How did Romania’s Petrom save Austria’s OMV?

The takeover of Romanian oil and gas company Petrom in 2004 was not only profitable but a game-changing deal for Austrian group OMV. A recent statement made by OMV’s CEO Gerhard Roiss comes to confirm that. “If we hadn’t taken over Petrom, it would have been very difficult to survive in the current climate,” Roiss, who will step down as CEO at the end of June after 17 years spent in the company, was quoted as saying. His blunt statement is fully covered by the figures, which show that the Austrian group made significant profits from its investment in Petrom, and financed its international expansion with this money. OMV took over Petrom in 2004, following a EUR 1.5 billion privatization deal. The Austrian group only paid the Romanian state EUR 670 million, for 33% of the company’s shares, and then increased its stake to 51% via a capital increase worth EUR 830 million, which remained in Petrom’s accounts for OMV to use. A part of the EUR 830 million returned to OMV’s accounts in 2006, when Petrom took over OMV’s gas station networks in Romania, Bulgaria, Serbia and Montenegro, for EUR 234 million. In addition to that, OMV has recovered almost twice the price it paid for Petrom only from dividends. Since 2004, Petrom has paid more than EUR 2.3 billion worth of dividends, EUR 1.2 billion of which went to OMV. And if it were to sell its 51% stake in Petrom at today’s market price, OMV would get another EUR 2.3 billion. But OMV would not sell Petrom, as the Romanian company is still the group’s cash cow. In 2014, Petrom accounted for 70% of OMV group’s operational profit EBIT (EUR 740 million of EUR 1.05 billion), and in 2013 Petrom’s contribution was over 50% (EUR 1.34 billion of EUR 2.6 billion), according to OMV’s reports. Petrom’s oil and gas reserves and production in Romania still represented more than half of OMV’s reserves and output, even as the Austrian group has been expanding its upstream operations to other regions, in recent years. In 2014, Romania generated an output of 62.6 million barrels of oil equivalent (boe), of OMV’s total 112.9 million boe. The total proven oil and gas reserves in Romania amounted to 671 million boe, standing for over 61% of OMV’s 1.09 billion boe. And these figures do not include Petrom’s operations in the Black Sea, where the Romanian company and American group Exxon have found significant gas reserves that they may start to exploit by the end of the decade. Looking at these numbers, it is safe to say that without Petrom, OMV wouldn’t now be one of the world’s top 30 integrated oil companies. In addition to upstream assets, OMV Petrom has a refinery in Romania that can process 4.2 million tonnes of oil per year and a high-efficiency gas power plant of 860 MW, a wind park of 45 MW, and 780 gas stations in Romania and the neighboring countries. Romanian Petrom makes EUR 5.8 bln profit after privatization