rompetrol’s success story
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ROMPETROL’S SUCCESS STORY
ENERGY—Romania’s Forum on Oil, Gas and Energy
Bucharest, June 16, 2005
Table of contents
The Rompetrol Group Profile
Rompetrol History
Privatization Attempts
The Turnaround of Rompetrol Rafinare
Structure of Romanian Oil Industry
Difference between Rompetrol Rafinare and others
Investigation into privatization procedures
The Rompetrol Group Profile
Largest Romanian group of private companies (2004 gross revenues of $1.61 billion), representing almost 7% of State Budget revenues
Covers 32% share of Romanian refined products market Domiciled in The Netherlands with worldwide operations and
assets (though mostly in Romania) Owned 100% by management Financed principally by international banks; audited to IAS
standards Active in upstream, refining, marketing and services One of the country’s largest exporters and taxpayers ($635
million in tax payments in 2004)
Achieved a landmark agreement with MOF in 4Q 2003 rescheduling historic tax liabilities
Our online Investor Relations center (at www.rompetrol.com) provides transparent information on company operations via our 2003 and 2004 Annual Reports, management presentations and a White Book on the 3-year post-privatization history of the Petromidia refinery
Our largest subsidiary, Rompetrol Rafinare SA, was listed on the Bucharest Stock Exchange on April 7th, 2004 and broke all trading records (and the IT system!) on the first day
The Rompetrol Group Profile
1998 - Control purchased by Dinu Patriciu and local investor group
1999 – Holding company established as The Rompetrol Group (‘TRG’) in the Netherlands
Rompetrol – History
1974 - Established as the international operator of the Romanian oil industry
1993 - Privatized by Management and Employee Buy Out (“MEBO”) and turnover subsequently reduced to below $6 million by 1998
1999 – First major acquisition. The Vega refinery – located in Ploiesti – is bought and doubles its revenues in the first nine months after take-over
2000 – Rompetrol takes over Petros – at that time Romania’s principal oilfield operator. The company has since been renamed Rompetrol Well Services, which is now listed on RASDAQ, Romania’s OTC market.
2001 – The Group’s largest acquisition, Petromidia S.A., is also Romania’s largest and most sophisticated oil refinery. Rompetrol committed itself to a sustained modernization process to make Petromidia a state-of-the-art facility in Eastern and Central Europe
2000 - Private equity investment by US-managed Romania & Moldova Direct Fund, L.P.
History – cont’d
History – cont’d
2001 – Rompetrol creates Rominserv, Romania’s first Engineering Procurement Construction & Maintenance (EPCM) company focusing on the oil industry.
2002 – OMV of Austria buys 25.1% of TRG NV; RMDF exits; OMV Chairman Dr. Wolfgang Ruttenstorfer joins TRG Board.
2002-2003 – Rompetrol opens subsidiaries in neighboring Republic of Moldova (Rompetrol Moldova) and Bulgaria (Rompetrol Bulgaria)
2004 – OMV takes over Petrom and sells its 25.1% stake in TRG back to management
2005 - Most significant Q1 results ever with net profit reaching $43 million. Rompetrol starts operations in Albania and opens a representative office in Moscow
Complexul Petrochimic Midia Navodari (the first name of Rompetrol Rafinare S.A) was one of the large oil refining plants which appeared after 1975
In 1991, the entity was changed into a stock company by taking over all of the assets of the former unit. The Romanian Government attempted three privatizations of Petromidia The first attempt was carried out in 1997 when the State Ownership Fund (SOF) had discussions with Daewoo, Glencore and Petromidia USA
The second effort was made over July 1998 - January 1999 and resulted in a sales/purchase agreement for 65.323% in Petromidia’s share capital with Turkish investor Akmaya
Due to the disagreements between the Romanian authorities and Akmaya regarding the additional incentives the Government re-slated the sale of a controlling interest in Petromidia
In a third effort, SOF concluded an agreement with the Rompetrol Group N.V. on 31 October 2000. Actual transfer of the stake was subsequently performed on 26 January 2001
Privatization Attempts
The turnaround of Rompetrol Rafinare
Crude Supply - considerations
Brent vs. Urals YTD 2005
$25
$30
$35
$40
$45
$50
$55
$60
$65
USD/bbl
Brent (Dtd) Urals (Med)
Crude Oil Prices
Types of crude used
The turnaround of Rompetrol Rafinare
Avg. Q1 Crude prices - 2004 vs. 2005
$32.03
$47.70
$29.00
$43.28
$3.02
$4.42
$- $10.00 $20.00 $30.00 $40.00 $50.00 $60.00
2004
2005
Brent Dtd Urals Med Differential
6.8847.297
8.488
13.148
0
2
4
6
8
10
12
14
2001 2002 2003 2004
% MTBE
Evolution of MTBE % in unleaded gasoline
The turnaround of Rompetrol Rafinare
Products Euro Products Sour CrudeSweet Crude
The turnaround of Rompetrol Rafinare
Production – 100% sour crude into 100% euro standard fuels
Structure of Romanian Oil Industry—Survival of 3 out of 5
80% Dinu Patriciu
TRG20% Phil Stephenson
51% OMV
Difference between Rompetrol Rafinare and others
RRC is a public company listed on the BSE and the ROTX Vienna Index
RRC discloses all ultimate beneficial owners
RRC has net profits as of Q4, 2004 and Q1, 2005
RRC financial results are audited by international independent auditors
RRC covers 32% of the refining market share in Romania
RRC has open and transparent supply contracts for crude imports
RRC is backed mostly by international banks which finance its activity
RRC has expanded its exports and activity regionally
RRC meets EU quality and environmental standards
Interest groups are still active in Romania and receive strong political backing PNA investigation started and ended last year—charges were rejected and sent for investigation to the General Prosecutor’s Office The General Prosecutor’s Office has launched an investigation into the privatization of Petromidia Although we suspect the initiation of the investigation was politically motivated, Rompetrol will cooperate fully with the prosecutors all through the process, which we hope will be:
Professional Expeditious Apolitical
Conclusions expected to vindicate the Rompetrol Group and also to disarm special interest groups
Investigations into privatization procedures
What we are doing to defend ourselves
To prove our innocence we have been cooperating with prosecutors and provided documents and answers that show no wrongdoing
Rompetrol retained the services of a team of local and international attorneys including international law firm Salans
Rompetrol shareholders brought forth to the public attention the lack of due process in conducting the investigation
Local and international media and civil society have rallied in support of principles such as presumption of innocence, fair and quick due process free of political or economic interference
Rompetrol shareholders are considering international legal action to defend investments made in the company
Rompetrol welcomes a swift and independent investigation conducted with the observance of due process and respect for the justice process
Rompetrol has posted documents, releases and media articles on its website detailing the issues surrounding the inquiry
Why should you care
Oil industry development in Romania moving away from old guard to a new paradigm embodied by Rompetrol will allow business to thrive and benefit all constituencies
Maintain positive investor climate in light of forthcoming EU accession
Respect for the rule of law and true presumption of innocence as part of the due process, to be followed
Cooperation with civil society to defend human rights
Prevent potential negative economic impact of justice does not follow due process
What happened to us can happen to anyone conducting business in Romania unless structural reform is applied
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