Toader Gaureanu General Manager of Rafo-Onesti

Although it has not been highly publicized, Romania is a well established oil processing country with extensive refining capabilities and a transportation infrastructure that can easily handle the needs of the country’s ten refining facilities, one oil terminal and one pipe transportation company that are all partially or fully privatized.
Romania’s total crude oil processing capacity is more than 30 million tons per year, out of which only about 30% is actually used, a situation overburdened refineries in the United States, for example, would envy.
The current government program for the sector includes increasing crude oil production to around 40%, notes Toader Gaureanu, general manager of Rafo-Onesti, a state-owned enterprise earmarked for privatization that is one of the country’s five biggest refineries.

“This increase is the first step towards the improvement and re-launching of the oil and petrochemical industry. Rafo is part of this program,” Mr. Gaureanu explains. “Of the country’s 10 refineries, only five of them, including Rafo, have gone through a modernization process, which makes them efficient and quite similar to one another. All of them were built in 1980 with the assistance of U.S. technology. The older parts of the refinery were built using Russian technology.”
The Rafo chief points out that the main difference today between U.S. and Romanian companies in the sector has nothing to do with technology or know-how, it is merely organizational.
“I believe that the only way for Rafo to ensure successful privatization is to appeal to the big operators within the oil industry. This is how we could eventually become part of big multinational industrial groups, which is the main trend at the moment,” Mr. Gaureanu stresses.

One drawback, according to Mr. Gaureanu, is the state’s privatization laws that limit the involvement in the process of the firms’ management. “In the Czech Republic or in Slovakia the privatization process is much more rapid, as the managers of the companies are actively involved in it.”
A big selling point for Rafo is that crude oil fields in the Onesti area where the company operates produce about 600,000 tons per year, which means that 20% of the oil necessary for the refinery is available in its own backyard.
Romania’s huge oil industry is also home to the country’s largest private enterprise, Rompetrol, a vertically integrated petroleum company with substantial upstream, downstream and refining assets and is partially financed with U.S. capital.

Turnover for Rompetrol this year is in excess of US$800 million

Dinu Patriciu Chairman of Rompetrol

Rompetrol’s chairman, Dinu Patriciu, says he is proud his company has earned the distinction as being the most “Western” firm in Romania, excluding the multinationals present there.
Although he warns that investing in Romania is still risky business, Mr. Patriciu seems to have hit upon the formula to make it a successful endeavor. “First of all, we are market orientated, we produce only in order to sell and have very good management and experienced marketing teams. We are a Western company from the point of view of the behavior of our people.”
Rompetrol began developing into two groups of companies in 1998. One is the oil service group, drilling in several regions such as Ecuador, Libya, Iraq and Turkmenistan to name a few.

“The other part of the group is an integrated oil company,” Mr. Patriciu explains. “We have our own production in Ecuador and there are some fields in Romania that we are redeveloping. We have two refineries in Romania, Vega and Petromidia and we develop our downstream distribution network of gas stations, which now total 21, but will be 200 within the next 18 months.” Turnover for the company this year is in excess of US$800 million, and 85% of its products are exported.
“We do not have much to do with the Romanian business environment. Our company is not only the biggest private company in the country, it is also a Western company with a management made up of young Romanians who used to work abroad. We are trying to form a group of 6,000 people while changing the work environment and the mentality,” Mr. Patriciu explains.