The Romanian oil market needs $2.7-2.8 billion for the next 3-5 years. However, according to Joel Maes, president of the Shell group in Romania, there is one major problem: the industry does not generate enough cash flow to return investments.
It takes more than $1 billion for technological investments only to maintain the current production rate at 6 million tones per year, whereas deposits are depleting. On the other hand, large refineries such as Arpechim Pitesti and Petrobrazi Ploiesti need some $250 – 300 million investments each in the short and medium term for their own facilities, environment protection and increased power efficiency. The modernisation of the fuel distribution network operated by SNP Petrom (National Oil Company) requires some $200 million. The rest of the domestic oil market needs $1 billion investments.
“In a capital-intensive business such as the petroleum industry, investors expect a minimum 10% profit rate for a serious player, while for Shell, British Petroleum or ExxonMobil, between 12-15%, otherwise, the shares go down. Or, the Romanian market has 1-2% profit rate on a good day,” the representative for Romania of the world’s second-largest petroleum group, the British-Dutch operator Shell told Ziarul Financiar.
SNP Petrom was the only significant player on the market that saw profit last year. However, private oil group Rompetrol, as well as international companies such as Shell, Mol (Hungary) or Agip (Italy) posted losses. These companies repeatedly spoke against Petrom, saying its price policy did not consider the international market quotations.
According to Shell officials, the Romanian market could shrink to half, unless deregulation occurs. adrian.mirsanu@zf.ro