Petrom Spends Over 1 Bln EUR for Refineries Modernization

Petrom, the largest oil and gas producer in South Eastern Europe, announced its first achievements of the modernization and revamping process in refineries, to be carried out until 2010. The strategy for the modernization of Petrom refineries, reaffirmed in October 2006, needs investments of more than EUR 1 bn, so that Petrobrazi and Arpechim will become more efficient and will supply products that meet the EU requirements.

Petrobrazi will be the most modern and efficient refinery in Romania and its capacity will increase from 4.5 mn tons/year to 6 mn tons/year. The refineries utilization rate will go up to 95% (at the end of 2006, the refineries utilization rate was 86%), and the diesel production of Petrobrazi will increase to 2.1 mn tons to supply expected increase in market demand.

• Investments in Petrobrazi, around EUR 1 bn

The most important projects developed in Petrobrazi target the expansion of the capacity of atmospheric and vacuum distillation unit, the modernization of the gas separation unit and a new hydrogen plant which helps at the reduction of sulfur content and pollution agents, modernization and capacity increase of naphta processing units - to improve the gasoline blend quality. Also, the utilities, energy and water system will be modernized and new tanks will be built or modernized in order to increase operational flexibility. Environment protection is one of the important components of the strategy and the investments will also focus on reducing the sulfur oxides emissions. The transformation process of Petrobrazi also includes the first hydrocracker to be built in Romania, having a capacity of around 1.75 mn tons/year, which will contribute to the elimination of sulfur out of intermediary products and to the production of larger high quality diesel quantities.

• Investments in Arpechim, around EUR 200 mn

The investments in Arpechim aim at improving energy efficiency and optimizing product mix. The most important projects focus on the system for the gasoline blending in line, on the improving of the production system and utilities distribution, the improving of the gasoline quality according to the standards and the revamp of the tanks farm.

Four new pipelines will connect Petrobrazi and Arpechim. The installation of new oil and oil products transportation pipelines will secure the flexibility of the crude supply network and the synergy between the two refineries, under the best operation and logistics conditions.

The first milestone of the investments program for Petrobrazi refinery targets the developments of an advanced technological line that will allow the production of a new generation of diesel fuels, according to the European environment policies. It is the hydrotreater equipment which will help the refinery produce low sulphur fuels of 10 ppm. The value of the investment for this project rises to approx. EUR 85 M. The entire unit will be put into operation in January 2008 at Petrobrazi

The most important element of the technological equipment, the hydrotreater, with a value amounting over EUR 5 mn, was made in Germany and transported in Romania under maximum safety conditions. The transportation was one of the heaviest ever to cross the Romanian territory. At the end of April, the hydrotreater arrived at Petrobrazi, where it was successfully installed.

Petrom is the largest Romanian oil and gas group, with activities in the business segments of Exploration and Production, Refining and Petrochemicals, Natural Gas, as well as Sales and Marketing. Petrom exploits estimated oil and gas reserves of 1 billion boe, has an annual refining capacity of 8 million metric tons and holds 593 filling stations in Romania. The company also has an international network of 211 filling stations located in Moldova, Bulgaria and Serbia. In 2006 the turnover of Petrom was EUR 3,709 million, EBITDA was EUR 1,020 million. Following the share capital increase OMV, the leading oil and gas group in Central Europe holds a 51,011% share in Petrom. OMV is active in 13 Central European countries in its Refining and Marketing business segment and in 19 countries on five continents in Exploration and Production. The Romanian state holds 30.862% in Petrom, Property Fund SA holds 9,887%, the European Bank for Reconstruction and Development, 2.026% and 6.214% are owned by minority shareholders.