BMI's Executive Summary

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The Romanian petrochemicals sector is entering a phase of renewal and capacity expansion following the takeover of facilities by foreign companies, according to BMI's latest Romania Petrochemicals Report.

In November 2007, the European Commission approved the proposed acquisition of a 75% in Rompetrol by KazMunaiGaz PKOP Investment NV, a Dutch subsidiary of Kazakhstan's state-owned JSC TH KazMunaiGaz (KMG). Rompetrol is making a concerted effort to raise polymer production. A US$400mn programme was launched in 2006 to revive its 200,000 tonnes per annum (tpa) ethylene plant, along with its high-density polyethylene (HDPE) and low-density polyethylene (LDPE) units at Navodari, Romania. The programme also included plans to start a 240,000tpa polyethylene terephthalate (PET) plant and a 250,000tpa polypropylene (PP) plant by 2009. Ethylene production is targeted at 100,000tpa in 2008, representing half the plant's nameplate capacity. In December 2007, Rompetrol launched production at a 60,000tpa HDPE line, with investment totalling US$14.5mn (EUR10.5mn). The line was mothballed in 1996 due to a lack of ethylene feedstock. The company expects output to reach 500,000tpa for polymers and 200,000tpa for ethylene by 2010. BMI has revised its forecasts accordingly, with polyethylene (PE) capacity set to reach 400,000tpa and PP capacity reaching 330,000tpa from 2009, with no further increases in capacity planned for the rest of the forecast period.

Meanwhile, the Romanian Senate's decision to overturn the privatisation of Romania's largest oil company, Petrom, looks set to fail when it is discussed by the lower house in 2008. Austria's OMV Group, which bought a 51% in Petrom for EUR700mn in 2004, is confident that the Romanian government and the lower house will affirm the privatisation. Despite the controversy surrounding the sale of Petrom, BMI does not expect the lower house to agree to reverse the company's privatisation, as it could spell the end of the growth and success that Petrom has been achieving since 2004. On its own, the company looked vulnerable. Backed by OMV, which could eventually merge its entire Romanian portfolio into Petrom, the future looks considerably brighter. Any move to reverse the privatisation of Petrom would be a risky strategy and one which would be likely to have a negative impact on the Romanian business environment.

BMI has revised its method of risk scoring in the petrochemicals sector, introducing dynamic scores that reflect on future growth as well as current capacities and the size of the internal market, along with investment risk assessments of the political, economic and regulatory environments. This revision has not affected Romania's ranking, with the country remaining in fifth place with 53.4 points, 1.2 points above the regional average and 3.5 points behind Hungary. BMI believes the country's score will steadily improve with the expansion of petrochemicals production capacity and improvements to the overall regulatory environment, which should support a positive business environment.

Contents

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Chapter 1 - Executive Summary

Market Overview

Industry Trends and Developments

Foreign Direct Investment

Trade Relations

Chapter 2 - SWOT Analysis

Romanian Petrochemicals Industry SWOT

Romanian Economic SWOT

Romanian Business Environment SWOT

Chapter 3 - Market Overview

Market Structure

Table: Romanian Petrochemicals Industry – Cracker Capacity Data & Forecasts (000 tpa)

Chapter 4 - Industry Trends and Developments

Trade Relations With Asia

Chapter 5 - Industry Forecast Scenario

Table: Romanian Petrochemicals Indicators

FDI Outlook

Table: Romanian FDI Data – 2000-2005

Chapter 6 - Economic Outlook

Table: Romania – Economic Activity

Chapter 7 - Company Monitor

SNP Petrom

Lukoil Romania SRL

Rompetrol

Oltchim

Chapter 8 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Petrochemicals Industry

Cross-Checks

Competitive Landscape for Emerging Europe Petrochemicals Reports: Sample of Companies Ranked

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Comparative company analyses and rankings by US$ sales, % market share, employee size, registration date and ownership structure. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) on all leading international and national operators in each market, including competitive intelligence in the following: Overall geographic presence, competitive positioning against local companies; production capacity, sales and market share; joint ventures, foreign direct investment, projects and acquisitions strategy.