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 the forward-looking statements. Let me hand over to Simona Crutu, Manager of the Investor Relations and Stakeholder Engagement Department, who will moderate the event.
Good afternoon, 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 first quarter operational activity, as well as our sustainability performance. Alina Popa, Chief Financial Officer, will give you more details on our financial performance and the 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 will then hear an automated message advising your hand is raised. You can also register during the Q&A session itself. I'm now handing over to Cristina.
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 first 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 and our main currencies in the first quarter of 2023. Brent continued its decline in the first quarter and averaged $81 per barrel, 9% lower versus the previous quarter. In a year-on-year comparison, the average Brent was down by 21%.
In the first quarter of 2023, on a year-on-year basis, the RON depreciated versus the US dollar by 4%, but remained broadly stable against the euro, supported by the National Bank of Romania interventions in the market. OMV Petrom indicator of refining margin reached $16.61 per barrel in the first quarter, $1.70 lower compared with the euro-based indicator of refining margin from first quarter of 2022, also as a result of a decrease in product spreads, mainly for diesel. In the natural gas market, the European spot prices fell by more than 40% during the quarter due to high storage levels as well as a mild winter. At an average of EUR 56 per MWh, the SEEP price was down by around 45%, both quarter-on-quarter and year-on-year.
Gas prices on the Romanian centralized market also decreased, with day-ahead prices 44% lower year-on-year to an average of EUR 55 per MWh. Baseload electricity prices in Romania in euro terms increased 41% versus the first quarter of 2022, however, decreased by 43% from the high levels recorded in the fourth quarter of 2022. Average market spark spread was negative in the first quarter as electricity price decrease outpaced the gas price decrease. The average CO2 price reached a record high of EUR 87 per ton due to the upcoming compliance period. Moving to the macroeconomic environment, the latest available data shows that in the fourth quarter of 2022, Romanian GDP increased by 5% year-on-year, mostly supported by services and construction.
In April, the IMF estimated the GDP growth for 2023 to be 2.4%, down from the previous forecast of 3.1% made in October last year. For 2024, the GDP growth was also slightly corrected to 3.7% from the previous forecast of 3.8%. Romania's economy is set to slow down due to high inflation, tighter financial controls, and the risks and uncertainties generated by the prolonged war in Ukraine and the related sanctions. The Consumer Price Index in the months of March 2023 versus March 2022 was 14.5%, driven primarily by energy prices and their impact on associated goods and services. For 2023, the National Bank of Romania estimates a gradual decrease of the inflation rate being more significant in the second half, with an average of 7% for the full year.
Looking at the energy sector in the first quarter of 2023, in the context of the still high energy prices and inflation concerns, the demand for all our products decreased in Romania, with a significant reduction for gas and power. Demand for retail fuels in Romania decreased by around 3% year-on-year, considering the high base effect from the first quarter of last year at the start of the Ukraine conflict. While the commercial market demand increased by 2% year-on-year. Jet demand continued to recover, increasing by 44% year-on-year, and for the first time exceeded pre-pandemic levels. According to our internal estimates, gas demand decreased by 13% year-on-year, the lowest level for a first quarter in the last two decades as a result of warm weather and low industrial demand.
Power demand was lower by 10% year-on-year, while domestic power production increased by 4% year-on-year, Romania being a net exporter of power in the first quarter. Power production from hydro had a significantly higher contribution to the generation mix. Gas was stable while wind, coal, and nuclear generation decreased year-on-year. In our previous calls, we mentioned the temporary measures implemented by the Romanian government to address the high gas and power prices applicable starting April 2022. As a result, almost 80% of our gas portfolio was subject to the new regulations.
For the full year 2023, we currently estimate that 90% of our gas portfolio will be regulated. When it comes to power, starting January 2023, given the regulatory framework, all our power sales in Romania are subject to some form of regulation or taxation. As mentioned previously, we recognize the need for the government to support consumers in these very unusual times. Frequent interventions, particularly in the gas and power segment and the lack of consultations, bring volatility and instability for the market participants and increased risks of market dysfunctions, including related to the security of supply. Price caps may support demand, but are a disincentive for investments in energy efficiency projects and send distorted signals to the market. Interventions should be temporary in nature, targeted mostly to vulnerable consumers, and taken only after a robust impact assessment.
In the medium term, free market principles are fundamental for investments. The Government Emergency Ordinance no. 186/2022, which transposed the EU regulation for a temporary solidarity contribution into Romanian legislation, is back in the parliamentary approval process. On slide six, we present the key highlights for the quarter. At group level, Clean CCS Operating Result of RON 2.1 billion was 7% lower year-on-year. Our operating cash flow increased by 77% year-on-year to RON 4.7 billion, helped by changes in net working capital. The Clean CCS Return On Average Capital Employed significantly improved to 37 percentage points. The lower result in Exploration Production reflects the decrease in oil and gas prices, as well as lower sales volumes. The result in Refining and Marketing was broadly flat year-on-year. Lower refining margins being almost offset by higher sales channel performance.
In Gas & Power, the result was broadly similar to the first quarter of 2022, supported by strong margins from gas storage and power transactions outside Romania. In Exploration & Production, we recorded lower production, reflecting the natural decline in the main fields, partly offset by the contribution of workovers in new well. In Refining & Marketing, Petrobrazi refinery had a very good utilization rate of 98%, while our refined product sales increased year-on-year by 2%. In Gas & Power, total gas sales volumes increased by 3% year-on-year, driven by an overall resilient customer portfolio, as well as sales to the regulated market and to the number of customers under the supply of last resort mechanism. Brazi Power Plant delivered a broadly similar net electrical output with a high contribution to balancing ancillary services market.
We have further focused on delivering on our three strategic directions and preparing OMV Petrom for capturing the energy transition opportunities. Regarding regional gas and our Neptun Deep strategic projects, we reiterate the need for a stable and predictable fiscal and regulatory environment, which is fundamental to ensure future investments. In March, we signed a contract for natural gas delivery from the Black Sea to the national transportation system with Transgaz. Assuming all key prerequisites are in place, we estimate the FID in mid 2023. As part of our transition to low and zero carbon, we are progressing towards securing EU funding for various low and zero carbon projects. In March, we received the approval for the financing through the National Recovery and Resilience Plan for building a green hydrogen production facility using water electrolysis.
We also act as 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 filling stations. We are also progressing with developing a renewable power portfolio and towards producing sustainable aviation fuel and second-generation bioethanol. On our third strategic pillar, optimizing our traditional business, in partnership with Auchan, we reached 316 stores in Petrom-branded, Petrom-branded filling stations at the end of March, and we aim to finalize the rollout to 400 stores by year-end. On HSSE, the total recordable injury rate for the rolling period April 2022 - March 2023 was 0.43. Moreover, we further continued our efforts to reduce GHG intensity with projects in all three business divisions. On slide seven, I would like to present the operational performance, and I will start with exploration production.
Hydrocarbon production decreased by only 4%, reflecting natural decline in the main fields, partly offset by the contribution of workovers in new wells. Production cost per barrel of oil equivalent increased by 2% year-on-year to a level of $14.48. This was mainly due to lower production available for sale and inflation on most cost items. These were partly offset by the favorable foreign exchange evolution. We continue to focus on containing costs and counteracting the pressure coming from suppliers by intensifying our procurement activities. In refining and marketing, the refining utilization rate was well above the European average. Total refined product sales volumes recorded a 2% year-on-year increase, driven by higher non-retail sales. Our group retail sales volumes were lower by 3%, considering the high base effect from the first quarter of 2022 at the start of the Ukraine conflict.
Non-retail sales increased by 9% year-on-year, mainly helped by the continuous recovery of the aviation business and increased exports. In Gas & Power, total gas sales volumes were 3% up year-on-year, while gas volumes sold to third parties increased by 4% year-on-year. We have proved once more the resilience of our customer portfolio with new customers brought in. We supplied natural gas to the regulated market, both households and heat producers for household consumption, as per received allocation, as well as to last resort customers. The higher volumes extracted from storage compensated the lower gas supply from both equity and third-party sources. The Brazi Power Plant generated almost 1 TWh in the first quarter, broadly flat year-on-year, as the power plant was in planned outage for the entire capacity in both March 2022 and March 2023. Moving now to slide eight.
Total organic CapEx amounted to almost RON 1 billion in the first quarter of 2023, 52% higher year-on-year. More than half was directed to exploration production, where we finalized the drilling of eight new wells and sidetracks, including one exploration well and performed more than 130 workover jobs. In refining and marketing, most of the RON 0.4 billion investments were dedicated to preparations for the major turnaround, which is currently taking place at our Petrobrazi refinery, as well as for ongoing projects such as coke drum replacement and new crude tank oil and new aromatic complex. In Gas & Power, most investments were directed to the Brazi Power Plant planned maintenance shutdown.
For 2023, we maintain our investment guidance of around RON 6 billion, approximately 70% higher year-on-year, with increased investments dedicated mainly to the Net Zero project, accelerated low and zero carbon projects, as well as the Petrobrazi refinery turnaround and related tie-in projects. Moving now to slide nine, I'm happy to share with you our progress in terms of sustainability. Yesterday, we published our sustainability report for 2022, the first year since we started the implementation of our 2030 Strategy with sustainability fully embedded. Our sustainability framework is built around three pillars environment, social and governance, 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 Scope 2 carbon intensity by 11% versus the 2019 baseline. In addition, we reduced our methane emissions intensity by 70%, progressing towards our target of less than 0.2% by 2030. We also continued our contribution to the largest privately funded forestation campaign and reached the goal of 2 million seedlings planted between 2020 and 2022. In addition, we launched the OMV Petrom Foundation with the aim to contribute decisively to the creation of a sustainable and fair society for all of us by supporting education, focusing on environmental protection, and improving the healthcare system. With regards to our communities, we see ourselves as a strategic partner for their development. Last year, we spent EUR 40 million in projects for long-term development of the communities in Romania for 1 million direct beneficiaries.
The revised remuneration policy for the executive board members was approved by the shareholders last year. The variable remuneration, which includes a long-term incentive plan and an annual bonus, is in line with the 2030 Strategy and places a strong emphasis on sustainability performance, including additional ESG-related performance targets and increased weights compared to the previous year. Since 2020, when we became the first Romanian company to support recommendations of the Task Force on Climate-related Financial Disclosures, we have improved our disclosures in terms of climate related risks and opportunities, as well as related governance strategy, risk management, metrics and targets. I want to highlight that our efforts to increase performance and disclosure in terms of ESG were recognized by an increasing number of rating agencies.
For example, Sustainalytics included OMV Petrom in their 2023 Top-Rated ESG list and ranked us in the top 5% of the oil and gas producers industry as of November 2022. The management of sustainability issues is rated as strong and ranks OMV Petrom first of the Bucharest Stock Exchange-listed companies. Please let me now hand over to Alina Popa, who will go into the financials and the outlook in detail.
Thank you, Christina, and good afternoon also from my side. I will continue the presentation on slide 11, starting with some highlights of the income statement, with focus on the developments of the first quarter of 2023 versus the similar period of 2022. Sales decreased by 20% year-on-year, following lower commodity prices and lower sales volumes of electricity. These were partly compensated by slightly higher sales volumes of petroleum products and natural gas. Exploration and production clean operating results decreased to RON 985 million from RON 1.1 billion in the first quarter of last year. The lower oil and gas prices and lower sales volumes were only partly offset by lower EMP taxation, lower exploration expenses, and favorable FX.
Refining and Marketing Clean CCS Operating Results decreased by 2% year-on-year, reaching RON 616 million, mainly due to lower refining margins, partly offset by higher retail and commercial margins and higher sales volumes. Gas & Power clean operating results was broadly flat year-on-year at RON 723 million, reflecting good operational performance in both Gas & Power business lines in the context of increased regulatory intervention. The clean consolidation line of minus RON 205 million in the first quarter of 2023 reflects mainly the increase in the quantities of petroleum products to prepare for the refinery turnaround in the second quarter. The group Clean CCS Operating Results decreased by 7% year-on-year to RON 2.1 billion.
For the first quarter of 2023, we recorded inventory holding losses of RON 122 million, mainly reflecting the decrease of crude prices over the quarter. For comparison, in the first quarter of last year, we recorded inventory holding gains of RON 107 million. Net special charges of RON 356 million were recorded in the first quarter of 2023, mainly related to the net temporary losses from forward power contracts in the gas and power segments. For comparison, in the first quarter of 2022, the net special charges of RON 162 million were also related mainly to temporary losses from power forward contracts. The Clean CCS net income attributable to stockholders increased by 5% year-on-year to RON 1.9 billion. The reported net income attributable to stockholders was RON 1.5 billion, 15% lower year-on-year.
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, where clean operating results decreased to RON 985 million. The market effect deviation of RON 164 million reflects the negative market effect of oil and gas prices and the positive effect from lower amount related to EMP taxes. For gas, last year, EMP taxes were based on abnormally high reference prices. By comparison, this year's taxes reflected high regulated sales quantities, which are accepted from overtaxation and for which royalties are calculated at kept prices instead of set. The operational effects include mainly the negative volume deviation due to the 4% lower hydrocarbon sales.
Looking at the lower chart, Refining and Marketing Clean CCS Operating Result slightly decreased by 2% compared to the first quarter of 2022. The negative market effect reflects the lower refining margin as a result of decreasing product spreads, mainly diesel. Operational effects in Refining and Marketing were overall positive, derived mainly from higher refined product sales, as well as an improved performance in the non-fuel business margin. In Gas & Power, the clean operating result was broadly flat year-on-year. In the gas business, the very good contribution from gas volumes extracted from storage partly offsets the lower margins from equity and third-party gas in the context of the highly regulated gas sales portfolio. The power business also had very good performance built on transactions outside Romania and strong captured power spreads, supported by contributions from balancing and ancillary services.
On slide 13, I would like to continue with the highlights of our cash flow statement. In the first quarter of 2023, we achieved an operating cash flow of RON 4.7 billion, 77% higher year-on-year, reflecting mainly the positive net working capital changes. Regarding the evolution of the net working capital, in the first quarter of 2023, we recorded a cash inflow of RON 1.7 billion compared to a cash outflow of RON 0.6 billion in the first quarter of 2022. The inflow in the first quarter of 2023 was mainly due to the decrease in trade receivables following lower sales volumes for electricity and petroleum products, as well as lower prices for commodities.
The inflow in the first quarter of 2023 also reflects the decrease in cash guarantees for transactions with energy products, which were built in the third quarter of 2022. The decrease in liabilities was mainly due to lower gas supplementary taxes driven by lower volumes subject to gas overtaxation, lower royalties driven by tax prices, as well as lower power overtaxation. In addition, inventory decreased, driven mainly by natural gas extraction from storage, partly compensated by the buildup of the fuel product stocks in preparation for the upcoming turnaround in Petrobrazi. Our net payment for investment amounted to RON 1.4 billion in the first quarter of 2023, 88% higher year-on-year.
The net cash position, including leases, increased to RON 16.7 billion at the end of the first quarter of 2023 versus RON 11.3 billion at the end of the first quarter of 2022. Our record high dividends for the financial year 2022 amounting to RON 2.3 billion will be paid starting June 7, 2023. Let me conclude our presentation with the outlook on slide 14. We expect Brent price in 2023 to be above $80 per barrel, significantly above the average of $65-$70 per barrel assumed in our Strategy 2030. Our hydrocarbon production in 2023 is expected to be around 110,000 barrels of oil equivalent per day, excluding divestments. We expect inflationary pressure on our costs to persist throughout the year.
However, a stronger dollar may support the production cost, estimated at around $15 per barrel of oil equivalent for the year 2023. In refining and marketing, we currently estimate an average refining margin higher than $9 per barrel in 2023. The refinery utilization rate is estimated to be above 85% in 2023, considering the scheduled major refinery turnaround. Petrobrazi refinery started a planned six-week turnaround on April 21st, with an estimated total impact in Clean CCS Operating Result of around RON 200 million, including OpEx and estimated margin loss. With regards to the Brazi Power Plant, the shutdown was prolonged until the end of June due to findings identified during inspections.
Consequently, we expect the result of Gas & Power segment to reflect the full shutdown of the plant for the entire second quarter and also the usual seasonal gas injection period. As Christina mentioned earlier, CapEx is expected to be around RON 6 billion in 2023, of which RON 2.9 billion dedicated to EMP, including Neptun Deep, RON 2.2 billion in R&M, and the rest in Gas & Power division. In 2023, we expect a positive free cash flow before dividends lower compared to 2022 value of RON 8.2 billion, mainly due to higher investments. We estimate demand for retail fuel products in Romania to be slightly above 2022. Demand for Gas & Power is expected to be lower compared to the previous year.
We expect total refined product sales to slightly 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 be lower, mainly on lower supply, both in equity and third parties. Net electrical output is also expected to be lower year-on-year in the context of the longer than initially planned outage of the Brazi Power Plant. For 2024, 2025, we maintain our guidance communicated in February. In conclusion, we continue our journey to deliver on our Strategy 2030, including securing EU funds for low and zero carbon projects that underpins our significant increase in investment and competitive shareholders returns. 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 will take as many questions as time permits. Once again, to ask a question, please press star one one. We'll pause for a moment to assemble the queue. I'm going to take our first question. The question comes from the line of Oleg Galbur from Raiffeisen Bank International. Your line is open. Please ask your question.
Yes, good afternoon, and thank you for the presentation, and congratulations on the strong results. I hope you can hear me well.
Yes, very well. Oleg.
Yes. I have two questions. The first one is on Gas & Power segment. Could you please provide more details on the G&P segment's strong performance in the first quarter? For example, it would be very helpful for us to have an idea of the individual contribution of gas and power business in the first quarter, as well as some guidance regarding the expected performance in the current and next quarters would also be helpful, especially when it comes to the gas business. Secondly, on the special dividend, we have now a better idea of what is the intention of the Romanian authorities with respect to the windfall tax application. Assuming that the final text of the law is promulgated by the president without major changes to what have been seen by the market, how would you...
How would it change your thinking about the size of the special dividend, if at all? Thank you.
Thank you, Oleg, for the question. I'll start with the first question on the gas and power results. Indeed, we had a very good result in Q1 for gas and power, and I'll try to explain a bit the main drivers for that. When it comes to gas, we had very good storage margins on a higher extracted volume of gas. We really realized very good storage margin. Here also on gas, you know, we are very regulated. Approximately 80% of gas volumes is regulated. When we say regulated, we refer not only to sales to households and district heating companies, but also industrial and consumer sales, which are at regulated supply margins and cap prices and sales to power plant.
If we refer to the sales to households and district heating, we indicated in our report approximately 4 TW to households and district heating. Coming to where is the driver for the great performance, we would highlight really the storage margin. If we move to power, on the power plant, power plant was utilized for the two months. We started the shutdown at the beginning of March. Nevertheless, we managed to have good results from the power plant and also very good results from balancing and ancillary services which were obtained to do based on availability of the power plant. In addition to that, we had high power margins from transactions concluded outside Romania. This would be the main things I would like to highlight.
We do not give the split Gas & Power, and I do recognize that it's hard to model. Nevertheless, if we look a bit into the next quarter, next quarter will be for Gas & Power, significantly lower. We need to have in mind the fact that the Brazi Power Plant is has an extended outage, so the entire Q2 will be affected by this Brazi Power Plant outage whole Q2. We expect an impact of such outage of extended outage of up to RON 150 million on EBIT impact coming from that.
If we look on the gas side, of course, it's a seasonally lower quarter for gas and corroborated also with significantly lower prices if we compare to last year, but also with the previous quarter and in the context also of higher regulation. I hope it was helpful a bit on guiding also on the next quarter.
Yes, thank you very much again. maybe just.
Yes, sure.
Maybe just a follow-up on the-.
Yeah.
power trading outside Romania. Is this something to be expected also in the current quarter, or this is rather on an opportunistic basis and hard to predict? How should we think about it?
This is something which we consider going forward. It's not so easy to secure. We cannot say we do expect a similar impact. It's rather opportunistic, but we continue to look into such opportunities in the next quarters as well.
Okay, thank you.
Moving to the second question on the special dividends, I think your question was corroborated with solidarity contribution discussions. Let me start from the solidarity contribution. As you might have seen, the amendments to the law that were proposed by the parliament have been rejected by the president due to unclarities, which was very much the case because the level of unclarities was very high in that draft. We do not know where this will be concluded, the parliament will start working on it next week, we do not have at all an indication on where the result will be.
Definitely when we will have an updated law, we'll look at it, calculate, and communicate the impact. Nevertheless, going to the special dividends, we have announced that we believe our balance sheet is strong enough, and we should be in a position to pay special dividends mid of this year, announced mid of this year. Based on our cash position and the size of such special dividends will depend on three things. Number one is Neptun, in mid of the year, we will have a better understanding of the cost and timing related to Neptun. Second is regulatory and fiscal intervention, here the main topic is the solidarity contribution.
Until then, we will know exactly what will be the final version, and the third, of course, the market environment and financial performance of the group. We remain consistent with this message like we had it quarter ago, and we look forward for mid of the year to give you more news about that.
Thank you.
Thank you. Now we're going to take our next question. The next question comes from line of Ioana Andrei from Alpha Bank Romania. Your line is open. Please ask your question.
Hello. Thank you for the presentation, from my side as well. Can you please disclose the gas deliveries at the regulated price allocated by ANRE in the first quarter and maybe for the full year? Additionally, can you disclose the sales on the power side that should be realized via the centralized acquisition mechanism at RON 450?
Okay. Thank you, Ioana, for the question. When it comes to sales to households and district heating companies in Q1, they were approximately 4 TWh . For the full year, we estimate more than double the amount of last year, which was similarly 4 TWh of gas. That's on the households and district heating companies. On the sales with the sales of this market mechanism, we do not disclose, but most of our sales will be subject to this starting the beginning of this year.
Okay, thank you.
Thank you. Now we're going to take our next question. The next question comes from line of Tamas Pletser from Erste Group Research. Your line is open. Please ask your question.
Yes. Thanks very much. Good afternoon. I got only two questions in my mind. First of all, on the Petrobrazi shutdown, can you tell us some details about it, the potential financial impact, and how do you manage the situation? My second question would be just a follow-up on Igor's question on the gas and power side. Do we have a significant seasonality in the gas and power business going forward? And is the new requirement to fill 90% of the storages, are these affecting your business positively? As far as I understand from your explanation, this is the case. Could we expect, let's say again, much better earnings in the fourth and the first quarter coming forward? Thank you very much.
Thank you, Tamar, for the question. Start with Petrobrazi shutdown. As we announced, we will have six weeks turnaround for Petrobrazi. We started 21st of April. The impact in the EBIT is approximately RON 200 million. Half of this impact is coming from maintenance costs that will be booked in P&L, and the other half is coming from lost margin not having the refinery available in this six weeks. Think that is clear. Of course, we do have CapEx that we spent for Petrobrazi in this period as well. On the Gas & Power, I try to guide that Q2 we expect to be significantly lower due to the combination of the both power and gas seasonality.
On the Q3 and Q4, we talk about, I mean you know the regulation is significant. 80%-90% level of regulation on the gas and power side. It's from that perspective, it's not much opportunity to do except for sales outside Romania or transactions outside Romania. On the storage side, I mean, it depends a lot on the prices, yeah? On the evolution of the prices versus the moment when we put the gas into storage and the moment when we sell it out, which was favorable in Q1 now. We'll have to see how this goes. I cannot provide the guidance in this respect right now.
Mm-hmm. Okay. That was great. Thank you very much.
Can I...
Yeah.
I was just gonna add one thing to Alina's comment, if that's all right. With regards to the Petrobrazi turnaround, actually this is the first time we've gone five years since our last turnaround. Prior to that, we were doing them almost every 2-3 years. We're increasing the cycle time, which overall means that the utilization of the refinery over sort of a five-year period is much higher than we've had in the past.
Okay. That's fair enough. 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 can now take the next question. Now we're going to take our next question. The question comes to line of Iuliana Ciopraga from WOOD & Company. Your line is open. Please ask your question.
Hi. Good afternoon, thank you for the presentation. Just again on the Gas & Power. There are no limits to the to the to the margin on storage because actually trading is regulated and there you're allowed just a 2% gain. Supply is regulated as well. What, I mean, how can you generate how such a high profitability on the gas side? Is there a lot of trading outside of Romania as well? If you could explain this a bit.
Yeah. Indeed, Iuliana, thank you for the question. It's not so easy to generate additional profitability in Gas & Power going forward. I think my colleagues do a great job. They look at the regional in the region, and they try to see if they can have anything around Romania, so in the region. Also they look into import possibilities to expand to LNG and with Greece as well as a hub for that. These type of things. Otherwise, if we look strictly into Romania is quite limited. Possibilities are quite limited considering the limitation and the regulation that you know very well.
The result of the first quarter, did that come from Romania or outside of Romania on the gas side?
On the gas side, it came from storage margin, as I mentioned. We still.
Is that six-
Had a good margin. Mm-hmm. Not that much from outside Romania on the gas side. On the power side.
Mm-hmm.
It came from outside Romania.
On the gas side, on the storage, is there a fixed margin that you can add or how does that work?
I mean, it's the margin that you achieve considering the cost of the gas that you had when you put it in the storage. The difference from that to the final price to the customers that you achieve. It's, yeah, it's not necessarily a fixed for us.
I see. I see. Okay. Okay. It's basically a one-off, right? Secondly on the-
Yes.
On the power...
Yes. Yes, please.
Secondly, on the power side, you had losses on the revaluation of the hedging contracts for power, EUR 371 million. That do not affect the Clean Result. However, power prices declined significantly in the first quarter. I was wondering what generated the losses. I would have expected gains on that side.
These are forward contracts to purchase power. That's why they generate an unrealized loss.
Oh, okay. Okay.
Okay.
Thanks a lot.
Thank you.
Thank you. Now we'll go and take our next question. The next question comes from line of Oleg Galbo from Raiffeisen Bank International. Your line is open. Please ask your question.
Oleg.
Excuse me, Oleg, your line is open.
Oh, yes. Hello again. I have a follow-up question. Could you please provide some details with respect to the gas sales portfolio, the split of which you show on slide number five? This is very helpful, but we're missing the quantities or the volume based on which this, the share of different segments or type of sales are presented here.
I mean, what we disclose, Oleg, in details with regards to quantities are the sales to households and district heating companies, which in Q1 were 4 TWh . Yeah. That's the level of sales to households and district heating companies. You might have also, of course, sales to power plants. This is, you can deduct that from the utilization of the power plant as well.
Okay. I was rather looking for the total volume of gas in the first quarter so that I can also calculate the volume sold on free market and on the regulated sales to third parties.
I think total gas sales volume we have in our in our report. I'm just opening it now to tell you. 13.13 for the Q1.
Sorry, how much?
Which is the total in sales. 13 TWh . 13, 1 3 for Q1. Approximately 80% of that overall was regulated and the remaining free market.
Okay. I don't know. It doesn't add up. If I take this, if I calculate 63% of 14TW, of 13 TW, I don't get to this 4 TW, of gas sold to households and, district heating companies, unless you include something else here or exclude something else here.
This is just a part of it. No. four out of 13 represents the regulated sales to households and district heating companies, approximately 30% of that.
Okay. Maybe then I'll follow up with you or IR team to-
Yeah.
To get to clarify this. Thank you very much.
Welcome.
Thank you. Now we'll go and take our next question. The next question comes to line of Daniela Mandru Petrovici from Swiss Capital. Your line is open. Please ask your question.
Hi. Hello. Thank you for the presentation. I have a very quick and simple question regarding the regulated volumes. Just a clarification because I'm not sure if the volumes that I heard are correct. You said that for this year, you are estimating 8 TW to be sold to, at regulated prices for households and non-households. Is correct?
We said more than double. That is double is more than eight. Yeah.
More than double. Okay. You sold 4 TW in the first quarter and for the full year, you estimate only eight?
More than eight.
More than eight-
For the full year, yeah.
Meaning, there could be more than eight, could be 20. More than eight meaning this is the minimum amount that you estimate?
Yes. Mm-hmm.
Okay, good. Not eight, so the minimum amount. Okay, thank you.
Of course, I mean, Daniela, it's Q1 and Q4 with the biggest quantities, yeah?
Yes.
Q1 was 4, and the rest of the year is more than 4, yeah?
ANRE didn't publish the allocated volumes for this year?
not entirely.
Not entirely. Okay, thank you. Thank you. This is all.
Welcome.
Thank you. Now we're going to take our next question. The next question comes through line of Iuliana Chiopραγă from WOOD & Company. Your line is open. Please ask your question.
Hi. Hi. Back to the gas sales. Just very briefly, how much of these sales were done outside of Romania? I mean, of the total 13 TW, how much was outside of Romania? Because that's actually the missing bit.
For Q1, Iuliana, for Q1 2023, 0.9 TW were outside Romania.
Can I clarify, are there any... I mean, I guess you also import gas into Romania because most likely...
Mm-hmm.
more trading. What are the regulations on the import side? Is there a limit on the margin for imports or? 'Cause there were some changes-
Mm-hmm.
on regulations. I'm not sure now.
Yes, we do not have a limit on the imports.
there is-
Otherwise.
No limit on margin for import. Okay.
Yes. Yes. Free market principle.
Something very basic actually. What is the transfer between BCM and megawatts? Just to clarify. You report production in BCM, what would be the.
It is around 11, but I will ask my colleagues in IR to follow up with you.
Thank you.
Thank you.
Thank you. Now we're going to take our next question. The question comes from the line of Tamas Pletser from Erste Group Research. Your line is open. Please ask your question.
Yes, thanks very much. I would have also a follow-up. I'm sorry for my ignorance for this question, but when you talk about the storage business, basically it means that you buy some gas from your Gas & Power segment, from your EMP segment during the summer, let's say for EUR 100, and you sell it later on on the free market, let's say in February, so during the first quarter at EUR 120. Let's say that. Is this the simple business model, what you talk about the storage margin and you always talk about the gain on this? Is it only affecting the free market, if I'm correct?
In principle, it's most of the gas is bought from our EMP segment. We have some quantities also from third parties, which are put into storage.
Mm-hmm.
When on the sales side, we sell the best we can sell. I mean, if it is, free market on free market, otherwise we need to follow the regulations now.
Mm-hmm.
That's.
Most of the margins you basically earned on your 22% sales during the quarter, which went to the free market, if I understand correctly?
Say again, Tamas. I didn't get this question.
Sorry. Are most of the margins, what you gained during the first quarter, 2023, you earned on this 22% free market sales?
Not, not only. I mean, I cannot say only that. Yeah. That's
That is the crucial part of it.
It was an important part on the free market, but not only. Yeah. We have also some sales which are cost plus, which are on end users, with bigger volumes. Is that that part also generated good results.
Okay. What was the reason that you were able to increase this storage business so much? Was it because the, let's say the, your customers were afraid of the security of supply issues and were they willing to pay some premium to you for this business? Was there any reason, particular reason in relation to the energy crisis to these good margins here?
First of all, we had a bigger obligation. Yeah. Our obligation to storage was higher than in the past. Yeah. It was in the context of everybody was afraid of last winter, what will happen in the context of the geopolitical context. From that perspective, yes. Also customers try to have secured volumes. That's why we were able to do contracts for the quantities from storage.
I see. I see. Okay. I think I tried to get a little bit closer to understand how this works. Okay, great. Thanks very much for that.
Thank you.
Thank you. There are no more questions.
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