BMI's Executive Summary

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The latest Romania Oil & Gas Report from BMI forecasts that the country will account for 4.99% of Central and Eastern European (CEE) regional oil demand by 2011, while providing just 0.58% of supply. CEE regional oil demand rose to an estimated 5.21mn barrels per day (b/d) last year and should average 5.35mn b/d in 2007, before reaching 5.97mn b/d by 2011. Production of an estimated 12.41mn b/d last year is forecast to reach 15.22mn b/d by 2011.

CEE gas consumption in 2006 was an estimated 587bn cubic metres (bcm), with demand of 715bcm targeted for 2011. Production last year of an estimated 680bcm should reach 758bcm by the end of the period. Romania's share of consumption in 2006 was an estimated 3.07%, while its share of production was 1.76%. By 2011, its share of demand is forecast to be 3.36%, with the country accounting for 1.19% of supply.

For the whole of last year, our estimates of average crude oil prices are US$61.10 for the OPEC basket, US$65.10 for Brent, US$66.20 per barrel (/bbl) for WTI and US$61.30 for Urals. For the first quarter of this year, we have adjusted our forecasts to reflect the weather-induced volatility. The OPEC basket is now expected to have averaged US$54.30/bbl, with Brent at US$57.60; WTI averaging US$58.70 and Urals at US$54.00/bbl. Our projections for 2007 as a whole are barely changed from the last quarterly report. We are still assuming an OPEC basket price average of US$55/bbl. Based on last year's typical price differentials, this implies Brent at US$58.80, WTI averaging US$59.90/bbl, and Urals at US$55.30/bbl.

Romanian real GDP growth is now forecast by BMI at 6.9% for 2007, down from 7.7% in 2006. We are assuming 5.0% growth in 2008, 4.5% in 2009, followed by 4.9% in 2010 and 4.6% in 2011. BMI's GDP growth outlook suggests that oil demand could potentially grow at 4.0% per annum, rising from an estimated 245,000b/d in 2006 to at least 298,000b/d by 2011. In spite of greater efforts by the OMVbacked national oil company Petrom, we see domestic oil production slipping from an estimated 109,000b/d last year to 89,000b/d over the same period.

This implies rising import levels, with volumes up from an estimated 136,000b/d last year to 209,000b/d by 2011. Natural gas consumption put at 17.6bcm in 2006 can be expected to reach at least 24.0bcm over the same period, while nuclear power usage is set to show the highest growth rate. Romania's gas production is forecast to slip to no more than 9.0bcm by 2011, providing an import requirement of at least 15bcm.

In the BMI Business Environment Ranking matrix, Romania receives an unchanged composite score of 28, which still ranks the country 10th out of 12 states included in the CEE region. The overall business environment can be considered fairly unattractive in a regional context, thanks largely to a high level of perceived economic risk, limited growth prospects in upstream oil and gas and only an average regulatory and competitive framework. The country's reserves-to-production ratio (RPR) is around the regional average, but there isn't a great deal to attract larger international oil companies (IOCs) into the local energy market.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Romania Economic SWOT

Romania Political SWOT

Romania Business Environment SWOT

Chapter 3 - Regional Market Overview

Central/Eastern Europe Region

Table Central/Eastern Europe Oil Consumption (000b/d)

Table Central/Eastern Europe Oil Production (000b/d)

Table Central/Eastern Europe Oil Refining Capacity (000b/d)

Table Central/Eastern Europe Gas Consumption (bcm)

Table Central/Eastern Europe Gas Production (bcm)

Table Central/Eastern Europe LNG Exports/(Imports) (bcm)

Romania

Chapter 4 - Business Environment Rankings

Romania

Central/Eastern Europe Region

Chapter 5 - Romania Business Environment Ranking

Economics – long-term risk

Politics – long-term risk

Oil & Gas Growth

Oil/Gas Reserves

Licensing/Regulation

Competitive Environment

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Legal Code/Corruption

Foreign Direct Investment

Tax Regime

Chapter 6 - Oil Market Outlook

Table: Crude Price Forecasts 2006

Revised Forecasts

Table: Oil Price Forecasts

Chapter 7 - Regional Supply and Demand

Central/Eastern Europe

Table: Oil Production (000b/d) – Central/Eastern Europe

Table: Oil Consumption (000b/d) – Central/Eastern Europe

Chapter 8 - Global Picture

Table: Global Oil Consumption (000b/d)

Table: Global Oil Production (000b/d)

Chapter 9 - Industry Forecast Scenario

Oil and Gas Reserves

Oil Supply and Demand

Gas Supply and Demand

Refining and Oil Products Trade

Revenues/Import Costs

Table: Romania Oil & Gas – Historic Data & Forecasts

Other Energy

Table: Romania Other Energy – Historic Data & Forecasts

Key Risks to BMI’s Forecast Scenario

Chapter 10 - Economic Outlook

Table: GDP Output & Population

Chapter 11 - Country Snapshot: Romania Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 12 - Regional Case Study

Emerging Player

Table: Lukoil Investment*

Chapter 13 - Competitive Landscape

Executive Summary

Table: Key Players - Romania Oil & Gas Sector

Overview/State Role

OMV/Petrom – Summary

Rompetrol – Summary

Table: Key Upstream Players

Shell – Summary

Lukoil – Summary

Eni – Summary

Table: Key Downstream Players

MOL – Summary

Others – Summary

Chapter 14 - Company Monitor

SNP Petrom

Lukoil Romania

Rompetrol

OMV Romania

Chapter 15 - BMI Forecast Modelling

How we generate our industry forecasts

Energy Industry

Cross checks

Sources

Chapter 16 - Appendix: Regional Demographic Data

Wages (ave labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Network of European Oil & Gas Sources

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BMI's European Oil & Gas Reports are based on an extensive network of multilateral organisations, government departments, oil and gas industry associations, chambers of commerce and company reports. Information sources include: