Vol. 3 No.2  

Reigning over energy

From exploration and production to refining and marketing, business never stops at oil and gas giant Petrom. Corina Mica speaks with Mariana Gheorghe, the leader of Romania’s largest company

     It was dubbed as Romania’s greatest asset and kept front pages for weeks as the biggest privatisation contract this country has ever signed, when Austria’s OMV paid a total of 1.5 billion Euro for Petrom back in 2004.
     Three years later, although Erste’s purchase of state bank Banca Comerciala Romana may have eclipsed its fellow Austrians in terms of value, Petrom has emerged as the leader in the oil and gas industry of south-eastern Europe.
     The new company aims to modernise and restructure the old state firm. The Austrian owners have also transformed the profits from 38.4 million Euro in 2003, before they took it over, to 255 million Euro at the end of the third quarter of last year.
     “Investments are and have always been the defining characteristic of this business,” says CEO Mariana Gheorghe. “Then again, each part of our activity is very complex and investment projects are very hard to prioritise.”
     New developments include an increase in refining capacity at Ploiesti-based Petrobrazi refinery, which equals an investment of more than one billion Euro in 2007. This will increase the capacity from 4.5 million tonnes to six million tonnes by 2011.
     “At the end of this investment programme, Petrobrazi will be one of the most modern refineries in south-eastern Europe and a cost leader,” argues Gheorghe.
     “In fact, we committed to more than three billion Euro in investments in all segments by 2010, which makes it by far the most impressive investment programme in the energy sector and in the economy at large,” she says.
     Now Petrom exploits estimated oil and gas reserves of one billion barrels of oil equivalent (boe) and has an annual refining capacity of eight million metric tonnes, along with 550 filling stations in Romania.
     Petrom runs its operations in Romania, Kazakhstan and Russia in the exploration and production field (E&P), and intents to intensify its E&P activities in the Caspian Sea, Kazakhstan, Turkmenistan and Russia, with an objective of reaching a level of 70,000 boe per day in international production.

“Our investment programme is by
far the most impressive one in the
economy at large”

     But Romania’s energy sector has been rocked by political battles. Now Romanian prosecutors are investigating corruption allegations in regard to privatisations in the energy field. This led to a public debate that could have impeded the activity of companies in the sector, but has not caused any problems for the oil and gas company, argues the CEO.
     “Of course the public debate [on privatisation contracts] was not a very pleasant experience, but we fully cooperated and answered all the questions asked,” says Gheorghe. “Moreover, OMV agreed to make its privatisation contract public. Concerning our operations or the financial outcome of these investigations, there has been no negative impact on sales. On the contrary, sales in the last quarter of last year were very solid. Basically, it’s business as usual and we continue our investments and development plans.”

“Of course the public debate
[on privatisation contracts] was not
a very pleasant experience, but we
fully cooperated and answered
all the questions asked”

     But the oil and gas business is never a smooth ride, especially when it seems that each year now starts with a crisis. Last year it was Russia and Ukraine conflicting over pipeline transport that put into question Europe’s energy security, this January it was Russia versus Belarus battling over Moscow’s price for its gas and taxes levied on Russia’s oil shipments through Belarus.
     “The conflict as such did not impede that much on our business,” says Gheorghe. “We process about 4.5 million tonnes of crude per year and we import up to two million tonnes from Russia, but using maritime shipping, not any pipeline. And then, this was a short-time conflict, but which led to the European Commission’s reaction about [Europe’s] dependency on just one supply source, which is Russia.”

“The Nabucco pipeline is a
project in which Romania plays
a very important part”

     The CEO argues that such conflicts emphasise the necessity of alternative transport routes. This leads her to mention the importance of Nabucco, the OMV-led project to build a pipeline taking gas from the Caucasus through Turkey, Bulgaria, Romania and then to  Austria through Hungary.
     “The European Commission has drawn up an action plan with very well-defined goals and objectives, to be coordinated and promoted at an European level,” she says, “and Nabucco is one of these projects, in which Romania plays a very important part.”


     Almost eight months into a job running an oil and gas company, Gheorghe says she is amused by the way men act during board meetings. “This has started to turn into a cliche,” she says, “the fact that women are in charge of top companies in Romania, but the truth is that is it amusing to see how men behave when there’s only one woman around and she also happens to be the CEO of the company.”
     Gheorghe does not have a history of working for a company of roughnecks. Instead she comes from the cosmopolitan world of international finance.
     She returned to Romania after almost 14 years jet-setting around new Europe with the EBRD, the EU-backed post-Soviet finance firm bent on long-term lending for the best projects in damaged economies. During this time she managed, originated, structured, negotiated and implemented financing transactions for around 1.5 billion Euro in more than 35 projects. This has given her great experience in the often tricky world of dealing between state and businesses in developing markets, especially in privatisations and key industries such as energy, telecom, pharma and agribusiness. Some of the major transactions Gheorghe has been involved in in Romania include Petrom, Romtelecom, the National Roads Administration, pharma firm Terapia, glass makers Stirom and Transgaz.


Mariana Gheorghe
■ CEO of Petrom, a member of OMV Group
■ Age: 50
■ Romanian-born, married with one son

■ 1975 - 1979   Academy of Economic Studies Bucharest, International Relations
■ 1983 - 1989   University of Bucharest, Law School
■ 1994 - 1995   London Business School, Corporate Finance
Career history:
■ Since 2006: Chief Executive Officer of Petrom
■ 1999 - 2006: Senior banker in the South-Eastern Europe and the Caucasus Group at the European Bank for Reconstruction and Development (EBRD)
■ 1994 - 1999: Associate/principal banker in Romania, Ukraine and West Balkans, EBRD
■ 1993 - 1994: Associate banker, energy team, EBRD
■ 1991 - 1993 Deputy general director in the International Finance Department, Ministry of Finance, Romania
■ 1985 - 1991 International trader and account manager, Chimica Romferchim, a Bucharest foreign trade company

Balance Sheet

Integrated oil and gas company
Started operations: 1997
Bought out by Austria’s OMV Group in 2004 for 1.5 billion Euro
Runs exploration and production activities in Romania, Kazakhstan and Russia
Owns two refineries in Romania: Petrobrazi (Ploiesti) and Arpechim (Pitesti)
Annual refining capacity: eight million metric tonnes
Filling stations: 550 in Romania.
The company also has an international network of 82 filling stations located in the Republic of Moldova and Hungary. This network was increased by 178 OMV premium stations in Romania, Bulgaria and Serbia-Montenegro, acquired in January 2006
3Q 2006 turnover: 955 million Euro
3Q 2006 EBITDA:
255 million Euro
3Q 2006 employees: 36,011