Good afternoon, ladies and gentlemen, and welcome to the OMV Petrom's 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 Investor Section. These also include the cautionary statement regarding forward-looking statements. Now, let me hand over to Simona Crutu, Manager of Investor Relations and the 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, the second quarter operational performance, as well as our progress in terms of strategy. Alina Popa, Chief Financial Officer, will give you more details on our financial performance and a 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 will hear an automated message providing your hand to raise. You can also register during the Q&A session itself. I now hand it 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 to you today OMV Petrom's performance for the secon quarter of 2023. Please let me first 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 second quarter of 2023. Brent price continued its decline in the second quarter and averaged $78 per bbl, lower by 4% versus the previous quarter. In a year-on-year comparison, the average Brent price was down by 31%.
OMV Petrom indicator refining margin reached $11.17 per bbl in the second quarter , lower by more than $13 compared to the record high values from the second quarter of 2022, driven by a decrease in product spreads, mainly for diesel, gasoline, and jet. In the natural gas market, European spot prices fell in the first two months of the quarter due to weak demand and strong energy flows. In June, European hub prices rebounded on the back of maintenance outages in Norway. At an average of EUR 38 per MWh, the CEGH price was down by 63% year-on-year and by 33% quarter-on-quarter. Following the trend in European prices, gas prices on the Romanian centralized market also decreased, with day-ahead prices lower by 65% year-on-year to an average of EUR 35 per MWh.
Base load electricity prices in Romania, in euro terms, decreased by 56% from the high levels recorded in the second quarter of 2022 and by 30% quarter-on-quarter. The average CO2 price remained at the record high value of EUR 87 per ton recorded in the previous quarter. Moving to the Romanian macroeconomic environment, the latest available data shows that in the first quarter of 2023, GDP increased by 2.8% year-on-year, mostly supported by services and construction. In May, the European Commission revised upwards its estimates for 2023 GDP growth to 3.2% from 2.5%. For 2024, the GDP growth estimate was also increased to 3.5% from the previous forecast of 3%. Romania's economy is set to continue its growth, supported by private consumption growth and a resilient labor market.
Yet the growth will be slower than in 2022 due to persistent inflation, tight financing conditions, and low economic growth in Romania's trading partners' countries. The Consumer Price Index for the month of June 2023 versus June 2022 was 10.3% on a downward trend, in line with expectations. For 2023, the National Bank of Romania estimates a gradual decrease of the inflation rate, more significant in the second half , with an average of 7% for the full year. Looking at the Romanian energy sector in the second quarter of 2023, in the context of still high energy prices and inflation concerns, the demand for gas and power fairly decreased, while the demand for retail fuels increased. More precisely, demand for retail fuels increased by around 7% year-on-year as a result of the low base effect from 2022.
While the commercial market demand increased by 3% year-on-year, jet demand was higher by 8% year-on-year due to increasing number of flights. According to our internal estimates, gas demand decreased by 12% year-on-year, reflecting mainly the Brazi Power Plant outage and reduced overall industrial gas offtake. Power demand is lower by 7% year-on-year, while domestic power production increased by 5%, Romania being a net exporter of power in the second quarter . Power production from hydro had a significantly higher contribution to the generation mix. Nuclear also increased, while gas and coal significantly decreased, with renewables being relatively flat year-on-year. It's been more than one year since the Romanian government has implemented measures to address the high gas and power prices in place between April 2022 and March 2025.
These have also impacted the second quarter of 2023, with almost 80% of our gas portfolio subject to the regulations, a level that we expect to be maintained for the full year of 2023. When it comes to electricity, all our sales in Romania were subject to some form of regulation or taxation in the second quarter . The Government Emergency Ordinance 186/2022, which transposed into Romanian legislation, the EU regulation for a temporary solidarity contribution, was amended and transformed into Law 119/2023 in May of 2023. This law introduced the obligation to pay for 2022 and 2023, a contribution of RON 350 for each ton of crude oil processed for companies that produce and refine crude oil.
Alina will detail later the implications on our financials. As mentioned previously, frequent regulatory interventions bring volatility and instability for the market participants and increased risks of market dysfunction, including risks related to security of supply. While price caps may support demand, they are a disincentive for investment in energy efficient projects and send distorted signals to the market. Therefore, we reiterate our belief that free market principles are fundamental for investment and that intervention should be temporary in nature. On slide six, we present the key highlights of the quarter. Our operational performance this quarter reflected the major turnarounds in the Petrobrazi Refinery and the Brazi Power Plant, both were planned but also prolonged. Our financial performance also reflected low commodity prices, which are converging back to pre-energy crisis levels.
This was partially compensated by the resilience of our business, including sales optimization measures, as well as a continuous focus on costs and working capital. Consequently, our Clean CCS Operating Result of RON 1.6 billion was lower by 58% year-on-year. Our operating cash flow decreased by 89% year-on-year to RON 0.4 billion on lower operational results, but also due to the payment of the approximately RON 1.5 billion solidarity contribution on refined crude oil for 2022, that I mentioned earlier. The Clean CCS Return on Average Capital Employed remained robust at 31 percentage points. In Exploration & Production, decreased results is mainly due to lower quality prices and sales volumes. The results in Refining and Marketing was lower by 88% year-on-year, driven by lower refining margins, as well as the prolonged Petrobrazi Plant turnaround.
In gas and power, the result was lower by 42% in the context of the Brazi full shutdown and a challenging market environment with a negative impact from legislation. We are further focused on delivering on our three strategic directions. I will detail later on the progress regarding the strategic pillars transition to low and zero carbon and grow regional gas. I will now refer only to our third strategic pillar, optimizing our traditional business, where in partnership with Auchan, we reached 357 stores in Petrom branded filling stations at the end of June, and we aim to finalize the rollout of 400 stores by year-end. In June, we announced the discovery of new crude oil and natural gas resources in Romania. Cumulatively, the discovered deposits hold recoverable resources of over 13 million bbl of oil equivalent.
This is the result of our exploration strategy focused on near field opportunities located close to existing infrastructure, which facilitates quick development tie-ins and early production of new found resources. On the 27th of July, we announced the executive board proposal for the distribution of a special dividend of RON 0.045 per share. This is subject to the approval of the supervisory board and subsequently by the general meeting of shareholders, and Alina will provide more details on this. On HSSE, the total recordable injury rate for the rolling period, July 2022 to June 2023, was 0.48. Moreover, we further continue our efforts to reduce GHG intensity with projects in all three business segments. On slide seven, I would like to present our operational performance, and I will start with exploration and production.
Hydrocarbon production decreased by 5%, reflecting the natural decline in the main fields and the effect of planned maintenance activities, partially offset by the contribution of new wells and workovers. Production cost per barrel of oil equivalent increased by 41% year-on-year to a level of $15.40, reflecting increased costs, lower production available for sale and unfavorable foreign exchange. We also remind you that the cost in the second quarter of 2022 benefited from a positive effect of a $2.10 per bbl of oil equivalent, one-off following a tax audit. In order to address cost inflation, we continue to focus on measures for counteracting the pressure coming from suppliers by intensifying our procurement activities while we further implement efficiency measures.
In refining and marketing, the refining utilization rate was 31%, reflecting the turnaround for Petrobrazi Refinery, initially planned for 42 days, then prolonged by two weeks due to discovery maintenance. For July, the average refining utilization is above 80%, reflecting slower than initially estimated ramp-up and increasing in the last days to 95%. Total refined product sale volumes decreased by 10% year-on-year, mainly as a result of lower product availability due to the shutdown. As such, a decrease by 28% was recorded by non-retail sales volumes, both export and commercial sales in Romania. Our retail sales volumes were up by 5% due to higher demand. In gas and power, total gas sales volumes were down by 14% year-on-year as a result of no gas volumes consumed in the gas power plant.
Gas volumes were rerouted and sold to third parties, resulting in an increase of 8% year-on-year, with much larger volumes sold to household and district heating for household consumption, as well as Supplier of Last Resort customers. This is a major achievement of our sales team, especially in the context of an oversupplied market with declining margins. The Brazi Power Plant was in prolonged plant outage, with its full capacity for the entire quarter, compared to only half of its capacity in April of 2022. Moving now to slide eight. Total organic CapEx amounts to RON 2.4 billion in the first half of 2023, higher by 72% year-on-year. Almost half was related to Exploration Production, where we finalized the drilling of 16 new wells and sidetracks, including 1 exploration well, and we performed more than 240 workover jobs.
In refining and marketing, most of the RON 1.1 billion investments were dedicated to the major turnaround at our Petrobrazi Refinery, as well as to ongoing projects such as coke drum replacement, a new crude oil tank, and new aromatic complex. In gas and power, most investments are allocated for the plant maintenance shutdown at Brazi Power Plant. For 2023, we maintain our CapEx guidance of around RON 6 billion, higher by approximately 70% year-on-year, with increased investments dedicated mainly to the Neptun Deep Project, accelerated low and zero carbon projects, as well as the Petrobrazi Refinery turnaround and related tie-in projects. Ladies and gentlemen, the second quarter of 2023 saw some significant milestones in implementing our Strategy 2030, that was launched in December of 2021. I will start with our strategic pillar, growing regional gas.
In June, we announced the final investment decision of our Neptun Deep Project. Together with our partner, Romgaz, we submitted the field development plan to the regulator for endorsement. This triggered the start of the recognition of related 1P reserves in the second quarter . For the remaining of the year, we are focusing on awarding the main contract commencing following the endorsement of the field development plan by the regulator. Neptun Deep is crucial in securing our sustainable long-term growth by generating higher profitability that will facilitate new investments and attractive shareholder returns. This project will bring a significant shift in our hydrocarbon portfolio. By 2030, our gas production will be more than double compared to current levels. Gas will reach 70% weight in our total hydrocarbon production. Moving to our strategic pillar, transition to low and zero carbon.
Regarding our renewable power portfolio, in July, we continued to progress our partnership with Complexul Energetic Oltenia, with the signing of a financing contract for building four photovoltaic parks with accumulated capacity of 450 MW. The total investment needed for their development amounts to more than EUR 400 million, out of which 70% is to be financed through the Modernization Fund. In addition, we continue to grow our renewable power portfolio with the signing in June of a contract to purchase several photovoltaic power projects with installed capacity target of around 710 MW, to be built in Teleorman County in Romania. The transaction is expected to be completed in the second quarter of 2024, and the parks to become operational 18-24 months later.
This recent purchase supports the achievement of our strategic objective to have installed renewable power capacity of at least 1 GW by 2030, including through partnerships. On alternative mobility, 155 ultra-fast charging points were installed by the end of June 2023. Our plan for 2023 is to reach around 240 charging points, both within our own filling station network and in other locations. As announced yesterday, we also accessed an EU grant for further expanding our EV charging network, thus contributing to the creation of a corridor of fast-charging stations in our existing fuel stations. The total investment in this project is estimated at approximately EUR 40 million, of which approximately EUR 15 million will be provided from European funds through the Connecting Europe Facility.
In addition, we are also delivering on our commitment to offer attractive shareholder returns. Following the record high dividends paid last year, yesterday, we announced the executive board's proposal for the second special dividend. Together with the base dividend already paid this June, this will lead to a total dividend of RON 5.1 billion to be distributed in 2023 as last year's profit. More details will be provided by Alina shortly. We have been very active in meeting with investors from various parts of the world to discuss our strategic plans and execution, and to collect their feedback. The year-to-date improvement in our share price of more than 30% is significantly above our peers. We see this as a sign of confidence from investors in the performance of the firm and our progress in implementing our strategy.
Please let me hand over to Alina, who will go into more detail about the financials and outlook.
Thank you, Christina. Good afternoon also from my side. I will continue the presentation with slide 11, starting with some highlights of the income statement, which focus on the developments of the second quarter of 2023 versus the similar period of 2022. Sales decreased by 39% year-on-year, following lower commodity prices, lower sales volumes of petroleum products and electricity. The decrease was only partially compensated by higher sales volumes of natural gas. Clean operating results in exploration and production decreased to RON 1.2 billion from RON 1.9 billion in the second quarter of last year. This was driven by the lower oil and gas prices, lower sales volumes, higher production costs, and unfavorable FX, stronger RON versus the US dollar, partly offset by lower E&P taxation and impairments.
Clean CCS Operating Result in refining and marketing decreased by 88% year-on-year, reaching RON 142 million, due to lower refining margins and refinery utilization, partially offset by higher retail volumes and margins. Clean operating results in gas and power was lower by 42% year-on-year, at RON 471 million, in the context of a challenging market environment and significant regulatory and fiscal intervention. The results also reflect the prolonged Petrobrazi power plant outage. The clean Consolidation line of - RON 139 million in the second quarter 2023 reflects mainly the increased quantities of the crude stocks as a result of the refinery turnaround, as well as higher natural gas stocks due to the injection period.
Consequently, the group Clean CCS Operating Result decreased by 56% year-on-year to RON 1.6 billion. For the second quarter of 2023, we recorded inventory holding losses of -RON 30 million, mainly reflecting the decrease of crude prices over the quarter. For comparison, in the second quarter of last year, we recorded inventory holding gains of RON 322 million. Net special charges of -RON 25 million were also recorded in the second quarter of 2023. For comparison, in the second quarter of 2022, the net special charges of RON 450 million were related mainly to temporary losses from forward power contracts. Clean CCS Net Income attributable to stockholders decreased by 51% year-on-year to RON 1.5 billion.
As Christina mentioned before, the new legislation, issued in May 2023, introduced the obligation to pay a solidarity contribution for 2022 and 2023. We reflected in the second quarter the solidarity contribution on the refined crude oil in amount of RON 1.5 billion for full year 2022, and in amount of RON 498 million for the first half of 2023, presented as a separate line in the consolidated income statement below the operating result line. The solidarity contribution on refined crude oil is treated as a special item in the computation of the Clean CCS Net Income. The reported net income attributable to stockholders was negative at RON 537 million. Let me go on to slide 12. Slide 12, which shows the major building blocks for the development of the Clean CCS Operating Result.
I will start with Exploration & Production, where clean operating results decreased to RON 1.2 billion. The market effect deviation of RON 433 million reflects the negative effect of lower oil and gas prices, partly compensated by the positive effect of the lower E&P taxes. For gas, this year's taxes reflected higher regulated sales quantities, which are excepted from overtaxation, and for which royalties are calculated at capped prices instead of tax. The operational effects include mainly the negative volume deviation due to the 6% lower hydrocarbon sales, partly compensated by lower impairments. Looking at the lower chart, Refining & Marketing Clean CCS Operating Result decreased by 88% compared to the second quarter of 2022. The negative market effect reflects the lower refining margin, driven by the decrease in most product spreads.
Operational effects were negative due to the prolonged turnaround of the Petrobrazi Refinery, with a total negative impact in the result of RON 355 million, in the form of higher maintenance costs and margin loss. The result was also negatively impacted by an increase of the environmental provisions of around RON 60 million. These were only partly compensated by the higher retail sales volumes and margins, as well as an improved performance in the non-fuel business margin. In gas and power, the clean operating results decreased by 42% year-on-year. The contribution of the gas business decreased, being impacted by the lower margins realized on equity gas and on transactions outside Romania, partly compensated by good margins from imported gas volumes. The power business result increased, supported by the good margins realized on transactions concluded outside Romania.
The results also reflected the reversal of a provision for risks assessed by the group in the area of sector-specific taxation. On slide 13, I would like to continue with the highlights regarding our cash flow statement. In the second quarter of 2023, the operating cash flow was RON 412 million, lower by 89% year-on-year. This decrease reflects mainly the lower operating results, higher tax on profit paid, and also the payment of the solidarity contribution for 2022. With respect to evolution of the net working capital in the second quarter of 2023, we recorded a cash inflow of RON 0.5 billion, compared to a cash outflow of RON 0.8 billion in the second quarter of 2022.
The inflow in the second quarter of 2023 was mainly due to the decrease in trade receivables, largely in gas and power segment, due to lower gas and power sales. Our net payments for investing activities amounted to RON 1.6 billion in the second quarter of 2023, higher by 117% year-on-year. Payments for investing activities refer to capital investments in tangible and intangible assets amounting to RON 1 billion, and payments for investments in other financial assets amounting to RON 0.6 billion. Our record high base dividends in the financial year 2022, amounting to RON 2.3 billion, have been paid starting June 7, 2023.
The net cash position, including leases, increased to RON 13.2 billion at the end of the second quarter of 2023, versus RON 12.3 billion at the end of the second quarter of 2022. Let me continue our presentation with the outlook on slide 14. We expect Brent oil price in 2023 to be between $75-$80 per bbl. Our hydrocarbon production in 2023 is expected to be around 110,000 bbl of oil equivalent per day, considering no divestment in 2023. However, a stronger US dollar may support the production cost, estimated now at around $16 per bbl of oil equivalent for the year 2023.
In refining and marketing, we currently estimate an average refining margin higher than $10 per bbl in 2023. The refinery utilization rate is estimated at around 80% in 2023, considering the prolonged major refinery turnaround and slower ramp up. As Christina mentioned earlier, CapEx is expected to be around RON 6 billion in 2023, of which RON 2.9 billion dedicated to E&P, including Neptun Deep, RON 2.1 billion to R&M, and the rest to Gas and Power division. In 2023, we expect a positive free cash flow before dividends, yet lower compared to the 2022 value of RON 8.2 billion, mainly due to higher investments and the payment of solidarity contribution. We estimate demand for retail fuel products in Romania to be slightly above 2022.
Demand for gas and power is expected to be significantly lower compared to the previous year. We expect total refined product sales to decline compared to 2022, due to lower exports year-on-year, while our retail fuel sales are expected to slightly increase year-on-year. Our total gas sales volumes are envisaged to decrease, mainly on lower supply, both from equity and third parties. With regards to Brazi Power Plant, the shutdown was prolonged until the first week of July due to findings identified during inspections. Therefore, net electrical output is expected to be lower year-on-year in the context of the longer than initially planned outage for Brazi Power Plant. For 2024-2025, we maintain the, for the time being, our guidance communicated in February.
Moving now to slide 15, as Christina mentioned, we have delivered on our Strategy 2030 by progressing with our transformation for a lower carbon future, and also by delivering strong returns to our shareholders. In 2022, we increased our base dividend by 10% versus the one paid in the previous year and distributed our first special dividend. This year, we already paid in June a base, base dividend increase by another 10%, and yesterday we announced our second special dividend. The special dividend proposal amounts to RON 0.045 per share and is subject to the approval of the supervisory board and the general meeting of the shareholders. The total dividend yield, including both base and special dividend, will increase to 19.6% in 2023 from almost 16% last year.
As you can see on the slide, this total dividend yield maintains us in a highly competitive position among our peers. This shows that we, the Executive Board of OMV Petrom, are committed to deliver a competitive shareholder return, also by paying an attractive dividend. 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. We'll take as many questions as time permits. Once again, to ask a question, please press star one one. We'll also permit external participants. Now we're going to take our first question. The first question comes through line of Ioana Andrei from Alpha Bank Romania. Your line is open. Please ask your question.
Hello, and thank you for the presentation. Can you hear me?
Yes, very well.
Great. My first question is regarding the special dividend. Obviously, it was very appreciated by Investors, but I was wondering if you could give us a little bit more color on what is going to happen next year, considering the weaker results that are expected for this year. What am I asking is, do you consider continuing with the special dividend proposal next year? I have a second question regarding Brazi output. You mentioned lower output compared to 2022. Can you give us a little bit more clarity on what are your expectations? Because 2022 was considered a high output. For this year, we are looking for something, I don't know, is 4 TW reachable?
Okay, thank you, Ioana. Alina, maybe you want to touch on the special dividends, and then Frank will cover your questions with regards to the Brazi Power Plant.
Thank you, Ioana, for the question, and happy that our announcement yesterday has been appreciated. We have a dividend policy which basically says, progressive dividend, base dividend every year. Our base dividend increases every year by 5%-10%. In addition, we have a dividend guidance, which is special dividends can be also given at management discretion in a favorable market environment and provided that our CapEx plans are funded. Now, if we-- the fact that we call it special means that it's not every year, but on the other hand, I cannot exclude it as well, being next year, in case the situation will be a favorable market environment and provided that our CapEx is funded. Thank you.
Hi, Ioana. Thank you, it's Frank speaking, for your second question. Yes, we restarted the gas power plant first week of July. After three months of shutdown, it's running well, so very pleased with the startup of the power plant. You know, it was the first time we opened the steam turbine, so it was quite after 10 years of operation. It's always quite an event for a gas power plant. Indeed, we're expecting to deliver more than 4 TWh . We are expecting 4.3 TWh. We see at the moment a very good demand on power due to the, you know, hot weather and the demand on the air conditioning. For our price, we expect for Q3 to go up and Q4 as well.
We expect the demand also, you know, even if Christina was mentioning, the demand is a bit down versus last year. We think we see for the second half of the year, the start of potential recovery, even if at the end of the year, we'll be still below last year in terms of demand. I think the trend is going in a good direction for the, for the power demand at the moment. That's. I hope it answer your question.
Thank you very much.
Thank you. Now we're going to take our next question. The next question comes from line of Iuliana Ciopraga from WOOD & Company. Iuliana, is open, please ask your question.
Hi, good afternoon, thank you for the presentation. I have a number of questions. First, on the production side, you are keeping production guidance despite a decline below 5% in the 1st half of the year. Do you expect the decline to accelerate in the second half? Secondly, on the, on the cash inflow from changes to working capital, do you expect this positive inflow to continue, this inflow of cash from working capital to continue in the following quarters? Something on the, on the OpEx per BOE. You're now guiding for $16 per BOE for 2023. You were guiding before for $15.
Do you keep guidance for the following two years at 16, or you see a risk that OpEx per BOE will be higher in 2024, 2025 as well? If I may, one more. Regarding the cost of the refinery turnaround, you were estimating around RON 200 million impact, but the turnaround was prolonged by two weeks. Do you confirm the RON 200 million, or was it a stronger impact? Thank you.
Thank you, Iuliana. Maybe we say that Cristi will take your comment, your questions on production and on OpEx per barrel, and then Alina on your working capital and cash flow, and then come back to Radu on the, on the turnaround costs.
Yeah. Thank you. Thank you, Ioana Andrei, for... Iuliana Ciopraga, for your question. Yes, we're seeing the, the first half of the year, that the decline is staying at 5%. However, at the end of the year, we're maintaining 110,000 BOE per day, which is, which is year-on-year, 8% basically decline. That's due to intensifying the efforts on the planned maintenance of our assets. With regard to the, to the OpEx, yes, we are seeing a guidance for RON 16 for the, the year ends, and that's due to the pressure from the suppliers as well. The fixed rates it's influencing us and, yeah, the overall environment.
Okay. Iuliana, I will continue with your third question on the cash flow. Indeed, positive inflow from networking capital. Now, if we look what is the main impact is coming from receivables. Receivables going down as a consequence of of sales going down as well, and this receivable, seasonal receivable, so to call it, for gas and power. This is a temporary effect on one hand. On the other hand, we work a lot on our working capital measure, so it's we are very strict, and we try to optimize the best we can working capital. We try to keep it under control, but there is some seasonal effect which we cannot continue to see in the next quarters.
Good afternoon, Iuliana, from my side. Radu here. Thank you for the question. Indeed, the first number that we have indicated as an impact of the turnaround was 200 million RON. The revised number, and this is, this, this was reflecting the OpEx and the loss margin. The revised number, due to the prolonged turnaround, it's RON 355 million .
If I may, all this, almost all of this was booked in the, in the, in the second quarter, right?
Yes.
The RON 355. Okay.
Yes.
Thanks a lot. If I may, I didn't, I didn't quite catch that on the production side. You're intensifying efforts on? I missed, I missed what you, what you said, actually.
Planned maintenance activities on the main assets.
Is that something temporary? I, I mean, you're, you're basically, basically keeping guidance, guidance for the following years as well. We should take that. I mean, it doesn't matter that it was 5%, we should take what you-- what, what, what happened, what, what you're guiding for, we should take those numbers basically. That's what we should, we should understand. You did announce a discovery not long ago, I think almost a month ago, but you're still keeping the same production, guidance. We- I was kind of expecting the positive impact from, from, from that announcement of, of, new resources, but I don't really see it in your guidance now.
Uh, indeed, we announced a discovery, but you know that the discovery needs to be maturated. The, the glass height is in, uh, is in production already, but it's only one well. The other two are, are, are to, to come in the tests, uh, uh, end of the year. Uh, so, uh, year on year, as I said, uh, we'll stay with, uh, with around eight percent decline, uh, closing the year with one hundred and ten thousand, uh, uh, estimated, uh, viewing average, uh, viewing per day.
For the following years, 95-100 doesn't really account for any upside from this discovery, or does it?
For the time being, we do not change our guidance, Juliana. We will come with back with this at the end of the year, when we have our year-end results. We will present you the guidance for the next two years as well. For the time being, we keep it, the same level as last.
Thank you.
Thank you. Now we're going to take our next question. The next question comes from the line of Oleg Galbur from Raiffeisen Bank International. The line is open. Please ask your question.
Good afternoon, and thank you for the presentation. I hope you can hear me well. I have three questions. The first one, very short. What was the impact of the Brazi Power Plant shutdown in the second quarter? If I remember correctly, initially you estimated it at some RON 150 million. Second question also relates to the G&P segment. You have again achieved very strong earnings, despite the complete shutdown of Brazi Power Plant. In the last earnings call, Alina was able to provide more color on the GMP earnings development, in particular, the development of the gas and of power trading business. Maybe could you, again, say a few more words about what drove earnings in gas and power trading in the second quarter, and perhaps also share your expectations for the current quarter?
Lastly, on this solidarity tax, just a clarification, what is the estimated impact on the third and fourth quarter of this year? Am I right in presuming that the solidarity tax will be booked on a quarterly basis? Thank you.
Thank you, Oleg, for your questions. I think Frank will take on your first 2 questions with regards to the Brazi outage impact, as well as the good performance even in that context. Then Alina, with regards to the Solidarity Contribution impact in the second half of the year.
Hi, good afternoon, Frank speaking. For the Brazi shutdown, we have an extension which was not planned, of course, but from mid-May till end of June, plus the start of the first week of July. The estimate was now moved from EUR 150 million to RON, sorry, to RON 200 million. I think the good news compared to where we were in end of Q1, was we mitigate some of the potential losses due to the June extension, especially thanks to trading outside of Romania and to import electricity to compensate the lack of power from the Brazi Power Plant. That was one of a good achievement.
To come back to your second question, there was also, of course, the sale of gas, because we had to, in a depressed market, I would say, where the gas consumption in Romania was quite low. We had to secure the sale of additional 1 TWh of gas per month, due to the Brazi Power Plant. I think the team has done a very good job looking at the gas markets, not only from Romania, but from, I would say, all optimization and trading we put in place the last years from Greece to Hungary and Moldova. I think we have managed to secure opportunity in all this region, I think that's, that's, you know, continuing Q2. Yeah, even in this current depressed demand on, on, on gas.
The same on power, we've been quite active on the, on the Hungarian market, on the power trading, and between the cross-border with, with Bulgaria and Serbia as well. All this cross-border trade has benefited for the Q2, Q2 with us. In term of looking forward for Q3, keep in mind that in Q2 we had a reversal of provisions, that has an impact, of course, on Q2 as well on power.
... which we cannot, of course, have in Q3. I will say we are quite bullish with Q3 in terms of gas and power. We've seen power plant running at a good, good regime, as I mentioned before, due to the power demand and power price going up. On gas, we have also secured some export contracts and some customers in Romania as well. We see also a good increase of market share and good security. We secure some increase of volume compared to what we are forecasting at the beginning of the year.
Good expectation, but I would say, not necessarily well above Q2 because of this reversal of provision, but I would say good expectation for in, in the summer quarter, where, you know, it's always more difficult for gas and power due to the gas demand and the fact we need to inject the gas in the storage.
Hello, Oleg on my side. With regards to the solidarity tax, your assumption is correct. We will book it on a quarterly basis, and with regards to the calculation itself, you can take the refinery capacity 4.5 million tons, 80% utilization and 350 RON per ton. That will give you the estimated number to be booked. Thank you.
Thank you very much.
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 now take the next question.
Thank you. The next question comes through line of Laura Simion from BRD GSG. Your line is open. Please ask your question.
Hello, good afternoon. Thank you for the presentation. I have just two couple of questions regarding the refinery turnaround. You mentioned the impact were around RON 355 million, but you also mentioned in the report some reassessment of some provisions. Could you give us an idea about the amount in this case? What additional gain do you expect at the level of clean EBIT in R&M after this turnaround? Thank you.
Thank you for your questions, Laura. Alina will take on your question with regards to the provisions, and then on the between EBIT, Alina will talk about. To be fair, we don't tend to talk about the forecast of EBIT going forward, so maybe I'll just do that for Alina and Radu and say, we don't give an indication of the forward look on the results until obviously we start with the trading update and the results in the third quarter. Maybe Radu can give you a little bit of an operational feel of what's going on in the refinery right now. Maybe that will give you an indication. Yeah.
Okay. The the topic about provision, indeed, it's about the environmental provision, which has been reassessed at the end of Q2. This is a normal IFRS treatment. IAS 37 requires when we have a legal obligation, a past event, and outflow of future economic benefit to book provision. Environmental provision was in connection with the terminal, where we could got the documentation related to legal obligation, and then also some additional costs for other team environmental provision. All in all, RON 60 million booked in Q2, 2023. As we say, this is not in connection of the turnaround. Like, nothing to do with turnaround. They have affected Q2 results of refining and marketing, but nothing to do with turnaround.
That's okay.
Sorry? Okay. Laura, what to expect for the second half of the year, refinery utilization goes high. What was indicated so far in July, average will be around 80%, but right now we are operating on a 95% utilization rate, which is a high, which is a high level for on any, any standard. As well indicated in the earlier presentation, the fact that the refinery margin will be expected to be above 10 toward the end of the year. A solid, still a solid Q3, of course, when you talk about the sales, because you talk about the driving season and then, of course, a much lower demand in Q4.
Otherwise, you should expect normal operation and normal performance for the second half of 2023.
The turnaround was not for gaining some more efficiency in operations, it's just a normal turnaround in the business cycle?
I understand the question now. The turnaround, the turnaround is an important activity in, in the life, in the life cycle of a refinery. Why? Because it's ensuring a high utilization between the two cycles of the turnaround. If you look back to the performance of our refinery in the previous years, you will already see it's quite a strong performance from this perspective, above, above the average, European average, as a, as a reference. In this turnaround, beyond the, the ensuring the high utilization in the cycles, we are as well going for several inspections, which are related to the permitting that we need to obtain, and as well, some modernizations, which are ensuring all this high utilization.
Of course, the tie-ins of the future invest or of the existing investments which we'll do, and future, future installations, which we are going to bring into the refinery in the next in the next years. Like, for example, the new aromatic complex and other similar ones.
Okay, thank you. I have no more question. Thank you.
Thank you. Now we're going to take our next question. The next question comes to line of Iuliana Ciopraga from WOOD & Company. Your line is open, please ask the question.
I, I also noticed something in the cash performing investment, some investment in financial assets. Can you clarify what are those? I mean, is that something we should assimilate to cash, these short-term securities that you bought? How can you tell us what, what's the total amount that you have invested in that? Because I don't think we can find it in the balance sheet separate.
Thank you, Iuliana, for the question. Indeed, in the financial assets, current assets, current financial assets, you see an increase there. It's investment which we did in government bonds, treasury bills, RON 0.8 billion total, as of June.
Thank you.
Thank you. Now we're going to take our next question. The question comes from line of Daniela Mandru Petrovici from Swiss Capital. Your line is open, please ask the question.
Hi. Hello. Thank you for the presentation. Now, I have some two questions related to GMP. Can you disclose the reflected amount, the reversals of provision reflected on clean EBIT GMP? The second one related to the same segment regards the power acquired from third parties in terms of quantities. If you can let us know what would be the amount of gas or the regulated prices estimated by you and partially communicated by the regulator for the full year. I'm referring to the quantities of gas to be sold at the regulated prices of 150 RON per MW power. Thank you.
Thank you. Alina will address your first two questions with regards to provision reversal. Then Frank will cover the power from third parties, as well as regulated prices for gas. Hello, Daniela. From my side, with regards to reversal provision, just to explain it a little bit, in 2022, we had significant regulatory and fiscal changes, where we had a lot of unclarity. At the end of the year, we booked some provisions where we were not sure about the treatment. We got clarified in the meantime. Then this triggered some reversal that we booked in two. Indication for that would be mid-double digit EUR million.
This amount is reflected in Clean GMP, EBIT operating profit?
Yes, in clean, yes. When we booked it, we booked it together with taxation. It was not Because it was part of the, our interpretation of taxation, and then when we reversed it, we had to follow the same treatment as a clean item.
Right. That, explain a lot, of your good results in the first quarter.
Indeed. Yes.
You should have started with this.
Yes, we, we have explained it in the, in our investor meeting.
Okay. Thank you. Thank you.
Hi. First, I realize I confused with the, the exchange rate before on the turnaround of Brazi impact. Maybe I will clarify for I forgot who asked the question, but the estimation at the end of Q1 for the extension of the Brazi turnaround was EUR 30 million. I will say in euro to make sure I don't make another mistake.
[Alex.]
Yeah, it was [Alex. Alex question. Sorry, Alex.] EUR 30 million, and we now having terminated the shutdown, we are at EUR 17 million impact. We reduced the impact quite significantly, thanks to what I was mentioning. Sorry for the confusion on the numbers. In term of your question for the gas to the regulated market, we our forecast for the full year is about 25% of our total sales. That's to give you a, I'd say, the 150 RON per 150 RON per MW hour.
Mm-hmm.
For the sale of power, outside of, not outside, I would say all the, the trading we've done, is around the, this trading, as mentioned, all the power sales we did in Q2 were linked to power trading because we were not running the power plant. That was the full number was for the power trading.
Yes, I don't know the number, so at least I didn't see it in the presentation. Because, from my understanding, you bought power and, sold it forward, of course, bought power from third party. The question is: how much did you, acquired in, in the second quarter of the year? Because I know the, the figure for the first quarter.
Yeah, we, we, we don't provide this, this, data.
Okay.
It's quite confidential.
Good. Okay. Thank you. Thank you, Luc.
Thank you. Now we're going to take our next question. The question comes from line of Iuliana Ciopraga from WOOD & Company. Your line is open, please ask the question.
Hi. Sorry. Actually, after Daniela's question, I have one more. 25% of sales for the full year will of gas sales, are at regulated prices, but sales from E&P, or are you looking at sales for GMP? Sales to third parties at the GMP level or total sales of gas from E&P? It's just a clarification.
Yeah, the yeah, the total sales for gas and power, because we are looking at the full sales. It's true that.
Full sales including, including internal?
Yeah. Yeah.
Okay. Okay.
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That concludes today's conference call. Thank you for your participation, ladies and gentlemen.