Politics complicate sale
BUCHAREST – Domestic and international politics look set to complicate Romania’s plans to sell oil company SNP Petrom, a landmark privatization seen as a test of the government’s commitment to reforms. Binding bids for Petrom, valued by analysts at around $1.0 billion, are due today. Analysts said fewer than the original seven contestants from Central Europe, Russia, Greece and the United States appeared likely to show up. Austrian oil and gas group OMV announced yesterday it had made a binding offer for 51 percent of Petrom, but said details remained confidential. Romania owns around 93 percent in Petrom and plans to sell about a third to an investor who would at the same time buy newly issued shares to raise its stake to 51 percent. A smaller field may be problematic for the government as it faces domestic criticism of the sell-off in an election year because it may bring in less revenue. «I’m afraid that because of a lack of competition the price will be disappointing, which might lead to a cancellation of the tender,» said Erste bank oil analyst Tamas Pletser. The sale of Petrom is a key element in Romania’s accords with international lenders and would help convince a skeptical European Union that the ex-communist country is fit to join the bloc as planned in 2007. Among companies that made preliminary bids, other than OMV, are US firm Occidental Oil and Gas, Hungary’s MOL, PKN Orlen of Poland, Russia’s Gazprom, Greece’s Hellenic Petroleum and Swiss firm Glencore. Analysts say some bidders might have been put off by what they saw as Romania’s foot-dragging in clarifying some terms of the sale, including the buyer’s ability to fire workers and raise prices. The leftist government faces elections in November but it said recently it would remove the obstacles, which also include unresolved issues of environmental liabilities and land ownership. Cold feet Further complicating the sale, MOL and PKN Orlen may also get cold feet because of waning hopes that the two will form a regional partnership down the line. PKN Orlen, which remains state-controlled, is currently at the center of a political storm at home as some Polish parties criticize the company’s move toward a tie-up with MOL. Both firms may find it difficult to swallow such a major acquisition on their own, analysts say, also given that they are bidding for Czech firm Unipetrol. «This lowers the chances of any of these two companies buying Petrom,» said Tomasz Bardzilowski, an analyst with BZ WBK Brokerage in Warsaw. Gazprom would not lack financial muscle but analysts expect Romania to be wary of the Russian giant because of its political weight at home. The Romanian government has declined to comment on the bidding process, beside saying that the privatization process is on track. Sources familiar with the privatization said Austria’s OMV, which competes with Orlen and MOL for dominance in ex-communist Eastern and Central Europe, stood to benefit from the uncertainty surrounding the other contenders. «OMV stands out as the primary bidder in this auction,» said a source close to the situation. OMV already holds 25.1 percent of Romania’s second-largest oil company, privately held Rompetrol. Were it allowed to buy Petrom, it would need to divest the stake. Some bankers say a wider asset swap between the two companies was also an option.
