The takeover of 51% in SNP (National Oil Company) Petrom, the largest company on the Romanian market is estimated at $1.3-$1.4bn, says Tamas Pletser, Central and Eastern European oil and gas sector analyst with Austrian Erste Bank Investment Ltd.
“SNP Petrom’s privatisation scheduled for 2004 could be the next step towards regional consolidation. Romania is a promising market for the oil companies in Central and Eastern Europe, but Petrom requires more investments. Romania hopes to get $600-$700 for the 33.4% in Petrom and the buyer should invest another $700 million to boost its stake to 51%,” Tamas Pletser said in a presentation made during the sixth Refining and Petrochemistry in Central and Eastern Europe conference organised by the World Refining Association.
Under the circumstances, the analyst estimates the transaction amounts to $1.3-$1.4bn, albeit the most often mentioned value on the market was approximately $1bn, which the future owner of Petrom will have to pay in order to control 51% in it.
Petrom’s shares closed at 1,340 ROL on the Stock Exchange on Wednesday, which accounts for a market value of $1.54bn.
The strategic investor or consortium selected as winner will buy 33.34% in Petrom at first and then boost the stake to 51% following a capital increase, as specified in the privatisation announcement.
At present, the Economy and Trade Ministry has 11 companies short-listed as pre-qualified investors for Petrom, which include ConocoPhilips (US), Occidental (US), Eni (Italy), Gazprom (Russia), Russian-British venture TNK-BP, MOL (Hungary), PKN Orlen (Poland) and OMV (Austria). Several short-listed suitors have already announced plans to team up for a consortium to buy Petrom, as they are contemplating a split of the company’s portfolio to accommodate the members of the consortiums.
Conoco is interested in Petrom’s gas stations and possibly in its refining operations, while OMV and PKN find oil and gas production more alluring. As for MOL and Hellenic Petroleum, Petrom is a bigger bite than they can chew, analysts feel. The estimated price of Petrom’s takeover amounts to more than $1.2bn, which the Russian press says discouraged LukOil from participating in Petrom’s privatisation. Petrom registers annual turnover of $2.2bn and is currently employing 57,000 people.
On the other hand, Economy minister Dan Ioan Popescu on Wednesday said he did not believe Petrom’s privatisation might be put on hold by a suit filed by a company interested to buy the controlling interests. He said the privatisation process of a Romanian company might be theoretically suspended in case of a suit pending if the justice sustained the claim, though.
Popescu added that, as far as he knew, only the representatives of the consortium comprising Halliburton (US), Tender Timisoara and Royal Petroleum (UK) had challenged the decision to exclude them from the race for Petrom’s privatisation. “We received two letters from a law firm representing
Halliburton-Tender-Royal, which we forwarded to the consultant and the law firm representing us to provide the requested answers,” Popescu added.