Romanian state-controlled natural gas and energy group Romgaz, the country’s largest gas producer, is set to issue the first tranche of a €500m bond on the Luxembourg Stock Exchange as early as next week, CEO Răzvan Popescu told Paperjam.
Romgaz, which plays a pivotal role in Romania's energy landscape--controlling 52% of domestic gas production and providing over 90% of the country’s underground gas storage capacity--received approval for its up to €1.5bn Euro medium term notes (EMTN) programme from the Luxembourg market regulator, the Financial Sector Supervisory Commission (CSSF), on 20 September 2024.
This EMTN programme, marking Romgaz’s first bond issuance, will be listed both on the Luxembourg and Bucharest stock exchanges. Popescu highlighted the importance of this dual listing, saying, “As a Romanian majority state-owned company, however, we feel it is our duty to support the local market and thus we will also list the bonds on the Romanian stock exchange [as well].” The Romanian state, through the ministry of energy, is the majority shareholder of Romgaz, owning 70.01% of the company’s shares.
Major offshore project
Romgaz’s future growth is closely tied to its offshore operations, especially the Neptun Deep Black Sea offshore block. The project, a 50-50 joint venture with OMV Petrom, a Romanian subsidiary of Austrian OMV. “This project will make Romania the largest gas producing country in Europe, bringing energy security to Romania and the region,” Popescu said. He also emphasised Romgaz’s diverse portfolio, which extends beyond offshore development to onshore projects and renewable energy.
Romgaz’s Neptun Deep project is currently in the development phase, with production expected to begin in the first quarter of 2027. The environmental permit for the project was issued by the Environmental Protection Agency Constanța in June 2024.
Bond programme
To finance its ambitious plans, Romgaz is preparing to issue a €500m benchmark bond with a five-year maturity, offering an annually payable fixed coupon. Popescu mentioned that the company is holding meetings with investors, saying, “This week our executive team planned several meetings with potential investors that may have an interest in supporting our plans. If all goes well, next week we should be in the position to close the deal and raise the first tranche.”
Banque Internationale à Luxembourg (Bil) is acting as the ‘listing agent’ for the EMTN programme. The bond proceeds will be essential to fund both the Neptun Deep project and the company’s planned investments in renewable energy.
Market position
As of the end of 2023, Romgaz reported approximately 46bn cubic metres of proved gas reserves and an annual production of nearly 5bn cubic metres. For the first half of 2024, the company reported a profit before tax of RON 2.17bn (€434m). The company has a credit rating of BBB- with a stable outlook, assigned by Fitch Ratings.
The proceeds from the EMTN bond issuance will be crucial for Romgaz as it seeks to finance its offshore projects, stabilise its onshore production and explore opportunities in renewable energy. “We are planning to invest in renewables, actively looking for projects worth pursuing. We have ambitious plans going further, all these plans requiring substantial funds. The current onshore production will fund our offshore project, but additional finance will be needed to complete the project and implement our growth plans,” Popescu noted.