A tangled business: Romanian oil company Rompetrol SA files for insolvency

Romanian oil company Rompetrol SA, which is controlled by KazMunayGas - Kazakhstan's national oil and gas operator, has filed for insolvency. The company has to pay USD 58.5 million plus three times that amount as legal interest to the state. The debt comes from a tangled business in the late 1990s when the company was controlled by late Romanian businessman Dinu Patriciu. “Rompetrol SA, a closed company, requested the Bucharest County Court to initiate the reorganization proceedings against the company, so as to enable the furtherance of the commercial operations thereof conducted both domestically and abroad,” the company announced on Friday, June 5. “At the end of the former year, the Bucharest Court of Appeal committed the company jointly with other individuals to the payment of the amount of USD 58.5 million, plus legal interest computed as of 05.01.2001. The aspects considered by the Bucharest Court of Appeal referred to a series of deeds perpetrated throughout the period 1999-2001, long before 2007 when KazMunayGas became the major shareholder of the group of companies Rompetrol SA is part of,” reads the company’s press release. According to the company’s representatives, the enforcement of the court resolution generates a major financial imbalance for the company, which impacts its current activities. “Legal proceedings have been initiated to enforce the former owner of Rompetrol Group's obligations in the context of the resolution passed by the Bucharest Court of Appeal,” the company’s representatives added. Rompetrol SA was a state-owned import-export company before 1989. It handled Romania’s international operations in the oil sector. Romanian businessman Dinu Patriciu bought the company in 1998 and thus started to create one of Romania’s biggest private groups. When Patriciu bought Rompetrol, the company still had to recover some USD 85 million from Libya, for services that the Romanian company had delivered to the Libyan state before 1989. The Libya claims technically belonged to the Romanian state. However, Dinu Patriciu considered that the money belonged to Rompetrol SA. He cashed in the claims, which he transferred to The Rompetrol Group, a company registered in the Netherlands, and used the money to buy the Petromidia refinery from the Romanian state and to make the first investments in the refinery, in 2001. This is how Patriciu set the foundation of The Rompetrol Group, a multi-billion dollar international business, which he sold to KazMunaiGas in 2007, for EUR 2.7 billion. However, a few years before the sale Romanian prosecutors had started several legal cases against Patriciu, including one that targeted the money he received from Libya. The cases dragged on for many years, allowing Patriciu to make his exit. Patriciu died in August 2014 with his fortune shattered by bad real estate investments and a costly divorce. After his death, the Bucharest Court of Appeal made its final sentence in the cases that targeted Patriciu.