Good afternoon, ladies and gentlemen, and welcome to the OMV Petrom Earnings Call. Today's presentation will last around 30 minutes and will be recorded. By now, you should have received the presentation by email. The slides and the speech are also available online on www.omvpetrom.com in the Investors section. These also include the cautionary statement regarding forward-looking statements. Now, let me hand over to Simona Cruțu, Manager of the Investor Relations and Stakeholder Engagement Department, who will moderate the event.
Good afternoon, ladies and gentlemen, and thank you for joining us. We'll have a presentation followed by a Q&A session. Christina Verchere, Chief Executive Officer, will provide the key highlights about the macroeconomic and regulatory environment, our first quarter operational results, as well as our sustainability performance. Alina Popa, Chief Financial Officer, will give you more details on our financial results and a brief outlook. Afterwards, they will be available to answer your questions. We recommend you to register for the Q&A session during the presentation by pressing star one one on your telephone keypad. You can also register during the Q&A session itself. I'm now handing over to Christina.
Good afternoon, ladies and gentlemen, and a warm welcome from my side. Thank you for joining our call. It is a real pleasure to present our performance for the first quarter of 2024. Please let me draw your attention to our legal disclaimer, which you can read in detail on slide two. Let me start by taking a look at the evolution of commodity prices in the first quarter of 2024. Brent price increased by 12% during the quarter to around $87 per barrel. This evolution was a result of concerns on the escalating conflict in the Middle East, bullish sentiment on revised demand expectation, and the materialization of OPEC Plus production cuts in the first quarter extended into the second quarter. Brent quotation averaged $83 per barrel for the first quarter, a 2% increase year-on-year.
OMV Petrom indicator refining margin reached $12.56 per barrel in the first quarter, 24% lower year-on-year, as a result of lower product spreads, mainly for diesel and gasoline. European spot gas prices declined, mainly driven by high gas storage levels and a mild winter in Europe. At an average of EUR 28 per MWh, the CEGH price was down by almost 50% year-on-year and almost 30% quarter-on-quarter. Gas prices on the Romanian centralized market had a similar trend, with day-ahead prices lower by 50% year-on-year to an average of EUR 27 per MWh. Baseload electricity prices in Romania decreased by 43% and by 24% quarter-on-quarter, to an average of EUR 74 per MWh.
The average CO₂ price decreased year-on-year by 32% to 59 EUR per ton, due to additional allowances available in the market in the context of REPowerEU plan. Moving to the Romanian macroeconomic environment, the latest available data shows that in the fourth quarter of 2023, GDP increased by 1.1% year-on-year. According to the European Commission's latest estimates from February 2024, GDP growth is expected to be 2.9%, while for 2025, it's forecasted to grow by 3.2%. Both figures are well above the estimates for the EU average of 0.9% in 2024 and 1.7% in 2025.
The consumer price index for the month of March 2024 versus March 2023 was 6.6%, on a downward trend compared to the spikes in January and February 2024. Looking at the Romanian energy sector, in the first quarter of 2024, the demand for all our products increased year-on-year based on our internal estimates. The demand for retail fuels increased in the first quarter by around 6% year-on-year, driven by mild weather, car park increase, and higher disposable income. The commercial demand increased by 3% year-on-year, supported by an increase in road construction activities as well as higher jet demand. Gas demand increased by around 6% year-on-year on higher gas to power consumption, as well as fertilizer restarts, partially offset by warmer weather.
Power demand was 2% higher year-on-year, while domestic power production slightly decreased, Romania being a net exporter of power in the first quarter. Power production from gas and solar had a significantly higher contribution to the generation mix. Coal, wind, and hydropower decreased, while nuclear power was stable year-on-year. It has been two years since the Romanian government implemented measures to address the high gas and power prices at that time. In March 2024, in the context of gas and power market prices returning to pre-crisis levels, the government took the first steps towards liberalizing the markets through Ordinance 32, applicable starting April 2024.
On the gas side, the ordinance reduced the cap price for gas sold to households and heat producers for households from 150 RON per megawatt hour to 120 RON per megawatt hour, applicable until the end of 2024. In addition, the regulated supply component was increased from 12 RON per megawatt hour as regular supplier and 13.5 RON per megawatt hour as supplier of last resort, to 15 RON per megawatt hour for both. And the gas price used for power production is no longer capped at 100 RON per megawatt hour. On the power side, the centralized mechanism for power acquisition became voluntary and applicable until year-end, while the price was lowered to 400 RON per megawatt hour for monthly allocations. The threshold for power overtaxation is also lowered to the same price level.
In addition, CO₂ costs for future deliveries are no longer recoverable. For both gas and power, the margin for trading activities in Romania was increased from 2% to 10%. The preliminary negative net impact of regulatory changes on OMV Petrom's financials for April to December this year is estimated at mid double-digit million EUR. Going forward, we will optimize our gas and power sales strategy considering the new regulatory environment. As mentioned before, we support free market principles with a competitive fiscal framework. In the first quarter of 2024, around 86% of our gas portfolio was subject to regulations, while the majority of our electricity sales in Romania were subject to some form of regulation or taxation.
On slide six, we present the key highlights for the quarter, when we had robust performance in the context of weaker market fundamentals compared to the first quarter of 2023. At RON 1.8 billion, our first quarter Clean CCS operating result was 16% lower year-on-year. This result is above our last five years average for a first quarter, and was supported by our integrated business model and recovering market demand across all our products. Our operating cash flow in the first quarter of 2024 reached RON 3 billion, 36% lower year-on-year. The Clean CCS return on average capital employed remained robust at 25 percentage points. In exploration production, the result reflects the lower gas prices and the declining hydrocarbon production over the period.
The result in refining and marketing reflected lower refining and marketing margins, and refinery utilization, as well as additional tax on revenues. In gas and power, the result in the first quarter of the last year reflected excellent gas storage margins, which did not materialize again in this quarter. During the first quarter, we have further focused on delivering on our three strategic directions. In our strategic pillar, Grow Regional Gas, our Neptun Deep project is progressing as planned. We are also making significant progress in our strategic pillar, Transition to Low and Zero Carbon. We received clearance from the Romanian authorities for our announced renewable power and e-mobility M&A transactions with Renovatio.
In February, we announced the signing of the financing contracts through the National Recovery and Resilience Plan for two green hydrogen production projects at Petrobrazi Refinery, with a total capacity of 55 megawatts. The total investment is estimated at EUR 150 million, with a maximum amount of EU funding of EUR 50 million. On alternative mobility, around 290 fast and ultra-fast charging points were installed by the end of March 2024. Our ambition is to reach around 1,000 fast and ultra-fast charging points by the end of 2024, including the charging points to be taken over after closing the Renovatio transaction. In the first quarter, we also received the green light from the Romanian authorities to proceed with the announced acquisition of the 50% stake in Respira Verde, the leading company in the collection of used cooking oil in Romania.
Thus, we are taking an important step to ensure access to a reliable source of raw materials to produce biofuels. On HSSE, the total recordable injury rate for the rolling period, April 2023 to March 2024, was 0.4. Moreover, we further continue our efforts to reduce greenhouse gas intensity with projects in all three business segments. Based on our preliminary data, the GHG intensity in the first quarter decreased year-on-year in all three divisions, reflecting our ongoing initiatives to reduce carbon emissions. On slide 7, I would like to present our operational performance, and I will start with exploration and production. Hydrocarbon production decreased by 4%, reflecting the natural decline in the main fields, partly offset by good results from new wells and workover jobs.
Production cost per barrel of oil equivalent increased year-on-year by 10% to $15.91, mainly due to higher personnel and service costs, as well as lower volumes available for sale, partly counterbalanced by lower costs for energy and materials. In refining and marketing, the refining utilization rate was 93%, reflecting short, unplanned plant outages and supply constraints. However, utilization was above the European average of around 80%. Total refined product sales volumes increased by 4% year-on-year, with retail sales up 7% year-on-year on the back of strong market demand. In gas and power, total gas sales volumes were 4% lower year-on-year, with higher sales to end users and Brazi power plant offtake, while volumes sold to wholesalers were lower.
The Brazi power plant generated a record high net electric output for a first quarter, reaching 1.8 TWh, covering a 10% share in Romania's generation mix. Moving now to slide 8. Total CapEx in the first quarter of 2024 slightly increased year-on-year to RON 972 million. In exploration production, we increased investments in the Neptun Deep project, which entered the execution phase. Moreover, we finalized the drilling of 7 new wells and sidetracks, and we performed around 140 workover jobs. In refining and marketing, around RON 155 million of investments were mostly dedicated to the refining business for major projects such as the new aromatic complex, sulfur acid gas treatment plant, and the new SAF HVO unit.
In the full year 2024, we maintain our guidance provided in February of six point five billion RON organic CapEx, a 38% increase compared to last year. There will also be CapEx associated with the closing of our M&A transactions of low and zero carbon projects that would bring total CapEx to around eight billion RON. Yesterday, we published our sustainability report for 2023, and I'm happy to share with you our progress in terms of sustainability. Our sustainability framework is built around three pillars: the environment, social, and government, with a clear commitment to run responsible operations, foster people and communities, and leverage innovation and digitalization. On our journey to reach net zero operations by 2050, we aim for a 30% reduction in the carbon emissions from our operations by 2030 versus 2019.
Last year, we decreased our Scope 1 and 2 carbon intensity by 11% versus the 2019 baseline. In addition, we reduced our methane emissions intensity by 72%, progressing towards our target of less than 0.2% by 2030. We remain extremely proud of our social contribution. Last year, more than EUR 40 million went into projects tailored to supporting education, focusing on environmental protection and improving the healthcare system, including the projects supported by the OMV Petrom Foundation. The remuneration policy for the executive board members places a strong emphasis on sustainability performance, including ESG-related key performance indicators. I want to highlight that our efforts to increase performance and disclosure in terms of ESG were recognized by some of the biggest and most credible ESG rating agencies globally.
In 2023, we maintained the scores received from ESG rating agencies, and we were included for the first time in the FTSE4Good Index. OMV Petrom was also included in the Sustainalytics top-rated ESG companies list and maintained silver supplier status with EcoVadis. On a strategic level, we'll be providing an update on our 2030 strategy execution in a detailed, dedicated webcast on the nineteenth of June. Please let me now hand over to Lina for more details on the financial results of the first quarter of 2024.
Thank you, Christina, and good afternoon also from my side. I will continue the presentation with slide 11, starting with some highlights on the income statement, with focus on the developments of the first quarter of 2024. Sales decreased by 10% year-on-year, impacted by lower prices for natural gas and electricity, as well as lower gas sales volumes. This was partly offset by higher sales volumes of electricity and refined products. Clean operating results in exploration and production stood at RON 0.7 billion, lower than the RON 1 billion in the first quarter of 2023. This was driven by the lower gas prices, lower sales volumes, higher depreciation and impairments, as well as increased production costs, partly offset by lower E&P taxation.
Clean CCS operating results in refining and marketing reached RON 484 million, 21% lower year-on-year, mainly due to lower refining and marketing margins, as well as additional tax on revenues. Clean operating results in gas and power was RON 433 million, 40% lower than the result recorded in the first quarter of last year, which was achieved in a different context, supported by the higher market prices and excellent storage margins. The clean consolidation line stood at RON 151 million in the first quarter of 2024, mainly as a result of gas extraction from storage. Consequently, the group Clean CCS operating result decreased by 16% year-on-year to RON 1.8 billion. For the first quarter of 2024, we recorded inventory holding gains of RON 23 million, mainly reflecting the increase of crude prices over the quarter.
For comparison, in the first quarter of 2023, we recorded inventory holding losses of RON 122 million. For the first quarter of 2024, we also recorded net special charges of RON 193 million, compared to net special charges of RON 356 million recorded in the first quarter of 2023, in both quarters, mainly driven by the net temporary effects from forward contracts for power and CO2. The Clean CCS net income attributable to stockholders decreased by 18% year-on-year to RON 1.5 billion. Let me go on to slide 12, which shows the major building blocks for the development of the Clean CCS operating result. I will start with exploration and production.
The market effect deviation of RON 48 million reflects the increase in oil price and the negative effect of lower gas prices, compensated by the positive effect of lower EMP taxes. For gas, the taxes paid in the first quarter of 2024 reflected higher quantities used in Brazi Power Plant, which are exempted from overtaxation. The operational effects had a negative deviation year-on-year, mainly due to lower hydrocarbon sales, higher depreciation and impairment, and higher production costs. In downstream, the negative market effect in refining and marketing reflects the lower refining margin driven by the lower product spreads. Operational effects were positive due to higher sales volumes and an improved performance for the non-fuel business. In gas and power, the gas business has a good contribution, even if lower compared to last year first quarter, which benefited from higher market prices and excellent storage margins.
The decline in market prices impacted realized margins, especially on transactions concluded outside Romania. The strong power business result was built on excellent Brazi Power Plant production, a record high level for a first quarter. In addition, higher margins from the ancillary services and balancing markets were achieved, while margins from transactions concluded outside Romania were lower. The 5% tax on revenue introduced starting January was in total amount of around RON 54 million, and the effect made it the refining and marketing result. On slide 13, I would like to continue with the highlights regarding our cash flow statement. In the first quarter of 2024, the cash generated from operating activities before net working capital movements was flat year-on-year, at RON 2.9 billion.
Working capital changes led to cash inflow of RON 184 million in the first quarter of 2024, compared to a cash inflow of RON 1.7 billion in the first quarter of 2023, the latter being achieved in the context of steep decline in commodity prices. Consequently, the operating cash flow in the first quarter of 2024 amounted to RON 3 billion, 36% lower year-on-year. Our net payments for investing activities amounted to RON 1.1 billion, lower by 20% year-on-year. This reflects an increase of 9% year-on-year of cash outflows for capital expenditures, offset by inflows from investments in government bonds. The net cash position, including leases, decreased to RON 14.4 billion at the end of March 2024, versus RON 16.7 billion at the end of the first quarter of 2023.
Our record high-base dividend for the financial year of 2023, amounting to RON 2.6 billion, will be paid starting June 5, 2024. We also remind you that the solidarity contribution for the year 2023, in amount of RON 2.7 billion, will be paid in June. Let me conclude our presentation with the outlook on slide 14, and I will refer only to the guidance for this year, as commodity prices for 2025, 2026 are currently under review. We expect Brent oil price in 2024 to be around $85 per barrel, revised up from $80 per barrel previously. Our hydrocarbon production in 2024 is expected to be above 106,000 barrels of oil equivalent per day, considering no divestments.
As a reminder, we have the planned maintenance activities scheduled as usual in the second half of the year. We expect inflationary pressure on our cost to persist throughout the year, and we see the production cost at above $16 per barrel of oil equivalent for the year 2024. In refining and marketing, we currently estimate an average refining margins at around $10 per barrel in 2024, and refinery utilization rate is estimated to be above 95%. As Christina mentioned earlier, we maintain our CapEx guidance. Organic CapEx will ramp up in the second half of the year and is expected to be around RON 6.5 billion in 2024. Additional investments for the announced M&A transactions will bring total CapEx to around RON 8 billion.
In 2024, we expect a positive free cash flow before dividends, but lower year-on-year, driven by strong operational performance, offset to a large extent by significantly higher investments. We estimate demand for retail fuel products, gas, and power in Romania to be slightly above 2023. We expect both total refined product sales and retail fuel sales to be higher year-on-year. Our total gas sales volumes are envisaged to decrease, mainly on lower supply, both from equity and third parties. The net electrical output is expected to be higher year-on-year, reflecting a shorter shutdown of the Brazi Power Plant, which is planned to be for full capacity in April and half capacity in May. With this, I close our presentation, and thank you for your attention. We are now available for your questions.
Thank you, Alina. Let me remind you that if you want to ask a question, you need to press star one one on your telephone keypad. We'll pause for a moment to assemble the queue.
We will now take our first question from the line of Laura Simion from BRD GSG. Please go ahead. Your line is open.
Good afternoon. Thank you for the presentation. I have a couple of questions related to this quarter's results and then a more general one. So regarding the OpEx per barrel for this quarter is about 11% higher on a quarterly basis. I know the production was also a bit higher, but what else is behind this? Because I was expecting a production cost in line with the last quarter of 2023. And then about the additional tax on revenues, why it is calculated only for R&M, and where it is reflected in the PNL? And then-
Okay, please go ahead. If you have further questions, address them, all at once.
Okay. If you could give us more details about this pilot project of green hydrogen at Petrobrazi, and how do you see it developing further on? And about the investments you announced, the projects in renewables. If you have a number of how much new added production will you have from this project once they are all in production. And if this will imply also a change in strategy on your power business. Thank you.
Laura, thank you very much for your questions. I will take your first question, OpEx per barrel, and Alina will talk to you about taxes with regards to refining and marketing. You're right, we have had an 11% increase in our OpEx per barrel. For the first quarter, we're sitting around $15.91. And we do hold to the full year being just above the $16 range. The main driver at this point, Laura, is personnel costs. Obviously, as you may know, the inflation in wages has been quite high in Romania overall, and then general inflation across all parts of our sectors as well in that. So mainly inflation-driven is showing up in our personnel costs.
Be assured, we are working hard to look at opportunities to take our costs down, but also to take our production up as well.
Okay, I will continue, Laura, with the second question. So the new tax of 0.5% is applicable starting this year for two years. We calculate it on a quarterly basis for the entire Petrom S.A. The value for first quarter was approximately RON 54 million. For Petrom group, this number covers Petrom S.A. and also OMV Petrom Marketing. It does not affect only R&M, it affects all the segments. The reason for the biggest amount being in refining and marketing is triggered by the fact that refining and marketing has a portion from Petrom S.A. allocated to refining and marketing, but also the portion related to OMV Petrom Marketing. That's why approximately RON 35 million out of RON 54 million is going to R&M.
For the full year, we keep our initial estimation that we announced beginning of the year, that the impact will be less than RON 250 million for the full year, 2024.
Thank you.
With regards to the green hydrogen projects that we announced the financing of from the National Recovery and Resilience Plan, these are not pilot projects. These are projects to put 55 megawatts of green hydrogen capacity into the refinery. It has a few key aspects for the owner. Obviously, it will help to reduce the scope of CO₂ emissions from our products, particularly in the production of HVO and SAF. It will ensure compliance with the regulations that we have in place, and it will enable a lower cost of green hydrogen that we will need, that will replace it from a third-party supplier overall. So this is, these are the main attributes with regards to this project. On the investments in the renewable, yes, you are right.
We have quickly succeeded, surpassed our target that we had put out, in place for that. If I would just say one thing, Lara, we announced that on the nineteenth of June, we will have our 2030 strategy update, and maybe we hold there to give, to give more details at that point in time, so... And we look forward to you being able to join us at that call. Thank you.
Okay, thank you.
Thank you. Your next question comes from Ioana Andrei from Alpha Bank, Romania. Please go ahead.
Hello, and thank you for the presentation. I have a couple of questions. First, if you could tell us a little bit more on the Georgia exit decision, what does it mean for Petrom? And, do you have any update on Bulgaria offshore project? Second, I have a follow-up question regarding the new royalties quotas. Are the new higher quotas applicable to Petrom concessions or Neptun Deep? I know there has been a discussion on this, but I would like to know if you have any update on this. And, third, I would like to know what are the quotas set by ANRE for the gas sold at the regulated price, and if they remain in place, even if the market prices fall below RON 120 per megawatt.
What about the power market? If the market is no longer mandatory, does it actually mean that if prices fall below around RON 400, all volumes will be sold on the free market? Thank you.
Thank you, Anna. I will take your first two questions on Georgia and Bulgaria, and then you can get the next two questions. So yes, we have announced that following several unsuccessful attempts to actually get a partner for the exploration of the offshore block two in Georgia, we have decided to withdraw from the license, and we are under this process right now. It's quite common normally that you would have a partner in this kind of activity. It's a form of de-risking, and we've been unable to secure a partner, so we have chosen to exit from that activity.
Maybe on the flip side, when we come to Bulgaria, we have, you may have seen, that we have recently and are in the process of taking over operatorship of the Han Asparuh block, from TotalEnergies, and, we are in the process and pursuing continuing exploration activity in that license. So we continue to see, particularly on the, on the western part of the Black Sea, significant potential, and we are keen to, to pursue that.
Okay. I will continue now with the next question. So what's first, was related to the royalties, and, I can confirm that, in our view, the new royalty rate applied for new concessions, consequently for both our existing concessions on shore and offshore, but also for Neptune, we do not see this applicable. That's why we did not calculate the royalty for the Q1 with the higher rate. This has been confirmed by the Minister of Finance in the public statements as well. And otherwise, there is no other development here. With regards to ANRE, regulated prices, so, what we see is that for Q1 2024, the quantities for households and district heating customers are at approximately 2.9 TWh for Q1, versus 4.2 TWh in Q1 last year.
And also, similarly for full year 2024, we have an estimation of 7.9 TWh versus 10.4 TWh last year. So, these quantities are lower on the basis of lower production on one hand, but also on lower demand for households. I think your question was what, what if the quantities then actually will be lower than this? If the volumes to households and district heating companies will be actually lower, this will lead to higher volumes to be sold on GRP, yeah, on the gas release program. If we move similarly to MACE, that I can confirm your understanding that if the price will be below MACE price of 400 RON per megawatt, then we will basically sell everything on the free market.
Okay, thank you. But, this remains in place also for the gas side, if the prices are lower, actually you will sell it on the free market or-
Basically, it will be up to the customers, yeah. The customers can choose to go on the free market, but then we will have the GRP obligation, so we will be obliged to sell because in the GRP obligation, the quantities for households and district heating are being deducted, yeah? So, the regulator is trying to ensure that the market will have enough liquidity via this GRP mechanism. But what is happening, basically, what I mean, I think if we go a bit higher level, we see clear steps towards the regulation. We see markets, regulated markets, moving to the market prices, going down in line with market prices. We see shortening of the deadlines, yeah, to end of this year.
The Romanian market for gas and power is moving to a free market, started to move towards a free market with these changes.
Thank you. But for the GRP obligation, right now, do you have to sell it at a 5% discount versus market price? Or, what is the ...
There is a price formula according to the GRP. It's a formula given by the legislation, which takes into consideration the recent prices.
Okay. And GRP obligation is only for 2024, or it's... What, what is the information on GRP program right now?
To my knowledge, for 2024.
Okay. Thank you.
Welcome.
Thank you. Your next question comes from the line of Tamás Pletzer from Erste Group. Please go ahead.
Yes, good afternoon. I got 2 questions. First of all, regarding these regulatory changes you said during the presentation on slide 5, how, what is your estimate? How does it impact on your profitability of all these changes? And do you expect the ... I mean, you said that the market moves now to the free market again. Do you expect that the next round of changes after the first quarter 2025 would result that Romania would be again a fully liberalized market for both gas and power, or can we expect some further steps to that direction? That would be my first question. And my second question is regarding these acquisitions you announced in the renewable energy.
I think during the presentation you mentioned RON 1.5 billion was the CapEx for M&A. Is this two acquisitions - are these two acquisitions actually cover this RON 1.5 billion, or do you expect some more M&A to include into this figure? Thank you.
Thanks, Tamás , and thank you for joining us. Alina will cover the regulatory changes and your questions with regards to CapEx.
Hello, Tamas, from my side. So with regards to the, to the impact, it is not easy to isolate how much is the impact coming from changing the regulation, because what regulation does, it's really decreasing the regulated prices in line with the market. But nevertheless, trying to do that, we ended up with an estimation of these changes being approximately mid-double-digit million EUR. And the main impact is coming from non-recoverability of the CO2 for quantities to be sold on March contract. Because this is no longer recoverable, the CO2 no longer recoverable for the new quantities sold on March. That is the main impact there.
Okay. So I should, I should follow that two items. Okay.
Yeah. That's otherwise, with regards to the general comment, we see first steps towards the regulation. So, it's not yet a free market, but we see clear steps in that direction. With regards to the CapEx for acquisitions, indeed, we have an estimation of RON 1.5 billion CapEx for M&A. But what is important is to understand this is especially the one announced beginning of January, it's a 50/50 percent partnership. It's which means it's a non-consolidated subsidiary. And also we mentioned at that time that this will take also external financing. So the CapEx overall for the project is significantly higher, as announced at that time, but the impact on our CapEx is just a 50% share of the equity portion of that company.
So, that's the value, and that's mainly the 1.5 is related to this, what we announced already. There is a little bit of contingency for other potential things, but most of it is for what we have announced.
Sorry, what is this JV exactly? What of the two you mentioned?
We have announced the beginning of January the partnership with Renovatio.
Okay.
Yeah. This is early January.
Okay, so that's-
I think third of January is the press release. You can search for it.
Mm-hmm. So this is the one which takes most of the CapEx, although you said that 50% of the equity is covered from your CapEx?
Yes. Mm-hmm.
Oh, okay. Thanks, thanks so much.
Welcome.
Let me remind you that if you want to ask a question, you need to press star one one on your telephone keypad.
Thank you. Your next question comes from the line of Oleg Galbur from Raiffeisen Bank International. Please go ahead.
Yes, good afternoon, and thank you for the presentation. Two questions, if I may. The first one refers to your guidance for the oil and gas production. Looking at the first quarter development, the 6% decline this year seems rather cautious and also implies sharp decreases in the coming quarters. So could you help us understand what is the driver behind this 6% decline that you guide for the full year? Is it related to some maintenance works? And if yes, when do you expect them to implement, et cetera? Also, a split on the expected decline by oil and gas would be very helpful. Secondly, could you explain why the windfall tax paid in first quarter increased in comparison to the fourth quarter?
I was having difficulties in reconciling the number, especially when taking into consideration the lower gas prices in the first quarter of this year, and also according to my calculation, the volume sold to non-regulated consumers went down. So a bit more color would be very helpful here as well. Thank you.
Thanks, Oleg, for your questions. Could you just repeat the start of your second question? We just, the line wasn't so clear.
Okay. I was asking about the windfall tax paid in the first quarter, which went up quarter-on-quarter, despite the fact that gas prices were lower, and also according to my calculation, the volume sold to non-regulated consumers went down quarter-on-quarter.
Thank you. I will take your first question on production. So yes, in the first quarter, we had a good production performance, actually better than expected, with just a -4% decline year-on-year. I think it was pretty even between oil and gas in the first quarter. And yes, at this point in time, absolutely, we hold to our expectation to be above 106,000 barrels of oil equivalent a day for the full year. The thing I would just point out that you're absolutely right, Oleg, it is in the second half of the year that we have the maintenance activity that's occurred, and you saw that actually the same as last year as well.
In the second half of the year, we have planned maintenance. So we would expect a higher decline rate in the second half of the year. But yes, it was a good strong start to the year.
Oleg, I go to the second question. Indeed, the windfall tax is lower than last year and not higher than last year. So I do not know where you saw that, but it is lower as we and also working full capacity, and also we had regulated quantities. So we have lower, also influenced by the prices as well. We have lower windfall tax for gas.
I was comparing to the fourth quarter, to the last quarter of 2023, not year-over-year comparison.
Okay. By comparison with last quarter, it was... Yeah, indeed, that was slightly increased. Yeah, slight increase or not that, not that significantly increased. With, I will have to look up what was the main reason for that.
Okay. But basically, there was no change in the regulation, probably only due to some-
There was no change in the regulation. No, no, no.
Okay. Okay. Maybe probably it was, it was driven by, by quantities sold to non-regulated consumers. That would be my assumption.
Yes, you are right. That can be the only one. Yes.
Yeah. Christina, just to come back to the first question, would you be able to provide a split by oil and gas of the expected decline for the full year?
We expect gas to be a bit more than oil, but let us, let us come back to you on that one, yeah?
All right. Thank you.
If there are no more questions, I would like to thank you again for taking part in our conference call. For further information, please do not hesitate to contact the investor relations team. Until our next call, we wish you all the best. Thank you.
That concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.