Outsourcing remained the biggest project, with around 1,000 people leaving Rompetrol structures, while the biggest investment project was a partnership with French oil giant Total for a $35 million storage facility for oil products.
“At group level last year we sold about the same volume as in 2010. We recorded increases in Romania, 6%, Bulgaria, 14%, Georgia, 8%, the Republic of Moldova, 5%, but we saw a decline in France and Spain, by 5% and 8% respectively.” As for the Romanian market, it fared differently on different segments. “Retail (sales through fueling stations) continued to slip by 3% compared with 2010, but wholesale volumes rose. The overall market fell by around 1-1.5%,” said Buzescu.
While people now travel less by car and are using public transportation more, a slight rebound is felt on the corporate segment, especially in sectors such as agriculture and constructions.
“In terms of value, retail is on the rise, but the number of liters sold is lower. (…) On the wholesale segment, our portfolio has increased. The biggest rises came from construction, infrastructure and agriculture.”
Major outsourcing moves
As the market continued to decline and margins in turn fell, Rompetrol’s strategy has focused on cost cuts last year, with outsourcing operations being the leading cost cutting moves. Since Rompetrol’s takeover by Kazakh state-run company KazMunaiGaz, the group has seen $200 million in cost cuts and they will probably continue this year, as the results do not meet expectations.
“Last year we made a series of outsourcing moves in terms of primary and secondary logistics. Primary logistics entails transportation from the refinery to the storage facilities and this was done with trains owned by us. Secondary logistics entails transportation from the storage facilities to the stations and is done with cisterns. They were 50% owned by us,” Buzescu explained.
So Petrom signed partnerships with companies to whom it sold the wagons and the cisterns, and which also took over Rompetrol’s employees involved in those activities.
“We outsourced both activities. Around 1,000 people were transferred to the companies that took over these operations from us. Since the group was taken over by KazMunaiGaz, there have been cost cuts of $200 million at group level.”
$35M project with Total
Apart from outsourcing, the group went ahead with investments. Last year’s biggest project was the signing of a partnership with French-held Total for a $35 million investment in a storage facility in French town Port la Nouvelle.
“Last year we had a $18 million investment budget for retail. We were planning to open five new stations in Romania, but we are still in the process of obtaining permits. (…) Last year we also signed a joint venture with Total for the construction of a storage facility in Port la Nouvelle. Works are set to start soon, and the joint investment will be finalized in 2013. The partners have equal shares in this project worth around $35 million,” Buzescu said.
“For 2012 I estimate stagnation on the market and we want to keep the same volume for the Rompetrol group. We have a $31 million investment budget this year.”
Rompetrol was fined over 159 million lei (EUR36.5 million) by the Competition Council at the beginning of this year in a case that targeted all major oil companies on the Romanian market, for agreeing to withdraw a type of fuel from the market in 2008.
Te overall value of fines levied by the antitrust authority was around RON900 million. Petrom, leader of the fuel market, was fined the biggest amount.
Although the withdrawal of that fuel type was based on solid commercial arguments, the Competition Council explained that the companies were fined because of how they made the decision, by exchanging emails and agreeing to withdraw a type of fuel in order to protect their market shares.
The Rompetrol executive said the fine is unfounded and disproportionate.
“This was a product that accounted for just 2% of the turnover in the year it was withdrawn. The fine was larger than the share of the product to overall sales,” Buzescu said.
(English version by Daniela Stoican)