The oil and gas company SNP Petrom may still be almost wholly owned by the Romanian state, but it has shown a firm grasp of the principles of private enterprise.
Petrom runs a network of 538 service stations, mostly located in Romania but also in neighboring Hungary, which proudly display the company’s logo: a distinctive wolf’s head superimposed on a capital letter “P”.
Petrom’s mission statement confirms the company’s clear vision of the future. “We discover, exploit, refine and transport oil resources to offer quality products and services to our customers, who reward us by increasing our sales and income. We manage our business with the responsibility to earn a profit, in balance with our long-term development, for the benefit of our shareholders, while assuming our responsibilities toward society and the environment.”

Since its creation in 1997 as a joint stock company, largely replacing a state-run bureaucracy in a major overhaul of the country’s energy sector, Petrom has trimmed costs and made the most of its assets and markets.
Petrom is a vertically integrated company, handling everything from pumping crude oil out of the ground through to selling gasoline to motorists. Last year, despite a government-imposed cap on fuel prices, it managed to turn a profit of over US$100 million on total sales of US$2.67 billion.
Far from resting on its laurels, the company slated US$375 million for capital expenditures this year, at the same time as it continued to slim the payroll costs it inherited at birth in 1997, after bringing the number of employees down from 88,000 in 1998 to 78,000 last year.

Petrom has bought a 95% stake in the Kazakh firm Oztyur-Munai Ltd.

Petrom’s activities are broadly divided into three segments: upstream operations (exploration, development, and extraction); refining and petrochemical and fertilizer production; and marketing and distribution.
The company’s upstream operations, already very extensive, continue to expand. At the beginning of this year, Petrom bought a 95% interest in the Kazakh firm Oztyur-Munai Ltd., which holds exploration and production rights to a field in the former Soviet Central Asian republic of Kazakhstan with estimated reserves of 4 million tons of oil, scheduled to begin producing in 2004. Those rights were added to the license Petrom received from Kazakhstan in 1998, for five years of exploration plus 20 years of production in an area of almost 10,000 square miles, with estimated reserves of 6.6 million tons of crude oil and 6.3 billion cubic meters of natural gas. The company holds development rights for yet another field in Kazakhstan, with estimated reserves of 5 to 7.3 million tons of crude, due to go into production by the end of this year.

Petrom also shares extensive exploration rights with its Indian partner, Essar Oil Ltd., through its own Indian subsidiary, M.D. Petrom. The company also owns and operates two of Romania’s ten refineries, with a combined annual capacity of 8 million tons, about 40% of the country’s total. Its upstream and refining operations have positioned Petrom to expand its foreign markets, especially in neighboring countries such as Hungary, Bulgaria, and the former Yugoslavia.
Having successfully undertaken technical and operational restructuring, applied cost management techniques, and extended its upstream activities to oil fields abroad, Petrom is now planning its next steps forward, which could well involve a new partnership with a strategic investor.