Bogdan Preda in Bucharest -

There is no other story in Romania's recent business history as impressive as the one involving The Rompetrol Group and its main Petromidia refinery, which escaped closure a decade ago and has now been sold to another foreign state-owned company for billions of dollars. And there won't be another such story for many years to come.

At the end of August, 75% of Rompetrol ended up in the hands of KazMunaiGaz, Kazakhstan's state-owned oil and gas company. In exchange, Rompetrol's majority owner Dinu Patriciu filled his pockets with an amount reported to be anywhere between $1.5bn and $2.5bn. His deputy, US citizen Philip Stephenson, is also believed to have received several hundreds of millions dollars for his smaller stake. The unexpected move to sell such a large stake to a company virtually unknown in Romania left most of Patriciu's friends and enemies speechless. It remains to be seen for how long.

Setting aside criticism, controversy and myths about any connections with Russian and US oil interests, the truth is that Rompetrol's sale, which includes a majority stake in its Petromidia refinery located strategically on the Black Sea Coast and its smaller Vega refinery in southern Romania, is the biggest sale of a private company in the country since the fall of communism in 1989. By comparison, Romania sold a 51% stake in Petrom, at the time an oil company much bigger than Rompetrol, to Austria's OMV in December 2005 for €1.5bn. Today, Petrom is still Romania's biggest refiner, followed by Rompetrol.

Ironically, Patriciu, once a successful architect turned oilman who never wore a Stetson, bought Petromidia from the Romanian state only to sell it to another state, this time Kazakhstan, which has the Black Sea, Georgia and Russia standing between its oil reserves and the Romanian company's refining operations. Patriciu, who says he will continue to manage Rompetrol, argues that it suits the interests of the Kazakh company to secure additional refining output for the oil products it wants to sell into Western Europe.

To one who has watched the wheeling and dealing in Romania's energy sector over the past 18 years, it's hard not to think back on the sagas that surround Rompetrol, and the questions that remain unanswered.

Wrecked

Rompetrol, which was established in 1974 as the Romanian company to represent the communist country's oil industry interests abroad, didn't own Petromidia at the time of its establishment. Nor did Petromidia become a part of Rompetrol at the time of its designation in 1985 as the refinery that former dictator Nicolae Ceausescu wanted to refine heavy Russian and Iranian oil. Patriciu bought a 70% stake in the refinery only in 2000 for just $50.5m and later, in 2003, was granted the right by former premier Adrian Nastase's government to swap almost $640m of debt into 20-year bonds, an unusual favour given by Social Democrats to a Liberal.

The government was even close to shutting down Petromidia in the mid-1990s upon advice from the World Bank. The government had tried to sell the refinery several times to save it from closure, or at least so it said back in 1997, when it listed three potential bidders: Daewoo Corporation, Glencore International and Petromidia USA, the latter a group of US investors who had established a company at the time with the purpose of buying the Romanian refiner. None of the three got their hands on the refiner, so the government put Petromidia up for sale again, and even agreed to surrender it to Turkish company Akmaya in 1999. The government revised the sale several months later on grounds that it hadn't received the $239m it asked for from Akmaya. Patriciu's move to buy the refinery followed a year later, when the refinery's future looked desperate and thousands of oil workers facing the sack.

Patriciu, a leading National Liberal Party member and a close friend of current Prime Minister Calin Popescu-Tariceanu, has been at loggerheads with President Traian Basescu, his fiercest enemy for the past two years. Patriciu, whom prosecutors have investigated and even arrested for alleged insider trading with his company's shares, allegations he has repeatedly denied, accused Basescu of turning against him as part of a political vendetta and causing a Romanian Yukos-type case by calling on prosecutors to harass him. As recently as this week, Patriciu said Rompetrol's total value would have exceeded the $3.6bn agreed upon with KazMunaiGaz if Basescu hadn't been pressuring on him.

So far, Basescu hasn't commented on the sale. Neither has Tariceanu. But independent analysts and journalists claim Patriciu in fact rushed to sell Rompetrol to escape pressure while also cash in a lot of money.

While such assumptions may prove true to a certain extent, there is one important detail that no one seems to have discussed thus far. Patriciu earlier this year said he would sell only a minority stake in Rompetrol, with Gazprom Neft tipped to be the buyer of the minority stake at one point. However, this week's evidence shows that Patriciu apparently suddenly made up his mind and decided to sell a majority in the company. The question is why hadn't he previously voiced his intentions to sell a majority? Would other oil companies, much bigger than KazMunaiGaz, have shown an interest in buying Rompetrol if a 75% stake had been in the offing from the very beginning? If he had such a scheme in mind all the times, it looks like a lack of transparency. Did he do that on purpose, or was it a sudden agreement to massively increase the stake on sale? And if so, what triggered his decision to sell now rather than wait for even more money? Maybe he was certain that no other company but KazMunaiGaz would have agreed to pay the same amount.

Sooner or later, answers to some or all these questions will come out. One thing is for sure, though - Romania's entry into the EU has boosted the value of the country's assets and if Patriciu bought Petromidia with the sole purpose of making a lot of money from re-selling it, his seven-year-long wait has been rewarded, big time.

Send comments to The Editor