Crude, Refining, Petrochemicals Sector in Romania (Update - January 2008)

Martie 2008

MANUELA OGRINJA, CFA - EFG EUROBANK SECURITIES

• Romania is a mature oil processing country, with multiple refining facilities and intensive transportation infrastructure. Of the total number of 10 refineries, 5 are owned by three players which succeeded to improve operations (Petrom-OMV, Rompetrol Rafinare and Petrotel-Lukoil), while all others are in a poor financial situation.
• The retail distribution comprises the refineries’ retail network, foreign distributors with no production facilities in Romania and small private filling stations.
• The sector also includes services providers (one public oil terminal and three private oil products transportation and services companies).
• The major change in the sector was Petrom’s privatization with OMV at the end of 2004 that resulted in a price increase of the oil refined and petrochemical products in 2005, to a level close to the CEE one. Rompetrol Rafinare has also changed hands to KazMunaiGaz last year (the latter acquired 75% of The Rompetrol Group).
• Requirement that Romania should comply with EURO 5 standards starting with January 1, 2009 (2 years later than the EU countries) has forced the players to accelerate investments in technology; important to mention that EURO 4 standards have been enforced on January 1, 2007, when Romania joined EU.

 

Industry structure

Crude production and imports

Total crude supply absorbed by Romania’s refining system recorded an upward trend during the past years. Nevertheless, in 2006 crude supply abated 3.2% y/y to 13.5 mn, and over the first 10 months of 2007 it reached 11.0 mn tons (from 11.3 mn over the same period of 2006).

Imported crude quantities recorded an accelerated growth, to 8.7 mn tons in 2006 (from 5.2 mn tons in 2003). Nevertheless, over the first 10 months of 2007, crude imports decreased 5.5% y/y to 6.9 mn tons.

The weight of imports has also increased over the past years, to 63-65% over 2005-2007 (from 49% in 2002). The balance is domestically produced.

Romania’s audited reserves stand at 75.5 mn tons of crude and 60.7 bn m³ of natural gas, with a life of around 16 and 10 years respectively. The domestic crude generally has mostly low sulphur contents, Petrom being the major Romanian producer.

Refining facilities

Romania has a total refining capacity of 23.5 MMT, in 9 facilities, the most important being Arpechim and Petrobrazi (Petrom OMV’s plants), Petromidia (owned by Rompetrol) and Petrotel-Lukoil. All other ones are in a poor financial situation or with unclear shareholding structure.

In 2006 Romania’s refineries processed a total of 13.5 MMT of crude, resulting an utilisation rate of 54% of the overall capacity (full 2007 data not available so far).

Petrom processes both imported and domestic crude, and Rompetrol and Lukoil – imported crude.

1

2

3

4

5

6

7

8

9

10

The tricky lag LUCIAN CROITORU Adviser to the Governor - BANCA NAŢIONALĂ A ROMÂNIEI Lucian Croitoru, Adviser on monetary policy issues to the National Bank of Romania Governor, talks about the NBR’s next moves and explains why the decrease ofthe policy rate hasn’t been reflected into lower interest rates on bank loans. mai mult... The turnaround CRISTIAN SPORIS Secretar de Stat - MINISTERUL ECONOMIEI ŞI FINANŢELOR Cristian Sporis, Secretary of State at the Ministry of Public Finance, in charge with the national treasury and public debt, explains how the state managed to borrow money at the lowest costs in the last seven years and how it turned from a clear market taker into a player with a strong position on the market. mai mult...