2 0 11

A N N U A L R E P O R T

3

4 . . . . . . . . . . Letter from the CEO

6 . . . . . . . . . . Refining and Petrochemicals PetromidiaRefinery

VegaRefinery

RompetrolPetrochemicals

20 . . . . . . . . Trading

32 . . . . . . . . Retail RompetrolDownstream

DyneffFranceandSpain

RompetrolBulgaria

RompetrolMoldova

RompetrolGeorgia

RompetrolGas

50 . . . . . . . . Business Development & Industrial Services RompetrolWellServices

DrillingandWorkover

ExplorationandProduction

Rominserv

RQC

Palplast

Ecomaster

70 . . . . . . . . Corporate Social Responsibility

80 . . . . . . . . Marketing, Corporate Governance & Finance Marketing

CorporateGovernance

Finance

Contents

4 AnnualReport2011

“Evolution is change and adaptation

to the constantly changing environment,

while seeing the good opportunities

for future investments.”

Letter from the CEO

5

Evolutionischangeandadaptationtotheconstantlychangingenvironment,while

seeingthegoodopportunitiesforfutureinvestments.Overthelastyears,theindustry

changedalot,andweasagroupofcompanies,hadtoadapttothesechangesinorder

tocontinueouractivitiesandimproveouroperations.Thus,in2011wemanagedto

comeclosertoourgroupcapitalobjectives,tooptimizeourcurrentlineofbusinessinall

countriesandimprovethecompany’skeyactivities.

Oneofthekeyobjectivesfor2011wastocontinuetheinvestmentpackageforthe

PetromidiaRefinery,whichaimstoincreasetherefinery’scapacityandgeneralworkflow.

Inthisregard,majorimprovementshavebeenmadetowardstheproject’sfinalization,

andthewholepackageistobecommissionedin2012.Oneofthekeycompaniesin

makingthispossibleisRominserv,theRompetrolGroup’sgeneralentrepreneurandone

oftheleadinglocalcompaniesinEPCM(Engineering,Procurement,andConstruction

Management).

Thecompletionofthisproject,alongwiththeconstantdevelopmentofouroperations

abroad,arepartofTheRompetrolGroup’sstrategytoimprovetheenergeticbridge

betweenCentralAsia,andEurope.WebuyouroilfromKazMunayGasinKazakhstan,

processesitatPetromidiainRomania,anddistributetheproductsintheBlackSeabasin,

theBalkans,CentralandEasternEurope.

OurTradingdivision,responsibleforoptimizingtheentiresupplychaininTRG,has

shownincreasedresults,especiallyinFranceandSpain.Onthesemarkets,ourexports

grewby50%,whilethevolumessoldtothegeographicallyclosesubsidiarieshave

showna25%increase.

AnessentialcomponentofTRG’sactivitiesistheRetaildivision,whichmanaged

tomaintainover1,000fueldistributionpointsacross6Europeancountries,while

announcingitsexpansionontheTurkishmarket.Eventhoughtheeconomicconditions

werenotthegreatest,ourRetailsubsidiariesadaptedtothemarketchangeandachieved

significantcostimprovements,increasedvolumessoldoreventhecommissioningof

newgas-stations.

Intunewiththegroup’soverallstrategy,ourretailnetworkwillprovidebetterfuelsfor

ourclients,mainlythankstothemodernizationpackageimplementedatPetromidia.

Wehelpedthecommunitieswhereweworkandlivebycontinuingournational

programentitled“Togetherforeachandeveryone”,withstrongemphasisonhealth

andenvironmentissues.Thus,RompetrolmaintaineditspartnershipwithSMURD,the

emergencymedicalrescueunit,implementedcloseto20projectsin15countiesand

invested25millionUSDinenvironmentalprotection.

OnemajorculturalmilestoneinRomaniain2011wastheGeorgeEnescuInternational

MusicFestival,whichbroughttoBucharestthebestclassicalartistsintheworld.

Rompetrolwasanactivepartneroftheevent,providingfuelfortheentirefleetofcars

responsiblewiththefestivallogistics.

Allexperiencegainedin2011,aswellasduringthedecadesofactivitiesperformedon

fourcontinents,givesmetheconfidencethatpeopleofRompetrolcansurpassany

challenge.Thecompanywillevolveandconstantlyimproveitsoperations,regardlessof

thechangesitmeets.

Saduokhas Meraliyev

CEOofTheRompetrolGroup

LetterfromtheCEO

6 AnnualReport2011Refining and Petrochemicals

TheRefiningandPetrochemicalsdivisioncomprisesthreeproductionentities:

—ThePetromidiaRefinery(locatedinNăvodari,Constanţa)

—TheVegaRefinery(locatedinPloiești)

—RompetrolPetrochemicals

WhilePetromidiahasapproximately29%oftherefiningcapacityinRomania

(est.capacityfor2012–5,000,000tons/year),beingtheonlyspecializedplantlocatedon

theBlackSeacoast,Vegaemphasizesonorganicsolvents,bitumenorecologicalheating

fuels(capacity300,000tons/year).

RompetrolPetrochemicalsistheonlylocalproducerofpetrochemicals,withanannual

productioncapacityofover200,000tonesofpolymers(polypropylene,polyethylene

oflowandhighdensity).

TheBusinessUnithastwooperatingentities:

—RompetrolRefining(PetromidiaandVegarefineries);

—RompetrolPetrochemicals.

RefiningandPetrochemicals

growth

8 AnnualReport2011

Rompetrolcontinuedin2011thegeneralinvestmentprogram,whichaimstoincrease

theprocessingcapacityto5milliontonsofrawmaterial(from4.03milliontonsin2009

and1.15milliontonsin2000–beforethetakeoverbyTheRompetrolGroup).Tothis

extent,thecompanycompletedtheconstructionof6newunits.

TheyarescheduledtoentertheoperationalflowoftherefineryintheQ32012,when

threemoreinstallationswillbecompleted(theMildHydroCrackinginstallation,the

HydrogenandSulfurrecoveryunit).

Theprogramwasinitiatedin2006as“RefineryInvestmentPackage2010”,related

investmentvaluebeingestimatedatover377millionUSD.Afterthecompletionofthe

investment,therefinerywillproducefuel(petrol)withsulfurcontentbelow10ppm,

whileprocessing100%Uraloil.

Petromidiawillalsoshowincreasedproductionofdieselyields,alongwithadifferent

productionstructure,moresuitableforthecurrentmarketdemands.

TheGroupcreatedtheinfrastructurefortheseinvestments,byfocusingalsoon

complementaryprojectslocatedonthePetromidiaplatform–off-shoreoilterminalon

theBlackSeacoast,fuelexportcapacityincreaseforgasolineanddiesel,andanLPG

terminalonthe9thberthintheMidiaport.

ThetotalexportedvaluegeneratedbyRompetrolRefining,RompetrolGasand

RompetrolPetrochemicalsincreasedbymorethan53%YTY,upto1.5billionUSD.

Therefore,thecompanywasasignificantcontributortotheRomanianstatebudget,the

totalcontributionbeingofover1.2billionUSD,200millionUSDmorethanin2010.

2011 Key Performances— 195millionUSDinvestedinefficiencyincrease,environmentalprotectionand

processingcapacityofPetromidiaandVega.

— 84%efficiencyinwhiteyields,thelargestlevelreachedbyPetromidiainthelast5years.

— Consumptionreduceby8%

— AlignmenttotheEUenvironmentalrequirements,intermsofairemissionsand

hazardouswastedisposal.

BycommissioningthenewinstallationsonthePetromidiaplatform,RompetrolRafinare

willbeabletoproduceinS22012onlyEuro5byprocessingonlysulfurousoil.This

happensamidanincreaseoftheprocessingcapacityupto5milliontonsperyear.

Duringthescheduledstopin2011,themaincatalysts,neededinordertomaintainand

increasethefuelquality,werereplaced.Throughthesameperiod,refiningmaintenance

workwasdone,aswellasspecializedworksmeanttointegratethenewunitsinthe

processingflow.

PetromidiaRefinery

195millionUSDinvestedinefficiencyincrease,environmentalprotectionandprocessingcapacity

Refining and Petrochemicals

9

The Reconfiguration of the Vacuum Distillation and Hydrofining Unit to Diesel HydrofiningPatofthecapacityincreaseprogram,theprojects’purposewastotransformtheVacuum

DistillationandHydrofiningunit(VDH)intoaDieselHydrofiningone,abletoprocessthe

rawmaterialathighquality(Euro5dieselcomponent)andsafetystandards,ataflowof

180cm/hour.Thefinalizationofthisinvestmentwillallowtheincreaseofdieselyields.

Thetotalvalueoftheinvestmentswas7.5millionUSD.

The modernization of the Gas Desulfurization unitWiththeincreaseoftheprocessedgasandaminesresultedfromtherefinery’scapacity

increase,thecompanymodernizedthegasdesulfurizationinstallationandintegrated

intheproductionflowtheMildHydroCrackinginstallation(MHC).TheMHCunitisan

importantproviderofsulfurousgasandamine.

ThefinalizationoftheprojectledtoaincreasedprocessingcapacityofH2Sgas,

from19,000Nmc/hto32,800Nmc/h,andofamine,from100to195mc/h.Thetotal

investmentamountsto18millionUSD.

New Flame systemWithaninvestmentvalueof12.7millionUSD,thenewflamesystemensuresthe

following:

— BurnsthegasesproducedatPetromidia.

— Protectstheequipmentfromover-pressure.

— Eliminatesthedangerofexplosionorairpolution,inattunewiththelocaland

internationalEnvironmentalLegislation(OUGnr.152/2005andOUGnr.195/2005,as

wellastheactissuedbytheEuropeanCommissioninFebruary,2003,onthebest

availabletechniquesinoil&gasrefining).

The construction of High Purity Nitrogen and Compressed Air installationsTheconstructionoftheHPNinstallationispartofthemodernizationprogrammeantfor

thenitrogen,instrumentalandtechnicalairdistributionunit,necessarytooperatethe

refineryandthepetrochemicalunitunderanycircumstances.

Theprojectalsoaimedfortheincreaseoftheliquidnitrogenvaporizationcapacity

from3,000to7,500Nmc/h.Thiswillensurethenecessarynitrogenforthestartofall

installationsinthe2010package–Nitrogenproductionunit,MildHydroCrackingunit

andthenewlineofSulfurRecoveryunit.Readyin2012,theunithasareducedenergy

consumptionofover40%.

Representative productsProduction results

RompetrolRafinarehasincreasedby10.2%thequantitiesofprocessedrawmaterialYTY,

from3.5milliontons,to3.9.Also,consideringthe18daysofgeneralrevision,whenthe

mechanicalavailabilitywaslower,theutilizationcapacitydecreasedfrom80.2%,

to77.56%.

40%

5

reductionofenergyconsumption

milliontonsperyearincreaseoftheprocessingcapacity

10 AnnualReport2011

Total raw material (tons) 3,896,516

Crude oil (tons) 3,729,615

Finished goods (tons) 3,812,199

Petrol(tons) 1,258,126

DieselOil(tons) 1,497,116

In2011,thevolumesoffinishedgoodsincreaseby12%,andby54%,thetotalsaleslevel.

Thiswassustainedbythegrowthinsalesofthefinishedgoods,alongwiththe36%

increaseofinternationalquotations.

Refining and Petrochemicals

Quantities of raw material processed annually (thousand tons)

0

1,000

2,000

3,000

4,000

5,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

-Total -Crude oil

Total raw material processed per month, 2011 (thousand tons)

0

100

200

300

400

DecNovOctSepAugJulJunMayAprMarFebJan

Volumes of finished productssold (mt)

-2010 -2011

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2010

3,003,0643,359,004

2011

Meanwhile,theamountofmotorfuelsoldincreasedby14%.

10.2%

54%

increaseofprocessedrawmaterials

increaseoftotalsaleslevel

11

Market outletsThedivisionfocuseditstradingactivitiesontheoptimizationofthecommercialflowsfor

thepurchaseofrawmaterialsandsalesoffinishedgoods.Thevolumesofpurchasedraw

materialsincreasedbyapproximately6%,whilethefinishedproductssoldby12%.

Allcrudeoilacquisitionswerecarriedoutsolelythroughthegroup’stradingdivision,

VectorEnergy,whichhasalsotakenovermostofthevolumesofgasolineanddieselsold

onforeignmarkets.AllproductssoldbyRompetrolcompliedwiththeEUenvironmental

standards,placingtherefinery’sproductionatahigh-qualitystandard.Hence,the

positionofthecompanywasstrengthenedonthetraditionalmarkets.Moreover,starting

withJanuary1st,gasolineanddieselwith5%bio-componentwassold,asrequiredby

theEU’sregulations.

— 60%ofthefinishedgoodsweresoldonthelocalmarket.

— 53%ofthemotorfuelsoldwenttothelocalmarket.

-2010 -2011

Total sales, 2011 vs. 2010 (tons)

DecNovOctSepAugJulJunMayAprMarFebJan

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

-Domestic -Export

Domestic vs. External sales in 2011 (tons)

DecNovOctSepAugJulJunMayAprMarFebJan

0

50,000

100,000

150,000

200,000

250,000

Abroad,petroleumproductsweresoldbothintheEUspace(25%),aswellasoutside

ofit(75%).Almost80%oftheforeignsalesweredirectedtoEuropeanmarketsin

Romania’sproximity.

ThemainexportdestinationsforRompetrolRefiningproductsarethefollowing:

Gasoline Georgia,Ukraine,Turkey,Lebanon,Moldova

Diesel Bulgaria,Turkey,Georgia,Serbia,Moldova,Lebanon

Coke Ukraine,Greece,Turkey,Serbia

Sulfur Egypt,Ukraine,Greece

60% ofthefinishedgoodswentonthelocalmarket

12 AnnualReport2011

Themaindomesticcustomerswere

RompetrolDowstream,Rompetrol

Gas,RompetrolPetrochemicals,

AirBPSales,andAirTotalRomania.

Themainexternalcustomerswere:

VectorEnergy,RompetrolMoldova,

RompetrolBulgaria,CalviTrade

Limited,TransamoniaSwitzerland,

andSteuerman.

Major objectives for 2012

QHSE Objectives (Quality, Health, Safety, Environment)

— RecertificationoftheintegratedQHSEmanagement,accordingtoISO&OHSAS

standards.

— ReachzeroaccidentsonthePetromidiaandVegaplatforms.

— Continuethe1.LIFE,meanttoincreasesafetyawareness,inordertoachieve3rdlevel

ofhealthandsafety,accordingtotheDuPontmatrix.

— Improvesafetyperformanceindicatorsestablishedatgrouplevel,byloweringthe

targetvaluewithmin0.5%YTY(autocrashrates,disabilityfrequency,incidencerate,

andfrequencyandseverityrates);

— RevieworrenewaloftheIntegratedEnvironmentAuthorizations,SecurityReportand

InternalEmergencyPlanforRompetrolRefining,byincludingnewinvestments;

— Participateinvolunteerandsocialresponsibilityprojectsintheneighboring

communities;

— Maintainacustomersatisfactionindicatorofmin.90%;

— RecertificationoftheautofuelsproducedbyRompetrolRefiningandadditives

producedbyVegaRefinery.

Operational objectives

— Tocompletethe“2010investmentpackage”.Aftertheprogramis100%implemented,

Petromidiawillstarttoprocessover5milliontonsofrawmaterialperyear.

— Theincreaseofdieselyieldsintherefinery’sproductstructure,duetotheincreasein

demandfordiesel.

— AlignwiththemandatoryEUproductsspecificationsforgasanddieselproduction–

produceonlyfuelswithbelow10ppm,whileprocessing100%sulfurousoil.

— Furtheroptimizationofthebusinessinordertoachieveanoperationalandfinancial

efficiencyashighaspossible;

— Currentactivitiesandassetsstrengthening.

Refining and Petrochemicals

-Export -ICS

ICS vs. Export (tons)

DieselGasolines

0

200,000

400,000

600,000

800,000

1,000,000

-Trading -Near abroad

Near abroad vs. Trading (tons)

DieselGasolines

0

200,000

400,000

600,000

800,000

1,000,000

Outofthetotalautomotivefuels

distributedontheexternalmarket,

approximately46%weredelivered

tosubsidiariesinMoldova,Bulgaria,

Georgia,andUkraine.

5 milliontonsperyearofprocessedrawmaterials

13

14 AnnualReport2011

RompetrolRefining–VegaPloiestiisaunitintendedfortheprocessingofspecial

products:organicsolvents,fuelsforheating,orspecialbitumen.

Theinvestmentactivityin2011atVegahasbeenfocusedonenergyefficiencyincrease,

diversificationofproducts,doublingtheproductioncapacityofthehexaneplant,

increaseofoperationalsafetyandabidanceofthecomplianceprogram.

In2012,Vegawillonlyprocessalternativerawmaterials(suchasNaphthagasoline,

C5-C6fraction,slurryandjetfuel).Theunitsoperatingontheplatformwillbe–hexane,

grinding,de-flavoring,refining,AFP,DVandbitumen.

2011 Key Performances— Thecompanykeptthevolumeofrawprocessedmaterialover335,000tons,achieving

recordnumbers–highestinsevenyears.

— 100%capacityincreaseoftheN-Hexaneplant,from70tons/day,to140tons/day.

— Achieved100%oftheplannedCAPEXworks–refinery’sboilermodernization,

thoroughtheassemblyofnoxburnersandtheautomationoftheCR3steamboiler.

— Technologicalconsumptiondecreasedto1.76%(from1.81%),throughtheintegration

ofnewprojectsandbetterstorageandhandlingofrawmaterialsandfinishedgoods.

— Decreasedenergyconsumptionto2.49GJ/mt(from2.7GJ).

— ContinuedtoworkontheprojectsintheIntegratedEnvironmentAuthorizationplan.

— 100%saleofproduction.

Representative products and production resultsVegaRefinery’sproductionisdividedintospecificproductgroups:

— Solvents:Organicsolvents–RompetrolSE,lightsolvents,lightn-hexanenaphtha

— Gas:ExtraIcalor

— WhitespiritandPetroleum

— Fuel

— Bitumen

— Oil

Vegaistheonlymanufacturerofn-hexaneinEasternEurope,usedforpolypropylene

productionandextractionofvegetableoilsinfoodindustry.Inaddition,VegaRefineryis

theonlymanufacturerinRomaniaof:

— Organicsolvents:RompetrolSE–itprovidesalowtoxicitylevelbyreducingsulfur

andaromatichydrocarbons.

— SpecialBitumen,usedinthemanufacturingofbituminousmasticsandfor

waterproofingworksinconstruction,metallicpipelinescorrosionprotection.

Vegaalsoproducesroadbitumenmodifiedwithpolymers,widelyusedinasphalting

worksforhightrafficroads.Therefineryproducesorganicheatingfuelsareproducedas

well,whichareinaccordancewithallstandardsimposedbytheEuropeanUnion.

VegaPloiestiRefinery

Refining and Petrochemicals

100% saleofproduction

15

Theproductionprogramfor2011wasexceededwithatotalproductionofrawmaterials

of336,646tons,1.5%YTY.

In2011,therefineryincreaseditswhitegoodsefficiencyinthetotalproduction,which

allowedstrengtheningitspresenceonforeignmarkets,especiallyontheorganic

solventsmarket.

Salesofwhiteproducts(Naphthagasoline,organicsolvents,n-hexaneandwhitespirit)

representabout63%oftotalsalesfor2011.Salesoffinishedproductsonforeignmarkets

were65%,whiletherest35%wassoldinRomania.

Major objectives in 2012

— Maximizethemarginsofnicheproducts.

— Obtaincertificationforallclassesofbitumenmodifiedwithpolymer.

— Achievesignificantreductionsinconsumptionofutilitiesandtechnology,

bycontinuingtheinvestmentprogram.

— Compliancewithenvironmentalrequirements.

-Budget -Actual

Processing of raw materials (tons)

ActualBudget

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000 331,816 336,646

-White products -Black products

Efficiency 2007–2011(tons)

2007 2008 2009 2010 2011

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

23%

77%

30%

70%

29%

71%

27%

73%

33%

67%

65%

35%

offinishedproductssoldonforeignmarkets

offinishedproductssoldinRomania

16 AnnualReport2011

2011 Key PerformancesThepetrochemicalsdivisionofRompetrolkeptitspositionassoleproducerofpolymers

inRomania–polypropyleneofhighandlowdensity.Thecompany’sdevelopment

strategyhasensuredaconstantgrowthofthelocalandinternationalmarketshare.Thus,

thecompanynowhasacompetitivepositionregionally,inalltheBalkansarea.

Oneofcompany’smajoradvantagesistheproximitytothecustomer.Thisensuresthat

theproductstheyorderedwillreachthemasspecified,throughtheJust-in-Timesystem,

whiletheRompetrolPetrochemicalsspecialistareconstantlygivingtechnicaladviceand

assistanceformonitoringtheirproductioncircuit.

Thecompany’sturnoverreached355millionUSDin2011,a34%increaseYTY.Thiswas

mainlyduetotheimprovementofinternationalpricesforpetrochemicalproducts,along

withtheincreaseofthetradedvolumes.

Unfavorablemarketconditions,causedmainlybytheLibyansocio-economiccrisis,led

tolowmarginsinS22011,whichaffectedthedivision’sfinancialresults,thusreaching

lowerfiguresYTY.

Thequantityofprocessedrawmaterialwashigherin2011,mainlythankstotheHDPE

installationrestart,attheendof2010.Atthesametime,thesalesvolumesin2011

increasedby24%YTY.

In2011theproductionofpolymersincreasedto188,315tons,comparedto149,901tons

in2010.RompetrolPetrochemicalsalsoimprovedtheaveragequalityoftheproduced

polymers,reaching98.1%offullycompliantpetrochemicals,1.2%YTYincrease.

Inviewoffuturedevelopmentofactivities,RompetrolPetrochemicalsinitiatedin

2011thelastphaseofthemodernizationprogramfortheHDPEplant(highdensity

polyethylene).Throughthis,thecompanyextendeditsproductrangewithhigh-blown

bodies,thinfilm,orpipeforinflammablegastransportation.Theprogramwillbe

finalizedinQ32012,whentechnologicaltestsarescheduled.

Key Technological Achievements in 2011— Thecompanyproduced68,500tonsofLDPE(low-densitypolyethylene),14%above

capacity,whilethePP(polyethylene)productionroseto88,000tons,10%abovethe

designedcapacity.

Amidanincreasedproductioncapacityandmarketshareofproducts,thecompanyhas

developedaseriesofprojectsinordertomodernizeitsfacilitiesandexpandthesupply

ofrawmaterialsandcommercialactivities.Theprojecthasthreestrategicdirections:

RompetrolPetrochemicals

Refining and Petrochemicals

355

24%

millionUSDturnover

increaseofsalesvolumes

17

Development, capacity increase, improved products quality

— ThecompanyimplementedaPIsystem,thattracks,archivesandprocesses

operationaldata.Thisledtotheoptimizationofplantoperations,improvedreporting

dataandincreasedproductquality,mostlythankstorapiddataanalysysand

visualization.

— Processcontrollabilityincrease,withhighreliabilityonpolymerqualitycontroland

settingsadjustmentoftheplantPPextruders.

— Modernizationoflaboratoryequipment–chromatographgasforrapidand

expandedanalysisofgas.

— Inadditiontothis,PetrochemicalscontinuedtheprojecttoenlargetheHDPE

productionrange.

Safety increase

— Theinstallationofagasdetectionsysteminthepyrolysisplantthatensuresanoverall

safetyincreaseintheplant’soperationsusingaperformantgasdetectionsystem.

— ISCIRrenewalworks/capitalrepairs–RompetrolPetrochemicalsinstallationsrevision.

Environment

— ThemodernizationofburnersforC121A/BboilerstoreduceNOXfromburntgases

belowthe150ppmlimit.Theimplementationofthisprojectmadethecompany

complianttotheEUregulationsonthepollutantsdischargedintheair.

— Upgradeoftheventilationsystem,neededinordertoensureproperworking

environment.

— Rehabilitationoftheacidandbasesplatform,byrestoringtheplatform’santi-acid

protection.

ProductionPolypropyleneproductionreached88,079tons/year,whileLDPEandHDPEproduction

reached68,544tons,and31,692tons,giventhattheHDPEplantoperatedintwostages:

fromJanuarytoAprilandfromAugusttoSeptember.

RompetrolPetrochemicalsisthesoleproducerofpolypropylene(PP)andpolyethylene

inRomania,showingadomesticmarketshareof50.2%forPP,23.2%forLDPEand9.1%

forHDPE,accordingtothedatafromtheNationalInstituteofStatistics.

Throughthedevelopmentofstrategiesthatemphasizeoncustomersatisfactionand

loyalty,thecompanymanagedtoimproveitspositiononthelocalmarket,aswellas

ontheregionalone.ThisincludestheBlackSeaandMediterraneanbasins,Central,

andEasternEurope.

200 thousandtonsoffinishedgoodsweresoldin2011

-PP -LDPE -HDPE -Total

Polymers Production 2000–2011

201120102009200820072006200520042003200220012000

0

50,000

100,000

150,000

200,000

18,51935,915

56,908 63,06573,862 74,359

96,958

161,718

196,586187,022 188,315

149,901

18 AnnualReport2011

Oneofthecompany’smajor

commercialadvantagesisthedirect

accesstoalltransportationlinks

(road,sea,rail),whichfacilitatedthe

logisticstotheBalkans(Macedonia),

AsiaandMiddleEast,aswellas

theupkeepofthecurrentregional

partners–Bulgaria,Serbia,Italy,

Greece,PolandandTurkey.

TradingInadditiontoproduction,thecompanyrunsamarketingbusinessforavarietyof

petrochemicalproducts,whicharecurrentlynotintheproductionportfolioofthe

petrochemicalscomplex.Nevertheless,seeingtheincreaseindemand,thecompany

capitalizedonthisopportunitybytradingspecialsortsofPP,HDPEpipeaprons,LDPE

andPET.

In2011tradingwithPETledtoa12%marketshareonamarketwithanincreasing

competition.

Refining and Petrochemicals

-Domestic -Export

Sales on destinations 2011

DecNovOctSepAugJulJunMayAprMarFebJan

0

3,000.00

6,000.00

9,000.00

12,000.00

15,000.00

-Own Production -Trading

Sales volumes (tons)

20092008 2010 2011

0

50,000.00

100,000.00

150,000.00

200,000.00

DecNovOctSepAugJulJunMayAprMarFebJan

-PP -LDPE -HDPE -LLDPE imp -HDPE imp -PET

Monthly sales by product type (tons)

0

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

19

Quality-Environment-Occupational Health and SafetyRompetrolPetrochemicalsemphasizedonestablishingabettercommunicationlink

betweentheproducerandthefinalprocessor,bygatheringfeedbackconstantly

fromtheprocessingdepartmentandintegratingitinthedevelopmentandproduct

improvementstrategies.

Thetechnicalassistancedepartmentcontinuedstrengtheningthepartnershipswith

RompetrolPetrochemicals’customers,byidentifyingtheaspectsofproductbehavior

duringprocessingandtechnicalsolutions.Thedepartmentwasalsoinvolvedinthe

developmentprogramofRPproductsfromHDPE.

QHSE accomplishments in 2011

— GLISqualitymanagement–ISO9001,environmental–ISO14001,andocupational

healthandsafety–BSOHSAS18001surveillanceauditswereconducted.

— TheIntegratedEnvironmentalAuthorizationnr.9/03.10.2011,validfor10years,was

renewed.

— TheWaterManagementpermitrenewed.

— AuthorizationtoconductnuclearactivitiesandPlanforSpillPreventionandControl

bothrenewed.

— Recoveryandrecyclingobjectivesforpackagingwastelegallyestablishedfor2011

weremadeonacontractualbasis,bytakingresponsibilityforrecoveryandrecycling

bySCEcoRomPackagingSA.

— Inthefirsthalfof2011,thePetrochemicalslabsreceivedreaccreditationinaccordance

withtherequirementsofSREN17025/2005bytheNationalAccreditation–RENAR.

Major Objectives for 2012

— CompletionofthefirstphaseintheHDPEmodernizationprogram.Theunitproduces

specializedapronsandintroducesnewapronsfornewapplications.Thisincludes

polyethylenepressurepipes,thinfilm,blowinglargepot,orcableprotection.

— Achieve:

— 20%domesticmarketshareforHDPEproducts.

— 55%domesticmarketshareforPP.

— 25%domesticmarketshareforLDPE.

— Developthedirectsaleschanneltoend-userscustomersonmarketsabroad.

— StrengthenRompetrolPetrochemicalspositiononthelocalandBalkanicmarket.

55%PP

25%LDPE

20%HDPE

Domesticmarketshare

toachieve

20 AnnualReport2011

TheTradingBusinessUnitisresponsiblefortheoptimizationoftheentiresupply

chainacrossTheRompetrolGroup(TRG),fromfeedstocksupplytofinalproducts’

saleandisactivefromtheCaspianSeaareatotheWesternMediterraneanSea.

TheTradingBusinessUnitincludes

thefollowingoperationalentities:

—VectorEnergyAG

—RompetrolUkraine

—ByronShippingLtd

—MidiaMarineTerminal

—RomaniaOperationsDivision

Trading

Trading

energy bridge

22 AnnualReport2011

2011 Key Performances— Volumeoftradedcrudeoilwas0.3milliontonsandproductexportstothirdparties

was0.66milliontons–7.24%higherthanlastyear

— VolumessoldonFrench&Spanishmarketswere1.14milliontons,approximately

53%higherthanin2010

— SecuredadditionalfeedstockbasketbysupplyingMTBEandETBEplusBiodiesel

(requireddieselblendingmaterialforEUcountries)

— VolumesforNear-Abroadsubsidiarieswere0.48milliontons–25%abovelastyear’s

supply

Apartfromtradedcrudeoil,totaloilvolumedeliveredbythecompanyinordertoensure

crudeneedsofPetromidiarefinerywas3.63milliontons,withKazMunayGas(KMG)

barrelsshareincreasingfromaround78%in2010toalmost90%in2011.

VectorEnergyAGisthesupplyandtradingsubsidiaryoftheRompetrolGroup,withits

mainofficeinZug(Switzerland).Thecompanycontinuedin2011tooptimizetheoverall

supplychainoftheGroup.Vectorfine-tunedthesynergieswithothercompanieswithin

theKMGGroup,namelyKazMunayGasTradeHouse–themaincrudeoilsupplierfor

Petromidiarefinery,aimingatanimprovedstocklevel.

In2011,thecompanysoldaround23%oftherefinerycarfuelproductiontocompanies

outsidetheGroup,whilearound0.48milliontonnes(17%)wenttoNear-Abroadentities

withintheGroup(toRompetrolBulgaria–124kt;toRompetrolGeorgia–149kt;to

RompetrolUkraine–205kt).ThiswasthedirectresultofincreasedsalesontheRomanian

market(53.6%oftotalcarfuelsales).Basedonimprovedproductqualityandnegotiated

contractualstipulations,profitabilityforsomedestinationsincreasedsignificantly.During

thesameperiod,thecompany’sexportofproductstotheFrench&Spanishmarketswas

1.14milliontonscomparedto0.75milliontonsin2010anincreaseofaround53%,with

dieselremainingmainproduct.

Theresponsibilitiesundertakenbythecompanyin2011arepartofthestrategicplan

ofKMGmother-companytofinalizeintegrationofTRGsustainingforwardmotion

regardlessofdifficultgeneralinternationalclimate.Vectorisinchargeofstream-lining

operationsoffuelsaletowardstheGroupsubsidiaries(Bulgaria,Georgia,Ukraine),

effectiveproductstockmanagementinRefiningandRetailEntities.Inaddition,in

depthmarketresearchhasresultedintoextendingTRGbusinessportofolio,byfinding

aconstantoutletforourgasolineanddieselgrades,whichdonotcomplywithEuro

standards.TheseeffortsresultedinmonthlysalestoLebanonmarketandspotsales

madetonewdestinations(UAE,NorthAfrica,Israel).

Inaddition,Vectorisinvolvedinfinancialriskmanagementactivitiesatgrouplevel.

During2011weexperiencedveryhighvolatilityinoilprices,drivenbyfundamental

factorsinbothofferanddemand.Onthesupplyside,themaindriverwasthefearof

VectorEnergyAG

1,14 milliontonsvolumessoldonFrenchandSpanishmarkets

Trading

23

disruptioninimportantoilproducingregions,whileondemandsidefactorswhich

couldpotentiallyleadtoadeeperrecessionandadecreaseindemand.Insuchan

environment,Vectorplayedanimportantroleinmitigatingcommoditypricevolatility

atgrouplevel,actingasanadvisorandexecutingmostofthetransactions.Derivative

instrumentsusedforcommoditypricevolatilityaremainlyexchangetradedfuture

contractsandliquidOTCswaps.

Vectormonitorsmarketforwardcurvesandexecutesrefinerymarginhedgetransactions

whentargetedlevelsaremet.SuchlevelsareapprovedbyBoardandTopManagement

RiskManagementPoliciesandsetdesiredlevelsofprofitability.

InordertoensurerawmaterialsupplyoftheGroupcompanies,andtheirsalesof

finishedproducts,VectorEnergyoptimizedcompanyheadcountandworkedclosely

withtheShippingandMarineOperationsentities.Theteamcontinuestoberesponsible

fordeveloping/implementingnewprocesses,suchasselectionofoptimumoilmixes,

establishingtargetstocksofrawmaterial/endproducts.

Theachievedoperationalresultisdirectlyaffectedbytheinternationalmarketconditions

andoperatedvolumes,reaching2.1millionUSDin2011.

For2012,VectorEnergywillfocusmainlyoncoveringtheentirefeedstockacquisition

forPetromidiaRefineryestimatedaround4.64milliontons(outofwhich4.4million

tonscrudeoil90%Uralsplus10%sweetcrudeoil).Besidesa16%increaseofprocessed

feedstockversuspreviousyear,thecompletionofrefineryrevampingprojectwillalso

bringasignificantincreaseinwhiteproductsyields(17%forcarfuelscomparedto2011),

morethanhalfofitwillbedirectedtoexportmarkets(0.32milliontonsoutoftotal0.52

milliontonsyieldincrease).

Market context in 2011Ukrainianmotorfuelsmarketin2011wasmarkedbyashareincreaseinimportedmotor

fuels,from39%to60%.

2011 Key AchievementsRompetrolUkrainehascontinueditstradingoperations,importingandsellingproducts

manufacturedbyRompetrolRafinare,mainlyEuroPlusGasolineRON95.InMay2011the

companyswitchedtodeliveryofEURO5productstoUkraine.RompetrolRafinareisthe

biggestRomanianmotorfuelsexportertoUkraine.

— BecomingthefourthlargestimporterofRON95ontheUkrainianmarket.

ThequantityofRON95importedbyUkraineexceeded164KT,thecompany’sshare

representing11.5%ofthetotalvolumesofRON95importedbyUkraine(8%oftotal

RON95consumption);

— RompetrolUkraineinadditiontoRON95,imported1.3%ofRON92and1%ofdiesel

ofthevolumesimportedtoUkraineduring2011;

— Despiteharshbusinessconditions,thecompanyhadasuccessfulfinancialyear.

EBITDAregisteredalevelof7millionUSDandthenetprofitexceeded4millionUSD.

RompetrolUkraine

16% increaseofprocessedfeedstockversuspreviousyear

24 AnnualReport2011

Thetradingactivityhasbeencarriedoutthroughnewlocations:oneBlackSeaterminal

locatedinKherson,oneDanube-riverterminalnearIsmailandthreein-landdepots,two

ofthemlocatedinOdessaregionandoneinVinnitsa.Thefuelwassoldaspreviousyears

oncarrierpaidtoterms,RompetrolUkrainedeliveringbyrailwaytheproducttoclients’

storagefacilities.

In2011thecompanydevelopedFCAsalesloadingproductsatterminalsandwarehouses

ontoclients’trucks.Thetotalquantitysoldamountedto64KT.

2012 Key Objectives

— Identifyingandprovidingneededlogisticinfrastructuretosecurefueldeliveries

tradednationallyandregionally;

— Increasinglogisticchainefficiencyandimplementingnewdeliverymethods;

— Developingnewmarketopportunities,bothforwholesaleandretail.

In2012,RompetrolUkraineaimstofurtherconsolidateitspositionasadistributorof

qualityfuelontheUkrainianmarket,especiallyinimportantcommercialareafrom

theSouthernandSouth-Eastern.Fortheretailsegment,RompetrolUkraineintendsto

implementadevelopmentplanforDOCOandDODOstations.

ByronShippingLtd,theshippingtransportationsubsidiaryofVectorEnergy,continuedin

2011tooptimizetheflowsamongTheRompetrolGroupentitiesandRompetrolRafinare.

StartingasofQ42010,ByronsignedaContractofAffrètementapplicableforAframax

(80kt+10%)sizevesselsinordertosecurefreightcostsforthecrudesupplyfor

PetromidiarefineryandalsotoavoidtheTurkishStraitsdemurragerisk.

Therestofthefixturesweremadefromthespotmarket,whichledtosavingsofapprox.

2.5millionUSDforthecompany.

In2011,SeniorManagementapprovedtheestablishmentofByronShippingRomanian

Branch,allowingByronShippingtointegrateallshippingrelatedservicesandtocreate

synergiesfromBlackSeatotheMediterranean.ThebranchwasestablishedonMarch1st,

2011andthepositiveinfluenceinEBITDAwasregisteredwhentheconsolidation

ofoperationsstarted.

Also,fullimplementationofGroupDemurrageProcedureresultedinanadequateand

moretransparentdemurragesplitamidstGroupCompanies.

TotaldemurragecostsatGroupleveldecreasedbyaround8%comparedto2010,down

from1.6millionUSDto1.47millionUSDin2011.

ByronShippingLtd

-2009 -2010 -2011Sales Rompetrol Ukraine (vol)

0

50

100

150

200

250

201120102009

2,5 millionUSDsavingsforthecompany

Trading

25

MidiaMarineTerminal,initiallyasubsidiaryofVectorEnergyAGbecameasubsidiaryofTheRompetrolGroupinDecember2009aftera

capitalincreaseof20millionUSDoperatedbyTRG.Thecompanywascreatedtoconsolidatetheenergybridge–Easternoilresources

andWesternmarketneeds.Thus,thepresenceofKazMunayGasandRompetrolwithinthegeographicalarchlinkingtheCaspianSeaarea

(Kazakhstan,Georgia),BlackSeaarea(Ukraine,Moldova,Romania,Bulgaria)toWesternEurope(FranceandSpain)supportingthisstrategy.

In2011thecompanycapitalwasincreasedagainby84millionUSD(TRGloancapitalisation).

Inthisrespect,inDecember2008thecompanyhascompletedtheconstructionofanewoff-shoreoilterminalintheBlackSea,11kmfar

fromPetromidiaRefinerycrudeOilTankFarm,operationalasofJanuary2009.Thenewterminalpermittedoilsupplycostreductionsof

approx.USD8/tonnein2009,andofferedthenecessaryframeworkfordevelopingtheRompetrolGrouptradingactivitiesintheregion.

Achievedcostsfor2011crudeoilactivityviaoffshoreterminalwerearoundUSD2.3/tonne.

The main performance indicators achieved in 2011

Off-shore oil terminal (Midia SPM)

TotalqtyofcrudeimportedviaMidiaSPM 3,444kt

TotalqtyofcrudetransferredviaOTC 160kt(duetoSPMhoseschangeout)

TotalnumberoftankerscallingMidiaSPM 43

Operationalcosts 2.28USD/mt

Commerciallosses(B/LversusOUTRep.) 0,07%

TotalsavingbyusingtheSPMsincestartup about25.1millUSD

TimespenttoreceivethecrudedischargedviaSPMinRompetrolcrudeoilstorage 19hours/ship

TimespenttoreceivethecrudedischargedviaOTCinRompetrolcrudeoilstorage 6days/ship

ThecompanyisoperatingtherefineryCrudeOilTankFarmwithadesigncapacityof418,000cbm,netstoragecapacity391,499cbm,

andapumpingtotalvolumeof342,575cbm,receivingcrudemainlyfromMidiaSPM,butalsofromOilTerminalConstantaviaCONPET

anddeliveringtorefinerythetwotypesofcrudeoilaccordingtodailydietrequirements.Entirecrudeoilvolumehandledthroughcrude

oiltankfarmin2011was7.174kt(bothreceiptanddelivery).TheLPGoperationsviaberth9AbeganinDecember2010.

Port terminal (products & gas) EXPORT/IMPORT (Berths 9 A, 9B and 9C)

Totalqtyofproductsexported/imported 1,313kt

Totalnumberoftankerscallingportterminals 328

Operationalcosts 1.41USD/mt

Totalcost 1.49USD/mt

SavingsrecordedbyusingMidiaportterminals

insteadOilTerminalConstanta&railways about11.8millUSD

Port terminal (VGO & COB) EXPORT/IMPORT (Berths 1–4)

Totalqtyofproductsexported/imported 34.149kt

Totalnumberoftankerscallingportterminals 4

MidiaMarineTerminal

26 AnnualReport2011

MMT Services to Non Group entities, 2011MMTisperformingathigh

standardsfollowingservicestoship

owners(nongroupentities):

— Piloting

— Towing(vesselassistance

withtugs)

— Mooring/Unmooringall

foroffshoreandporttanker

manoeuvres,usingown

resourcesonly.

Gross income cashed in by during 2011

Piloting(SPM&Port) 0.671millUSD

Towing(statictowingSPM&port,alltugs) 3.179millUSD

Mooring/Unmooring(SPM&port) 0.282millUSD

Total income from non group entities 4.162 mill USD

MMT Strategic Objectives for 2012

— OPEXoptimization,stayintheapprovedbudged

— CAPEXexecution:constructionofMMTtugfleet

— Consolidatingtheexitingincomesfrom3rdpartynon-groupsources

— DevelopnewbusinessbasedonexistingMMTassets,equipmentsandownHR

RomanianTradingOperationsDivision

MarketIn2011,tradingfocusedonoptimizingtradeflowsofrawmaterialpurchasingand

productsales.Feedstockacquisitionsincreasedbyabout6%andsalesbyaround12%in

2011vs2010.Crudeacquisitionswereexclusivelycarriedoutbythegrouptrader,Vector

Energy,whotookoverthemostpartofgasolineanddieselvolumessoldonforeign

markets.

ThequalityofproductssoldbyRompetrolmettherequirementsandstandardsfor

qualityandenvironmentinforcewithinEuropeanUnionandledtoastrongerpositionof

thecompanyontheinternationaloilmarkets.BeginningJanuary,1stgasolineanddiesel

havebeensoldwith5%biofuels,asper2003/30EUDirective.

-2010 -2011

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

DecNovOctSepAugJulJunMayAprMarFebJan

Sales 2011 vs. 2010 (tons)

Trading

27

28 AnnualReport2011

In2011,theshareofdomesticmarketintotalPetromidiasaleswashigher(60%)

thanofexternalmarket.Morethanhalfoftotalmotorfuels(about53%)weresoldon

domesticmarket.

-Domestic -Export

Domestic vs. Export sales in 2011 (tons)

0

50,000

100,000

150,000

200,000

250,000

DecNovOctSepAugJulJunMayAprMarFebJan

-Near abroad -Trading

Near abroad vs. Trading (tons)

0

200,000

400,000

600,000

800,000

1,000,000

DieselGasolines

-ICS -Export

ICS vs. Export (tons)

0

200,000

400,000

600,000

800,000

1,000,000

DieselGasolines

60% shareofdomesticmarketinPetromidiasales

Ontheexternalmarkets,salesweredistributedbothonEUmarketsandnonEUmarkets.

SalesofPetromidiaproductsonEUmarketsrepresentedabout25%oftotalsales,therest

of75%beingsalesonnonEUmarkets.

Almost80%ofexternalsalesfromPetromidiarefineryhaddestinationsonneighboring

markets.Detailedoncountriesandproducts,saleshadfollowingdestinations:

Gasoline Ukraine,Georgia,Turkey,Lebanon,Bulgaria,Tunisia

Diesel Bulgaria,Serbia,Georgia,Turkey,Moldova,Ukraine

Petcoke Ukraine,Greece,Turkey,Serbia

Sulphur Egypt,Ukraine,Greece

SalestoRompetrolbrancheslocated

abroad(Moldova,Bulgaria,Georgia,

Ukraine)representedabout46%oftotal

externalsales.

Trading

29

Naphthagasoline,oneofthemainproductsobtainedinVegarefinery,constituted34%

fromtotalvolumeofsoldproducts.

Detailed on countries and products, sales had following destinations:

UE Non-UE

Naphthagasoline Hungary Serbia

Hexane Bulgaria,Poland,Austria India,Turkey,Ukraine,Korea

Ecologicalsolvents Germany,Poland Moldova,Ukraine

Fueloil Bulgaria –

Fuelsfordomesticuse Bulgaria Moldova

Thetargetistomaintaintheexistingdestinationsandenteronnewmarkets.

Petromidia’smaindomesticcustomerswere:RompetrolDownstream,

RompetrolGasS.R.L.,RompetrolPetrochemicals,AirBPSales,AirTotalRomânia.Main

externalcustomerswere:VectorEnergy,RompetrolMoldova,RompetrolBulgaria,Calvi

TradeLimited,TransamoniaSwitzerland,Steuerman.

Vegasalesduring2011werearound0.3milliontonessameas2010outofwhich

0.27milliontonsfinishedproducts.

Splitbymaindistributionchannels,internalsaleswere35%oftotalsalesvolume,while

therestwenttoexportmarketssimilartolastyear.

Forecast and developments trends in 2012

Sales structureby product group

(%)

Other solvents34

Fuels for domestic use6

Petrol & white spirit7

Fuel Oil14

Bitumen18

Ecological solvents8

Hexane14

Internal35

Export65

Sales structureby channel

(%)

30 AnnualReport2011

-Domestic -Export

Sales by main destination (tons)

0.00

3,000.00

6,000.00

9,000.00

12,000.00

15,000.00

DecNovOctSepAugJulJunMayAprMarFebJan

RompetrolPetrochemicalsistheonlyPolyPropylene(PP)andPolyEthylene(PE)

producerinRomania.In2011,theRomanianmarketsharewas50.19%forPP,23.18%for

LDPE,9.12%forHDPE.Totalsales’volumein2011was0.2milliontons.

ThedevelopmentstrategyofRompetrolPetrochemicalstopromoteaculturebasedon

customersatisfaction,insuresacompetitivepositionbothontheinternalandonthe

regionalmarkets(BlackSeaarea,MediterraneanSeaarea,CentralandEasternEurope)

whereRompetrolPetrochemicalshasbecomeanimportantpresence.

Oneofthemaincompetitiveadvantagesistheaccesstoalltypesoftransport(by

rail,road,sea),facilitatingnewdestinationsintheBalkanarea(Macedonia),Asiaand,

occasionally,theMiddleEast,butalsostrengtheningourpositionintheregionalmarket

(Bulgaria,Serbia,Italy,Greece,Poland,Turkey).

Tradingoperationsrepresentadifferentbranchofouractivity.In2011,thecompany

achieveda12%shareonRomanianmarketforPET,inanenvironmentcharacterizedby

fiercercompetitioneachyear.

RomanianCommercialDivisionforPetrochemicalProducts

50.19%PP

23.18%LDPE

91.2%HDPE

MarketshareinRomania

Trading

31

-PP -LDPE -HDPE -LLDPE imp -HDPE imp -PET

Monthly sales by product type (tons)

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

DecNovOctSepAugJulJunMayAprMarFebJan

Besidesourownproduction,thecompanyrunsasustainedactivityofmarketingfora

widerangeofproducts,whicharenotcurrentlyproducedinRompetrolPetrochemicals

facilities,butwithastrongdemandonthedomesticmarket.Thesearespecialty

productssuchas:polypropylenespecialgrades,highdensitypolyethylene(HDPE)pipe

grades,linearlowdensitypolyethylene(LLDPE)andPET.

-Own Production -Trading

Sales volumes (tons)

0.00

50,000.00

100,000.00

150,000.00

200,000.00

20092008 2010 2011

Strategic Objectives

— PP:toreacha55%marketshareinRomania

— LDPE:toreacha25%marketshareinRomania

— HDPE:toreacha20%marketshareinRomania

— Developmentofnewgrades,foraddedvalueapplicationssuchas:polyethylene

pressurepipes,verythinfilm,blowmouldingoflargecanisters,cablecoating.

— Developmentofdirectsaleschannels,targetingend-usersontheexportmarkets.

Commercial Strategy for 2012StrengtheningourpositiononthedomesticandBalkanmarketisadriverforour

commercialteam,maintainingourflexibility.

0.2 milliontonstotalsales’volumein2011

32 AnnualReport2011

TheRompetrolGrouphasretailoperationsin6European

countries,linkinganetworkof1,000fueldistributionpoint,

spreadfromWesterntoEasternEurope.

—RompetrolDownstream

—DyneffFranceandSpain

—RompetrolBulgaria

—RompetrolMoldova

—RompetrolGeorgia

—RompetrolGas

Retail

Retail

expansion

34 AnnualReport2011

Evolution of the Romanian fuel market and Rompetrol Downstream achievements in 2011 FuelconsumptioninRomaniahasbeenrelativelystableinthepastyears,ranging

between5.8and5.9milliontonsannually.Table1belowprovidestheevolutionofthe

Romanianfuelmarketandexpectationsfor2012.Itshowsthatretailfuelconsumption,

representingsalesthroughgasstations,isstillthemainsegmentofthemarket,butits

marketshareinthetotalconsumptionhasdeclined,reaching71%in2011,significantly

belowthelevelrecordedin2009.

Conversely,thewholesaletoconsumer(W2C)segmentofthefuelmarket,representing

bulksalesoffuelfromdepotsbyend-consumers,hascontinuedtogrowsignificantly

in2011,reachingnearly30%ofthefuelmarket.Thisincreaseispartiallyexplained

byamigrationoffleetsfromthegasstationstointernalbases,whichensuresbetter

monitoringoffuelusage,naturallyduringthesedifficulteconomictimes,andbysome

economicrecoveryinareassuchasindustrialproductionandconstructions(in2011,

Romanianrealgrossdomesticproduct–GDP–hasincreasedby2.5%vs.2010).

TheevolutionoftheW2Csegmentin2011istheresultofanexceptionalagricultural

season,whichledtohigherfuelusage.

Table1Aalsoindicateshowconsumptionbytypeoffuelhasevolvedbetween

2009–2012.

Dieselconsumptionhasexpandedbynearly6%in2011toreachthreequartersof

thefuelmarket,mainlyasaresultofthefactorsindicatedbefore,whilegasoline

consumptionhascollapsed,whichisexplainedmainlybyindividualconsumerslimiting

theirretailfuelpurchases.Infact,intherecentpasttherehasbeenacleartendencyto

switchfromgasolinetodieselusageasthenumberofdieselvehicleshasconstantly

increased,whilethoseusinggasolinehasstalled.

RompetrolDownstream

2.5% increasedsalesofGDP

TABLE1−A

Romanian fuel market evolution, 2009–2011, and expectations for 2012

Year

Fuel market Retail segment W2C segment Diesel Gasoline

Size (kt) Change vs. LY

Sales (kt)

Share in mkt.

Change vs. LY

Sales (kt)

Share in mkt.

Change vs. LY

Sales (kt)

Share in mkt.

Change vs. LY

Sales (kt)

Share in mkt.

Change vs. LY

2009 5,858 0.0% 4,595 78.0% -2.0% 1,263 22.0% 8.1% 4,067 69.0% 0.4% 1,791 31.0% -0.9%

2010 5,866 0.1% 4,384 75.0% -4.6% 1,482 25.0% 17.3% 4,185 71.0% 2.9% 1,681 29.0% -6.2%

2011 5,901 0.6% 4,210 71.0% -4.0% 1,691 28.7% 14.1% 4,428 75.0% 5.8% 1,473 25.0% -12.4%

2012 5,940 0.7% 4,110 69.2% -2.4% 1,810 30.5% 7.0% 4,475 75.3% 1.1% 1,465 24.7% -0.5%

MarketsizeiscomputedbasedondataprovidedbytheNationalInstituteofStatisticsandtheCustomsAuthority.RetailsegmentisdeterminedbasedondatafromtheRomanianOilAssociationandoninternalestimatesofthewhitestationsegment.

Retail

35

ThefuelconsumptioninRomaniaisestimatedtoincreasetoabout6milliontonsin2012.

Theseexpectationstakeintoconsiderationprospectsofeconomicdevelopment(IMF’s

currentforecastisfora1.7%increaseingrossdomesticproductin2012,wellabovethe

region’saverage).

Theretailsegmentisstillexpectedtoslightlydecreasecomparedto2011andtheW2C

segmenttocontinueitsexpansion,butatamuchslowerpacecomparedtoprevious

years.Byfueltype,dieselisexpectedtoremainatabout75%ofmarket,whichimpliesa

smallfurtherincreasecomparedto2011.

Evolution of Rompetrol Downstream market shares in 2009−2011 and expectations for 2012RompetrolDownstream’stotalmarketshare(MS),whichtakesintoaccountallcompany’s

salesinRomania,hascontinuedtoincreasein2011,aquarterofthefuelconsumedon

thelocalmarketbeingproducedbyRompetrol(seetable3).Thecompanyshareonthe

retailsegmentofthemarkethasalsoincreasedfrom15.9%in2010to16.5%in2011.Our

expectationfor2012istoincreaseboththetotalmarketshareandretailmarketshare.

TABLE2

Evolution of number of vehicles by fuel type, 2009−2011

YearDiesel Gasoline

No. of vehicles Change vs. LY No. of vehicles Change vs. LY

2009 1,844,084 7.2% 3,239,677 3.7%

2010 1,944,333 5.4% 3,221,317 -0.6%

2011 2,029,328 4.4% 3,182,869 -1.2%

SOURCE:OfficialdataoftheMinistryofAdministrationandInterior

TABLE3

Evolution of Rompetrol market shares 2009−2011

Year Total Market Share Retail Market Share

2009 23.70% 16.0%

2010 24.30% 15.9%

2011 24.90% 16.5%

-Diesel -Gasoline

Sales by product type (tons)

2009 2010 2011 2012

0

500,000

1,000,000

1,500,000

2,000,000

6 milliontonsestimatedfuelconsumptionin2012

36 AnnualReport2011

37

38 AnnualReport2011

over760 fueldistributionpoints

attheendof2011

Retail

TheincreaseofretailMSin2011istheresultofbothhigherFill&GoBusinessCard*

sales(non-cash)andNonCardsales(cash).ThehigherretailMScomesalsofroma

consolidationoftheRompetrolPartnerchannel,from4.8%in2010to5.6%in2011,due

toagroupofabout10Partnerstationswhichhaveenteredthefranchiseattheveryend

of2010.ThesePartnerstationsarecomprisedofsiteslocatedonhightrafficroutes,thus

recordinggoodFill&GoBusinesscardsales.Consequently,RompetrolPartnercardsales

hasincreasedfrom5.5%in2010to6.2%in2011,whilethesameindicatorhasremained

stationaryforownstations.

However,ifweconsidercashsales,the2011evolutionisdifferent:throughRompetrol

Downstreamgasstation,ithasincreasedfrom5.8%in2010to6.1%in2011,whichis

notableifweconsiderthetough2011environment,withcost-consciouscustomers

lookingforcheaperfuelalternatives(switchfrompremiumtoeconomyfuelsand

networks),whilethroughRompetrolPartnerchannel,ithasremainedrelativelystable.

Attheendof2011,RompetrolDownstreamoperatedinRomaniaanationalnetworkof

over760fueldistributionpoints(Rompetrolstations,Partnerstations,RompetrolExpres,

InternalBasesof9and20cm).

Inordertoreachthetargetedmarketsharewillfocusontheloyaltyofthecustomersand

increaseourcurrentcustomerportfolio.NewlocationsforRompetrolDownstreamgas

stationsarealsoidentifiedandevaluatedandnewpartnershipsaretakenintoaccount.

* Fill&Go service platform is the first payment service at pump offered only by Rompetrol. Fill&Go addresses

both individual customers through the Fill&Go personal and business customers through the Fill&Go

Business.

Fill&Go Personal – an innovation in Romania – is a modern service that offers the possibility to pay the fuel

directly to pump and purchase products from the store, invoiced at the end of the month.

Fill&Go Business – a service to companies that allows effective control of commercial auto fleet activity and

a significant costs reduction.

-2009 -2010 -2011 -2012

Stations, end of period (no)

0

50

100

150

200

CuvesInternal BasesExpressDODOCOCO

39

General market description and Dyneff France and Spain evolutionIn2011,theFrenchmarketcontinuedtobeinfluencedbytheunfavorableeconomic

conditions,thustheoilproductsdeliveriesdeclinedby-1.2%incomparisonwith77,820

ktonsregisteredin2010.

Regardingproductssold(Diesel,Gasoline,HeatingOil),theFrenchmarketdeclined

by-2.3%,to53,462ktons,asfollows:

— Diesel+5.6%(35,494ktons),whereof1,411tonsofnon-roaddiesel,whichwas

progressivelyimposedtoreplaceHeatingOilformotoruses(construction,

agriculture).

— Gasoline-5%(7,804ktons)

— HeatingOilmarketdeclinedby-21%(10,164ktons).Halfofthissignificantdropisdue

totheintroductionofnon-roaddieselmentionedabove.

The main events which contributed to this decline are:Regulatory constraints

Frenchgovernmentimposedanewproductcalled“non-roaddiesel”toreplaceHeating

Oil.AfirststeptookplaceinMay2011whichmainlyaffectedconstructionbusiness.Then,

inNovember2011,non-roaddieselbecamemandatoryforAgriculturalenginesalso.

Significant climate change

2011wasthewarmeryearinFrancesince1900whichenforcedHeatingOil

market’sdecline.

Changes in competition tactics

AfterTOTAL‘sshuttingdownrefiningoperationsinDunkerquein2010,thecrisis

affectingFrenchRefineriesexpandedin2011,3additionalrefineriesannouncedtheywill

stoptheiractivities(Petroplus-ReichstettinNorth-east,LyondellBasell-CDHintheSouth

andPetroplus-Petit-CouronneintheNorth-west).Duringthelastyears,Spanishrefineries

mademajorinvestmentsinordertoincreasetheirproductioncapacityofdiesel.Inthe

meanwhiletheSpanishmarketdecreasedinasignificantway(-16%vs2007).Thisleaded

tomoretensionsonthemarketwithlowermargins.

Increaseofoilandoilproductsquotations,between15%forGasolineand28%

forDieselinFrance.

DyneffFranceandSpain

15%

28%

increaseofoilquotationsforGasoline

increaseofoilquotationsforDiesel

-Diesel -Gasoline -LPG -Heating Oil

Sales Dyneff France by product type (tons)

TABLE 1

2007 2008 2009 2010 2011

0

500,000

1,000,000

1,500,000

2,000,000

40 AnnualReport2011

ThevolumeofproductssoldbyDyneffFrance(diesel,gasoline,LPGandheatingoil)

decreasedin2011to1,7milliontonscomparedto2010when1,8milliontonswere

registered,thehighestvolumeduringthelast5years.Outofthetotalamount,Diesel

salesrepresented1,2milliontonsandthemainsellingchannelwaswholesale,aprox.

1milliontons.(table2)

Basedonthemarketcharacteristicsandthevolumessold,theshareofDyneffFrance

was3,23%,lowerthanin2010of3,31%.

TheSpanishMarkethasdecreasedby-6.5%in2011and-16,2%from2007to2011in

extremelydifficulteconomicalcontextinSpain.

DyneffSpainregisteredadecreaseinthevolumesofproductssold,toaprox.357ktons

in2011(table1),mainlythroughwholesale–aprox.272ktons(table2).Thischangeinthe

marketdemandwasbasedoneconomicalfactors,thedeclineoftheconstructionsector

andalsotheconsumptionlevelduetoeconomiccrisis.

-Diesel -Gasoline -Heating Oil

Sales Dyneff Spain by product type (tons)

TABLE 1

2007 2008 2009 2010 2011

0

100,000

200,000

300,000

400,000

500,000

-Retail -Detail -Trading -Wholesale

Sales Dyneff Spain by channel (tons)

TABLE 2

2007 2008 2009 2010 2011

0

100,000

200,000

300,000

400,000

500,000

-Retail -Detail -Trading -Wholesale

Sales Dyneff France by channel (tons)

TABLE 2

2007 2008 2009 2010 2011

0

500,000

1,000,000

1,500,000

2,000,000

357 ktonsdecreaseinthevolumesofproductssold

DyneffSpain’smarketshare

decreasedby-3%between2010and

2011,to1,02%.

Retail

41

Key achievements in 2011Consolidation of current businesses and development of on-going projects

During2011,DyneffconsolidateditsDyneffandRompetrolfueldistributionnetworkin

France,bycollaborationswithtraditionalpartners,butalsobytheextensionofFill&Go

serviceorHeirestaurantconceptandBriocheDorée.

DyneffFrancehasopenedanewRompetrolfuelstationonA10highway,connecting

BordeauxandParis,atabout320kilometresfromParis.

Byintegratinganefficientmanagementofenergyandwaterconsumptionorfor

wastemanagement,thenewstationcomplieswiththenewsustainabledevelopment

principlesandthoseofenergyefficiency.

New products

DyneffFrancesuccessfullylaunchednon-roaddiesel(NRD).Itsmarketshareincreasedto

5.7%andthisresultwasduetoitscustomer-orientedapproachwhichledtoofferabio

freeNRD.Thisproductisrepresentingmorethan20%ofDyneff’sNRDsalestoday.

Marketing Projects

DyneffFrancecontinueditsE85-SuperthanolsalesbyinvestinginitsGasStations

network.Thisprogramwillcontinuein2012.

Attheendof2011,DyneffoperatedinFranceandSpainafueldistributionnetwork

composedof128stations,ofwhich9Rompetrolstations,locatedespeciallyon

highways,nearlocalitiessuchasArzens,SaintEtienne,PeypinorLesHerbiers.

Key directions for 2012–2013

TwomajorprojectsforthedevelopmentofDyneffFrance:

— TheupgradeofanewmajordepotinPortlaNouvelleina50/50joint-venturewith

TotalGroup.

— TheconstructionoftwonewmotorwayGasStationneartheSpanishborder(“Village

Catalan”project).

— ThecompanywillalsorentnewstoragecapacitiesinNorth-WestofFrancetoallow

BiofuelblendingforproductssoldinParisarea.

— RegardingDyneffSpain,theobjectiveistoconsolidatethedevelopmentonretailand

detailbasedonwiththeexistingassets.Thesetwochannelsmustprogressivelyturn

tobethemainchannelsofactivity,beforewholesale,whichregisterlowermargins.

Wholesalemustconsolidateitsvolumesbutonalong-termstrategyitwouldbe

awaytomoveimportantvolumesandthereforetogetcompetitivepurchaseand

logisticprices.

WithheadofficesinMontpellier,Dyneffdeliverseachyearover2.6millioncubic

metersofoilproducts,throughits3majordistributionchannels,Gasstations,

9retailand2wholesaleagencies,itsstoragecapacitybeingofabout400,000cubic

meters.Theseoperationsarecarriedoutthrough3ownterminalsinPortlaNouvelle

andSaint-Gaudenslocalities,throughMarseilleandLyonterminals–whereitis

ashareholderaswell,andthroughother15locationsrentedinFranceandSpain

(2inBarcelonaand2inBilboa).

128

NRD

stationsinFranceandSpain

(non-roaddiesel)newproduct

42 AnnualReport2011

General market condition and Rompetrol Bulgaria achievements in 2011Theyear2011wasayearofoperationalimprovementandbetterbrandrecognitionfor

RompetrolBulgaria.Despiteawellbalanced(intermsofsupplyanddemand)market,the

economicturmoilinfluencingthelocalindustryhadseriousimpactonthefuelsector.

Therewerenosignificantchangesinthestructureofthemarketregardingthemajor

competitors.Theplansofanothercompetitor(Gazprom)toenterthemarketareputting

pressureonthemarket.

RompetrolBulgariafocusedonatwo-prongedstrategyofprofitabilityimprovement

andcostcontrolinordertoadequatelyfacethechallengesofthemarket.Improved

performancemanagementandprudentsiteevaluationinvigoratedtheRetailNetwork

andcausedorganicgrowthintheexistingpointsofsalestructure.FollowingtheCAPEX

strategy,new7stationswerecommissioned,thusthenetworkofRompetrolBulgaria

included73distributionpointsattheendof2011.

RompetrolBulgariaregistereda15%increaseofthemarketshare,to8%,whilethetotal

marketsizedecreasedwith1%(2,580,000tons).

Theoptimizednetworkmanagementandmarketinghavebroughta14%growth

inoverallRetailsalesand16%increaseinRompetrolownedstations,thehighest

profitabilitychannel.In2011allretailpointsofsalehaveregisteredanincreaseinaverage

dailysales.

RompetrolBulgaria

-COCO -DODO -Internal BasesStations, end of period (no)

201120102009

01020304050607080

-Market size (tons) -Market share (direct&indirect)

2009 2010 2011

2,500,000

2,520,000

2,540,000

2,560,000

2,580,000

2,600,000

2,620,000 9,00%

8,00%7,00%

6,00%5,00%4,00%3,00%

2,00%1,00%0,00%

-2009 -2010 -2011

Retail Sales (tons)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

DODO for retailCOCO F&GCOCO cash

Retail

43

Anothermajoreventinretailsectorin2011wasthesuccessfulfinalizationoftheDealer

Partnershipbusinessmodel(Companyowned,Dealeroperated)startedinthefourth

quarterof2010.Therelatedsitemanagementandqualityofserviceimprovements

increasedsufficientlytheefficiencyofthechannelandthevaluegeneratedforthe

customers.Thisprojectalsoaidedtheconsiderablecostsavingswithover1.2million

USDonlyintheretailnetwork.

PortfoliooptimizationcontinuedinWholesaleChannelswithextensiveclientprofitability

managementandtheapplicationofamarkettailoredCommercialPolicy.Asaresult,

theavailablefuelvolumesweredistributedthroughsaleschannelsbasedonprofit

optimizationpriorities.Thesalesinthemostprofitablechannelincreasedwith20%

comparedto2010.Thisincreasewasgreatlysupportedbythebroadenedportfolioof

wholesaleclients.

-2009 -2010 -2011

Wholesale Sales (tons)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Wholesale to resellerWholesale to consumerTradingInternal bases

1.2 millionUSDcostsavingsintheretailnetwork

Theotherstrategicdirectionstartedin2010waseffectiveCostManagement.

Thecombinationofimprovedcostplanning,procurement,andprojectmanagement

wereamongthemostimportantinitiativesthatrealizedsavingsinoperatingexpenses.

Theestimatedeffectoftheseinitiativesin2011is5%overallcostreductionand

increasingprocessquality.

Oneofthemainachievementsfor2011wastheOutsourcingOptimizationofSecondary

Logistics.RompetrolBulgaria’sownfleetwasgivenformanagementtoanoutsideparty

highlyspecializedinlogisticsservices.Thisprojectbroughtprocessoptimization–

improvedDSOandcostperunittransportedindicators.

Anothersubstantialachievementfor2011wasthatRompetrolBulgariawascertified

underISO9001:2008,ISO14001:2004andOHSAS18001:2007andanIntegrated

ManagementSystemwasestablished.Priortothecertificationallrequirementsfor

implementationandsustainingofeffectiveSystemforEnvironmentalProtection,

OccupationalHealthandSafetyweredevelopedanddocumented.Thesecertificates

correspondwiththeconstantstriveofRompetrolBulgariaforimprovedoccupational

healthconditions,environmentalprotectionandprocessoptimization.

Key directions for 2012

— Openatleast4newgasstations

— ImplementTLGproject(tanklevelinggauge)tocomplywithgovernmentregulations

— UpgradeRuseDepotforbettersupplyflexibility

— Increaseretailvolumeswithminimumof18%,volumestoconsumerswith39%

— ContinuousImprovementsinPortfolioandNetworkmanagement

4newgasstationtobeopenedin2012

44 AnnualReport2011

RompetrolMoldovaimplementedasignificantdevelopmentofthegasstationnetwork

in2011,duetotheopportunitiesappearedonthemarket.

Attheendof2011RompetrolMoldovaoperated45fillingstations(ofwhich16hadalso

LPGproduct),fromanetworkof30fillingstationsatthebeginningoftheyear.

ThisnetworkincreaseispartofapartnershipbetweenRompetrolMoldovaandprivate

owners,abusinessmodelbasedonprofitshareforbothparties.

AsaresultofRompetrolMoldovanetworkincrease,thetotalvolumessoldin2011on

retailwereofapprox.33ktons,44%morethanin2010,whileonwholesalethevolumes

soldwere32,7ktons,adecreaseof24%thanthepreviousyear.

General market overview and Rompetrol Moldova achievements in 2011In2011,23tradersoperatedonMoldova

marketunderthelicenseofimportand

wholesaletradeofoil.OnLPGmarketthere

were10tradersoperatingunderthelicense

ofimportandwholesaletradeofLPG.

Regardingtheretailsector,141ownersof

licensesoperatedtradeactivityofgasoline,

dieselandLPG.Gasolineanddieselwassold

through586gasstationsandLPGthrough

370stations.

RompetrolMoldova

Retail market share according to imports and network coverage, 2011

Marketshare Gasoline Diesel LPG Total(miitone)

Marketshare2011

NetworkShare NetworkCoverage

Efficiency

Rompetrol 16.46 40.06 3.75 60.27 9.65% 7.68% 57.89% 126%

Bemol 8.88 19.35 – 28.22 4.52% 8.87% 55.26% 51%

Petrom 52.88 24.04 – 76.93 12.31% 17.06% 78.95% 72%

Lukoil 64.66 119.52 20.85 205.02 32.82% 17.41% 84.21% 189%

TirexPetrol 26.44 71.78 3.98 102.20 16.36% 16.55% 84.21% 99%

Others 23.68 78.85 49.52 152.05 24.34% 32.00% – 76%

Total market 193.00 353.60 78.10 624.70 100% – 38 –

AccordingtoANREreport:R.Moldova Oil Market overview, 12 months 2011

Total number of gas stations

Rompetrol 45

Lukoil 102

Petrom 100

Bemol 52

TirexPetrol 97

Valiexchimp 19

BasaPetrol 12

ParstarPetrol 8

Others 151

Retail

45

Allthefuels,whichRompetrolMoldovaissellingthroughthenetwork,areimported

exclusivelyfromPetromidiaRefinery:

— Alto101Gasoline(sinceFebruary2009)

— Premium95Gasoline

— Alto55(sinceDecember2010)

— Euro5Diesel

— Premium95EFIXGasoline(sinceMay2008)

— Euro5EFIXDiesel(sinceMay2008)

— LPG

-Sales 2010 -Sales 2011 -Change 2010 -Change 2011

Evolution of Rompetrol Moldova sales 2011 vs. 2010 (tons)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

-0.20

-0.10

0.00

0.10

0.20

0.30

0.40

0.50

DecNovOctSepAugJulJunMayAprMarFebJan

0.0%8.5%

19.6%24.1%

3.6%11.4%

24.9%

8.2%

-3.0%4.4% -2.6%

-5.4%0.0%

-7.1%

12.8%13.6%

5.2%

-1.2%

-11.7%

40.0%

-4.6%

11.7%

-5.0%

1.6%

-Total -Diesel E�x -Gasoline 95 E�x -Diesel Euro 5 -Gasoline Premium 95 -LPG -Super ALTO 101-Diesel Alto 55

Retail sales evolution in 2011 (tons)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

0

200

400

600

800

1,000

1,200

DecNovOctSepAugJulJunMayAprMarFebJan

813

420362

322120

29

19 17 16 15 8 8 8 12 11 12 15 21

26 30 30 34 31 26 36 35 37 32 32129 153

202 183 204 178269 269

216 203 221

383361

306

425491

352

478

599

444

459

688

471

448

624

458548

750

566

393

529

411 533

733

540575

863

588

530

843

538

558

775

547

730 747 776 807

866

779

11061026

11441094 1166

Atthebeginningof2011yearRompetrolMoldovamergedwithMoldintergaz(MIG)

companyandasaconsequencereceivedMIG’sassets,whichmeansoneLPGDepotin

Tirnovaand5LPGStations,inNorthernpartofMoldova.

Key directions for 2012RompetrolMoldovawillcontinuethedevelopmentoftheretailnetwork,uptoanumber

of52gasstationsin2012.Thesecondpartofthisstrategyreferstoanoptimization

processtorenderfullefficiency.

46 AnnualReport2011

General market overview and Rompetrol Georgia achievements in 2011RompetrolGeorgiahaspositioned

onthemarketasaEuropeanHigh

qualityoildistributor.In2011,

RompetrolGeorgiahadamarket

shareof18,39%,outofa820ktonsof

fuelsoldonthelocalmarketin2011.

Accordingtotheimportedquantity,RompetrolGeorgiaisonthe3rdposition,having

upto18.4%ofthetotalimportsonthelocalmarketoutofwhich60%isusedforretail

networkandtherest40%forthewholesale.

ThetotalquantityoffuelssoldbyRompetrolGeorgiain2011wasaprox.150ktons,a7.5%

increasetowards2010.

Thesalesofgasolineincreasedby4%in2011,whilethedieselby13%.

RompetrolGeorgiarankedthe3rdonretailmarket,having15%ofsales.Attheendof

2011,thecompanyoperated73pointsoffueldistribution,comparingto63in2010.

RompetrolGeorgia

-Market size (tons) -Market share (direct&indirect)

2010 2011 2012

780,000

790,000

800,000

810,000

820,000

830,000

840,000 19,50%

19,00%

18,50%

18,00%

17,50%

17,00%

Retail Sales 2011(%)

Lukoil15

Lukoil21.4

Rompetrol15

Rompetrol18.4

Others5

Gulf&Others2.9

Socar25

Wissol29

Wissol7.4

Gulf11

Socar49.9

Imports 2011(%)

Retail Sales 2011(%)

Lukoil15

Lukoil21.4

Rompetrol15

Rompetrol18.4

Others5

Gulf&Others2.9

Socar25

Wissol29

Wissol7.4

Gulf11

Socar49.9

Imports 2011(%)

3rd positionontheretailmarket

Retail

47

Major achievements in 2011Inyear2011RompetrolGeorgiahasstartedimplementationofseveralprojects,namely:

— Investingincompany’sownsassets,meaningimplementingcapitalmaintenance

projectforseveralstationrebranding;

— Attheendofyear2011wasactivelyinvolvedinERPsystemimplementationprocess;

plannedtofinalizein2012;

— Enterpriseresourceplanning(ERP)systemsintegrateinternalandexternal

managementinformationacrossanentireorganization,embracingfinance/

accounting,manufacturing,salesandservice,customerrelationshipmanagement,

etc.ERPsystemsautomatethisactivitywithanintegratedsoftwareapplication.

Theirpurposeistofacilitatetheflowofinformationbetweenallbusinessfunctions

insidetheboundariesoftheorganizationandmanagetheconnectionstooutside

stakeholders;

— StartimplementationofVTmoduleproject,whichwillenablethecompanyto

automatecouponbar-codereadingprocess.

In2011RompetrolGeorgiawasawardedbyGHNnewsagencyforbeingthemoststable

foreigncompanyinGeorgia.

Expectations for 2012 and the upcoming years

— Currently,severalRompetrolGeorgiastationsneedsignificantmaintenanceworkings

inordertoupgradethegeneralstandards.Forthispurpose,24stationsareincluded

intheproject,outofwhich6willbedonebyJuly,andtherestbytheendoftheyear;

— RompetrolGeorgiaisplanningarebrandingprojecton13stationsduringtheyear.

5stationbrandreplacementprocesswillbeaccomplishedbyJuly,andtherest8by

theendoftheyear;

— UntilJune2012implementationof6stationORPAKrolloutisinorder.Asaresultonly

fivestationswillremainun-automated;

— Attheendoffirsthalfoftheyear,RompetrolGeorgiaisplanningtoaccomplish

NavisionandVTmoduleprojectswhichwerestartedin2011.

-Diesel -Gasoline

Sales by product type (tons)

2010 2011 2012

0

200,000

300,000

100,000

24

13

gasstationstobeupgraded

gasstationstoberebranded

48 AnnualReport2011

General market overview and Rompetrol Gas achievements in 2011In2011thetotalLPGconsumptioninRomaniahasincreasedby2%,upto460ktons,

outofwhich29%wereconsumedintheretailsegment,whilethewholesalesegment

represented71%ofthetotalconsumption.

Thesegmentofcylindersdecreasedby7%,to205ktons,whiletheautogasincreasedby

12%to208ktons.

RompetrolGasmarketshareinthetotalLPGmarketreached19%in2011,withanetwork

including250autoLPGdistributionstations,8,000cylinderdistributionpoints,aswell

as3LPGbottlingfacilities(Constanta,AradandBacau).ThetotalvolumeofLPGsoldby

RompetrolGasincreasedby4%in2011,to274ktons:theretailsalesrepresented0,32%

(88ktons),wholesale0,33%(91ktons)andexport0,35%(95ktons).

Theexportedvolumesrepresent25%ofthecompanyturnoverandweredelivered

mainlytoBulgaria,Serbia,Macedonia,Albania,Maroc,TunisiaandCroatia.

RompetrolGas

-CYLINDERS, kmt -ATG, kmt -PROPANE, kmt

20092008 2010 2011

0

100

200

150

50

300

250

400

350

500

489

468

450

460

450

420

450

440

430

470

460

480

500

490

-Retail -Wholesale -Export

Channel Structure (%)

20092008 2010 2011

01020304050607080

Retail

250 autoLPGdistributionstations

49

Salesonretailandwholesaledecreasedin2011by1%,to179ktons,outofthesethesales

ofcylindersdecreasedby17%,whiletheautogasincreasedby20%duetohighprice

increaseofwetfuels

Changes in competition tacticsDuring2011,thedemandfornewcylindersincreasedsignificantly;thereareregions

inRomaniawheretheproductissoldexclusivelyinnewcylindersandtherestofthe

countrytheoldcylindersarelosinggrounddaybyday.Thus,themainRGScompetitors

oncylindersmarkethavedevelopedintensiveprogramsforrenewthecylinderspool

andbecomeveryaggressiveonthemarket.

Key achievements in 2011RompetrolGasmanagedtoincreasethevolumessoldin2011,thusconsolidatingits

positiononRomanianLPGmarket,beingthe2ndmajorplayerandtheleaderonAutogas

market.

Awell-balancedchannelssalesstructurepermittedtobeflexibleonLPGdynamic

markets–localandregionalBlackSeamarkets–andtoobtainthemaximumadded

valueamonganysaleschannel.

Ontheretailsegment,RompetrolGasmaintainedin2011thelevelofsoldvolumes

versuspreviousyear.

Key directions for 2012

— Optimizationofsupplychain,includingupgradeofPantelimonstorageuntilJune

2012inordertopermitthesupplybytrainwagonsinsteadofsupplybytrucks,

meaningatransportationcostdecreaseby30%

— Decreaseoperationscostspertonebyincreasingsoldvolumesthroughimportsand

salesoptimizationamongsaleschannels

— Maintainexistingmarketshareonretailchannels

-CYLINDERS -ATG -PROPANE

Retail channels. Market share evolution (%)

20092008 2010 2011

0

5

10

15

20

25

30

2nd majorplayeronRomanianLPGmarket

50 AnnualReport2011

Thisbusinessunitcoversallthenon-groupactivities

ofRompetrol.Itemphasizesonimprovingouroperations,

bybringingaddedvaluethroughadditionaloperations

suchasE&PorEPCM.

BusinessDevelopment&IndustrialServices

Business Development

development

52 AnnualReport2011

RompetrolWellServices(RWS)isoneoftheleadingcompaniesinwellservicesinRomania.

Itoffersawiderangeofservicesforoilandgaswells,onthedomesticmarketaswellasin

severalEasternEuropeanandCentralAsiancountries.

Major performance and accomplishments in 2011— Increasedrevenuesby26%andanetresultincreasedby33%YTY.

— BeganwellserviceoperationsinHungary,andresumedserviceactivityinBulgaria

— Madea3.4millionUSDinvestmenttoimprovecementing,stimulation

andslicklineservices.

Aftertwoyearsofmoderategrowth,thewellservicesactivityinRomaniaand

neighbouringcountriesincreasedsignificantlyin2011.

Havingtheadvantageofowningmodernequipment,acquiredoverthelastyears,

RompetrolWellServicessucceededincapitalizingonthegreatervolumeofwork.

Thus,thecompanyhasshowna25%increaseinrevenueandnetprofitYTY.Although

therangeofservicesprovidedbythecompanyhasnotchanged,2011markedan

increaseofcomplexservicesofferedasaresultofthetechnologicalleapmadebyRWSin

therecentyears.

TheoverseasactivityfocusedontheneighboringcountriesandKazakhstan.Theresults

werea250%increaseinrevenuesregisteredbythebranchinKazakhstan,250%,and

a450%increaseofthewholeoverseasactivity.Thiswasduetothestartoftheservice

operationsforthermalwaterwellsinHungary,andtheresumingofwellservices

operationsinNorthBulgaria.

Themainfinancialresultsoftheyear2010were:totalrevenuesofover31millionUSD,

operationalprofit(EBITDA)ofover8millionUSDandaNetProfitofover4millionUSD.

In2011,RWScontinueditsmodernizationprogram,withthecompletiontermin

2014.Thecapitalinvestmentachievedintheyear,amountingover3.4millionUSD,

wasfocusedontheupgradeofcementing,stimulation,slicklineandtubularrunning

services.

Thecompanypaidparticularattentiontothemodernizationofdatamonitoringand

recordingsystems,fittedwithrealtimedatatransmissionforthewholerangeofwell

servicesitprovides.Inadditiontothesuperiortechnicalparameters,RWSisequally

interestedintheacquisitionofnewequipmentwithreducedemissions,whicharealso

equippedwithenvironmentalprotectivefeatures.

RWScarriesoutspecializedservicesinoilandgasfieldsinRomaniaandabroad.These

servicesincludecementing,consolidationandsandcontrolservices,stimulation,testing,

slick-line,tubularrunningoperationsetc.

RompetrolWellServices

26%revenueincrease

Business Development

53

Annually,thecompanycases300stringsandliners,rangingindepthfrom500to4.500

meters.Italsoconsolidatesandperformssandcontroloperationsformorethan200oil

andgaswells.

Stimulationservicesandslick-lineservices,aswellascasingandlinerrunning,are

accomplishedwithin-houseresources.Fortheoptimizationoftheactivities,the

companyalsooffersarentalserviceforitsdrillingtools.

RWSoverseesallongoingprojectsfromitsmainofficeinPloiesti,Romania,offering

technicalsupportfor13locationsinRomaniaandKazakhstan.

-Gross Revenues -Net Pro�t

Evolution of the main financial figures (USD)

2011 2010

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

450%increaseofthewholeoverseasactivity

Petrom72.8

Client structureDomestic market

(%)

IndependentOperators

15.6

Romgaz7.5

DrillingContractors

4.2

Client structureOverseas

(%)

Kazakhstan32

Bulgaria19

Hungary20

Others29 3.4

millionUSDinvestmentcapital

54 AnnualReport2011

2012 Key Objectives

— DevelopWell-Stimulationtechnologies.

— Focusonincreasingoperationsintheneighboringcountries.

— EnsureoperationalprofitabilityoftheKazakhstanBranch.

— Carryoutaninvestmentplanof3.7millionUSD,financedexclusivelyfrominternal

resources.

In2012andthefollowingyearsweestimateanincreaseofwellstimulationandother

enhancedoilrecoveryapplications.

Inthismarketenvironment,thecompanywillfocusontheimprovementofitsacidizing

andnitrogenservicestechnologies,aswellasonthedevelopmentandimplementation

ofdedicatedstimulationsoftware.

ImprovingwellservicesactivityinCentralandEasternEuropeancountrieswillbe

anotherimportanttarget,whilethecompanyalsoplanstoextenditsoverseas

operationsinAfrica.

Theinvestmentprogramwillbefocusedontheconsolidationoftheoperatingfleet,in

ordertoincreaseitscapacityandversatility,andimprovetheresponsetime.

3.7millionUSDinvestmentplan

Withmorethan30yearsofexperienceinprovidingequipment,expertiseandprofessional

servicesfortheinternationaloilandgasindustry,theRompetrolDrillingandWorkover

Divisionhasachievedabalancebetweenthestate-of-the-arttechnologyitusesanda

highlyqualifiedoperationalteam.Thecompanyhasdrilledover550wellsinSyria,Algeria,

Egypt,Iraq,Jordan,Libya,Sudan,andGreece,andover250servicedonlyinLibya.

Basedontheexperienceinprojectmanagement,localknowledgeandbroad

contractualbasis,DWhasthecapacitytorapidlymobilizeresourcesalmostforany

projectoftheoil&gasindustryworldwide,alsoduefrommanagingofprojectsinsome

ofthemostdifficultplacesintheworld.

Throughthismixtureofexperienceinoilservicesandtomanageprojectsinternationally,

RompetrolDrillingandWorkoverhasbuiltasoundreputationforthequalityofthejobin

thetraditionalmarketsofEasternEurope,NorthernAfricaandtheMiddleEast.

DW’semployeesareamongstthebestspecialistsinthefieldandtheyarekeepingthis

levelofprofessionalismthroughconstanttraining.Thisisrequiredinordertoguarantee

thattheydopossessthenecessaryknowledge,qualificationandexperienceneededto

finishtheirtasksproperly.

RompetrolDrillingandWorkover

70% lowturnoverYTYduetothesocio-politicaleventsinLybia

55

-2010 -2011

Turnover (USD)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

3,794

2010 2011

12,505

In2011,theRompetrolGroupDrillingDivisionhasfocusedthecontinuationand

developmentoftherelationwiththededicatedcustomers.Thecompanymakes

constanteffortstowardstheimprovementofcompetitivenessandmaintainingitshigh

leveloffunctionality,qualityandsafetyofservicesprovided.Thus,thecreationoffuture

collaborationandcustomerreachisimproved.

TheCAPEXProgramhascontinuedduringtheyearandinvestmentshavebeenmade

inordertoimprovethelevelofouroperationalassistance.TheProgramwas100%

implemented(effective8,838,000USDincomparisonwithbudgeted8,741,000USD),

despitetheharshfinancialenvironment.

Duetothesocio-politicaleventsthatshookLibya,thecompanysuspendeditsactivities

there(March2011),thusreachinga70%lowerturnoverYTY.

Drilling Division achievementsActivities on Romania

— ThecompanyfinalizedthepurchaseoftheRP11ROrig,commissioningitin

November2011.

— Thebeginningofa4yearframe-workagreementwithOMVPetrom,fordrilling

services.Thecontractisestimatedat22millionEUR.

— DrillingandMudloggingservicescontractsignedwithWinstar,for2wells–Madaras

andMoftinu,ontheSatu-Mareconcession.

— ExtensionofthemudloggingservicescontractwithOMVPetrom.

— MudloggingservicescontractsignedwithPetrofacSolution&Facilities,forwellson

theTiclenipremieter.

— 1yearcontractwithDirectPetroleumBulgaria,formudloggingservices.

— 3yearcontractwithSterlingResources,formudloggingservices.

Activities in Libya

AsaconsequenceoftheLibyanwarattheendof2011,ananalysisoftheequipment

hasbeencarriedout.Theresultshaveshownthattheequipmentcanbecontinuously

used,atapproximately90%ofitscapacity.Thecompanyestimatesthatitwillresumeits

activitiesstartingwithJanuary,2012.

Objectives for 2012

— FocusonsigningofanextensionofthedrillingContractwithWinstarSatu-Mare,

forthetestingof1000Moftinuand109Mădărașwells.

— Finishtestsat1000Moftinuand109Mădărașwells–Satu-Mareconcession.

— ExtendthemudloggingcontractwithOMVPetromuntilJune,30,2012.

— Purchaseanew320tonsrig.

— ResumeactivitiesinLibya,withall3rigs(Ghani,AmalandAwbarioilfields).

— IncreasetheRomanianmarketsharefordrilling,workoverandmudloggingservices.

— Extendoperationsthroughdiversificationofprovidedservices,byestablishingnew

strategicalliances.

— MaintainallIntegratedManagementcertifications.

56 AnnualReport2011

RompetrolExplorationandProduction

TheExplorationandProductiondivisionofTRGfocusedin2011onupgradingthe

currentleadsandprospectsportfolio,estimatedatover100MMbblprospective

resources,basedonseismicprocessingandinterpretation.

Furthermore,in2011E&Pcontinuedtoattractnewpartnerswithfinancialpotentialand

technicalcapabilitiesinthedevelopmentofongoingandprospectprojects.Tothis

extent,inOctober2011,aFarm-outAgreementwassigned.

ThetotalinvestmentmadeforRompetrolexplorationblocksin2011reachedUSD1million,

consistinginseismicacquisition,dataprocessingandinterpretationofgeologicalstudies.

2011 Key Achievements— TheRompetrolGroupcontinuedtheexplorationactivitiesonthefiveblockswhere

wearetitleholderandoperator:SatuMare,Zegujani,Greșu,NerejuandFocșani.

— Rompetrolhasfulfilledtheminimumworkprogramforalltheblocksonthephases

expiringonDecember2011.

— InSatuMare,in2011,wehavedrilledtheMadaras109(1690m)welltogetherwith

ourpartner,WinstarSatuMareRomania.Thewellwassuspendedfortests,while

preparationworksforthesecondwell,Moftinu1000,werestarted.

— WesignedafarmoutagreementwithAmromcoEnergyfortheGresuandNereju

blocks.

— IntheZegujaniBlock,wehavefinalizedtheinterpretationof120km2Ddetailed

seismicdata,identifyingmoreprospectsonSouthandNorthpartoftheblock.

— InFocsaniwehaveacquiredadditional55kmof2Dseismicdataandalsogravimetric

andmagnetometricinvestigationweredone,withtheviewtocovertheareaof

interestandforbetterdefiningtheNWFeteasca/Kaz1Prospect.

2012 Key Objectives

— IntheSatuMareBlock,thecompanyplanstodrilltheMoftinu1000well,withthe

objectivetofindcommercialoilaccumulationinLowerMioceneformation.

— Acquire80km2seismicdatatogetherwithWinstarSatuMare.

— DrillonedeepwellintheLupsaDragotestiProspect,ontheZegujaniblock;

— Finalizethefarm-outagreementforGresuandNerejublockswithAmromco.

— InFocsaniblock,drilltheNWFeteascaKaz1deepwell.

— IdentifynewproductionopportunitiesintheRomanianmatureoilfieldsordevelop

productionprojectsintheCaspianRegion,MiddleEastandNorthAfrica.

100 MMbblprospectiveresources

57

Key achievements in 2011Rominservhassuccessfullycompletedin2011theconstructionoftwonewplantsat

thePetromidiarefinery(MildHydro-crackingandHydrogenPlant),partofthecapital

investmentpackagethatwillincreasetherefineryprocessingcapacityto5million

tons/yearofcrudeoil.

Anothermajorachievementisthecompletionofthe2weekturnoverofthePetromidia

plant,scheduledinSeptember/October.Morethan4,000operationshavebeen

executedwithintherefinery,intheapprovedbudgetandtimeschedule.

Duringtherefineryshut-down,besidesthespecificturn-aroundoperations,other

significantprojectshavealsobeencompletedandintegratedintotherefinery’s

installations,suchasthemodernizationoffluegasesdesulfurization,conversionofthe

existingVGO(vacuumgasoildistillate)reactorintoDHS(dieselhydro-desulfurization)

reactor,aminerevamp,newnitrogenfacility,orthenewflaresystem.

Inthepetrochemicalsector,Rominservhassuccessfullycompletedthemodernization

worksoftheHDPEplantthatwillincreasetheproductionrangebyfournewspecial

applicationproducts.

IntheVegaRefinery,theworksforincreasingtheproductioncapacitywith100%of

N-hexaneplantwerecompleted,alongwithtechnologicalupgradesintheplantcooling

andcontrolsystems.

Duringtheentireyear,70projectshavebeenfinalizedintherefiningandpetrochemical

sectors,amountingto79millionUSD,whichincludesthetwomajorprojects,andseveral

lowcostprojectsthatimpactenergyortechnologicalconsumptionsavings,plussafety

andenvironmentcompliance(especiallyreductionofNOXemissions).

Maintenanceoftheplant’sinstallationswasanothermajorachievement.Besidesthe

compliancewiththeapprovedbudgets,mechanicalplantavailabilityreachedapeak

level,slightlyover96%,allowingtherefinerytoprocessbiggercrudequantitiesandto

cutitsoperationalcosts.

Thiswaspossibleduetotheimplementationofanintensiveprogramofpreventiveand

predictivemaintenance,riskanalysis,alongwithalternativehi-techsolutionsfortesting,

on-lineinspections,monitoringandrepairworksoftheplant’sequipment.

Apartfromtherefiningandpetrochemicalsectors,Rominservhasconsolidatedits

marketpositionfornon-groupclients,mainlyinthesectorofpublicinfrastructure

projects,likewatersupplydistributionandseweragenetworks.

In2011,Rominservalsocompletedtheturn-keyconstructionofavegetaloilstoragetank

farmforMartiferGroup,alargePortugalgroupwithextensivebio-dieselproductionin

Romania.

InNovember2011,thenon-groupclientportfoliowasextended,bysigningatwo-year

maintenancecontractforDalkiaTermoco-generationplantatBrazi-Ploiești,Romania.

Rominserv

70

79

finalizedprojectsintherefiningandpetrochemicalssectorsamounting

millionUSD

58 AnnualReport2011

59

Withexcellenttechnicalresultsachievedduringthemaintenanceprojectsandindustrial

servicesin2011,Rominservmanagedtoincreaseitssales,achievingaturnoverof225

millionsUSD(over4%increasestowards2010)andanEBIDTAincreasebyapproximately

46%,in2011,comparedto2010.

RominservKazakhstanfinalizedthereconstructionworksattheAtyraurefinery–

AtmosphericVacuumDistillationUnitandtheDelayedCookerUnit.

Main Objectives for 2012

Oneofthemainobjectivesfor2012isrelatedtotheachievementofruntests,

commissioning,start-upandperformancetestsoftheMildHydro-crackingand

HydrogeninstallationsonthePetromidiaplatform.

Atthesametime,thenewSulfurRecoveryUnit,theTailGasTreatmentortheDelayed

Cokerunitsarealsostrategicprojects,fortherefinery’sproduction,technological

upgradeandenvironmentalcompliance.Theseinstallationswillbecompletedandput

intooperationin2012.

AttheVegaRefinery,Rominservisworkingtocompletetheprojectforanewcrude

vacuumdistillationcolumn.Furthermore,thenewlybuiltinstallationshavetobe

integratedintheexistingprogramanddatabase,whiletheexistingprogramof

preventiveandpredictivemaintenanceandinspectionsshallbepermanentlyimproved

forachievinghighestpossibleplantmechanicalavailabilitylevels.

Intensiveengineeringworkswillsupportfurtherdevelopmentandimplementationoflow

costprojectsthatwillhaveanimpactontherefinery’senergyortechnologicalconsumption

savings,safetyandenvironmentcompliance(especiallyreductionofNOXemissions).

ExtendEPC(engineering,procurement,construction)contractorservicesforup-stream

projects,i.e.surfaceworks,isanobjectiveaswell.

Rominservwillstartachallengingproject(worthapproximately100millionUSD),in2012,

attheCombinedHeatandPowerPlant(CCPP)of75MW,basedonnaturalgas,located

withinthepremisesofthecompany“UzinaTermoelectricăMidia”,Năvodari,România.

Regardingthenon-groupclients,Rominservestimatesanincreaseofitsbusiness

portfolioandturn-overwith20%,asaresultofinfrastructureprojectsforwatersupply

distributionandseweragenetworksandinindustrialservicesandmaintenance.

In2012,Rominservisalsofocusingtoextendthebusinessinnewcountries,for

non-groupclients,mainlyinoildownstreamsector.

Thecompanywillcontinuetheoptimizationandcostefficiencyprocess,withthe

particularobjectivetoreducegeneraladministrativecosts,toreviewcontractswith

suppliersforbetterpricesandpaymentsterms,torestructurecompanyinternal

processesandflows.

-2010 -2011

Net revenues (mill USD)

0

50

100

150

200

250216

225

20112010

225

46%

millionUSDturnover

EBITDAincrease

60 AnnualReport2011

Key achievements in 2011RominservValvesIaifocontinuedin2011tocontributetoTheRompetrolGroup’s

strategicgoal–tofinalizethecapacityincreaseprogramatthePetromidiaRefinery,up

to5milliontonsofprocessedcrudeoilperyear–byprovidingtheplantwithmorethan

7,000ironandsteelindustrialvalves.

Thegeneralmarketconditions,influencedbytheinternationaleconomiccontext,have

causedmajorchangesintheactivityofalleconomicagents.Thevalveproduction

activitydivisionatRominservValvesIaifohasadjusteditsbusinessstrategyaccording

totheevolutionofthemarketdemand,aswellasthepriceofrawmaterialsandthe

productioncost.

Thecompanyhomologatesattheendof2011thelargestcomponentpartconstructed

uptothatpoint.Thepart’soverallnetmassis4,300kg/pieceandduetoitscomplex

shape,27coresforcastingwerenecessaryforassembly.Thecomponentswerecastiron,

accordingtotheASTMAstandard,anditrepresentedaninnovationforRISZalaufoundry.

Inadditiontothis,RominservValveshomologatedthecaststeelgatevalvesforged

variant,weldedflanges,accordingtostandardsDINandAPI,DN1/2"–11/2".

During2011,thecompanycontinueditscollaborationwithGEAGroupGrasso–one

ofthelargestengineeringcompaniesinGermany–forcomplexcastings,producedat

foundryinZalau,thushomologating67newparts.

RominservValvesmanagedtoincreaseitssales,reachingin2011aturnoverof10.75

millionUSD,37.53%morecomaparedto2010,and14.61%overthepredictedturnover.

RominservValvesIAIFO

Main objectives for 2012

Thecompanywillemphasizein2012ontheinvestmentprogrammeanttoalignthecompanytoallenvironmentalstandards,

withthedeliverytermofJune30th,2012,andontheexpansionofitsrangeofproducts.Theexpansionoftheproduct’srangeoffered

byRominservValveispartofthestrategymeanttoimprovethecompany’sturnover.Outsidethemainproducts,IaifoZalaucanproduce

customparts,whichisamajoradvantageinanmarketwitharapidexpansion.

In2012,RominservIaifoestimatesaturnoverof9.9millionUSD,5%above2010.Thisestimationisbasedontheincreaseofcastcomponents

sales,aswellasthenumberofordersplacedbythecompany’sforeignclients,thankstothegrowthshownbyWesternEurope.

-Budget 2011 (USD) -Actual 2011 (USD)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

DecNovOctSepAugJulJunMayAprMarFebJan

10.75 millionUSDturnover

61

ThelaboratorydivisionofTheRompetrolGroup,RompetrolQualityControl(RQC),isone

ofthetoplocalcompaniesonlaboratoryanalyses.Since2004,whenitwasfounded,

RQChasbeenconstantlyidentifyingandimplementingthesafestandmostefficient

methodsofenvironmentalprotection,aswellasassuranceofproductquality.

Regardlesstheeconomicconditions,in2011thecompanycontinuedtodevelopand

improveitsbusinessactivities,managingtokeepitsmajorclientsandattractnewones.

TheimplementationofnewtypesofanalysesisamajorachievementforRQC.Thislead

tothecompany’sbusinessconsolidation

Furthermore,RQCrenewedthemainaccreditationcertificatesfromRENARand

GERMANISCHERLLOYD,inordertoconsolidatetherelationswiththethird-partyclients

andtoattractnewcustomers.Thiswasachievedbybeingunbiasedandalwayslooking

aftertheconsumers’bestinterests.

Alsoin2011,theRQC’slaboratoriesobtainedexcellentscores,throughtheparticipation

tovariousinternationalinter-laboratoryproficiencytests.

RQCcontinuedtodevelopitsbusinessbyimplementingnewtypesofanalysesand

acquiringtheappropriatecertifications.Thiswasrequiredinordertomeetitsclients’

demandsandaccordingtotheRomanianandEuropeanlegislation,necessaryinorder

tocontinueofferingpetroleumproductsanalyses–coalanalyses(humidity,volatile

substances,ashes,power,sulphurcontent)andenvironmentalanalyses–sodium

hypochloriteanalyses.

ThiswasaddedtothelargerangeofanalyseswhichRQCalreadyperforms:

— Completeoilproductsanalyses(crudeoil,gasoline,dieseloils,LPG,kerosene,

petroleumcuts,cokeandpetroleumsulphur,ecologicalfuels–biodieselandbio

ethanol,bitumen,etc.)

— Completewateranalyses(contaminatedchemicalwater,processingwater,drinkable

water,drainagewater,coolingwater,softenedwater,desaltingwater,boilerwater,

swimming-poolwater,steam,condensewater,undergroundwater,etc.)

— Completesoilanalyses(industrialsoils,agriculturalsoils,andindustrialmud)

— Completeairanalyses(physicalandchemicaltoxicsubstancesfromthe

workingplacesairandfromprotectedareasbydeterminingthecorresponding

concentrations)

— Explosionmeteringanalyses(determinationofexplosionhazardpotentialwhen

workingwithopenfireinindustrialspacesandclosedvessels)

— Medicalandbio-toxicologicalanalyses(forquantitativeandqualitativedetermination

ofvariousspecificcomponents)

— Analysisofphysicalandchemicaltoxicemissionsatworkingplaces(byobservingthe

provisionsoftheapplicablelabourprotectionnorms)

— Analysesofweatherfactors,environmentandspecificmicroclimates

— Chemicalanalysesonmetalmaterials

RompetrolQualityControl–RQC

62 AnnualReport2011

Theaccuracyoftheprocessesandanalysesperformedareconfirmedbythe

certificationsRQCobtainedandmanagedtomaintain.Thisleadtothecreationofthe

toolsneededtoenlargetheportfolioofthirdpartycustomersandconsolidatethe

company’spositiononthespecificmarket:

— RENAR–RomanianAccreditationAssociation.AllRQClaboratoriesareaccredited

accordingtothestandardSRENISO17025:2005,acertificationgrantedbyRENAR,the

onlynationalinstitutionthatcancertifythestandardsoflaboratoryactivities.Hence,

analysesperformedbyRQCareacknowledgedinover70countrieswhosignedthe

agreementsforinternationalacknowledgement(I.L.A.C,M.L.A.,E.A.)concludedby

RENAR;

— GermanischerLloyd(2008)certifiedRQCfortheIntegratedManagementSystem:

Quality(ISO9001),Environment(ISO14001)andWorkplaceSafety(QHSAS18001)

— AFER–RomanianRailwayAuthority–licensesforrailwayproductstrials(diesel,oils

andenvironmentalparameters)

— ISCIR–RomanianInspectionAuthorityforControlofBoilers,PressureVesselsand

LiftingEquipment–licenseformetallic-graphictrialsandboilerwatertests

— MinistryofHealth(PublicHealthDepartment)–Authorizationtoconduct

professionaltoxicemissionsmeasurements

Sinceitsestablishment,RQCconstantlyinvestedinitsdevelopmentandlaboratory

upgradeandmodernization,inordertooptimizeitsprocessesandthequalityofthe

servicesoffered.Asaresult,RQC’slaboratoryactivityisentirelycomputerizedthrough

LIMS(LABORATORYINFORMATIONMANAGEMENTSYSTEM),aninformationalprogram

thatincreasestheaccuracy,efficiencyandproductivityofouractivities.RQCwasthefirst

companyontheRomanianmarkettoimplementthisinternationallyrenownedprogram.

Ongoingeffortstoimprovethequalityofourservicesarealsoconfirmedbythe

certificatesofexcellenceobtained.Thiswastheresultofourconstantparticipation

tovariousinternationalproficiencytesting(PT)programsandcollaborationswith

internationalresearchcenters(Spain,TheNetherlands).TheparticipationinPT

evaluationsguaranteesthattheresultsoftheanalysesarecorrect,andalsokeeptheir

integritywhenthesampleistestedagain,byotherlaboratories.Thus,thisprovides

theconfidencethatourlaboratoriesproducereliableresults,factofmajorimportance

tothelaboratoryitself,theorganizationitbelongstoandalsotopotentialcustomers,

accreditationorregulatorybodies.

Anotherimportantacknowledgementforourcompanyhasbeenprovidedeveryyear,

since2005,bytheMinistryofEconomyandFinances.ThishappenedintheEuropean

financedproject“Qualitativeandquantitativemonitoringsystemforgasolineanddiesel

oil”,ontheobservationoftheEuropeanUnionconditionsonintroducinggasoline

anddieseloilontheRomanianmarket.RQCcontinuedthiscollaborationin2011and

strengtheneditsrelationshipwiththestateauthoritybyperformingatitsrequest

analysesfordeterminingthecontentofsulphurinliquidfuels,anothercollaboration

whichstartedin2009.

In2011,RQCrenewedthecollaborationwithoneofitsmajorclients,ArcelorMittalGalaţi,

thelargeststeelworksoperatorsinRomania.Thiswasachievedthroughacontractfor

environmentalfactorsmonitoring,whichcontributedtotheconsolidationofRQC’s

positiononthemarket.

Oneofthemainfocuspointsin2011forRQCwastogainandkeepthetrustofits

customersandinterestedorganizations.Thiswasachievedbymaintainingahighlevel

ofqualityforitsprovidedservices.RQCmanagedtokeepitsmajorclientscloseandalso

startnewpartnerships.Therefore,thecompanycontinuestobeacompetentpartner

RQCrenewedcollaborationwithoneofitsmajorclients,ArcelorMittalGalaţi,thelargeststeelworksoperatorsinRomania

63

forthemajorindependentinspectioncompanies,withactivitiesintheConstantaport,

intermsofspecificanalysesforimported/exportedoil.TheEnvironmentalLaboratories

havebecomeaviablealternativeforcompaniesintheDobrogearegion,focusing

mainlyonmonitoringspecificenvironmentalfactors(waters,air,andsoil).Moreover,the

companyhassignificantanalysesactivitiesinotherregions,suchasBanat,Muntenia,

OlteniaorSoutherMoldova.

TheeffectsofthesevereeconomiccrisisthatRomaniapassedthroughin2011are

reflectedinRQC’sturnoverandnetresultsevolution.Still,RQCmanagedtoremain

financiallyindependent.Asinthepreviousyears,thecompanycontinuedtodevelopits

activitieswithoutanyfinancialexternalfunds,thusprovingitssolvabilityandraisingthe

trustofitsstakeholders.

As a major objective in 2012,RQCwillexpandtherangeof

servicesbyaddingnewtypes

ofanalyses(e.g.airandvacuum

distillationanalyses,determination

oftotalorganiccarboninairandsoil

pollutants,brominevalue).

Also,thecompanyintendsto

maintainthemainaccreditation

certificatesfromRENARand

GERMANISCHERLLOYD.Asa

powerfulmarketingargument,this

objectiveaimstoconsolidatethe

relationswiththethird-partyclients

alreadyexistingintheportfolio,

andtoattractnewcustomers.This

objectivewillbeachievedbystaying

technicallycompetent,impartial,

keepingthecompany’sintegrity,and

protectingtheconsumers’interests.

Dynamics of revenues from third party customers in total turnover (%)

12

6

7

11 11

8

9

10 1011

10

9

8

7

6

5

2005 2006 2007 2008 2009 2010 2011 2012budgeted

2012budgeted

RQC Third-party Revenues (thousand RON)

0

500

1,000 981

1,331

1,8871,814

1,587

1,886

1,704 1,776

1,500

2,000

2005 2006 2007 2008 2009 2010 2011

Other major objectives are:

— Theaccreditationextensionforthenewanalysismethodsandinspectionservices.

— ThecapitalizationofnewmarketopportunitiesinordertoconsolidateRQC’smarketshare.

— Increaseofprofitabilityandthepercentageoftheturnoverfromthird-party

customers.

RQCisaimingtooptimizetheoperationalcostsandtoregisterzeroaccidentsin

laboratoriesandtheotherlocations.Thisobjectivewillbetargetedbya100%

implementationofthepersonneltrainingplanonoccupationalhealthandsafety,which

includesDuPontSafetyResources.

64 AnnualReport2011

In2011,thegeneralmarketconditions,influencedbytheinternationaleconomiccontext,

havecausedmajorchangesintheactivityofallcompanies.Palplastmanagedtoadjust

itsbusinessstrategyaccordingtotheevolutionofthemarketdemand,focusingon

infrastructureandagricultureprojects,supportedbyEuropeanfunds,toresizethe

productioncostsandthepipeprices.

2011 Key Achievements:— Newdomesticsuppliers(ReplasticaTimisoara,SabicEurope).

— Newcontractsforagriculturewithpaymentinadvanceweresigned.

— Anextensivemarketresearchwasperformed,contactingmostofthedomestic

constructors,whoofferwatergasandsewerageworks.

— Developmentofthecommercialandproductiondepartmentwithnewemployees.

Palplast’sproductionwassuspendedforaperiodof4months,betweenApriland

August.Afterresumingproduction,theresultsimprovedsignificantly,operationalresult

+182kUSD,netresult+161kUSD,inspiteofthefactthatproductionwasstartedin

autumnwhenpipemarketisaffectedbyseasonality.

Thefactthatthecompanymanagedtogetgoodresultsunderthesecircumstances

leadstoconclusionthatithascapabilitytoextendandbecameahighprofitable

business.TheprofitsgainedinSeptember–December2011coveredmostoftheprevious

lossandimprovedtheresults.

Palplastsignednewcontractswithdomesticsuppliers(ReplasticaTimisoara,SabicEurope)

andforagricultureprojectswithpaymentinadvance.In2011,thecompanyperformedan

extensivemarketresearch,contactingmostofthedomesticconstructorswhoperformed

watergasandsewerageworks.

PalplastSibiumaintainedtheproductionactivityofopticalfiberprotectiontube,in

additiontocarryoutwaterandsewageinfrastructureprojects.

Moreover,thecompany’sstrategyhasincludedaseriesofcostcontrolandreduction

actions,aswellastheimplementationofeffectivebusinessstrategiesinitsrelationwith

suppliersandcustomers.Lastyear,Palplastdevelopedthecommercialandproduction

departmentwithnewemployees.

In2011,Palplasthadaturnoverofapproximately3.4millionUSDwithaproduction

of1,030tonsofpipe.

2012 Key Objectives

Palplastwillcontinueitsinvestmentprogramin2012,butwilladjustittotheproduction

needsrelatedtotheprojectsthatthecompanyhasalreadyundertakenin2011.The

companywillalsoensurethatitmaintainsthequalitystandardalreadyimposedonthe

market.Thus,Palplastwillinvestinthemodernizationoftheproductioncapacities,which

wouldresultinoptimizedproductivity,reducedcostsandthelowerenvironmentalimpact.

For2012,thecompanyestimatesaturnoverof7.2millionUSDwithaproductionof2,555

tonsofpipe.

PalplastSibiu

3.4 millionUSDturnover

1,030 tonsofpipe

65

-2010 -2011Direct distribution (import; USD)

0

100,000

200,000

300,000

400,000

500,000

20112010

459,374

361,947

-Budget 2010 -Actual 2011Logistic costs (%)

Actual 2011Budget 2011

2.28 2.45

0.00

1.00

2.00

3.00

-Jan 2010 -Dec 2011Welding machines stocks (pieces)

31 Dec 20111 Jan 2011

10

14

0

3

6

9

12

15

2011 Key Achievements— DevelopmentoftheNationalPartnershipProgramwithregionalwastecollectors

(52partners);

— QHSEcomplianceofEcopark(afterobtainingtheIntegratedEnvironment

Authorization);

— Hazardouswastecollectedin2011amountsto9,600tons.

In2011,EcomasterEcologicalServiceshassignednewcontractswith52ownersof

hazardouswasteforservicesprovidedbyEcopark.

FortheRomanianenvironmentalmarket,Ecoparkrepresentsanimportantlandmark,

duetothemodernandreliableconditionsofstorageoffered.

Throughtheprogramforthepartnershipsdevelopment,thecompanyisabletooffer

thefullspectrumofwastemanagementservicestocustomers,bothdirectlyandvia:

transport,treatment,neutralization,stabilization,finalelimination,bioremediation,

thermaldesorption,ensuringatthesametimetraceabilityandeconomicefficiency.

ThecompanyreceivedtheQHSEConformitycertificates,forthehazardouswaste

managementactivity.

TheIntegratedEnvironmentAuthorizationfortheactivityatEcoparkwasreviewed,

aimingtointroducethehazardouswastetreatmentactivity,whichshallbecarriedout

usingtheautomatedtreatmentplant.

EcomasterEcologicalServices

9,600 tonsofhazardouswastecollected

Thereareverygoodprospectsfor2012,duetothefactthatduringDecember2011we

recevedover40pricerequestsrelatingto2012forPEpipeandfittings,intotalamount

ofaproximately4milionUSD–inagrowingmarket.

Weexpectthepiperequesttoincreaseasalargenumberofwater,sewerage,andgaswork

wereauctioned.Weestimatethatanimportantpartoftheserequestswillmaterializein

contracts.

66 AnnualReport2011

160 thousandtonsofhazardouswasteprocessed

2011 Key Achievements— DevelopmentoftheNationalPartnershipProgramwithregionalwastecollectors

(52partners);

— QHSEcomplianceofEcopark(afterobtainingtheIntegratedEnvironment

Authorization);

— Hazardouswastecollectedin2011amountsto9,600tons.

In2011,EcomasterEcologicalServiceshassignednewcontractswith52ownersof

hazardouswasteforservicesprovidedbyEcopark.

FortheRomanianenvironmentalmarket,Ecoparkrepresentsanimportantlandmark,

duetothemodernandreliableconditionsofstorageoffered.

Throughtheprogramforthepartnershipsdevelopment,thecompanyisabletooffer

thefullspectrumofwastemanagementservicestocustomers,bothdirectlyandvia:

transport,treatment,neutralization,stabilization,finalelimination,bioremediation,

thermaldesorption,ensuringatthesametimetraceabilityandeconomicefficiency.

ThecompanyreceivedtheQHSEConformitycertificates,forthehazardouswaste

managementactivity.

TheIntegratedEnvironmentAuthorizationfortheactivityatEcoparkwasreviewed,

aimingtointroducethehazardouswastetreatmentactivity,whichshallbecarriedout

usingtheautomatedtreatmentplant.

Also,theEnvironmentalAuthorizationfortheactivityofcollectinghazardous/non-

hazardouswasteandtransportwasalsoreviewed.Thiswasneededinordertotransfer

theseactivitiesfromtheVegarefinery,toEcopark,andallowedtheexpansionofthe

collectedwastespectrum,togetherwiththetemporarystorage,inviewofeliminationor

furtherusage.

TheWaterManagementAuthorizationonEcoparkhasbeenextendedthroughthe

introductionofthehazardouswastetreatmentactivity.

Furthermore,toregulatetheactivityhazardousandnon-hazardouswastecollection

nationwide,EcomasterhasbeengivenauthorizationbytheNationalAgencyforthe

EnvironmentalProtection.

2012 Main Objectives

Integrated Management of increased volume of hazardous waste

— EcoparkDevelopment(increaserevenuesandnewinvestments);

— Developstrategicpartnershipstoincreasemarketshareandaccesstocomplex

environmentprojects;

— TREATapplicationservicecapabilitiesforthetreatmentanddecontaminationoflarge

scaleprojects.

Also,Ecomasterhasmajorprojectsintreatmentanddecontamination.Technologies

andknow-howacquiredbyEcomasterinthelastfewyearsallowedprocessingand

neutralizationofover160,000tonsofhazardouswaste,onthePetromidiaplatform

alone.Ecomasterintendstoimplementtreatmentcapabilitiesinmoredecontamination

projects,forRompetrol,aswellasoutsidetheGroup.

Tothisextent,EcomasterwillrevisetheIntegratedEnvironmentalAuthorization,inorder

tointroducenewtreatmenttechnologiesandactivitiesontheEcoparkplatform.

Ecopark Development

Ecomasterisveryinterestedin

developingstrongpartnershipswith

keyplayersontheregionalmarkets,

aimingatconsolidating

thetechnologicalcapabilities

ofthecompany.

67

QHSE

Regardingourpolicytowardsenvironmentquality,securityandhealth,weconsider

thatalltasksandactivitiesmustbesafeforouremployees,forthirdpartiesandforthe

environment.

Thehealthofouremployeesisveryimportant,andsafetyattheworkplaceisapriority

formanagementandforeachemployee.Ourmaingoalistoreducetozerothenumber

ofincidentsandtocreatesafetyhabitsforallemployees.

Giventhefactthatoneofourprioritiesisenvironmentprotection,wecommitourselves

toreducetheimpactonenvironmentandCO2emissions,resultedfromouractivities,

productsandservices.Environmentissuesaretakenintoconsiderationinthedecisional

processateachlevel.

Weprovideourpartnersandclientswithdetailedinformationregardingourproducts

andservices.Weattentivelyfocusonthequalityoftheproductswesupply,sotheymust

complywiththoroughsafetystandardsandmusthavealowimpactonenvironment.

Safetyandreducedimpactovertheenvironment

68 AnnualReport2011

TheRompetrolGroup(TRG)considerssocialresponsibility

asvoluntarycontributiontodevelopmentinthesociety,

connectedwiththebasicactivityofthecompany,

theinternationallawsandtheresourcesofthegroup.

CorporateSocialResponsability

Corporate Social Responsability

community

70 AnnualReport2011AnnualReport2011

AsaleadingCorporateCitizen,TheRompetrolGroupseekstoactresponsiblyinall

activities.Asaglobalcompanywhosesuccesshasbeenbuiltoninnovation,passion

throughqualityandindividualleadership,werequirehighCorporateandPersonal

Responsibilitystandardswhereverweoperate–withtheultimateaimofimprovingour

businessandthequalityoflifeofthoseweimpact.Wearecommittedto:

OurcommitmenttoCSRprovides

aguidingframeworkforallour

managementdecisionsandwefocus

particularlyonharnessingindustry

bestpracticebyencouraging

CompanyandCommunity

participationincorporatecitizenship

projectsfocusedonraisingthe

standardsintheareasof:Business

success,Environment,Healthand

Safety,CommunityResponsibility,

YouthEducationandLeadership.

1Sustainable,responsibledevelopment

whichextendsthroughandbeyondthe

lifeofouroperations;

3Bestpracticesincorporategovernance

asitaffectsallofourcommunitiesof

stakeholders,includingouremployees,

localandregionalcommunities,

suppliers,investorsandpartners;

2Operatingethicallyandresponsiblywith

respectforthesafety,healthandwelfare

ofouremployeesandpartnersinthe

community;

4Investingtimeandenergyinpromoting

thespiritofleadershipthrough

entrepreneurialandeducationalpursuits.

MissionandValues

HighCorporateandPersonalResponsabilitystandards

Corporate Social Responsability

71

ThespiritofTheRompetrolGroup’sapproachtowardsCSRisreflectedinour

corporatemotto,“EnergyforLife,”whichisacalltoongoing,activeinvolvement

inprojectsthatmeetourCSRgoals.

RompetroldefinesthefollowingguidingprinciplesofitsCSRPolicy:

1Respect Employees

Torespectemployeesandhelp

enhancetheirlifethroughdevelopment

opportunitiesandemploymentpractices

groundedonequalopportunitiesand

OccupationalandSafetyBestPractices

3Health and Safety

Toensurethehealthandsafetyof

ouremployees,suppliersandthe

communitiesinwhichweoperate

5Education and Leadership

Topromotethespiritofleadership,

especiallyamongyoungpeople,

throughcivicinvolvementand

educationalactivitiesthatencourages

sociallyresponsiblepursuitsand

entrepreneurship

7Best practice

WeareguidedbytheUnitedNations

GlobalCompact’stenprinciplesin

theareasofhumanrights,labor,the

environmentandanti-corruption.

2Ongoing Involvement

Toinvolveatanappropriatelevelthe

authorities,community,andother

concernedstakeholdersinalldecisions

thataffectthem

4Risk management

Toidentify,assess,manageand

mitigateriskstoourhostcommunities,

employees,contractors,theenvironment

andourbusiness

6Respect local communities

Torespect,protectandpromotethe

humanrights,culture,customsand

valuesofthecommunitiesinwhichwe

operate

TheRompetrolGroup,asasocially

responsiblecompany,iscommitted

totheongoingimplementationand

improvementofthequality

ofsocialactivitiesinthefollowing

maindirections:

External Social Responsibility

— SocialPartnership

— EnvironmentProtection

Internal Social Responsibility

— DevelopmentofHumanResources

potential

— Healthandjobsecurity

— SocialCausessupportedby

Rompetrolemployees

Inordertocomplywiththeguiding

principlesoftheGroup,thefollowing

ruleswillbeapplied:

— AllCSRprojectswillbeundertakenin

thespiritoftransparency,fairness,and

respectforhumanrights,laborand

anti-corruptionpractices.

— AllCSRprojectsrequireapro-active

inputbyallemployeesand

arecoordinatedbyCorporate

CommunicationandPublicAffairs

Department.

— AllCSRprojectsarereviewed,

monitoredandmeasuredonan

ongoingbasis.

— TheCompanywillseekprojectsthat

promotethedevelopmentofsocial

capitalbetweenourstakeholders.

GuidingPrinciples

72 AnnualReport2011Corporate Social Responsability AnnualReport2011

73

ExternalSocialResponsibility

Social Partnership

Toprovidesupportandfinancialaidtosociallyvulnerablesectors,TheRompetrolGroup

gathereditsinitiativeswithintheCSRplatform“Energycomesfromtheheart”(launched

inMay2009)–whichincludesanationalprogram,“Togetherforeachandeveryone”,

andseparateprogramsinthefieldsofhealthcareandenvironmentprotection,thetwo

directionstheGrouphasdecidedtosupport.AttheGrouplevel,in2011,theinvested

amountinsocialcausesexceeded1millionUSD.

In2011,thenationalprogram“Togetherforeachandeveryone”considered195projects

registeredonthewebsitewww.impreunapentrufiecare.ro(123inthehealthcarefield

and72inenvironmentprotection).Aftertheevaluationperiod,19projectswere

financedinAlba,Arad,Argeș,Bacău,Bihor,Brașov,Buzău,Caraș-Severin,Constanţa,

Galaţi,Hunedoara,Mureș,Sălaj,SibiuandBucharestcounties.Allprojectshadtwo

overlappingparts:onewhichconsistedintherestorationofmedicalcareunitsinrural

andurbanareas,ortheconstructionofwatercollectors,ecoplantsforwaterrecycling,

solarpanelsforschools,andasecondcomponentwhichconsistedineducationaland

culturalactivitiesforthemembersofthecommunities.Thetotalinvestedamountforthe

implementationofthe19selectedprojectswas275.000USD.

Severalprojectsonhealthcareandenvironmentprotectionweredevelopedin2011

aspartoftheplatform“Energycomesfromtheheart”.Inthehealthcarefield,The

RompetrolGroup,FundaţiapentruSMURDandtheGeneralInspectorateofAviation

(IGAV)enteredapartnershipforsupportingairemergencyinterventions,themovement

ofmedicalpersonnelandthetransportationofvictims.Inthiscooperation,the

RompetrolGroup,throughRompetrolRafinare,providedin2010amonthlyamountof

30tonsofJetA1fuel,thequantityestimatedfortheoperationofthetwohelicoptersin

BucharestandTârguMureș.

TheRompetrolGroupisinvolvedinsocialpartnerships,implementingjointprojectsand

programsorarrangingsocialevents.

In2011,theGroupdecidedtosupportthe20theditionoftheprestigiousGeorgeEnescu

InternationalFestival,heldinseveralcities,fromSeptember1throughSeptember25.

ThisassociationofRompetrolwithsuchalargescaleeventwasmeanttostrengthenthe

internationalvocationofthetwobrandsanditsproducts–fuelsandqualitymusic.The

partnershipcreatedtosupporttheprestigiousculturaleventallegedthetotalquantity

offuelrequiredtooperateofficialcarsusedinthefestival.Thecompanyalsoprovided

financialsupportfor“GeorgeEnescu”festival.Thecompanyofferedthepublican

exceptionalconcertoftheLondonSymphonyOrchestraonSeptember09,atthePalace

HallinBucharest.

1millionUSDinvestedinsocialcauses

74 AnnualReport2011

Muchattentionispaidtosupportthenationalcampaign“FiecareCopilînȘcoală”(Each

ChildinSchool)initiatedbyOvidiuRomAssociation.Thispartnershipwhichbecame

effectivein2004advocate:schoolpreparationprograms,freeschoolmaterials,uniforms

andhotlunchesforchildrenfromlow-incomefamilies;incentivesintheformoffood

coupons;enforcementofeducationandchildren’srightslegislationetc.

Startingasof2003,RompetrolisapartnerandmainsponsorforGalaSocietăţiiCivile

(CivilSocietyGala)–theannualcompetitionthatawardsthebestprojectsoftheyear,

projectsinnitiatedbyNGOs,unions,individualsetc.

In2011,thecompanyhascompletedvarioussocialpartnershipsorsponsoredinitiatives

oftheJuniorAchievementRomania(leadershipprogramforhighschoolstudents),

FreedomHouseRomania(tosupportyoungjournalistsinRomania),amongothers.

Environment Protection

TheRompetrolGroupcarriesoutenvironmentprotectioninfullconformitywith

therequirementsofthenatureprotectionlegislationoftheEuropeanUnion.The

environmentalstrategyhasthefallowinginterestareas:

— Complianceofactivitiesandfacilitiesatnationalandinternationalrequirements;

— Tominimizeenvironmentalincidents;

— Tominimizetheconsumptionofresourcesandquantitiesofwastegenerated;

— Tooptimizetheoperation,intermsofenergyfacilitiesandreduceCO2emissions;

— Tomaintainacertifiedenvironmentalmanagement;

— Permanenttrainingofspecializedpersonnelinthefield;

— ToensuregoodcommunicationwithintheGroupandtheinterestedpublic,NGOsetc.

In2011,therewasnoenvironmentalincidentleadingtoaccidentalpollution.

Thegrouphas5IPPCplantswhichmettheirobjectivesfor2011:2plantsinoilrefining

(PetromidiaandVegarefineries),1petrochemicalplant(RompetrolPetrochemicals),

1plantinthemetallurgyindustry(RominservIAIFOZalau)and1wastelandfill(Ecopark–

hazardouslandfillopenedin2010).Also,during2011,novalueswereregisteredinexcess

oftheemissionthresholdsforthespecificpollutantswhichweremonitored.

Since2008TheRompetrolGroupisamemberofCONCAWE(ConservationofClean

AirandWaterinEurope),anorganizationfoundedin1963whichresearchesmultiple

aspectsofenvironmentalprotectionintheoilindustry.OnceaffiliatedtoCONCAWE,all

oftheGroup’smembercompaniesbenefitfromassistancetocomplywiththeEuropean

REACHRegulation(Registration,Evaluation,AuthorizationandRestrictionofChemicals).

Thisis,byfar,thelargestlegislativeprojectadoptedbytheEuropeanUnioninthepast

yearswhichaimsatestablishingaconsistent,transparentandsafermanagementof

chemicalsintheE.U.

Allcompanies,membersofTheRompetrolGroup,maintainedtheirGermanischerLloyd

certificationsfortheirintegratedmanagementsystems(ISO9001:2008,ISO14001:2004and

OHSAS18001:2007).However,in2011twoothercompanieshaveobtainedcertification

ofmanagementsystemsintegrated:TheRompetrolGroupCorporateCenterand

RompetrolBulgaria.TheRompetrolGroupinvestedinenvironmentalprotection,in2011,

approximately25millionUSD,themostimportantprojectsbeingintherefiningsector.

25millionUSDinvestedinenvironmentalprotection

Corporate Social Responsability

75

InternalSocialResponsibility

Human Resources Development

TheRompetrolGrouppaysparticularattentiontohumanresourcesdevelopment

andtraining.Thus,thecompanyprovidedadvancedtrainingandimprovementof

professionalskillstomorethan3779employees,basedontherequestsoftheirpositions

withintheGroup.

Theywereabletodevelopbothtechnicalskills(ACCAandMBAprograms,IFRS,Project

Management,specificcoursesaboutoilandgas,coursesofEnglishandRomanian

languageforexpatsemployeesandsoon)butalsoonthebehavior(courseson

leadership,customerservice,managementskillsetc.).Acomprehensiveprogramof

professionaltrainingwasofferedtotheemployeesofRompetrolDownstreamandit

involved138peoplefromthemanagementand1578employeesfromthedistribution

(station)withatotalof11,039hoursoftrainingdeliveredin20cities.

RompetrolRefining,therefiningdivisionofTheRompetrolGroup,developedin2011a

comprehensivetechnicaltrainingprogramto9employees/operatorsofthecompany

AgipKCOKazakhstan,responsibleforexplorationandproductioninthefirstphase

oftheKashagan(Caspian).Theobjectiveoftheprogram“OntheJobTraining”aimed

atfamiliarizingthenineoperatorswiththeprocessingflowoftheoilinPetromidia

Refinery.Atthesametime,theprogramwasstructuredtoprovidespecificknowledge

assimilationoftheprocessofrefining,themaincontrolparameters,securityissues

andoccupationalsafety,environmentalprotection,butalsotheworkinDAVfacilities

(atmosphericandvacuumdistillation),DGRS(GasDesulphurizationandSulphur

Recovery)andwaterstripping.

Rompetrolhadthesameconsistentapproachintermsofeducationanddevelopof

theyouthskillsthroughtheirinvolvementinactivitieswithintheGroupcompanies.In

2011,onthePetromidiaplatform,RompetrolRafinare,RompetrolPetrochemicalsand

Rominservhavedevelopedseveralprogramsfortheselectionofpotentialstudents,

providingthemwithanorganizedframeworktoimproveprofessionaldevelopmentskills

needed.

Internship 2011

2011wastheninthconsecutiveyearinwhichtheRompetrolGrouphasorganized

andconductedthisprogramdedicatedtofreshgraduatesoftechnicaluniversities

orhigh-schools.Theprogramconsistedofactivepracticewithinthecompany,for2

months,finalizedwithanassessment,basedonwhichapartoftheparticipantswere

selectedforthe“Trainee”program.Theprogram,thattookplacebetweenAugust–

September2011,included39studentsfromfiveuniversitycenters(Constanţa,Cluj,Iași,

Bucharest,Ploiești).

11,000hoursoftraining

more then

76 AnnualReport2011

Trainee Program 2011

TheTraineeProgramrepresentsthefinalselectionstageofthemostcompetent

participants.Itsdurationisof6months,fromOctober01,2011throughMarch31,2012,

periodduringwhichtheselectedstudents(12withsecondarystudiesand14with

advancedstudies)hadthepossibilitytoputtheirknowledgeintopracticeinvarious

departmentsonthePetromidiaplatform.Thisexperiencewasfollowedbyafinal

performanceassessmentandhiringthebestintheorganizingcompanies.

TheCostsoftheTraineeandInternshipprograms(salaries,accommodation,and

transport)arefullycoveredbyTRG.During2002–2011,400graduatesofsecondaryand

advancedstudiesattendedtheseprograms,outofwhich111peoplestartedtheircareer

withinthecompany.

Workplace health and safety

TRGpriorityin2011wastocontinuetoprovideasafeworkingenvironmentforbothits

employeesandcontractors.

Withregardtooccupationalhealth,theconcernsoftheGroupfocusedonthehealthof

theworkersthroughtheaccesstomedicalservicesthatmeetthelegalrequirementsand

thehigheststandardsofmedicalpractice.

Recognizingtheimportanceofthehealthofouremployees,wehaveensuredthatall

staffisfitphysicallyandmentallyfortheperformanceofjobduties.Byacontinuous

monitoringofallprocesses,whilepermanentlyassessingthehealthriskrelated,an

adequateperformanceofallspecificactivitieswascreated.

Thisyear,thetrainingandawarenessactivitieswerecontinuedforemployeesand

contractorsandinvolvedsafeactivities,proceduresandpoliciesbytheGroup.

Thetraininginhealth,safetyandemergencysituationsamounted29,376hoursof

training.PetromidiaandVegarefineriescontinuedactionstoincreasesafetycultureby

maintainingtheprogramdevelopedwithDuPontSafetyResources.

In2011TheRompetrolGroup’semployeesincreasedtheirinvolvementinthe

identificationandeliminationofallunsafeactionsandconditionsintheworkplace.

Theperformanceindicatorswereimproved,andadecreaseby0.5(from3.00to2.50)

comparedtothetargetobjectivesfor2010(incidentrate,frequencyofcasesresultingin

disability,ratefrequencyandseverityofaccidents,incidentsrateauto)beingregistered.

-2010 -2011

Main indicators on work health and security

Neconformitaticonstatate

Neconformitatirezolvate (inchise)

Inspectii/Auditurisafety

Exercitii situatiide urgenta

0

2000

4000

6000

8000

10000

5706

9131

5706

2485

86157836

1383 1387

400graduatesattendedourtraineeprograms

Corporate Social Responsability

77

Regarding2012,RompetrolGroupaimstodecreasewithanother0.5(from2.50to2.00)

theperformanceindicatorsagainsttargetobjectivesfortheyear2011.

Social Causes supported by Rompetrol employees

TheRompetrolGroupemployeesaredeeplycommittedtoconductingbusinessina

sociallyresponsibleandethicalmanner,puttingtheireffortstocontinuallyimprovethe

company’sperformancesandbestpractices.Thus,2011representedanewopportunity

forcommunityprojectsdevelopedbytheemployees–WorldTheatreDaycelebrated

onMarch27anddedicatedtochildrenfromorphanages,InternationalChildren’s

Day–markedbytoysandclothescollectionanddonatedtoimpoverishedkidsfrom

Dâmboviţacounty.

The CSR Objectives for 2011 were:

— Communityleadershipandcivicinvolvementactivities;

— Improvingthequalityoflifeinthecommunitiesweimpactorinfluencethrough

environmental,publichealthandeducationalprojectsdevelopedaspartoftheCSR

platform“Energycomesfromtheheart”;

— Youtheducationandpromotingapro-active,entrepreneurialspirit;

— PromoteresponsiblebehaviorofRompetrolemployees,byencouraginginternal

socialinitiativesandbylaunchinganinternalCSRprogram“Lucrurilemicicare

conteaza”(Smallthingsthatmatter).Theprogramwouldfocusontheenvironment

protection,healthcareandeducationandwouldinclude,amongothers,paper

recycling,blooddonationsandeducationalactivities.

-2010 -2011

Performance indicators in work and health security

Incidentrate

Frequencyof incidentswith workincapacity

Total rateof registered

incidents

Frequencyrate

Severityrate

Rateof incidents

causingdeath

0.0

0.5

1.0

1.5

2.0

2.5

3.0 2.93

1.011.29

0.51

2.05

1.29 1.29

0.51 0.51 0.51

0.00 0.00

0.5decreaseoftheperformanceindicators

78 AnnualReport2011

Marketing,CorporateGovernance&FinanceAttheendof2011TheRompetrolGroup(TRG)comprised

42commercialcompanies–jointstockorlimitedliabilitycompanies

–havingtheirheadquartersin12countries.

Corporate Governance & Finance

integration & strenght

80 AnnualReport2011

Inanindustryconstantlyfacingchallengesandopportunities,Rompetrolmanagedto

maintainapowerfulimageonthemarketandfindnewwaystopromoteitsproductsand

services.

Amongthedirectionsthecompanytookin2011,oneofthemostnotableistowards

socialmedia,whichhasshownaconsistentincrease.

Thus,togetherwiththeRompetrolCSRplatform,“TogetherforEachandEveryone”,the

marketingandcommunicationdepartmentfocusedonatransparentstrategy,meantto

establishaconnectionwithourcurrentandpossibleclientsviaonlinechannels.Through

social-media,Rompetrollistenstopeopleneedsandexpectationsmakingtheutmost

possibletotransformitintoreality.

Likeeveryyear,importantstepsweremadetowardstheupkeepofthecompany’sbrand

awareness.Asaresult,RompetrolwasawardedtheConsumerSuperbrandAward2011.

Superbrandisgiventothemostpowerfullocalcompanies,accordingtocorporate

brandpopularity.

Anotherpointofemphasisforthecompanywasthecampaigntopromoteitsfuels,

2011beingnoteworthyyearinthisdirection.RompetrolwontwoEffieawards(themost

prestigiousawardintheRomanianadvertisingindustry),SilverandGold,bothforthe

Efixfuelviralcampaign.Thecampaign,focusingonthehumoroussideoftheRomanian

traditionallife,hasproventobethemostpopularinitiativeofsuchkindin2011,withover

500,000viewsonYoutube.comalone.

Efix–ThisisthefirstfuelbrandofTheRompetrolGroup,bothfromthepointofview

ofthetimewhenitwaslaunchedonthemarket,andofitssalespercentage,providing

engineprotectionandconsumptionsavingstotheconsumers.Efixispresentinfour

countries:Romania,Moldova,GeorgiaandBulgaria.

Fill&Go–Thisisthebrandofservicesofferingcustomersthepossibilitytobuyfuelsand

otherproductsfromstationsfortheirpersonaluseorforthecompanytheyworkfor.The

businesssegmentrepresentsthehighestpercentageofthebrandsales.Thebrandis

offeredtothebusinesssegmentin4countries:Romania,France,GeorgiaandBulgaria.

Alto101 / Alto 55–Altoisapremiumfuelline,especiallycreatedforthedriverswho

expectmaximumperformancesfromtheircars.Bothfuelsbeingarepreparedaccording

tothehighestqualitystandards,atPetromidiarefinery,havingahighoctane/cetane

number.Duetothehighpuritydegree,thefuelsensurecompleteburning,highcalorific

valueand,implicitly,lowerenginewearandtear.

Ecopark–Thisisanewconceptandbrand,launchedandcommunicatedin2010by

EcomasterEcologicalServices,thewastemanagementcompanyofTRG.Ecoparkstands

fortheIndustrialEcologicalPark,developednearPloiesti,whichintegrates3services

Marketingin2011–TRG

Business Development

81

fromthecompanyplatform:Collect–Treat–Deposit,inorder

toprovideacompletewastemanagementtotheRomanian

hazardouswastegenerators.

Eurobitum–Arangeofmodifiedwithpolymersroadtypes

ofbitumenfromRompetrol.Theproductshaveresistance

andreliabilitymuchovertheusualroadbitumen,usedin

manufacturingasphaltmixtures,andthusprovedawarranteefor

durabilityoftheasphaltcovering.Eurobitumwaslaunchedin2007,

afteraUSD7millionworthinvestmentforbuildingthefirstunitof

roadbitumenmodifiedwithpolymersinRomania,itsbasisbeing

atechnologyofitsownofthebitumenenrichmentwithpolymers.

Researchhasbeendone,thatprovedthatbyapplyingthisprocess,

theroadbitumengains:

— Increasedresistancetotemperaturevariations;

— Longlifeperiod;

— Betterresistancetodeformationsandwear;

— Capacitytoreducethenoiseintraffic.

Propane Power Station–Itisanenergyunit,basedonpropane

fromthecompanyRompetrolGas,especiallydesignedfor

professionalusers,butalsoforhomeusers,whichprovidesan

integralindependencefromotherenergysources,anincreased

permanentyield,whichismultifunctionalandensuresan

unpollutedenvironmentwithminimalmaintenancecosts,

becausetheunitdoesnotcontainimpuritiesandcorrosive

elements.ThePropanePowerStationsystemcouldbeusedfor

sourcingconsumingdeviceswithmultipleapplications–itcould

becomposedofoneormorepropanetanks,dependingonthe

necessaryamountofenergy.

Injection Solutions, Extrusion Solutions, Blow Solutions

In2007,RompetrolPetrochemicals–theonlypolypropylene

andpolyethylenemanufacturerinRomaniaandoneofthemost

dynamicandinnovativedistributorofpolyolefinproducts–has

repositioneditselffromarawmaterialsproducerintoapartner,

offeringintegratedsolutions,adaptedforitscustomers.This

newstrategymeantaprocessofcustomers’knowing,ofthe

companynecessitiesandpossibilitiesinordertofurthercreate

adaptedsolutionsandofferconsultancyandtechnicalsupport.

Thus,providingefficientsolutionsforeverymethodofprocessing

(InjectionSolutions,ExtrusionSolutions,BlowSolutions),the

companyhadreadaptedandreorganizeditsproductsportfolio

inaccordancewiththemarketdemandsandhadpositioneditself

asareliablepartnerforthecompanies,manufacturersofplastic

masses.Solutionsofferedforcustomersarebasedbothonitsown

productionandonimportedproducts,everythingdependingon

thecustomers’needsanddemands.

Carflux–UsingtheRompetrolRafinareexpertiseinfuels,

Rompetrolhascreatedin2010arangeofengineadditives,

meetingthedrivers’needs.SpeakingaboutgasolineorDiesel,

aboutprotection,power,clearing,reductionoffuelconsumption

oraboutlowtemperatures–theCarfluxrangerepresentsthe

solutionforimprovingtheengineperformancesandprolonging

itslifetime.

Euroizolir–Acompleterangeofproductsforwaterproofing,on

bitumenbasis,containingbitumenmembranes,bitumenshingles,

asphaltcardboardandbitumenprimers.

Vegasolv 509–representsthefirstproductfromafuturerangeof

solventsandlacquers.Vegasolv509isasolventforpaints,enamels

andprimersonoilandalkydresinsbasis.Thissolventisaproduct

basedonwhite-spirit,anadvantagereflectedinitsevaporation

grade.Italsohelpstheefficientpaintmixing,whichlayseasily,

itdegreasesandisalsousedformaintenanceofpainting

equipment.

Car Glance–ItistheRompetrolbrandforthewindshieldfluid

availableinourowngasstationsnetwork.Developedin2008,

theproductcontainsanionicsurfactantsprovidinganefficient

clearing,protectingthewashingsystemagainstcorrosion,in

winterversion–downto-20ºC.

Ardent and Ultrafoc–Twoproductsofthesameutility,namely

liquidforfirelighting,buthavingdifferentdestination.Ardentis

idealforbarbecuesandchimneys,whileUltrafocisrecommended

forfirelightinginheatingsystemsbasedonsolidfuelandfor

fillingilluminatinglampsbasedonliquidfuel.Bothproductsare

recognizedfortheiradvantageofbeingarapid,easyandclean

solution.

Ecomaster–Supplierofintegratedservicesintheareaof

industrialwastemanagement,providingserviceslikePlan,Collect,

Treat,Deposit,Clear.

2011

2

ConsumerSuperbrand

Award

EffieAwards

82 AnnualReport2011

Administration and decisional rightThemajorshareholderoftheGrouphasaunifiedmanagementsystem.TheTRGBoard

ofDirectorshassixmembersoutofwhichoneexecutive(theExecutiveManager–CEO)

andfivenon-executivemembers.TheExecutiveManagerisresponsible,inaccordance

withtheArticlesofAssociation,fortheeverydaymanagementofthecompanyandits

subsidiaries.OthermembersoftheBoardofDirectorsareresponsibleforthegeneral

policyofthecompanyandforsupervisingthemanagementposition.

Inordertosupportitsactivities,theBoardofDirectorsisinchargewithfounding

specializedcommitteeslikeAuditCommitteeorRemunerationCommittee.

TheExecutiveManagermaydelegatehismanagingfunctionforcertainoperations/

groupsofoperationstocertainthirdparties.So,attheTRG’slevelthereareDeputy

ExecutiveManagersspecializedindifferenttypesofactivitiesoftheGroup.

AtthelevelofthecompanieswithintheGroupthemanagementcanbecarriedoutin

dual/unifiedsystemandthemajorityofcommercialcompanieshaveimplementedthe

unifiedmanagementsystem.

Thedecisionalrightuponinternaloperationsofeverycompanyisdividedondifferent

decisionallevels:ExecutiveManager,BoardofDirectorsandShareholders’GeneralMeeting.

Main performances and achievements in the sphere of Corporate Governance in 20112011wasayearfullofeventsfromtheCorporateGovernancepointofviewatthe

Group’slevel.Thelistofmostsignificantperformancesincludes:

TheprocessofrestructuringS.C.RominservS.R.Lwasinitiatedandfinalized,the

mostimportantnon-corestructurewithinTheRompetrolGroup.Theprocessmeanta

partialdivisionthroughoutsourcingforthebenefitofthecompanytheactivitycarried

outbytheworkingpointRominservValvesIaifoZalau,leadingtothefoundationofa

newentityS.C.RominservValvesIaifoS.R.L.thatrepresentedthecreationofpremises

forowningandaffectingtheassets,necessaryforcontractingindustrialconstruction

andmanufacturingandsellingofmetallurgicalproducts.Alsowithintheframework

ofRominservrestructuringtheBulgarianSubsidiarywasdissolved,theprocessbeing

finalizedon23.12.2011.

MergeroftheJointCompanyRompetrolMoldovaS.A.withtheJointCompany

MoldintergazS.R.L.On12.09.2011theprocessofreorganizationofthecompaniesfrom

theRepublicofMoldovahasbeenfinalizedthroughmergerbyabsorptionofboth

mentionedcompanies.TheabsorbedcompanywastheJointCompanyMoldintergaz

S.R.L.andtheJointRompetrolMoldovaS.A.wasitssuccessorinrightsandobligations.

General dataCorporateGovernanceprovides

coherentinformationconcerningthe

frameworkinwhichTheRompetrol

Group(TRG)activatesatoperational

andmanaginglevel,thusensuring

thetransparencyofallactivities.

Attheendof2011TheRompetrol

Groupcomprised42commercial

companies–jointstockorlimited

liabilitycompanies–havingtheir

headquartersin12countries.

RegulationsofArticlesofAssociation

applicabletothesecommercial

companiesarethelocalones.

InRomaniathemainapplicable

regulationsaretheLaw31/1990

aboutcommercialcompaniesand

theLaw297/2004concerningthe

capitalmarket(incaseofcompanies

listedonthestock-exchange).

Thecompanieswithin

TheRompetrolGroupare

administratedinaccordancewith

theprovisionsoftheirownArticles

ofAssociationandprovisionsofany

otherrelevantdocuments.

ShareholdersThesoleshareholderof

TheRompetrolGroupN.V.is

KazMunayGasPKOPInvestmentsB.V.

(KMG),headquarteredinAmsterdam,

Holland.

CorporateGovernance

Corporate Governance & Finance

83

Development directions and tendencies in 2012 and for the nearest futureTheRompetrolGroupwillcontinue

implementingstandardizationin

thefieldofCorporateGovernance

throughadoptingaseriesof

documentsandstandardsofinternal

procedures,rules,policiesand

regulationsinaccordancewiththe

bestpracticesinthefield.

RompetrolTurkey–TRGPetrolTICARETAnonimȘirketi–anewCompanyoftheGroup

wasfoundedinNovember2011,itsmainobjectofactivitybeingthetransporting,

distribution,exportingandimportingofpetroleum,chemicalandpetrochemical

products.ThefoundationofthiscompanyisapartoftheGroup’sstrategyinrespectto

theexplorationofnewfullyexpandingmarkets.

ThecompanyByronShippingS.R.L.wasregisteredinFebruary2011inConstanta.

Serviceactivitiesforwatertransportationarethemainobjectofactivityofthisnew

company.

EntrepotPetrolierdePortlaNouvelleisanewentityfoundedinFranceinJuly2011.

Dyneffowns50%ofthecompanyanditsmaindirectionsofactivityarearrangingand

operatingofastoragedepotforpetroleumandderivedproductsinPort-la-Nouvelle,as

wellasthedevelopmentofthedepot’sactivityandidentification,purchasing,owning

andthemaintenanceofgroundfields,installationsandmeans,necessaryforthe

operationofthestoragedepot.

Important achievements within the framework of integration processIn2011theintegrationprocessofTRGinKMGcontinuedthroughtheadoptionand

implementationattheGroup’slevelofanumberofprocedures,policiesandregulations:

Human Resources:theProcedureofAssessmentofJobDescription,theProcedure

ofRecruitingandSelectionandtheInductingProcedure,theProcedureofCostsand

Benefits,theTrainingProcedure,theRelocationProcedure,theProcedureofDisciplinary

MeasuresandtheProcedureofthePositionAssessment.

Finance:theHedgePolicy,RulesofCoordinating,ApprovalandMonitoring

ExpendituresofCapitalwithinTheRompetrolGroup,theMethodofMateriality,the

PolicyconcerningtheAccrualAccounting,theProcedureofPerformance’sManagement

andthePolicyandRegulationofCorporateAudit.

Administrative:theProcedureofOfficialTripsforJobPurposes,theProcedureof

Documents’Management(Secretariat)andtheInsurancePolicy.

Development of commercial operations and activities specific for Corporate GovernanceIn2011thesellingandliquidationofsomebusinessunitstookplacewithintheTRG’s

restructuringprogramasfollows:

— SellingofS.C.RominservicesThermS.A.On27.01.2011thesellingofthesharesowned

byRompetrolS.A.(1,111%)andS.C.RominservS.R.L(65,556%)atRominservicesTherm

S.A.toS.C.C&CWealthManagementS.R.L.wasfinalized.

— FinalizeactivitiesofRompetrolUpstreamInternationalLtd(RUI).Thesharesownedby

TheRompetrolGroupN.V.(100%)atRUIweresoldtoRaduMihailon14.07.2011;

— LiquidationofthecompanyContrastS.R.L.During2011theprocedureofvoluntary

dissolvingandliquidationofthecompanyContrastS.R.L.wasfinalized–acompany

owned100%byS.C.RompetrolDownstreamS.R.L

42commercialcompanies

84 AnnualReport2011

85

Introduction

In2011TheRompetrolGroup(the“Group”,“TRG”)anditssubsidiariesengagedinall

aspectsofthepetroleumindustry.Itscoreoperationsareinthedownstreamsegment,

throughitscompetitivePetromidiarefineryandstrongretailoperationsinRomania,

aroundtheBlackSeaandinSouthofFrance.TheGroupcontinuedtopursueits

strategyofdevelopingitscorerefininganddistributionoperations,despiteaworsening

economicenvironmentandverylowrefiningmargin.

Strategy

In2011theGroupcontinuedthelargeinvestmentprogramtoexpandtherefinery’s

capacityandachievedarefiningutilizationratehigherthan2010with7.3%.Petromidia

hassuccessfullyconcludedinNovember2011theplannedshutdownandrestartworks

ontheproductionunitswithinthePetromidiaplatform,aswellastheintegrationof6

newinstallationsintheoperationalflow,withfocusonthecapacitygrowthprogram

oftherefineryupto5milliontonsofprocessedrawmaterialperyeartobefinalized

beginningof2012.

AsaresultofinvestmentsundertakentheGrouphasincreasedtheprocessingcapacity;

alsoachievedEURO5standardfor96%ofdieselproductionand60%gasoline

production;finalizedandputintouseatthebeginningof2009amarineoilterminal

ontheBlackSeacoastthatprovidesgreateroperationalandlogisticcapabilities,and

significanttransportationcostsavingsofoverUSD6/tone(outofwhichasavingofUSD

1.64/tonesincurredin2010and2011);completedlaunchofnewpetrochemicalproducts

andimprovedpetrochemicaloperationsefficiency;andincreasedmarketsharein

RomaniaandwithincreasedpresenceintheUkraine,Bulgaria,GeorgiaandMoldova.As

partofdevelopmentitsoperationalnetworkinUkraine,Rompetrolinitiatedtheprocess

ofacquiringapetroleumproductsdepotof9000cbmcapacityinIsmailregion.

Attheendof2011,RompetrolestablishedanewcompanyinTurkey,withthepurpose

ofenteringonTurkeypetroleumproductsmarketstarting2012.Untilthatmoment,the

companywillstartthesaleofpetrochemicalproducts.

ThroughitswhollyownedsubsidiaryMidiaMarineTerminal,in2009theGroupstarted

operatingitstradingplatformintheBlackSea–themarineterminaloffshorePetromidia

refinery,whichwasconstructedin2008.Theterminalservesasanimportanthubfor

crudetradingandbringssignificantsavingsinlogisticscostsfortherefinerycrude

supply.During2010and2011,theoperatingcostshavebeendecreasedbyanadditional

USD1.64/tonne,reachingacostofUSD2.28/tonnefor2011transactions.

For2012managementbelievesthatthefollowingwillenableittofurtherimprove

itsresults:thecompletionoftheRefineryExpansionProjectcorrelatedwiththe

developmentofitsretail/wholesalenetworkinRomania,TurkeyandUkraine;cost

reductionprocessinitiatedthroughthe2012budgetaryprocesstogetherwithan

enhancedbudgetexecutionprocesstobefollowedduring2012;optimizationofits

AnalysisoftheFinancialResults

EURO 5standardfor96%ofdieselproductionand60%gasolineproduction

86 AnnualReport2011

capitalstructureandoperationalstructure.Themanagementbelievesthatthese

developmentswillresultinanenhancementoftheGroup’sabilitytosupportits

continuingoperations,despitethechallengesofthefinancialcrisis.

Thedecisiontoemergeonanewmarketwastakenintheviewofincreasedprocessed

petroleumproductsfollowingthecapacityenhancementprogramforthePetromidia

Refinery.

Business Environment

AverageBrentpricein2011(USD111.29/bbl)hasincreasedby40%ascomparedto

2010(USD79.5/bbl).Theoveralltrendin2011wasincreasingfromUSD93.7/bblatthe

beginningoftheyeartoUSD106.51/bblasoftheendoftheyear,withahighofUSD

126.64/bblrecordedonApril11th,2011andalowofUSD93.7/bblonJanuary4th,2011.

TheUralsdiscounttoBrenthasbeenonaverageatUSD1.65/bblahigherlevelcompared

withUSD1.34/bblasof2010,withahighestlevelofUSD3.47/bblon28ofApril2011and

aclosinglevelofUSD0.14/bblasoftheendof2011.

Averagegasolinecrackingmarginin2011wasatUSD135.8/mt(asof2010wasatUSD

127.58/mt)reachingitshighofUSD182.26/mtinAugust2011.Averagegasolinecracking

marginin2011was6%higherthanin2010.

Dieselcrackingmarginshaveincreasedin2011,startingfromUSD89.71/mtasof

December31.2010tillUSD123.29/mtasofDecember31,2011.Averagedieselcracking

marginin2011wasUSD115.37/mt,(asof2010wasatUSD80.63/mt),reachingitshighof

USD151.55/mtinAugust2010.Averagedieselcrackingmarginin2011was43%higher

thanin2010.

Although2011averagegasolinecrackingmarginwasalmostUSD21higherthanaverage

dieselcrackingmargin,thetwoquoteshavebeenalternativelyhigher.ThusMarch

andOctobertoDecember2011werethemonthsthatmarkedtheupperlevelofdiesel

comparingtogasolinequotes.

BytheyearendRomanianRONdepreciatedbyalmost4%againstUSDandby1%against

EUR,whileaverageexchangerateRON/USDhasincreasedby4%andRON/EURhas

decreasedby1%.In2011bytheyearendUSDstrengthenedagainstEURby3%.

2011 2010

BrentDated USD/bbl 111.29 79.50

UralMed USD/bbl 109.60 78.16

Brent-UralDifferential USD/bbl 1.65 1.34

PremiumUnleaded50ppmFOBMed USD/t 978 729

DieselULSD50ppmFOBMed USD/t 957 682

RON/USDAverageexchangerate 3.05 3.17

RON/USDClosingexchangerate 3.34 3.20

RON/EUROAverageexchangerate 4.24 4.21

RON/EUROClosingexchangerate 4.32 4.28

USD/EUROClosingrate 1.29 1.34

InflationinRomania 3.13% 6.09%

Corporate Governance & Finance

87

During2011,crudeoilmarketscontinuedtheirvolatileevolutionstillaffectedbythe

LibyandropinoutputandreturningfearsoverIraniandisputewithEUauthorities.

AnunexpectedturnwasthesteadyincreaseofUralsquotations,resultinginpositive

differentialstoBrentDatedduringNovemberandfirsttwodecadesofDecember.

Comparedtolastyear,quotationsregistereda26%increaseforBrentand28%forUrals

withQ4averagearound109.5USD/bblforbothgradesandBrent/Uralsdifferentialunder

0.25USD/bbl.

Ontheproductside,gasolinecracksplummetedfromover130USD/mtinOctober

toaround85USD/mtaverageinNovemberandDecember.Thiswasthedirect

consequenceofacombinationbetweensinkingdemandandoversupply.

Financial Results

Theconsolidatedaccountsarefullydisclosedinthenextchapterofthisreportand

furtheranalyzedinthefollowingsectionsforeachbusinessunit(figuresinUSDmillion).

2011 2010

Netrevenues 6,886.02 5,070.66

Grossprofit 348.00 363.41

Capex 249.59 226.60

TheincreaseofGroupNetrevenuesin2011comparedwith2010washighlyinfluenced

bythehigherpetroleumproductssellingpricesfollowingtheproductsquotations.

Increasedcrackingmarginsleadtohigherrefiningrevenuesin2011against2010.A

secondfactorwhichinfluencedtheenhancedrevenueswasthehigherproductionof

gasolineanddieselproducts(11%forgasolineand12%fordiesel).

2011 Refining Retail Trading Non-Core and Others

Consolidating Adjustments

Consolidated

Netrevenues 756.93 4,615.63 1,447.04 66.18 0.24 6,886.02

Grossprofit (48.06) 321.95 30.97 64.18 (21.03) 348.00

Capex 203.44 16.15 3.22 39.18 (12.40) 249.59

2010 Refining Retail Trading Non-Core and Others

Consolidating Adjustments

Consolidated

Netrevenues 572.54 3,488.49 900.34 109.30 – 5,070.66

Grossprofit 7.74 299.44 21.42 57.32 (22.52) 363.41

Capex 184.41 19.77 0.47 27.41 (5.47) 226.59

88 AnnualReport2011

Analysis Of Operations

Refining & Petrochemicals

Petromidia Refining 2011 2010

Feedstockprocessed Kt 3,896 3,507

Gasolineproduced Kt 1,116 970

Diesel&jetfuelproduced Kt 1,474 1,308

Motorfuelssales–domestic Kt 1,362 1,283

Motorfuelssales–export Kt 1,225 1,060

Export % 47% 45%

Domestic % 53% 54%

Grosscashrefinerymargin USD/bbl 4.2 4.75

Theincreaseof46%ingrossrevenuescomparedwiththesameperiodlastyearismainly

theresultofhigherinternationalquotationsforpetroleumproductsandhighersalesof

products,mainlyfuels.

InQ42011therefiningaveragemonthlythroughputwashigherby18.4%thaninQ4

2010,whentheactivitywasaffectedbytheplannedshutdown(startingwith20thof

September2010therefinerywasshutdownfor43daysforgeneralturnaround).Forthe

year2011therefiningaveragemonthlythroughputwashigherby11%comparedby2010.

In2011therefiningcapacityutilizationratewas80.2%by3%higherthanin2010when

therefiningcapacityutilizationwas77.56%andtherefinerywasshutdownfor43days

forgeneralturnaround.

RegardingVegarefinery,inQ42011totalfeedstockwashigherby18%thanthesame

periodin2010andhigherby9%in2011comparedto2010.Thegoodresultsaredueto

maximizeproductionofvaluableproducts:theproductionofn-hexaneincreasedby

47%,whitespiritproductionincreasedby87%andtheproductionofbitumenincreased

by24%inthelastquarterof2011comparedto2010.

In2011theproductionofn-hexanewashigherby47%,whitespiritproductionincreased

by129%andtheproductionofbitumenwashigherby45%.Year2011wastheyearwith

thelowesttechnologicalconsumptioninthelastsevenyears.

RompetrolRafinarecontinuedtobeanimportantcontributortoRomania’sfiscalbudget

withover1.2billionUSDin2011.

RompetrolRafinarestartedthelastphaseofitscapacityincreaseprogramforthe

PetromidiaRefinery,from3.8milliontons,toover5milliontonsofprocessedraw

materials.

Therefinery’scapacityincreaseinvestmentprogramwillbefinalizedatthebeginning

ofQ22012,andwillallowtheconsolidationanddevelopmentofRompetrol’spresence

inCentralandWesternEurope,inRomania,Bulgaria,RepublicofMoldova,Ukraineand

Georgia,wherewehaveRompetrolgas-stations,aswellasincountriessuchasTurkey,

SerbiaorGreece.

1.2billionUSDcontributiontoRomania’sfiscalbudget

Corporate Governance & Finance

89

Petrochemicals 2011 2010

Propyleneprocessed Kt 119 107

Ethyleneprocessed Kt 103 72

Soldfromownproduction Kt 217 175

Soldfromtrading Kt 12 20

Totalsold Kt 229 195

Export percent 61% 55%

Domestic percent 39% 45%

RompetrolPetrochemicalsgrossrevenuesreached355millionUSDin2011,by34%

highercomparedwiththesameperiodlastyear.Theincreaseingrossrevenuesisthe

resultofhigherinternationalquotationsforpetrochemicalproducts,aswellashigher

quantitiessold.

In2011versus2010,thecompany’sfinancialresultswerenegativelyinfluencedbylower

margins,mainlyduetounfavorablemarketconditions,followingtheconflictsinLibya,

thereforeEBITDAreached0.9millionUSD,lowercompared2010.

Thenetresultofthecompanywasnegativelyinfluencedbyanadditionalimpairment

provisionrecordedinDecember2011inamountof33.2millionUSD.

Theincreaseinthequantityofrawmaterialsprocessedin2011comparedwiththesame

periodlastyearistheresultofHDPEunitrestart,attheendof2010.HDPEunitrestartin

2010influencedthelevelofsales,leadingtoanincreaseby24%in2011againstthesame

periodlastyear.

In2011RompetrolPetrochemicalsimprovedtheaveragequalityofitsproducts,thus

theweightofhighqualityrated,polymersproductsreached98.1%comparedwithan

averageof96.9%inthe2010.

Inordertosupportthepetrochemicalactivities,thecompanyhasstartedthelastphase

ofmodernizationofthehigh-densitypolyethyleneinstallation,inviewoftheproduct

rangeexpansions,towhichfournewkindsofitemswereadded(largecontainers–up

to200l,thinfilm,pipegradePE100).TheprojectwillbefinalizedinApril2012when

technologicaltestsarescheduled.

RompetrolPetrochemicalsisthesolepolypropyleneproducerinRomania;in2010and

2011thecompanywasalsothesoleproducerofpolyethylene,giventheeconomic

circumstancesonthemarket,thusconstantlyincreasingitsmarketshare.Itsdynamic

developmentstrategyhassecuredthecompanyacompetitivepositiononthedomestic

andregionalmarkets–intheBalkansRegion.

TradingTheBusinessUnitTradinghasbeenstrengtheningitsroleofthesupplychainoptimizer

withintheGroup,continuingtoensureoptimumfunctioningconditionsforPetromidia

refinerybymovinganimportantpartoftheproductvolumesthatcannotbeabsorbed

onRomanianmarketorbyNear-AbroadsubsidiariestoNon-Groupdestinations.A15%

increaseinoveralloperatedtradingvolume(crude&productscombined)wasobtained

during2011comparedto2010.Demurragecostswerebroughttoaminimuminthelast

3years(lessthan1milUSDin2011comparedto2.8milUSDin2008).

Duetotheevolutionoffreightmarketleadingtoverylowlevelscomparedto2008,

managementofByronShippingLtdconsideredin2009endingtimechartercontracts

earlierandfocussingonspotmarket.Astheresult,Byroncarriedon2010onlyontime

355millionUSDgrossrevenues

90 AnnualReport2011

chartercontract,decreasingsignificantlytheshippingrevenuescomparedwith2009.

ThisalsoleadedtoasignificantlyreductionoflossesinByroncomparedwith2009,due

tomovementfromtimechartertospotvesselsbenefitingfromlowerfreightcosts.

MidiaMarineTerminalthroughtheCrudeOilTankFarminsuredsinceopeninginJanuary

2009costreductionsinrelationtooilsupplyofUSD6/tonne,byeliminatingthethirdparty

handling/storage/transfercostsandcommercial/technologicallosses.During2011,the

off-shoreoperatingcostshavebeendecreasedbyanadditional6%comparedwith2010.

Despitetheunfavourableeconomicenvironment,RompetrolUkrainemanagedto

increaseitsvolumessoldby112%during2011,achievinghighesthistoricalmonthly

volumeofsalesduringJuly2011.Ithasmanagedtoconsolidateits4thplaceasrankin

topUkrainianmarketRON95gasoline.

RetailDespiteprolongednegativeeffectofthefinancialcrisis,theRetailBusinessUnit

managedtokeepvolumesat2010level,slightlyabove,reachingatotalof4milliontons

ofproductssold.Mainhighlightsonkeyretailmarkets:

Romania:

— Gasoilandgasolinevolumessoldwere6%abovepreviousyear,meaningalsoagain

inmarketshareof0.8%,reachingat25.1%,intheconditionsofastablefuelmarket;

— EBITDA19%higherthanpreviousyear,reaching36.4mUSD;

— Significantimprovementofcreditindicatorsevolution,receivabledaysdecreasing

from29.2daysin2010to22.4daysinDecember2011.

France:

— NewmotorwaystationwasopenednearPamproux,,integratingmodernprinciples

ofdurabledevelopmentandenergeticefficiency,withanefficientmanagement

ofenergy,waterconsumptionandwastemanagement;

— ThePalombierstationwasawardedthe“BriocheDorée”awardforthequalityof

services,havingbeenincompetitionwith“bignames”likeTotal,Sodexho,Autogrill;

— Generaloil&gasdemandenvironmentwasmarkedbyasignificantdropinheating

oildemandduetoanexceptionallywarmyearinthesouthofFrance(-21%vs.2010).

Bulgaria:

— 5newstationswereopenedduring2011Volumesoldduring2011increasedby14%

comparedto2010sales,drivenbothbyretailandwholesalesegments,reachinga

9%marketshareinthewholesalesegment;

Moldova:

— FusionwithMoldintergazhasenabledRompetrolMoldovatopenetratetheLPG

marketinMoldova,acquiring4stationswhicharesellingexclusivelyLPG,located

mainlyinthenorthofthecountry;

— 12newgasstationsopenin2011,aspartoftheoverallgroupstrategyofnetwork

developmentinMoldova,whichhasbegunin2010;

Industrial Services and Other ActivitiesAllactivitiesnotdirectlyrelatedtotradingincrudeandoilproducts,refining,andsalesof

oilproductsaregroupedtogetherinIndustrialServices.

Duringfirstsemester2011,RompetrolLogisticsfinalizeditsrestructuringplanand

successfullyconcludedtheexternalizationofsecondarytransportationsegment.

EcomastersustaineditseffortsputintoGroup’senvironmentalprojects,demonstrating

thehighimportancegiventoecologicalfriendlysolutionstotheproductionand

distributionofoilproducts.DepositedquantityatEcoParkEcomasterreached9560tons.

4milliontonsofproductssold

Corporate Governance & Finance

91

Rominserv,theGroup’sengineeringcompany,hasincreaseditstechnicalcapabilities,

beingabletosuccessfullycompletecomplexprojectsatthehighestqualitystandards

andontime.Rominservisthegeneralcontractorforallupgradeprojectsintherefinery,

includingtheRefininginvestmentprogramofcapacityboostingandwhiteproducts

yieldsimprovement,tobefinalizedduringfirstsemester2012.

Rominservalsosteadilydecreasedmaintenancecostsin2010–2011despitematerialsand

energycostinflation.

RompetrolWellServicesincreaseditsRomanianactivitiesbyenhancingitscasing

runningservicesandextendingitscustomersportfoliowithadditionalcustomers;

outsideRomaniaactivitieswereextendedbylaunchingnewwellserviceoperationsin

BulgariaandHungary.

Drilling&mudloggingRomanianactivitieswerealsoimprovedbyextendingthe

customerportfolioandnewcapitalinvestmentsfinalization,whiledrillingrevenuesfrom

outsideRomaniaoperationsdroppedconsiderablyduring2011generatedbyLibyan

Branchduetothecivilwar.RompetrolGrouprestartedthedrillingservicesinLibyaatthe

endof2011andbeginningof2012.

RestructuringDuring2011,theGrouphasfurtherdefinedtherestructuringplan.DuringJanuary2011

theGroupdisposeditsinterestinRomiservicesThermS.A..In2011aspartofGroup’s

restructuringplan,RompetrolLogisticsfinalizedtheexternalizationofthesecondary

logisticsegmentafterexternalizationofprimarylogisticin2010fortheRomanianretail

andwholesalecompanies.During2012,theGroupintendstocontinuetherestructuring

oftheindustrialactivitiesandwillassesstheoptionstostreamlineitsstructure.

Financial Instruments And Risk Management

Financialinstrumentsinthebalancesheetincludeinvestments,tradereceivablesand

otherreceivables,cashandcashequivalents,short-termandlong-termdebts,tradeand

otherpayables.Theestimatedfairvaluesoftheseinstrumentsapproximatetheircarrying

amounts.

TheGroup’sactivitiesexposeittoavarietyofrisksincludingtheeffectsof:changesin

theinternationalquotationsforcrudeoilandpetroleumproducts,foreigncurrency

exchangeratesandinterestrates.TheGroup’soverallriskmanagementmainobjective

istominimisethepotentialadverseeffectsonthefinancialperformanceoftheGroup

companies.

Commodity Price RiskTheGroupisaffectedbythevolatilityofcrudeoil,oilproductandrefinerymarginprices.

Itsoperatingactivitiesrequireongoingpurchaseofcrudeoiltobeusedinitsproduction

aswellassuppliestoitsclients.Duetosignificantlyincreasedvolatilityofcrudeoil,the

managementdevelopedahedgepolicywhichwaspresentedtotheGroup’sBoardof

Directorsandwasapprovedinmostsignificantaspectsin2010andinamoreextensive

mannerinFebruary2011.Followingthisapproval,theGroupstartedonJanuary2011the

hedgeofcommoditiesheldbyRompetrolRafinare.Previously,untilJanuary2011,Vector

andDyneffweretheonlytwocompanieshavinginplacecommoditieshedgeprocess.

9,560tonsdepositedquantityatEcoParkEcomaster

92 AnnualReport2011

Accordingtothehedgepolicy,onthecommodityside,theflatpriceriskforpriced

inventoriesaboveacertainthreshold(calledbaseoperatingstock)ishedgedusing

futurecontractstradedonICEExchangeandsomeOTCinstrumentsforthebasisrisks.

Thebaseoperatingstockistheequivalentofpricedstocksthatareheldatanymoment

intimeintheGroup,hencepricefluctuationswillnotaffectthecash-flow.

Tradingactivitiesareseparatedintophysical(purchasefromthirdpartiesotherthan

KMG,andsalestothirdpartiesorIntercompany)andpapertrades(foreconomic

hedgingpurposes).Eachphysicaltransactioniscoveredthrougharelatedfutures

positionaccordingtotheexposureparameterssetbymanagement(i.e.basedon

physicalquantitiessoldorpurchased).TheGroupsellsorbuystheequivalentnumberof

futurecontracts.ThispapertradeisdoneonlytohedgetheriskofthePhysicalTradeand

nottogainfromthetradingoftheseinstruments.Asof2011,thenettradingposition

takingintoconsiderationtherealizedandunrealizedgainsandlossesonderivativesand

thephysicaltradewasanetgainof8.8millionUSD.

Interest Rate RiskInterestratepriceriskistheriskthatthevalueofafinancialinstrumentwillfluctuatedue

tochangesinmarketinterestratesrelativetotheinterestratethatappliestothefinancial

instrument.Interestratecashflowriskistheriskthattheinterestcostwillfluctuateover

time.TheGrouphaslong-termdebtandshort-termdebtthatincurinterestatfixedand

variableinterestratesthatexposestheGrouptobothfairvalueandcashflowrisk.

Foreign Currency Risk ManagementTheGroup'sfunctionalcurrencyisUnitedStatesDollar(“USDollars”)andcrudeoil

importsandasignificantpartofpetroleumproductsarealldenominatedprincipallyin

USDollars,thereforelimitedforeigncurrencyexposurearisesinthiscontext.Inaddition

certainassetsandliabilitiesaredenominatedinforeigncurrencies,whichareretranslated

attheprevailingexchangerateateachbalancesheetdate.Theresultingdifferences

arechargedorcreditedtotheincomestatementbutdonotaffectcashflows.Group

TreasuryisresponsibleforhandlingtheGroupforeigncurrencytransactions.

Capital Risk ManagementTheGroupmanagesitscapitaltoensurethatentitiesintheGroupwillbeableto

continueasagoingconcernwhilemaximizingthereturntostakeholdersthroughthe

optimizationofthedebtandequitybalance.ThecapitalstructureoftheGroupconsists

ofshareholdersloans,bankdebt,cashandcashequivalentsandequityattributableto

equityholdersoftheparent,comprisingissuedcapital,reservesandretainedearnings.

Overview

Tooffsetprolongednegativeimpactofdepresseddownstreammarket,Managementof

theGroupiscommittingthemselvestofurtherreducecosts,completemodernizationof

thePetromidiaRefinery,restructurethebusinessandconcentrateoncorebusiness,close

non-profitablebusinesses.Wewillfundourplansthroughamixofequityanddebt,with

asupportfromourshareholders.

TheaverageheadcountacrossGroupentitiesduring2011was7,530.Weemploy

bestpracticesforattracting,retainingandmotivatingouremployees,whoarethe

principalcontributorstothedevelopmentofourGroup.Wearefullycommittedtoour

responsibilitiesfortheirdevelopmentandforthecommunitiesinwhichweoperate.

8.8millionUSDnetgainofthePhysicalTrade

Corporate Governance & Finance

93

Planning and Performance Management (PPM)

Key 2011 PPM activities:

— Coordinationofthefiveyearsannualbudget,withsignificantshiftofset-upfrom

traditionalincrementalplanningprocesstowardsanactivity-basedone,given

assumptionsofratherprudentoperatingmargins;significantcostsreductionswere

consideredandimplemented

— Groupoperational&financialyearlyresultsimprovementprocess,startedbeginning

of4thquarter,whichleadtoimprovedGroupcostsmanagement

— Increasedsupportonmonitoringtherawmaterials&productsmassbalances,

whichcontributedtosignificantworkingcapitalimprovementbyoptimizedGroup

inventorieslevels.

— What-ifanalysismainlyonrefiningenvironment;makevs.Buydecisionsandmultiple

sensitiviesanalysis(e.g:refiningthroughput,productbasket,feedstockevalutation)

— IncreasedroleinMOPtargetsachievementviasupplychainoptimizationprocess

Main 2012 PPM initiatives for implementation along the year

on both supply chain & controlling areas:

— Rollingforecastprocess,amonthlyrollingplanningprocessforthenexttwelve

months.Itsgoalistobothcreateastructuredroutineofworkingoutsolutionsfor

meetingtheannualbudgettargetsandimproveforecastaccuracyonalargertime

frame,highlyneededincurrenteconomiccrisisperiod.

— Integratedplanningmodel,representingaGroupresultsplanningtoolbeingableto

receiveinputsonkeybusinessdriversfromallacrossthevalue-chainandtodeliver

onalternativebusinessscenariosGroupfinancialresultsforareal-timeassesmentof

besteconomicalsolutionstoundertake.

— ImplementingallmanagementreportingrequirementsinSAPCO(Controlling)

moduleofnewGroupERP-SAP,mainlyonSAPCO-OM(OverheadManagement)and

SAPCO-PA(Profitabiltyanalysis).

— SingleGroupmasterdatabaserepository,tocollectallrelevantbusinesskeydrivers

onbothpastandfutureperiod,ondaily,monthly,annual,timeframes,singleaccess

pointcoveringmostofthequantitativesideofentities&Groupmanagementteams

reports.

— ACorporatereportingdashboard(CORDA)aimingatdailyGroupkeyperformance

driversmonitoringonbothInternet&mobileadaptedplatformsonmainlyfollowing

areas:TRGGroupkeymajordrivers,marketdynamics,riskmanagement,supply/

production/inventories,sales&margins.

— Enhancedmargins&opexanalysisbyactionabledrivers(clientlevelprofitability,costs

drivers),assupportforanymanagementbusinessdecisions.

— Activebudgetcontrolprocedureaimingtooptimizethebudgetexecutionprocess

byensuringaproperapprovalflowforvalidatinganyupdatesonbudgeted

assumptionseitherfromtimingperspectiveorfromanynewassumptions

perspective.

— Furtheroptimizecurrentreportingpackage(GFO,MOP,MOPexecutionreports)on

planning&budgetingexecutionreportsbyincreasedfocusonactionablebusiness

driversanalysistoallowtheoptimumdataandanalysispackage,supportfor

operationaldecisions.

— Optimizedperformancemanagementprocessbytwomeans:a)aligning2012

operational&financialsetofKPIswiththenewfiveyearsbudgetobjectivesforall

eligiblepeople;b)implementingamonthlyroutineprocessofKPIsachivements

revision,toallowforcorrectiveactionsonallpotentialnegativegaps.

— Alignementofrefiningplanningtoolstonewrefineryproductionconfigurationand

productsspecifications

94 AnnualReport2011

Thesefinancialstatementshavebeenpreparedinaccordance

withInternationalFinancialReportingStandards(“IFRS”)effective

asofDecember31,2011,asendorsedbytheEU.

Theconsolidatedfinancialstatementsarepreparedunder

thehistoricalcostconvention.AnexceptionisforRompetrol

RafinareS.AandRompetrolPetrochemicalsS.R.L.whereproperty,

plantandequipmentarestatedatrevaluedamountsbeing

thefairvalueasat31December2003and31December2005

respectivelylessanyaccumulateddepreciationandaccumulated

impairmentloss,withacquisitionssubsequenttotheindicated

revaluationdatesbeingatacquisitiondatehistoriccost.The

financialstatementsoftheGrouparepreparedonagoing

concernbasis.

Thegroup’sconsolidatedfinancialstatementsarepresentedin

UnitedStatesDollar(“USDollar”or“USD”),whichistheGroup’s

functionalcurrency.Theconsolidatedfinancialstatements

comprisethefinancialstatementsoftheparentcompanyandits

subsidiariesasat31December2011.

ControlisconsideredtobeachievedwheretheGroup(either

directlyorindirectly),ownsmorethan50%ofthevotingrightsof

thesharecapitalofanotherenterpriseandisabletogovernthe

financialandoperatingpoliciesofanenterprisesoastoobtain

benefitsfromitsactivities.Non-controllinginterestsrepresentthe

portionoftheprofitorlossandnetassetsthatisnotheldbythe

Groupandarepresentedseparatelyintheconsolidatedincome

statementandwithinequityintheconsolidatedbalancesheet,

separatelyfromtheparentshareholders’equity.

Businesscombinationsareaccountedforusingtheacquisition

method.Thecostofanacquisitionismeasuredastheaggregate

oftheconsiderationtransferred,measuredatacquisitiondate

fairvalueandtheamountofanynon-controllinginterestinthe

acquiree.Foreachbusinesscombination,theacquirermeasures

thenon-controllinginterestintheacquireeeitheratfairvalue

orattheproportionateshareoftheacquiree’sidentifiablenet

assets.Acquisitioncostsincurredareexpensedandincludedin

administrativeexpenses.

Theinterestofnon-controllingshareholdersintheacquiree

isinitiallymeasuredatthenon-controlling’sproportionofthe

netfairvalueoftheassets,liabilitiesandcontingentliabilities

recognised.Businessesacquiredordisposedduringtheyearare

includedintheconsolidatedfinancialstatementsfromthedate

ofacquisitionortodateofdisposal.

TheGroup’sinvestmentsinassociatesareaccountedforusing

theequitymethodofaccounting.Undertheequitymethod,the

investmentinanassociateiscarriedinthebalancesheetatcost

pluspostacquisitionchangesintheGroup’sshareofnetassetsof

theassociate.Afterapplicationoftheequitymethod,theGroup

determineswhetheritisnecessarytorecogniseanadditional

impairmentlossontheGroup’sinvestmentinitsassociates.

Starting2011,Grouphasalsoinvestmentsinjointventurewhich

areaccountedusingtheequitymethod.Allintra-groupbalances,

incomeandexpensesandunrealisedgainsandlossesresulting

fromintra-grouptransactionsareeliminatedinfull.

Goodwillisinitiallymeasuredatcostbeingtheexcessofthe

aggregateoftheconsiderationtransferredandtheamount

recognisedfornon-controllinginterestoverthenetidentifiable

assetsacquiredandliabilitiesassumed.Goodwillistested

forimpairmentannually(asat31December)andwhen

circumstancesindicatethatthecarryingvaluemaybeimpaired.

Property,plantandequipmentarestatedatcost,exceptforthe

RompetrolRafinareS.Awheretheproperty,plantandequipment

arestatedatrevaluedamounts,beingthefairvaluelessany

accumulateddepreciationandaccumulatedimpairmentloss.

Whenassetsaresoldorretired,theircostandaccumulated

depreciationareeliminatedfromtheaccountsandanygain

orlossresultingfromtheirdisposalisincludedintheincome

statement.

Depreciationforproperty,plantandequipmentexceptlandand

constructioninprogressiscomputedusingthestraight-linemethod

overthefollowingestimatedusefullives,between3to60years.

AteachbalancesheetdatetheGroupreviewsthecarrying

amountsofitsproperty,plantandequipmentandintangible

assetstodeterminewhetherthereisanyindicationthatthose

assetshavesufferedimpairment.Ifsuchindicationexists,

therecoverableamountoftheassetisestimatedinorderto

determinetheextentoftheimpairmentloss(ifany).Whereitis

notpossibletoestimatetherecoverableamountofanindividual

asset,theGroupestimatestherecoverableamountofthecash–

generatingunittowhichtheassetbelongs.

Inventories,includingwork-in-processarestatedatthelower

ofcostandnetrealisablevalue.Netrealisablevalueisthe

sellingpriceintheordinarycourseofbusiness,lessthecostsof

completion,marketinganddistribution.Costcomprisesdirect

materialsand,whereapplicable,directlabourcostsandthose

overheadsthathavebeenincurredinbringingtheinventoriesto

theirpresentlocationandcondition.Thefollowingcostformulas

wereusedtodeterminethecostapplicabletodifferenttypesof

inventories:

— theweightedaveragemethodforpurchasedcrudeoiland

petroleumproducts

— thefirst-in-first-out(FIFO)forsuppliesandmaterials.

Summary of Significant Accounting Policies

Corporate Governance & Finance

95

Tradereceivablesarerecognisedinitiallyatfairvalueand

subsequentlymeasuredatamortisedcostusingtheeffective

interestmethod,lessprovisionforimpairment.

Cashincludescashonhand,cashwithbanksandchecksin

courseofbeingcashed.Cashequivalentsareshort-term,highly

liquidinvestmentsthatarereadilyconvertibletoknownamounts

ofcashwithinremainingthreemonthsorlesstomaturityfrom

thedateofacquisitionandthataresubjecttoaninsignificantrisk

ofchangeinvalue.

Revenueisrecognisedtotheextentthatitisprobablethatthe

economicbenefitswillflowtotheGroupandtherevenuecanbe

reliablymeasured.

Salesofgoodsarerecognisedwhendeliveryhastakenplace

andtransferofsignificantrisksandrewardshasbeencompleted.

Revenuecomprisesthefairvalueofthesaleofgoodsand

services,netofvalue-addedtaxandanyexcisedutiesandother

salestaxes,rebatesanddiscounts.

Revenuefromrenderingtransportationservicesandother

servicesisrecognisedwhenservicesarerendered.

Paymentstodefinedcontributionretirementbenefitplansare

chargedasanexpenseastheyfalldue.Paymentsmadetostate

–managedretirementbenefitschemesaredealtwithasdefined

contributionplanswheretheGroup’sobligationsunderthe

schemeareequivalenttothosearisinginadefinedcontribution

retirementbenefitplan.

Incometaxchargeconsistsofcurrentanddeferredtaxes.The

chargeforthecurrenttaxisbasedontheresultsfortheperiod

asadjustedfornon-deductibleandnon-taxableitemsThetax

ratesandtaxlawsusedtocomputetheamountarethosethat

areenactedorsubstantivelyenacted,bythereportingdate,in

thecountrieswheretheGroupoperatesandgeneratestaxable

income.Deferredtaxisprovidedusingtheliabilitymethodon

temporarydifferencesatthereportingdatebetweenthetax

basesofassetsandliabilitiesandtheircarryingamountsfor

financialreportingpurposes.

TheGroupdeterminatestheclassificationofitsfinancialassets

andliabilitiesatinitialrecognition.Financialassetsarerecognised

andderecognisedonatradedatewhereapurchaseorsaleof

aninvestmentisunderacontractwhosetermsrequiredelivery

oftheinvestmentwithinthetimeframeestablishedbythe

marketconcernedandareinitiallymeasuredatcost,including

transactioncosts.

Group’sfinancialassetsincludecashandcashequivalents,

tradeandotherreceivables,unquotedfinancialinstruments,

andderivativefinancialinstruments.Financialliabilities

includefinanceleaseobligations,interest-bearingbankloans

andoverdraftsandtradeandotherpayablesandderivative

financialinstruments.Foreachitemtheaccountingpolicies

onrecognitionandmeasurementaredisclosedinthisnote.

Managementbelievethattheestimatedfairvaluesofthese

instrumentsapproximatetheircarryingamounts.

FinancialassetswithinthescopeofIAS39areclassifiedas

financialassetsatfairvaluethroughprofitorloss,loansand

receivables,heldtomaturityinvestments,available-for-sale

financialassets,orasderivativesdesignatedashedging

instrumentsinaneffectivehedge,asappropriate.Financial

liabilitieswithinthescopeofIAS39areclassifiedasfinancial

liabilitiesatfairvaluethroughprofitandloss,loansand

borrowings,orasderivativesdesignatedashedginginstruments

inaneffectivehedge,asappropriate.

96 AnnualReport2011

Consolidated Statement of Financial PositionTheabbreviatedfinancialinformationisderivedfromtheConsolidatedFinancialStatementsasofandfortheyearended31December2011andshouldbereadinconjunctionwiththeseauditedConsolidatedFinancialStatements.Onthefullconsolidatedfinancialstatementsanunqualifiedauditopinionwasissued.

Abbreviatedfinancialstatements

December 31, 2011 December 31, 2010

Non-current assets

Intangibleassets 60,798,370 58,280,764

Goodwill 55,241,231 55,241,231

Property,plantandequipment 1,258,589,025 1,228,811,319

Availableforsaleinvestments 949,204 1,489,055

Investmentsinassociates 19,919,984 20,154,955

Interestinjointventure 19,566,950 –

Deferredtaxasset – 412,188

Long-termreceivable 14,259,033 16,438,263

Total non-current assets 1,429,323,797 1,380,827,775Current assets

Inventories,net 546,981,447 633,007,698

Tradeandotherreceivables 670,611,954 614,077,330

DerivativefinancialInstruments 5,690,146 –

Cashandcashequivalents 198,617,647 220,924,420

Total current assets 1,421,901,194 1,468,009,448

Total Assets 2,851,224,991 2,848,837,223

Equity and liabilitiesCapital and reserves

Issuedcapital 120,338 133,712

Sharepremium 2,631,512 2,631,512

Revaluationreserve 20,625,249 20,625,249

Additionalpaid-incapital 1,100,000,000 1,100,000,000

Effectoftransferswithequityholders 115,029,358 115,029,358

Retainedearnings (637,706,175) (487,528,262)

Currentyearresult (122,506,647) (151,120,945)

Translationreserve 1,415,028 (1,826,333)

Equity attributable to equity holders of the parent 479,608,663 597,944,291Minorityinterest (163,653,769) (47,844,946)

Total equity 315,954,894 550,099,345Non-current liabilities

Long-termborrowingsfromshareholders 896,000,000 896,000,000

Long-termborrowingsfrombanks 2,823,265 5,739,039

Netobligationsunderfinancelease 6,279,290 12,045,744

Deferredtaxliabilities 28,297,076 32,248,488

Provisions 31,038,241 38,828,654

Othernon-currentliabilities 2,034,794 7,846,356

Total non-current liabilities 966,472,666 992,708,281Current liabilities

Tradeandotherpayables 1,073,528,229 926,749,364

DerivativefinancialInstruments 1,206,201 5,183,543

Netobligationsunderfinancelease 3,232,603 7,563,095

Short-termborrowingsbanks 474,245,900 366,533,595

Short-termborrowingsshareholders 13,304,927 –

Provisions–currentportion 3,279,571 –

Total current liabilities 1,568,797,431 1,306,029,597

Total liabilities 2,535,270,097 2,298,737,878

Total Equity and Liabilities 2,851,224,991 2,848,837,223

Corporate Governance & Finance

97

Consolidated Income StatementTheabbreviatedfinancialinformationisderivedfromtheConsolidatedFinancialStatementsasofandfortheyearended31December2011andshouldbereadinconjunctionwiththeseauditedConsolidatedFinancialStatements.Onthefullconsolidatedfinancialstatementsanunqualifiedauditopinionwasissued.

Consolidated Statement of Comprehensive IncomeTheabbreviatedfinancialinformationisderivedfromtheConsolidatedFinancialStatementsasofandfortheyearended31December2011andshouldbereadinconjunctionwiththeseauditedConsolidatedFinancialStatements.Onthefullconsolidatedfinancialstatementsanunqualifiedauditopinionwasissued.

2011 2010

Continuing operationsRevenue 6,886,017,721 5,070,656,915

Costofsales (6,538,021,618) (4,707,251,055)

Gross profit 347,996,103 363,405,860

Sellinganddistributionexpenses (284,355,211) (273,290,874)

Generalandadministrativeexpenses (153,032,837) (159,783,303)

Otheroperatingexpenses/revenues,net (94,928,136) (31,482,778)

Operating profit/(loss) (184,320,081) (101,151,095)

Financecost (60,727,387) (62,920,106)

Financeincome 7,444,394 5,915,775

Netforeignexchangelosses 4,017,091 (10,173,427)

Shareofprofitsofassociates 669,103 553,824

Shareofprofit/(losses)ofjointventures (2,587,276) –

Loss before income tax (235,504,156) (167,775,029)

Incometax (2,144,681) (10,346,219)Loss (237,648,837) (178,121,248)

Attributableto:

Equityholdersoftheparent (122,506,647) (151,120,945)

Non-controllinginterests (115,142,190) (27,000,303)

2011 2010

Net loss for the year (237,648,837) (178,121,248)

Other comprehensive income

Exchangedifferencesontranslationofforeignoperations 3,227,987 (902,685)

Actuarialgains/(losses)relatedtodefinedbenefitplan 1,560,072 (2,448,866)

Total comprehensive income/(loss) for the year, net of tax (232,860,778) (181,472,799)Attributableto:

Equityholdersoftheparent (117,718,588) (154,472,496)

Non-controllinginterests (115,142,190) (27,000,303)

Consolidated Statement of Cash FlowTheabbreviatedfinancialinformationisderivedfromtheConsolidatedFinancialStatementsasofandfortheyearended31December2011andshouldbereadinconjunctionwiththeseauditedConsolidatedFinancialStatements.Onthefullconsolidatedfinancialstatementsanunqualifiedauditopinionwasissued.

2011 2010

Loss before income tax (235,504,156) (167,775,029)

Adjustmentsfor:

Depreciationandamortisation 137,917,092 130,977,627

Reservesforreceivablesandinventoriesandwrite-offs 40,450,969 12,394,016

Impairmentforpropertyplantandequipmentandintangibles 61,707,196 7,211,722

Otherprovisions (1,467,798) 11,740,763

Retirementbenefitchargedtoequity (610,241) –

Latepaymentinterest 3,383,986 11,590,236

Unwindingofdiscountonhybridinstrument – 1,084,943

Interestexpense,commissionandbankchargesandcollectiondiscounts 44,038,475 36,625,531

Interestexpenseshareholders 13,304,926 13,619,396

Financeincome (7,444,394) (5,915,775)

Netlossfromnon-currentassetsdisposalsandwrite-off (793,935) 517,671

Netresultfromsaleofinvestments (80,357) 423,382

Unrealisedlosses/(gains)fromderivativesonpetroleumproducts (2,546,174) 4,510,298

Realizedlosses/(gains)fromderivativesonpetroleumproducts 63,768,720 5,314,460

Shareofprofitsofassociates (669,103) (553,824)

Shareoflossesofjointventure 2,587,276 –

NetresultfromliquidationofGroupinvestments – 71,693

Unrealisedforeignexchange(gain)/lossonmonetaryitems 11,898,024 9,461,589

Operating profit before working capital changes 129,940,506 71,298,699

Networkingcapitalchangesin:

Receivablesandprepayments (72,664,535) (7,001,660)

Inventories 63,278,742 (144,363,352)

Tradeandotherpayables 118,252,526 89,687,402

Change in working capital 108,866,733 (61,677,610)

Incometaxpaid (6,360,659) (4,580,619)

Cashpaymentsforderivatives,net (71,201,395) (5,314,460)

Net cash provided by/(used in) operating activities 161,245,185 (273,990)

Cash flows from investing activitiesPurchaseofproperty,plantandequipment (227,077,317) (211,973,005)

Purchaseofintangibleassets (22,514,633) (14,609,004)

Changesinpayablesforcapitalexpenditures 28,128,184 39,818,676

Dividendsreceivedfromassociatedcompanies 75,477 279,269

Proceedsfromsaleofproperty,plantandequipment 1,165,955 1,961,762

Cashofsubsidiariesbeingdisposedoff (177,654) (240,707)

Proceedsfromliquidation/salesofsubsidiaries/investments 1,200,000 62,340

Cashofsubsidiariesbeingliquidated – (275,657)

Considerationpaidforacquisitionofminorityinterests (550,000) (126,436,203)

ConsiderationpaidforJointVenture (14,833,270)

Net cash used in investing activities (234,583,258) (311,412,529)

Cash flows from investing activitiesHybridpartialpayment – (71,024,745)

Couponpaidonhybridinstrument – (22,498,405)

Interestandbankchargespaid (51,105,824) (54,848,055)

Interestandotherfinancialincome 7,444,394 5,915,775

Drawingsoflongtermborrowingsfromshareholders – 300,000,000

Repaymentlongtermloansfrombanks (2,915,774) (4,614,532)

Movementinshort-termborrowings 107,712,305 122,209,280

Repaymentsoffinanceleases (10,103,801) (10,029,770)

Net cash from financing activities 51,031,300 265,109,548

(Decrease)/Increase in cash and cash equivalents (22,306,773) (46,576,971)Cashandcashequivalentsatthebeginningofperiod 220,924,420 267,501,391

Cash and cash equivalents at the end of the period 198,617,647 220,924,420

99

Consolidated Statement of Changes in EquityTheabbreviatedfinancialinformationisderivedfromtheConsolidatedFinancialStatementsasofandfortheyearended31December2011andshouldbereadinconjunctionwiththeseauditedConsolidatedFinancialStatements.Onthefullconsolidatedfinancialstatementsanunqualifiedauditopinionwasissued.

Issued capital

Sharepremium

Retainedearnings

Revaluationreserves

Additional paid-in capital

Effect of transfers with equity

holders

Translation reserve

Non-controlling

interests

Totalequity

December 31, 2010 133,712 2,631,512 (638,649,207) 20,625,249 1,100,000,000 115,029,358 (1,826,333) (47,844,946) 550,099,345

Netlossfor2011 – – (122,506,647) – – – – (115,142,190) (237,648,837)

Othercomprehensiveincome/loss

(13,374) – 1,560,072 – – – 3,241,361 – 4,788,059

Total comprehensive income

(13,374) – (120,946,575) – – – 3,241,361 (115,142,190) (232,860,778)

Dividendspayabletonon-controllinginterest

– – – – – – – (452,147) (452,147)

ChangesinGroupstructure–acquisitionofRompetrolGeorgianon-controllinginterests(Note5)

– – (617,040) – – – – 67,040 (550,000)

ChangesinGroupstructure–saleofRominservicesTherm

– – – – – – – (547,059) (547,059)

Otherchanges – – – – – – – 265,533 265,533

December 31, 2011 120,338 2,631,512 (760,212,822) 20,625,249 1,100,000,000 115,029,358 1,415,028 (163,653,769) 315,954,894

100 AnnualReport2011

IntroductionWehaveauditedwhethertheaccompanyingabbreviatedfinancialstatementsof

TheRompetrolGroupN.V.,fortheyearDecember31,2011havebeenderivedconsistently

fromtheauditedfinancialstatementsofTheRompetrolGroupN.V.,fortheyear31

December2011.Intheauditor'sreportdatedMarch1,2012issuedbyErnst&Young

AccountantsLLP,Amsterdam,TheNetherlands(signedbyJ.J.Vernooij),anunqualified

opiniononthesefinancialstatementswasexpressed.Managementisresponsibleforthe

preparationoftheabbreviatedfinancialstatementsinaccordancewiththeaccounting

policiesasappliedintheconsolidatedfinancialstatementsofTheRompetrolGroupN.V.

Ourresponsibilityistoexpressanopinionontheseabbreviatedfinancialstatements.

ScopeWeconductedourauditinaccordancewithInternationalAuditingStandards.

Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonable

assurancethattheabbreviatedfinancialstatementshavebeenderivedconsistently

fromtheconsolidatedfinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriate

toprovideabasisforourauditopinion.

OpinionInouropinion,theseabbreviatedfinancialstatementshavebeenderivedconsistently,

inallmaterialrespects,fromtheconsolidatedfinancialstatementsofTheRompetrol

GroupN.V.fortheyearendedDecember31,2011.

Emphasis of matterForabetterunderstandingoftheGroup'sfinancialpositionandresultsandthescope

oftheaudit,weemphasizethattheabbreviatedfinancialstatementsshouldberead

inconjunctionwiththefullfinancialstatements,fromwhichtheabbreviatedfinancial

statementswerederivedandtheunqualifiedauditor'sreportissuedbyErnst&Young

AccountantsLLP,Amsterdam,TheNetherlands(datedMarch1,2012).Ouropinionisnot

qualifiedinrespectofthismatter.

Ernst & Young Assurance Services S.R.L.

Bucharest,Romania

May18,2012

Auditor’sreport

Corporate Governance & Finance

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www.rompetrol .com