- Petrom fuel prices at a pre-“Katrina” level
- Application of international crude oil prices ensures competition
- International product prices secure supply for the market
Petrom, South Eastern Europe’s largest producer of oil and gas, will continue to apply international standards to its pricing policy as these are the best guarantee for functioning product supply, competition and fair prices on the market. “Petrom applied a moderate pricing policy fully in line with the development of the international market”, Gheorghe Constantinescu, CEO of Petrom said. “We are now again back to a gasoline price level of before hurricane Katrina affected the international markets.” Romania’s fuel prices thus remain in the lower half of the European market.
Romania cannot fully supply itself with crude oil. The country currently has to import 60% of its demand in crude oil. In addition, demand will rise on an average level of 6% each year until 2010. “Petrom cannot ignore international prices and it also cannot offer crude oil below market prices – not even to its own business units. Cross-subsidizing would counter EU principles of fair competition”, said Petrom CEO Constantinescu.
“Petrom’s prices are open and transparent and the prices did not at any point detach from the international trend,” Tamas Mayer, member of the Management Committee responsible for marketing stated. Petrom orients its pricing policy towards the international quotations for oil products (Platts FOB Med Italy). This ensures that no supply disruptions resulting from fluctuations in import and export are taking place. Retail and wholesale prices are considered twice a week and trends of the international product market do significantly influence pricing decisions. Regional trends and product flows are analyzed and taken into account. The demand and supply situation of the Romanian market and the competitors’ behaviour of course also have a strong impact on decisions. Petrom has been consequent and cautious following international trends.
The rise in oil and fuel prices is an international development and it is not only limited to Romania. Rising demand for crude oil in Asian countries – particularly China and India – have hardly been matched by increased supply. Higher prices were therefore inescapable in matching supply and demand. A similar situation is the one at the fuel market, where insufficient refining capacity in the US resulted in increased demand also in Europe and thus rising prices.
The privatisation of Petrom has been one of the prerequisites for EU accession of Romania. Petrom established itself well already in the first half year of the privatisation, supplying new products to the market and improving standards. The first new filling station setting new standards for Petrom and offering new services for the customers is already operating in Bucharest.
Petrom is the largest oil and gas producer in South Eastern Europe, with activities in the business segments of Exploration and Production, Refining and Petrochemicals, as well as Sales and Marketing. Petrom has estimated oil and gas reserves of 1 billion boe, refining capacity of 8 million metric tons and around 600 filling stations. In 2004 the sales revenue of Petrom was EUR 2,143 million, EBITDA was EUR 28 million. Since December 2004 OMV, the leading oil and gas group in Central Europe holds a 51% share in Petrom. OMV is active in Refining and Marketing, Exploration and Production, Gas as well as Chemicals in 28 countries on five continents. The Romanian state holds 40.74% of Petrom shares, the European Bank for Reconstruction and Development, 2.03% and 6.23% are owned by minority shareholders.