The Romanian petrochemicals industry is expected to see better prospects this year as export industries exhibit stronger growth. However, BMI has said that the key issue for the sector remains the future of Oltchim, the troubled chemicals manufacturer that the government hopes to privatise this year.
In 2013, rubber and plastic output grew by 11.7% year on year while chemicals output rose 12.5%. Growth was sustained heading into Q1 of this year. In the first two months of the year, chemicals output rose 9.1% and rubber and plastic grew 9.4%, which was lower than the industrial average of 9.7% but still outpaced the rate of economic growth.
BMI forecast that 2014 should be a stronger year of growth for the Romanian construction industry, following the release of official full year 2013 data that showed a 0/1% contraction. In 2014, construction is expected to grow 1%.
Oil and gas
Even though concerns of gas supply disruptions due to Russia’s actions in Ukraine have heightened the energy security issues, there continues to be a strong backlash against shale gas drilling in the country.
Weak industrial demand, which was partly due to increasing gas prices as well as a mild winter, saw demand for natural gas last year fall for the second year in a row. 2013 consumption is estimated at 12.88 billion m3 and is forecast to rise by approximately 1 billion m3 by 2018. In BMI’s opinion this could grow further from 2018, especially if more domestic gas can be produced. Trangaz is also expanding its network, investing Euro 3.5 million to connect nine new villages to the transmission system. A further 11 localities in Prahova county are due to be added by 2016.
The positive privatisation trend in Romania has continued with the successful IPO of Romgaz. 15% of the Ministry of Econmy’s 85.1% share of the company was sold to international investment funds. Further privatisation of electricity companies will also take place this year, improving the overall look of the energy industry.
The Romanian government has hinted at an increase of oil and gas royalties from the end of this year. While no official figures no the changes have been publicised, the National Agency for Mineral Resources declared current levels remain insufficient. The move could be of increased importance if the appraisal of the Domino field is successful.
Adapted by Claira Lloyd
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