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The investments planned for the special fund created by KMG International with the Romanian state will be made next year, while the negotiations on the Memorandum with the state will be closed in July, said Azamat Zhangulov, senior VP of KMG International. The The payment procedure will take between 6 and 7 months, so the company thinks it’s unlikely that the 200 million dollars payment is going to be made this year.
„KMG International is convinced that by implementing the provisions of the memorandum signed with the Romanian Government in 2013 on a partial redemption of their shares, but also on the creation of an investment fund in the energy sector with a total value of up to 1 billion USD, real benefits will be generated for both the company and for the Romanian economy. The realization of these investments could contribute to the creation of over 2,000 jobs, while having a major impact in horizontal development of the national economy”, say KMZ offcials.
For this year, the group made its financial projections based on a quotation of 50 dollars for a barrel of oil. “80 dollars per barrel of oil could become a reality in the next 3-4 years”, said Azamat Zhangulov.
KMG International invested about 55 million dollars in 2014 in Romania, mainly focused on the modernization program of 90 Rompetrol gas stations in Romania, while for this year, the Group has proposed an investment plan of over 200 million dollars, according to a release received by energynomics.ro. A large part of the amount allocated for this year is scheduled for the general overhaul of Rompetrol Rafinare, and also for the retail operations. Petromidia refinery operated last year at full capacity and did not registered any scheduled or accidental interruption of activity (365 days), the volume of processed raw material being 13,800 tons / day.
Half of the pump price is excise and taxes
Around 52% of the pump price of fuel is taxes and duties, and the decrease of price came only from companies, the state toll remains at high levels, said KMG Vice President of International Operations, Cătălin Dumitru.
“Both for petrol and diesel, over 52 percent of the pump price are the taxes and duties. Sure percentages differ on petrol and diesel, but there is over 50 percent. During the period when oil fell sharply, we cannot ignore the fact that there has been a decline in the price at the pump, indeed, a much lower percentage. But if we do a calculation we see that the price fell at manufacturer and the distributor, given that all excise, tax, has remained constant”, said Cătălin Dumitru.
“What happens to the price at the pump in Romania, at present, is exactly what happens to the price at the pump in any country in Europe, in a free market where prices are aligned automatically according to a highly simple mechanism, i.e. supply and demand. In Romania, petrol and diesel are produced, petrol and diesel are imported, consumption is somewhere around 6 million tons per year. Prices align and competitors pursue in this competition each other, there is always a leader in every market, we also have the market leader in terms of pricing, there are some trends that all competitors follow”, said Vice President for Operations at KMG International.
Investment of 1.4 billion dollars in seven years
KMG International Group (formerly named The Rompetrol Group), solely owned by the national oil & gas company of Kazakhstan – KazMunayGas, shows in 2014 record financial and operational results, an unique performance in the past 15 years since its founding.
“KMG International’s long-term strategy envisages an organic growth in the countries of the Black Sea region, including the expansion of retail and gas business in Romania, enhancement of operational efficiency of the refinery after the record performances reached in 2014 as a result of the large investments of KazMunayGas in this sector – over 1.4 billion dollars during the past 7 years. At the same time, we aim further organic growth on the priority markets as well as expansion of activity in the provision of industrial services (EPC) in Kazakhstan, North Africa and the Middle East”, stated Azamat Zhangulov, Senior Vicepresident KMG International.
EBITDA doubled, net earnings are still negative
In the context of the international evolution of crude oil and petroleum products prices, KMG International 2014 reached a net turnover of 11.4 billion dollars in 2014, higher with 2% compared to the result of 2013. The increased of production and sales of petroleum products in conjunction with the optimization of operational and financial flows, and continuation of the “Change for Good” program contributed in 2014 to a double operational profit (EBITDA) up to a level of 140 million dollars and an improvement of 61 million dollars of net earnings (-58 million dollars).
Launched in 2013, the program Change for Good aims at an improved efficiency by 2018 of the entire flow of operations, specific to the refinery – petrochemical trading – raw material supply, retail – marketing upstream – industrial services. It also seeks a reduction in operating costs and an increased profitability, the targeted economic effect being of approximately 130 million dollars by 2018 (30 million dollars planned for 2015).
In 2014, the total contributions of KMG International to the state budget, and local budgets amounted to 1.93 billion dollars, out of which 1.8 billion dollars is Rompetrol Rafinare intake (1.4 billion dollars in 2013). Meanwhile, the exports of Rompetrol Rafinare amounted to over 2 billion dollars in 2014 (1.7 billion dollars both in 2013 şi 2012), the company being the largest domestic exporter of petroleum products and the second exporter of Romania on the overall top.
Over 5.5 million tons of raw materials processed in Romania
The quantity of raw materials processed by the two refineries of the Group – Petromidia Năvodari and Vega Ploiesti, as well as the petrochemical division – the only entity of its kind in Romania in operation, amounted in 2014 to over 5.54 million tons, higher by 21 % compared to the level reached in 2013. Last year Petromidia Refinery reached a historical record of processed raw materials – more than 5 million tons, while the total amount processed from 1979 (the year of its entry into service) until now exceeds 100 million tons.
Amid an increase of 22% of Petromidia refinery fuel production (a record of oil production of 2.43 million tons compared to 1.91 million tons in 2013), the sales of petroleum products through Rompetrol gas stations in Romania, Bulgaria, Moldova and Georgia increased by 15 % compared to 2013, reaching a level of 2.23 million tons.
At the same time, the Group’s trading activities (the sales of finished products, the acquisition of raw materials for the production units) in the Black Sea registered an upward trend in 2014, with 22% above the level of 2013 (11.5 million tons). These volumes were reflected at the level of the supply-chain division, which traded 550 vessels on the internal market, 670 trains left the refinery to 7 depots in Romania and other hundreds of tanks for Rompetrol gas stations and for domestic partners.
Among the performance achieved by the member companies of KMG International Group in 2014 – the decrease of the processing cost to 21.2 dollars/ton – the lowest level in the past 10 years, the increase of yields for diesel to 48.8% and the yields for white products to 85.7%, reaching the maximum production capacity of polypropylene – 90,000 tons in 2014, a record bitumen production (61,400 tons) and n-hexane (64,000 tons), a reduction of 5% in logistics costs and 10% of losses in petroleum products. To these is added the modernization and rebranding program of 90 Rompetrol gas stations in Romania and the implementation of the new concept in Moldova and Georgia.
