Lukoil sales up 150%, top $415 million

Lukoil Downstream SRL, the local branch of the Russian oil group on the fuel distribution market made profit in 2003 for the first time since the start of its operations in Romania. Lukoil’s business on the segment made $2 million estimated profit at a $415 million turnover. Its business grew 151% from 2002, due to an aggressive market expansion strategy. Lukoil has now come to own 202 stations, ten times more than it had two years ago.

“The number of gas stations is in line with our programme for 2003 we announced on various occasions. Lukoil Downstream operates, besides the 202 gas stations, 12 warehouses (for fuel wholesale), half of which belong to the company, while the rest are rented and we are negotiating their acquisition,” Nicolae Ciornai, Lukoil Downstream SRL general manager said.

The officials of the Russian operator announced last year the expansion of the gas station network targeted 200 stations by the end of 2003, and 300 stations by the end of 2004.

According to its own estimates, Lukoil Downstream Romania accounts for 15% of the oil product market in Romania through its gas station and warehouse network.

The Russian oil giant, the turnover of which amounts to $15bn a year, entered the Romanian market in 1998, when it bought the controlling interests in Petrotel Ploiesti Refinery. Its investments on the domestic market have reached $335 million so far, half of this amount being spent on the purchase of the Petrotel stake and on the investments for retooling it, while the other half has been allocated to the expansion of the network.

The Petrotel Refinery, halted in the spring of 2001, will become operational again this June, following an extensive upgrade programme enabling it to produce Euro 3, Euro 4 and Euro 5 fuels that cost $130 million.

“We hoped to begin (upgrading the refinery i.e.) in March, but began in July… We’ve had big problems, but no strikes, though,” Ciornai said. The Petrotel Refinery can process upwards of 3.5 million tonnes of crude oil a year and is one of the top five refineries in Romania alongside Petromidia (held by Rompetrol Group), Petrobrazi and Arpechim (SNP Petrom’s) and RAFO Onesti (controlled by businessman Corneliu Iacobov).

Lukoil’s investments on the Romanian market are supposed to amount to $450 million by the end of the year and the number of employees should exceed 5,000.
adrian.mirsanu@zf.ro