Shell Gas Romania, 55% owned by Shell Anglo-Dutch oil giant, last year derived net income worth 4.3 million euros, up 80% from the level reached in 2004.
At the same time, the company”s turnover rose by 25%, to 63.7 million euros. The company”s representatives could not be contacted for comment on the financial results by the time the story was ready for print.
Shell, the world”s third largest oil corporation, has been carrying out operations in Romania only on the liquefied petroleum gas (LPG) segment starting the end of 2004. The Anglo-Dutch giant sold the filling station business Shell Romania SRL, in two stages to Hungary”s MOL group.
The domestic market is put at almost 200 million euros a year, with the top positions being occupied by Petrom, the biggest Romanian company, which became part of the portfolio of Austria”s OMV oil group, and by Shell Gas Romania.
Major players on this market also include Butan Gas Romania or Crimbo Gas. LPG operations have surged over recent years, considering that during the period 2002-2003 the market was estimated to total sales worth 125-130 million euros. The LPG market includes three segments – cookers (domestic gas cylinders), small bulk and car LPG.
The LPG market has been entirely liberalised for years, unlike the natural gas one, which is scheduled to reach this status in 2007. The “veiling” of the true prices of natural gas has impacted players on the LPG market. However, in recent years, the price of natural gas has witnessed a solid growth trend in view of adjustment to the level of prices operated in Europe.
Shell Gas Romania is a joint venture in which Petrom has a 45% interest, with the rest being held by Shell.
According to the latest data available, Petrom and Shell Gas Romania have similar market shares, of around 29-30%. Butan Gas, with turnover worth 43.5 million euros in 2005, owns a market share of about 21%, in line with the company”s own estimations. Last year, the domestic branch of the international group, run by Romanian businessman Iosif Constantin Dragan, reported income standing at 4.03 million RON (1.11 million euros), after in 2004 the company had seen losses worth 2.43 million RON (0.7 million euros).
Shell entered the domestic market in the early ?”90s, carrying out operations on the segment of fuel distribution and in the exploration sector.
Shell strongly approached both segments, but the strategy did not bear fruit, in the context where its rapid expansion was done on a non-liberalised market, on which multinationals and Petrom were seeing losses. The massive investments in exploration and distribution Shell was unable to recoup were an increasingly heavier burden for the company as it was registering losses in each year of activity.
Finally, Shell decided to give up its petrol station business and operate on the LPG segment only.
Shell in Romania
* Entered the domestic market in the early ?”90s, with fuel distribution and exploration operations
* Its strategy failed and the company in 2003 decided to sell its petrol station business and operate on the LPG segment only
* Shell Gas Romania last year posted net income worth 4.3m euros, 80% higher than the level registered in 2004
* The company”s turnover advanced by 25%, to 63.7 million euros in 2005
* Has 291 employees .