Romania opened the bidding for control of its national oil company SNP Petrom yesterday, hoping to cash in on a wave of lucrative deals sweeping the sector in Central and Eastern Europe.
The long-delayed sale of a controlling stake in Petrom to a strategic investor or a consortium is epxected to be worth up to $1.0 billion and is a key element of Romania's accords with international lenders.
The Economy Ministry plans to sell 33.34 percent in Petrom outright, while the bidder would have to buy newly issued shares to raise its stake to 51 percent. The sale is scheduled to be completed by the end of March 2004.
Analysts predicted fat returns. Investors are scrambling to buy into the region's fast economic growth and rising fuel consumption as many of its countries prepare to join the European Union.
Romania, which hopes to join the EU by 2007, saw gross domestic product grow a whopping 4.9 percent in 2002.
"Recent deals were highly valued, they could prop up the price of Petrom," Tamas Pletser, oil sector analyst for the CEE region at Erste Bank told Reuters by the telephone from Budapest.
Potential bidders for Petrom, which has around 60 percent of the domestic market, could include US giant Chevron Texaco, BP, France's Total or Royal Dutch/Shell, according to Romanian ministry officials.
The privatization was delayed several times by the government, which analysts said was reluctant to make reforms which might result in job cuts or higher oil prices.
Regional competition
Petrom, which has a work force of over 60,000, has both upstream facilities -drilling 6.0 million tons of crude and 6.1 billion cubic meters of natural gas per year from fields mainly in Romania- and downstream facilities such as refining and retail sales through its petrol stations.
It also offers access to the Black Sea and could become a springboard for transport of Middle East crude to Europe.
However, its oilfiels are maturing and production is set to decrease, according to analysts.
That makes it more of a target for Russian companies looking for distribution facilities than for Western companies seeking profitable drilling fields.