ECONOMY

ENI drops out of race for privatization of Romania’s Petrom

BUCHAREST (Reuters) – Italian oil group ENI yesterday dropped out of the contest for the privatization of Romanian national oil company SNP Petrom, opening the field for regional contenders. Seven companies, including four vying to consolidate Central and Eastern Europe’s fragmented oil markets, are now left to compete in the sale, valued at around $1 billion and due to be completed by the end of March next year. «Italian company ENI sent a letter announcing it will not participate further in Petrom’s privatization,» the Economy Ministry said in a statement, without elaborating. The remaining bidders are US firm Occidental Oil and Gas, Austria’s OMV, Hungary’s MOL, Poland’s PKN Orlen, Russia’s Gazprom, Greece’s Hellenic Petroleum and Swiss firm Glencore. ENI’s withdrawal came as a surprise and, analysts said, was not good news for the privatization process. «It may signal other bidders to take a closer look at the company,» Tomasz Bardzilowski, an analyst with BZ WBK Brokerage, told Reuters. Petrom, which employs a work force of over 60,000, has both upstream facilities – producing 6 million tons of crude oil and 6.1 billion cubic meters of gas per year – and a downstream business – two refineries and 600 filling stations. The government owns around 93 percent of Petrom and plans to sell 33.34 percent to an investor who would at the same time buy newly issued shares to raise its stake to 51 percent. Analysts said ENI’s move clears the way for MOL, OMV, PKN Orlen and Hellenic Petroleum to try and win market share in the country of 22 million, where Petrom claims around 60 percent of the domestic oil market. «The chances of companies in Central and Eastern Europe will increase,» Tamas Pletser, industry analyst at Erste Bank, said. «OMV, MOL and PKN Orlen, alone or in consortia, seem to have the best chances, because they are the most interested.» The Central and Eastern European firms are in the throes of trying to consolidate in the region’s fragmented fuel markets. Petrom also offers access to the Black Sea and could become a gateway for Middle East crude in Western Europe, but the task of restructuring it would be daunting, analysts say. «Petrom needs investment in its refineries and in the upstream operations,» Pletser said. «The key point is: Will the buyer be allowed to act freely on restructuring Petrom?» Petrom’s nine-month profit fell to 1.2 trillion lei ($36 million) in the first nine months of this year from 1.48 million in the same period last year.