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 Q4 operational performance, and the 2030 strategy execution. Alina Popa, Chief Financial Officer, will give you more details on our financial performance and the brief outlook. Afterwards, all executive board members 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 fourth quarter of 2023. Please let me 1st 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 fourth quarter of 2023. Brent price decreased by 3% versus the previous quarter, and by 5% year-on-year, an average $84 per barrel. This evolution was the result of concerns on suffering global demand and rising crude inventories, partly counterbalanced by concerns on the escalating conflict in the Middle East.
OMV Petrom indicator refining margin reached $10.79 per barrel in the fourth quarter, 43% lower year-on-year as a result of lower product spreads, mainly for diesel, gasoline, and jet. European spot gas prices declined year-on-year, reflecting the weaker demand and the high storage levels. At an average of EUR 40 per MWh, the CEGH price was down by 60% from the very high levels in the fourth quarter of 2022, but was up by 17% quarter-on-quarter. Gas prices on the Romanian centralized market had a similar trend, with day-ahead prices lower by 59% year-on-year to an average of EUR 38 per MWh.
Base load electricity prices in Romania, in euro terms, decreased by 57% from the high levels recorded in the fourth quarter of 2022, and by 4% quarter-on-quarter to an average of 96 EUR per MWh. The average CO2 price decreased year-on-year by 2% to 76 EUR. Moving to the Romanian macroeconomic environment, the latest available data shows that in the third quarter of 2023, GDP increased by 2.9% year-on-year. According to the European Commission's latest estimates from November 2023, GDP growth is expected to be 2.2%, while for 2024, the GDP is forecasted to grow by 3.1%. Both figures are well above the estimates for the EU average of 0.6% in 2023, and 1.3% in 2024.
The consumer price index for the month of December 2023, 2023 versus December 2022, was 6.6% on a downward trend. Looking at the Romanian energy sector in the fourth quarter of 2023, the demand for all our products increased year-on-year based on our internal estimates. The demand for retail fuels increased in the fourth quarter by around 3% year-on-year, driven by lower prices, while the commercial market demand increased by 2% year-on-year, supported by the expansion of road construction activities. Gas demand increased by 8% year-on-year, reflecting the increases in industrial offtake, as well as higher gas to power consumption. Power demand was marginally higher year-on-year, while domestic power production increased by 2%, Romania being a net exporter of power in the fourth quarter. Power production from renewables, gas and hydro had a significantly higher contribution to the generation mix.
Nuclear power slightly decreased, while coal-based power significantly decreased year-over-year. It has been almost two years since the Romanian government implemented measures to address the high gas and power prices, regulations that will be in place until March 2025. In the fourth quarter of 2023, around 80% of our gas portfolio was subject to regulations, while all our electricity sales in Romania were subject to some form of regulation or taxation. As announced in our previous call in October last year, a set of fiscal measures were adopted in order to reduce the high budget deficit. The main provision impacting our company was an additional tax of 0.5% on revenues for companies operating in the oil and gas sector, applicable in 2024 and 2025.
We estimate the yearly impact on OMV Petrom financials to be less than RON 250 million for the next two years and lower thereafter. However, the exact fiscal burden can only be assessed after authorities provide clarifications regarding this legislation. Also, an emergency ordinance introducing higher royalty rates for oil and gas was adopted by the Romanian government in October last year. Based on our current understanding, these new rates apply prospectively to future concession agreements, thus, we expect no impact in the short term. Romania already has one of the highest effective tax rates for hydrocarbon production in Europe. As previously mentioned, we need a stable and competitive fiscal regulatory framework in order to implement our future investment plans.
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 fourth quarter of 2022. At RON 2.2 billion, our fourth quarter Clean CCS operating result was 9% higher year-on-year. For the full year, the Clean CCS operating result was almost RON 8.5 billion, 30% down year-on-year, still the 2nd best performance in our history. Our operating cash flow in the fourth quarter of 2023 increased by 15% year-on-year and reached RON 2 billion, supported by an improved working capital position. The Clean CCS return on average capital employed remains robust at 27 percentage points. In exploration production, the result reflects lower oil and gas prices and lower hydrocarbon production over the period.
The result in refining and marketing reflects lower refining margin and refining utilization, partly offset by higher sales channel margins. In gas and power, the power activity was particularly strong, with the highest quarterly net electrical output in the history of the Brașov Power Plant. Based on the preliminary results for 2023, the executive board proposes for the 2023 financial year, a base dividend per share of RON 0.0413 , 10% higher year-on-year. We also intend to announce a special dividend later this year. Alina will provide more details on this. During the fourth quarter, we have further focused on delivering on our three strategic pillars, and I will go into more details on the progress made in 2023 later on. On HSSE, the total recordable injury rate for the year 2023 was 0.5.
Moreover, we further continue our efforts to reduce greenhouse gas intensity with projects in all three business segments. Our preliminary estimate in terms of GHG intensity points to around 11% decrease versus the base year of 2019. On Slide seven, I would like to present our operational performance, and I will start with exploration production. Hydrocarbon production came in above expectations and decreased by almost 7%, reflecting the natural decline in the main fields and the effect of planned maintenance activities, partly offset by the contribution of new wells and workovers. For the full year 2023, production was 113,000 barrels of oil equivalent per day, slightly less than a 5% decline year-on-year and above expectations.
Production cost per barrel of oil equivalent increased year-on-year by 33% to $17.85, mainly due to higher services and materials costs, lower volumes available for sale, and unfavorable Forex. In refining and marketing, the refining utilization rate was 95%, reflecting a planned slowdown of the Petrobrazi refinery in December. Total refined product sales volumes slightly increased year-on-year, with retail sales broadly flat and non-retail sales volumes 3% higher year-on-year. In gas and power, total gas sales volumes were stable year-on-year, with higher end users and Brașov power plant offtake offset by reduced volumes to wholesalers. For the full year, our total gas sales volumes were 1% higher year-on-year, in the context of a 6% decrease in overall Romanian gas consumption. The Brașov Power Plant generated a new record-high net electrical output, reaching 1.7 TWh.
This was 16% up year-on-year and represented 12% of Romanian generation mix, the highest quarterly contribution to the national power security of supply since the start of operations in 2012. Moving now to Slide eight, total CapEx increased 32% year-on-year to RON 4.7 billion in 2023. In exploration production, we finalized the drilling of 45 new wells and sidetracks, including three exploration wells, and we performed almost 500 workover jobs. Moreover, we increased investments in Neptun Deep after taking the final investment decision in June. In refining and marketing, almost RON 2 billion of investments were mostly dedicated to the major plant turnaround at our Petrobrazi refinery, coke drum replacement, as well as ongoing projects such as a new crude oil tank and new aromatic complex.
In gas and power, most investments were allocated for the planned maintenance at the Brașov Power Plant, the longest since the plant started operations in 2012. For 2024, we plan to further increase our organic CapEx to RON 6.5 billion. In exploration production, we expect investments of RON 4.7 billion, of which around half are to be directed to the Neptun Deep project. We also plan to drill around 40 new wells and sidetracks and perform up to 500 workovers. In refining and marketing, the CapEx will be directed to ongoing projects, such as the new aromatic unit in Petrobrazi, but also to new projects, such as the sustainable aviation fuel and hydrotreated vegetable oil production unit. 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 8 billion RON. Ladies and gentlemen, 2023 was a turning point in our company's transformation journey, in line with our Strategy 2030, launched at the end of 2021. In our strategic pillar, Grow Regional Gas, we made significant progress on our Neptun Deep project. After taking the final investment decision in June, we signed a EUR 1.6 billion contract with Saipem for the offshore facilities. In December, we announced the signing of an agreement for the Transocean Barents semi-submersible drilling rig for a minimum period of one and a half years at an estimated value of EUR 325 million. Moreover, a contract of approximately EUR 140 million was signed with Halliburton for integrated drilling services.
More than 80% of the execution agreements have been awarded, and we are focusing on finalizing awarding of the main contracts, permitting activities, the start of construction, and preparations to spud the first well in 2025. Regarding our strategic pillar transition to low and zero carbon, we made significant progress on many fronts, and particularly in electrification. We have been busy building our renewable power portfolio. Firstly, following the signing of the financing contracts to build four photovoltaic parks of 450 MW with CE Oltenia, the public tendering of the EPCC contract was launched. Secondly, the transaction to purchase 710 MW of installed capacity of photovoltaic power projects in Teleorman County in Romania is expected to be completed this year, and the parks to become operational 18-24 months later.
And most recently, at the beginning of 2024, we announced a new partnership to acquire a 50% stake in approximately 1 GW of capacity of renewable projects in Romania, out of which 950 MW is of wind and 50 MW of photovoltaic capacity. The projects will be further developed, built, and operated in partnership with Renovatio. Through this newly formed partnership, we plan gross investments of approximately EUR 1.3 billion, including project financing by 2027. On alternative mobility, around 270 fast and ultra-fast charging points were installed by the end of 2023. We also accessed an EU grant for further expanding our EV charging network, thus contributing to the creation of corridor fast charging stations in our existing retail network.
The total investment in Romania for this project is estimated at approximately EUR 32 million, of which approximately EUR 12 million will be provided from EU funds. As announced at the beginning of 2024, we will fully acquire Renovatio Asset Management, the owner of Romania's leading EV charging network, with more than 400 operational EV charging points in Romania, and plans to increase to approximately 650 by 2026. Thus, by the end of 2024, our ambition is to reach around 1,000 fast and ultra-fast charging points, accelerating our Strategy 2030 target. In addition, we are also delivering on our commitment to offer attractive shareholder returns. In 2023, we paid record high dividends in total amount of RON 5.1 billion.
This translated into a total dividend yield of almost 20%, and together with the share price appreciation of 37% over the year, led to a total shareholder return of 56%. Before handing over to Alina, please let me share with you that we plan to provide an update of our strategy execution later this year.
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 development of the fourth quarter of 2023. Sales decreased by 40% year-on-year, following lower crude prices and lower sales of electricity and natural gas. Clean operating results in exploration and production stood at RON 0.9 billion, lower than RON 1.1 billion in the fourth quarter of 2022. This was driven by lower oil and gas prices, lower sales volumes, higher production costs, and unfavorable FX effects due to weaker U.S. dollar versus RON, partly offset by lower E&P taxation. Clean CCS operating results in refining margins reached RON 729 million, 15% lower year-on-year, mainly due to lower refining margins and refining utilization.
Clean operating results in gas and power was 514 million RON in the context of steep decrease of gas and power prices. This result was still higher than 132 million RON in the fourth quarter of 2022, as the previous year was affected by a provision for risks related to gas and power taxation. The clean consolidation line stood at 122 million RON in the fourth quarter of 2023, as a result of lower margins and quantities of crude oil and oil products in stock. Consequently, the group Clean CCS operating results increased by 9% year-on-year to 2.2 billion RON. For the fourth quarter of 2023, we recorded inventory holding losses of 32 million RON, mainly reflecting the decrease of crude prices over the quarter.
For comparison, in the first quarter of 2022, we recorded inventory holding losses of RON 126 million. For the fourth quarter of 2023, we also recorded net special charges of RON 250 million, driven mainly by the net temporary effects from forward power contracts. For comparison, in the first quarter of 2022, the net special charges of RON 823 million were related mainly to net impairment in exploration and production, partially offset by net temporary gains from forward power contracts in the gas and power segment. The Clean CCS net income attributable to stockholders increased by 11% year-on-year to RON 2.1 billion.
The fourth quarter of 2023 reflected also an impact from solidarity contribution of RON 375 million, presented as a separate line in the consolidated income statement below the operating results line. This contribution is treated as special item in the computation of the Clean CCS net income. The reported net income attributable to stockholders increased by 29% 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 three CCS operating results. I will start with exploration and production. The market effect deviation of RON 143 million reflects the negative effect of lower oil and gas prices, more than compensated by the positive effect of lower E&P taxes.
For gas, the taxes paid in the fourth quarter of 2023 reflected higher regulated sales quantities, which are exempted from overtaxation. The operational effects had a negative deviation year-on-year, mainly due to lower hydrocarbon sales and higher production costs. In downstream, the negative market effect in refining and marketing reflects the lower refining margin, driven by lower product sales. Operational effects were positive due to higher retail and commercial margins and an improved performance in the non-fuel business margins. In gas and power, the gas business had a good contribution, even if lower year-on-year, with stable sales volume. The steeply declining prices impacted the realized margins, both on equity and third-party gas, especially on transactions outside Romania. The excellent power business results reflected the record high net electrical output and transactions concluded outside Romania.
We have to mention that the results recorded in the fourth quarter of 2022 was also affected by a provision for risk related to sector-specific taxation. On slide 13, I would like to continue with the highlights regarding our cash flow statement. In the fourth quarter of 2022, the operating cash flow was RON 2 billion, 15% higher year-on-year, supported by a strong management of working capital. Working capital changes led to a cash outflow of RON 279 million, compared to a cash outflow of RON 904 million in the fourth quarter of 2022. Our net payments for investing activities amounted to RON 1.1 billion, higher by 24% year-on-year. This was due to increased capital expenditures, including advanced payments for Neptun Deep projects, following FID, and also investment in government bonds and treasury bills.
Last year, we also distributed special dividends for the 2nd year in a row, amounting to RON 2.8 billion. Special dividends have been paid starting October 19, 2023. The net cash position, including these, decreased to RON 12.6 billion at the end of 2023, versus RON 13.5 billion at the end of 2022. Moving now to slide 14. Back in December 2021, we reinforced our dividend policy with a stronger commitment by announcing our intention to increase our base dividend per share by 5%-10% per annum over the strategy 2030 cycle. We, the OMV Petrom Executive Board, are committed to deliver a competitive shareholder return also by paying an attractive dividend. Consequently, based on 2023 preliminary results, we are now proposing a base dividend per share of RON 0.0413.
For the 3rd time in a row, 10% higher year-on-year, being again at the high end of the range stated in our dividend guidance. We believe that this proposal is competitive among regional peers from the perspective of a base dividend yield, which stands at 7.2%. The proposed dividend is subject to the approval of the supervisory board and general meeting of shareholders, which will take place in April. In addition, and again, for the third year in a row, we announced this morning that we are planning to propose another special dividend this year. Let me conclude our presentation with the outlook on slide 15. We expect Brent oil price in 2024 to be around $80 per barrel. For the years 2025 and 2026, we expect an average oil price between $70 and $75 per barrel.
Our hydrocarbon production in 2024 is expected to be above 106,000 barrels of oil equivalent per day, considering no divestment. For the years 2025, 2026, our hydrocarbon production is estimated to be around 100,000 barrels of oil equivalent per day, excluding divestment. We expect inflationary pressure on our costs to persist throughout the year, and we see the production costs at above $16 per barrel of oil equivalent for the year 2024, and below $16 per barrel on average for 2025 and 2026, on the basis of cost and portfolio optimization programs started. In refining and marketing, we currently estimate an average refining margin at around $10 per barrel in 2024, and a similar level also for 2025 and 2026 on average.
The refinery utilization rate is estimated to be above 95% in 2024, as well as in 2025 and 2026. As Christina mentioned earlier, 2024 organic CapEx is expected to be around RON 6.5 billion in 2024. Of this amount, approximately RON 4.7 billion will be dedicated to E&P, thereof, around half for Neptun Deep. Approximately RON 1.4 billion will go to refining and marketing, and about RON 0.3 billion to gas and power. Additional investments for the announced low and zero carbon M&A transactions will bring total CapEx to around RON 8 billion. For 2025 and 2026, we expect a similar CapEx of RON 8 billion on average. As we prepare to enter the most intensive investment period in our company history, we reiterate that investments require predictable and stable regulatory and fiscal environment.
In 2024, we expect a marginally positive free cash flow before dividends, driven by strong operational performance, offset to a large extent by significantly higher investment. We estimate demand for retail fuel products, gas and power in Romania to be slightly above 2023. We expect 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 the shorter planned power plant outage compared to 2023. To summarize, year 2024 is expected to be a year of project execution and significant higher capital expenditure, being supported by our strong operational performance. 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 kindly ask you to limit to three questions per participant. Once again, to ask a question, please press star one one. We'll pause for a moment to assemble the queue.
We will now take the first question from Oleg Galbur from Raiffeisen Bank International. Please go ahead.
Yes, good afternoon. I hope you can hear me well.
Yes, we hear you very well. Hi, Oleg.
Yes. Hi, hello. Thank you for the presentation and for the opportunity to ask questions. I have several. The first one I have is about the actual last year's CapEx. Could you please help us understand where is the difference between the initial guidance of RON 6 billion and the realized CapEx of RON 4.7 billion coming from? Were there some projects, for example, which were moved to 2024, or there are other reasons behind it? My second question is on the 2024 CapEx guidance. Could you please provide a split of the RON 1.5 billion CapEx allocated for M&A so that we can have a better understanding and know how to book it in our or record it in our financial models?
Lastly, on special dividend, I was hoping you can tell us when should we expect the announcement of the special dividend, and what are the key parameters which will determine its amount? Thank you.
Thank you very much. Alina, I think these look like good questions for you.
Thank you. Thank you, Oleg. I'm happy to take your questions, so I'll start with the first one. Indeed, last year, we are below last year guidance on CapEx in referring to 2023. And this is because we had in some delays in scheduling on our renewable project. You know, have a partnership with CE Oltenia. The financing agreement have been signed a bit later than planned, and then we, and moved on into the tendering, also taking a bit more time. So it seems like you signaled it. We are talking here about some movement from 2023 to 2024. Now, if we refer to 2024 guidance, indeed, we go now with a much higher CapEx.
So we have, if we include the inorganic part, 70% increase in CapEx versus previous year, which has a RON 1.5 billion for M&A. We cannot disclose more at this stage, and this is primarily in connection with the announced M&A transaction. That's all we can give around the CapEx guidance at this stage for 2024 M&A part. Moving to the third question on special dividend. So we did our calculation, and we have decided that, yes, we can go for the third year in a row with an increase of 10% on the base dividend. This is clearly driven by the strong operational performance, but also around a market environment and more clarity around our CapEx plans.
Therefore, looking at our balance sheet, looking also and considering that we know now much better, we have more than 80% of the contract size also for Neptune, so we have much more clarity around, CapEx as well. We consider that we are in a position to announce again special dividend this year in 2024. We did not decide when, that's why we, we are saying in 2024, so we don't have a decision when, exactly. With regards to the parameters, what we will do, we will look on, next, month, how the market environment will be and our performance in this market environment. And also we'll look at our peers. We are committed to deliver, competitive shareholder return, competitive dividend yield.
We'll look on what's going on on the market, and we hope we will be able to offer competitive overall dividend base plus special. I hope I answered your question.
Understood. Thank you very much.
We will take our next question from Tamás Pletser from Erste Group Research. Please go ahead.
Yes, thank you very much. Good afternoon. I got three questions. First of all, the current regulatory regime, do you see any chances that the current regulation of selling natural gas, electricity towards households may change before the original date, which is March 2025? I just thought because what I see now, that your profitability of selling natural gas, for example, towards households, is significantly better than, you know, selling this natural gas on the free market. So do you see any chances that the current regulatory regime may change before this date? That would be my first question. And my second question is, what are your target capacities in photovoltaic power generation and in wind energy based on your plans?
Finally, I didn't catch what you said, Alina, about this project, which CapEx slipped from 2023 to 2024. Could you just repeat that, please? Thank you.
Alina, do you want to just quickly wrap on that one? This is a CE Oltenia project. Yeah.
So, okay. [crosstalk]
Yes. With related to Oltenia, well, generally photovoltaic, renewable projects have been delayed, and the main one with Oltenia, that has been delayed from 2023 to 2024.
Okay.
Franck?
Yes. Good afternoon, Tamas. So to your first question on the regulatory, I mean, it's a good question, but I have to say, it doesn't depend on us what will change or we will follow the, the, the regulation. I think what we communicate to the authorities is, we should start to work on the, the after March 2025. We should start as between the industry and the, the regulator and the authorities, to start to think about how we could move to a liberalized market from March 2025. Now, there are some, yes, in the press, some article mentioning potential change before March 2025. I have to say, the, the market price today is not really below the cap price.
So if you think that the RON 150 per MWh, or 30 EUR per MWh, you are referring, I suppose, in your questions, is rather in line with the market price. So we are not expecting a change on the, on this cap. Potentially could be a change on the overall tariff for, for the household, but I- We don't see that at the moment. But let's see, we have to follow the regulation. Of course, we have to adapt on that. And on your second question around the capacity PV. So of course, it's we have to close some of the M&A that we have announced at the beginning of the year. So we sign, now, we have to close.
There is the 450 MW of CE Oltenia, which will be at 50/50 with our partner, CE Oltenia. We have the 710 MW in Teleorman, where we are expecting a closing also this year. And we have about 100 MW of other projects which are Petrom projects of PV. And we expect, if everything on the closing goes well, to already produce by the end of 2024, between 80 MW of PV already in operation. So that, that will be the an objective, but, you know, still a lot of closing to do this year. But will be an exciting year in terms of closing and passing FID on all these different projects.
Maybe just to add, a little bit to that. Obviously, as Frank said, him and his team have been very busy building a, building a strong portfolio. And we see that obviously this is acceleration, given what the market opportunities have provided us. With regards to your question on sort of targets on capacity, we're gonna provide an update on our strategy execution later in the year, and we'll touch on that then. If that's all right, Tamas. Thank you for your question.
Okay. Yeah. Thank you very much.
We will take our next question from Ioana Andrei from Alpha Bank Romania. Please go ahead.
Hello, and thank you for the presentation. I was wondering if you can tell us a little bit more on the regulated gas sales expected for 2024. Do you expect them to be maintained at similar levels with 2023? My second question, if you could please give us a little bit more on what to expect from the low and zero operations. Basically, what I was wondering, what are your expectations in terms of EBIT over the next years from this business line?
Thank you, Ioana. Franck will take your first question with regards to regulated gas sales in 2024.
Hi, Ioana, thank you for your question. In fact, we know the numbers quite soon. I think it's, you know, the regulator and Transgaz should confirm in February the final number. We are waiting for two things, in fact, the allocation to the regulated for the regulated market, but also the storage obligation for the- how we calculate the storage obligation for the different operators. So that's I think is two important. In term of forecast, I think we expect to be a bit slightly below than last year, mainly because there's still a lot of gas in storage. And the demand has been a bit below than last year. Now, let's see, it depend what the suppliers will request from the producer. But I would say slightly below what's our forecast.
Thank you.
When it comes to low and zero operations, this is, at the beginning, they will start with small impact, because of course, we need to build a portfolio, and also it's a lot of knowledge that we need to gain over the years. When it comes to the second part of the decade, we need to be indicated with our strategy, somewhere around 15% of our EBIT, coming from low and zero carbon. But at the beginning, in the first years, we do not expect something significant coming from that. Thank you.
Okay, thank you.
Thank you, Ioana.
Let me remind you that if you want to ask a question, you need to press star one one on your telephone keypad.
We will take our next question from Iuliana Ciopraga from Wood & Company. Please go ahead.
Hi, hi, good afternoon, and thank you for the presentation. Actually, I want a bit of clarifications regarding the CapEx and this EUR 1.5 billion for this year, and actually the reason why you increased CapEx for the following years. So this EUR 1.5 billion, I guess this is the EUR 350 million euro for Renovatio deal, and the portfolio of wind capacity. And then in the following years, and I guess that the EUR 1.5 billion include also the Teleorman, right, deal? And then going forward, can you provide some color why CapEx was raised as well? I think that's it.
Okay.
One more regarding peers. You're mentioning peers, that you will be looking at peers, what peers are doing when it comes to dividends. When you talk about peers, what are you, what are you referring to? Local peers, oil and gas players? Thank you.
Okay. Thanks. Alina, would you like-
Yes, yes. Thank you, Iuliana. So, referring to CapEx, so the M&A CapEx, I think was, was your question. So we, we set it first primarily to announce M&A deals. Basically, what we have announced is the Renovatio deal, and also we announced this, Teleorman transaction that, that we did. So now we don't provide a split of how much, but it, both of them will have some impact in 2024, that would bring this 1.5 together. This is the main part. I mean, there are other small things, but, most, most of it is coming from, from this one. And when it comes to peers, we talk about...
2025, 2026.
Oh, thank you.
So when it comes to 2025, 2026, and the level of CapEx of RON 8 billion, 2024, 2025, 2026, of course, in all these years, we have Neptun being in the most intensive investment period. If we refer to Neptun, also here of an indication, we estimate the cash out for Neptun, EUR 500 million-EUR 600 million every year in these three years. I mean, to have in mind, of course, most of it will be in CapEx. It could be some amount also in advances to be reflected from accounting perspective, but most of it will be in CapEx. So Neptun is an important part, and then all the efforts we do on energy transition, but also our traditional business will continue to attract investment as well.
Coming- What I was actually referring to was mainly the increase, right? I mean, you're guiding before towards the CapEx of somewhere around RON 7 billion in 2024, 2025. Now, actually, I was more asking about 2025, why, what, why you're increasing that from RON 7 billion to RON 8 billion?
Well, 2024, we guided together with them in around eight.
Mm-hmm, mm-hmm.
[audio distortion] We stay with around eight in 2025 and 2026 as well. Driven by combination of Neptun, energy transition, and traditional CapEx, which we have defined.
Thank you.
When it comes to the dividend, the peers for the dividend, what we look at, generally European oil and gas companies. On our slide 14 from the presentation, you have also the names. If you want to know exactly which company.
Thank you.
Thank you, Juliana.
We will take our next question from Oleg Galbur from Raiffeisen Bank International. Please go ahead.
Yes. Hello again. I have a follow-up question on your 2025, 2026 guidance, and specifically about your production guidance. If I look at the numbers, I understand that in both years or in this period, 2025, 2026, you expect a lower decline rate in comparison to 2024 and 2023, and I was wondering why is that? Thank you.
Thank you.
Yeah. Thank you for this question. Basically, we're looking on in increasing the activity in the workover. As well, there is an increase in the activity in the drilling as a result of the 3D seismic, which was shot in the previous years, which is increasing the prospectivities in the blocks which we are operating. And yes, he's not considering any divestment.
The number you guide does not include any new production coming on stream?
Sorry, say it again.
The numbers you guide does not-
No.
Include any new fields coming on stream?
No. Not no.
Okay. Because it's interesting that in a actually lower, or less favorable oil price environment that you guide for this year, you plan to increase the workovers in order to achieve a lower decline rate. That's... This is what I was trying to put into... These two developments I was trying to correlate, and that's why I asked. Thank you.
Thank you too.
I think what we would say is more geology driven-
Mm-hmm.
as opposed to price driven.
Okay, thank you.
If you have further questions, please, press star one one on your telephone keypad. If there are no more questions, I want to thank you again. Look, it's Iuliana. That's Iuliana has a follow-up. Please, Iuliana.
Contribution from E-Mobility and what this generates right now and what do you expect going forward?
Hi, Juliana. Could you maybe just repeat, 'cause you... We didn't hear you at the start of your question, so it just came in part way. If you could say it again, that would be helpful.
Sure. Sure. I was wondering about E-Mobility. What's the current contribution, profitability, and what you expect from this segment going forward?
Thank you.
You know, I would underline part of... Hello, this is from my side. I would underline part of Alina's answer earlier, saying that for the moment, the profitability or the contribution on the result is relatively limited, because we are at the beginning of stepping into the new field and growing that portfolio of business. And I said, for this year and for previous year and this year, it's a relatively limited contribution to the overall result. In the second decade, we expect seeing more relevant numbers contributing to our results.
Thank you.
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