Petrom (SNP.RO), the biggest company on the market posted growthof business and profit, even though the market it operates oncontinued to go down. Repeated pump price hikes and cost cuts,however, helped it turn in its favor a demand that refused to growdespite tentative economic rebound since the beginning of theyear.
"The entire retail market went down 4-5% in the first part ofthe year, which is no surprise to us. On the one hand, it wascaused by the trend of public sector salaries and on the other itwas a response to high oil product prices. I am not reallyoptimistic about a rebound in demand this year consideringforecasts point to a merely 1-2% economic growth for Romania. Thiswill show in the purchasing power as late as next year," saidMariana Gheorghe, Petrom's chief executive officer.
Although admitting that one of the factors that caused the dropin demand in terms of volume was precisely the rise in pump prices,Petrom officials say that the often mentioned fuel price freezecould have adverse effects on the economy as a whole.
"Legally, prices may be frozen in case of an exceptionalsituation of crisis, yet the consequences of such a step can benegative. I will not believe someone would want a shortage ofproducts as in Russia. Any producer, if it cannot get the marketprice locally, will export if prices are frozen at a lower level(...)," Mariana Gheorghe, Petrom's CEO says. Several areas inRussia have been faced with a shortage of oil products recently, aslocal companies chose exports over selling at state-controlledprices.
Although early this year the fast-paced rise in gas and dieselprices made motorists take to the streets and politicians come upwith bold statements, no state official has actually had anyserious talk with Petrom over fuels so far.
Another issue that a number of state officials said would takesteps about was the closing the Arpechim refinery, which Petrom putup for sale in 2009. The problem caused by the closing of thisfacility, beyond jobs, is that Arpechim used to be Oltchim's rawmaterial supplier.
Mariana Gheorghe says the closure of Arpechim, which accountedfor half of Petrom's refining capacity and has not been operationalfor more than a year now needs to be put in context, seeing assimilar decisions have been made in Europe because of excessrefining capacity.
"Over the last two years, I haven't had any negotiations withthe state over the sale of Arpechim to Oltchim. There were talksbut no offer. Right now I cannot tell who and how might invest thehundreds of millions of euros required to bring Arpechim backonline."
On the other hand, Gheorghe rules out Petrom closing Petrobrazi,too, the only refinery the company still has.
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