RAFO Onesti to get scrapped

Two decades ago, the Romanian petrochemical sector was a force in the region, but then it went into decline. We cannot minimize the efforts of the remaining companies on the market, such as Petrobrazi, Rompetrol Rafinare or Petrotel-Lukoil, to modernize and keep the pace along with new technologies, but we cannot overlook the way we’ll be affected by the fact that the beginning of 2015 has marked a milestone of this general decline. It is about the decision for RAFO Onesti to be sold for scrap, while the land is to be used as industrial platform for a number of technical projects, there is even talk about an industrial park.

Ovidiu-TenderIn early February, the company’s General Meeting of Shareholders (GMS) in Bacau has introduced on the agenda the demolition decision, which was approved by vote of the majority shareholder, Petrochemical Holding from Vienna, controlled by Russian citizen Yakov Goldovskiy, who holds a 96.51 percent stake in RAFO. “The meeting approves the mandate of the Director General of RAFO SA to start the sale of assets and equipment related to the company. The assets and equipment selling price will be determined based on the market prices for used equipment, but cannot be lower than the price of scrap iron on the Romanian market on the day of signing sale/purchase contracts of the equipment,” the GMS report submitted by the company to the Bucharest Stock Exchange (BVB) reads.

Short history

Borzesti petrochemical platform, of which RAFO was part of, was developed in 1964 and the refinery was built to process imported sulphurous crude oil. Two years after the Revolution, RAFO had become legally independent and in 2001 the companies Imperial Oil in Bacau and Canyon Servicos in Portugal bought a 59.99 percent stake in the refinery from the Authority for Privatization and Management of State Assets (APAPS) for USD 7.48 million.

Subsequently, the two companies’ stake to RAFO reached 94.5 percent. Imperial Oil Bacau, belonging to Cornelius Iacobov and Canyon Servicos undertook at the privatization moment to carry out, during a five-year interval, investments of USD 80 million and to assume all commercial debts of the society amounting to some USD 200 million. Imperial Oil was, at that time, the majority shareholder of Darmanesti Refinery, while Canyon Servicos was a company focused mainly on capital investment, with shareholders in Portugal and Switzerland. In 2003, Balkan Petroleum Ltd from the UK became the main shareholder in the company, following the takeover from Canyon Servicos of a 48.91 percent package of shares. A year later, Balkan Petroleum, owned 50 percent by VGB company, managed by businessman Marian Iancu, has increased its stake in RAFO to 97.82 percent, following the transfer of 74,500,000 shares from the Canyon Servicos and Imperial Oil.

Convictions in court

In December 2004, the court sentenced Marian Iancu to 12 years in prison for tax evasion and money laundering after a trial that lasted eight years. In the same file were also sentenced to prison Octavian Iancu, brother of Marian Iancu, Constantin Margarit, Gheorghiţa Iancu, Marius Turica, Alex Martin, Elenkalan Hayrettin, Basaran Kadri Mazhar, who held various positions with VGB. They were accused of tax evasion, association to commit offenses and money laundering. The court also sentenced to prison, in the summer of 2012, businessmen Corneliu Iacobov and Toader Gaurean, who were accused of damaging the company.

During 2001 - 2003 RAFO accumulated large debts, in 2004 became insolvent, with liabilities of over ROL 8,000 billion to the state budget. In July 2005, the company Calder-A, part of the group Petrochemical Holding, has signed a contract with Balkan Petroleum for the acquisition of a 98 percent stake. Petrochemical Holding had become the owner of RAFO in 2009 with a stake of 96.21 percent of the shares. Calder-A belonged to and was controlled by the Russian citizen Yakov Goldovskiy, former president of the Russian petrochemical company Sibur.

Activity halted in 2008

However, the refinery’s activity was stopped in 2008 to carry out modernisation investments expected to last two years, but they were never achieved. Furthermore, the company recorded losses of two billion lei in recent years, which made the company’s main shareholder, Russian businessman Yakov Goldovski, to request the management to turn into account the refinery’s assets and equipment. The amounts to be cashed by selling the equipments will be used to finance current activities, to pay for environment obligations and to maintain the existing infrastructure for the development of an industrial platform for the implementation of technical projects.

Challenged decision

A few days after the decision on demolition was taken, the minority shareholder Prospecţiuni announced that it would appeal against the decision of the shareholders’ meeting to sell the refinery for scrap iron. “Besides the long history of over 60 years, RAFO Onesti is one of the few refineries that the country has at this moment and the impact of this decision is too important to be ignored - from national strategic importance, to the impact on industry, geopolitical and social importance. Let’s not forget that an entire city was born following the refinery’s businesses. Moreover, the statements of former RAFO employees point to the fact that the state of the refinery’s equipment is a very good one. Under these circumstances, Prospecţiuni, as a shareholder, expresses firm disagreement with the decision of Petrochemical Holding and will take all necessary measures to fight against this decision and accuse the unprecedented decision as being an act of sabotage against the national economy,” a statement released by Prospecţiuni management reads, a company owned by businessman Ovidiu Tender.


We would have liked to write that the story continues, but unfortunately, it has reached the end. We find, therefore, another loss for the Romanian petrochemical sector.

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March 2015

June 2017