The company announced yesterday it will invest €500 million in an 860 MW capacity power plant, located within the Petrobrazi refinery complex. Petrom’s investment is the largest project announced by a private investor, and was approved by the company’s surveillance committee.
With this investment, Petrom is not only attacking the top five electricity producers in Romania, but may also become the largest Romanian electricity producer using natural gas as a raw material. According to company officials, a fifth of the plant’s capacity will be used for its own consumption with the rest being distributed to the national power grid. Electricity market analysts say that the drop in Petrom’s power production costs will only be a mere side effect of this investment.
“At an average wholesale price of €50/MWh in 2010, the Petrom
power station will post yearly revenues of €200-250 million,” said independent expert Jean Constantinescu. He
added that, at a yield threshold of 15 percent, Petrom’s investment amortization will take 12 years at most. “Besides, this is a minimum risk investment in terms of competition,” he said.
Werner Schinhan, Deputy CEO of Petrom, said the investment is part of the development strategy approved by majority shareholder OMV. “The electricity market is experiencing significant structural changes, especially in countries where production capacities are old and highly polluting, needing to be replaced by ones with much lower carbon emissions,” Shinhan added. He also pointed out that, in this context, the electricity market represents an extraordinary opportunity for Petrom. A few important names dominate this market: Alstom, Siemens, General Electric and Itochu.
