1. Prerequisites to attract investment and financing in Romania’s Oil Industry Eric Kish VP Business Development, Mergers and Acquisitions November 18, 2003

2. Largest private company in Romania (2002 revenues in excess of $1 billion), representing roughly 2.4% of GDP Domiciled in the Netherlands with operations worldwide and assets mostly in Romania  Owned 75% by management and 25% by OMV Financed principally by international banks; audited to IAS standards  Active in upstream, refining, marketing and services One of the country’s largest exporters and taxpayers 1 The Rompetrol Group – an overview

3. Principal challenges to private oil business in Romania De facto price controls on domestic motor fuels prices by Government of Romania Low domestic motor fuels prices are subsidized by domestic oil production (e.g., 100% of population subsidizes 15% of population who drives) Tax system which promotes tax evasion and fraud, leading to high percentage of counterfeit products No real regulation of trading companies Need to attract fresh investment to modernize/upgrade production to EU standards inhibited by non-productive “historic debts” 2

4. Principal challenges to publicly owned companies in Romania Large labor forces compared to global competitors Insulation from market forces promotes uncompetitive behavior “Self-sufficiency” idea in crude oil results in losses from using over-quality crude vs. import prices Need to attract additional investments to meet EU standards ($800 million needed by 2005) Risk of self-insuring assets Small capacities compared to global competitors (e.g., esp. in petrochemicals) 3

5. Suggestions from the private sector 4

6. Liberalize pricing Tax rates are as high as W Europe, but retailing margins are only 40-60% of West Europe and CEE countries Domestic prices need to be linked to international price of crude Consistent with World Bank/IMF recommendations 5

7. Move quickly to EU product quality standards 6

8. Regulate the unorganized trading sector to reduce: Tax evasion Counterfeit or mis-branded products Environmental degradation Theft 7

9. Privatize Petrom in a way that: Is 100% transparent Invites proposals from all quarters but very quickly narrows the list in order to meet end 2003 deadline Maximizes payments to the State and the value of the privatized entity Leaves the buyer with management flexibility to perform needed restructuring consistent with social protection norms 8