Petrom to borrow €500 mln from OMV for investments

“Besides the €375 million loan taken out by Petrom from banks in October 2008, the company is now borrowing one half of million euro from OMV, and all the money will be used for investments,” sources within the company said. Company officials declined to comment this information. Petrom’s CEO, Mariana Gheorghe, said in November that the company was looking for a new medium or long-term loan to finance its investments, following the one signed with five banks in October. Petrom seems to have opted for a medium-term loan. Gheorghe explained that the company’s 2009 investment program, “which should worth an average €1.5 billion,” required external financing. Ruttenstorfer added that “OMV is affected by the declining price of oil, which leads to a drop in profitability. Thus, we will have to slow our development in the region in the near future. We will have lower growth rates compared to previous years, but markets in the region continue to have potential.”

The fuel demand is still high on the markets in Central and Eastern Europe, compared to Western countries, which register a substantial drop, according to Ruttenstorfer. He added that the gas war between Russia and Ukraine revived talks at the European Union level regarding the Nabucco pipeline project, but European countries should rather focus on interconnection with neighboring countries and increasing their stocking capacity before finalizing large projects. Furthermore, Austria-Slovakia, Romania-Hungary, Romania-Bulgaria, and Bulgaria-Greece bilateral agreements are necessary.

“Of course that large projects, such as Nabucco and South Stream, are solutions for increasing the independence of countries in Central and Eastern Europe from Russian gas. However, after the last crisis, it has become clear that neighboring countries should be better connected. Before, everyone wanted isolated markets, but now this approach cannot be sustained any longer and I believe things will change in the near future,” said Ruttenstorfer.

What OMV’s CEO is interested in at the moment is opportunities which would match the company’s business plan. Ruttenstorfer said yesterday that Petrom is not affected by the soaring leu/euro exchange rate , as oil is priced in dollars.

The Austrain group took over Petrom in 2004, through a combined transaction, worth €1.5 billion, which included an acquisition of shares from the Romanian state and a capital increase. Petrom ensures 61 percent of OMV’s oil and gas production and owns 73 percent of the group’s proven reserves.