Regional Expansion: Opportunity & Challenge

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Presentation transcript:

Regional Expansion: Opportunity & Challenge Philip Stephenson, Deputy CEO The Rompetrol Group, NV World Refining Association CEE 8th Annual Roundtable Warsaw, October 19, 2005

Table of Contents Company Profile TRG Profile Rompetrol History 4/24/2019 Table of Contents Company Profile TRG Profile Rompetrol History Regional environment Expansion premises The Opportunity Rompetrol Rafinare’s expansion case Regional demand and supply Regional refining capacity Demand and supply gasoline Demand and supply distillate Demand and supply six-products Rompetrol prices vs. EU prices Rompetrol Rafinare’s advantage Strategy Financials H1 2005 vs. H1 2004

The Rompetrol Group profile Largest Romanian group of private companies (2004 gross revenues of $1.61 billion), representing almost 7% of state budget revenues and 3% of GDP 32% share of Romanian refined products market Domiciled in the Netherlands with worldwide operations and assets (though mostly in Romania) Owned by management Financed principally by international banks; audited to IAS standards Mostly active in refining and marketing in the Balkans One of the country’s largest exporters and taxpayers ($635 million in tax payments in 2004) Core asset is 4.8 mta. (nameplate) capacity Petromidia refinery north of Constanta Listed on BSE since April 2004; market capitalization over $800 million; 20% weight in local index

Rompetrol - History 1974 - Established as the international operator of the Romanian oil industry 1993 - Privatized by Management and Employee Buy Out (“MEBO”) and turnover subsequently reduced to below $6 million by 1998 1998 - Control purchased by Dinu Patriciu and local investor group 1998 to 2000 - Series of synergistic acquisitions; private equity investment 2001 to 2003 – Restructuring of management, technology, finances and operations of associated companies; strategic investment by OMV (25.1%) 2004 to 2006 – Becoming a large integrated regional producer of refined products; divestment of OMV and access to capital market; regional expansion

Regional refining capacity (barrels/day) Bulgaria 125.000 Georgia 100.000 Hungary 225.000 Macedonia 50.000 Romania 385.000 Serbia 170.000 Turkey 687.000 Source: Platts

CEE and Eurasia Demand and Supply of Gasoline, 2004-2006 Source: Cambridge Energy Research Associates

CEE and Eurasia Demand and Supply of Distillate, 2004-2006 Source: Cambridge Energy Research Associates

CEE and Eurasia Demand and Supply of Six-products, 2004-2006 Source: Cambridge Energy Research Associates

Regional expansion: the opportunity Several countries around Romania don’t have the capacity to develop refining facilities of their own in the near future The Balkans and Black Sea region is too far and too fragmented to be attractive to US majors, while most European majors have not invested heavily in the region’s growth potential Romania has a two-year window of opportunity to expand at a fast pace in this region prior to EU integration Rompetrol has the experience, brand name, and traditional ties that give the company a competitive advantage in conducting business in the region

Regional expansion trends OMV MOL ROMPETROL Rompetrol Total Wholesale Storage Capacity Romania 61,350 Bulgaria 5,800 Albania 14,000 Georgia (under development) cubic meters

Premises for expansion opportunity As demand rises Romania has enough capacity to export white products Some countries in the region cannot meet domestic refining and consumption needs Rompetrol exports 52 percent of its white products Rompetrol prices lower than the EU average determine competitive offer Romanian and international capital is seeking regional opportunities Demand driven increased exports, acquisitions, and distribution network development are underway Rompetrol is becoming the first multinational company with its base in Bucharest, expanding to the South and East.

Rompetrol Rafinare’s case for expansion 4/24/2019 Rompetrol Rafinare’s case for expansion Most sophisticated refinery in Romania with the highest (81%) white products yield in the region Strategic location near the Constanta Oil Terminal, on the Black Sea coast case Direct access to the Danube-Black Sea Channel, the Midia port, and Constanta port (one of largest harbors on the Black Sea); close vicinity to crude oil pipelines Its own railway yard and logistics assets Facilities allowing crude oil reception and shipment of liquid products by sea, railway and/or road tankers Fully incorporated wholesale and retail downstream distribution networks Established export markets and regional subsidiaries Expanding its distribution networks and production relationships into the Balkans, the Black Sea Region and the FSU states

Rompetrol Rafinare

Rompetrol gasoline prices compared to prices in several EU countries

Rompetrol diesel prices compared to prices in several EU countries 4/24/2019 Rompetrol diesel prices compared to prices in several EU countries

Rompetrol Rafinare refining capacity 4/24/2019 - 19 -

Consideration on crude supply 4/24/2019 Consideration on crude supply Petromidia refinery benefits from processing only Ural crude (strategic decision taken in 2001) improved in 2004 as a result of increased differential between Brent and Ural Average differential in 2004 was approx. $3.76 per bbl while the average on the last 5 years was less than $2 per bbl The trend is expected to continue in the near future

Rompetrol Rafinare strategy 4/24/2019 Rompetrol Rafinare strategy Rompetrol Rafinare strives to become, through organic growth and sensible low-cost acquisitions that integrate with its existing operations, the leading low-cost provider of petroleum products in the Balkans and the Black Sea region. The strategy will be executed by: Refining: Increasing the quantitative and qualitative performance of the Petromidia platform while upgrading to continue to meet EU quality standards Downstream: Maintaining an approximate 50-50 balance between internal and external markets, while establishing direct selling operations in regional countries and building the retail brand in Romania and abroad Petrochemicals: Restarting of the Ethylene Plant and the related Polyethylene plants and becoming a middle size player in the Balkans Services: Using services companies synergistically with the group (Rominserv), with third parties (Rompetrol Logistics) or divesting them as “non-core”

IFRS Consolidated Financials ’04 vs ’03 Million USD – Standalone - Audited 2004 2003 % Gross Revenues 1,445 1,138 27 Sales Taxes (399) (317) 26 Net Revenues 1,046 821 Gross Margin 90 32 183 Selling, General and Admin (49) (56) -13 EBIT 41 (24) N/A EBITDA 86 16 437 Finance, net (30) (103) Exceptional Item - 415 Net profit / (loss) 11 288

IFRS Consolidated Financials H1’05 vs H1’04 4/24/2019 IFRS Consolidated Financials H1’05 vs H1’04 Million USD H1’05 H1’04 % Gross Revenues 989 599 +65 Sales Taxes (223) (161) +39 Net Revenues 766 438 +75 Gross Margin 127 37 +243 SGA & other (50) (38) +32 EBIT 77 (1) N/A EBITDA 97 24 +304 Finance, net (21) (20) +5 Forex 15 2 +650 Net result 71 (19)