KMG renegotiates terms of sale of Romanian refinery to CEFC

By bne IntelliNews September 13, 2016

Kazakhstan's state-owned KazMunaiGaz (KMG) is renegotiating some of the terms for the sale of Romanian refinery Petromidia to China Energy Company Limited (CEFC), following recent asset seizure and investigations launched by Romanian prosecutors.

CEFC and the Kazakh company signed an agreement in April which envisages that the Chinese company, which is involved in the financial, energy and investment industries, will purchase 51% of the KMG International (KMGI), the owner of the Romanian refinery. However, the transaction is now at risk after Romanian prosecutors seized the assets of the refinery and started investigations into alleged losses suffered by the state budget during the privatisation process of Petromida and the debt conversion into bonds of the oil company.

“[The transaction] has been affected because we were taken by surprise. It was somehow affected the next day after it was signed,” KMGI senior vice president Azamat Zhangulov told Economica.net. “The asset seizure was an unpleasant surprise for us. Now we have to renegotiate with our partners some of the terms which are related to some aspects of the probe. There has been progress in this respect,” he added.

Zhangulov suggested there have been changes regarding the price of the transaction, although the Chinese buyer has never said “we will pay that less because of the Romanian state.”

“The availability of the proposal was limited in time. You cannot have the same price offer for things that change in time,” he said.

In May, the Directorate for Investigating Organised Crime and Terrorism (DIICOT) seized around $680mn worth of assets owned by four people involved in the privatisation of Petromidia in 2000, as well as assets of three companies. DIICOT said at that time it was taking action to recover alleged losses incurred by the state budget. Former Prime Minister Victor Ponta is reportedly part of an investigation related to the settlement of a $600mn debt of KMG, Euractiv reported in July.

Romanian prosecutors have recently intensified their efforts to solve the outstanding issues related to the privatisation of Romania's biggest refinery, before it changes its owner again.

In a July statement, KMGI said that together with KMG it had submitted a notice of investment dispute to the Romanian authorities, a first step towards eventual international arbitration. KMGI said in August it could cut its losses and pull out of Romania if it loses the dispute with the country over Petromidia.

Related Articles

EU to fund feasibility study on Slovakia’s proposed Eastring gas link to Balkans

The EU has agreed to help fund a feasibility study on the Eastring pipeline project, which would link Slovakia to the Balkan markets, Slovak transmission system operator Eustream announced on May 26. ... more

Hungarian PM's "proxy" moves into the nuclear industry as Paks tenders approach

Firms controlled by Hungarian oligarch Lorinc Meszaros have purchased a 51% stake in the Hungarian subsidiary of Czech nuclear ... more

CEZ set to place Czech nuclear assets in new unit

Czech state-controlled energy group CEZ is set to place all nuclear-related activities into a new division, local media reported on May 17. The move raises speculation that the company is ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss