Good afternoon, ladies and gentlemen, and welcome to the OMV Petrom' s 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 at 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, who will moderate the event. Please go ahead.
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 start with a brief overview of our progress in terms of strategy and continue with presenting our second-quarter operational performance together with some key highlights on the macroeconomic and regulatory environment. Alina Popa, Chief Financial Officer, will give you more details on our financial performance and the brief outlook. Afterwards, the two EB members, together with Cristian Hubati, EB member responsible for E&P ; Radu Căprău, EB member responsible for R&M ; and Franck Neel, EB member responsible for Gas & Power, 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 to our conference call that will take you through our performance in the second quarter of 2025. Please let me draw your attention to our legal disclaimer, which you can read in detail on slide two. Ladies and gentlemen, let me open our presentation with a summary of our progress in our Strategy 2030 implementation in the first half of this year. In our strategic pillar, Grow Regional Gas, our Neptune Deep project is progressing as planned. In March, we started development drilling in the Pelican South field while progressing with the fabrication of equipment and construction, including the natural gas metering station in Tuzla, Romania. We also continued gas marketing activities.
In offshore Bulgaria, in the Hanas-Balun block, adjacent to the Neptune Deep block, in March, we closed a transfer of a 50% interest in the license to NewMed Energy while maintaining our role as operator. Last week, we announced the signing of a rig contract with Noble Corporation, an international offshore drilling contractor, for the drilling of the two offshore exploration wells. The drilling campaign in Bulgaria is expected to start in the fourth quarter of this year and last approximately four months. Regarding our strategic pillar transition to low and zero carbon, we made significant progress on many projects, particularly in renewable power. In June, we signed the acquisition from Enery for a 50% interest in the Gabare photovoltaic project, one of Bulgaria's largest PV projects. OMV Petrom and Enery will invest approximately EUR 200 million by 2027, including external financing for an installed capacity of approximately 400 MW.
We are also advancing with the SAF HVO project, aiming to support the decarbonization of the transportation sector. In February, we started the construction works for the production unit in the Petrobrazi Refinery, and in June, we exercised our option in a supply contract with Astra for the acquisition of pre-treated used cooking oil, thus reaching more than 80% of the feedstock for the first eight years of biofuels production at the SAF HVO plant. In the area of mobility, we inaugurated the largest electric charging hub in Romania for all types of vehicles, including for heavy transportation. By the end of June, we had around 1,000 charging points installed, and our plan is to reach up to 1,500 by the end of the year. We are also delivering on our commitment to offer attractive shareholder returns.
For the year 2024, we paid a base dividend per share of RON 0.044, up 7.5% year- on- year. In the third quarter, the Executive Board will decide if a special dividend is to be proposed. On HSSE, the total recordable injury rate for the period July 2024 to June 2025 was 0.54. Moreover, we continued our efforts to reduce greenhouse gas intensity with projects in all three business segments. On slide four, we present the key highlights for the second quarter. Operational performance was resilient in the second quarter. However, the context of lower and volatile oil prices, as well as the regulatory environment in gas and power, had a negative effect on our financial performance, partially offset by integration benefits. At RON 1.2 billion, our second-quarter clean CCS operating result was 14% lower year- on- year.
Our operating cash flow in the second quarter of 2025 reached RON 2 billion. The clean CCS return on average capital employed reached 12.8%. I will provide more detailed information on each business division later in this presentation. For now, I would like to highlight some developments in our traditional business. The second quarter is generally characterized by scheduled maintenance, and this was the case across all three business divisions in the second quarter of 2025. In E&P, this translated in a higher-than-usual decline in hydrocarbon production, reflecting larger scopes of works performed at key wells as well as timing. In refining, the planned shutdown at the Petrobrazi Refinery led to lower utilization of the asset. Similarly, in the power segment, the scheduled outage at the Brazi Power Plant resulted in a lower-than-normal contribution to the national production mix of 5%.
Worth mentioning that these maintenance activities are essential for the regular and safe operations of our business. In today's high-inflation environment, maintaining a sharp focus on cost, efficiency and streamlining our operations is crucial. To achieve this, we will continue our optimization programs by assessing selective field divestment opportunities, simplifying and automating our processes, and further improving contractor management throughout the company. We have launched cost optimization initiatives that are expected to achieve cost reductions of EUR 150 million by 2027 compared to 2024. We anticipate that the most significant impact from these programs will be realized in the next two years. At the beginning of July, we announced a natural gas discovery in Spineni, Craiova. Testing has confirmed that the discovery is commercially viable with a production potential of 1,300 barrels of oil equivalent per day, and we are moving forward with the approval of the development plan.
For this onshore project, we have already invested around EUR 15 million during the exploration phase. Our core business remains a strong source of cash flow and continues to support our investments in regional gas growth, low and zero carbon projects, as well as dividend payments. Let us now look at the evolution of commodity prices in the second quarter of 2025. Oil prices were highly volatile during the second quarter. Prices trended downwards in late April and May, influenced by escalating trade tensions, OPEC+'s decision to accelerate the unwinding of voluntary production cuts, and ongoing discussions regarding a potential [U.S.A.] Nuclear agreement. By early May, oil prices fall into their lowest level in several years, briefly dipping below $60 per barrel.
A reversal began in early June as supply concerns mounted due to rising geopolitical tensions, Ukraine's strikes on Russian air bases, and ultimately the breakout of an open military conflict between Iran and Israel, leading to Brent crude briefly trading above $80 per barrel. On average, Brent crude was priced at $68 per barrel in the second quarter, representing a decrease of 20% year- on- year and 10% quarter- on- quarter. OMV Petrom indicator refining margin reached $10.27 per barrel in the second quarter, 6% higher year- on -year in the context of lower crude oil prices. European spot gas prices began the quarter on a downward trend, reflecting significant concerns about economic growth in an increasingly protectionist environment. However, prices started to rise in June, driven by fears that physical energy flows from the Middle East could be disrupted.
The SEG price averaged EUR 39 per MWh during this quarter, representing a 20% increase year- on- year, but a 20% decrease quarter- on- quarter. On the Romanian centralized market, gas prices also declined quarter- on- quarter, but from a higher base, reaching an average level comparable to the SEG. Day-ahead prices averaged around EUR 39 per MWh , marking a 25% decrease quarter-on-quarter and a 46% increase year-on-year. Baseload electricity prices in Romania decreased by 36% quarter-on-quarter, but increased by 8% year-on-year to an average of EUR 86 per MWh. The average CO2 price fell by 6% quarter-on-quarter to EUR 69 per ton. This decline was largely driven by market uncertainty following the tariffs discussion, which raised concerns about a major restructuring of the global trade, potential long-term countermeasures, and the outlook of manufacturing activity.
CO2 prices, which are closely linked to gas prices, mirrored the downward trend seen in the gas market during this period. Looking now at the Romanian macroeconomic environment, the latest available data shows that in the first quarter of 2025, GDP increased by only 0.3% year-on-year. In May, the European Commission reduced its projected GDP growth for 2025 for Romania from 2.5%- 1.4%. For 2026, Romanian GDP is now forecast to grow by 2.2%, reduced from the previous 2.9%. The consumer price index for the month of June 2025 versus June 2024 was 5.7%. One rating agency issued a report after the announcement of the new fiscal consolidation package by the government. In July, S&P reconfirmed Romania's investment-grade status, yet with a negative outlook. S&P's estimates for Romanian GDP growth were revised down from 1.8% - 0.3% for 2025 and from 2.6% - 1.3% for 2026.
Nonetheless, most rating agencies welcomed the announced fiscal consolidation package, highlighting its importance for restoring fiscal credibility and stabilizing Romania's debt. However, the anticipated fiscal tightening is expected to put pressure on future economic growth and most likely will result in higher inflation. Looking at the Romanian energy sector in the second quarter of 2025, based on our internal estimates, the demand evolution for our products was mixed. Demand for retail fuels was stable year-on-year. Commercial demand was down by 4% year-on-year due to weak industrial sector evolution. Gas demand increased by around 9% year-on-year, generated by higher consumption from households and smaller medium enterprises due to colder weather, especially in April and May. Power demand was 1% lower year-on-year, while domestic production decreased by 2% year-on-year, making Romania a net importer of power in the second quarter of 2025.
The contribution of hydro and coal to the overall generation mix significantly decreased year-on-year, while electricity from solar, wind, and gas sources increased year-on-year. Let me now summarize the key highlights of the Romanian regulatory framework. Looking at the fiscal regulatory framework in Romania, the power market was liberalized starting from the 1st of July, and additionally, the government is implementing a series of measures to protect vulnerable consumers. As for gas, the Ordinance 6/2025 maintains the regulations until the end of March 2026, after which the gas market is also set to be liberalized. We reiterate our belief that free market principles are fundamental for investments and that interventions should be temporary in nature, and we welcome the state actions to put in place the mechanism for vulnerable consumers.
The 0.5% tax on the net value of certain constructions introduced at the beginning of 2025 has had an impact, had an impact of low double-digit million euros for 2025. The 0.5% tax on turnover introduced in 2024 for two years remains applicable also in 2025. We maintain our estimate on the impact from this tax to be below RON 250 million in 2025. The newly appointed Romanian government has proposed a set of fiscal measures with effect after the 1st of August 2025. These include, among others, increases of VAT rates and excise duties, which could potentially affect the demand for our products in the medium term. Let me now move to the performance of our divisions, starting with exploration and production.
Clean operating results in exploration and production decreased by 20% year-on-year to RON 657 million in the second quarter of 2025, driven by lower oil price and hydrocarbon sales volumes, unfavorable forex effects, higher gas taxation, and higher production costs. These were partly compensated by low depreciation, higher gas price, lower exploration expenses, and net positive impact from mitigations. Hydrocarbon production in the second quarter decreased by 7% year-on-year, mainly due to planned maintenance activities and natural decline in the fields. However, on a like-for-like basis, excluding the impact of maintenance, which occurred in the second quarter this year versus the third quarter last year, production was 3.7% declining year-on-year.
Production cost per barrel of oil equivalent increased year-on-year by 18% to $18.51, reflecting lower production, unfavorable forex, and increased costs, including the newly introduced construction tax, with an impact of $0.32 per barrel of oil equivalent. For the full year 2025, we largely maintain the guidance provided in April. We keep our estimate for Brent oil price at $70 per barrel. We expect to produce around 104,000 barrels of oil equivalent per day, considering no divestments. We now see the production cost above $17 per barrel of oil equivalent, given the forex effect, the new construction tax, and the expectation of persisting inflationary pressures on our costs. CapEx in E&P is estimated to be around RON 5.8 billion. Alina will provide more details later.
In refining and marketing, the clean CCS operating result decreased by 25% year-on-year to RON 550 million in the second quarter of 2025, mainly in the context of the 20-day planned shutdown of the Petrobrazi Refinery in May. Retail sales were flat year-on-year. However, total refined product sales volumes decreased by 9% year-on-year, reflecting lower product availability in the context of refinery plant shutdown, impacting export and commercial sales. Recent market evolutions have improved the outlook related to refining margins. For the full year 2025, we now estimate the indicator refining margin to be around $8 per barrel. The guidance for refinery utilization rate is capped at between 90% and 95%. In terms of retail fuel products demand, we change our estimate for Romania from slightly above compared to 2024 to stable.
For our total refined product sales, we now see a lower year-on-year performance, with broadly flat retail fuel sales in line with demand evolution. In gas and power, we achieved improved performance in both business lines. However, the overall result remained a loss of RON 7 million as it continued to be affected by regulatory framework and market price development. In the gas business, we had a good operational performance with sales volumes 23% higher year-on-year and higher realized margins for both equity and third-party gas. The power business continued to be affected by the changes in legislation introduced starting April 2024, although to a lower extent compared to the second quarter of last year, mainly from reduced overtaxation. We achieved good results from higher production, improved margin generation by volumes bought from third parties, and by the balancing and interior services.
In addition, our already operational renewable assets in our portfolio, though small, have also started to contribute to our overall power margin. The Brazi Power Plant generated 0.61 TWh in the second quarter, covering 5% of Romania's generation mix in the context of the planned shutdown. For the full year 2025, our total gas sales volumes and the net electrical output are estimated to remain stable year-on-year. Please let me now hand over to Alina for more details on the financial results of the second quarter of 2025.
Thank you, Christina, and good afternoon also from my side. I will continue the presentation with slide 12, starting with some highlights on the income statement and also presenting key developments in our cash flow statement.
Group clean CCS operating results decreased by 14% year-on-year to RON 1.2 billion, with lower results in E&P and R&M and improved results in gas and power. The clean consolidation line was RON 15 million in the second quarter of 2025, mainly as a result of lower fuel product stocks and lower oil prices, overcompensating the effect from gas volumes injected into storage. For the second quarter of 2025, we recorded inventory holding losses of RON 113 million, compared to losses of -RON 4 million in the second quarter of 2024. We also recorded net special charges of RON 121 million, mainly in relation to reassessment of provisions and temporary valuation effects from forward contracts. For comparison, in the second quarter of 2024, we recorded net special gains of RON 46 million, mainly due to the net temporary gains from forward contracts.
The net financial result was a +RON 225 million, mainly due to interest income following positive outcome from litigation. As a result, in the second quarter of 2025, the net income attributable to stockholders decreased by 17% year-on-year to RON 1.1 billion. The 0.5% tax on revenue introduced in 2024 amounted to around RON 44 million, mostly booked in the refining and marketing segment. As for the newly introduced 0.5% tax on constructions, we booked in the second quarter around RON 16 million, mostly in the exploration and production division. With regards to our cash flow statement, in the second quarter of 2025, the cash generated from operating activities before networking capital movements was RON 1.4 billion. For comparison, the amount recorded in the second quarter of last year was RON 683 million, being impacted by the payment of RON 1.2 billion solidarity contribution on refined crude oil for 2023.
Working capital changes led to a cash inflow of RON 571 million in the second quarter of 2025, compared to RON 372 million in the second quarter of 2024. Following a strict working capital discipline, the higher cash inflows reflect mainly lower receivables and inventories. Overall, the operating cash flow in the second quarter of 2025 amounted to RON 2 billion, compared to RON 1.1 billion in the previous year. Our net payment for investing activities amounts to RON 1.9 billion, an increase of 180% year-on-year. This mainly reflects a cash outflow for organic CapEx amounted to RON 2 billion, partly compensated by a net cash inflow from investments in government bonds. Our base dividends for the financial year 2024, amounting to RON 2.7 billion, were paid starting June 3rd, 2025.
The net cash position, excluding leases, decreased to RON 7.3 billion at the end of the second quarter of 2025 versus RON 12.8 billion at the end of June 2024. Moving now to slide 13, total CapEx for the first half of 2025 was RON 3.3 billion, 37% higher year-on-year. 73% of this amount was spent in exploration and production, the biggest project being Neptune Deep. In addition, we finalized the drilling of 15 new wells and site tracks and performed more than 260 workover jobs. In refining and marketing, investments increased by 24% to RON 740 million, mainly for the Petrobrazi shutdown and ongoing projects related to the transition to low and zero-carbon activities, such as SAF HVO unit and e-mobility. In gas and power, we invested RON 120 million, reflecting the progress made on the renewable power portfolio and the planned outage of Brazi Power Plant.
For the full year 2025, assuming a predictable and competitive regulatory and fiscal environment, we maintained the guidance provided in February. We planned organic CapEx of around RON 8 billion, more than 25% higher year-on-year. Additionally, potential inorganic CapEx is estimated at up to RON 0.6 billion, mainly in connection to the M&A transactions in the gas and power segment. Let me move to outlook on slide 14. We have presented already our expectations for the relevant indicators for 2025. As a result, this year, in the context of higher planned investments, we expect the free cash flow before dividends to be negative, decreasing further our net cash position as planned. We are closely monitoring events on the global and local agenda and permanently assess their impact on our business. The assumptions and targets for the period 2026-2027 are currently under review as part of our annual midterm planning process.
We are confident that our strong financial position and integrated business model will help us navigate in this volatile environment. With this, we conclude 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 now pause for a moment to assemble the queue.
Our first question comes from the line of Oleg Galbur of ODDO BHS. Please go ahead. Your line is open.
Good afternoon, and thank you for the presentation and for the opportunity to ask questions. I have four. Firstly, on the litigation gains, could you please tell us what was the exact impact on the operating results and on financial results? Could you also explain why was this gain not reported on the special items?
Because, frankly, it was a bit confusing for us to interpret correctly the E&P segment performance. Secondly, on the special dividend decision. From the way you phrased it in the report, it seems that you have delayed the decision, although you must have already pretty good visibility on this year's performance. My question is, I guess, are there any particular reasons for that? Could it be related to possible exclusion of Petrom from FTSE indices, for example? My next question relates to your investments in green energy project. After the most recent acquisition in Bulgaria, it looks like Petrom should be able to achieve its 2030 targets in terms of installed capacity. Do you see more room to grow in this space? In other words, do you plan to invest more money in renewables, at least opportunistically Lastly, could you please provide us the volume of gas to be sold at regulated prices in Q3 and Q4? Thank you.
Oleg, thank you very much for your questions. Alina, maybe you take the litigation and the special dividends, but also the FTSE indices. I think, question that's there as well. Franck, maybe you'll take the volume sold on the gas market, and I will take the energy transition investment.
Yep. Hello, Oleg from my side. Starting with the first question, the net positive impact from litigation in EBIT in the operational result was approximately RON 200 million. The positive impact in the financial result was approximately RON 170 million in Q2 2025. This is related to old topics, related to fiscal treatment for some transactions that happened many years ago, more than 10 years ago. Legal process took very long, and it was concluded by the court in Q2 2025.
Therefore, the impacts were booked in Q2. The reason why they were not reflected as special, when we booked the expenses related to this. Litigation, actually, the provisions related to this, they were also not special at that time. We followed the original treatment of the expense also when we reversed, when we had the revenue this time. This is the simple technical explanation on it. Moving now to special dividend. I think you know very well our dividend policy and dividend guidance. We had, when it comes to base dividend, the progressive base dividend, we announced 7.5% increase versus previous year. It was approved. The payment started in June. When it comes to special dividends, we paid them in a favorable market environment and provided our CapEx spends are funded. For the decision, we debated a lot what mid of the year means in our company.
We had some lively debates on that. We announced now that we will take the decision by end of September, so in Q3. This is what we announced together with the report today. This decision is based on three main elements. Number one is the progress on our significant projects. We are in the most intensive investment period of our history with a lot of projects ongoing. We will assess the progress of all that. Second one, which is probably the most unknown at this point in time, is related to the significant changes in the regulatory and fiscal regulations going on in Romania right now. There are several fiscal packages that have been announced, but we are still assessing, and there are still potentially more to come.
We want to have full clarity on the extent to which such fiscal and regulatory measures will have an impact on our company. The third dimension is related to the overall market environment, oil gas prices, refining margins, and our financial results. There, yes, we do have quite some clarity based on the first two quarters already. Later September, we will have a decision when it comes to that. This has nothing to do with the FTSE, and let me explain a bit the FTSE situation because I think it's important to go through that as well. Our share price had a very strong evolution in the last few years. If we look year- to- date, we had approximately 10%. If we look last three years, above 45%. FTSE has three criteria. First is size of market capitalization. We have no issues at all on that.
Second is size of free float. No issues at all on that. The liquidity test is the third one where we are struggling. The reason for that, what we see is the number of investors, middle and long-term investors in Petrom is increasing. Generally, this is a good thing. It's not a bad thing, especially as we are a company and an industry which are investing mid and long term. That shows the trust of the investor in us. It comes with the unintended consequences of this low liquidity. This is where we have the challenges around this third criteria related to FTSE. We will see. We will monitor the progress. It should be somewhere in August, September where we will see the final decision from FTSE. Thank you.
Thank you, [yet again]. Maybe I'll just say a couple of comments on investment in energy transition in general, and then actually probably the details should come from Franck. I think, Oleg, what I would just want to highlight maybe at the higher level of energy transition investment, what I think you can see is that there are some areas where we go faster, and there are some areas where we go a bit slower. For example, when we put our strategy update out last year, we increased our target to 2.5 GW for our renewable power portfolio, including with partnerships. That was an increase from 1 GW in our original ones. This is a clear example of where we were going larger. In biofuels, we went a bit slower. The main message there is that we will need to watch how things are unfolding to make sure that we are investing appropriately.
As we put the assets and bring the new assets in, they are fully being utilized. It's going to be a real ability to sort of predict how the market is going to unfold, always to make sure that we are maximizing the use of our assets and not putting any assets onto the market that won't be fully utilized. That gives you just a little bit of example to make sure that we're being flexible and careful and also always making sure that we get double-digit rates of returns for our low and zero-carbon investments. Maybe, Franck, you want to add a little bit with regard to renewable in general.
Good afternoon, Oleg, and thank you for the question. We are quite busy now to build our renewable portfolio. As we mentioned in our slides, we are building about 100 MW under construction. It's photovoltaic.
We will start also the two- wind project construction in the second half of the year. Very busy schedule. We will have a new project in Bulgaria. Yes, we are in line with our target. We will achieve our target. What we are looking at on top is not necessarily new renewable capacity, it's power storage. Where we have a PV plant, we install also power storage, as we see quite a good opportunity and good return there. That's what we are focusing on at the moment in terms of business development. In terms of your question on gas, we have this regulation till March 2026, which impacts two things. One is the price to sell to the B2C customers and the district heating, and that's capped at 120 lei per MWh, but with no supplementary tax on gas for this sale, which is quite significant in Romania.
Also, for the storage of gas for the B2B, we also supply at 120 lei per MWh as well. This will cover around 65% of our sales for 2025.
Thank you very much for that. Just as a follow-up, do you have a specific number for the third quarter and fourth quarter?
It's nearly the same. I think it's 65% per quarter. There is a mix between injection now for storage, which is mainly Q2, Q3, but then we have the winter sales for the household. It's quite stable around 65%.
In terms of megawatts, you don't have a number yet for—
Oleg, are you referring to the sales to households and district heating? This is the one?
Exactly. Exactly.
We can provide these numbers. I can do that. If we refer to Q2 2025, 2.6 TWh . First half 2025, 6 TWh . Q3 2025, 2.1 TWh. Full year forecast 2025, 10 TWh. We have also Q1 2026, 2.6 TWh.
All right. Thank you very much. It was very helpful.
Thank you. We will now take our next question.
It may change. That's our forecast.
Our next question comes from the line of Tamas Pletser of Erste Group Research. Please go ahead. Your line is open.
Yes, thank you very much. Good afternoon. I got two questions. First of all, I think you mentioned during the presentation that in the second quarter, you booked around 16 million payment as a construction tax in the E&P segment. I just wanted to ask this confirmation. Also, what was the impact of the oil and gas revenue tax in the same period? I suppose this is also affecting the E&P. If you can tell a little bit more on this, that would be really helpful.
The second question I have is your gas and power business. I mean, you mentioned that the regulation for the gas part of that business will change only in 2026. Can we expect this segment to return to profitability in the third or the fourth quarter or in the first quarter next year, even before the regulation changes for the gas part of that business? Thank you very much.
Thanks very much for your questions, Alina, on the tax and Franck. I'm very glad to see regulation changing.
Hello, Tamas. Construction tax in Q2 2025 was approximately RON 17 million , and as it was an incentive for paying it earlier, we paid it fully in Q2. When it comes to oil and gas taxation, you mentioned, so we had normal, we have royalties, approximately RON 175 million royalties paid in Q2, both crude oil and gas. Then we have natural gas, additional revenue taxes, supplementary taxes for gas, approximately RON 95 million in Q2 2025.
Okay. I think you mentioned in the presentation, I don't remember precisely, I think it was page, let me just check it. Yeah, that was page seven. You mentioned this oil and gas revenues tax. What was that one, this 0.5%, which is applicable until the end of 2025? What was the value of that tax? If you can mention, that would be helpful.
Okay. It refers to tax on turnover. If there is a tax on turnover of 0.5% applicable for 2024 and 2025, it should end in 2025. This is for full year 2025, approximately RON 250 million , up to RON 250 million for the entire year. So, yeah, 60 million per quarter.
Okay. That's good. Thank you.
Yeah. Hi, Thomas. On the gas and power, yes, we definitely will come back to some, I would say, more positive results. Definitely. I think the last year has been very difficult with this regime of regulation on power. As you know, there were two taxes mainly. One was about above 400 lei per MWh, and including your CO2 cost, you had 100% tax and then 80% tax in Q2 this year. This will disappear since 1st July, and also, the tax on power and gas trading disappeared as well. That's really very beneficial, of course, for the business. Now, we depend on the stock spread, of course, but we see already an improvement. We will see positive results already for Q3 and Q4, and our target is to recover the losses from Q1, Q2 by the end of the year.
Okay. That's quite clear. 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 wait to see if there are any further questions.
Our next question comes from the line of Laura Simion of BRD GSG. Please go ahead. Your line is open.
Good afternoon. Thank you for taking my questions. In fact, I have only one question remaining because some of them were answered earlier. Regarding your expectation of the demand of your products, especially retail, you mentioned in the presentation an estimate of the National Bank for the inflation this year, which is quite outdated. In May, they said in the last policy decision that inflation will be much higher than their May estimate. Considering this inflation spike in the second half of the year, do you still see the demand stable? Thank you.
Thank you, Laura. One question, and I'll do answering on this one. Generally, when we have adjustments, like in this particular case for us from tomorrow, the excise and the VAT, we do not see immediate impact into the demand. Generally, for the base products, the demand stays for a while on a similar level. We do stay with the actual forecast of having a stable demand. Most probably, the impact is going to be visible and felt in the sense of decreasing from next year on, beginning of next year, as we are calling it, on a midterm. In general, when we talk about the impact on sales related to the macroeconomic indicators, the economic growth is the one that gives us the best indication on that, which indeed is relatively slow or reduced for this year, but still on a positive trend.
Thank you.
Thanks so much.
Our next question comes from the line of Oleg Galbur of ODDO BHF. Please go ahead. Your line is open.
Yes. Thank you for letting me ask a follow-up question. I'd like to ask you, can you spend a few minutes and elaborate on the impact of the U dollar depreciation on your second quarter results? Because you're mentioning the impact on different segments, I would like to ask you maybe to give us more color on what was the impact on the segment level and also on the consolidated level, maybe. In other words, if you know and can share with us on a like-for-like basis, what would have been the net profit results in a stable FX environment? Thank you.
Thank you, Oleg, for the question. I mean, we don't have such a calculation. I mean, I think probably the place where you see this impact the most is if you look into the production cost in E&P. Production cost in E&P, if we look Q2 versus Q1, we have a $1.1 per barrel impact, negative impact, increasing production cost because a dollar weakened versus first quarter. Overall, clearly, we have. When dollar is weakening, we have a negative impact in our results, but we don't have such a calculation in, such a detailed calculation. What we do present is a sensitivity in the sensitivity page, the end of our presentation. You can see there, sensitivity for US dollar appreciation by $0.10. We have approximately EUR 90 million EBIT impact. You can use that one to do some estimations, but we do not provide more than that.
Understood. Thank you.