The company got these results on a difficult market that significantly affected its industry.
“Losses were possible to cut in 2012 compared with 2011 because of the steps taken to optimize spending,” Petrotel-Lukoil officials said. One of the most drastic steps the company took was to axe jobs. Out of the over 1,000 employees in 2008, a record year for the local economy, it had only half left at the end of 2012.
Demand for oil products was down again in 2012, this time by 2%, after having gone up really slightly in 2011, as shown by the amount of products processed by the Petrotel refinery in Ploiesti (southern Romania), too.
“The refining process turned out about 2.3 million tons of oil products in 2011, and 2.1 million tons in 2012. The lower production volume was due to the decline in demand,” the company officials said.
Whereas last year the oil barrel quote kept at about the same level as in 2011, $111, the leu lost a lot of ground against the US dollar, 14%. Petrotel-Lukoil refinery does not have access to local oil and has to import what it processes. On the retail segment, however, even though the oil barrel price remained unchanged, the pump price in lei went up about 10% in lei for gas and 12% to 14% for diesel, according to ZF’s calculations.
The refining sector will not be free of problems on long term, either, according to a story Bloomberg published last month. Oil companies in Europe will close 10 refineries until 2020, about 10% of the total such facilities in the region, due to the decline in fuel demand to 19 years’ low.
The problems of the European refining sector are partly due to it being equipped for production of gas, when it is diesel that accounts for 75% of the demand in Europe.
The local market imported EUR1.2 billion worth of oil products in 2011, most of which diesel, despite refining overcapacity. On the other hand Romania exports gas and Petrotel is one of the top exporters.
Despite the difficult market, Lukoil officials say they have other operations in Romania, as well and are not considering an exit. Petrotel should get a further $23.1 million investment this year.
“Even though things are difficult now, Lukoil has no intention of withdrawing from the Romanian market, and is actually developing its business here by participating to the Black Sea project and renewable energy projects.”
Lukoil has two blocks in the Black Sea and started work on a EUR135 million wind farm in Tulcea (SE Romania).
It also operates a 300 gas station network in this country, the third largest after OMV Petrom’s and Rompetrol’s. (EUR1=RON4.3352)
(English version by Loredana Fratila-Cristescu)