The total investment level of the Romanian-Kazakh FIEKR Fund in energy projects reached USD 290 million, prioritizing the development of the network of gas stations at the local level and, in addition, the construction of a cogeneration plant on the Petromidia platform, while KMG’s investments in Romania have reached the 4 billion USD mark, tells Energynomics Iskander Abdibaitov, Chief Officer Corporate Development, KMG International.
“Ensuring a stable level of Kazakh crude oil import – necessary to ensure security of supply in Romania – is our main priority,” he says.
“Since February, KMG has not faced any interruption in the supply of crude oil needed by Romania”.
How large are KMG’s investments in Romania so far? What are the main KPIs achieved in 2022 and what investments are you planning for 2023? How has the price crisis affected these investments, including EU-funded projects?
Romania continues to be the focal point for Kazakhstan investments abroad, amounting to approximately 4 billion USD allocated since KazMunayGas acquired Rompetrol back in 2007. In the past 15 years, with KMG as sole shareholder of the company, over 1.5 billion USD have been invested in the Company whereas the sheer contribution to the Romania`s state budget exceeds 20 billion USD.
2022 marks a historical year with financial record results. Considering the processed raw materials, within the first 9 months of the current year, Petromidia Năvodari refinery processed more than 3.8 million tons of raw materials, achieving a production of approximately 1 million tons of gasoline and 1.97 million tons of diesel and Jet A1 fuels. The overall results, both for refining and petrochemical segment, are higher compared to the previous year. In addition, more than 60% of fuel sales were concentrated on the domestic market, attesting once more that Rompetrol, part of KazMunayGas, is an important pillar of the local and regional economy.
The turbulent times and present crisis impacted part of our investment projects due to the fact that cost of each project suffered an increase of 20% due to energy prices and materials costs. Several adjustments have been put in place, thus meeting our KPI`s and general objectives, while more than half of million USD were allocated to various feasibility studies for sustainable projects.
The investment plan for 2023 is focused on our retail station development in Romania, continuation of storage capacities modernization for our refined products and, above all that, dedicated projects aimed at ensuring safety and health of our employees
What is the status of the FIEKR Investment Fund disbursement and investments, at the end of 2022, and what are the plans for 2023?
Romania demands energy security for attaining an even higher role in the region. Considering the country`s potential of becoming an energy hub, FIEKR mission is to solidify commitment to deploying energy projects, by putting forward clear and timely investments so as not to lose momentum.
The total investment level of the Romanian-Kazakh FIEKR Fund in energy projects reached USD 290 million, prioritizing the development of the network of gas stations at the local level and, in addition, the construction of a cogeneration plant on the Petromidia platform. The recent delivery of Siemens gas turbines is an essential phase for project`s implementation in due time – Q2 2023, this project would secure electricity and steam supply for uninterrupted operations of Petromidia refinery. For 2023 we can talk about investments in a pipeline of projects according to the Decarbonization strategy.
What should 2023 bring to investors in terms of market changes in order to surpass the current energy crisis? How can Romania benefit from lower energy and gas prices and diversify its sources?
An intertwined world shares both welfare and hardships. At the group level dived deep into a genuine transformation facing geopolitical uncertainty that led to increased oil price volatility. High energy prices will likely remain prevalent for the forthcoming months at least. Moving from a carbon sources of energy and development of sustainable sources is a common objective for EU economies in the mid-term, meanwhile ensuring a stable import of Kazakh crude oil in the interest of assuring the security of supply in Romania is our forefront priority.
The sanctions formulated by the European Commission, which provides for a phased release of crude oil and petroleum products of Russian origin were broadly embraced by member states in a commendable unity.
Although the restrictions do not apply to purchases of crude oil from other countries and delivered by sea, if such crude oil is loaded into or transits the Russian Federation, to ensure uninterrupted import of crude to Europe, as a differentiation measure, Kazakhstan-originated crude oil was renamed to ‘KEBCO’ (Kazakh Export Blend Crude Oil), starting from June 2022.
Since February, KMG did not face any interruptions in supplying the necessary crude for Romania. On top of that, at EU level discussion materialized in plans and concrete actions stressing out that Kazakhstan could supply Europe`s energy needs, including not only crude but also raw materials for batteries and renewable hydrogen production. Joint projects, respecting environmental and social standards, become a must and shall gain traction in the upcoming period while Romania may have a privileged role.
What are the most important pillars of the new sustainability strategy in the short, medium and long term the group concentrates on, in this new environment?
KMG International commissioned and approved its decarbonization strategy which should be enacted via multiple plans in the near future. The key-objective for the company lies in its transformation from a traditional downstream oil and gas player to a diversified energy provider able to adopt and, at latter stage, diversify green energy projects portfolio. The short-term perspectives are still centered around refining, petrochemicals and fuel retail segments with a more pronounced e-mobility features such EV charging.
Envisioned more as a challenge and not as much as a concern, we will pursue our path towards sustainability aiming to become a diversified energy player by 2030 with focus on renewable energy producing and biofuels projects.
To KMGI, sustainability has become an inherent operating principle, as well as for an increasing number of market players within the oil & gas industry and beyond, and even a way of corporate and individual thinking, deepening commitment to the growth and wellbeing of our people and communities. Currently, without oil and peace, that wellbeing remains out of reach.
