Russian oil giant LukOil, which boasts more than 15 billion dollars in annual revenues, is planning to buy Romanian chemical plant Oltchim Ramnicu-Valcea, through its petrochemical division, sources with the Privatisation Authority (AAPPS) – the main shareholder of Oltchim, told Ziarul Financiar.
Although Oltchim will not be put up for sale until the end of the year, LukOil has already submitted a letter of intent to APAPS, expressing interest in the company’s takeover, the quoted sources say.
Oltchim has caught the Russians’ eye because their petrochemical division – LukOil Petrochemicals is expanding in the area, owning a plant in the Ukraine (Lukor) and another one in Bulgaria (Neftochim).
Due to its two plants, LukOil is facing an overproduction of ethylene and propylene (the main raw materials for the production of PVC), but the surplus can be used up by Oltchim, the only PVC producer in Romania.
Ethylene supply was one of the key issues in the previous attempts at selling Oltchim: the plant’s sole ethylene supplier is SNP (National Oil Company) Petrom, a company that was officially put up for sale by the Romanian State last week.
The potential change in the shareholding structure of the national oil company and a strategy adjustment for the company’s petrochemical division could have left Oltchim without its main raw material supplier.
On the other hand, LukOil holds sufficient ethylene reserves and things could become even simpler, should the Russian conglomerate manage to buy Petrom as well, eventually.
However, the Russians are not the only company to have voiced interest in Oltchim: the chemical plant’s privatisation may also be attended by a financial group – Vienna Capital Partners (VCP), which owns the main stake in Hungarian PVC producer Borsodchem.
VCP had expressed interest in Oltchim ever since last year, after the last failed attempt at privatising the Romanian company.
Back then, the only investor having submitted a bid for Oltchim was Canadian company Exall Resources, which signed the privatisation contract but failed to meet certain stipulations.
VCP tried to take over Exall’s contractual obligations and the main stake in Oltchim last year, but the transaction fell through.
Oltchim may be put up for sale this fall, after the plant’s main problems are solved: the petrochemical division split from the food department and the company’s debts, totalling almost 300 million dollars (at the end of June 2003).