Romgaz Medias is next target in gas privatisation

Gaz de France (France) and Ruhrgas (Germany) are considering taking part in the privatisation of Romgaz Medias, one of the leading producers of natural gas in Central and Eastern Europe, when it is put up for sale, sources from the two companies told Ziarul Financiar.

Gaz de France last week signed the contract on the basis of which it will acquire 51% in Romania’s largest natural gas company, Distrigaz Sud, for 311 million euros.

Shortly afterwards, Germany’s Ruhrgas signed for 51% in Distrigaz Nord, the other major gas company in Romania, for 304 million euros.

“Gaz de France might be interested in this privatisation (of Romgaz), but we will analyse this when the authorities start the process,” sources from the French company said. Ruhrgas officials reacted in a similar way, saying “everything will be debated when the deal is on the table.” (i.e. brought to the investors’ attention by the authorities).

Societatea Nationala de Gaze Naturale (National Natural Gas Company) Romgaz Medias produces in excess of 7 million cubic metres per year and is the largest producer on the domestic market. It has some of the richest deposits in the region and the increase in domestic prices makes the company even more attractive to investors.

According to the latest financial data from the Ministry of Finance, Romgaz is one of the most profitable companies in Romania – in 2003 it made 75.3 million euros (2,829bn ROL) in net income and had a turnover of 315 million euros (11,845bn ROL). It currently employs 5,300 people, which does not seem to indicate an overstaffing problem.

Still, international institutions are pressuring the Romanian authorities to sell Romgaz in 2006, which would involve selection next year of a consultant to prepare the privatisation process, Ministry sources say.

At the moment Romgaz accounts for 44% of domestic consumption, with the remaining amounts supplied by Petrom and imports from Russia though Gazprom.

Romania has imported gas from Russia for many years since its domestic production is declining every year due to its own deposits drying out.

Gaz de France representatives recently announced they would be involved in the Nabucco project that involves construction of a pipeline to bring gas to Central Europe from Iran via Turkey, Bulgaria, Romania, Hungary and Austria.

For its part, Ruhrgas wants to bring gas to Romania from Northern Europe via the Arad-Szeged pipeline between Hungary and Romania, which is currently under construction, so as to provide alternatives to Russian gas. adrian.mirsanu@zf.ro