Download - Raport integrat (inclusiv CSR) al KMG International (fostul Grup Rompetrol) 2012

CEO Letter Milestones for 2012Refining and PetrochemicalsTradingVector EnergyByron ShippingMidia Marine TerminalRompetrol UkraineRetailRompetrol DownstreamDyneff France and SpainRompetrol BulgariaRompetrol MoldovaRompetrol GeorgiaRompetrol GasUpstream and Industrial ServicesRompetrol Well Services Rompetrol Exploration and ProductionDrilling and WorkoverRompetrol Quality Control RominservRompetrol Iaifo Valves PalplastEcomasterMarketingCorporate Social ResponsibilityCorporate GovernanceFinanceAudit Letter

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0708091011

4 Rompetrol 2012 Annual R eport

2012 was full of challenges for TheRompetrol Group that turned intoimportant strategic achievements. Wesuccessfully completed the amplemodernization program within thePetromidia Refinery, which has becomeone of the most technologicallyadvanced in Central and EasternEurope, with the Nelson complexityindex of 10,5, and in accordance withthe highest environmentalrequirements, safety and mechanicalavailability. The annual processingcapacity of the refinery increased from3.8 million to 5 million tons, and theoutput of white products reached therecord level of 85.4%. Taking into account that we provide 43percent of the refining capability ofRomania, the company's objective ofbecoming profitable is soon tangible. After the completion of themodernization program of Petromidia,the long-term strategy for TheRompetrol Group has been set in orderto expand the Group’s presence bothin the Black Sea area and in Europe,with a new top management team. In 2012, The Rompetrol Group was thelargest exporter of petroleumproducts in Romania, with a value ofsold products of USD 1.7 billion.Another notable achievement is thefirst well of KazMunayGas through TheRompetrol Group outside Kazakhstan’s

borders. Kaz1, from the perimeterFocșani marked our presence inEuropean territory. The Rompetrol retail network, spreadthroughout 12 countries with over1.100 fuel distribution points,increased in 2012 in Moldova andGeorgia, with expansion on newmarkets such as Ukraine, Turkey andother countries from the Middle East. In 2012 we remained involved in the lifeof Romanian local communities throughthe social responsibility program“Together for each and everyone” thatreached the fifth year. We can proudlysay that, from 2009 through 2012, onlythrough this national program, ourprojects have helped to improve thelives of over 250,000 under-privilegedpersons, beneficiaries of over 70 projectssupported with USD 1 million by TheRompetrol Group. Realignment of The Rompetrol Group’sactivity continued this year, as well, itsefficiency being rigorously dictated bythe global economic crisis. In 2012, wemanaged to further reduce operationalcosts by about USD 150 million, and thathelped to improve our EBITDA from 46,1to 129 million USD. Despite the difficult times we are facing,with European refineries being on salefor 1 EURO, with the support of ourshareholder KazMunayGas, we managednot only to keep the company, but also

to continue the implementation of anextended investment program. Wemaintained the jobs of over 7,000employees and generated business forour partners (suppliers, serviceproviders). As the second largestcontributor to the state budget, we havefulfilled all payment obligations,contributing with over USD 1.2 millionUSD to the Romanian state budget, atrusted partner of KazMunayGas.Rompetrol made an important step in2012 towards becoming an energy hubin the Black Sea area. By strengtheningthe presence of KazMunayGas inRomania, new expansion plans forproviding energy stability of the entireregion are on the Group’s businessagenda.I am convinced that The RompetrolGroup will continue to grow and in thenear future I will be able to announcethat the synergy with KazMunayGas ,our main shareholder, is completed. Forthe next years, the Rompetrol team has areachable target: a consolidated holisticapproach towards the development ofthe Group in the Black Sea region, anobjective easy to meet for innovativeand ambitious people like all ouremployees from 12 countries.

Zhanat Tussupbekov, CEO of The Rompetrol Group

CEO letter01

Milestones for 201202


January

Royal Bank of Scotland (RBS) andRompetrol Group concluded amulti currency revolving creditagreement totaling 55 millionEuros, with a 1 year maturity.

March

n Rominserv partnered with RajaConstanța – the largest regionalsupplier of water and wastewatertreatment. The contract value is 4million USD.n Through it's Upstream division,The Rompetrol Groupcompleted the drilling of twoexploration wells in the SatuMare area (Madaras and Moftinulocalities), with production testsindicating the presence ofhydrocarbon deposits.

April

The Group launches the forth edi-tion of it's corporate social respon-sibility program ”Together foreach and every one” for the development of local communities.

May

n Zhanat Tussupbekov was ap-pointed general manager of TheRompetrol Group.n Rompetrol Moldova, member ofThe Rompetrol Group, openedtwo filling stations, the companyoperating a total of 46 stationsnationwide.n Rompetrol Well Services beganwork on the Muglad Basin insouthern Sudan.n Rompetrol Georgia openedthree new filling stations, reaching a national network of 68fuel distribution points.

June

The Midia Marine Terminalreached a level of 10 million tonsof discharged oil.

July

The Rompetrol Group started thedrilling of the Kaz 1 explorationwell in the Focșani perimeter – thefirst KazMunayGas well beyond it'sborders.

September

The Group has successfully com-pleted the modernization programfor Petromidia – increasing theprocessing capacity from 3.5 to 5million tons of raw material andswitching to exclusive productionof Euro 5 fuel, following invest-ments of over 380 million USD.

Milestones for 201202

Refining and petrochemicals

03


The Refining and Petrochemicalbusiness unit is made up of 3production entities – The PetromidiaNăvodari and Vega Ploiești refineriesand Rompetrol Petrochemicals.The largest refining unit in Romania andthe only one located at the Black Sea,Petromidia represents approximately40% of Romania's total refining capacity.

Vega has evolved from a classic refinery(started in 1905, with an annualcapacity of 500.000 tons of rawmaterial) to a manufacturer of specialproducts and elements (ecologicalsolvents, specially design bitumen,ecological fuels, for heating and otherdedicated products). Through synergywith the Petromidia Refinery, the rawmaterial provided by the Black Searefinery are used to obtain specialproducts with added value.

Rompetrol Petrochemicals is the soleproducer of petrochemical products inthe country, with an annual capacity ofover 200.000 tons of polymers(polypropylene, low and high densitypolyethylene).

The business unit houses twooperational entities:• Rompetrol Refining (PetromidiaNăvodari refinery, Vega Ploiești refinery)• Rompetrol Petrochemicals (PetromidiaNăvodari refinery)

RompeTRol Refining – peTRomidiaRefineRyThe year 2012 was historic for the BlackSea refinery and very important for it'sevolution. The Rompetrol Group,together with it's sole shareholder –KazMunayGas, the national gas and oilcompany of Kazakhstan, successfullyfinalized the program for modernizationand increase in refining capacity of thePetromida refinery.

The new capacity of 5 millions tons ofraw materials per year gives the Groupthe premises necessary for theconsolidation and development of retailand trading activities in the Black Searegion, both in countries that have aRompetrol retail chain (Romania,Bulgaria, Moldova, Ukraine andGeorgia), and other countries likeTurkey, Serbia or Greece.

In the context of an economic difficultyfor Europe and for the refining sectoras a whole (refineries closing/inconservation), the main objectives forthe company in this period, vital forongoing refining activities, wereincreasing processing capacity,reaching the nominal refining capacity,aligning the product line with marketdemand the optimization andautomation of production flow andimproving energy efficiency. All this,together with other auxiliary projects

of the Group, transformed thePetromidia refinery into an example ofperformance for units in Central andEastern Europe.

On the grounds of a significant drop inrefining margins – from 5.85 USD/bblin 2008 to 0,56 USD/bbl in 2011, 20refineries in the European Union havebeen forced to shut down from 2009 to2012. The refining sector is up against acapacity surplus that determinesinefficient and small capacity units toeither completely or partially halt theiroperations or become fuel storageterminals.

Started in 2006, the program formodernization and increase in refiningcapacity for the Petromidia refineryaimed at completing nine majorprojects: building five new facilities(mild hydrocracker facility, hydrogenproducing facility, sulfur recoveryfacility, nitrogen producing facility anda new flare system) as well as themodernization/expansion of fourother existing facilities (the Flue-gasdesulphurization facility, thetransformation of the distilled vacuumdesulphurization facility into a dieseloil desulphurization plant, the catalyticcracking facility and the gasdesulphurization and sulfur recoveryfacility).


03


Besides the capacity increase program,the Group developed other projectsnecessary for it's upkeep – building aterminal out at the Black Sea for oilsupply, the tripling of oil productstransit capacity through Berth 9 of theMidia port, the rehabilitation of the oiland finished products reservoir lot andconstruction of the LPG import-exportterminal. Also, the company hasallotted over 50 mil. USD forenvironmental projects, aligning itselfconstantly with European standards forfuels and the latest environmentalprotection laws.Rompetrol Refining completed the last

stage of the program to increase theprocessing capacity of the Petromidiarefinery in the third trimester of 2012.

The main projects finalized in 2012 are:

tHe MIld HydRo cRAckeR (MHc)With a capacity of 220m3/hour (1.7million tons per year), the new MildHydro Cracker facility ensures a growthin processing capacity and dieseloutput for the refinery, but alsoprovides a product low in sulphur forthe catalytic cracking facility.This allows for full processing of oil witha high amount of sulphur and

production of exclusively EURO 5 fuels.The facility started it's operations in thesecond half of 2012, and performancetesting was successfully completed inNovember 2012. At the present date,the facility is operating under normalconditions.

HydRogen PRoductIon PlAnt(HPP)Another important project for thegrowth of the refinery's capacity wasbuilding another Hydrogen ProductionPlant, that would provide the necessaryhydrogen for extracting sulfur from theoil and aligning production to Euro 5standards. The plant has an installedcapacity of 40.000 m3/hour and willproduce hydrogen at a minimum purityof 99.98% at a minimum pressure of 86bar.The facility started operating at thestart of 2012, with performance testingcompleted in November of 2012. At thepresent date, the facility is operatingunder normal conditions.

SulPHuR RecoveRy unIt (SRu)In order to sustain the new capacity ofthe refinery, a new Sulphur RecoveryUnit had to be built, together with a TailGas Treatment plant (TGT).With a capacity of over 220 tons ofsulphur per day, the plant is designedto collect the hydrogen sulfide


Indicators Before Package After Package

Capacity mil tons/year 3.8 5

Nelson Index* 8.3 10.5

Jet & Diesel %wt 2.6/38 5.5/45

Diesel mil tons/year 1.5 2.5

Gasoline mil tons/year 1.3 1.4

Jet mil tons/year 0.15 0.3

EII (Solomon)** % 120 84

*The Nelson Index is a frame of reference used to assign values to oil refineries on the basis of their level ofcomplexity.** Energy Intensity Index - It is a benchmark of performance for the process - energy used per unit produc-tion divided by a 'standard' energy per unit.

03


containing gasses from all the refinery'sfacilities, including the recentlyincorporated ones (MHC), as well assupplement them because of thehigher degree of desulfurization (therefinery only produces EURO 5products)The facility (SRU) started operating inOctober 2012 and TGT in November ofthe same year.

ReconfIguRIng tHe dIStIlled vAcuuM HydRo-fInIng fAcIlIty toA dIeSel HydRo-fInIng fAcIlItyPart of the program to increase theprocessing capacity of the refinery to 5million tons of raw materials, theproject aimed at transforming theDistilled Vacuum Hydro-fining facilityinto a Diesel Hydro-fining facilitycapable of processing raw materials inquality conditions (component of EURO5 diesel) and providing a flow of180m3/h. Finalizing this investmentallows for an increase in diesel outputbecause of the increase in processingcapacity of the refinery.

MAJoR PeRfoRMAnceS In 2012• Over 118 million USD invested forincreasing efficiency, environmentprotection and processing capacity inthe Petromidia and Vega refineries;• Steady improvement of financialindicators: a 58, 35 million USD EBITDAindicator was reached in 2012;

• An output of 85.4% of white productper processed quantity, the highestlevel achieved by Petromidia;• 39,6% output of Diesel, the highestlevel achieved by Petromidia followingthe finalization of the 2010 investmentpackage;

• The Nelson index, measuring the degreeof complexity of refineries, grew from 8.3to 10.5, following the finalized investmentpackage worth 380 million USD;• Launching a new product, EFIX S,starting October 2012;• Production of bio-fuels (diesel and


03evolution - Raw materials processed (million tons/year)

Structure of raw material processed monthly, 2012 (thousand tons)


gasoline) using bio-components inconformity with legal requirements;• A 1.1% reduction in energyconsumption per ton of raw materialsprocessed compared to 2011, owing toconstant concern with improvingenergy efficiency and general output;• Aligning with the European Union'senvironmental laws regarding gasemissions and storage of toxic waste.

RePReSentAtIve PRoductS AndPRoductIon ReSultSThe company increased the quantity ofprocessed raw materials by 4% in 2012,from 3,896 million tons to 4,047 tons.

Other commodities: Methane gas,methanol, biocomponents, MTBEOther finished products: Reactive Oil,Crude Oil, Gasses, Polypropylene ,Coke,Sulphur.

In 2012, the company increased theoutput of finished product by 3% andrecorded a 5% increase in sales.

At the same time, the quantity of autofuels sold grew by over 5%.

coMModIty MARketTrading activity in 2012 aimed atcontinuing the optimization andstreamlining program for acquiring rawmaterials and selling finished products.The volume of raw materials grew by7% compared to 2011, and finishedproduct sales increased by 5%.Crude purchases were handledexclusively by Group's trading companyVector Energy, that took over thelargest part of gasoline and dieselvolumes traded on the foreign market.The quality of Rompetrol's soldproducts respects the quality andenvironmental standards set by theEuropean Union and helped consolidatethe company's presence and position onthe established oil markets. Starting withthe 1st of January, gasoline and dieseltraded contained 5% bio-fuel, pursuantto EU Directive 2003/30. In 2012, about 61% of the total finishedproduct sold were directed at theinternal market. The internal marketabsorbed more than half (52%) of thetotal volume of automobile fuels tradedthis year.

On the foreign market, oil products weresold in both inside and outside of the EUcommunity. The community market


03

total raw materials (tons) oil (tons)

4,047,346 3,806,421

100

90.00

2008 2009 2010 2011 2012

85.484.084.0

78.380.00

70.00

volumes of finished product sold (mt)

White product yield, %gr

volumes of automobile fuels sold (mt)

Amount ofmotor fuels soldincreased byabout 5.73 in2012 comparedto 2011, with agreater increasein diesel thangasoline.

Gasoline

finished products (tons) 3,930,111

Gasoline 1,293,061

Diesel 1,602,852

2011 2012

1,472,3331,588,700

1,114,575 1,146,548

Diesel



absorbed about 20% of the total finishedproducts sold, with the 80% differencerepresenting exports to non-communitycountries.Almost 80% of external sales weredirected to European marketsneighboring Romania.

The main destinations for exportedproducts by Rompetrol Refining are asfollows:

Sales 2011 vs. 2012

lIc vs. export

03

Gasoline Ukraine, Georgia, Bulgaria,Tunisia, Lebanon, Moldova

Diesel Serbia, Bulgaria, Georgia,Moldova, Ukraine

Coke Ukraine

Sulphur Egypt

LIC

Gasoline

tons

Diesel

147,727

101,349

687,907

370,169

Export

Product market

Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

Monthly sales 2012


From the total automobile fuels tradedon the foreign market, about 38% weredelivered to subsidiaries of TheRompetrol Group (Moldova, Bulgaria,Georgia, Ukraine). The main clients onthe internal market were: RompetrolDownstream, Rompetrol Gas SRL,Rompetrol Petrochemicals, Air BP Sales,Air Total România. The main clients onthe external market were: VectorEnergy, Rompetrol Moldova, RompetrolBulgaria, TVK Supply ChainManagement, TransamoniaSwitzerland, Steuerman.

MAJoR oBJectIveS foR 2013:QHSe oBJectIveS (QuAlIty,HeAltH, SAfety, envIRonMent• Rectifying the integrated QHSE man-

agement system according to

ISO&OHSAS standards;• “ZERO” accidents on the Petromidia

and Vega platforms;• Continuing the “1.LIFE” program for

safety awareness and achieving level 3 for health and work security on the Du Pont model;

• Improving safety performance indica-tors set at group level , with a 0.5% minimum decrease of target value compared to 2011 (automobile acci-dents rate, incapacity for work rate, incident rate, periodicity and severity rates);

• Renewal of the Environment Author-izations and the Security Report and Internal Emergency Plan for

Rompetrol Refining, through new in-vestments;

• Keeping our client satisfaction indica-tor at a minimum of 90%;

• Rectifying the automobile fuels pro-duced by Rompetrol Refinery and ad-d itives produced by the Vega Refinery.

oPeRAtIonAl oBJectIveS 20131. Finalizing projects for alignment tothe current legislative regulationsconcerning environmental protection,health and safety at the workplace andreauthorizing the equipment andpiping for technical facilities:Installing a system that reducesparticles in chimney emissions in the


03near abroad vs trading (tons)

LIC

Gasoline Diesel

235,496

255,935600,138

215,583

Export


fluid catalytic cracker.The project consists of assembling asystem for the reduction of chimneycatalyzed particles in the fluidcatalytic cracker (ElectrostaticPrecipitator: ESP) in order to adhere tothe latest regulations, that allow amaximum of 40mg/Nm3 solidparticles in chimney gas emissions.The project will be finalized inDecember 2013, with a totalinvestment of 10,8 mil. USD.

Decreasing NOx emissions fromfacility furnaces in the PetromidiaRefinery.The project consists in changing theburners for the furnaces in thefacilities with burners that generate alow content of nitrogen oxides, inconformity with present legislativeregulations (max. 150mg/Nm3).The project's implementation dependson halting refinery operations, which isplanned for March-April 2013. Thetotal cost of investment is 47,6 mil.USD.

Reauthorizing pipes andtechnological equipment from thePetromidia Refinery with ISCIR

The project is part of a more ampleprogram of reauthorizing theequipment and piping from the

Petromidia refinery with ISCIR. Theprogram started in 2012 and theexecution is planned over a number ofyears. For 2013, the total cost isestimated at 11,5 mil. USD.Halting the technological operationsof the refinery for inspection oftechnological equipment, changingcatalysts, performing maintenance onmachinery, reauthorizing equipment,as well as implementing the projectsthat need the halting of activities willcost an estimate of 11,8 mil. USD.

2. Increasing storage capacity, themixing and delivery of oil products tothe Petromidia refinery to match theincreased processing capacity of 5 mil.tons/year;Related projects:

Building a new 30.000 m3 diesel reservoir;

Three-way diesel delivery facilities;

Rehabilitating the tank loading facilities;

Expanding the capacity for deliveringreactive oil to tanks;

Improving railway road capacity.

3. An 14.000t/day output from therefinery after the halting of operationsplanned for March-April 2013, which

will lead to the biggest quantityprocessed in the history of the refinery– 4,57 mil. tons/year.

4. An increase in diesel output for therefinery, following an increase indemand on the global market – 46%.

5. Decreasing the Energy IntensityIndex to 96.52% following theintegration of new facilities and plantsin the technological flow of therefinery, but also because of optimizedtreatment processes achieved throughinvestments and operational measures.

RoMPetRol RefInIng – vegAPloIeștI RefIneRy Rompetrol Refining – Vega Ploiești is aprocessing unit designed for obtainingspecial products: ecological solvents,heating fuels, special bitumen, etc.

Investments from 2012 aimed atincreasing energetic efficiency,improving functioning safety andaligning to current standards.

In 2013, the Vega refinery will processalternative raw materials (naphta, C5-C6 fracture, slurry, jet and crude oil),with working facilities as Hexane, De-Aromatization, Refining, MixingFinished Products, Vacuum Distillationand Bitumen.


03


MAJoR PeRfoRMAnceS In 2012• Maintaining a volume of processed

raw materials of over 305.000 tons, in spite of difficult market conditions;

• Continue the „Replace the vacuum column” project. The project intends to improve the vacuum system and the surveillance and control system by mounting a DCS (Distributed Control System);

• Complete 100% of the planned CAPEXworks;

• Maintaining technological consump-tion at 1.80% in 2012, processing less raw materials and implementing proj-ects for the optimization of the han-dling and storing of raw materials and finished product;

• Completing projects from the Inte-grated Environment Authorization ac-tion plan.

RePReSentAtIve PRoductS AndPRoductIon ReSultSThe Vega Refinery production isstructured by special products:• Solvents: ecological solvents:

Rompetrol SE, n-hexane and light naphtha

• White spirit and oils• Rompetrol Calor extra I• Fuels• Bitumens• Crude oil

The Vega Refinery is the only n-Hexaneproducer in Eastern Europe, used forpropylene production and forvegetable oil extraction in the foodindustry. Also, the Vega refinery is theonly Romanian producer of:• ecological Solvents – Rompetrol SE –that insures, through a lower sulphurand aromatic hydrocarbons, a lowerdegree of toxicity;• Special Bitumens, used in makingbituminous mastics, for hydro-isolationworks in construction and for anti-corrosive treatment of metallic piping.Vega also produces polymer modifiedbitumen, widely used in asphalting

extensively circulated roads. Thepresence of polymers in bitumenincreases the performance of theasphalt coating produced with this kindof binder by:• increasing resistance to fatigue• increasing resistance to permanent

deformation• increasing resistance to cracking at lowtemperatures and crack propagation• increasing resistance to aging and wear• maintaining the roll surface roughness

of the layer• improving bitumen-rock adhesion• reducing traffic noise


03


The company also produces ecologicalheating fuels, in compliance to allrelevant standards imposed by theEuropean Union, standing alongsideHeating Oil class products traded inWestern Europe.

Due to market conditions that requiredreduced processing, amid a globaleconomic and financial crisis, that hitthe oil market and oil products, the2012 production program was 305,171tons of raw materials, 17% lower thanthe budgeted amount of 367,331 tons.

In 2012, the Vega refinery increased theyield of white products per totalproduction, which has strengthenedthe presence on the foreign market,especially with organic solvents and n-


hexane and also by adjusting to newmarket requirements.Sales of white products (naphthagasoline, organic solvents, n-hexaneand white spirit) represent about 68%of total sales in 2012, up about 5% fromthe previous year. Sales of finishedproducts on the foreign market were54% and 46% domestic.

MAJoR oBJectIveS 2013 – vegA• Maximizing margins for niche products

to give added value to the business;• Developing new products under the

Rompetrol Brand by diversifying pro-duction and sales (dearomatized white spirit)

• Continuing the investment program to reduce utility consumption, technological consumption and to comply with the Environmental Authorization.

RoMPetRol PetRocHeMIcAlS –MAJoR PeRfoRMAnceS In 2012In 2012, Rompetrol Petrochemicalscontinued to be the sole producer ofpolymers in Romania: high and low

03

Raw materials processed (tons)

program actual

367.331305.171

2007-2012 output

tons


density polyethylene. The developmentstrategy of the company allowed for asteady increase in market sharedomestically and internationally.

The quality and diversity of the productrange, the location and routes ofdistribution and the technicalassistance made RompetrolPetrochemicals a reliable partner bothin Romania and in the Black Sea region.

The company has an annual productioncapacity of over 200.000 tons ofpolymers (polypropylene, high and lowdensity polyethylene) with an addedmarine download terminal and a10.000 ton capacity cryogenic tank.

One of the advantages of the companyis proximity to it's customers, ensuringthat all products are delivered in a Just-In-Time system, as well as offeringtechnical advice and assistedmonitoring of their production cycle.

Regarding the quality of its products,Rompetrol Petrochemicals is activelyincreasing the quality of its productsand generating customer satisfaction.

To support the development of itsactivities, in 2012 the companycompleted the last phase oftechnological tests to modernize the

high density polyethylene plant inorder to extend the range of productsand to market four new varieties withspecific applications (large bodies,ultra-thin foil, piping for combustiblegasses)Rompetrol Petrochemicals turnoverreached 247 mil. USD in 2012.Compared with 2011, the financialresults were negatively influenced bylow margins in the third quarter of2012, mainly due to unfavorable marketconjuncture.

AcHIeveMentS In 2012Amid the strategy of expandingproduction capacity and thereforemarket share for products, thecompany has initiated an implementeda series of projects to modernize thefacilities and to expand commercialactivities, structured in three directions:

develoPMent, IncReASe In cAPAcIty, IMPRoveMent In PRoductS QuAlIty• Obtained new varieties of HDPE with

high recovery, with demand on the specialized market; expanding the product portfolio, covering the full range of HDPE applications.

• For the LDPE plant, a number of proj-ects are in implementation, such as: increasing product quality, “angel hair” trapping system bunkers, assem-

bling a lightweight storage warehouse, prepare logistics for manufac-turing varieties for the electric indus-try, modernization of the reactor's water cooling system

• In 2012, the PP plant developed and successfully implemented thermo-forming.

• The pyrolysis plant heat exchangers were replaced with ones with a high coefficient of heat transfer, recovery of the resulting condensate from cold and cryogenic facilities, rehabilitate static equipment.

IncReASIng SAfety• Supplying the M 301 reducer to avoid

plant shutdown for a longer period of time in the PP facility

• Verification programs used for investi-gation\examination of technical (VTU-projects) to equipment under pressure

envIRonMent• Study on how to load the lower flare

in the pyrolysis


03

coMMeRcIAlRompetrol Petrochemicals is the soleproducer of polypropylene(PP) andpolyethylene in Romania. In 2012, thelocal market share of RompetrolPetrochemicals was 44% for PP, 29% forLDPE, 13% for HDPE and PET, accordingto data from the National StatisticsInstitute.

Trading activity is another importantbranch Rompetrol Petrochemicals'activity. In addition to it's products, thecompany runs a trading activity of avariety of petrochemical productswhich are not currently in theproduction portfolio of the RompetrolPetrochemicals complex, but for whichthere is demand on the Romanianmarket: high-density polyethylenevarieties (HDPE pipe varieties), low


03

PP LDPE TotalHDPE

02000

18,519 35,91556,908 63,065

73,862

96,958

161,718

196,586 187,022

149,901

188,315

142,670

74,359

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

40,000

80,000

120,000

160,000

200,000

240,000

2000-2012 Polymers Production

Monthly sales by product type

Jan

Domestic

2,000

Sales by destination

Feb

Export

Mar Apr May Jun Jul Aug Sep Oct Nov Dec

4,0006,0008,000

10,000

12,000

14,00016,00018,000

Jan

2,000

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

4,0006,0008,000

10,000

12,000

14,00016,00018,000

PP LDPE HDPE LDPE trading HDPE trading Pet trading


(large bodies, ultra-thin foil, piping forcombustible gasses).The new varieties obtained were testedby the recipients and the feedback waspositive, with one new variety awaitingapproval for the PE100 pipe.Developing a variety of LDPE for cableinsulation in the electrical industry. Anindustrial batch was produced, namedRCB302, and is ready to be tested byclients.

PRoductIonIn 2012, production of polymers was of142,670 tons, compared to 188,315tons in 2011, running only the PP andLDPE plants.The HDPE plant modernization wascompleted with a series ofperformance tests in November andDecember, in order to extend therange of products and market four newvarieties with specific applications

tons

tons tons


density polyethylene (LDPE) and PET.

QuAlIty-evIRonMent-HeAltH,occuPAtIonAl SAfetySpecific QHSE activities aimed atcompleting the objectives set for 2012.All these materialized in:

• maintaining the integrated quality-environment-health management and work safety system, confirmed by the rectification audit conducted by representatives of the Germanischer Lloyd Industrial Services (June 2012)

• reaching level 3.17 in the DuPont model, from a safety point of view.

Throughout 2012, by identifyingaspects of product behavior andfinding technical solutions tocontinually improve its characteristics,the technical assistance servicessuccessfully continued the process ofstrengthening partnerships betweenthe business and its clients.

In 2012, the Technical AssistanceService has been involved in programdevelopment for the RP HDPE products.Conducted tests with our clients for thenew varieties produced after restartingthe HDPE plant in November 2012.For this milestone in the developmentof HDPE products, collaboration startedwith the Dutch KIWA Certification

Institute to obtain HDPE certificationfor the PE100 pipe for special variety7700M. A contract was subsequentlysigned between RP and Kiwa, andproduct certification was launched.

To develop and enhance the productportfolio , talks were had with variouscollaborators and new varieties weredeveloped:• a variety of thermoforming PP – RTF 3

in cooperation with Milliken. An industrial batch was sent to the customers for testing.

• a variety of LDPE for cable insulation inthe electrical industry. An industrial batch called RCB302 was sent to customers for testing.

Together with PetrochemicalsLaboratory, the Declarations ofConformity for all Rompetrol projects of2012 were updated, containing all therequirements of current EuropeanComission directives.

MAJoR goAlS In 2013• Complete the certification of variety

HDPE PE100 pipe;• Implement an energy optimization

study;• Strengthen the position of Rompetrol

Petrochemicals domestically and in the Balkans;

• Regaining the HDPE market, internally

and externally following the restartingof the HDPE plant;

• Achieving a 20% share of the domesticmarket of HDPE;

• Achieving a 55% share of the domesticmarket in PP;

• Achieving a 25% share of the domesticmarket in LDPE;

• Developing a direct sales channel to customers in export markets;

• Implement the project for revision andand non-destructive testing (NDT);

• Rehabilitation of cryogenic insulation;• Continuing the program to increase

safety culture through the “1.LIFE” project and strengthen our position inthe Du Pont model.


03

trading04


vectoR eneRgy Ag2012 key PeRfoRMAnceSVector Energy AG is the supply andtrading subsidiary of the RompetrolGroup. The company continued tooptimize the overall supply chain of theGroup in 2012, by providing improvedoperations, logistics and risk managementservices to the Group subsidiaries.

Vector continued to supply the crudeneeds of Petromidia refinery in full at 3.9million tons (vs 3.6 million tons in 2011),with KazMunayGas(KMG) barrels sharemaintained at around 90%. In 2012, the company sold around 0.8million tons of the refinery car fuel

production to non group companies,while around 0.4 million tons went toNear-Abroad entities within the Group(Rompetrol Bulgaria, Rompetrol Georgia,Rompetrol Ukraine).

In 2012, Vector focused on developingnon group crude and oil products tradebusiness, building up new businessrelations (operations, logistics, customerbase). Non Group share of profitincreased up to 45% of total achievedgross margins, while trade financefacilities increased to cope withadditional volumes. The responsibilities undertaken by thecompany in 2012 are part of the strategic

plan of KMG mother-company to buildup a stronger presence in the Black Seamarket through improved logisticscapabilities and higher retail marketshare, regardless of difficult generalinternational climate.

Apart from effective product stockmanagement in Refining and Retailentities, Vector is in charge of stream-lining operations of fuel sale towards theGroup subsidiaries (Bulgaria, Georgia andUkraine) and to non group companiesprimarily on the Black Sea region. In addition, Vector is involved incommodity risk management activitiesat group level.

trading Vector Energy

04


During 2012, crude quotations were veryvolatile, driven by fundamentals in bothsupply and demand. Following a Q1crude quotation increase (from 110USD/bbl up to 125USD/bbl) drivenmainly by optimism on economicrecovery and supply disruption concerns(Iran/Hormuz strait), a sharp decreasewas seen in Q2 (down to 95 USD/bbl inJune) backed by double recession fearsin EU and tension ease on crude supplydisruption. The Iran embargo, MiddleEast tensions and launch of quantitativemeasures drove crude back to morestable levels around 110 USD/bbl inQ3/Q4.In such an environment, Vector played animportant role in mitigating commodityprice volatility at group level, acting as anadviser and executing most of the grouptransactions on both daily commodities

hedging and future refining marginhedge, according with group policiesand authorities. Derivative instrumentsused for commodity price volatility aremainly exchange traded future contractsand liquid OTC swaps.

Vector monitors market forward curvesand executes refinery margin hedgetransactions when targeted levels aremet. Such levels are approved by Boardand Top Management. In 2012, Vector Energy further optimizedgeneral & administrative expensesmainly by continuing to outsource noncritical accounting and treasuryfunctions resulting in cost savings. Vector’s team continues to beresponsible fordeveloping/implementing newprocesses, such as the selection of

optimum oil mixes, establishing targetstocks of raw material/end products,developing it's customer base andlogistics alternatives.

The achieved net result of 12 million USDis therefore the result of additional nongroup margins, efficient operations,adequate risk management policies andcost reduction measures. For 2013, following finalization ofrefinery investment package, the mainfocus for Vector will be to ensureincreased feedstock supply for therefinery (up to 4.6 million tons) and toensure deliveries of an additional 0.8million tons of products at optimummargins, while continuing to developnon group business based on KMGsupport for additional crude and oilproducts supply.

trading Vector Energy

04


trading Byron Shipping

04

MAJoR AccoMPlISHMentS In 2012:Byron Shipping is a maritime and rivership agency. The company coordinatedthe activity of 343 ships and barges, ofwhich 317 ships in Midia port and 26ships in Constanta port.

In 2012, SC BYRON SHIPPING SRL won thefirst place in the 10th edition of theRomania private companies’ national top,amongst newly founded companiesBYRON SHIPPING was also on the thirdplace, same category, according to itsturnover.

The ranking was decided according tothe gross profit. Over 620.000 companiesparticipated in the competitionorganized by the Romanian NationalCouncil of Small and Medium PrivateEnterprises and IMM Projects andPrograms Implementation Agency.

tRendS foR 2013Along with keeping the present portfolioof clients, we focus our efforts onattracting new clients in our quest tocover more ground in water transport(multimodal transport, brokerage,chartering).

Net turnover 1.035.871 USD

Total revenue 1.272.509 USD

Total expenses 881.937 USD

Net profit: 390.572 USD


trading Midia Marine Terminal

04 MIdIA MARIne teRMInAl The Midia Marine Terminal (Midia SPM) ispart of the trading division and operatesthe off-shore terminal and maritimeberths 1 to 4 (petroleum) and 9 to 9A, 9Band 9C (petroleum products) from Midiaport, part of the Rompetrol Group. The off-shore terminal allows supplycosts cutting by approximately 8USD/ton as a result of handling /depositing operations and transferringcosts, as well as reducing commercial ortechnological losses, offering thenecessary frame for the company todevelop commercial activities in theregion.

MAJoR AcHIeveMentS In 2012

The off-shore terminal generated a costreduction from unloading activities ofapprox. 18.6 million USD in 2012.

MAJoR AcHIeveMentS In 2012foR BeRtHS 1-4

MAJoR AcHIeveMentS In 2012 foRtHe PIlotAge, toWAge, tyIng /untyIng SeRvIceS In MIdIA PoRtAnd MIdIA off-SHoRe teRMInAl).

The Midia Marine Terminal used itsown staff and towboats for shipsoperating in Midia port, petroleumterminal (berths 1-4 and 9) and MidiaSPM.A remarkable performance for thecompany was that it maintained shipaccess to petroleum terminals of theMidia port during the 3 week period inFebruary 2012, when the Midia portdocks were completely frozen.

The Midia Marine Terminal operates alsothe Petromidia refinery petroleum tankpark, with a storage capacity of approx.400.000 m3, receiving petroleum mostlyfrom Midia off-shore terminal, as well asfrom Oil Terminal Constanța, throughCONPET.The total amount of petroleum handled bythe tank park in 2012 was of 7.5 mil. tons. Due to the specifics of the terminal’sactivity, respecting all legalenvironmental requirements is a priority.According to the maintenance plan, theentire system was verified (LLOYDScertificate of annual inspection).

MAJoR AcHIeveMentS In 2012foR BeRtHS 9A, 9B And 9c

Using Berths 9A, B and C generated costreduction from loading / unloadingactivities of approx. 13 mil USD.

Total handled quantity 53.000 tons

Total number of ships handled 3

Total effective loading/unloading days:

4 days

Total effective loading/unloading days

1.39%

Income from port pilotage: 260.000 USD

Income from port towing: 400.000 USD

Income from towing at Midia SPM

2.2 mil USD

Income from off-shore termi-nal tying/untying activities

244.000 USD

Income from off-shoreterminal pilotage activity

270.000 USD

Total quantity of crude im-ported through Midia SPM

3.71 mil tons

Total no. of ships unloadedin Midia SPM:

40

Total effective days of unloading

65 day

Total days of delay as a result of bad weather

9 days

Total operational costs (SPM & TK FARM)

7.26 mil USD

Commercial losses (B/L vs.Unloading report):

0.12 %

Berth occupancy rate

9A 60.39%

9B 47.05%

9C 21.80%

Total amount of productshandled:

1.46 mil tons

Total number of ships handled

401

Total effective days of loading/unloading

257 days

total operating costs 1.36 mil uSd


trading Rompetrol Ukraine

04

RoMPetRol ukRAIne Ukraine is a market with greatpotential in the Black Sea region,having a constant demand growth forthe last 10 years, of 11-12 million tonsper year. Approximately 80% of oil products areimported since all the refineries areoutdated and closed at the moment.

feAtuReS And AdvAntAgeS oftHe ukRAInIAn MARket foRRoMPetRol: • Well developed logistic infrastructure• Market consumption in 2012 reached

10,2 million tons per year• Consumption has a steady growth

tendency • Proximity to Petromidia refinery

RPu on ukRAInIAn MARket 2012 • RPU market share fluctuated about

1,5%• Comparing to 2011, consumption

remained at the same level • Rompetrol Ukraine has market

expertise in tuning up supply, trans-shipment, storage and client distribution

• Rompetrol Ukraine's volumes were

sold through wholesale channel only;

RoMPetRol ukRAIne MARketPeRSPectIveS In 2013:• Plans to develop the retail chain. • In order to supply retail chains with

petroleum products, a secondary logistics scheme was defined.

• Plans to develop the retail chain. • In order to supply retail chains with

petroleum products, a secondary logistics scheme was defined.

• Entering on new markets ofpetrochemicals: niche products sales development.

Retail05


RetailRompetrol Downstream

05 RoMAnIAn fuel MARketFuel consumption in Romania has beenrelatively stable in the past years, rangingaround six million tons each year. The retail represents the main segmentof the market, having 71% share in 2012and being influenced by the economiccrisis hitting the region in the past years.The average fuel usage of Romanianprivate consumers was of 56liters/month stabilized for the last 2 years. In terms of products, dieselconsumption has increased in the pastyears, reaching 77% of total fuelquantities consumed in Romania.In 2012 there was an increase of over4% in the total number of vehiclesregistered in Romania compared to thelast year. The increase is coming mainlyfrom diesel vehicles, which increased byover 7%, while gasoline vehiclesincrease with just 2%.

AcHIeveMentS of RoMPetRoldoWnStReAM At the end of 2012, RompetrolDownstream operated a retailnetwork of 406 gas stations: 131stations operated under theRompetrol brand (COCO), 151Partener stations (DODO) and 124Expres stations, located in rural areasof the country and offering only thetwo main fuels, Efix Diesel and EfixGasoline.

The total fuel sales volume in 2012was over 1.4 million tons, 4% lowerthan in 2011. In Q4, the fuel quantityrose by approximately 8% (390,000tons), 56% of which were deliveredto the wholesale segment andpartners.

Among the measures taken by thecompany in 2012 is to continue theoptimization of the distribution andgeneral administrative expenditurewith positive (USD 30 million), but notstrong enough results to countervailthe negative effect of margin decrease.The financial results were affected bythe dropdown in the commercialmargins by USD 24/ton in the retailsegment and USD 15/ton in thewholesale segment.

Looking by payment methods, thedecrease of 2012 is the result of bothlower Card market share (which takesinto account Fill&Go Business sales)

2011 2012

Diesel 1.163.821 1.106.334

Gasoline 301.817 308.826

LPG 1.954 1.641

Total 1.467.592 1.416.801

Sales (tons) by product type

and Non Card market share (whichincludes sales on all other methods ofpayment). In 2012, card sales inRompetrol Partener stations increasedwith 0.8 pp., in Expres there wereconstant and in Rompetrol own stationsregistered a decrease of 1.7 pp.. Theresults registered in card sales wereinfluenced by more prudent commercialpolicies, namely to protect the companyagainst the non-payment risk. In Non-Card market share we had adecrease of 0.5 pp. compared to lastyear (from 13.2% to 12.7%), almostequally spread between channels, maindecrease coming from cash sales (- 0.4pp.) also due to the economicconditions of the market.

Besides the evolution of stations in thecontext of the current marketcharacteristics, Rompetrol Downstreamrenewed its range of premium productsby launching EfixS, a premium gasolineand diesel oil, starting with mid-November.

The new products replace Alto fuels,thereby increasing Efix product family -the best known fuel brand on theRomanian fuel market, according to amarket study conducted recently.By EfixS, the company addresses thedrivers who want a maximum engineperformance and, at the same time, an


RetailRompetrol Downstream

05

optimal functioning. In addition to Efixbrand's innovative features, Efix Sproducts benefit from the quality offuels produced in Petromidia refinery,exclusively at Euro 5 standard, followingthe recently completed upgradingprogram.

EfixS gasoline and diesel will be sold in160 stations operated by RompetrolDownstream (own and Partnerstations).

According to the general developmentstrategy of the company, the plan for

the retail segment is to increase thenetwork by 150 stations on the localmarket in the next 3- 5 years, takinginto account the market demands.


RetailDyneff France & Spain

05 geneRAl MARket deScRIPtIon &PeRfoRMAnce of dyneff fRAnce In France, oil products deliveries declinedby - 0.9 % in comparison with2011 (- 0.5 million tons).

Regarding products addressed by DyneffFrance (Diesel, Gasoline and Heating Oil),French market declined by - 0.5 % (- 282thousand tons), as described below:

• Diesel + 7.5% (+ 2 646 thousand tons),• Gasoline - 6.5% (-506 thousand tons),• Heating Oil market declined by - 23.8%

(-2 421 thousand tons)

This change occurred as Frenchregulation imposed non-road Diesel formotor uses in several economicalsectors (construction, agriculture, rivershipping), a significant transferbetween Diesel and Heating Oil startedin 2011 and continued in 2012.Dyneff France sales decreased to 1 607thousand tons in 2012 (- 6.8 % comparedto 2011).

The product breakdown illustratesmarket trends:• Gasoline steady decline due to tax regu-

lation which promote diesel motors• Regulation accelerated heating Oil de-

cline by making non-road diesel mandatory for motor uses (2011 new regulation).

Sales dyneff france by product type (tons)

Sales dyneff france by channel (tons)

• Although regulations changes should have strongly promoted diesel, its slightincrease illustrates demand weakness due to economic environment and high prices.

All sales channels, except Trading, were

affected by sales drop in 2012. This ismainly due to strong competition onprices for Wholesale clients (highlysensitive to price elasticity) and to aprofit driven policy in other saleschannels (focus on margins rather thanvolumes in order to consolidate



05 profitability). dyneff SPAInThe Spanish market decreased by - 7.7 %in 2012 and - 20 % compared to 2008due to extremely difficult economiccontext in Spain. Dyneff Spain recorded a significantincrease of heating oil sales due to newTrading contracts concluded.Wholesale activity was affected by salesdrop in 2012 due to bad economicconditions which drove Dyneff toaccurately monitor customers’ solvency.

B. key AcHIeveMentS In 2012

Port-la-nouvelle / ePPln:Implementation of a strategic project forDyneff within the new major oil terminalin Port la Nouvelle in a 50/50 joint-venture with Total Group. With thisproject, which represents an investmentof 38 million USD over 3 years, Dyneffmaintains its position as a major actor inthe Mediterranean area (40% of volumeswill transit through this depot).

vIllAge cAtAlAn:• A new motorway Gas Station was builton a major European motorway betweenFrance and Spain (“Village Catalan”project). Dyneff will operate this site inearly January 2013.

non RoAd dIeSel:

• Dyneff market share reached 5% for theNon Road Diesel distribution and itsbiofree NRD brand “GNR ZÉRO“ beingalso successful.• Launch of a Non Road Diesel dedicatedto river shipping at the end of the year

e85 develoPMent: E85 is a biofuel composed of up to 85%ethanol and 15% gasoline (unleaded 95).Using E85 helps to reduce greenhouse

gas emissions and contributes to reduceglobal warming.• Dyneff France continued its E85-Su-

perthanol sales development by furtherinvesting in its gas stations network. At the end of 2012, Dyneff reached 12% national market share, expanding its E85 distribution network to 13 addi-tional gas stations.

• Dyneff is currently the 3rd market playerin E85 distribution in France.

Sales dyneff Spain by product type (tons)

Sales dyneff Spain by channel (tons)


• Highly concerned with environmental protection, Dyneff will continue with this program in 2013.

eneRgy SAvIng ceRtIfIcAteS: Dyneff concluded partnerships with construction companies in order torespond to the French regulation which obliges producers/retailers to promote energy savings.• Plus, by selling its in excess Energy

Saving Certificates to other market players, Dyneff recorded additional 5.6 million USD turnover in 2012.

key dIRectIonS foR 2013• Full commissioning of operations in

Village Catalan motorway station, with the finalization of the truck distribution platforms at the end of the year.

• Revamping of a major road gas station close to Montpellier Airport which will

offer a “Boutique du Soleil” shop and a “Brioche Dorée” restaurant.

• Continue with the E85 Network development

• Development of Dyneff’s commercial offer by introduction of complementaryproducts such as motor oils (B to B) and pellets (B to C).• Renewal of several big account contracts representing a significant volumes increase in comparison with 2012.


05


RetailRompetrol Bulgaria

05 2012 was a year of operationalimprovement and better brandrecognition for Rompetrol Bulgaria.Despite a well balanced (in terms ofsupply and demand) market, theeconomic turmoil influencing the localindustry had a serious impact on thefuel sector.

Rompetrol Bulgaria focused on a two-pronged strategy of profitabilityimprovement and cost control in orderto adequately face the challenges of themarket. Improved performancemanagement and prudent siteevaluation invigorated the RetailNetwork and caused organic growth inthe existing points of sale structure.Following strategy for restructuring andfocus on profitability, most of theequipment of the Internal Baseschannel (small fuel distribution points of9 and 20cm) was relocated toRompetrol Downstream (retail segmentin Romania) where it will bring moreprofit to the group.

Despite the limited resources andtough economic conditions, theoptimized network management andmarketing have brought a 8% growth

Stations (no), end of period

Retail sales (tons)


RetailRompetrol Bulgaria

05 in overall Retail sales, and 10%increase in the highest profitabilitychannel, own stations (COCO). In 2012most of the retail points of sale haveregistered an increase in average dailysales.Portfolio optimization continued inthe Wholesale Channels with extensiveclient profitability management andthe application of a market tailoredCommercial Policy. As a result, theavailable fuel volumes weredistributed through sales channelsbased on profit optimization priorities.The sales in the most profitablechannel increased with 10% comparedto 2011. This increase was greatlysupported by the broadened portfolioof wholesale clients.

The other strategic direction started in2010 was effective Cost Management.The combination of improved costplanning, procurement, and projectmanagement were among the mostimportant initiatives that realizedsavings in operating expenses. Theestimated effect of these initiatives in2012 is a 5% overall cost reduction andincreasing process quality.

One of the main achievements for2012 was implementing the TLG

Wholesale sales (tons)

project in all of Rompetrol Bulgaria’sstations within the planned deadlineand with compliance with governmentregulations.

MAIn PRIoRItIeS foR 2013:• Perform capital maintenance on exist-

ing stations • Improve IT infrastructure• Increase retail volumes with a minimum

of 12%, volumes to consumers with 18%• Continuous Improvements in Portfolio

and Network management• Increased Brand Recognition and Or-

ganic Market Share Growth


RetailRompetrol Moldova

05

RetAIl MARket oveRvIeWIn 2012, there were 26 traders operatingunder the license of import and wholesaletrade of oil and only 4 players on themarket had licenses for all types ofactivities on the fuel market.

Retail trade activity of gasoline anddiesel was done by 89 owners oflicenses. Gasoline and diesel in retailwas sold through 602 filling stationsand liquefied gas through 385 stations.

RoMPetRol MoldovA RetAIlMARketIn 2012, Rompetrol Moldova had a totalvalue of imports of 51 Ktons, representing

9% of the total market share.

The company opened 6 new fillingstations, operating a network of 50 fillingstations at the end of the year. All the fuels sold by Rompetrol Moldovain its network are imported exclusivelyfrom Petromidia Refinery. Starting withNovember 2012, Rompetrol Moldovastarted importing the new premiumproducts EfixS, gasoline and diesel:

Rompetrol Moldova had an increase ofsales in the retail channel by 27% and anincrease of 37% in the wholesalechannel, which generated a totalincrease of 31% in 2012 vs. 2011.

In 2013, Rompetrol Moldova plans todevelop its network in an extensive way,up to 62 Filling Stations.

0%

50%

100%

150%

200%175%

110%101%

2%

28 28

56 5876

0

50

100

150

2008 2009 2010 2011 2012

Retail Wholesale to resellers Year-on-2008 (%) Total volumes

33

231481420

24

34

33

43

Rompetrol Moldova sales evolution, tons:

Rompetrol Moldova sales


RetailRompetrol Georgia

05 MARket condItIonSRompetrol Georgia has successfullymaintained the position of EuropeanHigh Quality fuel distributor on themarket. In 2012, RPG had a marketshare of 15%, representing the sharefrom the sale of fuel on the localmarket. It has four main competitors.

2012 was a profitable year forRompetrol Georgia, which registeredthe highest EBITDA, of 11 million USDand Net Result of 7,7million USD. Theslight decrease in wholesale wascompensated with an increase inretail sales.

The local subsidiary of the Groupcompleted the construction of fivenew gas stations in 2012, the nationalnetwork currently having 71 fueldistribution points.

The 5 gas stations are part of a projectaimed at developing a franchiseddistribution system, started in 2009,and they are located in Poti, Batumiand Gachiani, close to Tbilisi. Therelevant works planned to align thestations to the Group’s quality andsafety standards, by modernizing theequipment and arranging the visualidentification elements of theRompetrol brand.

MAJoR AccoMPlISHMentS In 2012:• Rebuilding of control mechanismsover the critical business processes,namely various optimizations in termsof accounting, loss control, logistics,and other improvements that wereaccomplished.• ERP system implementation (firstlaunched in late 2012); the Enterpriseresource planning system facilitates theintegration of all the information withinan organization into a single platform.The purpose of ERP is to ensuretransparency of data within anorganization and to facilitate access toany useful information in the activity.• Promoting of higher marginchannels/products had a positive effecton overall efficiency during the year;

• Supply chain loss decrease by 220 mt.vs. 2011 due to better control over theprocess; Optimization of outboundlogistic costs;• Significant improvement in QHSEoperations resulted in decreased riskexposure;

tendencIeS foR 2013, And tHeuPcoMIng yeARS:1. Increasing of retail sales portion in total sales via:

a. Further network development;b. Corresponding marketing activities;c. Aggressive competitive campaigns;d. Participating in tenders.

2. Further costs optimization;3. Considering the possibility of refreshing the product range.

Sales evolution 2009-2012

tons

2008

9%

2%5% 6% 6%

17%18%

27%27%

5%

12% 12%

2009 2010 2011 2012

30%

35%

20%

25%

10%

15%

0%

5%

15%

30%30%

Cylinders ms% ATG ms% Propane ms%


RetailRompetrol Gas (RGS)

05 geneRAl 2012 MARket oveRvIeWIn 2012 the total LPG consumption inRomania remained at same levelcompared to 2011. Out of the 440 kmt of LPG consumedin 2012, 29% were consumed in theretail segment, while the wholesalesegment represented 71% of the totalconsumption.

cHAngeS In coMPetItIon tActIcSDuring 2012, the demand for newcylinders increased significantly; thereare regions in Romania where theproduct is sold exclusively in newcylinders and the rest of the countrythe old cylinders are losing ground dayby day. Thus, the main RGScompetitors on cylinders market havedeveloped intensive programs forrenew the cylinders pool and becomevery aggressive on the market.

key AcHIeveMentS In 2012: Consolidate of the current businessesand develop of on-going projects. Rompetrol Gas maintained the same

level of sold volumes in 2012 as in2011 and managed to consolidate itsposition on Romanian LPG market,being the 2nd major player and theleader on Autogas market. Rompetrol GAS market share in thetotal LPG market reached 21% in 2012.A well-balanced channels salesstructure permitted to be flexible onLPG dynamic markets – local andregional – and to obtain the maximumadded value among any sales channel.

Rompetrol GAS succeeded in 2012 tomaintain the retail sold volumes versusprevious year, namely See below market share evolution forevery retail channel.

key dIRectIonS foR 2013-2017• Modernization of 70k cylinders;• Open Filling Plant Bacau;• Increase Arad terminal capacity;• Decrease operations “costs per tonne”by increasing sold volumes throughimports and sales optimization amongsales channels

2008

489500

410420430440450460470480490

444451

440 440

2009 2010 2011 2012

Rompetrol gas Sales (,000 mt)

Retail channels market share evolution

2008

Cylinders, mt

2009 2010 2011 2012

48

161

280

47

171

233

47

208

185

47

208

185

44

185

215

ATG, mt Propane, mt

total lPg Market evolution(thousand tons)

upstream and industrial services

06



Rompetrol Well Services

06 RoMPetRol Well SeRvIceSRompetrol Well Services (RWS) is oneof the major suppliers of well servicesin Romania. The company offers awide range of services for oil and gaswells on domestic market and inseveral countries of Eastern Europeand Central Asia.

MAJoR AccoMPlISHMentS In2012 • EBITDA increased by 15% and Netresult increased by 48% comparedwith 2011• Six new important customersacquired in Romania and five newcustomers acquired by our KazakhstanBranch in addition to our traditionalcustomers • Investment worth $ 3 million,financed from company’s ownresources to improve cementing,stimulation and tubular runningservices• Positive results and five newcustomers acquired by KazakhstanBranch, after 3 consecutive years ofstagnant results.

The professionalism and the quality ofthe services, sustained by over 60years of tradition in well services,granted RWS in 2012 a record EBITDAof $9.4 million and net result of over $6million.

After several years of stagnant ormoderate growth, the year 2012continued the trend recorded in 2011of significant raising of the wellservices activity in Romania andconsequently the increase ofcompany’s financial performance.

Despite the increasingly competitiveenvironment, RWS succeeded tomaintain its market share for the rangeof services provided in Romania whilesimultaneously raising the complexityof services rendered.

The overseas activity, representing

14% of the company’s revenues in2012, focused on the neighboringcountries and Kazakhstan. While theKazakhstan Branch recorded anincrease of revenues by 160 %compared with the previous year, thewhole overseas activity of thecompany was 130% higher than in2011.

The equipment modernizationprogram was focused on the upgradeof stimulation and tubular runningservices. RWS paid in 2012 particularattention to the development andimplementation of a new data



Rompetrol Well Services

06acquisition system and simulationsoftware for the acidizing services. The company conducted the trainingof its personnel, primarily donethrough in-house tuition programs, toensure maximum benefit from thenew state-of-the-art equipment put inoperation in the last year.

RWS carries out specialized services inoil and gas fields in Romania andinternationally. These services includecementing, consolidation and sandcontrol services, stimulation, testing,slick-line, tubular running operationsetc.

Annually, the company cases 300strings and liners, ranging in depthfrom 500 to 4.500 meters andconsolidates and performs sandcontrol operations for more than 200oil and gas wells.

Stimulation services and slick-lineservices and casing and liner runningare accomplished with in-houseresources. For the optimization of theactivities, the company also offers arental service for its drilling tools.

2013 key oBJectIveS • Continue modernization of servicesfocusing on cementing and stimulationservices• Consolidate market shares inRomania for all type of servicesrendered• Start the implementation of theDevelopment program focusing onbusiness development in largedemand area

To strengthen its market position inRomania, RWS will continue themodernization program for the servicesrendered by a capital investmentprogram of $2.7 million USD.

In 2013 we will prepare an extensiveprogram of development, designed forthe next five years, targetingdevelopment of new services andbusiness development in largedemand area.

RWS oversees all ongoing projectsfrom its main office in Ploieşti,Romania, offering technical support for13 locations in Romania andKazakhstan.

overseas

client structure - domestic market

57%

33%

5%

5%

64%

6%10%

7%

4%

9%

evolution of the main financial figures

35,000

Gross revenues Net profit

5,000

thousand USD

10,000

2012

15,000

25,000

30,000

20,000

2011


Rompetrol Exploration and Production

06 RoMPetRol exPloRAtIon AndPRoductIonThe Exploration and ProductionDivision has intensified its activitiesfocused on exploration of the fiveblocks leased by The Rompetrol Groupin Romania. Therefore, E&P upgradedthe leads and prospects portfoliobased on seismic processing andinterpretation. Between 2009-2011,the investments made by TheRompetrol Group and its mainshareholder, KazMunayGas (KMG), forseismic acquisition were about 7million USD.

In 2012, KMG has drilled the first welloutside its borders, in Facsani block,leased by The Rompetrol Group since2005.

The total investment made forRompetrol exploration blocks in 2012reached USD 11 million, consisting indrilling one deep well (5000m) inFocsani Block as well as preparingdrilling for a new deep well (4200m) inZegujani Block.

Another objective in 2012 for theExploration & Production Division wasto continue to attract new partnerswith financial potential and technicalcapabilities in the development ofongoing and prospect projects. In this

regard, in October 2012, a Farm-outAgreement and Joint OperatingAgreement were signed.

2012 key AcHIeveMentS• The Rompetrol Group continued the

exploration activities on the five blocks: Focșani, Zegujani, Satu Mare, Greșu and Nereju

• Rompetrol has fulfilled the minimum work program for all the blocks on the phases expiring on December 2012.

• Continued drilling program of one deep exploration well (5000m) - Kaz1 - NW Feteasca well on Focsani Block

• After the final 2D seismic interpretat-ion report, a deep well (4200m) was designed and preparation of well site was done. Rompetrol has 100% working interest, as Zeta Petroleum (previous partner for North Zegujani) has withdrawn from the block.

• On Satu Mare, in 2012 we haveacquired 80 km of 3D seismic data and interpretation was almost ready. NAMR approved entering phase II of exploration, consisting of 2 deep exploration wells and acquisition of 180km2 3D seismic data. Outside of this program, for 2013, NAMR approved an 80 km 2-3 D seismic acquisition onMoftinu-East and drilling Moftinu 1001exploration well.

• On the Greșu and Nereju Blocks

NAMR approved the partial assignment of working interest and operatorship to Amromco Energy Srl. And a Joint Operating Agreement (JOA) was signed.

2013 key oBJectIveS• To complete 80 km 2 - 3 D seismic

data acquisition in the Satu Mare Block, together with Winstar Satu Mare.

• Preparation for drilling one deep well in Lupșa Drăgotești, in the Zegujani Block. Prospects were completed.

• NAMR to approve the assignment of partial working interest to Amromco Energy as well as operatorship on theGreșu and Nereju blocks and sign the Joint Operating Agreement.

• To drill one deep exploration well (TD=5000m) on Kaz1, in the Focșani Block.

• Identifying new production opportunities in the Romanian mature oil fields or developing production projects in the Caspian Region, Middle East and North Africa.



06 RoMPetRol dRIllIng AndWoRkoveRThe Rompetrol Drilling and WorkoverDivision has over 35 years of experiencein drilling and workover operations,ranging from exploration drilling,production well drilling, well cementing,well fitting and testing, and up torehabilitation and stimulation ofproduction.Thanks to continuous investments intechnology, market studies, and aflexible business vision, the DrillingDivision managed to win the respect ofa market involving tough competitionand the highest demands as tocompetency standards. The highquality service standards are supportedby a management, whose proceduresare certified with ISO 9001, ISO14001and ISO18001,by Germanischer Lloyd.DW Division included in medium andlong-term development plan thedevelopment of drilling andmaintenance / workover operationsthanks to the acquisition of newequipment.Providing expert labor and professionalservices to the international oil and gasindustry is guaranteed by over 550wells drilled in Syria, Algeria, Egypt, Iraq,Jordan, Libya, Sudan, and Greece andover 180 workovered wells in Libya.In 2012, the Drilling Division hasfocused on continuing and developing

the relationship with the traditionalclients, making efforts to continuouslyimprove our performance and to earnnew clients through our excellentperformance, quality and safe services.The Turnover achieved in 2012registered a 288% increase against2011, while the net profit was with131% higher than 2011 figures.

dRIllIng dIvISIon 2012 executIve SuMMARy• The Rompetrol Goup, through it's

Drilling and Workover Division, re-sumed the activities in Libia, sus-pended in 2011 because of the

Libyan Civil War, the three rigs started in normal conditions for the clients Akakus Oil Operations and Harouge Oil Operations.

• D&W Division performed drilling services and mud logging services forOMV Petrom in Romania.

• One mud logging unit also performedservices for KAZ 1 well, on Rompetrol concession, Focșani.

• Following Germanicher Lloyd surveil-lance audit, the Integrated Manage-ment System certifications were ex-tended (ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007).

dRIllIng dIvISIon 2013 BuSIneSS tARgetS • Highly participation in the develop-

ment of exploration blocks of Rompetrol.

• Strengthening and further development of excellent cooperationwith existing customers: Harouge Oil Operations (PetroCanada) and AkakusOil Operations (Repsol) for drilling, workover and consultancy services inLibya.

• Expand overseas drilling and workover operations in Europe and MENA.

• Development of new services that require small investments with high impact on clients.

• Maintaining all Integrated Manage-ment System certifications.


Drilling & Workover

turnover 2012 vs 2011

2012

thou

USD

$20,000

$10,000

$02011

$14,726

$3,794

net profit 2012 vs 2011

2012

thou

USD

$20,000

-$10,000

$0 2011$1,040

($3,312)


06 RoMPetRol QuAlIty contRol -RQcThe Laboratory Division of TheRompetrol Group, Rompetrol QualityControl – RQC, is one of the topcompanies on the national market oflaboratory analysis. Since itsestablishment in 2004, RQC granted anongoing support to its customers (bothTRG companies and external customers)efforts in identifying and implementingthe most safe and effective ways inorder to protect the environment andprovide the high product quality.

Despite the still unfavorable economicsituation, in 2012 the companycontinued to develop and improve itsperformance, managing to retain currentcustomers and attract new partners.

By maintaining business activities at thesame high quality standards, RQCfulfilled a major objective for 2012:renewal of the main accreditationcertificates awarded by RENAR andGERMANISCHER LLOYD. Theseaccreditations provide technicalcompetence guarantee, the impartialityand integrity of RQC laboratories andprotection of consumer interests.Certificates of accreditation represent animportant tool used strengtheningrelationships with existing customersand attracting new customers as well.

Security and health protection havealways been and remain the mainpriorities of TRG and RQC. The companyoperates its activity in continuingcompliance with the regulations onsecurity and health protection ofemployees, by implementing theongoing training program for personnelin the field and by providing optimalconditions for carrying out activities.Another realization of 2012 is theachievement of the objective “zeroaccidents” within the laboratories RQC.

The quality of services provided by RQCwas recognized year by year by the majorcustomers RQC outside TRG:

• Ministry of Economy and Finance byparticipating since 2005 in the projectmonitoring process funded by the EU onobserving common rules of introducingdiesel and gasoline on the Romanianmarket..• ArcelorMittal Galați by participating inthe environment monitoring of thelargest steel plant in Romania since 2008.

The two relationships that contributed tothe consolidation of the company’sposition on the Romanian marketproceeded in 2012 as well.

Attracting new customers outside TRGwas and remains one of the main

objectives of the company. Thedevelopment of the customer portfoliooutside TRG resulted in 2012 by startingnecessary procedures for concludingnew contracts on providing gas analysisrequired by EU Regulation no.601/2012in accordance with the Directive2003/87/CE on monitoring and reportinggreenhouse gas emissions.

RGC meets customers demand with awide analysis range in order to satisfy alltheir needs according to the Romanianand European applicable law in thissphere:

• Petroleum products complete analysis(crude-oil, gasoline, diesel, GPL, kerosene,petroleum fractions, cocks andpetroleum sulfur, ecological fuels –biodiesel and bio-ethanol, bitumen etc.)• Water complete analysis (chemicalimpure water, process water, drinkingwater, drainage water, cooling water,softened water, desalinated water, boilerwater, pool water, steam, condensate,phreatic water etc.)• Soil complete analysis (industrial soils,agricultural soils, industrial sludge)• Air complete analysis (physical andchemical pollutants in the workplacesand protected areas air by determiningappropriate concentrations)• Explosimetric analysis (by determiningexplosion danger availability at working

upstream and industrial servicesRompetrol Quality Control


06 with open fire in the industrialenvironment and closed vessels)• Medical and bio-toxicological analysis(quantitative and qualitativedetermination of different specificcomponents)• Physical and chemical pollutantsanalysis at workplaces (by observingeffective labor protection provisions)• Weather factors, environment andspecific microclimates.

Accuracy of carried out processes andanalysis are confirmed by the certificatesobtained and maintained by RQC whichcreate the necessary tools for extendingcustomer portfolio and consolidating thecompany’s position in the industrialanalysis market:

• RENAR – Accreditation Association ofRomania. All three laboratories RQC areaccredited in accordance with thestandard SR EN ISO 17025:2005,certification issued by the AccreditationAssociation of Romania (RENAR), the onlynational institution that certifiesstandards of laboratory activities.Therefore, RQC analyzes are recognizedin over 70 countries around the worldthat signed the international recognitionagreements (I.L.A.C, M.L.A., E.A.)concluded by RENAR. • Germanischer Lloyd (2008) certifiedRQC for the Management Integrated

System: Quality (ISO 9001), Environment(ISO 14001) Labor Protection (QHSAS18001);• The Romanian Railway Authority (AFER)– licenses for testing products used inrailway transport (environmentparameters);• State Inspection for Boilers, Recipientsunder Pressure and Hoisting Units (ISCIR)– licenses for testing boiler water;• Ministry of Health (Public HealthDepartment) – authorization to performprofessional measurements of toxicemissions.

Efforts exerted in order to improve thecompany's services are confirmed bycertificates of excellence obtained byconstant participation of the company ininternational programs of proficiencytesting (proficiency tests - PT) andcollaboration with international researchcenters (Spain, Netherlands).Participation in PT assessments provide abetter guarantee for its customersensuring that test results are accurateand retain their integrity when thesample is retested in other laboratories.Testing at an international level inspirestrust and confidence that laboratoriesRQC ensure constant accurate results, thefact that is of fundamental importancefor the laboratory itself, for theorganization to which it belongs and forthe beneficiaries (including potential)

and accreditation and regulatory bodies.

RQC managed to keep its majorcustomers loyalty and to enter into newpartnerships, despite unfavorableeconomic conditions. The RQC is still acompetent partner for the majorcompanies of independent inspectorsoperating on Constanta port platform forits specific analyzes of petroleumproducts imported / exported throughthe port of Constanta and for performingmonitoring of the specific factors forcompanies in most areas of the countrythrough its environmental laboratories.

Business environment affected by theeconomic crisis that Romania passedsince 2008 has influenced the companyeconomic indicators. However, due toefficient cost-reduction activities, as ofend of the financial year 2012 RQCmanaged the best results registeredsince its establishment in 2004.

In 2012, as well, RQC succeeded tomaintain its liquidity and financialindependence. As during previousyears, the company continued todevelop and carry out businessactivities on its own financialresources, without requiring externalfunding, thus providing solvency andpartners confidence.



06

oBJectIveS foR 2013One of the main objectives of RQC for2013 is the expansion ofpetrochemicals currently conditionedby taking over the laboratory held byRompetrol Petrochemicals thatprovided the widening the servicesrange with new laboratory analysis.

Another important objective is toincrease market share and revenue byproviding gas monitoring startingfrom 1 January 2013 and by attracting

new customers outside the Group onthe analysis petrochemicals market.Achieving this goal will ensurecompany’s income growth from TRGexternal customers with minimum36% in 2013, so the estimation of thetotal turnover being 13%.

The company also aims to maintainthe accreditations from RENAR andGERMANISCHER LLOYD and to prolongthem for the new analysis types to berealized in 2013. Being an important

marketing instrument, thesecertifications have a major role both inconsolidating relationships withavailable customers and in attractingnew business partners.

“Zero accidents” realization in RQClaboratories, operational expensesoptimization and financialperformance improvement alsorepresent constant companyconcernments.


non-group income dynamics in the total turnover

2005

6%7%

11%

15%

10%

5%

11%

8%

10%9% 9%

2006 2007 2008 2009 2010 2011 2012

RQc non-group income (lei, thousands)3,000

2005

981

1,331

1,887 1,814

1,587

1,8861,630 1,762

2006 2007 2008

2,500

2,000

1,500

1,000

500

2009 2010 2011 2012


06 2012 AcHIeveMentS

StRAtegIc PRoJectS foRRoMPetRolThe main objective for the generalconstructor of the Rompetrol Group,Rominserv, in 2012 was to successfullyconduct the completion of all projectsrelated to the modernization program ofPetromidia refinery started in 2006. The modernization of Petromidiarefinery focused on nine major projects:the construction of five new facilities(factory mild hydrocracker, hydrogenplant and sulfur recovery plant treatingwaste gas, air separation plant forproduction of liquid nitrogen and a newflare system ) and modernization /expansion of four existing facilities(catalytic cracking facility, processingplant desulfurization vacuum distillatediesel desulphurisation, Amine systems,gas desulphurisation plants and sulfurrecovery - stoves Claus).Rominserv coordinated the works, withover 280 companies involved(construction and assembly, design,manufacturers and suppliers), 3,500people, 200 pieces - 5,600 tons, 2,400tons and 280,000 centimeters pipewelding, land consolidation, 130 km grid.

tuRnkey PRoJectS1. Mild Hydro-Cracking Plant, the largestindividual project reaching a capacity of

220 m3/h, guarantees a 30% conversionand max 100 ppm of unconverted gasoil(FCC feed). It was a special project alsodue to its outstanding particularities:plant web implementation, specialdesign for space savings, special soilconsolidation, special materials forreactors fabrication – CrMo (V) steelplates and special heavy lifting(equipments in excess of 450 Tons).

2. Green Field Hydrogen Plant is capableof producing 40,000 Nm3/h with a purityof 99.98% H2 at a pressure of 86 bar/min.Outstanding particularities of the projectconsist of delivering: high purity H2 athigh pressures, the latest generation ofPSA, plant web implementation, specialdesign for space saving and special soilconsolidation.

3. New Sulphur Recovery Unit and TailGas Treatment Unit (SRU & TGT) –through this project Petromidia refinerysucceeded to fulfill the environmentalregulations for the recovery of sulphurand SO2 emissions (max 1000mgSO2/Nm3). The project delivered anew SRU of 220 tons of sulphur/daycapacity and a new TGT unit of 250tons/day capacity. Outstandingparticularities of the project: over 70installed equipments, undergroundpiping and cables were installed with therefinery operating and exceeding

technical challenges in positioningdrums at high depth beneath sea level.

4. New flare system implying 3 John Zinkflare tips for low pressure, high pressureand catalytic cracking for Petromidiarefinery. From the outstandingparticularities of the project we lookupon: the impressive height of the flarestack (over 120m), smokeless operation,fully automated operation andintegration with the refinery DCS.

vegA RefIneRyRominserv is also coordinating themodernization works at Vega Refinery. In2012, a vacuum column was replaced, aspart of the Modernization of the VacuumDistillation Unit (VDU), a project whichwill deliver an upgraded vacuum system,DCS integration, upgraded I&C hardwareand an increased safety in refineryoperation.

PRoffeSIonAl MAIntenAnceSeRvIceSRominserv managed to perform at aprofessional level, in respect to themaintenance operations both inPetromidia and Vega platforms,succeeding to achieve all keyperformance indicators for maintenancebudgets and mechanical availability. As aplus for ROMINSERV’s technicians, theymanaged to achieve the highest


Rominserv


06 mechanical availability in the history ofPetromidia, that reached 96.37% in 2012,a figure that places Petromidia betweenthe top European refineries. Themechanical availability ensured byROMINSERV’s technicians enhanced theoperational performance of the refineryresulting in larger quantities of processedcrude and significant savings in theoperating expense budgets. The excellent results were possible dueto constant improving of themaintenance operations throughstreamline planned maintenance, stateof the art condition based monitoringtechniques, custom online inspection,accurate fault reporting, strong inter-cooperation with the Engineeringdepartment and continuousimprovement of the human resourcesinvolved in maintenance operationsthrough training and developmentprograms.

non gRouP BuSIneSS develoPMent Although the industrial marketregistered a downfall in the past years inRomania, ROMINSERV managed to cut ashare of the market by signing contractsor winning tenders in Oil & Gas andWater Management Infrastructure: In February 2012 ROMINSERV, as Leadpartner in a local joint venture, signed acontract amounted to USD 4 million

with RAJA Constanta, the largest regionaloperator in potable water supply topopulation and waste water treatment inROMANIA. The EPC project aims torehabilitate and develop the watersupply and sewage system and buildthree new waste water pumping units inPalazu district, Constanta Municipality.The project is scheduled to finish inAugust 2013.At the end of 2012, ROMINSERV wasawarded two (2) EPC tender contracts byPETROTEL LUKOIL, the operatingcompany of LUKOIL’s Romanian refinerylocated in Ploiesti.Also in 2012 an important companybecame a Rominserv client, namely CNECernavoda, the operational branch ofNUCLEARELECTRICA Romania and theoperator of Cernavoda Nuclear PowerPlant. A first business has beenconcluded consisting in two (2) contractsfor Plant’s diesel tankfarm rehabilitation.

QHSe PeRfoRMAnce As a specialized company whichintegrates industrial services,maintenance, project management andtechnical upgrades, ROMINSERVmaintained an Integrated ManagementSystem in 2012 which implied constantconcern for:Continuous Quality Control – In 2012ROMINSERV’s Quality ManagementSystem was designated by Germanischer

Lloyd to meet all requirements of ISO9001:2008 standard.

Guaranteed Health and Safety of ouremployees and subcontracted workers –In 2012 we committed to our goal tohave “Zero Injuries and Incidents”registering 1.15 million work hourswithout LTI - Loss time injuries. During2012, ROMINSERV’s Safety ManagementSystem was designated by GermanischerLloyd to meet all requirements of BSOHSAS 18001:2007 standard.

Minimum Environmental impact of ouroperations by strictly complying withlegal requirements, adopting a proactiveattitude towards energy saving andperforming an efficient wastemanagement process. During 2012,ROMINSERV’s Environment ManagementSystem was designated by GermanischerLloyd to meet all require ments of DIN ENISO 14001:2009 standard.fInAncIAl PeRfoRMAnce


Rominserv

ROMINSERVIntegrated

ManagementSystem

Quality

Health

OccupationalSafety

RiskAnalysis

Environ-ment


06 Rominserv operations and technicalperformance was backed-up by thefinancial results of 2012. ROMISERV2012 turnover of USD 143 millionplaces the company between the leadEPC contractors and industrial servicesintegrators in Romania. The financialmetric indicators show the operationalperformance of ROMINSERV business -EBITDA and Net revenue indicatorsincreased versus the past year, USD11.31 million in 2012 versus USD 7.56

million in 2011 for EBITDA and USD8.73 million in 2012 versus USD 0.32million for Net result.

2013 oBJectIveS An important objective for 2013 is tomaterialize Rominserv opportunitiesfor business development in theRepublic of Kazakhstan, opportunitiesthat will create premises for carryingout a significant volume of servicesand works during 2013-2016 and alsowill ensure value capitalization ofRominserv capabilities and experiencein the field of EPC projects andmaintenance in Refining &Petrochemical industries.

The company is aiming to extend itsactivities to emergent countries likeLibya, Kuwait and Saudi Arabia. Regarding Maintenance operations for2013, the main aim is to maintain ahigh level of plant mechanicalavailability and specifically to performall the works related to the PetromidiaRefinery planned shutdown and TurnAround in March 2013 in a safe andprofessional manner.

In the VEGA refinery, all efforts will befocused on successful commissioningand handing over of theModernization of the VacuumDistillation Unit (VDU) project.

Quality control will be a focus area forROMINSERV in 2013, as well as aimingto improve client satisfaction duringproject execution, work quality andbusiness process.

Financial performance will continue tobe an important objective forROMINSERV, achieved through GAcost optimization, improved contractmanagement and increasing nongroup revenues.


Rominserv

net result (mil uSd)

eBItdA (mil uSd)


06

MAJoR PeRfoRMAnce And AccoMPlISHMentS In 2012Rominserv Valves Iaifo has continued in2012 to contribute to The RompetrolGroup’s strategic goal, to grow thecapacity program at Petromidia Refinery,by delivering more than 4.000 pieces ofiron and steel industrial valves.

Regarding the valve activity, RominservValves Iaifo has continued to adjust itsbusiness strategy according to theevolution of the market demand, as wellas the price of raw materials and theproduction cost. Rominserv Valves Iaifo has continued theprogram for compliance to theEnvironment Program in 2012, with thedeadline in first half of the year.

tHe vAlveS MARketThe general fittings market trendsfollow the industrial oil marketdevelopments closely. Therefore, therising oil prices cause massiveinvestments, which will increasedemand for valves.On the other hand, the traditionalproducts market is constantly decliningas production is geared towards smallseries made of special materials in acentralized system. Regarding castparts, the demand for these productswill increase significantly as a result ofclosure activities of most factories in theEuropean Community and the UnitedStates because of market conditionsand environmental legislation, requiringmajor investments.

tHe RoMAnIAn fIttIng MARketIn Romania, there are 10 manufacturersof valves that act on different marketsegments, interfering only in aproportion of 7-8%. Nevertheless, themarket is radically influenced byimporters of products at very low prices,made in China, Taiwan and Turkey. Theseproducts are used primarily for projectsthat do not require any specialconstruction, such as water or heat.In the second part of 2012, analystsobserved the growth of import productsused in the oil and gas industry that donot meet the special legal requirements.

upstream and industrial servicesRominserv Valves Iaifo


06 RoMInSeRv IAIfo ZAlăuPRoductS (RIS vAlveS IAIfo)• Oil processing industry, transport andstorage of oil and gas.• Refining and Petrochemical• Energy industry• Infrastructure of steam, water, heat

During 2012, RIS Valves Iaifo homologateda series of new products, such as:• gate valve body PN 40 DN 50 acc toPersta procedure (prototype 1 pc, zeroseries 5 pc, series homologation)• over 50 types of parts acc to a planestablished by GEA Refrigerationcompany• oil and ammonia filters also for thecompany GEA, • 21 new parts for the company SYSMECArad • Rominserv Valves Iaifo hashomologated a new material gradeCA6NM, for cast parts.• other sizes of the gate valvesexpandable type used in the oilfieldindustry for drilling and productionoperations for noncorrosive or lightcorrosive fluids • ball valve fire safe variant, RominservValves Iaifo obtained the certificate API607 for this type of valveThe strategy of Rominserv Valves Iaifo,adapted to market conditions, reflectedthe financial results achieved in 2012, aturnover of 8,96 mil USD, a 7% increasecompared to 2011.

Being the biggest producer of fittingsand valves in România, 75% ofproduction has been sold internally andthe rest were exported to Germany, Italy,France, Austria and Bulgaria.

MAIn oBJectIveS foR 2013The main objectives of Valves Iaifo in2013 include promotion and sale of newproducts assimilated in 2012,homologation and sale of new products,increase of the Marketing activity topromote new products and to developnew markets. Even the internationalmarket is dominated by companies fromChina, India and Turkey, as a direct causeof low prices. The quality of the productsmade by Rominserv Iaifo Zalău willallow entrance in new markets, from theBlack Sea region and Kazakhstan.

The expansion of the range of productsof Rominserv Valves Iaifo is part of thestrategy to increase the turnover byexecution and commercialization ofmarketable cast parts. In addition to thebasic products, Rominserv Valves IaifoZalau has also turned to those executedbased on beneficiaries’ documentation,which confers it an important advantageon the profile market. Such successoffers perspectives for a futurecollaboration for big-dimension parts ina market under continuousdevelopment.For 2013, Rominserv Valves is on targetto increase the turnover to 10,07 millionUSD, with the support of sales on castparts, and also increasing orders fromexisting partners.

upstream and industrial servicesRominserv Valves Iaifo

total sales

thousand USD


06

Palplast is one of the importantproducers on Romanian HDPE pipesand fittings market, with a sharemarket that grows from year to year.The company managed to achieve thismarket status by adjusting thebusiness strategy according to theevolution of the market demand,focusing on infrastructure andagriculture projects and resizing theproduction costs and the pipe prices.

In the Romanian market, projects forrehabilitation and expansion of water

and sewerage during 2013-2017 areestimated at 3.4 billion Euros. Theinterest shown by the Romanianauthorities and by the EU for therehabilitation and extension ofirrigation networks is continuouslyincreasing, therefore Palplast isfocused on developing new businesspartners with agriculture producers.

2012 key AcHIeveMentS:In 2012, the company becameprofitable and all indicators weresignificantly higher than in 2011. The

results were higher in 2012 than „2009– 2011” period.

Moreover, in 2012 we obtained with 447kusd EBITDA more than 2011 and with300 kusd Net profit more than 2011.

Palplast’s products becamecompetitive on the market in terms ofprice due to production cost reductionin 2012, meaning reduction oftechnological waste and energyconsumption. Palplast succeeded to increase the


Palplast


06 clients portfolio with 204 new clientsand has increased the number ofexternal and internal raw materialsuppliers.

Also in 2012, Palplast has signed newcontracts for agriculture area and forprotection optic cables, also bartercontracts for trading with PVC pipes,armatures and fittings.

With intention to develop the sinergybetween companies Palplast andRompetrol Petrochemicals, inDecember 2012 we started testing, inour own Laboratory, new sort of HDPEproduced by RompetrolPetrochemicals. Taking in considerationthat first test results were encouriging,we are positive that in the near futurethis action will lead to production ofPalplast’s HDPE pipes with new materialfrom Rompetrol Petrochemicals.

In 2012, the company’s strategy hasalso included a series of cost controland reduction actions, as well as theimplementation of effective businessstrategies in its relationship withsuppliers and customers.In 2012, Palplast had a turnover of 5.2million USD with a production of 1920tons of pipe.Palplast’s market share has risen alongwith the sales volume.

2013 key oBJectIveSFor the year 2013, the company isestimated an increasing turnover with49% vs. the previous year. Having thisin consideration, we intend tointroduce our products onneighbouring countries, starting withthe Bulgarian market and in theMoldavian Republic, countries in whichwe are already in negations withconstruction companies.

Another objective in 2013 is thetrading activity. Thus our goal is toconclude contracts with foreignproducers of pumping stations,fittings, valves to support thecustomers and to provide them acomplete offer, from water supply andgas to sewage. Also, Palplast intend to participate inauctions of execution services such aswater supply and sewerage, with

various construction companies.The company’s strategy for 2013 alsoincludes the signing of contracts inevery major city, in order to representPalplast ‘s deposits of products in theterritory; this measure will lead to abetter representation, besides its ownagents, of Palplast products. For a better coverage area andcontracting clients, Palplast is going todevelop a Commercial department byincreasing number of salesrepresentatives.

In 2013, Palplast intend to upgrade theproduction line and also to continueto reduce failures and to increase lineperformance by 15%, by increasingnumber of maintenance engineers.

06 upstream and industrial services

Palplast

Pipe sold (tons)

turnover (uSd)

2011 2012

3,427,594

5,500,000

5,181,507

1,920

1,0731,393

1,668

2,500

3,500,000

1,500,000

2009 2010 2011 2012

1,500

500


06ecoMASteREcomaster, part of the Rompetrol Group,is the biggest provider of integratedenvironmental services for hazardousindustrial waste in Romania. In more than 12 years of activity, thecompany has reached a level of capabilityand expertise allowing it to mangehazardous waste as general contractor orsubcontractor within the framework ofcomplex environmental projects.

2012 key AcHeIveMentS• Development of the PartnershipsNational Program in collaboration withregional companies generating wasteand companies whose object of activity iswaste collecting (over 60 partners).• Collecting, treatment and disposal ofabout 11,000 tons of hazardous waste.• In 2012 the program of identifyinggenerators and collectors of hazardouswaste has continued in order to sign newcontracts for waste storage in Ecopark. • The program for developingpartnerships has allowed for theproviding of integrated services of wastemanagement both directly and throughtransportation, treatment, neutralization,stabilization, final disposal so that we arein possession of overall wastemanagement, at the same time ensuringthe traceability and economical efficiencyprinciple. • The unit for treating and automatic

packing of hazardous waste has been putinto operation and has allowed the takingover for purposes of treating and finaldisposal of an extended range of waste. • Ecomaster has collected and disposed ofover 16.000 tons of sludge from theRompetrol Refining Sludge Lagoon 3.

2013 key oBJectIveS• Concluding of strategic partnerships inorder to increase the market share andaccessing of major environmentalprojects (thermal desorption, units for soiltreatment, bioremediation,centrifugation).• Targeting to participate in auctions,organized for environmental works andactivities of hazardous waste disposal.• Focusing on identifying major wastegenerators in order to concludeecologization contracts and contracts forwaste disposal/mastering. • Soil ecologization within Explorationand Production activities. • Disposal of waste formed during drillingactivity. • Transportation and disposal of waste

formed during demolitions. • Transportation and disposal of wasteformed during projects of rehabilitatingcontaminated sites. • Disposal of waste formed during tankscleaning.• Applying TRET service capabilities inmajor treatment and decontaminatingprojects.• Widening the range of providedservices by means of taking over andimplementation a broader range ofcollected waste, such as:

• hazardous waste: tank sludge, oil and crude oil containingmud, coal sludge, etc.;

• non-hazardous waste: dead-catalysts;• recyclable waste: automotive

batteries, paper, plastic, iron, DEE, etc. waste.

ecoPARk develoPMentEcomaster’s objective is thedevelopment of important partnershipswith key players on regional markets inorder to consolidate the technologicalcapacities of the company.

06 upstream and industrial services

Ecomaster

Marketing 07


RoMPetRol - BRAnd eSSence The desire to succeed is written in ourgenetic code. The difference is givenby the way we act for the fulfillment.And here comes the passion. The passion makes our desires anddreams become real. The passion isthe source of energy that helps to stepover the obstacles and reach our goals.

Our core values are• International recognition• Revolution • Applied creativity

2012 BRAnd PReSenceIn a dynamic market, in which theconsumer is well informed and the

decision is influenced by the quality ofthe products, services and brandreputation, Rompetrol succeeded torespond to the customer’s needs andto keep its position within the top oiland gas companies. The purpose of 2012 was to increasethe brand equity by consolidating acorporate brand involved in growingthe quality standards of its products,services and community life. That’s why the Image Campaign wasfocused on the company’s strongestasset- the fuel quality- by mentioningthe fact that the company controlsevery step in the way of the oil fromthe Kazakh ground to the Romanianpumps so that the consumers receive

the best quality of fuel. The imagecampaign was communicated mainlyon TV, print and point of sales. KV simulation of a Facebook page with30000 likes – to be inserted Meanwhile, with a consumer-orientedsocial media strategy with qualitycontent and engaging applications,Rompetrol was one of the most activebrands on Facebook. Although it is a difficult category,

Rompetrol became a popular socialmedia brand, with positive feedbackand key opinion leaders that took ourmessage further throughout theonline community. In December 2012, our Facebookcommunity gathered around 30,000fans. Constantly growing, our brandbecame a “friend” that gives theconsumers constant usefulinformation and also a lot of funopportunities – just like a modern andinnovative brand should.

efIx BRAnd In 2012, The Rompetrol Group has madea major change in its main domain ofactivity: fuels. The company has changedthe fuel strategy from having 2 brands tohaving ONE FUEL brand family – Efix,with standard and premium products.The change was made by replacing theformer premium product, Alto, withEfixS, making so an extension of the

Marketing07


most well know fuel brand on theRomanian market - Efix.

The change was driven by the desire toinnovate and to respond to consumerneeds, bringing production andlogistics savings for the company andalso focusing the communicationbudget on just one brand, bringingmore effects on market. The new EfixS offers the same Efixengine protection, while adding extrapower. The new value (power) addedto the Efix brand will increase generalEfix brand equity and mass marketsales will also benefit from it. In 2012, the Efix Brand implemented anew image campaign, having as

objectives to reinforce Efix as a cleverchoice by promoting its economicalcustomer values and to increase brandawareness and indicators. Thecampaign was very successful andsucceeded in increasing brandindicators, strengthening the product’snumber one position, and growing thegap between Efix and other brands onthe market.

The 2012 image campaign was thefirst campaign that was aligned andimplemented in all the Rompetrolcountries: Romania, Moldova, Bulgariaand Georgia. The EfixS fuel brand was also launchedalso on the Moldavian market.

PRoMotIonAl ActIvItyIn 2012, The Rompetrol Groupimplemented promotional activitiesseeking to secure the seasonalincrease of volumes by runningpromotional campaigns.

The most intense promotional activitywas a 20 week campaign in Bulgaria,the only entity covering both summerand winter periods. In Romania andMoldova, Rompetrol focused only onwinter promotion and in Georgia had a2 week co-branded promotion in May.

Marketing07

08 corporate social responsibility


coRPoRAte SocIAl ReSPonSIBIlItyThe Rompetrol Group (TRG) considerssocial responsibility as a voluntarycontribution to development insociety, connected with the basicactivity of the company, theinternational laws and the resources ofthe group.

MISSIon And vAlueSAs a leading Corporate Citizen, TheRompetrol Group seeks to actresponsibly in all activities. As a globalcompany whose success has beenbuilt on innovation, passion throughquality and individual leadership, werequire high Corporate and PersonalResponsibility standards wherever weoperate – with the ultimate aim ofimproving our business and thequality of life of those we impact.

We are committed to:1. Sustainable, responsible develop-

ment which extends through and beyond the life of our operations;

2. Operating ethically and responsibly with respect for the safety, health and welfare of our employees and partners in the community;

3. Best practices in corporate gover-nance as it affects all of our commu-nities of stakeholders, including our employees, local and regional com-

munities, suppliers, investors and partners;

4. Investing time and energy in pro-moting the spirit of leadership through entrepreneurial and educa-tional pursuits.

Our commitment to CSR provides aguiding framework for all ourmanagement decisions and we focusparticularly on harnessing industrybest practice by encouragingCompany and Communityparticipation in corporate citizenshipprojects focused on raising thestandards in the areas of: Businesssuccess, Environment, Health andSafety, Community Responsibility,Youth Education and Leadership.

guIdIng PRIncIPleSThe spirit of The Rompetrol Group’sapproach towards CSR is reflected inour corporate motto, “Energy for Life,”which is a call to ongoing, activeinvolvement in projects that meet ourCSR goals.

Rompetrol defines the followingguiding principles of its CSR Policy:1. Respect Employees: To respect em-

ployees and help enhance their life through development opportunitiesand employment practices grounded on equal opportunity and

Occupational and Safety Best Prac-tices;

2. Ongoing Involvement: To involve at an appropriate level the authorities, community, and other concerned stakeholders in all decisions that af-fect them;

3. Health and Safety: To ensure the health and safety of our employees, suppliers and the communities in which we operate;

4. Risk management: To identify, as-sess, manage and mitigate risks to our host communities, employees, contractors, the environment and our business;

5. Education and Leadership: To pro-mote the spirit of leadership, espe-cially among young people, throughcivic involvement and educational activities that encourage socially re-sponsible pursuits and entrepre-neurship;

6. Respect local communities: To re-spect, protect and promote the human rights, culture, customs and values of the communities in which we operate;

7. Best practice: We are guided by the United Nations Global Compact’s- ten principles in the areas of human rights, labor, the environment and anti-corruption.

corporatesocial responsibility

07


The Rompetrol Group, as a sociallyresponsible company, is committed tothe ongoing implementation andimprovement of the quality of socialactivities in the following maindirections:

n External Social Responsibility• Social Partnership and Sponsorship• Environment Protection • External Charity of Rompetrol em-ployees

n Internal Social Responsibility• Development of Human Resources potential • Health and job security

exteRnAl SocIAl ReSPonSIBIlIty

1. SocIAl PARtneRSHIP AndSPonSoRSHIPThe Rompetrol Group continued to grantsupport for projects related toenvironment, healthcare, sports, culture,and education. In total in 2012 TRGinvested 1,3 million USD USD, out ofwhich 900.000 USD was directed tosustain initiatives of civil society and localauthorities from Romania. In France, theamount of 300 000 USD was granted tosupport the football team of Montpellier,whereas in other countries (Moldova,Ukraine, Bulgaria, Georgia) the Groupcontributed for supporting educationand social charity actions.

RoMAnIAIn 2012, through the 4th edition of thenational program “Together for eachand everyone” 16 projects of healthcareand environment were financed, witha total budget of 250,000 USD. Allprojects had two overlapping parts:one which consisted in the restoration

of medical care units in rural andurban areas, or the construction ofwater collectors, eco plants for waterrecycling, solar panels for schools, anda second component which consistedin educational and cultural activitiesfor the members of the communities.

From 2009 to 2012:• 1100 community projects registered

in the competition, 71 were financed; • Over 100 NGOs, 100 schools, bene-

fited from the partnerships created during the projects implementation;

• 22,000 pupils have participated in seminars on environment/healthcare topics;

• 3500 volunteers, who actively took part in all implementation processes;

Several other projects on healthcareand environment protection weredeveloped or continued as part of theplatform “Energy comes from the heart”. In the healthcare field, The RompetrolGroup, Fundația pentru SMURD andthe General Inspectorate of Aviation(IGAV) continued the partnership forsupporting air emergencyinterventions, the movement ofmedical personnel and thetransportation of victims. In thiscooperation, the Rompetrol Group,through Rompetrol Rafinare, providesa monthly amount of Jet A 1 fuel since2010, the quantity estimated for the


07Sponsorship per Business units

Sponsorship per country

80,000

900,000

300,000


operation of the three helicopters inBucharest, Târgu Mureş and Arad.

2. SPonSoRSHIPThe Rompetrol Group is involved insocial partnerships, implementin jointprojects and programs or arrangingsocial events. Much attention is paid to support thenational campaign “Fiecare Copil înŞcoală” (Each Child in School) initiatedby the Ovidiu Ro Association. Thispartnership which became effective in2004 advocate: school preparationprograms, free school materials,uniforms and hot lunches for childrenfrom low-income families; incentivesin the form of food coupons;enforcement of education andchildren rights legislation etc.As of 2003, Rompetrol is the partnerand main sponsor for Gala SocietățiiCivile (Civil Society Gala) – the annualcompetition that awards the bestprojects of the year, projects initiatedby NGOs, unions, individuals etc.

3. exteRnAl cHARIty ofRoMPetRol eMPloyeeSThe Rompetrol Group employees aredeeply committed to conductingbusiness in a socially responsible andethical manner, putting their effort tocontinually improve the company’sperformances and best practices. Thus,

Bu RefInIngThe Business Unit environmentalstrategy is based on the compliancewith the legislation, on the permanentmonitoring and periodical reporting ofthe degree of compliance and on thecontinuation of investment programs,in order to harmonize with the besttechniques available in the field (BATBREF) and is based on the followingprinciples:• Compliance with the legislation and

of other applicable requirements, permanent monitoring of the degree of legal compliance;

• Use of the environmental managementsystem in order to integrate in the company decisions, criteria of performance and air, soil, water and natural resources protection;

• Continuation of the investment pro-gram in order to comply with the leg-islation in the environmental protec-tion field;

• Evaluation of the company’s environmental performances, communica-tion to the interested organizations and local communities, concerning the improvement of environmentalperformances.

• Promoting information and awarenessfor the company’s employees con-cerning the measures of prevention and reduction of emissions into theatmosphere, water and soil, including


07 2012 represented a new opportunityfor community projects developed bythe employees – 1000km BalkanCharity Challenge to support theactivity of Hospice Association, charityactions supporting impoverishedfamilies to send their children toschool (toys, clothes and moneydonations), blood donationcampaigns, charity concerts to supportyoung musicians.

4. envIRonMent PRotectIonThe Rompetrol Group carries outenvironment protection in fullconformity with the requirements ofthe nature protection legislation of theEuropean Union.The environmental strategy has thefollowing interest areas:• Compliance of activities and facilities at

national and international requirements;• To minimize environmental incidents;• To minimize the consumption of resour ces

and quantities of waste generated;• To optimize the operation in terms

of energy facilities and reduce CO2 emissions;

• To maintain a certified environmentalmanagement;

• Permanent training of specialized personnel in the field;

• To ensure excellent communication within the Group and the interested public, state authorities, NGOs etc.


measures concerning waste manage-ment for the developed activities, so that may have a positive impact over the environment.

• Participation in volunteering and social responsibilities projects in the neighboring communities.

During 2012, Rompetrol Rafinarerequested the revision of theintegrated environmental permit forthe Petromidia work point for theauthorization of the new plants fromthe platform, respectively HydrogenPlant (HPP), MHC (Mild Hydro-cracking- MHC) the new sulfur recovery unit(New SRU).

WAteR MAnAgeMent PeRMItAt Rompetrol Rafinare, the watermanagement permit was renewed by“Apele Române” NationalAdministration and the “Ape DobrogeaLitoral” Administration. The water management permit wasalso renewed at Rompetrol Rafinare –Vega work point by the “ApeleRomane” National Administration –Buzău Water Basin Administration -Ialomița –The water managementsystem of Prahova.

gReenHouSe gAS (co2)For each of the 3 entities of BURefining, the greenhouse gas permithad the period of validity 2008-2012,

stage II related to the EU-ETS scheme.During 2012, the necessary documentswere drawn out and submitted toANPM for the issue of a newgreenhouse gas permit for the period2013-2020 (Phase III), having theannex Plan concerning the monitoringand reporting of the CO2 emissions -2013.In February 2012, the checking of theCO2 emissions for the year 2011 andtheir validation by certified verifierstook place. (in order to report to theNational Environmental protectionAgency).

MAIn geneRAl QHSe oBJectS:• Re-certification of the integrated

management system QHSEaccording to ISO 9001,ISO 14001 and OHSAS 18001 standards• Maintaining the permits (AIM, CO2, AGA)• Achievement of environmental

targets established by BU Refining strategy

• Safety consolidation on the Midia and Vega Platforms for reaching the “zero accidents” objectives

• Continuation of the participation in CSR actions

Bu RetAIlThrough the activity developed in2012, the QHSE team ensuredmaintenance of the integrated

management system for quality,environment, occupational health andsafety implemented and certified,compliance and implementation ofthe new legal requirements applicablein all the entities within BU Retail

MAIn AcHIeveMentS In tHe envIRonMentAl fIeld In 2012• Renewal of the certifications of the

integrated management system in the environmental field (ISO 14001)

• Renewal of the environmental per-mits for the work point from Down-stream Romania;

• Implementation and certification of the integrated management system (ISO 14001) for Rompetrol Moldova

• Observance of the compliance program in environmental terms for DPPLN – Dyneff warehouse

• No accidental environmentalpollutions were recorded at none of the BU Retail entities

tendencIeS foR 2013 – 2015 • Maintaining the integrated manage-

ment system certification in accordance with the SR EN 9001:2008, SR EN 14001:2005 and OHSAS 18001:2007 standards.

• Implementation and certification of the energetic management standard:ISO 50 001.

• Maintaining the organization at a high level of performance in accordance


07


with the legislative and TRG requirements.

• Compliance with the environment strategy for BU, and the established targets.

Bu tRAdIngThrough the activity developed in2012, the QHSE team ensured themaintenance of the integratedmanagement system for quality,environment, occupational health andsafety implemented and certifiedrequirements applicable to all theentities within BU Trading

MAIn envIRonMentAlAcHIeveMentS In 2012• Renewal of the certifications for the


• Renewal of the environmental permitsfor Midia Marine Terminal (MMT);

• No accidental environmental pollu-tions in the work points of the enti-ties from BU Trading

• In accordance with the international standards, the MMT teams participatedsuccessfully in the following actions:

a. applications concerning the way of action and intervention in case of an accidental pollution b. fire simulation and way of taking actions in the administrative buildingc. international application – inci-dent simulation of intervention and

taking of hostages tendencIeS foR 2013 – 2015 Maintaining the certification for theintegrated management system inaccordance with the SR EN 9001:2008,SR EN 14001:2005 and OHSAS18001:2007 standards.Maintaining the organization at a highlevel of performance in accordance withthe legislative and TRG requirements.

non-coReRoMInSeRvMAIn envIRonMentAlAcHIeveMentS In 2012• Renewal of the certifications for the


Rominserv - environmental performance in 2012

• Renewal of the environmental per-mits for the Rominserv Petromidia and Vega work points;

RoMInSeRv vAlveS IAIfoIn 2012, in Rominserv Valves IAIFO(Zalău) the activity was developed inaccordance with the BU EnvironmentalStrategy.

According to the requirements fromthe action plan, annex of theintegrated environmental permit, until30.06.2012 there were carried out allthe measures for compliance, exceptthe measure related to the non-ferrouscasting activity, as a result of thecessation of this activity. In order to


07Indicators measurement unit 2011 2012

Discharge of sewage waters m3 88434.12 8349

Total waste tons 3424.628 129.339

Total water input m3 88434.12 8349

Total energy input MW 9249.329 694.826

Environmental charges USD 63,183 52,359

The number of accidental pollution units 0 0

Number of inspections by environmental state authorities

units 0 2

Charged environmental penalties by environmental state authorities

USD 0 0


comply in 2012, there were madeenvironmental investments of$136,023. The competentenvironmental protection authoritiescarried out 7 inspections. There were no fines charged.

RoMPetRol QuAlIty contRolThe strategy of Rompetrol QualityControl for the environment is based onthe compliance with the naturalresources and waste managementprinciple, by the increase of the use ofresources, reduction of waste andincrease in the degree of theirvalorization.

AccoRdIng to tHIS PRIncIPle,tHe PRoPoSed envIRonMentAltARgetS WeRe AcHIeved In 2012:• 77 % hazardous and non-hazardouswaste, valorized through hand over toauthorized companies.• reduction of the consumption ofutilities (drinking water consumption-10100 m3, compared to 14.300 m3

proposed)

tendencIeS foR 2013 And tHe folloWIng yeARS The established targets for theconsumption of utilities and waste willcontinue to be in compliance with theBU Environmental Strategy.

ecoMASteR:PeRfoRMAnceS And MAJoRAcHIeveMentS In 2012In 2012, Ecomaster revised theIntegrated EnvironmentalAuthorization for operations inEcopark. New codes of hazardouswaste and hazardous use of mixingand subsequent treatment of theresulting mixture into the plant, basedon Law no. 211/2011 on waste havebeen authorized by the new actrevised on 6/19/2012, followingevaluation of operating conditions.

In 2012, Ecomaster reviewed andobtained for its activity:

a) Integrated environmental permit for work done at Eco Park, aimed at:• introducing the activity of both the mixing hazardous waste and nonhazardous waste with cate-gories for mixing, blending per

formed before the operation of haz-ardous waste treatment, activity that is performed using automated instal-lation of treatment;• expanding the range of accepteddifficult and dangerous waste storage.b) Environmental authorization for the collection of hazardous waste/nonhazardous waste and transport.c) Renewal of authorization for water management within Ecopark;

Monitoring was performed according toenvironmental factors and an integratedenvironmental permit and submittedaccording to the terms of reporting toregional and local environmentalauthority.

envIRonMentAl PeRfoRMAnce In 2012As a result of investments, theconsumption of utilities decreased:water, energy and the amount ofgenerated waste.


07

Indicators measurement units 2011 2012

Discharge of sewage waters m3 460 2123

Total waste tons 42,52 38.08

Total water input m3 1591 1640

Total energy input MW 154,78 141.26

Total water input units 0 0

ecomaster - environmental performance in 2012


The increase in the amount ofwastewater generated is justified by thefact that the number rainy days in 2012was higher than the number of rainydays in 2011, so the amount ofwastewater (leachate) increased in 2012.

tRendS foR 2013 And folloWIngyeARS conceRnIngenvIRonMentAl PRotectIon• Renewal of Water Management

Permit for Ecopark, with completion in quarter II, 2013.

• Achieving 100% waste management in line with the new legislative changes throughout 2013.Ecomaster will continue to comply with the regulatory and legal provi-sions applicable to the management of hazardous waste.

PAlPlASt: PeRfoMAnce In tHeenvIRonMentAl PRotectIonfIeld foR 2012The activity of PALPLAST in 2012,developed in accordance with the TRGrequirements and of the ISO 14001:2009standard, which was confirmed by thescore 99.27% at the second party auditordered by TRG, in the OHS field andenvironmental protection, as well as bymaintaining the environmentalmanagement system of byGermanischer Lloyd System Certification.During the 57.136 hours of workperformed by the company’s employeesin 2012, no incidents or accidentaldischarges that would affect theenvironment were recorded. As environmental protection measures,

in the development of the operationaiming to increase the environmentalperformances, we outline those relatedto the technological waste, optimizationof the operation of an extrudingmachine, organization of the wastecollection deposits, rehabilitation of thesystem of irrigation of the green spaces,maintenance of the emergencyintervention materials.The company’s objective for 2013 andthe following years is to maintain a highlevel of performance in accordance withthe legislative TRG requirements, and theenvironmental management systemaccording to ISO 14001:2009, upgradingof the platform of the waste collectiondeposits, increasing the efficiency inusing the natural resources compared tothe production volume.


07

Indicators measurement units targets 2012

targets 2013

targets 2014

Reduction of the electric power compared to the production volume

Power consumption coefficient =power consumption / processed tons [MWh/t]

0.72 0.71 0.70

Reduction of the water consumption compared to the production volume

Water consumption coefficient = water consumption / processed tons [m3/t]

1.1 1 0.9

Palplast - environmental performance in 2012

** modifications may incur depending on the change of the object of activity


InteRnAl SocIAl ReSPonSIBIlIty

1. HuMAn ReSouRceS develoPMentIn 2012 the companies of the RompetrolGroup employed an average of 7,367employees, out of which 96% had apermanent employment contract andonly 4% were hired for temporaryassignments. During this year, thecompany attracted a number of 609 newemployees from the local and externallabor markets for existing or newlycreated positions.From the demographical point of view,the group population includes 4,898(66%) males and 2469 (34%) females andthe average age is 39 years, the majorityof the employees concentrating in the36-60 years range.

2. tRAInIngIn 2012, the Rompetrol Group focusedon addressing the key development andtraining needs of employees in spite of

scarce available resources. The trainingbudget was significantly smaller, butthere was a clear prioritization andefficient usage of potential learningsolutions.

The company involved 3,685 employeesin different types of training activities.Out of the total number, 2,685participated in technical training sessionsdesigned to improve or refresh jobspecific knowledge and practical skillslevel, language courses, professionalcertifications (ACCA, CIMA, CIA, CFA) andbehavioral courses (sales skills, leadershipskills, presentation skills, customerservice skills).

On the Petromidia and Vega platforms1,945 employees were engaged inDuPont occupational health and safetyinternal training sessions, with the goalto increase awareness of work related


07

Sex distribution for tRgcompanies (2012)

489866%

246934%

<18 years18-25 years26-35 years

<36-45 years46-60 years>60 years

employees trained in 2012

Age distribution for tRg companies(2012)


potential hazards and prevent workaccidents. On average, for each 10 employees inthe Group, 3.7 participated in a leastone training session. In somecompanies, as required by specificlegislation and regulations, allemployees must participate in specifictrainings; therefore the headcountcoverage is higher. In others entities,due to limited resources, mandatorytraining courses, authorizations andlegally required certifications werepreferred.

As a general overview, in 2012, 8 out of10 employees participated in technicalskills courses, while the 2 attendedbehavioral development trainings.

On average, an employee spent 3.3working days in training and, at Grouplevel, all trained employees cumulateda total of 10,947 working days in theclassroom. In 2012, the analysis showsthat 61% of the trained employeesattended courses delivered by externalproviders, while 39% were trained bycolleagues with expertise in areas suchas: computer skills, customer serviceand technical areas specific forproduction field.As a future objective, the Groupintends to make the most of theinternal knowledge capital and set up


07employees trained in 2012 vs 2011

technical vs. behavioral skills courses

employees trained internally vs. externally

training headcount coverage in 2012


a framework in which internalcapability is reachable andtransferable for large groups ofemployees. This will sustain costoptimization direction and willincrease flexibility in knowledgetransfer and management.

The aim of The Rompetrol Grouptraining and development strategy isto offer a consistent and structuredapproach to all development needs.Thus, in 2012 several programs wererun which intended to equipemployees working in the same areawith the appropriate skills and tools inorder to improve their productivityand performance.

A Customer Service program wasstarted several years ago aiming toreflect the company’s objective tocreate and maintain a customerservice culture. After 2011, when allgas station attendants and managersparticipated in the customer servicetraining, in 2012 all new employeesjoining the company attended thiscourse to learn how to address anddeliver an unforgettable customerexperience.Also, in the Romanian retail area, anumbrella training program wasdesigned and implemented covering 3


07 learning days per trained employee

training investment 2012 (590k uSd)

Average investment per trained employee

training investment 2012 vs. 2011


categories of employees and aiming tobuild cross functional skills for middlemanagement, sales force and networkoperations coordinators. The middlemanagement team participated inseveral training sessions, learning toimprove collaboration, solve issuesfaster without the need to escalateconflicts to higher levels, empowertheir teams to communicate andimplement changes faster. The salesteam participated in a customizedsession which focused on salestechniques, negotiation and follow upafter-sales activities. The networkoperations coordination teamconcentrated on developing coachingskills and the necessary practicalknowledge to become dealers andoperate a gas station facilityindependently.

In France, the sales team participatedin a similar program as the Romanianteam, with a focus on communicationand negotiation skills.

In 2012, there were 590,000 USDinvested in training and developingemployees. On average, the companyinvested 317 USD for an employeeparticipating in an external session.For internally delivered trainingsessions, the indirect investment for anemployee amounted to 60 USD.


07 3. coMPenSAtIon And BenefItS2012 was a challenging year and, inorder to enhance the employeebenefits package, we needed to becreative and focused on providingvalue adding non financial benefits, bynegotiating with external providers fordifferent discounted products andservices packages adapted toemployees lifestyles and needs.

Thus, our employees could contractdental care and medical services,home appliances, wellness services,catering services, books and fuel atbetter rates. Also, they were offeredthe opportunity to access customizeddiscounted banking products and freepersonal financial counseling.

4. WoRkPlAce HeAltH AndSAfetyTRG priority in 2012 was to continue toprovide a safe working environmentfor both its employees and contractors.Continuing the implementation of theprogram with the goal of zero injuriesand occupational illnesses whileeliminating high health-riskworkplaces helped us to achieve all ourproposed KPIs for 2012.Although these are better results thanthose of the previous year and betterthan average industry performance, westill considered that there is room for

improvement therefore for 2013 we aimto raise the stake.

With regard to occupational health, theconcerns of the Group focused on thehealth of the workers through theaccess to medical services that meet thelegal requirements and the higheststandards of medical practice.Recognizing the importance of thehealth of our employees, we haveensured that all staff is physically andmentally fit for the performance of jobduties. By a continuous monitoring of allprocesses, while permanently assessingthe health risk related, an adequateperformance of all specific activities wasensured.

The Group continuously improved thesystem of managing occupationalhealth and safety at work for all TRGentities, aiming to increase the level ofsafety and regularly monitoring thestatus of employee’s health. Specialfocus is given to adequate employeetraining, ensuring that work takes placein a safe manner and by that minimizingrisk related to daily work activities. This year, the training and awarenessactivities were continued foremployees and contractors andinvolved safety related activities,procedures and policies by the Group.The training in health, safety and



07emergency situations amounted39,580 hours. The Petromidia andVega refineries, including all entitiesoperating in those locations,continued actions to increase safetyculture.

In 2012 The Rompetrol Group’semployees increased theirinvolvement in the identification andelimination of all unsafe actions andconditions in the workplace.The performance indicators wereimproved, and a decrease by 0.5 (from2.50 to 2.00) compared to the targetobjectives for 2011 (incident rate,frequency of cases resulting indisability, rate frequency and severityof accidents, incidents rate auto)being registered.Regarding 2013, Rompetrol Groupaims to decrease with another 0.5(from 2.00 to 1.50) the performanceindicators against target objectives forthe year 2012, as a proof ofmanagement commitment towardssafety.

Corporategovernance

09


geneRAl InfoRMAtIonCorporate governance providescoherent information on the frameworkwithin which the Rompetrol Groupactivates at operational andmanagement level, thus ensuringtransparency in the activities it carriesout.Rompetrol Group currently includes47 companies, joint stock and limitedliability companies, as well as 6branches and representative offices,headquartered and operating infifteen countries. The statutory lawsapplicable to these companies are thelocal ones. In Romania, the mainapplicable regulations are Law31/1990 regarding trading companiesand Law 297/2004 regarding the stockmarket (for companies listed on thestock exchange). The companies of the RompetrolGroup are managed in compliancewith the statutory provisions undertheir own articles of incorporation andunder any and all other relevantdocuments.

SHAReHoldeRS The sole shareholder of TheRompetrol Group N.V. (TRG) is KMGInvestments B.V. (KMG),headquartered in Amsterdam, theNetherlands.

AdMInIStRAtIon And decISIon RIgHtS The TRG Board of Directors currentlyhas five members, of which oneexecutive member (Chief ExecutiveOfficer – CEO) and four non-executivemembers, amongst which one is anindependent director. The CEO is incharge, according to the Articles ofIncorporation, of the dailymanagement of the company and itsaffiliates. The other members of theBoard of Directors are in charge of thecompany’s general policy andmanagement position supervision. At the level of the Board of Directors ofTRG, there are special committees,such as the Audit Committee and theRemuneration Committee. The CEO may delegate itsmanagement position for specificoperations/groups of operations tothird parties. Thus, at the level of theTRG there are Deputy CEOsspecializing in different areas of theGroup’s activity.At the level of the Group’s companies,the management can be performedunder dual/unified system, mostcompanies having implemented theunified management. The directors ofthe Group companies are appointedby the General Assembly ofShareholders.The decision rights regarding the

internal operations of each company isfragmented using the decision-makingthresholds: CEO and CFO (under jointsignature), Board of Directors, andGeneral Assembly of Shareholders.

MAJoR PeRfoRMAnceS AndAcHIeveMentS In tHe AReA ofcoRPoRAte goveRnAnce In2012Regarding corporate governance atGroup level, the followingperformances were achieved:

1. RoMPetRol eneRgy, a newcompany of the Group, wasincorporated in March 2012, by theconsortium of TRG and Rominservtogether with UT Midia S.A., in theform of an Independent PowerProducer for the Purpose of buildingand Operating a Thermoelectric Plantin Cogeneration, to produce Electricaland Thermal Power, using Gaseousand Liquid Fuel and having anInstalled Power ranging between 50-150 MW and trading the Electrical andThermal Power produced by thenewly built Thermoelectric Plant.

2. tHe RoMPetRol gRouP coRPoRAte S.R.l. Representative Office in Kazakhstanwas established in March 2012,for thepurposes of representing and

corporategovernance

09


protecting the interests of thecompany in the Republic ofKazakhstan, performing activities suchas collecting information, conductingmarket research, establishingcontacts, organizing presentations,attending exhibitions, protocolactivities, sponsorship activities andtraining programs. Starting with May 21st, 2012, Mr.Zhanat Tussupbekov was appointedby KMG Investments B.V. as the newChief Executive Officer of TheRompetrol Group N.V.

MAJoR AcHIeveMentS In IntegRAtIon In 2012, the integration process ofTRG into KMG was continued byadopting and implementing of thefollowing internal procedures,policies and rules within the Group:

1. Enterprise Risk Management Policy2. Standard Operating Procedure for

Disposal of Fixed Assets and Related Scrap Sales

3. Competition Compliance Program4. Code of Ethics5. Sponsorship Policy and Procedure6. Whistleblower Policy 7. Policy no. 1.

develoPMent of oPeRAtIonSAnd BuSIneSS ActIvItIeS SPecIfIc to coRPoRAte goveRnAnceIn September 2012, on the stockexchange market, TRG acquired 2%of Rompetrol Rafinare fromRompetrol SA.Also, within the restructuringprogram of TRG, in December 2012 itwas decided to buy out the minorityshareholding in Rompetrol Bulgaria.

guIdAnce And develoP MenttRendS foR 2013 And tHeIMMedIAte futuReTRG will continue to implementstandardization in corporategovernance area by adopting internalprocedures, rules, policies andregulations documents andstandards, in accordance with bestpractice in this area.

In the future, TRG will focus on corebusiness and improvement ofprofitability, in order to optimizeGroup business portfolio, whiledeveloping core activities, enhancingbenefits through higher integrationand improvement of profitability.

corporategovernance

09

finance10


1. IntRoductIonIn 2012, The Rompetrol Group (the“Group”, “TRG”) and its subsidiariesengaged in all aspects of thepetroleum industry. Its core operationsare in the downstream segment,through its competitive Petromidiarefinery and strong retail operations inRomania, around the Black Sea and inSouth of France. The Group continuedto pursue its strategy of developing itscore refining and distributionoperations, despite a worseningeconomic environment and very lowrefining margin.

2. StRAtegyTo assure competitiveness of theKazakh crude based products in theBlack Sea market, an ambitiousupgrade program has been executedto bring the Petromidia refinery inRomania to world-class standards.Starting 2012, refining capacity hasbeen incremented from 3.8 milliontons per year to 5 million tons per yearcapable to fully run on Ural’s. Thedesirable middle distillate fraction(Diesel and jet-fuel) has been raised toa world class 47% (40% increase inDiesel). This upgrade makesPetromidia the largest refinery inRomania and one of the largest in theRegion. The refinery is strategicallylocated on the Black Sea shore, with

easy access to several markets forwhich forecast demand is expected togrow over the next years, at the sametime offering certain advantages ineach, such as: good contributionmargins or room for additional marketshare growth.

The 2013-2017 strategy is a mixture ofcost optimization projects forproduction, network expansion forretail; and rationalization of non-corebusinesses. The 2013-2017 strategyhas the following main businessobjectives:

To expand distribution operations incountries around the Black Sea, tobenefit from increased verticalintegration with refining operation forimproved financial performance

Specifically, the Group plans to:• Strengthen TRG’s Retail network

presence following the upgrading of the Petromidia Refinery.

• Develop in the rapidly maturing BlackSea Retail market. The Group is plan-ning to expand in the markets where it is presently active (Romania, Bul-garia, Ukraine, Moldova and Georgia) and to start-up operations in Turkey

Cost reduction initiatives in refining

with the purpose to improve Solomonindicators:The material technologicalimprovements brought by the RefineryUpgrade Package has increasedrefinery economics by an additionalUSD 60 – 90 million/year gross margin,and USD 2 – 4 /ton savings onprocessing costs (from USD 29/toncurrently).

To further the technologicalimprovements, Petromidia refinerymanagement will continue to focus oncost competitiveness (further costreduction initiatives) and energyefficiency for optimum refineryperformance.

Rompetrol Group has had for 2012 itsbest economic results in recent years,despite global economic environment -affected by successive political andrecessions fears unrest and substantialRompetrol internal structures ofmanagement re-organizations. Theperformance in 2012 was possible dueto margin improvements in keyoperational sectors, such as refining andimplementation of costs controllingprogram. The aggressive costs reductionprogram has contributed to better 2012economic performance against theimpact on that of the past three years.

10 financeAnalysis of the

financial results


In addition, Starting 1 January 2012,the Group reassessed the useful livesfor the refinery assets held inRompetrol Rafinare (Petromidia andVega) and for the gas station assetsand intangible assets held byRompetrol Downstream. As a result ofthe useful lives reassessment, adecrease of depreciation expense ofUSD 34.7 million was incurred.

While the first semester of 2012performance was affected by severeweather conditions during firstquarter/2012 and huge crude &products prices volatility (around +/-100USD/ton), the second semesterdelivered much better results, asPetromidia gross margin achieved hasbeen approximately USD 105 milliongenerated by international highestmarket margins in past 4 years.

The main objectives set by theRompetrol Group together with themajor actions to be carried on for 2013may be summarized in the followings: • client’s portfolio extension into the

markets with highest actual prof-itability and future potential one, in direct synergy with Petromidia to be increased production and capacity usage from 74% to 90.9% during 2013; these markets are Romania, Ukraine, Bulgaria, Georgia, Moldova,

Turkey; Market shares increases are expected for Romanian market by up to five percentage points and for Ukraine by up to two percentage points;

• Petromidia main products yields increase to maximize refinery gross margin for diesel and jet;

• Rompetrol Gas sales to be increasedby more than 50% compared with 2012;

• Group cash Opex level control, to limit them to maximum 77% of the Gross margin targets within given operational assumptions, compared to 84% during 2012 or 95% during 2011

• Finance costs tight control, by very

strict receivables and inventories working capital need management

The management believes that thisstrategy will result in an enhancementof the Group’s ability to support itscontinuing operations, despite thechallenges of the financial crisis.

3. BuSIneSS envIRonMent Average Brent price in 2012 (USD111.57/ bbl) has increased by 0.27% ascompared to 2011 (USD 111.27/ bbl).The overall trend in 2012 wasdecreasing from USD 111.15/bbl at the

financeAnalysis of the

financial results

10

2012 2011

Brent Dated USD/bbl 111.57 111.27

Ural Med USD/bbl 110.6 109.6

Brent-Ural Differential USD/bbl 0.96 1.68

Premium Unleaded 50 ppm FOB Med USD/t 1,02 978

Diesel ULSD 50 ppm FOB Med USD/t 969 957

RON/USD Average exchange rate 3.47 3.05

RON/USD Closing exchange rate 3.36 3.34

RON/EURO Average exchange rate 4.46 4.24

RON/EURO Closing exchange rate 4.43 4.32

USD/EURO Closing rate 1.32 1.29

Inflation in Romania 3.33% 5.79


beginning of the year to USD109.99/bbl as of the end of the year,with a high of USD 128.17/bblrecorded on March 8th, 2012 and alow of USD 88.62 /bbl on June 25th,2012.

The Urals discount to Brent has beenon average at USD 0.95/bbl, a higherlevel compared with USD 1.65/ bbl asof 2011, with a highest level of USD2.95/bbl on 13 of April 2012 and aclosing level of USD 1.07/bbl.Average gasoline cracking margin in2012 was at USD 176.45/mt (as of 2011was at USD 135.8/ mt) reaching its highof USD 279.78/ mt in March, 30th 2012.Average gasoline cracking margin in2012 was 23% higher than in 2011.

Diesel cracking margins havedecreased in 2012, starting from USD114.97/mt as of January 3rd 2012 tillUSD 104.99/mt as of December 31,2012. Average diesel cracking marginin 2012 was USD 124.35/mt, (as of2011 was at USD 115.37/ mt), reachingits high of USD 165.05/ mt in October2012. Average diesel cracking marginin 2012 was 7% higher than in 2011.

2012 average gasoline crackingmargin was almost USD 52 higher thanaverage diesel cracking margin. Marchand October 2012 were the months

that marked the upper level ofgasoline, respectively diesel quotes.

By the year end Romanian RONdepreciated by almost 2% against USDand by 3% against EUR. The averageexchange rate RON/USD has increasedby 14% and RON/EUR has increased by5% compared with 2011.

On the product side, the last quarterended with an average margin of$40/MT, with the highest levelsrecorded during October. InNovember and December the marginsdecreased significantly due to gasolinecrack and heavy components. Overall,the average margin for 2012 was,$43/MT, increasing by 25% comparedwith 2011.

4. conSolIdAted AccountSThe consolidated accounts are fullydisclosed in the next chapter of thisreport and further analyzed in thefollowing sections for each businessunit (figures in USD million).

5. AnAlySIS of oPeRAtIonSPetRoMIdIA RefIneRyThe Petromidia Upgrade program wasfinalized at the beginning of thirdquarter 2012, when the refiningcapacity was incremented from 3.8million ton of raw materials per year to5 million ton per year. As the result ofthe Upgrade programimplementation, white productsbasket yields achieved duringDecember 2012 were of 92.5%,


financial results

10

Petromidia Refining 2012 2011

Feedstock processed thousand tons 4,047 3,896

Gasoline produced thousand tons 1,135 1,116

Diesel & jet fuel produced thousand tons 1,728 1,578

Motor fuels sales – domestic thousand tons 1,428 1,362

Motor fuels sales – export thousand tons 1,307 1,225

Export % 48% 47%

Domestic % 52% 53%

Gross cash refinery margin USD/bbl 4.4 4.2


leading to the best yearly averageyield from the history of the refinery at85.4%.

For the year 2012, the refining averagemonthly throughput was higher by 4%compared by 2011.

vegA RefIneRyAlthough the total feedstock processedby Vega Refinery during 2012 waslower by 9% compared with 2011, thesame financial results in terms ofEBITDA were obtained due tocontinuous improvement of therefinery units operation and due tomaximization of valuable products:2012 Hexane yield of 43% was thehighest achieved in refinery history,with highest yield of Bitumen of 74%,while technological loss reached thelowest level in the past 5 years of 1.67%.

PetRocHeMIcAlSRompetrol Petrochemicals is the solepolypropylene producer in Romania;starting with 2010 the company wasalso the sole producer of polyethylene,given the economic circumstances onthe market, thus constantly increasingits market share. Its dynamicdevelopment strategy has secured thecompany a competitive position on thedomestic and regional markets – in theBalkans Region. One of the advantages

of the company is determined by itsproximity to its customers, providingthe products required Just - In – Time,as well as offering technical consultingand monitoring of their productioncycle.

In 2012, only the Polypropylene (PP)and Low density polyethylene (LDPE)plants were in operation, while HDPEremained shutdown, thus leading tolower feedstock processed, as well aslower production and sales. Thecompany finalized in 2012 themodernization of the high densitypolyethylene installation, in view ofexpanding its product range, by addinghigh-margin grades to its portfolio(large containers – up to 200 l, thin filmand pipe grade PE 100).

The financial results of the companywere negatively influenced, mainly inJune and July, due to the increasedmarket volatility, the polyethylene ICISquotations plunged by 17% (byapprox 290 USD/to) in June versusMay and by 20% in July (by approx.330 USD/to). Starting with the monthof August, the quotations followed anupward trend, increasing by 20%versus the previous month. AlthoughEBITDA for the whole year amountedto USD -8.1 million, the companyrecorded improved results, especially

in the last quarter of 2012.In 2012, Rompetrol Petrochemicalsmaintained the quality of its products,thus the weight of high quality ratedpolymers products remained 98%.

tRAdIngThe Business Unit Trading has beenstrengthening its role of the supplychain optimizer within the Group,continuing to ensure optimumfunctioning conditions for Petromidiarefinery by placing to profitable thirdparties the spare petroleum productsquantities obtained by PetromidiaRefinery after supplying the Romanianmarket and the near-abroadsubsidiaries. A 66% increase in overalloperated trading volume by VectorEnergy (crude & products combined)was obtained during 2012 comparedto 2011, through a 66% increase inoverall operated trading volume(crude & products combined)especially on deal stream side and unitbetter margins on almost all the sellingchannels.

Midia Marine Terminal through theCrude Oil Tank Farm has since openingin January 2009 cost reductions inrelation to oil supply of USD 6/ton, byeliminating the third partyhandling/storage/transfer costs andcommercial/technological losses. This


financial results

10


has resulted OPEX saving incomesgenerated from non group services:piloting, towing, mooring/unmooring.

Despite the prolonged negative effectof the financial crisis, in 2012, theRetail Business Unit managed to keepvolumes at 2011 level, slightly below,reaching a total of 4 million tons (20114.26 million tones) of products sold.Even with aggressive cost cuttingprogram in Rompetrol Downstream ofapproximately USD 30 millioncompared with 2011 the achievedEBITDA was lower than 2011, due tomarket margin decrease from 3.6% in2011 of Gross Price down to 2.9%,which had a negative effect ofapproximately 20 USD/ton. Followingthe development of a credit controlprocess, Downstream recordedsignificant improvement of creditindicators evolution, receivable daysdecreasing from 22 days in December2011 to 17 days in December 2012.

Rompetrol Gas improved EBITDA by48% compared with 2011 was incurredfollowing the optimization measureson retail network assessment, logisticscontracts renegotiation, corroboratedwith export sales higher by 12%compared with 2011.

During 2012, Rompetrol Moldova

opened 5 New DOCO Stations andclosed 4 DOCO stations having saleslower than 1cm/day. The overallvolumes sold increased by 30% in2012 compared with 2011.

The good net result of RompetrolGeorgia during 2012 of USD 7.7million was reached throughconsistent commercial and OPEXcontrol actions. Although the overallsales were lower by 4% than 2011, theproduct margins were kept stablethrough focusing on and increasingretail sales and high margins onwholesale channel.

Although the volumes sold byRompetrol Bulgaria decreased by 20%during 2012 compared with 2011, thecompany managed to preserve themarket share at 5.8%.

Dyneff France incurred lower salesvolumes by 7% compared with 2011.The results were affected by strongbackwardation on futures market(impact of USD (2.2) million and newlegislation of sales taxes whichaffected the yearly unit margin by USD(1) /ton. Nevertheless, the companyrealized a program for significantsavings on Selling and G&A expenses. All Non-Core activities, not directly

related to trading in crude and oilproducts, refining, and sales of oilproducts are grouped together in theBusiness Unit Non-Core.

Rominserv, the Group’s engineeringcompany, have completed 54 projectsin 2012. The Refinery UpgradeProgram was completed in 2012, bygiving into production some majorinstallations. In 2012, mechanicalavailability achieved a new recordlevel, of 96.37% above Western Europeaverage according to Solomonbenchmark.

Rominserv Valves Iaifo became newcompany within The RompetrolGroup, through spin-off process fromRominserv, in November 2011. It isspecialised in the design, manufactureand trading of a wide range of steeland iron industrial valves. In 2012, thecompany continued its plan ofconformation to market requirements,by increasing the types and sizes ofproduct range through homologationprocess.

In 2012, Palplast continued the newbusiness approach implemented inAugust 2011. As a result, the companywent on profit, despite bad weatherconditions in first quarter and political


financial results

10


crisis in second semester. Market shareincreased due to higher volumes ofpipe sold: 1920 tons vs. 1073 in 2011while the technological wastedecreased from 1 % to 0.72 %.

Rompetrol Quality Control improvedthe efficiency of its business activitiessignificantly, by reducing operationalcosts by 30% vs. 2011 and byincreasing revenues. StartingNovember 2012, the company signednew contracts for natural gasesmonitoring, following a legislativerequirement, considering that it is theonly company in the market able toperform this type of analysis.

uPStReAMRompetrol Well Services had goodperformance in 2012. EBITDA increasedby 15% and Net result increased by48% compared with 2011. Moreover,the overseas activity, representing 14%of the company’s revenues, was 130%higher than in 2011. Six new importantcustomers were acquired in Romaniaand another six were acquired by theKazakhstan Branch.

Drilling & Workover and MudloggingDivisions continued drilling services inRomania. Mudlogging services wereprovided onshore and offshore forboth Romanian and foreign Operators.

Workover in Libya re-started in January2012 with one workover rig, followingthe activity suspension in 2011 causedby the Libyan Civil War. The other tworigs started in February, respectivelyMarch 2012, operations with all threeequipment going in normal conditionsunder a 12 (twelve) hours schedulethroughout the rest of the year withthe two main former clients.

Exploration and Production divisionstarted drilling of NW Feteasca KAZ 1(TD=5000m) in Focsani Block reaching4669m at the end of 2012. On Gresu &Nereju Blocks, NAMR has approved theassignment of 75% working interestand operatorship to Amromco andJoint Operating Agreement wassigned. In Zegujani Block thepreliminary works and approvals(permits, authorizations, well sitepreparation, access road) are readytherefore the drilling activity on SAT 1-Lupsa may start in Q1- 2013. On SatuMare Block after the gas discovery onMoftinu area – 80km2 geologicalreports were acquired, processed andinterpretation is on final stage.

6. fInAncIAl InStRuMentS AndRISk MAnAgeMentFinancial instruments in the balancesheet include investments, tradereceivables and other receivables, cash

and cash equivalents, short-term andlong-term debts, trade and otherpayables. The estimated fair values ofthese instruments approximate theircarrying amounts.

The Group’s activities expose it to avariety of risks including the effects of:changes in the internationalquotations for crude oil and petroleumproducts, foreign currency exchangerates and interest rates. The Group’soverall risk management mainobjective is to minimize the potentialadverse effects on the financialperformance of the Group companies.

coMModIty PRIce RISkThe Group is affected by the volatilityof crude oil, oil product and refinerymargin prices. Its operating activitiesrequire ongoing purchase of crude oilto be used in its production as well assupplies to its clients. Due tosignificantly increased volatility ofcrude oil, the management developeda hedge policy which was presented tothe Group’s Board of Directors and wasapproved in most significant aspectsin 2010 and with some furtheramendments in February 2011.Following this approval, the Groupstarted on January 2011 the hedge ofcommodities held by RompetrolRafinare. Previously, until January 2011,


financial results

10


Vector Energy A.G. and Dyneff Groupwere the only two companies having inplace commodities hedge process.

According to the hedge policy, on thecommodity side, the flat price risk forpriced inventories above a certainthreshold (called base operating stock) ishedged using future contracts traded onICE Exchange and some OTC instrumentsfor the basis risks. The base operatingstock is the equivalent of priced stocksthat are held at any moment in time inthe Group, hence price fluctuations willnot affect the cash-flow. The companystarted few transactions of refinerymargin hedge during 2012 and theintention is to extend refinery marginhedge transactions in 2013.

Trading activities are separated intophysical (purchase from third partiesother than KMG, and sales to third partiesor Intercompany) and paper trades (foreconomic hedging purposes). Eachphysical transaction is covered through arelated futures position according to theexposure parameters set bymanagement (i.e. based on physicalquantities sold or purchased). The Groupsells or buys the equivalent number offuture contracts. This paper trade isdone only to hedge the risk of thePhysical Trade and not to gain fromthe trading of these instruments. As of

2012, the net trading position takinginto consideration the realized andunrealized gains and losses onderivatives and physical trades was anet loss of USD 4.7 million.

InteReSt RAte RISkInterest rate price risk is the risk thatthe value of a financial instrument willfluctuate due to changes in marketinterest rates relative to the interestrate that applies to the financialinstrument. Interest rate cash flow riskis the risk that the interest cost willfluctuate over time. The Group haslong-term debt and short-term debtthat incur interest at fixed andvariable interest rates that exposesthe Group to both fair value and cashflow risk.

foReIgn cuRRency RISkMAnAgeMentThe Group's functional currency isUnited States Dollar (“US Dollars”) andcrude oil imports and a significantpart of petroleum products are alldenominated principally in US Dollars,therefore limited foreign currencyexposure arises in this context. Inaddition certain assets and liabilitiesare denominated in foreigncurrencies, which are retranslated atthe prevailing exchange rate at eachbalance sheet date. The resulting

differences are charged or credited tothe income statement but do notaffect cash flows. Group Treasury isresponsible for handling the Groupforeign currency transactions.

cAPItAl RISk MAnAgeMentThe Group manages its capital toensure that entities in the Group willbe able to continue as a goingconcern while maximizing the returnto stakeholders through theoptimization of the debt and equitybalance. The capital structure of theGroup consists of shareholders loans,bank debt, cash and cash equivalentsand equity attributable to equityholders of the parent, comprisingissued capital, reserves and retainedearnings.

7. oveRvIeWTo offset prolonged negative impactof depressed downstream market, theManagement of the Group iscommitting themselves to furtherreduce costs, complete modernizationof the Petromidia Refinery, restructurethe business and concentrate on corebusiness, close non-profitablebusinesses.We will fund our plans through a mixof equity and debt, with a supportfrom our shareholders.


financial results

10


key 2012 PPM ActIvItIeS:• Coordination of the five years annual

budget, continuing the 2011 trend ofshifting of set-up from traditional in-cremental planning process towards an activity-based one; the Internal Plan version was also developed withassumptions of very ambitious oper-ating margins and sales;

• Active budget control procedure aiming to optimize the budget exe-cution process by ensuring a proper approval flow for validating any updates on budgeted assumptions either from timing perspective or from any new assumptions perspective.

• Optimising Group Performance Monthly reviews package (Flash and GFO reports) on planning & budgetingexecution reports by increased focuson actionable business drivers analysisto allow the optimum data and analy-sis package as well as support for op-erational decisions; the variance analysis both versus budget and ver-sus previous year were continuously optimised, offering a detailed under-standing of current month and year-to-date results evolution.

MAIn 2013 PPM InItIAtIveS foRIMPleMentAtIon Along tHeyeAR on BotH SuPPly cHAIn &contRollIng AReAS:• Rolling forecast process, a monthly

rolling planning process for the next twelve months. Its goal is to both createa structured routine of working out solutions for meeting the annual budget targets and improve forecast accuracy on a larger time frame, highly needed in this current eco-nomic crisis period.

• Integrated planning model, representing a Group results planning tool being able to receive inputs on key business drivers from all across the value-chain and to deliver on alternative business scenarios Group financial results for areal-time assessment of best economical solutions to be undertaken.

• Single Group master database repository, to collect all relevant business key drivers on both past andfuture period, on daily, monthly, annual, time frames, a single access point covering most of the

quantitative side of entities & Group management teams reports.

• Improved analysis of margins and operating expenses by actionable drivers (client level profitability, costs drivers), as support for any management business decisions.

• Optimized performance managementprocess by two means:

a. aligning 2012 operational & financial set of KPIs with the new five years budget objectives for all eligible people; b. implementing a monthly routine process of KPIs achievements revision, to allow for corrective actions on all potential negative gaps.

10 financePlanning and

performance management


These financial statements have beenprepared in accordance withInternational Financial ReportingStandards (IFRS) effective as of December31, 2012, as endorsed by the EU.

The consolidated financial statementsare prepared under the historical costconvention.

The financial statements of the Groupare prepared on a going concern basis.

The group’s consolidated financialstatements are presented in UnitedStates Dollar (“US Dollar” or “USD”),which is the Group’s functionalcurrency.

The consolidated financial statementscomprise the financial statements ofthe parent company and itssubsidiaries as at 31 December 2012.

Control is considered to be achievedwhere the Group (either directly orindirectly), owns more than 50% of thevoting rights of the share capital ofanother enterprise and is able togovern the financial and operatingpolicies of an enterprise so as to obtainbenefits from its activities. Non-controlling interests represent theportion of the profit or loss and netassets that is not held by the Group

and are presented separately in theconsolidated income statement andwithin equity in the consolidatedbalance sheet, separately from theparent shareholders’ equity.

Business combinations are accountedfor using the acquisition method. Thecost of an acquisition is measured asthe aggregate of the considerationtransferred, measured at acquisitiondate fair value and the amount of anynon-controlling interest in theacquiree. For each businesscombination, the acquirer measuresthe non-controlling interest in theacquiree either at fair value or at theproportionate share of the acquiree’sidentifiable net assets. Acquisitioncosts incurred are expensed andincluded in administrative expenses.

The interest of non-controllingshareholders in the acquiree is initiallymeasured at the non-controlling’sproportion of the net fair value of theassets, liabilities and contingentliabilities recognized. Businessesacquired or disposed during the yearare included in the consolidatedfinancial statements from the date ofacquisition or to date of disposal.

The Group’s investments in associatesand joint ventures are accounted for

using the equity method ofaccounting. Under the equity method,the investment in an associate/jointventure is carried in the balance sheetat cost plus post acquisition changesin the Group’s share of net assets of theassociate/joint venture. Afterapplication of the equity method, theGroup determines whether it isnecessary to recognise an additionalimpairment loss on the Group’sinvestment in its associates/jointventure.

All intra-group balances, income andexpenses and unrealised gains andlosses resulting from intra-grouptransactions are eliminated in full.

Goodwill is initially measured at costbeing the excess of the aggregate ofthe consideration transferred and theamount recognized for non-controlling interest over the netidentifiable assets acquired andliabilities assumed. Goodwill is testedfor impairment annually (as at 31December) and when circumstancesindicate that the carrying value may beimpaired.

Property, plant and equipment arestated at cost. Starting 1 January 2012,the Group changed its accountingpolicy for Rompetrol Rafinare S.A. and

financeSummary of significant

accounting policies

10


Rompetrol Petrochemicals S.R.L. fromthe revaluation model to the costmodel. As of 31 December 2011 forRompetrol Rafinare S.A. andRompetrol Petrochemicals S.R.L. theproperty, plant and equipment thatwas stated at revalued amounts, beingthe fair value less any accumulateddepreciation and impairment losshave been restated to the cost modelfor comparative disclosure.

When assets are sold or retired, theircost and accumulated depreciation areeliminated from the accounts and anygain or loss resulting from their disposalis included in the income statement.

Depreciation for property, plant andequipment except land andconstruction in progress is computedusing the straight-line method overthe following estimated useful lives,between 3 to 60 years.In 2012 the Group reassessed theuseful lives for the refinery assets heldin Rompetrol Rafinare (Petromidia andVega) and for the gas station assetsand intangible assets held byRompetrol Downstream. The newuseful lives were applied startingJanuary 1, 2012.

At each balance sheet date the Groupreviews the carrying amounts of its

property, plant and equipment andintangible assets to determine whetherthere is any indication that those assetshave suffered impairment. If suchindication exists, the recoverableamount of the asset is estimated inorder to determine the extent of theimpairment loss (if any). Where it is notpossible to estimate the recoverableamount of an individual asset, theGroup estimates the recoverableamount of the cash-generating unit towhich the asset belongs.

Inventories, including work-in-processare stated at the lower of cost and netrealisable value. Net realisable value isthe selling price in the ordinary courseof business, less the costs of completion,marketing and distribution. Costcomprises direct materials and, whereapplicable, direct labour costs and thoseoverheads that have been incurred inbringing the inventories to their presentlocation and condition. The followingcost formulas were used to determinethe cost applicable to different types ofinventories:• the weighted average method forpurchased crude oil and petroleumproducts • the first-in-first-out (FIFO) for suppliesand materials.Trade receivables are recognisedinitially at fair value and subsequently

measured at amortised cost using theeffective interest method, lessprovision for impairment.

Cash includes cash on hand, cash withbanks and checks in course of beingcashed. Cash equivalents are short-term, highly liquid investments thatare readily convertible to knownamounts of cash within remainingthree months or less to maturity fromthe date of acquisition and that aresubject to an insignificant risk ofchange in value.

Revenue is recognised to the extentthat it is probable that the economicbenefits will flow to the Group and therevenue can be reliably measured.

Sales of goods are recognised whendelivery has taken place and transferof significant risks and rewards hasbeen completed. Revenue comprisesthe fair value of the sale of goods andservices, net of value-added tax andany excise duties and other sales taxes,rebates and discounts.

Revenue from rendering transportationservices and other services isrecognised when services are rendered.

Payments to defined contributionretirement benefit plans are charged as


accounting policies

10


an expense as they fall due. Paymentsmade to state - managed retirementbenefit schemes are dealt with as definedcontribution plans where the Group’sobligations under the scheme areequivalent to those arising in a definedcontribution retirement benefit plan.

Income tax charge consists of currentand deferred taxes. The charge for thecurrent tax is based on the results forthe period as adjusted for non-deductible and non-taxable items Thetax rates and tax laws used to computethe amount are those that are enactedor substantively enacted, by thereporting date, in the countries wherethe Group operates and generatestaxable income.

Deferred tax is provided using theliability method on temporarydifferences at the reporting datebetween the tax bases of assets andliabilities and their carrying amountsfor financial reporting purposes.

The Group determinates theclassification of its financial assets andliabilities at initial recognition. Financialassets are recognised andderecognized on a trade date where apurchase or sale of an investment isunder a contract whose terms requiredelivery of the investment within the

time frame established by the marketconcerned and are initially measured atcost, including transaction costs.

Group’s financial assets include cashand cash equivalents, trade and otherreceivables, unquoted financialinstruments, and derivative financialinstruments. Financial liabilities includefinance lease obligations, interest-bearing bank loans and overdrafts andtrade and other payables andderivative financial instruments. Foreach item the accounting policies onrecognition and measurement aredisclosed in this note. Managementbelieve that the estimated fair values ofthese instruments approximate theircarrying amounts.

Financial assets within the scope of IAS39 are classified as financial assets atfair value through profit or loss, loansand receivables, held to maturityinvestments, available-for-sale financialassets, or as derivatives designated ashedging instruments in an effectivehedge, as appropriate. Financialliabilities within the scope of IAS 39 areclassified as financial liabilities at fairvalue through profit and loss, loansand borrowings, or as derivativesdesignated as hedging instruments inan effective hedge, as appropriate.


accounting policies

10


financeAbbreviated

financial statementsderived from the

consolidated financialstatements as of

31 December 2012

10 conSolIdAted StAteMent of fInAncIAl PoSItIon

non-current assets Intangible assets Goodwill Property, plant and equipment Available for sale investments Investments in associates Interest in Joint venture Long-term receivable total non current assets

current assets Inventories, net Trade and other receivables Derivative financial instruments Cash and cash equivalents total current assets

totAl ASSetS

equity and liabilities capital and reserves Issued capital Share premium Additional paid-in capital Effect of transfers with equity holders Retained earnings Current year result Translation reserve equity attributable to equity holders of the parent Non Controlling interest total equity

december 31, 2012(thousand uSd)

70,078,59255,241,231

1,290,272,204956,671

20,136,56516,677,25712,736,649

1,466,099,169

696,696,558962,484,445

2,672,639308,395,372

1,970,249,014

3,436,348,183

122,7042,631,512

2,017,699,790115,029,358

(754,616,268)(76,781,549)

9,791,2821,313,876,829

(246,084,879)1,067,791,950

december 31, 2011Restated (thousand uSd)

60,798,37055,241,231

1,247,806,313949,204

19,919,98319,566,95014,259,033

1,418,541,084

546,981,447670,611,954

5,690,146198,617,647

1,421,901,194

2,840,442,278

120,3382,631,512

1,100,000,000115,029,358

(631,890,668)(121,621,246)

1,415,028465,684,322(166,263,543)299,420,779


conSolIdAted StAteMent of fInAncIAl PoSItIon (contiuned)

non-current liabilities Long-term borrowings from shareholders Long-term borrowings from banks Net obligations under finance lease Deferred tax liabilities Provisions Other non-current liabilities total non-current liabilities

current liabilities Trade and other payables Derivative financial instruments Net obligations under finance lease Short-term borrowings banks Short-term borrowings shareholders Provisions - current portion totAl cuRRent lIABIlItIeS

total liabilities

totAl lIABIlItIeS And SHAReHoldeRS' eQuIty

december 31, 2012(thousand uSd)

-253,566,905

5,346,52221,816,34094,341,331

2,496,925377,568,023

1,314,542,1782,468,9261,267,954

670,960,502-

1,748,6501,990,988,210

2,368,556,233

3,436,348,183

The abbreviated financial information is derived from the Consolidated Financial Statements as of and for the year ended 31 December 2012 andshould be read in conjunction with these audited Consolidated Financial Statements. On the full consolidated financial statements an unqualifiedaudit opinion was issued.

financeAbbreviated



31 December 2012

10 december 31, 2011Restated (thousand uSd)

896,000,0002,823,2656,279,290

28,297,07635,145,097

2,034,794970,579,522

1,075,172,7751,206,2013,232,603

474,245,90013,304,927

3,279,5711,570,441,977

2,541,021,499

2,840,442,278


conSolIdAted IncoMe StAteMent

continuing operations

RevenueCost of sales

gross profit

Selling and distribution expensesGeneral and administrative expensesOther operating expenses, net

operating profit/(loss)

Finance costFinance incomeNet foreign exchange (losses)/gains

Share of profits of associatesShare of profit/(losses) of joint ventures

loss before income tax

Income tax

net loss for the year

Attributable to:Equity holders of the parentNon-controlling interests

2012 (thousand uSd)

9,259,018,700(8,818,041,722)

440,976,978

(337,056,519)(130,564,207)

(68,741,738)

(95,385,486)

(59,312,365)7,688,841

(7,339,346)

898,493(3,246,714)

(156,696,577)

750,883

(155,945,694)

(76,781,549)(79,164,145)

2011 Restated (thousand uSd)

6,886,017,721(6,537,136,217)

348,881,504

(284,355,211)(153,032,837)

(94,928,136)

(183,434,680)

(60,727,387)7,444,3944,017,091

669,103(2,587,276)

(234,618,755)

(2,144,681)

(236,763,436)

(121,621,246)(115,142,190)


financeAbbreviated



31 December 2012

10


conSolIdAted StAteMent of cASH floW

loss before tax

Adjustments for:Depreciation and amortizationReserves for receivables and inventories and write-offsImpairment and provisions for property plant and equipmentOther provisionsRetirement benefit charged to equityLate payment interestInterest expense, commission and bank charges and collection discountsInterest expense shareholdersFinance incomeNet loss from non-current assets disposals and write-offNet result from sale of investments Unrealised losses/(gains) from derivatives on petroleum productsRealized losses/(gains) from derivatives on petroleum productsShare in profits of associatesShare in profits of joint ventureUnrealised foreign exchange (gain)/loss on monetary itemsoperating profit before working capital changes

Net working capital changes in:Receivables and prepaymentsInventoriesTrade and other payableschange in working capital

Income tax paidCash payments for derivatives, net

net cash provided by operating activities

2012 (thousand uSd)

(156,696,577)

104,950,40162,604,587

604,10359,865,893

623,5755,503,538

45,413,9638,394,864

(7,688,841)(178,881)

-8,949,183

16,627,624(898,493)3,246,7141,045,499

152,367,152

(342,940,846)(156,104,071)

269,790,711(229,254,206)

(1,740,211)(21,180,573)

(99,807,838)


(234,618,755)

137,031,69140,450,96961,707,196(1,467,798)

(610,241)3,383,986

44,038,47513,304,926(7,444,394)

(793,935)(80,357)

(2,546,174)63,768,720

(669,103)2,587,276

11,898,024129,940,506

(72,664,536)63,278,742

118,252,526108,866,732

(6,390,659)(71,201,395)

161,245,184

financeAbbreviated



31 December 2012

10


conSolIdAted StAteMent of cASH floW (continued)

cash flows from investing activitiesPurchase of property, plant and equipmentPurchase of intangible assetsChanges in payables for capital expendituresDividends received from associated companies Proceeds from sale of property, plant and equipmentCash of subsidiaries being disposed offProceeds from liquidation/sales of subsidiaries/investmentsConsideration paid for acquisition of non-controlling interestConsideration paid for Joint Venture

net cash used in investing activities

cash flows from financing activitiesInterest and bank charges paidInterest and other financial incomeMovement long term loans from banksMovement in short-term borrowings Repayments of finance leasesnet cash from financing activities

(decrease)/Increase in cash and cash equivalents

Cash and cash equivalents at the beginning of period

cash and cash equivalents at the end of the period

2012 (thousand uSd)

(132,678,060)(18,688,994)(38,761,105)

196,160589,139

----

(189,342,860)

(45,413,964)7,688,841

250,743,640188,807,323

(2,897,417)398,928,423

109,777,725

198,617,647

308,395,372


(227,077,317)(22,514,633)

28,128,18475,477

1,165,955(177,654)1,200,000(550,000)

(14,833,270)

(234,583,258)

(51,105,824)7,444,394

(2,915,774)107,712,305(10,103,801)51,031,300

(22,306,774)

220,924,420

198,617,647


financeAbbreviated



31 December 2012

10


december 31, 2011

Net loss for 2012

Other comprehensiveincome

total comprehensiveincome

Dividends payable tominority shareholders

Hybrid loan

december 31, 2012

non-controlling interest

Restated

(166,263,543)

(79,164,145)

-

(79,164,145)

(657,191)

-

(246,084,879)

totalequity

299,420,779

(155,945,694)

7,274,266

(148,671,428)

(657,191)

917,699,790

1,067,791,950


conSolIdAted StAteMent of cHAngeS In eQuIty

Measurement unit: thousand uSd

translationreserve

1,415,028

-

8,376,254

8,376,254

-

-

9,791,282

effect oftransfer with

equity holders

1,415,028

-

8,376,254

8,376,254

-

-

9,791,282

Additionalpaid-in capital

1,100,000,000

-

-

-

-

917,699,790

2,017,699,790

RetainedearningsRestated

(753,511,914)

(76,781,549)

(1,104,354)

(77,885,903)

-

-

(831,397,817)

Sharepremium

2,631,512

-

-

-

-

-

(2,631,512)

Issuedcapital

120,338

-

2,366

2,366

-

-

122,704

financeAbbreviated



31 December 2012

10

Audit letter11

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