Romanian oil companies, government in talks on motor fuel price regulations.

By bne IntelliNews April 23, 2012
Lukoil Romania has proposed that the government sets up a transparent variable benchmark price for motor fuels that will be based on the Platts petroleum products quotations among others, Ziarul Financiar daily informed. Lukoil Romania's CEO Constantin Tampiza accused the country's leading oil company, OMV Petrom, of selling motor fuel at dumping prices, taking advantage of its local crude oil production. Currently, motor fuel prices in Romania are among the lowest in Europe and the lowest in the EU. Romanian oil companies have discussed with the government such an option last Friday, April 20, and the country's antitrust body also attended the meeting. Yet, there was no official comment on the options considered or on the views expressed by the other oil companies. While it is unclear whether OMV Petrom will back the benchmark price policy, Rompetrol has advocated rather against it. The options included variation bands around the benchmark price of 5% or +/-6% or even the option of defining the benchmark price as maximum price. IntelliNews Comment : Lukoil's rhetoric has several weak points, though this does not mean that certain regulations on motor fuel prices would be entirely inappropriate under the current circumstances of an oligopolistic market. The weak points refer to the triggers of low motor fuel prices in Romania - the excises are below the EU levels and the state charges low crude oil extraction fees. Lukoil's CEO is also misleading when he compares the profitability of an integrated oil company like OMV Petrom (where the profit is generated in the extraction segment) with that of a pure refining and marketing company like Lukoil Romania (that works rather for the benefit of Lukoil Group, where the profit is generated in the extraction segment). Rompetrol, owned and supplied with oil by Kazakh gas firm KazMunaiGaz, also runs losses, just like Lukoil Romania, but it still disagrees with Lukoil's rhetoric.

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