Privatization of Petrom Moving Forward

Romania has approved the privatization strategy for state-owned SNP Petrom SA. The government will sell a majority stake in the oil company through a combination of share sales and a capital increase. The government will ask investors interested in Petrom to buy a 33%-34% stake directly from the state and to obtain a 51% stake through an additional share capital increase, the ministry for economy and trade said in a statement.

No date has been set for the privatization auction. The Romanian government has pledged to privatize Petrom this year. The company's sale is central to the government energy reform agenda, and is a main requirement of the government's agreements with the International Monetary Fund and the World Bank.

A consortium comprising Credit Suisse First Boston Corp. and ING Barings is advising the Romanian authorities on the sale. The government controls a 93% stake in the company, and the remaining shares are publicly traded at the Bucharest Stock Exchange. Petrom is the country's largest oil company, which has upstream exploration units and produces 6 million metric tons of crude oil and 6.1 billion cubic meters of natural gas annually. Its two refineries have a combined capacity of 8 million tons of crude oil a year, and its retail network comprises nearly 700 filling stations.