Lower E.ON Gaz revenues due to warm winter

Natural gas distributor E.ON Gaz Romania, part of the German E.ON Ruhrgas, will lower its estimates for 2007 because of warm weather at the beginning of this year.  An initial increase of 20 percent was forecast.

E.ON Gaz posted net profit worth €24.7 million last year, compared to €34 million in losses registered in 2005. However, majority shareholders said the result is “unsatisfactory”, according to company Manager, Achim Saul. He blamed high losses of gas, low sales due to warm winter, the changing market, as well as a large number of outstanding debts to the gas distributor.

Saul said that losses are higher than the net result, but did not provide a figure for the losses. However, he added that outstanding debts amount to some €400 million. About €20 million are debts that will be impossible to recover, he said.

E.ON Ruhrgas bought 51 percent of the state-owned gas supplier and distributor Distrigaz Nord in 2005, for €303 million. The Authority for State Assets Recovery (AVAS) owns the remaining 49 percent. The company was renamed E.ON Gaz Romania after the purchase.

Gas distribution posted losses in 2005 because of a restructuring program. Last year, the company made investments worth €23.5 million to replace and modernize gas networks. This year’s investment will be twice as high, according to E.ON Gaz officials, while total investments will exceed €300 million by 2012. The company distributes gas to 14 counties in northern Romania.

Since 2005, the company lost some 40-50 corporate clients, some of which eventually returned to E.ON Gaz. Saul said they decided to buy gas directly from the producers, because of lower prices, and those who came back have signed new contracts because of the “quality services” provided by E.ON Gaz.

On the gas supply market, E.ON Gaz Romania has an 8.33 percent market share, according to National Authority for Natural Gas (ANRGN) gas regulator. E.ON Gaz’s main competitors are Romgaz, with 33 percent, Petrom with 24.3 percent, Distrigaz Sud with 14.36 percent and Interagro, with 10.9 percent.