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ROMPETROL’S TURNAROUND OF THE PETROMIDIA REFINERY

A Case Study in Sour Crude Processing in the Black Sea

CERA—East Meets West

Istanbul, June 29, 2005

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Table of contents

The Rompetrol Group Profile

Rompetrol History

Privatization Attempts

The Turnaround of Rompetrol Rafinare

Structure of Romanian Oil Industry

Difference between Rompetrol Rafinare and others

Investigation into privatization procedures

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The Rompetrol Group Profile

Largest Romanian group of private companies (2004 gross revenues of $1.61 billion), representing almost 7% of state budget revenues and 3% of GDP

32% share of Romanian refined products market Domiciled in the Netherlands with worldwide operations and

assets (though mostly in Romania) Owned by management Financed principally by international banks; audited to IAS

standards Mostly active in refining and marketing in the Balkans One of the country’s largest exporters and taxpayers ($635

million in tax payments in 2004) Core asset is 4.8 mta. (nameplate) capacity Petromidia refinery

north of Constanta Listed on BSE since April 2004; market capitalization over $500

million; 20% weight in local index

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Rompetrol – History

1974 - Established as the international operator of the Romanian oil industry

1993 - Privatized by Management and Employee Buy Out (“MEBO”) and turnover subsequently reduced to below $6 million by 1998

1998 - Control purchased by Dinu Patriciu and local investor group

1998 to 2000 - Series of synergistic acquisitions; private equity investment

2001 to 2003 – Restructuring of management, technology, finances and operations of associated companies; strategic investment by OMV (25.1%)

2004 to 2006 – Becoming a large integrated regional low-cost producer of refined products; disinvestment of OMV and access to capital market

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Complexul Petrochimic Midia Navodari (the first name of Rompetrol Rafinare S A) was one of the large oil refining plants which were built after 1975

In 1991, the entity was changed into a stock company which took over all of the assets of the former unit The Romanian Government attempted three privatizations of Petromidia

The first attempt was carried out in 1997 when the State Ownership Fund (SOF) had discussions with Daewoo, Glencore and Petromidia USA

The second effort was made over July 1998 - January 1999 and resulted in a sale/purchase agreement for 65.323% in Petromidia’s share capital to Turkish investor Akmaya. Due to the disagreements between the Romanian authorities and Akmaya regarding the additional incentives the Government re-slated the sale of a controlling interest in Petromidia

In a third effort, SOF concluded an agreement with the Rompetrol Group N.V. on 31 October 2000. Actual transfer of the stake was subsequently performed on 26 January 2001

Petromidia Privatization Attempts

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Rompetrol Rafinare

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The turnaround of Rompetrol Rafinare

Old Petromidia

State ownedListed on RASDAQ $6mil market capFinanced by traders Sweet crude slateLow capacity utilization (<1mta)Highly indebted and with historical tax arrearsOverstaffed (3600)

New Petromidia

Privately ownedListed on BSE with $500+ mil market capFinanced by western banksSour crude slateHigh capacity utilization (>3mta)Reasonable leverage (e.g., 40%)Automation brings a smaller staff (1200)

Unprofitable Profitable

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The turnaround of Rompetrol Rafinare

Brent vs. Urals 2001-2005

$10

$15

$20

$25

$30

$35

$40

$45

$50

$55

$60

Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05

USD/bbl

Brent (Dtd) Urals (Med)

Crude Supply - considerations

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Refinery Run

-

1.00

2.00

3.00

4.00

5.00

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Mil

lio

n m

t /

year

Used Capacity Unused Capacity Max.Capacity

The turnaround of Rompetrol Rafinare

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The turnaround of Rompetrol Rafinare

Feedstock - Product Quality

-

1.00

2.00

3.00

4.00

5.00

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Mil

lio

n m

t /

year

Sweet Crude Sour Crude

Non-Euro Products Euro Standard Products

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The turnaround of Rompetrol Rafinare

Refinery Staff

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Jan

-01

Jul-

01

Jan

-02

Jul-

02

Jan

-03

Jul-

03

Jan

-04

Jul-

04

Jan

-05

Jul-

05

Jan

-06

Jul-

06

No

.of

em

plo

ye

es

12

6.8847.297

8.488

13.148

0

2

4

6

8

10

12

14

2001 2002 2003 2004

% MTBE

Evolution of MTBE % in unleaded gasoline

The turnaround of Rompetrol Rafinare

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The turnaround of Rompetrol Rafinare

407

-10 -23

701

-75 -35

1,077

-74 -350

1,138

16

287

1,444

86 11

1,774

122 71

-500

0

500

1,000

1,500

2,000

2000 2001 2002 rest 2003 2004 2005

Gross revenues EBITDA Net profit

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Structure of Romanian Oil Industry—Survival of 4 out of 5 Name of

RefineryCapacity (mta) Governance

Nameplate 2003 actual

Owner Audits Listing Banking

Petrobrazi 3.5 2.8 Petrom (OMV 51%)

Ernst&

Young

BSE ING, ABN Amro, RZB,

Citibank, BCR

Arpechim 3.5 2.7 Petrom (OMV 51%)

Ernst&

Young

BSE ING, ABN Amro, RZB,

Citibank, BCR

Petromidia 4.8 3.3 TRG 79%Float 21%

Deloitte&

Touche

BSE HVB, RZB, Citibank,

BCR

Petrotel 3.8 0 Lukoil 100% KPMG

NYSEGlobal

Rafo 3.5 2.4 Balkan Petroleum

97%unknown

none Financed by oil

traders

Total 19.10 11.20  

Entire Nation 23.00 13.29

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Interest groups are still active in Romania and receive strong political backing PNA investigation started and ended last year—charges were rejected and sent for investigation to the General Prosecutor’s Office The General Prosecutor’s Office has launched an investigation into the privatization of Petromidia Although we suspect the initiation of the investigation was politically motivated, Rompetrol will cooperate fully with the prosecutors all through the process, which we hope will be:

Professional Expeditious Apolitical

Conclusions expected to vindicate the Rompetrol Group and also to disarm special interest groups

Investigations into privatization procedures

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What we are doing in response

To prove our innocence we have been cooperating with prosecutors and provided documents and answers that show no wrongdoing

Rompetrol retained the services of a team of local and international attorneys including international law firm Salans

Rompetrol shareholders brought forth to the public attention the lack of due process in conducting the investigation

Local and international media and civil society have rallied in support of principles such as presumption of innocence, fair and quick due process free of political or economic interference

Rompetrol shareholders are considering international legal action to defend investments made in the company

Rompetrol welcomes a swift and independent investigation conducted with the observance of due process and respect for the justice process