Petrom, the biggest Romanian company, controlled by OMV Austria, has earmarked 200 million euros for investments in the modernisation of Arpechim Pitesti petrochemical and refining platform over the next five years.
In parallel, the company plans to invest one billion euros in Petrobrazi Ploiesti refinery.
"We are going to invest 200 million euros by 2011 to boost the efficiency of the refinery. Arpechim is part of our strategy related to the refining segment. Giving this refinery up is out of the question, instead, we are going to invest in it so as to bring it up to the profitability standards we want," says Jeffrey Rinker, a member of the executive board, in charge with the refining activity and petrochemical products with Petrom.
As for the strategies implemented at the two refineries that entered OMV's portfolio once Petrom was taken over, Rinker says they are completely different.
"In the case of Petrobrazi, we want to boost the production capacity, to expand the refinery. Hence the much bigger amounts of money allocated. As far as the petrochemical segment of Arpechim is concerned, we want to bring it to a level from which it can sustain its own profitability, not through subsidies, and this involves shedding some unproductive activities," Petrom representative adds.
"The idea for both refineries is to have them focus on the core business, namely converting Romanian crude oil into fuel," stated Rinker.
By 2011, Petrobrazi will produce 2.1 million tonnes of diesel oil, compared with the current 700,000 tonnes.
The refinery's production capacity will increase from 4.5 million tonnes to 6 million tonnes.
The decision to invest 1 billion euros in Petrobrazi, particularly in diesel oil production, was triggered by the rising consumption of diesel oil internationally.
Before joining Petrom board early this year, Rinker filled several technical and commercial management positions with BP in the US and UK.
His joining Petrom meant setting a new strategy for the refining segment, designed to slash operating costs of the 2 refineries, which are among the most expensive in Europe from this point of view. "In terms of refining costs, we are in the bottom quarter in the ranking of European refineries.(...) Through investments, by 2011 we hope to be at the middle of the ranking," Rinker says. "The low energy efficiency of a refinery is the reason why this is extremely exposed to international price volatility. Rising prices harm it more than they do efficient refineries," Petrom representative added.
The main hurdle Rinker has coped with since taking over the company's refining and petrochemical unit was the management of very big investment budgets.
"The idea of being part of a company's transformation process was one of the main reasons why I came here, after BP (...)," said Rinker.
The company's plans
Will invest one billion euros in Petrobrazi Ploiesti refinery besides the Arpechim investment
Intends to bring Arpechim to the profitability standards it wants
Wants to raise the production capacity of Petrobrazi refinery from 4.5 million tonnes to 6 million tonnes
The decision to invest 1bn euros in Petrobrazi, particularly in diesel oil production, was based on the rising consumption of diesel oil internationally
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