Three major firms place bids for Romanian Petrom

Petrom's sale, estimated by analysts at about $1.0 billion, is a key element in Romania's accords with international lenders and could help to convince a sceptical European Union that the ex-communist country is fit to join the bloc as planned in 2007.

The rivals so far are Austrian oil and gas group OMV , U.S. company Occidental Oil and Gas , and Hungary's MOL .

OMV, seen as the leader in the race, said it had made a binding offer for 51 percent of Petrom, but gave no details.

OMV already holds 25.1 percent of Romania's second-largest oil company, privately held Rompetrol. Were it to be allowed to buy Petrom, it would have to divest the stake. Some bankers say a wider asset swap between the two companies is also an option.

U.S. company Occidental Oil and Gas, a unit of Occidental Petroleum Corp. also said it had submitted a binding bid, but only for Petrom's upstream assets.

"We believe that our offer is an attractive one," Occidental spokesman Lawrence Meriage told Reuters by telephone.

A binding offer usually commits the bidder to pay at least the amount it has presented.

MOL said it submitted an offer.

Petrom, with a market share of around 50 percent on the domestic fuel market, has both upstream operations -- drilling six million tonnes of crude and 6.5 cubic metres of gas per year -- and downstream, with two refineries and 600 filling stations.

The government has said the winning bidder must not split the company for five years after buying it.


POLITICS CLOUD THE SALE

Analysts have said that politics might cloud the sale. Some said bidders might be put off by what they saw as Romania's delays in clarifying some terms of the deal.

Romania owns around 93 percent of Petrom and plans to sell about third to an investor who would at the same time buy newly-issued shares to raise its stake to 51 percent.

The leftist government, which faces elections in November, said recently it would remove obstacles to the deal that include issues of environmental liabilities, land ownership and the buyer's ability to lay off employees at Petrom.

Companies that have previously also made preliminary bids also included PKN Orlen of Poland, Russia's Gazprom , Greece's Hellenic Petroleum and Swiss firm Glencore.

Analysts have said that MOL and PKN would have better chances of buying Petrom together since the deal, and subsequent investment in the company, require financial strength.

MOL and PKN have been in talks on a possible merger.

But PKN Orlen, which remains state-controlled, is currently at the centre of a political storm at home as some Polish parties criticise the company's move towards a tie-up with MOL.

"This lowers the chances of any of these two companies buying Petrom," said Tomasz Bardzilowski, an analyst with BZ WBK Brokerage in Warsaw.

Gazprom would not lack financial muscle but analysts expect Romania to be wary of the Russian giant, because of its political weight at home.



Source: Reuters