,640,082
4,903,849
403,801
6,648
6,954,380
*) According to GEO 27, gas sold at regulated prices is not subject to windfall tax. Royalties paid on this gas are
calculated at the level of the regulated price, instead of the reference price communicated by ANRM. As
quantities of gas sold under GEO 27 were significantly higher in 2023 (note 3), the cost of royalties and windfall
tax paid on gas decreased. In October 2023 royalty rates were increased by approximately 20%; Romgaz calculated
the royalties at the new rates.
**) In 2022 GEO 27 introduced a windfall tax on electricity later replaced by a contribution to the Energy
Transition Fund. Electricity sold at RON 450/MWh is not subject to the contribution. As over 90% of electricity was
sold at this price in 2023, the contribution decreased compared to 2022. The negative level of the expense is
determined by the recomputation of the windfall tax related to 2022 based on actual CO2 certificates costs, which
were acquired in 2023; in 2022 the windfall tax was calculated based on an estimate of the CO2 certificates cost.
11.
INCOME TAX
Current tax expense (note 11 a)
Deferred income tax (income)/expense (note 11 a)
Solidarity contribution (note 11 b)
Income tax expense
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
691,386
(123,404)
1,687,371
2,255,353
536,586
68,161
1,002,790
1,607,537
22
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Current income tax liability
Solidarity contribution (note 11 b)
Current tax liability
a) Current and deferred income tax
December 31, 2023
'000 RON
December 31, 2022
'000 RON
79,718
1,686,919
1,766,637
174,708
1,002,790
1,177,498
The tax rate used for the reconciliations below for the year ended December 31, 2023, respectively year ended
December 31, 2022 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, 2023
'000 RON
Year ended
December 31, 2022
'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
Effect of income tax expense related to previous
years
Income tax expense
3,380,091
-
3,380,091
540,815
(61,627)
340,975
(95,187)
(12,176)
-
21,098
(116,537)
(49,486)
107
567,982
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
23
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Components of deferred tax (asset)/liability:
December 31, 2023
December 31, 2022
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
Tax losses **)
(684,582)
27,357
(513,724)
(182)
(40,730)
(97,576)
277
10,461
(315)
(727,084)
(109,533)
4,377
(82,196)
(29)
(6,517)
(15,612)
44
1,674
(50)
(116,333)
Cumulative
temporary
differences
'000 RON
(473,030)
(109,338)
(527,951)
(977)
(34,956)
(97,576)
328
28
(374)
Deferred
tax (asset)/
liability
'000 RON
(75,685)
(17,494)
(84,472)
(156)
(5,593)
(15,612)
52
4
(60)
Total
(2,026,098)
(324,175)
(1,243,846)
(199,016)
Change, out of which:
-
-
-
in current year’s result
in other comprehensive
income
acquisition of ExxonMobil
Exploration and Production
Romania Limited
125,159
123,404
1,755
-
(70,629)
(68,161)
(2,534)
66
*) 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.
**) The tax losses generating a deferred tax asset relate to Romgaz Black Sea Limited. The Group estimates there
will be sufficient taxable profits in the future against which the tax losses will be used.
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 in the
fiscal years 2022 and 2023 at a rate of 60% of taxable profits, as determined under national tax rules, which are
above a 20% increase of the average of the taxable profits of the four fiscal years starting on or after 1 January
2018. The contribution for 2023 is of RON 1,686,919 thousand. The tax is due for payment in June, 2024.
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, 2023
119,196
949,367
7,181,828
1,178,993
123,135
1,736,107
336,494
2,095,471
13,720,591
Additions *)
Transfers
Disposals
-
2,795
-
10
48,070
(2,015)
110,100
505,052
(278,028)
-
73,616
(19,597)
12
18,667
11,195
73,875
50,747
1,188,569
1,360,633
(6,249)
(715,826)
-
(12,605)
(15,507)
(40,831)
(27,373)
(395,956)
As of December 31, 2023
121,991
995,432
7,518,952
1,233,012
129,209
1,805,670
340,161
2,540,841
14,685,268
Accumulated depreciation
As of January 1, 2023
Charge **)
Disposals
As of December 31, 2023
Impairment
-
-
-
-
415,923
4,890,092
26,140
(1,208)
291,231
(100,061)
440,855
5,081,262
823,173
68,037
(19,517)
871,693
94,969
810,595
9,044
(12,523)
91,490
18,135
(12,895)
815,835
-
-
-
-
-
-
-
-
7,034,752
412,587
(146,204)
7,301,135
As of January 1, 2023
8,255
Charge
Transfers
Release
-
-
-
61,827
28,700
-
(712)
651,677
86,546
1,202
367,890
161,509
307,619
1,646,525
91,029
38,882
(269,895)
1,783
1,252
(78)
503
-
(83)
730
-
25,311
-
(2,867)
(42,146)
57,296
(40,134)
(43,751)
205,352
-
(359,532)
As of December 31, 2023
8,255
89,815
511,693
89,503
1,622
365,753
144,674
281,030
1,492,345
Carrying value
As of January 1, 2023
110,941
471,617
1,640,059
269,274
26,964
557,622
174,985
1,787,852
5,039,314
As of December 31, 2023
113,736
464,762
1,925,997
271,816
36,097
624,082
195,487
2,259,811
5,891,788
*) Additions of capital work in progress include RON 535,408 thousand related to the development of the offshore Neptun Deep block.
**) The amounts include depreciation of tangible assets used in the production of other fixed assets, capitalized in their cost, amounting to RON 27,963 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
118,012
939,504
7,146,399
1,148,535
124,027
1,745,093
335,940
1,973,717
13,531,227
227
1,147
(190)
2,381
8,328
(846)
1,175
252,661
(218,407)
-
50,447
(19,989)
66
4,214
99
4,599
(5,172)
(13,684)
96,504
(24,311)
(71,639)
423,703
(297,085)
(4,864)
524,155
-
(334,791)
Cost
As of January 1, 2022
Additions
Transfers
Disposals
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
As of January 1, 2022
Charge
Transfers
Release
-
-
-
-
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
8,255
59,530
649,714
82,908
1,211
367,328
161,085
304,760
1,634,791
-
-
-
2,910
4
(617)
50,668
43,787
(92,492)
3,040
956
(358)
91
-
(100)
566
-
(4)
66,466
-
(66,042)
79,558
(44,747)
(31,952)
203,299
-
(191,565)
As of December 31, 2022
8,255
61,827
651,677
86,546
1,202
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.
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
Based on the current market conditions (decrease in prices, higher royalty rates), the Group considered there are
changes in the assumptions used in the previous impairment test on upstream assets.
Based on its assessment, the Group considered each commercial field a separate cash-generating unit. The
infrastructure common to several gas fields (e.g., compression stations, drying stations) was allocated to each
field according to the quantities processed for each field served.
The impairment test took into account the economic life of the fields, according to the latest studies approved by
the National Agency of Mineral Resources or submitted for approval, but no later than 2043, this being the limit
year of the concession agreements, according to the legislation in force.
Following the impairment test, no additional impairment was recorded and there was no decrease of previously
recognized impairment losses.
In the impairment test the following assumptions were used:
Weighted average cost of capital: 12.75%;
The inflation rate for the years 2024-2026 was the one reported by the National Commission for Strategy
and Prognosis in the 2023-2027 forecast. For the 2028-2043 period a constant inflation rate of 2.6% was
used;
Average estimated price for the period was RON 156.99/MWh.
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, 2023
'000 RON
Year ended
December 31, 2022
'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
3
84,637
84,640
23,361
(50,746)
16
59,698
59,714
66,447
(96,500)
Exploration assets (note 12)
Liabilities
Net assets
December 31, 2023
'000 RON
December 31, 2022
'000 RON
195,487
(13,342)
182,145
174,985
(13,218)
161,767
27
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. INTANGIBLE ASSETS. RIGHT OF USE ASSETS
a) 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
2023
'000 RON
5,245,101
1,733
(7,150)
5,239,684
104,676
6,227
(7,149)
103,754
5,140,425
5,135,930
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
Of RON 5,135,930 thousand, RON 5,105,563 thousand represent mineral rights from the ExxonMobil Exploration and
Production Romania Limited (currently Romgaz Black Sea Limited) acquisition in 2022.
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
2023
'000 RON
2022
'000 RON
9,649
406
2,705
(89)
12,671
2,521
1,473
(89)
3,905
7,128
8,766
12,671
1,346
4,303
-
18,320
3,905
2,819
-
6,724
8,766
11,596
28
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15. INVENTORIES
Spare parts and materials
Finished goods (gas)
Other inventories
Inventories at third parties
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, 2023
'000 RON
December 31, 2022
'000 RON
261,552
90,594
699
16,695
(67,755)
(95)
301,690
216,314
129,190
706
-
(62,187)
(16)
284,007
December 31, 2023
'000 RON
December 31, 2022
'000 RON
Trade receivables
Allowances for expected credit losses (note 16 c)
Accrued receivables
Total
1,645,124
(740,085)
493,914
1,398,953
1,492,403
(724,386)
605,647
1,373,664
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.
Trade receivables from the sale of electricity are generally due within 7 days of the date of invoice delivery. 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
CO2 certificates acquired
Other taxes receivable
Total
December 31, 2023
'000 RON
December 31, 2022
'000 RON
10
7,974
21,251
(169)
46,846
(46,029)
14,374
7,945
208,618
60,979
321,799
1,053
10,550
37,377
(172)
58,543
(50,055)
10,297
5,764
191,875
265,232
29
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
2023
'000 RON
774,613
204
109,200
(41,847)
(4,233)
(51,654)
786,283
2022
'000 RON
981,497
1,831
124,247
(262,649)
(1,232)
(69,081)
774,613
*) In 2023, the Group wrote-off receivables of RON 41,847 thousand representing receivables from clients
undergoing bankruptcy procedures. The write-off had no impact on the 2023 results, as those receivables were
already impaired.
As of December 31, 2023, the Group recorded allowances for expected credit losses, of which Interagro RON
41,808 thousand (December 31, 2022: RON 68,141 thousand), CET Iasi of RON 10,882 thousand (December 31,
2022: RON 46,271 thousand), Electrocentrale Galati with RON 168,620 thousand (December 31, 2022: RON 168,620
thousand), Liberty Galați with RON 113,665 thousand (December 31, 2022: RON 85,261 thousand), Electrocentrale
Bucuresti with RON 242,687 thousand (December 31, 2022: RON 243,547 thousand), G-ON EUROGAZ of RON 14,848
thousand (December 31, 2022: RON 14,848 thousand), Electrocentrale Constanta of RON 38,027 thousand
(December 31, 2022: RON 38,027 thousand) and Termo Ploiești of RON 72,857 thousand (December 31, 2022: RON
0 thousand) due to existing financial conditions of these clients as well as ongoing litigating cases related to these
receivables or exceeding payment terms.
d)
Credit risk exposure for trade and other receivables
December 31, 2023
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, 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
Gross carrying amount
'000 RON
Expected credit loss
rate
%
Lifetime expected
credit losses
‘000 RON
1,364,139
61,389
54,139
26,003
633,368
2,139,038
0.00
47.15
97.52
96.00
100.00
14
28,944
52,795
24,964
633,368
740,085
Gross carrying amount
'000 RON
Expected credit loss
rate
%
Lifetime expected
credit losses
‘000 RON
0.00
34.36
99.54
99.73
100.00
13
5,593
32,348
73,300
613,132
724,386
1,362,641
16,280
32,496
73,501
613,132
2,098,050
30
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17.
SHARE CAPITAL. EARNINGS PER SHARE
a) Share capital
December 31, 2023
‘000 RON
December 31, 2022
‘000 RON
385,422,400 fully paid ordinary shares
Total
385,422
385,422
The shareholding structure as at December 31, 2023 is as follows:
The Romanian State through the
Ministry of Energy
Legal persons
Physical persons
Total
No. of shares
269,823,080
95,343,630
20,255,690
385,422,400
Value
‘000 RON
269,823
95,344
20,256
385,422
385,422
385,422
Percentage
(%)
70.01
24.73
5.25
100
All shares are ordinary and were subscribed and fully paid as at December 31, 2023. All shares carry equal voting
rights and have a nominal value of RON 1/share (December 31, 2022: RON 1/share).
In December 2023 the Extraordinary General Meeting of Shareholders approved Romgaz’ share capital increase
through the incorporation of reserves of RON 3,468,802 thousand by issuing 3,468,801,600 shares with a nominal value
of RON 1/share, each shareholder registered on the Registration Date being entitled to 9 free shares for each share
held. The increase was registered in January 2024 at the Trade Register.
b) Earnings per share
Year ended
December 31, 2023
Year ended
December 31, 2022
Profit for the year attributable to ordinary
shareholders (RON thousand)
Number of shares outstanding during the year
Earnings per share (RON thousand)
18.
PROVISIONS
Decommissioning provision (note 18 a)
Retirement benefit obligation (note 18 c)
Total long term provisions
Decommissioning provision (note 18 a)
Litigation provision (note 18 b)
Other provisions *) (note 18 b)
Total short term provisions
Total provisions
2,812,109
385,422,400
0.0073
2,546,712
385,422,400
0.0066
December 31, 2023
'000 RON
December 31, 2022
'000 RON
373,536
189,314
562,850
32,049
18,839
70,844
121,732
684,582
210,838
168,830
379,668
25,652
6,620
289,217
321,489
701,157
*) On December 31, 2023, other provisions of RON 70,844 thousand include the provision for employee’s participation
to profit of RON 46,274 thousand (December 31, 2022: RON 41,479 thousand), the provision for taxes of RON 6,514
thousand (December 31, 2022: RON 10,207 thousand), the provision for CO2 certificates of 0 thousand (December 31,
2022: RON 228,126) and a provision of RON 6,101 thousand for the variable remuneration of the board of directors
31
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
and officers with a mandate contract to which they will be entitled if they meet the key performance indicators
approved by shareholders (December 31, 2022: RON 1,067 thousand). In 2023 the Group acquired the CO2 certificates
for the year, thus no provision is required at December 31, 2023.
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
2023
'000 RON
236,490
118,118
18,165
33,861
(1,049)
405,585
2022
'000 RON
437,638
1,273
21,668
(75,652)
(148,437)
236,490
The Group makes full provision for the future costs of decommissioning natural gas and storage 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 6.23% (year ended December 31, 2022: 8.19%). 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
62,650 thousand. The decrease with 1 percentage point of the discount rate would increase the decommissioning
provision with RON 81,201 thousand.
The increase with 1 percentage point of the inflation rate would increase the decommissioning provision with RON
83,103 thousand. The decrease with 1 percentage point of the inflation rate would decrease the decommissioning
provision with RON 64,871 thousand.
b)
Other provisions
At January 1, 2023
Additional provision in the period
Provisions used in the period
Unused amounts during the period, reversed
At December 31, 2023
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
Litigation provision
‘000 RON
Other provisions
‘000 RON
6,620
18,762
(4,025)
(2,518)
18,839
289,217
161,459
(374,327)
(5,505)
70,844
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
Total
‘000 RON
295,837
180,221
(378,352)
(8,023)
89,683
Total
‘000 RON
212,352
325,655
170
(217,318)
(25,022)
295,837
The movement in other provisions refers mainly to the CO2 certificates.
32
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
2023
'000 RON
168,830
13,139
10,899
(14,524)
10,970
-
189,314
2022
'000 RON
156,420
7,600
9,677
(10,697)
(15,839)
21,669
168,830
Except for actuarial gains/losses, all 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: 5.9% (2022: 8.1%);
Average inflation rate: 4.8% in 2024; 3.5% in 2025; 3.0% in 2026; 2.5% in 2027-2031 period, following a decreasing
trend in the next years (2022: 16.3% in 2022; 11.2% in 2023; 6.1% in 2024; 3.6% 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
Increase of 1% in assumptions
'000 RON
Decrease of 1% in assumptions
'000 RON
(16,567)
18,863
19,064
(16,698)
Up to 1 year
1-2 years
2-5 years
5-10 years
Over 10 years
19.
DEFERRED REVENUE
Benefit payments
'000 RON
17,360
8,502
48,710
134,612
543,259
Amounts collected from NIP (note 19 a)
Amounts collected from CINEA (note 19 b)
Other deferred revenue
Other amounts received as subsidies
Total long term deferred revenue
December 31, 2023
'000 RON
December 31, 2022
'000 RON
276,519
94,191
134
97
370,941
230,169
-
145
105
230,419
33
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
'000 RON
December 31, 2022
'000 RON
Other amounts received as subsidies
Other deferred revenue
Total short term deferred revenue
7
-
7
7
4
11
Total deferred revenue
370,948
230,430
a) National Investment Plan (“NIP”)
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", Romgaz 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, 2023 the Group collected RON 276,519
thousand. Amounts received under this contract will be transferred to income based on the depreciation rate of the
investment.
As per Government Decision no. 1118/November 16, 2023 the completion and commissioning period of investments
financed from the National Investment Plan was extended until December 31, 2024 and the reimbursement period
until June 30, 2025.
b) Projects of Common Interest
In 2023, Depogaz signed a financing agreement with the European Climate, Infrastructure and Environment Executive
Agency (“CINEA”) to increase the daily withdrawal capacity of the Bilciureşti storage facility. The financing
agreement is for EUR 37,962 thousand, of which Depogaz received the amount of RON 94,192 thousand as an advance.
20.
TRADE AND OTHER CURRENT LIABILITIES
December 31, 2023
'000 RON
December 31, 2022
'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
Other taxes
Total other liabilities
Total trade and other liabilities
62,983
50,926
32,202
146,111
41,004
174,773
38
126,057
33,334
219,173
9,616
1,453
29,420
2,696
637,564
783,675
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
*) Other current liabilities include the Group’s obligation to include the CO2 certificates acquired in 2023 for the
year’s emissions in the Unique Registry of Greenhouse Gas Emissions (note 16 b).
34
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
21.
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)
(i)
Market risk
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 28.
As of December 31, 2023, the official exchange rate was RON 4.9746 to EUR 1 (December 31, 2022: RON 4.9474 to EUR 1).
EUR
1 EUR =
4.9746
'000 RON
GBP
1 GBP =
5.7225
'000 RON
USD
1 USD =
4.4958
'000 RON
December 31, 2023
Financial assets
Cash and cash equivalents
Other financial assets
Trade and other receivables
6,822
94,418
-
Total financial assets
101,240
Financial liabilities
Trade payables and other
payables
Lease liability
Borrowings
(31)
(7,952)
(1,131,722)
Total financial liabilities
(1,139,705)
Net
(1,038,465)
RON
1 RON
'000 RON
528,381
2,390,284
905,039
Total
'000 RON
535,210
2,484,702
905,039
3,823,704
3,924,951
(83,046)
(5,077)
-
(83,128)
(13,029)
(1,131,722)
(88,123)
(1,227,879)
3,735,581
2,697,072
6
-
-
6
(8)
-
-
(8)
(2)
1
-
-
1
(43)
-
-
(43)
(42)
35
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
Total financial assets
Financial liabilities
77,764
-
-
77,764
Trade payables and other payables
Lease liability
Borrowings
(18)
(5,157)
(1,447,115)
Total financial liabilities
(1,452,290)
Net
(1,374,526)
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
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, 2023
‘000 RON
December 31, 2022
‘000 RON
(51,923)
51,923
(68,726)
68,726
The official annual inflation rate in Romania for 2023 was 10.4% as provided by the National Institute of Statistics. 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 18.
An increase of 1% in the interest rate on the borrowings would lead to an increase of the interest expense in 2024 of RON
10,269 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
loss 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 47.99% of net trade receivable balance at December 31, 2023 (its top
three clients: 86.60% as of December 31, 2022).
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 loss allowance already recorded.
36
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(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.
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.
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.
Due in
less than
a month
‘000 RON
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
904,306
401,521
733
-
1,268,562
814,619
Total
1,305,827
1,269,295
814,619
Trade payables
(78,328)
Borrowings
Lease liabilities
-
(246)
(4,798)
(92,343)
(797)
(2)
(272,306)
(1,536)
-
-
-
-
(853,610)
(5,854)
-
-
-
-
-
(4,596)
(78,574)
(97,938)
(273,844)
(859,464)
(4,596)
(1,314,416)
1,227,253
1,171,357
540,775
(859,464)
(4,596)
2,075,325
Due in
less than
a month
‘000 RON
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
December
31, 2023
Trade
receivables
Bank deposits
Total
Net
December
31, 2022
Trade
receivables
Bank deposits
589,135
5,000
116,864
10,000
62,018
75,000
Total
594,135
126,864
137,018
-
-
-
-
-
-
-
-
-
Trade payables
(60,735)
Borrowings
Lease liabilities
Total
Net
-
(170)
(60,905)
533,230
(12,204)
(84,892)
(476)
-
(253,397)
(1,152,132)
(1,534)
(3,371)
(4,129)
(97,572)
(254,931)
(1,155,503)
(4,129)
(1,573,040)
29,292
(117,913)
(1,155,503)
(4,129)
(715,023)
37
Total
‘000 RON
905,039
2,484,702
3,389,741
(83,128)
(1,218,259)
(13,029)
Total
‘000 RON
768,017
90,000
858,017
(72,939)
(1,490,421)
(9,680)
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
22.
RELATED PARTY TRANSACTIONS AND BALANCES
(i)
Sales of goods and services
Romgaz’s associates
Total
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
13,233
13,233
14,621
14,621
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:
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
Year ended
Dec 31, 2023
'000 RON
120,651
1,156,358
96,148
2,084,527
2,441,073
Year ended
Dec 31, 2022
'000 RON
111,684
1,582,639
493,146
2,702,642
1,955,551
Total
5,898,757
6,845,662
23.
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, 2023 and December 31, 2022, 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)
Year ended
Dec 31, 2023
'000 RON
31,726
1,926
3,808
530
Year ended
Dec 31, 2022
'000 RON
24,794
2,516
3,350
745
38
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Salaries payable to executives
Salaries payable to directors
December 31, 2023
'000 RON
December 31, 2022
'000 RON
816
288
754
154
In addition to the above, on December 31, 2023 the Group recorded a provision for bonuses for executives and
directors of RON 6,101 thousand (December 31, 2022: RON 1,067 thousand).
39
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24.
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, 2023, respectively, December 31, 2022.
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
Storage of natural gas
SC Agri LNG Project Company SRL
Feasibility projects
Romania
Romania
Proportion of ownership interest and voting power held (%)
December 31, 2023
December 31, 2022
40
25
40
25
Name of associate
SC Depomures SA
Tg.Mures
SC Agri LNG Project
Company SRL
Total
Gross carrying value
as of
December 31, 2023
’000 RON
Impairment as of
December 31, 2023
’000 RON
Carrying value as of
December 31, 2023
’000 RON
Gross carrying value
as of
December 31, 2022
’000 RON
Impairment as of
December 31, 2022
’000 RON
Carrying value as of
December 31, 2022
’000 RON
33,410
182
33,592
-
(182)
(182)
33,410
-
33,410
28,537
977
29,514
-
(977)
(977)
28,537
-
28,537
40
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, 2023
'000 RON
December 31, 2022
'000 RON
62,616
31,598
26,443
2,170
2,170
5,237
3,431
65,560
19,378
15,940
5,601
5,601
4,802
3,431
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
48,243
1,107
(3,826)
(309)
(2,114)
12,183
43,200
486
(3,919)
(447)
(1,087)
5,875
2022
'000 RON
26,187
2,350
28,537
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
25. OTHER FINANCIAL INVESTMENTS
2023
'000 RON
28,537
4,873
33,410
Other financial investments are reclassified at fair value through profit or loss.
Except for the investment in Patria Bank, which is classified as level 1 instrument in the fair value hierarchy, 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, 2023
December 31, 2022
Romania
Romania
Romania
Romania
2.49
0.02
10
12.2
2.49
0.02
10
12.2
Romania
33.33
33.33
41
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, 2023
’000 RON
Fair value as of
December 31, 2022
’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 concluded the restructuring plan in
February 2023, however its current financial position does not justify a modification of its value. 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 National Bank of Romania 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.
26.
SEGMENT INFORMATION
a)
Segment assets and liabilities
December 31,
2023
Property, plant
and equipment
Intangible assets
Investments in
associates
Other financial
investments
Deferred tax
asset
Other financial
assets
Inventories
Other assets
Trade and other
receivables
Cash and cash
equivalents
Right of use asset
Assets held for
disposal
Net investments
in leasing
Upstream
'000 RON
Storage
'000 RON
Electricity
'000 RON
Other
'000 RON
242,138
1,243,110
3,499,264
5,121,850
-
-
852
-
-
129,357
1,293
1
161,114
271,804
73,313
1,284,648
30,602
524
3,861
-
7,938
1,897
76,061
11,884
277
682,477
-
21
-
-
-
-
3,520
210,557
42,486
47,877
915
-
-
469,220
13,207
33,410
5,616
193,525
2,344,348
18,428
585,742
10,303
444,847
9,859
1,493
315
Consolidation
adjustments
'000 RON
438,056
-
-
-
-
-
-
(549,710)
(14,545)
-
Total
'000 RON
5,891,788
5,135,930
33,410
5,616
324,175
2,505,463
301,690
321,799
1,398,953
535,210
21
11,596
(687,831)
(315)
-
-
Total assets
10,415,224
1,185,931
1,548,486
4,130,313
(814,324)
16,465,630
42
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31,
2023
Retirement benefit
obligation
Contract liabilities
Provisions
Trade payables
Current tax
liabilities
Deferred revenue
Borrowings
Lease liability
Upstream
'000 RON
Storage
'000 RON
Electricity
'000 RON
Other
'000 RON
Consolidation
adjustments
'000 RON
Total
'000 RON
-
153,717
394,522
50,297
1,686,919
237
17,620
555
11,593
-
46,733
20,396
3,920
94,192
-
316
-
-
3,354
69,861
-
276,519
177,721
6
50,659
20,102
75,798
-
-
-
-
(14,545)
189,314
153,723
495,268
146,111
-
-
1,766,637
370,948
-
1,131,721
(17,619)
1,131,722
1,180
11,293
36,421
(315)
(532,089)
13,029
637,564
Other liabilities
902,113
17,503
213,616
Total liabilities
3,205,980
194,653
564,530
1,503,721
(564,568)
4,904,316
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
Right of use asset
Assets held for
disposal
Net investments in
leasing
Upstream
'000 RON
Storage
'000 RON
Electricity
'000 RON
Other
'000 RON
Consolidation
adjustments
Total
'000 RON
2,641,773
825,378
1,184,636
591,036
(203,509)
5,039,314
5,122,643
-
-
428
1
256,982
165,085
1,268,528
3
21,307
1,643
-
-
918
-
-
1,357
91,116
9,472
4,562
59,380
-
14,567
328
677,634
-
-
-
-
-
-
2,695
41,371
54,110
-
516
-
-
-
16,864
28,537
5,616
197,231
8,480
14,858
54,214
11,525
-
1,847,492
6,786
-
374
-
5,140,425
-
-
-
-
-
-
(19,879)
-
-
9
(677,634)
(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
1,684,712
1,283,328
2,783,013
(901,387)
14,328,059
Retirement benefit
obligation
Contract liabilities
Provisions
Trade payables
Current tax
liabilities
Deferred revenue
Borrowings
Lease liability
Other liabilities
-
263,340
234,697
62,564
1,002,790
258
-
1,573
216,806
9,896
-
32,388
42,581
5,625
-
-
374
14,265
-
-
230,691
4,621
158,934
-
34,551
20,119
-
169,083
230,169
3
-
-
18,049
1,447,115
8,107
63,148
-
-
-
(19,879)
-
-
-
(374)
-
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
43
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
b)
Segment revenues, results and other segment information
Year ended
December 31,
2023
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)
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
8,398,731
550,278
588,609
464,701
(1,000,441)
9,001,878
(332,511)
8,066,220
1,192
(946)
(33,342)
516,936
7,648
-
(181,722)
406,887
95
-
(452,866)
11,835
221,716
(43,181)
1,000,441
-
(17,643)
944
-
9,001,878
213,008
(43,183)
-
-
-
4,873
-
4,873
(318,171)
(13,750)
(2,927)
(28,939)
(29,883)
(393,670)
(174,448)
-
(15,861)
(14,692)
(351)
(205,352)
119,257
496
-
616
2,085
122,454
5,043,246
172,461
(326,152)
274,181
(96,274)
5,067,462
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
In the year ended December 31, 2023, the Group's three largest clients each individually represents more than 10%
of revenue, sales to these clients being of RON 2,489,605 thousand, RON 2,174,567 thousand, RON 979,005
thousand, (in the year ended December 31, 2022 the Group's three largest customers represented individually,
over 10% of revenue, sales to these clients being of RON 2,564,071 thousand, RON 2,064,087 thousand, RON
1,783,998 thousand), together totaling 62.69% of total revenue (year ended December 31, 2022: 48.00%). Of the
total revenue generated by those three clients, 5.75% are shown in the "Storage" segment and 93.33% in the
"Upstream" segment (year ended December 31, 2022: 3.54% in the "Storage" segment, 91.73% in the "Upstream"
segment).
44
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27.
CASH AND CASH EQUIVALENTS
Current bank accounts *)
Petty cash
Term deposits
Restricted cash **)
Amounts under settlement
Total
December 31, 2023
'000 RON
December 31, 2022
'000 RON
147,009
47
386,248
1,901
5
535,210
122,559
50
1,759,683
1,584
6
1,883,882
*) Current bank accounts include overnight deposits.
**) At December 31, 2023 restricted cash refers to bank accounts used only for dividend payments to shareholders,
according to stock market regulations.
28.
INTEREST BEARING BORROWINGS
Interest rate
Maturity
December 31,
2023
'000 RON
December 31,
2022
'000 RON
EUR 325,000 thousand bank borrowing
EURIBOR 3M +
0.05% p.a.
Total
June 30, 2027
1,131,722
1,447,115
1,131,722
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 (now Romgaz Black Sea
Limited) that holds 50% of the rights and obligations for the Neptun Deep block.
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.
In December 2023, Depogaz signed an investment credit contract for RON 250 million with Banca Transilvania SA to
finance the investment for the increase of the daily withdrawal capacity of the Bilciureşti storage facility. The
facility can be used until June 19, 2027 and must be repaid by August 06, 2037. The loan is repayable in quarterly
installments, after the end of the grace period on June 19, 2027. The loan is secured by Depogaz’ cash held at
Banca Transilvania. The loan was not drawn by December 31, 2023.
The fair value of the loans approximates their carrying value as they carry a variable rate of interest.
29. OTHER FINANCIAL ASSETS
Other financial assets represent 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.
December 31, 2023
'000 RON
December 31, 2022
'000 RON
Bank deposits
Accrued interest receivable on bank deposits
Total other financial assets
2,484,702
20,761
2,505,463
90,000
9,597
99,597
45
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30. COMMITMENTS UNDERTAKEN
Endorsements and collaterals granted
Total
December 31, 2023
'000 RON
December 31, 2022
'000 RON
273,425
273,425
312,689
312,689
In 2023, 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 500,000 thousand. On December
31, 2023 are still available for use RON 229,515 thousand.
As of December 31, 2023, the Group’s contractual commitments for the acquisition of non-current assets are of
RON 3,779,428 thousand (December 31, 2022: RON 396,551 thousand).
31. COMMITMENTS RECEIVED
Endorsements and collaterals received
Total
December 31, 2023
'000 RON
December 31, 2022
'000 RON
2,598,882
2,598,882
2,127,764
2,127,764
Endorsements and collateral received represent letters of guarantee and other performance guarantees received
from the Group’s clients.
32.
CONTINGENCIES
(a)
Litigations
The Group is subject to several legal actions arisen in the normal course of business. The management of the
Group considers that they will have no material adverse effect on the results and the financial position of the
Group.
On December 28, 2011, 27 former and current employees of Romgaz 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. A final decision was not yet issued by the court.
46
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED 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 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,
2023 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 405,585 thousand (December
31, 2022: RON 236,490 thousand), representing the decommissioning liability.
(d)
Contingencies related to grants related to income
Government Emergency Ordinance no. 27/2022 as subsequently amended (GEO 27) includes the obligation of the
Group to sell at a regulated price of RON 450/MWh the electricity it produces. According to GEO 27, electricity
producers must calculate a contribution to the Energy Transition Fund. If the value of the CO2 certificates related
to the energy sold at RON 450/MWh exceeds the contribution to the Energy Transition Fund, electricity producers
are entitled to receive the excess. Until December 2023, the legislation did not provide for the mechanism to
request these amounts from the Romanian State nor the competent authority for the settlement of such requests.
As such, the right to receive the grant is not enforceable.
By December 31, 2023 the Group should receive RON 167,743 thousand.
33.
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.
34. 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 2023 annual financial statements is RON 452 thousand.
The fees charged for other assurance services in 2023 are RON 219 thousand.
47
S.N.G.N. ROMGAZ S.A. GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
35.
EVENTS AFTER THE BALANCE SHEET DATE
In December 2023 the Extraordinary General Meeting of Shareholders approved Romgaz’ share capital increase
through the incorporation of reserves of RON 3,468,802 thousand by issuing 3,468,801,600 shares with a nominal
value of RON 1/share, each shareholder registered on the Registration Date being entitled to 9 free shares for
each share held. The increase was registered in January 2024 at the Trade Register. The share capital increased to
RON 3,854,224 thousand. The Extraordinary General Meeting of Shareholders approved the date of May 30, 2024 as
the date of distribution of the free shares. As such, earnings per share were not restated to reflect the increase in
the number of shares. Following the date of distribution, earnings per share will be ten times lower (2023: RON
0.0007 thousand/share; 2022: 0.0007 thousand/share).
36. APPROVAL OF FINANCIAL STATEMENTS
These financial statements were endorsed by the Board of Directors on March 22, 2024.
Răzvan Popescu
Chief Executive Officer
Gabriela Trânbițaș
Chief Financial Officer
48
No.12400/22.03.2024
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,
RĂZVAN POPESCU as Chief Executive Officer and
GABRIELA TRÂNBIȚAȘ as Chief Financial Officer,
hereby confirm that according to our knowledge, the annual consolidated financial statements
for the year ended December 31, 2023, 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,
Chief Financial Officer,
RĂZVAN POPESCU
GABRIELA TRÂNBIȚAȘ
Societatea Naţională
de Gaze Naturale
Romgaz S.A.
T: 004-0374 – 401020
F: 004-0269-846901
E: secretariat@romgaz.ro
551130, Mediaş
Piața C.I. Motaş, nr.4
Jud. Sibiu – România
Capital social: 385.422.400 lei
CIF: RO 14056826
Nr.ord.reg.com: J32/392/2001
Ernst & Young Assurance Services SRL
Bucharest Tower Center Building, 21st 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, cod 551130, Sibiu county, Romania, identified by sole
fiscal registration number RO 14056826, which comprise the statement of financial position as at
December 31, 2023 and the statement of comprehensive income, statement of changes in equity and
statement of cash flows for the year then ended and notes to the separate financial statements, including a
summary of material accounting policy 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, 2023 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.
2
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 (sections
“Exploration and Appraisal Assets” and respectively “Use of estimates” ) 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 whether the Company’s
disclosures in the separate financial statements
about calculation of depreciation, and
amortization are adequate.
Estimation of decommissioning provisions
The Company’s disclosures about decommissioning obligations are included in Note 2 (”Use of
estimates”) and Note 18 (“Provisions”) to the separate financial statements.
3
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 405,58 million at 31 December 2023) 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 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 Directors' Consolidated Report and
the Corporate Governance Statement, the Report on Payments to Governments, and the Remuneration
Report but does not include the separate financial statements and our auditors’ report thereon. We
obtained the Annual Report, the Report on Payments to Governments and the Remuneration Report prior
to the date of our auditor’s report, and we expect to obtain the Sustainability report, as part of a separate
report, after the date of our auditor’s report. 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.
4
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.
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.
5
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 independence threats or safeguards applied to reduce these threats.
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:
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, 2023;
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, 2023, 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.
6
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, 2021, 2022
and 2023. Total uninterrupted engagement period, including renewals (extension of the period for which
we were originally appointed) and previous reappointments as auditors, has lasted for six years, covering
the years ended December 31, 2018 till December 31,2023.
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 date on which we
issued 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.
We did not provide the Company and the entities controlled by it other services than those of statutory
audit and other services associated with the audit services presented in the separate financial statements.
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, 2023, 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, 2023 with the requirements of the ESEF Regulation. In accordance with these
requirements, the electronic format of the separate financial statements, should be presented in XHTML
format.
7
Responsibilities of the Management and Those Charged with Governance
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.
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,
which requires that we design, implement and operate a system of quality management, including policies
or 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).
8
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.
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
22 March 2024
S.N.G.N. ROMGAZ S.A.
SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2023
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. Taxes and duties
11. Income tax
12. Property, plant and equipment.
13. Exploration and appraisal for natural gas resources
14. Intangible assets. Right of use assets
15. Inventories
16. Accounts receivable
17. Share capital
18. Provisions
19. Deferred revenue
20. Trade and other current liabilities
21. Financial instruments
22. Related party transactions and balances
23. Information regarding the members of the administrative, management and
supervisory bodies
24. Investment in subsidiaries and associates
25. Other financial investments
26. Cash and cash equivalents
27. Other financial assets
28. Interest bearing borrowings
29. Assets held for disposal and related liabilities
30. Commitments undertaken
31. Commitments received
32. Contingencies
33. Joint arrangements
34. Auditor’s fees
35. Events after the balance sheet date
36. Approval of financial statements
1
2
4
5
7
7
7
19
20
20
20
20
21
21
21
22
25
27
28
29
29
31
31
34
34
35
38
39
40
41
41
42
42
42
43
43
43
44
44
44
45
S.N.G.N. ROMGAZ S.A.
STATEMENT OF COMPREHENSIVE INCOME
Note
3
5
4
6
16
5
7
8
10 b)
9
13
10 a)
3
11
18 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
Taxes and duties
Finance cost
Exploration expense
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
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
8,619,286
(107,060)
273,027
(12,957)
(57,546)
(5,767)
(94,857)
(433,391)
(819,207)
(1,478,423)
(61,913)
(83,051)
(850,009)
122,126
5,010,258
(2,360,981)
2,649,277
(9,338)
1,494
(7,844)
(7,844)
2,641,433
13,071,969
(183,574)
188,404
(10,795)
(55,166)
(2,197)
(102,326)
(461,425)
(769,026)
(6,940,057)
(27,233)
(59,069)
(604,114)
78,503
4,123,894
(1,591,949)
2,531,945
14,096
(2,255)
11,841
11,841
2,543,786
These financial statements were endorsed by the Board of Directors on March 22, 2024.
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
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 sale
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Reserves
Retained earnings
Total equity
Non-current liabilities
Retirement benefit obligation
Deferred revenue
Lease liabilities
Borrowings
Provisions
Total non-current liabilities
December 31, 2023
'000 RON
December 31, 2022
'000 RON
4,629,477
15,223
5,185,051
120
213,352
211
549,710
10,774
5,616
4,387,058
19,735
5,185,051
120
217,073
286
27,722
6,786
5,616
10,609,534
9,849,447
293,749
1,337,437
-
2,344,349
258,769
104
518,831
4,753,239
687,453
274,531
1,334,163
3
8,481
250,922
88
1,867,570
3,735,758
677,634
16,050,226
14,262,839
385,422
4,834,685
6,172,369
385,422
3,492,228
6,191,538
11,392,476
10,069,188
177,721
276,749
10,450
808,373
336,648
1,609,941
158,934
230,419
7,090
1,125,534
186,778
1,708,755
Note
12
14
24 a)
24 b)
11
16 b)
14
25
15
16 a)
27
16 b)
26
29
17
18
19
28
18
2
S.N.G.N. ROMGAZ S.A.
STATEMENT OF FINANCIAL POSITION
Note
December 31, 2023
'000 RON
December 31, 2022
'000 RON
Current liabilities
Trade payables
Contract liabilities
Current tax liabilities
Deferred revenue
Provisions
Lease liabilities
Borrowings
Other liabilities
Total current liabilities
Liabilities directly associated with the assets
held for disposal
Total liabilities
Total equity and liabilities
20
11
19
18
28
20
29
139,733
153,723
1,762,716
7
111,607
2,023
323,349
493,557
86,903
263,340
1,171,873
11
312,867
1,017
321,581
279,797
2,986,715
2,437,389
61,094
4,657,750
16,050,226
47,507
4,193,651
14,262,839
These financial statements were endorsed by the Board of Directors on March 22, 2024.
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, 2023
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the
year
Allocation to dividends *)
Allocation to development fund reserve
Increase in reinvested profit reserves
Share
capital
'000 RON
385,422
-
-
-
-
-
-
Legal
reserve
'000 RON
Geological
quota
reserve**)
'000 RON
Development
fund reserve
'000 RON
Reinvested
profit
reserve
'000 RON
77,084
-
-
486,388
-
-
-
-
-
-
-
-
-
-
2,543,502
-
-
-
-
1,268,874
-
365,529
-
-
-
-
-
73,583
Other
reserves
'000 RON
Retained
earnings ***)
'000 RON
19,725
-
-
6,191,538
2,649,277
(7,844)
Total
'000 RON
10,069,188
2,649,277
(7,844)
-
-
-
-
2,641,433
2,641,433
(1,318,145)
(1,268,874)
(73,583)
(1,318,145)
-
-
Balance as of December 31, 2023
385,422
77,084
486,388
3,812,376
439,112
19,725
6,172,369
11,392,476
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 development fund reserve
Increase in reinvested profit reserves
385,422
-
-
77,084
-
-
486,388
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,003,275
-
-
-
-
540,227
-
333,702
-
-
19,725
-
-
5,684,411
2,531,945
11,841
8,990,007
2,531,945
11,841
-
-
-
31,827
-
-
-
-
2,543,786
2,543,786
(1,464,605)
(540,227)
(31,827)
6,191,538
(1,464,605)
-
-
10,069,188
Balance as of December 31, 2022
385,422
77,084
486,388
2,543,502
365,529
19,725
*) In 2023 the Company’s shareholders approved the allocation of dividends of RON 1,318,145 thousand (2022: RON 1,464,605 thousand), dividend per share being RON 3.42 (2022: RON 3.8).
**) The geological quota reserve was set up until 2004 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. The reserve cannot be distributed.
***) Retained earnings include the geological quota reserve set up after 2004 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, 2023 the geological quota reserve available for distribution is of RON 627,612 thousand (December 31, 2022: RON 714,512 thousand).
These financial statements were endorsed by the Board of Directors on March 22, 2024.
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 18)
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
10, note 18)
Change in other provisions (note 10, note 18)
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
Net receivable write-offs and movement in
allowances for trade receivables and other
assets (note 16 c)
Other gains and losses
Net movement in write-down allowances for
inventory (note 6, note 15)
Liabilities written off
Subsidies income (note 19)
Cash generated from operations before
movements in working capital
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, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
2,649,277
2,531,945
2,360,981
43,748
(50,247)
18,165
(222,780)
4,501
33,763
(197,434)
23,361
3
61,271
7,382
348,759
59
53,519
1,069
4,568
(172)
(7)
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
55,765
1,793
4,814
(512)
(7)
5,139,786
4,522,135
(23,027)
(172,993)
236,006
5,179,772
(43,183)
(1,757,188)
3,379,401
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
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
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
Grants received (note 19)
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, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
(5,980,520)
3,655,236
(504,368)
194,553
1,684
50,247
-
(498,466)
(50,746)
120
(3,220,306)
3,599,005
(27,359)
179,571
1,033
13,583
(5,126,347)
(336,969)
(96,500)
105
(3,132,260)
(5,014,184)
-
(322,775)
(1,317,745)
(1,709)
46,349
(1,595,880)
1,606,475
(158,907)
(1,463,984)
(1,422)
-
(17,838)
(1,348,739)
(1,705,081)
1,867,570
3,572,651
518,831
1,867,570
These financial statements were endorsed by the Board of Directors on March 22, 2024.
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 condensate 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.
MATERIAL ACCOUNTING POLICIES
Statement of compliance
The separate financial statements (“financial statements”) of the Company are 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 purpose 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 are 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.
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 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 IAS 12 “Income taxes: International Tax Reform – Pillar Two Model” (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);
8
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
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 are not be impacted by this standard.
The adoption of these amendments, interpretations or improvements to existing standards has not led to changes
in the Company's accounting policies. The Company’s management has reviewed the disclosures of accounting
policies through the lens of IAS 1 Amendments and concluded no significant changes are required.
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 for
the following standards, amendments or improvements to the existing standards and interpretations, which were
not endorsed for use in the EU as at date of publication of financial statements:
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier
Finance Arrangements (effective for annual periods beginning on or after January 1, 2024);
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (applicable
to annual periods beginning on or after 1 January 2025).
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 adopted by the EU, but not yet
effective:
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 liability in a sale and leaseback (applicable to annual periods
beginning on or after 1 January 2024).
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 and related services, 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 Agreements applicable within the Company, 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 paid, 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.
CO2 certificates bought during the year CO2 emissions occurred that will be included in the Unique Registry of
Greenhouse Gas Emissions are recorded as current assets at the amount paid. Until the date certificates are included
in the Unique Registry, the Company records a current liability for this obligation at the amount paid when said
certificates were bought. At the date the certificates are included in the Unique Registry, the asset and liability are
derecognized.
11
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
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.
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 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.
12
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
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.
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 costs 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 costs 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.
13
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
(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 (ie. 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.
Assets representing gas cushion are not depreciated, as the residual value exceeds their cost.
For indirectly productive tangible assets and other assets, depreciation is computed 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, but not written off by reporting date, 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 2023, the Company conducted an impairment test in the Upstream segment (ie. onshore operations), as the
conditions existing when the previous test was conducted changed; the assumptions are presented in note 12. The
results of the impairment test are considered to be immaterial and were not recognized.
No impairment indicators were identified related to the investment in Romgaz Black Sea Limited.
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.
14
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
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 2023 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 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.
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.
15
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Inventories
Inventories are recorded initially at cost of production, or acquisition cost, as the case may be. The cost of finished
goods and production in progress includes materials, labor, expenses incurred in bringing the finished goods at the
location and in the existent form and 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
granted, 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 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 loss allowance impairment.
Any difference between the initial amount and the amount at maturity is recognized in the statement of
comprehensive income 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 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 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.
16
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
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:
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;
development fund reserves, which represent allocations from profit in accordance with Government
Ordinance no. 64/2001, paragraph (g);
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;
geological quota reserve, non-distributable, set up until 2004. Geological 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.
Grants
Grants are non-reimbursable financial resources given to the Company with the condition of meeting certain
criteria. In the category of grants 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.
Grants are not recognized until there is reasonable assurance that:
(a)
the Company will comply with the conditions attaching to it; and
(b) grants 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”.
If a government grant becomes receivable as compensation for expenses or losses incurred in a previous period,
the Company recognizes such grant in the profit or loss of the period in which it becomes receivable.
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.
17
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
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 grants related to income
Government Emergency Ordinance no. 27/2022 as subsequently amended (GEO 27) includes the obligation of the
Company to sell at a regulated price of RON 450/MWh the electricity it produces. According to GEO 27, electricity
producers must calculate a contribution to the Energy Transition Fund. If the value of the CO2 certificates related
to the energy sold at RON 450/MWh exceeds the contribution to the Energy Transition Fund, electricity producers
are entitled to receive the excess. Until December 2023, the legislation did not provide for the mechanism to
request these amounts from the Romanian State nor the competent authority for the settlement of such requests.
As such, the right to receive the grant is not enforceable.
The government does not act as a shareholder or a client of the Company in this matter. As such, the relevant
standard considered in the accounting of the grant is IAS 20.
By December 31, 2023 the Company should receive RON 167,743 thousand. Income recognized in previous financial
statements released by the Company in 2023 was reversed by December 31, 2023. Until the amount becomes a
receivable, the Company discloses the grant as a contingent asset.
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 of issue. Based on the information available at period end 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 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).
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 18).
Estimates related to the retirement benefit obligation
Under the Collective Labor Agreements applicable within the Company, the Company must pay 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. It is 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 is brought to present value using a discount factor based on interest on investments
with the highest degree of safety (government bonds) (note 18).
The Company does not operate any other pension plan or retirement benefits, and therefore has no other
obligations relating to pensions.
18
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
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
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
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
7,747,762
28,628
19,542
406,996
242,522
61,977
708
8,508,135
111,151
8,619,286
122,126
8,741,412
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
The decrease in revenue is generated by the application of GEO 27. In 2023, the Company sold 86.43% of gas at
regulated prices, while in 2022 it sold 33.3% of gas under GEO 27. Over 90% of electricity in 2023 was sold under
GEO 27 at a price of RON 450/MWh; no such obligation was in force in 2022.
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 contracts with 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.
19
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
4.
INVESTMENT INCOME
Income from dividends
Interest income
Total
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
50,247
222,780
273,027
13,583
174,821
188,404
Interest income is derived from the Company’s investments in bank deposits and government bonds. Interest rates
saw a significant increase in 2023, leading to higher income.
5.
COST OF COMMODITIES SOLD, RAW MATERIALS AND CONSUMABLES
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'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
6.
OTHER GAINS AND LOSSES
59,704
30,392
20,291
85,477
1,292
4,761
201,917
49,788
48,951
14,654
167,405
1,515
3,587
285,900
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'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)
Losses from trade receivables
Other gains and losses
Total
25,676
(32,528)
(4,501)
4,029
(4,568)
(2)
(1,063)
(12,957)
41,862
(45,000)
(451)
(599)
(4,814)
-
(1,793)
(10,795)
7.
DEPRECIATION, AMORTIZATION AND IMPAIRMENT EXPENSES
Year ended
December 31, 2023
Year ended
December 31, 2022
Depreciation and amortization
out of which:
- depreciation of property, plant and equipment
- amortization of intangible assets (note 14 a)
- amortization of right-of use assets (note 14 b)
Net impairment of non-current assets
Total depreciation, amortization and
impairment
'000 RON
348,759
341,355
5,920
1,484
84,632
433,391
20
'000 RON
321,268
315,708
4,649
911
140,157
461,425
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
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
Interest expense *)
Unwinding of the decommissioning provision
(note 18 a)
Total
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
855,202
30,735
34,814
29,922
10,295
10,318
971,286
(152,079)
819,207
808,084
28,091
24,621
26,655
10,227
6,393
904,071
(135,045)
769,026
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
43,748
18,165
61,913
5,565
21,668
27,233
*) 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, currently Romgaz Black Sea Limited (note 28).
10.
OTHER EXPENSES. TAXES AND DUTIES
a) Other Expenses
Energy and water expenses
Expenses for capacity booking and gas
transmission services
(Net gain)/Net loss from provisions movement
(note 18)
Gas storage services
Other operating expenses *)
Total
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
23,507
171,197
(163,671)
33,342
785,634
850,009
26,915
158,591
35,347
52,028
331,233
604,114
*) In 2023 Romgaz resumed the works on the new Iernut power plant with the former contractor. Disputes between
Romgaz and the contractor were settled through a transaction agreement approved by Romgaz’ shareholders. The
agreement stipulates the reimbursement by Romgaz of the performance guarantee executed in 2021 when the
former works contract was terminated. The amount paid by Romgaz was of RON 114,628 thousand and is included
in other operating expenses.
Other operating expenses also include the cost of CO2 certificates acquired during the year (RON 470,926
thousand; 2022 RON 169,638 thousand). In 2023, the Company acquired the CO2 certificates related to the year.
The certificates related to 2022 were also acquired in 2023; the cost of the 2022 certificates was offset against the
provision released to income.
21
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
b) Taxes and duties
Royalties *)
Windfall tax (gas) *)
Energy transition fund/windfall tax (electricity)
**)
Other taxes and duties
Total
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
583,516
889,799
(1,546)
6,654
1,478,423
1,625,800
4,903,849
403,801
6,607
6,940,057
*) According to GEO 27, gas sold at regulated prices is not subject to windfall tax. Royalties paid on this gas are
calculated at the level of the regulated price, instead of the reference price communicated by ANRM. As
quantities of gas sold under GEO 27 were significantly higher in 2023 (note 3), the cost of royalties and windfall
tax paid on gas decreased. In October 2023 royalty rates were increased by approximately 20%; Romgaz calculated
the royalties at the new rates.
**) In 2022 GEO 27 introduced a windfall tax on electricity later replaced by a contribution to the Energy
Transition Fund. Electricity sold at RON 450/MWh is not subject to the contribution. As over 90% of electricity was
sold at this price in 2023, the contribution decreased compared to 2022. The negative level of the expense is
determined by the recomputation of the windfall tax related to 2022 based on actual CO2 certificates costs, which
were acquired in 2023; in 2022 the windfall tax was calculated based on an estimate of the CO2 certificates cost.
11.
INCOME TAX
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
Current tax expense (note 11 a)
Deferred income tax (income)/expense (note 11
a)
Solidarity contribution (note 11 b)
Income tax expense
668,410
5,200
1,687,371
2,360,981
520,955
68,204
1,002,790
1,591,949
Current income tax liability
Solidarity contribution (note 11 b)
Current tax liability
a) Current and deferred income tax
December 31, 2023
'000 RON
December 31, 2022
'000 RON
75,797
1,686,919
1,762,716
169,083
1,002,790
1,171,873
The tax rate used for the reconciliations below for the year ended December 31, 2023, respectively year ended
December 31, 2022 is 16% payable by corporate entities in Romania on taxable profits.
22
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
The total charge for the period can be reconciled to the accounting profit as follows:
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'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
Effect of income tax expense related to previous
years
Income tax expense
Components of deferred tax (asset)/liability:
3,322,886
-
3,322,886
531,662
(97,647)
362,264
(91,132)
(11,773)
21,416
8,199
(49,486)
107
673,610
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
December 31, 2023
December 31, 2022
Cumulative
temporary
differences
'000 RON
(625,976)
(55,318)
(513,724)
(182)
(40,676)
(97,576)
(1,333,452)
165,182
Deferred tax
(asset)/ liability
'000 RON
(100,156)
(8,851)
(82,196)
(29)
(6,508)
(15,612)
(213,352)
26,429
Cumulative
temporary
differences
'000 RON
(430,452)
(297,761)
(494,982)
(977)
(34,956)
(97,576)
Deferred
tax (asset)/
liability
'000 RON
(68,873)
(47,642)
(79,197)
(156)
(5,593)
(15,612)
(1,356,704)
151,676
(217,073)
24,268
(41,266)
(6,603)
(27,666)
(4,427)
123,916
(1,209,536)
19,826
(193,526)
124,010
(1,232,694)
(3,706)
(5,200)
1,494
19,841
(197,232)
(70,459)
(68,204)
(2,255)
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.
23
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
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 in the
fiscal years 2022 and 2023 at a rate of 60% of taxable profits, as determined under national tax rules, which are
above a 20% increase of the average of the taxable profits of the four fiscal years starting on or after 1 January
2018. The contribution for 2023 is of RON 1,686,919 thousand. The tax is due for payment in June, 2024.
24
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
12.
PROPERTY, PLANT AND EQUIPMENT
Land and
land
improvements
'000 RON
97,428
377
1,163
-
Buildings
'000 RON
718,294
10
47,584
(1,132)
Gas
properties
'000 RON
7,181,827
110,100
505,052
(278,028)
Plant,
machinery
and
equipment
'000 RON
Fixtures,
fittings and
office
equipment
'000 RON
999,680
-
73,066
(19,428)
105,136
-
16,846
(12,084)
Storage
assets
'000 RON
213,387
-
-
(186)
Tangible
exploration
assets
'000 RON
Capital
work in
progress
'000 RON
Total
'000 RON
336,494
50,747
(6,249)
(40,831)
2,027,403
545,413
(637,462)
(27,373)
11,679,649
706,647
-
(379,062)
Cost
As of January 1, 2023
Additions
Transfers
Disposals
As of December 31, 2023
98,968
764,756
7,518,951
1,053,318
109,898
213,201
340,161
1,907,981
12,007,234
Accumulated depreciation
As of January 1, 2023
Depreciation *)
Disposals
As of December 31, 2023
Impairment
-
-
-
-
329,168
4,890,092
715,794
18,656
(578)
291,231
(100,061)
52,382
(19,356)
84,125
7,029
(12,005)
7,767
19
296
347,246
5,081,262
748,820
79,149
8,082
-
-
-
-
-
-
-
-
6,026,946
369,317
(131,704)
6,264,559
As of January 1, 2023
3,180
51,964
651,677
86,425
1,174
2,097
161,509
307,619
1,265,645
Charge
Transfers
Release
-
-
-
28,598
-
(514)
91,030
38,882
(269,895)
1,782
1,252
(70)
494
-
(82)
491
-
(990)
25,311
-
(42,146)
57,296
(40,134)
(43,751)
205,002
-
(357,448)
As of December 31, 2023
3,180
80,048
511,694
89,389
1,586
1,598
144,674
281,030
1,113,199
Carrying value
As of January 1, 2023
94,248
337,162
1,640,058
197,461
19,837
203,523
174,985
1,719,784
4,387,058
As of December 31, 2023
95,788
337,462
1,925,995
215,109
29,163
203,521
195,487
1,626,952
4,629,477
*) The amounts include depreciation of tangible assets used in the production of other fixed assets, capitalized in their cost, amounting to RON 27,963 thousand.
25
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Land and
land
improvements
'000 RON
96,815
37
576
-
Buildings
'000 RON
708,494
2,381
8,265
(846)
Gas
properties
'000 RON
7,146,398
1,175
252,661
(218,407)
Plant,
machinery
and
equipment
'000 RON
970,774
-
48,895
(19,989)
Fixtures,
fittings and
office
equipment
'000 RON
107,694
5
2,609
(5,172)
Storage
assets
'000 RON
213,387
-
-
-
Tangible
exploration
assets
'000 RON
Capital
work in
progress
'000 RON
Total
'000 RON
335,940
96,504
(24,311)
(71,639)
1,969,733
351,229
(288,695)
(4,864)
11,549,235
451,331
-
(320,917)
Cost
As of January 1, 2022
Additions
Transfers
Disposals
As of December 31, 2022
97,428
718,294
7,181,827
999,680
105,136
213,387
336,494
2,027,403
11,679,649
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
681,169
54,315
(19,690)
715,794
83,096
6,107
(5,078)
84,125
7,767
-
-
7,767
-
-
-
-
-
-
-
-
5,734,721
341,754
(49,529)
6,026,946
As of January 1, 2022
3,180
50,109
649,714
82,794
1,183
2,101
161,085
304,760
1,254,926
Charge
Transfers
Release
-
-
-
2,468
4
(617)
50,668
43,787
(92,492)
3,033
956
(358)
91
-
(100)
-
-
(4)
66,466
-
(66,042)
79,558
(44,747)
(31,952)
202,284
-
(191,565)
As of December 31, 2022
3,180
51,964
651,677
86,425
1,174
2,097
161,509
307,619
1,265,645
Carrying value
As of January 1, 2022
93,635
348,065
1,844,315
206,811
23,415
203,519
174,855
1,664,973
4,559,588
As of December 31, 2022
94,248
337,162
1,640,058
197,461
19,837
203,523
174,985
1,719,784
4,387,058
*) 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.
26
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
Based on the current market conditions (decrease in prices, higher royalty rates), the Company considered there are
changes in the assumptions used in the previous impairment test on upstream assets.
Based on its assessment, the Company considered each commercial field a separate cash-generating unit. The
infrastructure common to several gas fields (e.g. compression stations, drying stations) was allocated to each field
according to the quantities processed for each field served.
The impairment test took into account the economic life of the fields, according to the latest studies approved by
the National Agency of Mineral Resources or submitted for approval, but no later than 2043, this being the limit year
of the concession agreements, according to the legislation in force.
Following the impairment test, no additional impairment was recorded and there was no decrease of previously
recognized impairment losses.
In the impairment test the following assumptions were used:
•
•
•
Weighted average cost of capital: 12.75%;
The inflation rate for the years 2024-2026 was the one reported by the National Commission for Strategy
and Prognosis in the 2023-2027 forecast. For the 2028-2043 period a constant inflation rate of 2.6% was
used;
Average estimated price for the period was RON 156.99/MWh.
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, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
Exploration assets written off
Seismic, geological, geophysical studies
Exploration expenses
Net movement in exploration assets’ impairment
(net income)/net loss
Net cash used in exploration investing activities
3
83,048
83,051
23,361
(50,746)
16
59,053
59,069
66,447
(96,500)
Exploration assets (note 12)
Liabilities
Net assets
December 31, 2023
'000 RON
December 31, 2022
'000 RON
195,487
(13,342)
182,145
174,985
(13,218)
161,767
27
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
14.
INTANGIBLE ASSETS. RIGHT OF USE ASSETS
a) 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
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
2023
'000 RON
122,546
1,409
(7,150)
116,805
102,811
5,920
(7,149)
101,582
19,735
15,223
2023
'000 RON
9,918
1,169
4,303
-
15,390
3,132
1,484
-
4,616
6,786
10,774
28
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
15.
INVENTORIES
Spare parts and materials
Finished goods (gas)
Other inventories
Inventories at third parties
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, 2023
'000 RON
December 31, 2022
'000 RON
248,787
90,594
694
16,695
(62,925)
(96)
293,749
203,094
129,190
700
-
(58,437)
(16)
274,531
December 31, 2023
'000 RON
December 31, 2022
'000 RON
Trade receivables
Allowances for expected credit losses (note 16 c)
Accrued receivables
Total
1,604,362
(740,085)
473,160
1,337,437
1,471,250
(724,386)
587,299
1,334,163
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.
Trade receivables from the sale of electricity are generally due within 7 days of the date of invoice delivery. 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
Allowance for expected credit losses for other
debtors (note 16 c)
Prepayments
VAT not yet due
CO2 certificates acquired
Other taxes receivable
December 31, 2023
'000 RON
December 31, 2022
'000 RON
531,727
17,983
549,710
10
7,974
20,541
(169)
46,823
(46,029)
13,579
7,415
208,617
8
27,359
363
27,722
-
10,550
36,921
(172)
58,487
(50,055)
9,829
3,072
182,290
Total other assets (short term)
*) Romgaz signed two loan agreements of RON 247,500 thousand (in 2022, increased in 2023) and RON 2,100,000
thousand (in 2023) with subsidiary Romgaz Black Sea Limited to support its operations and the investment in the
258,769
250,922
29
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
offshore block Neptun Deep. The interest rate on both loan agreements is 12M ROBOR + 1.74%. The loans are
repayable on June 30, 2028 and December 31, 2029, respectively.
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
2023
'000 RON
774,613
204
109,200
(41,847)
(4,233)
(51,654)
786,283
2022
'000 RON
981,497
1,831
124,247
(262,649)
(1,232)
(69,081)
774,613
*) In 2023, the Company wrote-off receivables of RON 41,847 thousand representing receivables from clients
undergoing bankruptcy procedures. The write-off had no impact on the 2023 results, as those receivables were
already impaired.
As of December 31, 2023, the Company recorded allowances for expected credit losses, of which Interagro RON
41,808 thousand (December 31, 2022: RON 68,141 thousand), CET Iasi of RON 10,882 thousand (December 31,
2022: RON 46,271 thousand), Electrocentrale Galati with RON 168,620 thousand (December 31, 2022: RON 168,620
thousand), Liberty Galați with RON 113,665 thousand (December 31, 2022: RON 85,261 thousand), Electrocentrale
Bucuresti with RON 242,687 thousand (December 31, 2022: RON 243,547 thousand), G-ON EUROGAZ of RON 14,848
thousand (December 31, 2022: RON 14,848 thousand), Electrocentrale Constanta of RON 38,027 thousand
(December 31, 2022: RON 38,027 thousand), Termo Ploiești of RON 72,857 thousand (December 31, 2022: RON 0
thousand) due to existing financial conditions of these clients as well as ongoing litigating cases related to these
receivables or exceeding payment terms.
d)
Credit risk exposure for trade and other receivables
December 31, 2023
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, 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
Gross carrying amount
'000 RON
Expected credit loss
rate
%
Lifetime expected
credit losses
‘000 RON
1,320,745
44,579
53,832
24,998
633,368
2,077,522
0.00%
64.93%
98.07%
99.86%
100.00%
14
28,944
52,795
24,964
633,368
740,085
Gross carrying amount
'000 RON
Expected credit loss
rate
%
Lifetime expected
credit losses
‘000 RON
0.00
91.24
99.96
99.73
100.00
13
5,593
32,348
73,300
613,132
724,386
1,333,424
6,130
32,362
73,501
613,132
2,058,549
30
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
17.
SHARE CAPITAL
December 31, 2023
‘000 RON
December 31, 2022
‘000 RON
385,422,400 fully paid ordinary shares
Total
385,422
385,422
The shareholding structure as at December 31, 2023 is as follows:
The Romanian State through the
Ministry of Energy
Legal persons
Physical persons
No. of shares
269,823,080
95,343,630
20,255,690
Value
‘000 RON
269,823
95,344
20,256
Total
385,422,400
385,422
385,422
385,422
Percentage (%)
70.01
24.73
5.25
100
All shares are ordinary and were subscribed and fully paid as at December 31, 2023. All shares carry equal voting
rights and have a nominal value of RON 1/share (December 31, 2022: RON 1/share).
In December 2023 the Extraordinary General Meeting of Shareholders approved Romgaz’ share capital increase
through the incorporation of reserves of RON 3,468,802 thousand by issuing 3,468,801,600 shares with a nominal
value of RON 1/share, each shareholder registered on the Registration Date being entitled to 9 free shares for each
share held. The increase was registered in January 2024 at the Trade Register.
18.
PROVISIONS
Decommissioning provision (note 18 a)
Retirement benefit obligation (note 18 c)
Total long term provisions
Decommissioning provision (note 18 a)
Litigation provision (note 18 b)
Other provisions *) (note 18 b)
Total short term provisions
Total provisions
December 31, 2023
'000 RON
December 31, 2022
'000 RON
336,648
177,721
514,369
27,670
18,839
65,098
111,607
625,976
186,778
158,934
345,712
22,046
6,620
284,201
312,867
658,579
*) On December 31, 2023, other provisions of RON 65,098 thousand include the provision for employee’s
participation to profit of RON 42,364 thousand (December 31, 2022: RON 38,094 thousand), the provision for taxes
of RON 6,514 thousand (December 31, 2022: RON 10,207 thousand), the provision for CO2 certificates of RON 0
thousand (December 31, 2022: RON 228,126 thousand) and a provision of RON 4,666 thousand for the variable
remuneration of the board of directors and officers with a mandate contract to which they will be entitled if they
meet the key performance indicators approved by shareholders (December 31, 2022: RON 0 thousand). In 2023 the
Company acquired the CO2 certificates for the year, thus no provision is required at December 31, 2023.
31
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
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
2023
'000 RON
208,824
106,922
16,194
33,398
(1,020)
364,318
2022
'000 RON
398,039
1,175
19,834
(75,471)
(134,753)
208,824
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 6.23% (year ended December 31, 2022: 8.19%). 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
(including the decommissioning provision for assets held for disposal) with RON 62,650 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 81,201 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 83,103 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 64,871 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, 2023
Additional provision in the period
Provisions used in the period
Unused amounts during the period,
reversed
At December 31, 2023
2023
'000 RON
27,666
11,308
1,971
365
(43)
41,267
Litigation provision
‘000 RON
Other provisions
‘000 RON
284,201
155,713
(369,311)
(5,505)
65,098
6,620
18,762
(4,025)
(2,518)
18,839
32
2022
'000 RON
39,598
149
1,834
(158)
(13,757)
27,666
Total
‘000 RON
290,821
174,475
(373,336)
(8,023)
83,937
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
At January 1, 2022
Additional provision in the period
Provisions used in the period
Unused amounts during the period,
reversed
At December 31, 2022
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
The movement in other provisions refers mainly to the CO2 certificates.
c)
Retirement benefit obligation
Movement of the 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
2023
'000 RON
158,934
12,392
10,127
(13,070)
9,338
-
177,721
Total
‘000 RON
207,995
320,689
(212,841)
(25,022)
290,821
2022
'000 RON
144,880
7,044
8,921
(9,484)
(14,096)
21,669
158,934
Except for actuarial gains/losses, all 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: 5.9% (2022: 8.1%);
Average inflation rate: 4.8% in 2024; 3.5% in 2025; 3.0% in 2026; 2.5% in 2027-2031 period, following a
decreasing trend in the next years (2022: 16.3% in 2022; 11.2% in 2023; 6.1% in 2024; 3.6% 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
Increase of 1% in assumptions
'000 RON
Decrease of 1% in assumptions
'000 RON
(15,499)
17,636
17,826
(15,620)
Benefit payments
'000 RON
16,351
8,190
45,986
124,933
503,046
33
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
19.
DEFERRED REVENUE
Amounts collected from NIP (see below)
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
December 31, 2023
'000 RON
December 31, 2022
'000 RON
276,519
133
97
276,749
7
-
7
230,169
145
105
230,419
7
4
11
Total deferred revenue
276,756
230,430
National Investment Plan (“NIP”)
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", Romgaz 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, 2023 the Company
collected RON 276,519 thousand. Amounts received under this contract will be transferred to income based on the
depreciation rate of the investment.
As per Government Decision no. 1118/November 16, 2023 the completion and commissioning period of investments
financed from the National Investment Plan was extended until December 31, 2024 and the reimbursement period
until June 30, 2025.
20.
TRADE AND OTHER CURRENT LIABILITIES
December 31, 2023
'000 RON
December 31, 2022
'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
Other taxes
Total other liabilities
Total trade and other liabilities
60,934
48,062
30,737
139,733
36,226
170,255
38
30,270
218,961
4,284
1,453
29,420
2,650
493,557
633,290
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
*) Other current liabilities include the Company’s obligation to include the CO2 certificates acquired in 2023 for the year’s
emissions in the Unique Registry of Greenhouse Gas Emissions (note 16 b).
34
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
21.
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)
(i)
Market risk
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 28.
As of December 31, 2023, the official exchange rate was RON 4.9746 to EUR 1 (December 31, 2022: RON 4.9474 to EUR
1).
EUR
1 EUR =
4.9746
'000 RON
GBP
1 GBP =
5.57225
'000 RON
USD
1 USD =
4.4958
'000 RON
December 31, 2023
Financial assets
Cash and cash equivalents
Loans to subsidiaries
Other financial assets
Trade and other receivables
Total financial assets
Financial liabilities
Trade payables and other
payables
Lease liability
Borrowings
6,816
-
-
-
6,816
(31)
(7,396)
(1,131,722)
Total financial liabilities
(1,139,149)
Net
(1,132,333)
RON
1 RON
'000 RON
512,010
549,710
2,325,284
864,277
Total
'000 RON
518,831
549,710
2,325,284
864,277
4,251,281
4,258,102
(78,717)
(5,077)
-
(78,799)
(12,473)
(1,131,722)
(83,794)
(1,222,994)
4,167,487
3,035,108
4
-
-
-
4
(8)
-
-
(8)
(4)
1
-
-
-
1
(43)
-
-
(43)
(42)
35
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022
Financial assets
Cash and cash equivalents
Loans to subsidiaries
Trade and other receivables
EUR
1 EUR =
4.9474
'000 RON
77,760
-
-
Total financial assets
77,760
Financial liabilities
Trade payables and other payables
Lease liability
Borrowings
(18)
(3,584)
(1,447,115)
Total financial liabilities
(1,450,717)
Net
(1,372,957)
GBP
1 GBP =
5.5878
'000 RON
USD
1 USD =
4.6346
'000 RON
RON
1 RON
'000 RON
Total
'000 RON
3
-
-
3
-
-
-
-
3
8
-
-
8
(25)
-
-
(25)
(17)
1,789,799
1,867,570
27,722
746,864
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
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, 2023
‘000 RON
December 31, 2022
‘000 RON
(56,618)
56,618
(68,648)
68,648
The official annual inflation rate in Romania for 2023 was 10.4% as provided by the National Institute of Statistics. 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 18.
An increase of 1% in the interest rate on the borrowings would lead to an increase of the interest expense in 2024 of RON
10,269 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 loss 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 46.66% of net trade receivable balance
at December 31, 2023 (its top 3 clients: 89.72% as of December 31, 2022).
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 loss allowance already recorded.
36
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
(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.
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.
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, 2023
Deposits
Loans to
subsidiaries
Trade
receivables
Due in
less than
a month
‘000 RON
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
Total
‘000 RON
391,521
1,238,763
695,000
-
-
2,325,284
-
863,544
-
733
-
-
369,204
459,956
-
-
829,160
864,277
Total
1,255,065
1,239,496
695,000
369,204
459,956
4,018,721
Trade
payables
Borrowings
Lease
liabilities
Total
Net
December
31, 2022
Loans to
subsidiaries
Trade
receivables
Total
Trade
payables
Borrowings
Lease
liabilities
Total
Net
(74,001)
-
(4,796)
(92,343)
(2)
(272,306)
-
(853,610)
-
-
(78,799)
(1,218,259)
(137)
(575)
(1,311)
(5,854)
(4,596)
(12,473)
(74,138)
(97,714)
(273,619)
(859,464)
(4,596)
(1,309,531)
1,180,927
1,141,782
421,381
(490,260)
455,360
2,709,190
Due in
less than
a month
‘000 RON
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
Total
‘000 RON
-
-
557,735
557,735
127,111
127,111
-
-
-
-
-
-
46,448
46,448
-
46,448
684,846
731,294
(54,096)
-
(12,119)
(84,892)
-
(253,397)
-
(1,152,132)
-
-
(66,215)
(1,490,421)
(77)
(191)
(748)
(2,962)
(4,129)
(8,107)
(54,173)
(97,202)
(254,145)
(1,155,094)
(4,129)
(1,564,743)
503,562
29,909
(254,145)
(1,155,094)
42,319
(833,449)
37
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
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.
22. RELATED PARTY TRANSACTIONS AND BALANCES
i.
Sales of goods and services
Subsidiaries *)
Associates
Total
Year ended
Dec 31, 2023
'000 RON
134,343
22,055
156,398
Year ended
Dec 31, 2022
'000 RON
136,278
24,368
160,646
*) Of RON 134,343 thousand representing revenue obtained from transactions with subsidiaries, RON 101,122
thousand relate to rental revenues (2022: RON 103,351 thousand).
The Company is controlled by the Ministry of Energy, on behalf of the Romanian State (note 17). 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:
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
Year ended
Dec 31, 2023
'000 RON
Year ended
Dec 31, 2022
'000 RON
119,734
1,115,191
44,953
1,932,803
2,309,541
110,748
1,549,292
430,287
2,581,062
1,883,418
Total
5,522,222
6,554,807
ii.
Purchase of goods and services
Subsidiaries
Total
Year ended
Dec 31, 2023
'000 RON
33,342
33,342
Year ended
Dec 31, 2022
'000 RON
52,028
52,028
38
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
iii.
Interest and dividend income
Subsidiaries – interest income
Subsidiaries – dividend income
Total
iv.
Trade receivables
Subsidiaries
Total
v.
Net lease investment
Subsidiaries
Total
vi.
Loans granted
Subsidiaries
Total
vii.
Trade payables
Subsidiaries
Total
Year ended
Dec 31, 2023
'000 RON
17,643
50,247
68,230
Year ended
Dec 31, 2022
'000 RON
363
13,583
13,946
December 31, 2023
'000 RON
December 31, 2022
'000 RON
11,217
11,217
16,018
16,018
December 31, 2023
'000 RON
December 31, 2022
'000 RON
315
315
374
374
December 31, 2023
'000 RON
December 31, 2022
'000 RON
549,710
549,710
27,359
27,359
December 31, 2023
'000 RON
December 31, 2022
'000 RON
1,950
1,950
3,861
3,861
23.
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, 2023 and December 31, 2022, 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)
Year ended
December 31, 2023
'000 RON
Year ended
December 31, 2022
'000 RON
27,578
1,259
1,934
-
21,361
2,298
1,670
-
39
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Salaries payable to executives
Salaries payable to directors
December 31, 2023
'000 RON
December 31, 2022
'000 RON
581
96
644
87
In addition to the above, on December 31, 2023 the Company recorded a provision for bonuses for executives and
directors of RON 4,666 thousand (December 31, 2022: RON 0 thousand).
24.
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, 2023
December 31, 2022
100
100
100
100
Cost at
December 31, 2023
’000 RON
Cost at
December 31, 2022
’000 RON
SNGN ROMGAZ SA – Filiala de Înmagazinare Gaze
Naturale DEPOGAZ Ploiesti SRL
Romgaz Black Sea Limited
66,056
5,118,995
66,056
5,118,995
Total
5,185,051
5,185,051
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, 2023
December 31, 2022
40
25
40
25
Gross
carrying
value
as of
December
31, 2023
Impairment
as of
December
31, 2023
Carrying
value as of
December
31, 2023
Gross
carrying
value
as of
December
31, 2022
Impairment
as of
December
31, 2022
Carrying
value as of
December
31, 2022
’000 RON
’000 RON
’000 RON
’000 RON
’000 RON
’000 RON
120
182
302
-
120
120
-
(182)
(182)
-
120
977
1,097
(977)
(977)
120
-
120
Name of
associate
SC Depomures
SA Tg.Mures
SC Agri LNG
Project
Company SRL
Total
40
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
25.
OTHER FINANCIAL INVESTMENTS
Other financial investments are reclassified at fair value through profit or loss.
Except for the investment in Patria Bank, which is classified as level 1 instrument in the fair value hierarchy, all
other investments are included in level 3 category, according to IFRS 13.
Company
Principal activity
Electrocentrale
București S.A.
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
Patria Bank S.A.
Mi Petrogas
Services S.A.
Lukoil
association
Electricity
Producers
Association-
HENRO
Company
Electrocentrale București S.A. *)
Patria Bank S.A.**)
Mi Petrogas Services S.A.
Lukoil association
Electricity Producers Association-HENRO
Total
Place of
incorporation and
operation
Proportion of ownership interest and voting
power held (%)
December 31, 2023
December 31, 2022
Romania
Romania
Romania
Romania
Romania
2.49
0.02
10
12.2
2.49
0.02
10
12.2
33.33
33.33
Fair value as of
December 31, 2023
’000 RON
Fair value as of
December 31, 2022
’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 concluded the restructuring plan in
February 2023, however its current financial position does not justify a modification of its value. 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 National Bank of Romania 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.
26.
CASH AND CASH EQUIVALENTS
Current bank accounts *)
Petty cash
Term deposits
Restricted cash **)
Amounts under settlement
Total
December 31, 2023
'000 RON
December 31, 2022
'000 RON
135,125
39
381,761
1,901
5
518,831
106,252
45
1,759,683
1,584
6
1,867,570
*) Current bank accounts include overnight deposits.
**) At December 31, 2023 restricted cash refers to bank accounts used only for dividend payments to shareholders,
according to stock market regulations.
41
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
27. OTHER FINANCIAL ASSETS
Other financial assets represent 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.
Bank deposits
Accrued interest receivable on bank deposits
Total other financial assets
28.
INTEREST BEARING BORROWINGS
December 31, 2023
'000 RON
December 31, 2022
'000 RON
2,325,284
19,065
2,344,349
-
8,481
8,481
Interest rate
Maturity
December 31,
2023
'000 RON
December 31,
2022
'000 RON
EUR 325,000 thousand bank borrowing
EURIBOR 3M +
0.05% p.a.
Total
June 30, 2027
1,131,722
1,447,115
1,131,722
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 (now Romgaz Black Sea
Limited) that holds 50% of the rights and obligations for the Neptun Deep block.
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 carries a variable rate of interest.
29. 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, 2023 and December 31, 2022. The transfer of
assets has not been completed by the date of approval of these 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, 2023
'000 RON
December 31, 2022
'000 RON
Property, plant and equipment
Other intangible assets
Assets held for disposal
687,438
15
687,453
42
677,619
15
677,634
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
Provisions
Deferred tax liabilities
Liabilities directly associated with the assets
held for disposal
Net assets directly associated with the disposal
group
30.
COMMITMENTS UNDERTAKEN
Endorsements and collaterals granted
Total
December 31, 2023
'000 RON
December 31, 2022
'000 RON
41,266
19,828
61,094
27,666
19,841
47,507
626,359
630,127
December 31, 2023
'000 RON
December 31, 2022
'000 RON
273,425
273,425
312,689
312,689
In 2023, 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 500,000 thousand. On December
31, 2023 are still available for use RON 229,515 thousand.
As of December 31, 2023, the Company’s contractual commitments for the acquisition of non-current assets are of
RON 704,601 thousand (December 31, 2022: RON 181,936 thousand).
31.
COMMITMENTS RECEIVED
Endorsements and collaterals received
Total
December 31, 2023
'000 RON
December 31, 2022
'000 RON
2,593,693
2,593,693
2,124,357
2,124,357
Endorsements and collateral received represent letters of guarantee and other performance guarantees received
from the Company’s clients.
32.
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 of Romgaz 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.
43
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
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. A final decision was not yet issued by the court.
(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, 2023 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 405,585
thousand (December 31, 2022: RON 236,490 thousand), representing the decommissioning liability.
(d)
Contingencies related to grants related to income
Government Emergency Ordinance no. 27/2022 as subsequently amended (GEO 27) includes the obligation of the
Company to sell at a regulated price of RON 450/MWh the electricity it produces. According to GEO 27, electricity
producers must calculate a contribution to the Energy Transition Fund. If the value of the CO2 certificates related
to the energy sold at RON 450/MWh exceeds the contribution to the Energy Transition Fund, electricity producers
are entitled to receive the excess. Until December 2023, the legislation did not provide for the mechanism to
request these amounts from the Romanian State nor the competent authority for the settlement of such requests.
As such, the right to receive the grant is not enforceable.
By December 31, 2023 the Company should receive RON 167,743 thousand.
33.
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.
34.
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 2023 annual financial statements is RON 377 thousand.
The fees charged for other assurance services in 2023 are RON 205 thousand.
35.
EVENTS AFTER THE BALANCE SHEET DATE
In December 2023 the Extraordinary General Meeting of Shareholders approved Romgaz’ share capital increase
through the incorporation of reserves of RON 3,468,802 thousand by issuing 3,468,801,600 shares with a nominal
value of RON 1/share, each shareholder registered on the Registration Date being entitled to 9 free shares for each
share held. The increase was registered in January 2024 at the Trade Register. The share capital increased to RON
3,854,224 thousand. The Extraordinary General Meeting of Shareholders approved the date of May 30, 2024 as the
date of distribution of the free shares.
44
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
36.
APPROVAL OF FINANCIAL STATEMENTS
These financial statements were endorsed by the Board of Directors on March 22, 2024.
Răzvan Popescu
Chief Executive Officer
Gabriela Trânbițaș
Chief Financial Officer
45
No. 12399/22.03.2024
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,
RĂZVAN POPESCU as Chief Executive Officer and
GABRIELA TRÂNBIȚAȘ as Chief Financial Officer,
hereby confirm that according to our knowledge, the annual financial statements for the year
ended December 31, 2023, 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 Company is a going concern.
Chief Executive Officer,
Chief Financial Officer,
RĂZVAN POPESCU
GABRIELA TRÂNBIȚAȘ
Societatea Naţională
de Gaze Naturale
Romgaz S.A.
T: 004-0374 – 401020
F: 004-0269-846901
E: secretariat@romgaz.ro
551130, Mediaş
Piața C.I. Motaş, nr.4
Jud. Sibiu – România
Capital social: 385.422.400 lei
CIF: RO 14056826
Nr.ord.reg.com: J32/392/2001