Crude competition between Petrom and Rompetrol

Newsroom 04/03/2008 | 17:35

The history of Rompetrol is directly linked to 1998, when Dinu Patriciu, a local businessman, and a group of investors acquired the majority stake in Rompetrol. After this deal the whole future of the company changed.
The firm soon made the first steps towards its international expansion, setting up its headquarters in the Netherlands and acquiring Vega Ploiesti refinery. Between 1999 and 2000, Rompetrol sped up its evolution from a modest oil services company with a USD 5 million turnover, to the current powerful and integrated oil group, with an estimated turnover of around USD 6 billion in 2006. In 2000, Rompetrol took over Petros – the sole oil well service provider from Romania at the time. Petros was renamed Rompetrol Well Services SA and one year later the company makes its main acquisition: it buys Petromidia, later called Rompetrol Rafinare.
From 2002 the Romanian oil and gas company gained an important partner, when OMV Austria became the owner of 25.1 percent of Rompetrol Group shares. But OMV lost its share package two years later when, due to Romanian competition regulatory requirements, the 25.1 percent stake was returned to Rompetrol management. Meanwhile, from 2002, the company opened subsidiaries in the Republic of Moldova and Bulgaria. Another important step in the company future was taken in 2004, when Rompetrol Rafinare was listed on the Bucharest Stock Exchange. Three years ago, the Rompetrol Group NV announced that it had signed a contract for the purchase of the entire stake owned by Dyneff Group SA, the largest independent distributor of oil products in France, with operations in France and Spain.
In August, 2007, CEO Patriciu and his associate, Phil Stephenson, sold 75 percent of Rompetrol to the Kazakh company KazMunayGas (KMG). Patriciu is said to have netted around EUR 1.6 billion through the sale, though no sum has been made public, propelling him to the top of the Romanian business rich list. Patriciu will remain a significant shareholder and CEO of the group.
The firm plans to reach 450 gas stations units this year, meaning an investment of around EUR 80 million. And almost USD 22.6 million will be invested by August 2009 in growing the oil transportation capacity through Midia Navodari harbor.
At the same time,1998 was also a key year for Rompetrol's main rival – Petrom. That year, it merged with INCERP Ploiesti, a new subsidiary, and the main objectives of the privatization strategy were established. One year later, Petrom made the biggest Romanian oil field discovery in the last 25 years on the Black Sea platform through the Pescarus 60 well, and the Doljchim Craiova plant was purchased, becoming a new Petrom subsidiary.
In 1999 the firm started its expansion plans. It inaugurated the first commercial complex in Hungary, bought oil fields in Kazakhstan and began the social operations in view of exploration and extraction. Two years later, Petrom shares were listed at Bucharest Stock Exchange, and the year after Petrom split off some of the company's activities. It outsourced the mechanical and energetic activities of Petromar Constanta branch (785 employees) and the Petroserv branch, which was taken over by Petrom Service along with its personnel. All of this was done for the company's privatization, which started in earnest in January 2002, with the publishing in the Romanian and international press of the announcement for the selection of the consultant. Of the 12 banks which submitted their interest letters, seven were selected.
In August 2002 company officials signed an agreement with EBRD for USD 150 million, a pre-privatization syndicate loan, and in December the same year the syndicate formed of Credit Suisse Boston and ING Barings Limited was appointed privatization consultant. Two years later, the privatization process was finished.: OMV Austria acquired 51 percent of Petrom's share capital. One year later, it bought 99.9 percent of shares in OMV Romania, OMV Bulgaria and OMV Serbia and 30 MOL filling stations, plus a 95 percent stake in Aviation Petroleum.
In mid-September 2007, the firm acquired the oil service activities of Petromservice for EUR 328.5 million. Officials said that investments of around EUR 90 million would be made over the next few years in modern technologies and equipment, infrastructure and IT applications. Future plans include building a power plant that will be run on gas.
Sidex welds to ArcelorMittal corporation

Mittal Steel Galati, the largest iron and steel plant in Romania and Central and Eastern Europe, was state owned until 2001 and even now it is still commonly referred to by the old name, Sidex.
Media reports said over the years that the privatization process was not a good one for the Romanian authorities. The Indian company was awarded state aid worth millions of dollars. The foreign investor had to put up USD 500 million to modernize the technology and USD 125 million for environmental safety.
Augustine Kochuparampil, CEO of Mittal Steel Galati, told Business Review last year that the company had spent almost USD 77 million financing environmental projects. “In the last two years, we have installed de-dusting installations in furnace number two and number three. Number one is not working and we have no intention of making it work. At steel plant number one, where 80 percent of the production is carried out, we are investing in a de-dusting system and we hope to complete this project by October 2008,” said Augustine Kochuparampil. According to him, the company is considering the possibility of outsourcing this activity to a global company.
In 2006, Mittal Steel Galati announced a net profit of RON 167 million compared with RON 161 million of losses in 2005. Company officials say this year the firm will invest USD 50 million in 13 environmental projects. Discussions are ongoing with a renowned energy producer to sign a long-term contract in order to reduce energy costs that reached 11 percent of total production costs. Kochuparampil said that the company was talking with all top energy companies, in order to assure the necessary energy for the whole complex.
The Romanian company will this year start producing high-value products and will try to sell them in the company's focused countries: Romania, Bulgaria, Turkey, and Western Europe.

By Dana Ciuraru

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