Lukoil, one of the world’s biggest oil corporations, is relying on the Petrotel Ploiesti refinery to cover the fuel distribution markets in Romania, Hungary and the Republic of Moldova, as part of the company’s regional strategy. Lukoil’s Romanian-based refinery will supply fuel to the group’s gas stations, which are continuously expanding on these markets.
“In Hungary, Lukoil will invest some $150m in 2-3 years to open 120 gas stations. I can confirm that the Petrotel refinery will supply fuel to our network of gas stations in Hungary. Moreover, exports will also be directed at the Republic of Moldova,” Gennadi Abalov, Lukoil Downstream Romania’s press relations director told Ziarul Financiar. Lukoil Downstream Romania is the Russian group’s branch on the Romanian fuel market. Abalov would not reveal the amount of exports forecast for this year or their share in the refinery’s turnover, saying “this will depend on the market of oil products, but the company will never prompt a conflict with the Competition Council.”
Lukoil, with annual turnover worth some $15 billion, has a foothold on the Central and Eastern European oil market, with refineries in Romania, Bulgaria and the Ukraine and increasingly more gas stations in the Balkan states.
The Russians have recently bought Serbia’s second-largest oil company, Beopetrol, and teamed up with private Greek group Latsis to negotiate the takeover of a 23% stake in Hellenic Petroleum, the main oil company in Greece.
In Romania, Lukoil bought the Ploiesti-based Petrotel refinery in 1998, thus acquiring one of the largest crude processing units on the Romanian market. Nicolae Ciornai, the man who runs Lukoil Downstream’s operations in Romania, Hungary and the Republic of Moldova was recently saying that operations at Petrotel refinery would resume in June 2004, after having enforced a $130m investment programme to produce Euro 3, Euro 4 and Euro 5 fuels.
ExxonMobil, the world’s largest oil company was among the equipment suppliers for the upgrade programme at the refinery. Petrotel can process some 3.5 million tones of crude yearly.
The Russians have gradually increased their interest in Petrotel, so that the refinery’s shares were delisted from secondary trading market Rasdaq late last year. Lukoil turned the refinery into a closed-end company, in line with the capital market legislation.
In the spring of 2001, the Russians shut down the refinery and moved on to an aggressive expansion campaign on the fuel distribution market. In only two years, Lukoil’s network of gas stations grew from 20 to 202 units, second only to SNP (National Oil Company) Petrom.
According to Ciornai, Lukoil has invested some 335 million dollars in Romania, but investments are expected to grow to $450 million by the end of 2004. The Russians’ strategy for the Romanian market seems to have worked, since the company posted profit last year, for the first time since it started operating in Romania. Profit was worth $2 million.
adrian.mirsanu@zf.ro