Will Petrom be able to stay in one piece after sale?

The investors in the race for Petrom are not interested in all the assets of the company as neither are they interested in keeping it in one piece after privatisation, sources involved in SNP’s privatisation process told Ziarul Financiar. This is the trickiest issue the authorities have to deal with during their negotiations with the investors still in the race.

“The talks with the investors target precisely the period of time for which Petrom’s future owner shall keep Petrom like it is now, as investors want it shortened,” the quoted sources stated.

The Economy and Trade Ministry, however, wants Petrom to remain an integrated company, with a portfolio that includes drilling for and production of oil and natural gases, refining, petrochemical operations and a fuel distribution network as established back in 1997.

Still, signals from investors point to every competitor being actually interested in only a certain part of Petrom’s portfolio. The takeover of 51% in Petrom is appraised at approximately $1-$1.3bn by international analysts.

“We are selling the company with its future in mind. Had we intended to sell it piece by piece, a break-up would have been done prior to the privatisation. The negotiations include contractual provisions about the future of the company,” Dan Ioan Popescu, Trade and Economy Minister told a news conference on Tuesday.

Seven companies, OMV (Austria), Occidental (US), MOL (Hungary), PKN Orlena (Poland), Hellenic Petroleum (Greece), Gazprom (Russia) and Glencore (Switzerland) are currently expected to submit a final bid for Petrom by early April and one of them will be selected as winner.

Sources involved in the privatisation process last year were saying the international institutions and the consultant had suggested the Romanian State to split Petrom and sell it “piece by piece.” The Ministry dismissed this as an option.

Romanian State’s consultant for this privatisation is the consortium comprising Credit Suisse First Boston and ING Barings investment banks.

The representatives of some of the suitors later said what assets they wanted from Petrom.

PKN is primarily interested in Petrom’s gas production and its petrochemical industry-related assets. OMV eyes its upstream (oil and gas production) operations and part of the fuel distribution network. Lukoil is after oil processing assets and the gas station network, the group’s officials in Romania say.

The investors’ interests in taking over part of Petrom’s business led to preliminary talks over alliances, which did not materialise in the end, as the Economy Ministry himself pointed out.
adrian.mirsanu@zf.ro