Tampiza, Lukoil: "We understand people"s discontent, but we can"t lower prices"

• Oil companies claim that prices at the pump should be raised again, or else they would be forced to sell at a loss

• The state deciding to force Petrom to sell at a dumping price would eliminate the other companies from the market

• The Lukoil official considers that administrative measures are needed on worldwide scale to eliminate speculative oil trading

Drivers protesting at gas stations will not help bring lower prices at the pump, Constantin Tampiza, the coordinator of the development strategy for Romania of the Russian oil group Lukoil, said in an interview for "BURSA".

When asked if the oil companies could lower their prices in the near future amid social pressure, Constantin Tampiza said: "No, definitely not! Prices will not fall due to these protests. We do care that people are unhappy, but prices cannot go down when the international quotations of the oil barrel has climbed, and we are losing money. I understand these actions, but there is nothing we can do. The real danger for oil companies - what we are worried over - is not the protests, but the shrinking of our customers" buying power".

• "The price of fuel should be hiked again..."

Constantin Tampiza stressed that a reduction of the price of fuel is out of the question at the moment.

Quite the opposite: according to him, given the current price of the oil barrel, the price of fuel should be raised by at least 10 bani in Romania so the gas makers could stop selling fuel at a loss.

The Lukoil official said: "The price of gas at the pump should rise by about 10 bani to allow us to stop losing money on the fuel we sell. For instance, the price per liter of ECTO Super Diesel, which is currently 5.03 lei, should actually be 5.13 lei. But a new hike is not possible as long as Petrom keeps its prices unchanged. For us the prices of Petrom are like a < mirror >. If we had actually had a free market and it wasn"t for Petrom, we would have been forced to raise prices by about 27 dollars per ton as a result of the upward rise of the price of oil. With Petrom keeping its prices down, we can"t do that and as a result, we are working with a price that is causing us to lose 27-28 dollars a ton".

• Why fuel has gotten dearer

According to the Lukoil official, the factors that caused the rise of the price of fuel are the rise in the price of the oil barrel at a macro level by 27%, from 77.2 dollars to 98 dollars, the rise of the refining costs, the evolution of the leu/dollar exchange rate as well as the level of taxes levied by the state, which account for 51% of the price.

According to Tampiza, another facto that caused the price of fuel to rise was the inclusion of the bio elements in the fuel (which caused a 23 dollars/ton increase in the price of diesel fuel and a 16 dollars/ton increase for the price of gas).

• "Administrative measures are needed to limit oil speculation"

Constantin Tampiza considers that the current price of the oil barrel, which poses major problems to companies in the sector, is the result of speculation. "Today"s price of the oil barrel is the result of pure speculation, as a result of the channeling of financial resources into activities, or commodities such as oil, which are not at risk because of inflation", Tampiza said. The Lukoil official considers that on a macroeconomic level, the major powers of the world should come to a consensus on prohibiting speculative transactions.

According to him, the real price of the barrel of oil is somewhere between 70 and 80 dollars, and the normal price at the pump should have been 4.85-4.9 lei/liter.

• Why our fuel costs more excluding taxes, than it does in Austria

When asked why in Romania the price of fuel excluding taxes is higher than in other European countries such as Austria or Sweden, Constantin Tampiza explained: "One of the reasons for this is that we have a lower labor productivity than those countries, as well as higher costs. First of all, we"re talking about the high transportation costs. Due to the bad road infrastructure, we have to replace a tanker truck every tree years. Simply by having to lower their speed by 5 km/hour or else run the risk off having our trucks go off the roads, which are in a deplorable state - we lose 2-3 dollars per ton of fuel. The state also charges very high fees for the unloading and pipeline transport services of Oil Terminal, and Conpet, respectively, far higher than anywhere else in the region. We have asked the PM to lower the fees charged by Conpet from 8.6 dollars, to at least 6 dollars, given the fact that neighboring countries charge fees of around 2-3 dollars. We can"t go on like this, and the state needs to understand that if we shut down the refinery, Conpet will go bankrupt as well! We have also asked the state to lower the fees charged by Oil Terminal. We even contacted Rompetrol to work on their terminal, because they charge lower fees. Last but not least, in order to lower prices, the government should give up on the 1 cent fee it charges on every liter of fuel for the payment of the debts of the former state owned oil company whose debts were already paid".

• "There are no cartels on the local fuel market"

The Lukoil official claims that there are no price fixing agreements between the oil companies in Romania. "There are no cartels", he said, when asked about the authorities" suspicion in this respect.

Constantin Tampiza said: "We are definitely not worried and we have nothing to hide! We were investigated by the ANAF and the Competition Council last year. The latter took all the information from all our computers, even from our personal organizers; they were looking for cartels, but they found nothing".

• Running away from the Robin Hood tax

Tampiza warned that if the Government decides to impose new taxes against oil companies, this could have disastrous consequences: "If a Robin Hood tax gets introduced, Romania will be treated as having an unfavorable investment climate. Moreover, that would send a negative signal to other investors wishing to come in here. This kind of policy is very dangerous, given that Romania needs investments and to see its GDP increase. I also think that other measures such as forcing Petrom to sell at low prices are out of the question. It would be a dumping price that would eliminate competitors from the market. We are in the EU, and the European Commission would react right away".

• Refineries in danger!

The Lukoil official also warns that the Government needs to be very careful with oil companies, as 11-12 refineries shut down in Europe last year. "Over the past ten years, we had losses of 500 million dollars from refining activities!", said Tampiza.

Constantin Tampiza warned: "Refineries with a processing capacity of less than 5 million tons can"t withstand the pressure of the current cost levels. All Romanian refineries are in this situation: Petrotel-Lukoil (2.4 million tons processing capacity), Rafo (3 million tons), Petrobrazi (has 4.5 millions capacity, but it processes 3-3.2 million). Rompetrol could be the only exception, if it succeeds in increasing its refining capacity to 7 million tons. Besides, due to the increasingly shrinking margins in refining, last year Petrom opted to buy from us rather than do the refining itself".