Goal Of Rompetrol’s Arrest Is To Receive Certain Payments From Kazakhstan

Goal Of Rompetrol's Arrest Is To Receive Certain Payments From KazakhstanIt is possible that the Romanian government claims are intended to receive certain benefits and other preferences from Kazakhstan

  • “Rompetrol” under arrest
  • How to pay for the shares again and again
  • Purpose – Turkish market
  • Romanians reminded of the Energy Charter

In October KazMunaiGas International NV (KMGI), which owns the refinery complex in the Romanian Constanta, will be entitled to file a claim to international arbitration on the Romanian government with a demand to withdraw the arrest imposed by the local prosecutor’s office on the company’s property.

As is known, the Romanian prosecution authorities in May 2016 launched an investigation into the circumstances conducted in 1998-2004 the privatization of property complex of “Rompetrol” acquired “KazMunaiGas” in 2007.

Specific complaints against prosecutors EP voiced not (at least not yet), but the seizure of assets seriously complicates the completion of the deal with the Chinese China CEFC Energy Company Limited, which in the end of April, an agreement was reached for the sale of 51% stake KMGI.

Interesting coincidence: the agreement with China was signed on 29 April and 6 May Kazakh investor has received from the Romanian authorities notified the freezing of assets in connection with the events that happened over 10 years ago.

Maybe it’s just a coincidence …

How to pay for the shares again and again

Or maybe not.

Especially if you remember the history of relations between the Romanian Government and the Kazakh investor.

The agreement on the purchase of 75% stake in Rompetrol Group NV, owned by Romanian businessman Dinu Patriciu, was signed on 24 August 2007. However, in 2010, “Rompetrol Rafinare” – a company, a member of the group of “Rompetrol” and is the owner of the refinery “Petromidia”, has made the conversion of bonds issued in 2003, common shares of the Company in favor of the Romanian Government.

As a result, the Romanian government has become “Rompetrol Rafinare” status of a minority shareholder with a stake of 44.69% in.

After that KMG had to enter into long negotiations on the future status of the Romanian Government as a shareholder and a share buy-back. The negotiations culminated in the January 2014 signing of the memorandum, according to which the government received from the EP’s $ 200 million for a 26.7% stake in oil company.

Also, the memorandum called for the creation of a joint investment fund for projects in the energy sector of Romania of up to $ 1 billion, the share of which in Romania is 20%.

It is not excluded that the current Romanian government claims are intended to receive certain benefits and other preferences from Kazakhstan.

The goal – the Turkish market

Especially since the EP is extremely interested in a deal with a Chinese investor.

In the first half of 2016, for the first time since the acquisition of the asset, KazMunaiGas International achieved net profit from operating activities in the amount of 32.3 million US dollars.

The EBITDA (analytical indicator which is equal to the profit minus the cost of taxes paid, interest payments on loans and accounted for depreciation) for this period also reached a record level of 104.6 million dollars, which is 28% higher than the same period last year.

At the end of this year, according to senior vice president KMGI Azamat ZHANGULOVA planned to enter the figure of at least $ 200 million. It is promoted and developed in Europe, the trend growth of refining margins, and a leading company in the work of transformation, reduce administrative costs and streamline business processes.

If we take into account that in 2012, when the new management of the company has started to work, the consolidated EBITDA level was only $ 79 million, and a net loss was in the amount of 156 million dollars, it is easy to calculate that in 2016, EBITDA increased almost 3 times.

Now for the company it is the task of further growth. Chinese investor , in addition to the payment of “real money” for a 51% stake to, has made a commitment to implement the investment program, which will be concentrated in the retail sector. Today KMGI retail represented in Romania, Moldova, Bulgaria and Georgia under the brand of Rompetrol.

The company has been eyeing the very promising Turkish market – it is possible that Chinese money there is one gas station networks will be purchased.

Romanians reminded of the Energy Charter

However, the arrest of the shares frozen closing the deal with the Chinese.

According to Azamat Zhangulova, the Kazakh side position is simple: should not be held legally responsible bona fide purchaser who bought the asset after the period in which the prosecutor’s office alleges violations.

July 26, KazMunaiGas International to the Government of Romania notified of the possibility of arbitration. Its legal basis will be an agreement on mutual protection of investments between Romania and Kazakhstan, and between Romania and Holland, in whose jurisdiction the registered KMGI, as well as the Energy Charter Treaty, to which Romania also joined. According to the procedure, after such notice, or three, or six months Kazakhstan has the right to initiate arbitration proceedings.

So the ball on the Romanian side.

OLEG Czerwinski