With the support of the Group and its sole shareholder - KazMunayGas, the company continued last year the positive trend it started in 2015 due to major investments made between 2007 and 2013 in order to extend and modernise the production units in Romania. Therefore, 22 new historical records were obtained, half of them at Petromidia refinery.

“Year 2018 has become a turning point for the 40-year history of the Petromidia Refinery - raw materials processed, products obtained, processing capacity utilisation degree, reduction of technological losses, improvement of the energy efficiency index or over 2 million hours free of incidents. We have been building together for 11 years and during this time we managed to increase the activities and operations on the Petromidia platform, and together we are prepared for new challenges that motivate us and give us the strength to continue”, says Yedil Utekov, Rompetrol Rafinare General Manager.
 

Consolidated indicators*		2018	2017	%
Gross turnover	USD	5,259,166,505	4,151,088,337	27%
EBITDA	USD	152,956,649	210,727,761	-27%
Net result	USD	(23,068,476)	20,705,457	N/A

Note: The consolidated financial statement of Rompetrol Rafinare include the results of Rompetrol Rafinare S.A. and those of the subsidiaries Rompetrol Quality Control S.R.L., Rom Oil S.A., Rompetrol Downstream S.R.L., Rompetrol Logistics S.R.L. Rompetrol Gas S.R.L and Rompetrol Petrochemicals S.R.L.
 

In the context of the increases in prices and petroleum products commercialised during last year, Rompetrol Rafinare reached the gross turnover of USD 5.26 billion last year, which is 27% higher than the same indicator in 2017.

Regardless of the company's production activities, the consolidated financial results recorded in 2018 were mainly driven by the high volatility of the oil and gas market environment, the major fall in the gross refining margin in the last quarter of the year - from USD 55.2/tonne in Q4 2017 to 40,7 in Q4 2018, but also in the general economic environment in Romania and in the region (currency exchange rate, fiscal regime, etc.).

The operating result (EBITDA) decreased by 27% in 2018 - from USD 210.7 million in 2017 to USD 153 million, and the net consolidated result obtained was negative: USD 23 million as compared to 2017, when the indicator was positive around USD 21 million.

Rompetrol Rafinare continued as Romania’s largest petroleum exporter, as the quantities exported by the refining and petrochemicals divisions to the KMG International subsidiaries in Bulgaria, Moldova and Georgia and to the partners in the Black Sea region increased by 27% last year, up to USD 1.7 billion.

The company is among the main contributors to Romania’s state budget, its contribution in 2018 reaching USD 1.5 billion, approximately USD 300 million higher than the 2017 contribution.
 

Refining segment*

Financial indicator		2018	2017	%
Gross turnover	USD	4,464,215,781	3,479,314,807	28%
EBITDA	USD	146,958,807	164,431,901	-11%
Net result	USD	17,858,371	8,774,525	104%
Operating indicator
Raw materials processed - Petromidia	kt	5,925	5,662	5%
Processed raw material - Vega	kt	406	373	9%
Internal fuel sales	kt	2,215	2,128	4%
Fuel sales for export	kt	2,229	2,111	6%

Note: The refining segment includes the results of Rompetrol Rafinare SA referring to the activities of refineries Petromidia and Vega

 

The gross turnover of the refining the segment amounted to more than USD 4.46 billion in 2018, 28% higher than the previous year, in line with the trend in the international quotations for raw materials and petroleum products, but also for the volumes obtained from production units.

Despite the historical operating and production results, the financial results of the refining activity in 2018 were negatively influenced by unfavourable market conditions, especially in the fourth quarter, which affected the annual result of the segment.

The trend in the international refining margins, the volatility and variation in raw materials and petroleum products, the revision in the last quarter of the year also led to a 3% decrease in the gross margin of processing of the Năvodari unit as compared to 2017 and 15%, respectively, in the case of net refining margins.

The Petromidia Năvodari refinery recorded 11 new operating records last year, with historical levels reached on processed raw materials (5.92 million tonnes), petroleum products (5.78 million tonnes), gasoline production (1.36 million tonnes) and diesel fuel (2.75 million tons), fuel for aircrafts (317 thousand tonnes), white product yields (86.2%), refining capacity utilisation (91.98%). These include the improvement of the energy efficiency index - EEI (96.1) and the reduction of technological losses (0.83% wt.).

In its 40 years of activity, the refinery saw a continuous development of its production activities due to major investments. For example, from a quantity of raw material processed in 1979 (commissioning time) of 1.26 million tonnes to 3.82 million tonnes in 2007 (the time of acquisition by KazMunayGas), 5.66 million in 2017 and 5.92 million tonnes, respectively, last year.

At the same time, the production of fuels (gasoline and gas oil) had a similar trend, both in qualitative - from non-euro products, Euro 1 (5,000 parts per million sulphur) to Euro 5 (10 parts per million sulphur), and quantitative terms from 560 thousand tonnes in 1979 to 2,53 million in 2007, 4 million in 2017 and 4,1 million tonnes last year.

In 2018, the total fuel sales were 4.44 million tonnes, 5% higher than the volume sold in 2017, half of which were delivered on the domestic market.

Established in 1905, the Vega Refinery in Ploiesti recorded 8 historical records for the year 2018 - processed raw material, obtained products (bitumen, solvent, and hexane), the degree of refining capacity utilisation, technological losses and the energy efficiency index.

Thus, the Ploiesti unit processed a quantity of 406 thousand tonnes last year, 9% higher than the 2017 indicator. This trend was also reflected in the main products obtained– bitumen (over 100 thousand tonnes), hexane (84.5 thousand tonnes) and solvents (43.5 thousand tonnes).

Vega operates in perfect synergy with the Petromidia Refinery in Năvodari, the largest in Romani and one of the most modern in the Black Sea Region. Thus, Petromidia supplies the full quantity if raw materials / semi-finished products to the Ploiesti refinery, needed to obtain special products with high added value.
 

Petrochemical segment*

Financial indicator		2018	2017	%
Gross turnover	USD	202,703,696	191,326,498	6%
EBITDA	USD	(17,953,048)	(5,304,452)	238%
Net result	USD	(37,441,748)	(12,977,684)	189%
Operating indicator
Processed propylene	kt	143	134	7%
Processed ethylene	kt	60	64	-6%
Total sales from own production	kt	190	189	0%

Note: the petrochemicals segment includes the petrochemicals activity of Rompetrol Rafinare SA and Rompetrol Petrochemicals SRL
 

The petrochemical division registered a turnover of USD 202.7 million in 2018, 6% higher than the level recorded in the similar period of 2017. Currently this is the only unit producing polymers in Romania.

The financial results were strongly affected last year mainly by the unfavourable market conditions and the high volatility of raw materials and petrochemical products, with the LDPE/HDPE petrochemical margins being the lowest in the past 7 years.

Thus, the operating result (EBITDA) obtained last year was still negative, i.e. approximately USD 18 million. At the same time, the net result was negative, i.e. USD 37.4 million.

The Petrochemical Division of the refinery obtained an increase of about 3% in processed raw materials (propylene, ethylene) last year, from 199 thousand tonnes in 2017 to 203 thousand tonnes. Given the unfavourable context, the petrochemicals division reduced its processed ethylene by 6% - imported raw material required for low and high density polyethylene installations.

At the same time, the company increased its processed propylene by 7%; this raw material is provided by the Petromidia refinery.

The petrochemical segment is the only polypropylene and polyethylene producer in Romania. The dynamic development strategy ensures a competitive position for the company in the domestic market as well as on the regional markets - Black Sea and Mediterranean Sea region, Central and Eastern Europe.
 

Distribution segment*

Financial indicator		2018	2017	%
Gross turnover	USD	3,087,282,427	2,453,396,882	26%
EBITDA	USD	23,314,904	52,903,421	-56%
Net result	USD	(3,063,490)	27,493,675	N/A
Operating indicator
Fuel quantities - retail	kt	714	693	3%
Fuel quantities - wholesale	kt	1,248	1,191	5%
LPG quantities sold	kt	424	363	17%

Note: The distribution segment includes the results of subsidiaries Rom Oil, Rompetrol Downstream, Rompetrol Quality Control, Rompetrol Logistics and Rompetrol Gas

 

The consolidated gross turnover of the distribution segment amounted to USD 3 billion in 2018, 26% higher than the 2017 result.

The financial results were affected in 2018 by the trend in the international quotations for fuels - which saw a 21% appreciation for Euro 5 gasoline and a 30% appreciation for Euro 5 gas oil, the RON/USD exchange rate and the general economic context.

For example, in the last quarter of the year, international quotations rose by an average of 16% for gas oil and 2% for gasoline, and in the context of a 4% depreciation of the RON/USD exchange rate, the impact on the price of domestically traded fuels was 6% for gasoline and 21% for gas oil.

These market changes were determined by the high pressure on the margins of the distribution segment, and pump prices followed the growing trend of macroeconomic growth; however these could not be fully assimilated on the level of end-users.

Rompetrol Downstream and Rompetrol Gas increased their total volume of products sold by 6% up to a level of 2.38 million tonnes (gasoline, gas oil, liquefied petroleum gas). Retail and wholesale fuel sales increased by 3% and 5%, respectively, in 2018 as compared to the 2017 volumes.

Last year, Rompetrol Downstream continued the fuel distribution network expansion programme and, at the same time, the filling station rebranding programme, reaching 918 units at the end of 2018, as compared to 807 commercialisation points in 2017 (own station network, partner stations, mobile stations: express, 9m³ and 20m³ internal bases).

 

*The consolidated financial statements of Rompetrol Rafinare include the results of Rompetrol Rafinare S.A. and those of the subsidiaries Rompetrol Quality Control S.R.L., Rom Oil S.A., Rompetrol Downstream S.R.L., Rompetrol Logistics S.R.L. Rompetrol Gas S.R.L. and Rompetrol Petrochemicals S.R.L.

*The consolidated results presented are preliminary and unaudited, and the reporting was performed in compliance with the International Financial Reporting Standards (IFRS).

*The information contained herein are provided as at the date of the report and may be subject to updates, revision, amendment or change without prior notice. The analysis of how the economic operations of the company related to the financial year 2018 were transposed into the financial statements will continue until the completion and auditing of the financial statements, which is why the information disclosed may be subject to changes in terms of both value and disclosure and categorisation.

 

Public Relations and Communications Department

KMG International