Record fuel sales for oil companies

The drop in world demand for crude oil caused by the financial crisis generated a sudden fall of international quotations for oil on the international market. If during the summer we were referring to a price of 140 dollars per barrel, now the quotation has dropped under 60 dollars. The oil companies from Romania have adopted crisis measures and are on the look-out, although they say that aren’t affected yet.

However, they have record quantities of commercialized fuels.

The oil companies that operate in Romania sustain that the effects of the world financial crisis haven’t affected yet their business but they say that they have elaborated strategies for counteracting the negative influences. For the moment, they have announced record sales to fuel even if since July the prices at pump have decreased. For example the Petrom officials, have stated that in October they have sold almost 200 million liters, an absolute record, with 30% more against the similar period of last year, in terms in which the gasoline and diesel have dropped in price by 20-25%. “We’ve sold more because it has increased the number of car users in Romania. Moreover, the price was also taken into account”, Dan Pazara, director of communications at Petrom stated. The Rompetrol representatives have recently stated that during September-October their sales have increased with 7-8%. The car owners and transporters benefit the most of the fall in price at pump.

Who wins, who loses

The specific of the Romanian oil market determines that the effect of the drop in price for the crude oil to affect in diverse ways the main players. “This crisis could cause problems to the companies that have activities of exploring and production, the refiners being favored by the decrease of barrel price”, Andre Naniche, vice-president of the Rompetrol Group stated. Petrom enters in the first category, being the only company that extracts crude oil from Romania. During the past years, this one has reported profits in increase, reaching only in the first nine months of 2008 to almost 620 million euro, mainly due to the evolution in rise of the international quotations for oil. Rompetrol enters in the second category, a company controlled by Kazakhstan, through KazMunayGas, and the local subsidiary of the Russian company Lukoil. Of these two, only Rompetrol will fully take advantage because Lukoil will close for modernization the oil refinery Petrotel in Ploiesti, for two months, starting with December 1. “It will be a programmed shut down, established long time ago. It has nothing to do with the crisis”, Constantin Tampiza, general director of Lukoil Romania mentioned.

Strategies for counteracting the crisis

The oil businessmen say that it isn’t crisis but they have already elaborated strategies for counteracting it if it is the case.  Petrom, company controlled by the Austrians from OMV, will focus the investment program on the production and exploring sector and it will try to sell the assets that generate larger operational costs or that aren’t connected with the main activity objects of the company, such as lands, hotels, the company of Gas Distribution Petrom and the petrochemical activity of the refinery Arpechim. At sales level, Petrom records falls at supplying natural gas, due to the fact that some of the big customers have reduced or stopped the production. Petrom has also diminished the quantity of ethylene or propylene, raw materials for the chemical industry, Rompetrol will focus less on acquisitions and like Petrom, it will sell its non-core businesses. In exchange, the leadership of Lukoil Romania sustains that it will become more drastically with the bad payers.

Brief history

For the second time in the last two weeks, the price for oil has dropped to 50 dollars per barrel: first it got close to 51 dollars, for that on Wednesday night to touch the value of 53 dollars before to return to 55 dollars. The quotation for the crude oil is developing faster, the data are changing from one hour to another, the ups and downs being a thrilling show.  In the same rhythm the valuation agencies and investment banks are changing their forecast on medium and long term. It’s a “déjà vu” impression: the current situation on the oil market is very much alike with the one of the first half of the year. With a single difference – if then the price for the black gold recorded a rapid growth, ignoring all the attempts of stopping this ascent, now the oil is cheapening the same rapid, ignoring all the attempts for stopping the collapse. At the end of 2007, when few thought that the crude oil will exceed the psychological limit of 100 dollars per barrel, all the studies have registered records on the oil market: Brent brand has increased in price on last year with 82%, Urals brand, by 72%. At that time, most of the experts forecasted for 2008 that the prices for “black gold” will maintain at high level with a minimum of 75 dollars per barrel and this only for the end of the first quarter. In the rest, the forecasts were from moderate and veridical (from 75, to 82, 87, 95 dollars per barrel), till exaggerate and quite phantasmagoric: from 125, to 150, 200, even 250 and 300 dollars per barrel towards year 2011.

Total Revisions

At January 3, when the mankind still enjoyed the atmosphere of the winter holidays, the barrel dropped under the limit of 100 dollars. A few days later, Japan warned that expensive oil will direct to a decrease of the global economy. At January 15, the US Energy Information Administration (EIA) estimated that the prices for oil will increase till 2016 mainly due to the higher expenses of the companies of profile for prospecting and exploiting new oil fields.  Concomitantly, the tariff forecast for 2009 was of 120 dollars per barrel. EIA has reconsidered its forecasts for the following year, with an average of 63,50 dollars per barrel (after 112 dollars since October) and has announced a “sudden collapse” of the increase for world demand. Confirming this forecast, the International Energy Agency (IEA) has indicated a decrease in demand by 0,7 million barrels per day. At the beginning of the year it was staked on an increase of requests with 2,0 million barrel, up to a total of 84 million. IEA has already reduced its estimations related to the necessary of crude oil till 2030, from 116 to 106 million barrel per day, meaning an average increase of 1% yearly, instead of 1,3% anticipated with less than a year ago. 

Year 2008

• January 3 – the oil barrel goes above 100 dollars;

• February 27 – 102 dollars per barrel for the Light Sweet crude oil brand. The rate of exchange for dollar was dropping to the lowest level of 1,5055 euro since introducing into circulation of the single European currency, and the gold was breaking down a new record, reaching to 955 dollars per ounce.

• March 13 – at the stock exchange in New York, the oil exceeds 110 dollars per barrel and the euro was getting to 1,56 dollars;

• May 9 – the oil brand Light sweet was increasing at NYMEX, reaching to the incredible value of 126,25 dollars per barrel, at the end of a week in which the “black gold” had increased with 8,3%. At London the Brent barrel was being sold with 125,40 dollars. Among the invoked causes – the situation from Nigeria and Iraq.

• May 22 – a contract for oil brand WTI for July was worth at New York 135,04 dollars per barrel;

• June 30 – the crude oil was increasing to 140 dollars per barrel. OPEC estimated that till the end of the year the tariff could reach to 200 dollars, and in time even to 400 dollars.

• July 11 – historical maximum of 147,27 dollars per barrel of Light Sweet, the Brent one being worth 145,7 dollars. On the day before, the G8 leaders have expressed their concern related to the oil’s evolution, saying that it “represents a threatening for the world economy”.

• July 30 – the price for crude is collapsing to 121,37 dollars, decrease generated, according to the official data,  by reducing the gasoline consumption from USA.

• September 2 – 111,22 dollars per barrel, in only one day the oil’s price dropping with 4,24 dollars.

• November 4 – the Brent brand barrel drops under 59 dollars, up to 58,85, as a result of the negative news concerning the industrial production from USA and of the fears related to the global recession. OPEC demands to be assured a price of 80 dollars per barrel. 

• November 13 – price of the Brent crude oil decreased to 51,8 dollars and the one of the Ural crude oil to 49,8 dollars