Oil and gas company OMV, which owns Romania's Petrom, went to the International Arbitration Court in Paris against the Romanian state, asking for the reimbursement of some EUR 2 million on account of ecology works between 2009 and 2010, which were not covered by the state budget. The state pledged to reimburse all the investments made by the investors between 2005 and 2019 to solve the pollution issues Petrom had before its 2004 privatization.

At the beginning of 2008, OMV Petrom's evaluation of the environment expense that the state had to reimburse pointed to EUR 511 million, around three quarters of the price paid by the investor at privatization.

The environmental works which need to be covered by the state and are covered by the arbitration concern decontaminating fields at Doljchim and the Petrobrazi refinery, both owned by OMV Petrom. Romania's Environment Ministry rejected Petrom's reimbursement request in fall last year, saying the conditions to grant compensations for environmental loss, as stated in the privatization contract, were not met.

Romania will have to approve the payment for arbiters in Paris, some EUR 190,000 for this year.

Austrian OMV bought the stake in Petrom in 2004, for EUR 1.5 billion. It paid EUR 668 million for shares and made a capital increase of EUR 832 million.

Earlier this year, Romania's Competition Council fined several oil and gas companies, including OMV Petrom for having agreed to withdraw a type of product from the market. The accumulated fines for all six companies stood at EUR 205 million – 3 percent of their turnovers. OMV Petrom's sanction was EUR 120 million. The company wants to go to court, contesting the fine.

Romania's President Traian Basescu recently said he cut ties with OMV Petrom for having made a record profit during tough times. ‘I am the one who cut all ties with Petrom, in protest over the excessive profit during a time of crisis,” said Basescu.

“You cannot ask a company to be 100 percent moral, but you cannot throw the worldwide price of oil to our face every day – USD 120, when extraction costs USD 16 in Romania. This is the area where Petrom lack fair play,” said Basescu.

OMV Petrom posted its highest net profit ever last year: EUR 886 million, up 72 percent on the year before. Its turnover stood at EUR 5.3 million, slightly below its record turnover from 2008, of EUR 5.4 million. The business growth slowed down in the last quarter of the year, when turnover went up by 17 percent and profit, by 7 percent.

editor@romania-insider.com

(photo source: Arhivafoto.ro)