Petrom to borrow E500 mln from OMV for investments

Amid the deepening of the financial crisis, Romania's largest company, Petrom, plans to borrow up to €500 million from its major shareholder, Austrian OMV gas and oil group, sources within the company told Business Standard. OMV's Chairman and Chief Executive Officer (CEO), Wolfgang Ruttenstorfer, said yesterday that the company's liquidity has shrunk, as the access to foreign financing was reduced.

"Besides the €375 million loan taken out by Petrom from banks in October 2008, the company is now borrowing one half of million euro from OMV, and all the money will be used for investments," sources within the company said. Company officials declined to comment this information. Petrom's CEO, Mariana Gheorghe, said in November that the company was looking for a new medium or long-term loan to finance its investments, following the one signed with five banks in October. Petrom seems to have opted for a medium-term loan. Gheorghe explained that the company's 2009 investment program, "which should worth an average €1.5 billion," required external financing. Ruttenstorfer added that "OMV is affected by the declining price of oil, which leads to a drop in profitability. Thus, we will have to slow our development in the region in the near future. We will have lower growth rates compared to previous years, but markets in the region continue to have potential."

The fuel demand is still high on the markets in Central and Eastern Europe, compared to Western countries, which register a substantial drop, according to Ruttenstorfer. He added that the gas war between Russia and Ukraine revived talks at the European Union level regarding the Nabucco pipeline project, but European countries should rather focus on interconnection with neighboring countries and increasing their stocking capacity before finalizing large projects. Furthermore, Austria-Slovakia, Romania-Hungary, Romania-Bulgaria, and Bulgaria-Greece bilateral agreements are necessary.

Business Standard