Russian oil group LukOil, ranking third on the Romanian market, plans to invest in electricity production to cover its own consumption and to enter the domestic power market.
LukOil, which derived turnover worth 1.3 billion euros in Romania in 2005, helped Petrotel Ploiesti refinery get rid of losses after five years.
"The refinery in the first half of this year posted revenues worth $622 million (496.3 million euros) and broke even," says Constantin Tampiza, general manager with LukOil Romania.
Tampiza took the reigns of the LukOil business in Romania in April 2005, after the former manager of the downstream unit, Nicolae Ciornii, was promoted to the Russian group's management structure. According to the latest information, Tampiza also coordinates the units in Serbia and Hungary beside the Russian group's activities in Romania.
LukOil, which entered the domestic market in 1998 by acquiring Petrotel refinery, has seen strong growth in recent years. The Russians have invested over half a billion dollars and now hold one of the largest refineries in Romania and a network made up of some 300 filling stations in their portfolio.
Moreover, now the Russian group is also eyeing the electrical power market, where it may expand its business over the following period.
LukOil's strategy will have the Petrotel refinery supplied with self-produced thermal and electrical power.
To that end, the Russians have set up a new company, which is a separate legal entity with its own management, Energy&Gas Romania.
According to the above-quoted source, the plans of the newly founded company in terms of production and supply go beyond the gates of the refinery and target the domestic power market. After taking over Petrotel in 1998, LukOil operated the refinery until 2001, when it halted its activities. Subsequently, the Russians began an extensive investment programme, with the refinery being re-started in the autumn of 2004. According to the data released by LukOil officials, investments in refinery modernisation with a view to producing Euro 3, 4 and 5 fuel topped $120 million (97 million euros).
For this year, the company has earmarked investments worth $40 million (32 million euros).
Last year, Petrotel LukOil reported turnover worth $1.07 billion (868 million euros), from 9 million euros in 2004, and LukOil Romania, the company now operating more than 300 filling stations, doubled its turnover, to $950 million (766 million euros).
On the retail segment, the Russians project turnover worth 1.1 billion euros this year, 40% higher than the figure reported last year. LukOil Romania last year registered operating income worth 22.5 million euros.
LukOil is present on the Romanian market through several companies. On the Romanian market, LukOil competes with Petrom and Rompetrol.
LukOil in Romania
Derived turnover worth 1.3bn euros in 2005
Entered the domestic market in 1998 by acquiring Petrotel Ploiesti refinery
Helped Petrotel Ploiesti refinery break even in five years
Has invested over half a billion euros, and holds in its portfolio one of the biggest refineries in Romania and a network of 300 filling stations
Now targets the domestic electricity market, planning to have Petrotel refinery supplied with self-produced thermal and electrical power
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