Gazprom joins bidding for Romania’s Petrom

Gazprom and Italy's ENI were among eight companies that bid for Romania's SNP Petrom, the biggest Central European oil company to be sold since the fall of communism, as demand for fuel increases in the region. ConocoPhillips, the third-biggest US oil company, and Alon did not submit preliminary bids for a 51 % stake valued at more than $ 1 bn, Economy Minister Dan Popescu said at a briefing in Bucharest. Petrom produces 60 % of the oil used in Romania and controls 28 % of the retail fuel market.
Occidental Petroleum, Glencore International, Hellenic Petrol, MOL, OMV and PKN all submitted preliminary bids. BP's Russian venture, TNK-BP, dropped out of the bidding earlier this month.

A joint bid led by Halliburton was rejected in October. The elimination of ConocoPhillips and TNK-BP "doesn't at all make the process less attractive," Popescu said. "Any of the eight companies left in the race are major players. Petrom's privatisation will be a success given the size and reputation of bidders involved."
A purchase price of $ 1 bn would value Petrom at about $ 357 per ton of refining capacity. MOL this year paid $ 404 per ton for 25 % of INA, Croatia's state-owned refiner. Romania's advisers, Credit Suisse Group and ING Barings, will review the proposals to ensure they comply with bidding guidelines. Final bids are due at the end of February, one week later than originally planned. The government expects to complete the sale by March 31.

Petrom is Romania's biggest company, with 60,000 workers and $ 2.2 bn in sales. Net income fell 16 % to 2.28 t lei ($ 69 mm) last year. The government owns 93 % of Petrom, and the remaining shares are publicly traded.
The company extracts more than 6 mm tpy of crude and has 128 mm tons of reserves. US companies are looking for new sources of crude to reduce their reliance on the Middle East. Central Europe's pipeline connections to Russian oil fields, dating to the era when the countries were part of the communist Comecon trading block, are also attracting Russian companies looking for an outlet for their crude.