Petroleum & Natural Gas in Southeast Europe

Expectedly, the largest economies in terms of production and consumption in SEE have a significant presence in the ranking of the oil and gas companies: Romania and Bulgaria – with six and five representatives respectively, Serbia and Slovenia – three each, Croatia –two, Macedonia - one. Interestingly, Macedonia’s sole crude oil refinery Okta AD ranked 16th with a total revenue equivalent to 647 million euro in 2008. Okta is part of Elpet-Valkaniki SA, a subsidiary of Greek oil trader Hellenic Petroleum.

The leader in the ranking is Romania’s Petrom, which also is number one in SEE TOP 100.

The biggest foreign players in the sector, Russia's Lukoil and Austria’s OMV, had four and three of their national subsidiaries, respectively, among the top 20 companies.

Due to the contraction of oil and gas consumption in the second half of 2008, half of the 20 firms in the SEE oil and gas sector ended the year with a net loss, while only four of the mended 2007 in the red. However, their cumulative revenues increased to 34.1 billion euro in 2008 from 26.9 billion euro in 2007.

The oil and natural gas sector is expected to continue to dominate the 2009 ranking of the largest companies by revenue in Southeastern Europe as well.

Methodology

SEE Industry at a Glance represents a series of sub-rankings of the 20 biggest companies by total revenue within the top five industries in SEE TOP 100: Petroleum/Natural Gas, Electricity,Wholesale/Retail, Telecommunications and Metals. In order to make the ranking more comprehensive, we have looked beyond the 100 companies in our flagship ranking and expanded the scope to the entire pool of over 1,000 enterprises.

in millions of euro
(*) denotes net sales reven ue

Southeastern Europe (SEE) is a net importer of crude oil and natural gas. The region’s own oil and gas output covers just a quarter of local demand, which has been on the rise in recent years, shadowing the rapid growth of the region’s emerging economies.

For historical reasons Southeastern Europe relies mostly on imports of Russian oil and gas to meet its energy needs. In recent years the region’s fast growing economies started to seek diversification of both supply sources and routes to lessen their energy dependency on Moscow. The region’s geographical location makes it a natural choice for a hub for transiting oil and gas from energy-rich countries of the Middle East and Central Asia to the industrialisedeconomies of Western Europe. That is why SEE lies at the centre of several major oil andgas projects backed by Russia, the EU and the U.S. Of the SEE countries only Romania covers its demand for oil and gas mainly from its ownresources. Dwindling oil and gas reserves across the region increase the need for imports. Demand for gas in SEE is expected to rise by some 40% by 2020.

Total Oil Production (Thousand BarrelsPer Day)

Total Consumption of Oil Products (Thousand Barrels Per Day)

Gross Natural Gas Production (Billion Cubic Feet)

Dry Natural Gas Consumption (Billion Cubic Feet)

Russia Remains Top Oil/Gas Supplier to SEE

Russian majors Gazprom OAO and LUKoil OAO are the main suppliers of natural gas andcrude oil to the SEE countries. Romania and Albania have larger proven oil reserves than theother countries in the region but their oil refineries, as well as those in Bulgaria, Macedonia and Serbia, are processing Russian crude mainly.

SEE Crude Oil Proven Reserves (BillionBarrels)

SEE Proven Reserves of Natural Gas (Trillion Cubic Feet)

Investments in Maintenance and Expansion

The SEE oil and gas companies did not invest lavishly in boosting their capacity in 2008 as the global crisis hit the region. Most companies in the sector, especially oil and gas transportation and distribution operators, conducted annual maintenance, while companies operating in the retail of oil products financed their expansion on their domestic markets.

Selected Company Investment Projects in 2008

State Ownership

Albpetrol, Bulgargaz, Romgaz and Srbijagas all remain wholly state-owned despite acquisition interests shown by Gazprom and European energy majors.

State Holdings in SEE Petroleum and Natural Gas Companies

Regional and European Players on the SEE Retail Market

The SEE fuel retail sector attracted several European majors in recent years that defy the traditionally strong presence of LUKoil OAO in the region. Austria’s OMV AG, Royal DutchShell plc and Greece’s Hellenic Petroleum SA have developed their own networks of filling stations in several SEE countries.

A second wave of market expansion has brought regional players like Romania’s RompetrolSA and Slovenia’s Petrol d.d. to the fuel retail markets of other SEE countries. Unlike their Western European peers, those companies have restricted their regional expansion toneighbouring SEE countries for the time being. In 2008 Hellenic Petroleum considered the acquisition of two smaller retail networks in Bulgaria, while OMV intended to develop a second chain of filling stations in Bulgaria under the Avanti brand.

Leading Oil and Gas Retailers in SEE (by number of filling stations owned)

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