Petrom, a benchmark for the price of Romgaz

• Niţă: "It is hard to tell whether we could have gotten a higher price in the IPO of Romgaz"

The IPO of Romgaz has split the Romanian stock market down the middle. An important part of the market community considers the IPO a success. The other party criticizes the authorities for choosing the dual listing on the Bucharest Stock Exchange and the London Stock Exchange. Critics are saying that the IPO of the natural gas producer showed that 5-600 million Euros could have been raised easily from the domestic stock market alone and there was no need to issue GDRs (global depository receipts) in London.

When asked yesterday on how what his response was to the criticisms brought to this IPO, the delegate minister for energy, Constantin Niţă, said: "No one has the ability to foresee exactly how an IPO will go. The high degree of oversubscription took us by surprise. We knew there was a general interest in Romgaz, but nobody was able to predict it would be that high. It is hard to say now whether the oversubscription was caused by the good price in the IPO or if we could have obtained a higher price. We started off from the comparison with other companies in the market. Or, the other major natural gas maker is Petrom. It was hard to believe that we could have gone with a higher price than the quotation of Petrom".

The strategy of the authorities was to use a dual listing in order to attract major players from the international markets to the Romanian stock market.

In the opinion of the officials, the BSE stands to gain from this operation, and Constantin Niţă wants Electrica and Hidroelectrica to conduct IPOs that follow the Romgaz model next year. The difference will be that those operations will involve share capital increases, and the money will go to the companies for investments.

"Romanian energy companies in the energy sector are no less competitive than other companies in the region or in Europe. We have the necessary resources and we have specialists. I do not see why we would not be competing with another foreign company", Constantin Niţă said recently, who stressed that his strategy is to have the energy and gas producers become regional players.

• Lukoil and Romgaz will drill two exploration wells in the Black Sea

Next year, Lukoil and Romgaz will drill two exploration wells in the oil perimeters Trident and Rapsodia in the Black Sea, Radu Gheorghe, head of the Business Development Department of Romgaz, said yesterday in a conference. He emphasized the fact that the Black Sea has an exceptional potential when it comes to resources and that Romgaz has 10% of the Rapsodia and Trident leases operated by Lukoil. So far, 3D seismic projections were done, and the data is in the process of being analyzed.

Radu Gheorghe added that Romgaz will join companies ExxonMobil and Petrom in the perimeter they have acquired from Sterling Resources in the Black Sea only if it gets proven that its has gas deposits that can be exploited commercially.

Romgaz has not made it its plan to exploit natural shale gas, Radu Gheorghe said yesterday. Such a development strategy must be weighed carefully by the company, he said, and he emphasized the fact that for now, Romgaz has many plans and investments in the exploration of conventional natural gas.

The Romgaz official emphasized the fact that the exploration phase for shale gas takes many years and that there is a risk that those reserves would prove impossible to exploit profitably.