Finding the Best Way to Privatize NIS

Transcription

FACULTY OF TECHNICAL SCIENCES Novi Sad
UNITED BUSINESS INSTITUTES Brussels
MBA, Business intelligence concepts
Finding the Best Way to Privatize
NIS - Naftna industrija Srbije
(Petroleum industry of Serbia)
Jasna Hajder
Jelena Bajagi
Lana Ra kovi
Novi Sad, April 2006.
Goran Vasi
Igor Mandi
INTRODUCTION
Subject of this business intelligence case study is a privatization of NIS - Naftna industrija Srbije (Petroleum
industry of Serbia). At the moment, NIS is totally owned by the State, and also at the beginning of its
privatization process. This opens many questions, such as: what is the best moment to actually start privatization
process, whether to privatize only refineries or entire company, whether to privatize minority or majority share,
whether to make an IPO or offer share package to a strategic partner, whether to distribute free shares to the
company s employees and to other citizens. So far, most of oil industries in Central and Eastern Europe (CEE)
have been privatized and information obtained from these processes represent a starting point for intelligence
analyses in this case study aiming at using a knowledge acquired from these experiences into an actionable
intelligence which would enable to the company adequate decision-making and effective action planning.
1. In the first part we have analyzed statistical date of Central and Eastern Europe countries in regard to oil
production and consumption, as well as possible increase of oil consumption in Serbia and Montenegro.
2. In the second part, we have presented a company profile of NIS and pointed out investments needed by the
company
3. In the third part, we have compared NIS with other oil companies in Central and Eastern Europe. We did it in
order to find out what is the NIS position comparing to other companies in the region
4. In the fourth part we have presented in what way oil industries in CEE have been privatized
5. In the fifth part we have in detail analyzed privatization processes of Croatian INA and Romanian PETROM
as two privatization models which are paradigmatic for privatization of NIS
6. In the sixth part we have on the basis of the previous analyses proposed a model for NIS privatization
7. In the final part we have analyzed four companies (Lukoil, OMV, MOL, Hellenic Petroleum) which have
significant presence in the region and which also have already expressed certain interest to take part in NIS
privatization
MBA, Business Intelligence Concepts
1
BRIEF COUNTRY ANALYSES
CENTRAL AND EASTERN
EUROPE
COUNTRIES STATISTICS
GDP (billion $)
Population
Per Capita ($)
Poland
38.635.144
Poland
463,00
Czech Republic
16.799
Romania
22.329.977
Czech Republic
172,20
Hungary
14.900
S&M
10.829.175
Romania
171,50
Slovakia
14.500
Czech Republic
10.241.138
Hungary
149,30
Poland
12.000
Hungary
10.006.835
Slovakia
78,89
Croatia
11.200
Bulgaria
7.450.349
Bulgaria
61,63
Bulgaria
8.200
Slovakia
5.431.636
Croatia
50,33
Romania
7.700
Croatia
4.495.904
S&M
26,27
Macedonia
7.100
B&H
4.025.476
B&H
26,21
B&H
6.500
Albania
3.563.122
Albania
17,46
Albania
4.900
Macedonia
2.045.262
Macedonia
14,40
S&M
2.400
Source: CIA Factbook
2
OIL STATISTICS BY COUNTRY
Production (1000 bbl/d)
Reserve (million bbl*)
Consumption (1000 bbl/d)
Romania
956
Romania
114
Albania
158
Hungary
45
Hungary
102
Poland
37,2
96
Croatia
Poland
S&M
77,5
Poland
447
Romania
277
Czech Republic
206
28
Hungary
129
Czech Republic
15
S&M
98
13
Croatia
94
Croatia
69
S&M
Bulgaria
15
Slovakia
12,6
Bulgaria
86
Czech Republic
15
Bulgaria
1
Slovakia
71
9
Albania
0
Albania
25
Slovakia
B&H
NA
B&H
0
Macedonia
20
Macedonia
NA
Macedonia
0
B&H
20
All countries in the CEE are net oil importers
* 1 barrel = 0,1364 metric tons
Source: EIA US Government
3
SERBIA & MONTENEGRO
Population
GDP billion $
Oil consumption 1000 bbl/d
Czech Repubilc
10.241.138
172,20
206
Hungary
10.006.835
149,30
129
S&M
10.829.175
26,27
98
Expected GDP growth
Expected oil consumption growth
4
COMPANY ACTIVITIES
Exploration and production
Refining production
Exploration and production of oil,
natural gas, ground waters and
geothermal
energy
is
the
fundamental activity of NISNaftagas, which is an integral part
of NIS a.d. Novi Sad. Major part
of oil and gas production is being
done in the country and part of
production which belongs to NIS
is located in Angola. Biggest
number of oil and gas fields have
been discovered in Vojvodina
region. Works abroad have been
initiated thirty years ago and since
then Naftagas have been working
in more then twenty countries.
Refining production within NIS is done
in two refineries located in Pancevo
and Novi Sad. They produce variety of
products, such as: motor and power
fuels, road and industrial bitumen,
petrochemical
row
materials,
specialized petrols and other oil
derivatives. Total capacities of oil
refineries in Pancevo and Novi Sad is
7.3 million tons per year.
Trade of oil derivatives
Transportation and
processing of gas
Gas transportation and
processing represents an
important segment of NIS
scope of work.
Gas refinery in Elemir
which basic function is
preparation of liquid gas
for transportation and
production of gas and
gasoline is an integral part
of NIS company.
Trade of oil derivatives in NIS is done
through a retail network of more than
500 public and 1,600 internal petrol
stations.
Source: Company report
5
COMPANY STRUCTURE
NIS, Naftna industrija Srbije (Petroleum industry of Serbia), as a share-holding company for
exploring, production, processing, distribution and trade of oil and oil derivatives and
exploring and production of natural gas was established on the basis of the Serbian
Government decree dated October 1, 2005.
NIS - Naftagas
NIS - Petrol
NIS - TNG
NIS tourism
and catering
6
REGIONAL PIPELINES
Source: EIA US Government
7
KEY FINANCIAL AND OPERATING DATA
2002.
2003.
2004.
Sales
179 bl CSD*
190,8 bl CSD
193,3 bl CSD
EBIT
6,1 bl CSD
6,6 bl CSD
2,4 bl CSD
Assets
224 bl CSD
232 bl CSD
174,4 bl CSD
812.784,4t
773.103t
738.000 t
Production of natural gas (in 000)
449.485,3 m3
411.421,1 m3
331.000 m3
Turnover of natural gas (in 000)
2.033.706 m3
2.222.170 m3
2.500.000 m3
Total of processed oil
3.475.772t
3.749.250t
4.072.000 t
Turnover oil derivatives
2.339.000t
2.535.000t
2.407.000t
Production of lubricants
15.364t
15.032t
18.278 t
Number of emplyees
17.958
17.523
17.328
Oil production
* 31.12.2002. 1EUR=61,58CSD
31.12.2003. 1EUR=68,48CSD
31.12.2004. 1EUR=79,08CSD
8
NECESSARY INVESTMENTS UNTIL 2008.
million USD
Investments in process of refining
500 750
Investments in oil and gas production (incl. invest. in concessions) 250 300
Investments in retail sector
Investments and restructuring and other activities
TOTAL
100
50
900-1200 million USD
9
Core activities of oil companies in CEE
Exploration and Production
Refining
Marketing
MOL, Hungary
INA, Croatia
PETROM, Romania
NIS, S&M
PKN ORLEN, Poland
LOTOS, Poland
UNIPETROL, Czech Republic
SLOVNAFT, Slovakia
PETROMIDIA, Romania
PETROTEL, Romania
NEFTOCHIM, Bulgaria
OKTA, Macedonia
PETROL, Slovenia
BEOPETROL, S&M
10
NUMBER OF EMPLOYEES
PETROM
51.010
NIS
17.328
INA
16.147
MOL
15.465
PKN ORLEN
14.296
NEFTOCHIM
9.000
UNIPETROL
7.079
LOTOS
5.500
SLOVNAFT
3.000
PETROL
2.848
BEOPETROL
1.704
PETROTEL
1.200
Source: Annual reports 2004.
11
PRODUCTION
Crude oil production
Natural gas production
PETROM
5.46 million tons
6,44 bn cubic meters
MOL
2,65 million tons
INA
1,16 million tons
NIS
0,74 million tons
12
REFINING
Annual capacity million tons
Processed in 2004. million tons
PKN ORLEN
14,4
12,66
NEFTOCHIM
10,7
5,67
MOL*
8,5
6,3
INA
8,5
5,1
UNIPETROL
8
6,3
PETROM
8
6,42
7,3
4,07
6
4,7
SLOVNAFT
PETROMIDIA
5,7
4,8
5,7
3,18
PETROTEL
3,5
0,36**
OKTA
2,5
0,84
NIS
LOTOS
*Excluding Slovnaft
**Petrotel restarted production at the end of 2004. after two years of reconstruction work
13
NUMBER OF PETROL STATIONS
In the country
Abroad
Total
1906
485
2391
PETROM
542
70
612
MOL*
357
174
531
NIS
500
0
500
INA
413
40
453
LOTOS
349
0
349
SLOVNAFT
281
65
346
PETROL
293
50
343
UNIPETROL
314
0
314
BEOPETROL
200
0
200
PKN ORLEN
* Excluding Slovnaft
14
MAJORITY OF CEE OIL COMPANIES HAVE BEEN PRIVATIZED
POLAND
PKN Orlen, 1999.
Lotos, 2005.
CROATIA
INA, 2003.
CZESH REPUBIC
Unipetrol, 2001.
S&M
Jugopetrol, 2002.
Beopetrol, 2003.
SLOVAKIA
Slovnaft, 1995.
Transpetrol, 2002.
BULGARIA
Neftochim, 1999.
SLOVENIA
Petrol, 1996.
ROMANIA
Petrotel, 1998.
Petromidia, 2000.
Petrom, 2004.
HUNGARY
MOL, 1995.
MACEDONIA
OKTA, 1999.
15
PRIVATISATION PROCES IN CEE
Company
Year, Share, Buyer
Current ownership structure
PKN ORLEN
1999. 30% IPO
2000. 26% Stock market
Nafta Polska 17,32%
State Trasury 10,20%
The Bank New Yourk 11,96%
Others 60,52%
LOTOS
2005. IPO (new issue of shares) Nafta Polska 51.91%
State Trasury 6.93%
Others 41.96%
UNIPETROL
2001. 62,99% PKN Orlen
2004. 37,01% IPO
PKN Orlen 62,99 %
ATLANTIK finan ní trhy 6,41 %
Free Float 30,60 %
Source: Companies reports, Governments reports
16
PRIVATIZATION PROCESS IN CEE
Company
Year, Share and Buyer
SLOVNAFT
1995. 10,5% EBRD
1995. 39% Slovintegra
1998. Slovintegra became
majority owner
2000. MOL became strategic
partner buying 36,2% of
capital
MOL 98,4%
Individual shareholders 1,3%
Other legal entities 0,3 %
TRANSPETROL
2002. 49% YUKOS
Transpetrol 51%
RUSSNEFT 49%
MOL
1995. 18,8% foreign investors
1995. 5,5% employees
1995. 3,2% Hungarian
investors
1997. Government sold 22%
1998. Government sold 11%
International investors 56%
Own shares 5%
Individuals 5%
Hungarian investors 4%
State 12 %
OMV 10%
Slovintegra/Slovbena 8%
17
Company
PETROL
1996. IPO
At the moment of IPO the
Government had 15,6%, and
other significant shares belonged
to Slovenian workers
compensation fund, Slovenian
development fund and Capital
fond
Other 38%
Other institutional investors 24%
Slovenian Compensation Fund 20%
Kapitalska druzba Grup 9%
Banks 5%
Insurers 3%
Treasury shares 1%
INA
2003. 25% + 1 share MOL
Republic of Croatia 75%
MOL 25%
PETROM
2004. 51% OMV
OMV 51%
Romanian State 40.74%
EBRD 2.03%
Minority shareholders 6.23%
18
Company
PETROMIDIA
2000- 69,9% Rompetrol Group
Rompetrol Group 69,9%
Others 30,1%
PETROTEL
1998- 51% Lukoil
Lukoil 93%
Others 7%
NEFTOCHIM
1999- 58% Lukoil
Lukoil 97,2%
Others 2,8%
OKTA
1999- 54% Hellenic Petroleum
Hellenic Petroleum 81,51%
BEOPETROL
2003- 79,5% Lukoil
Lukoil 79,5%
Jugopetrol Kotor
2002- 54,35% Hellenic Petroleum
Hellenic Petroleum 54,35%
19
PETROM Privatization Process
The sale of 33,34% existing share capital
51%
The share capital increase
5%
Up to 5% to EBRD for conversion of the existing loan
Up to 2.0% to the employees of Petrom
10%
Later up to 8% to the employees of Petrom
Pre-qualification criteria
Strategic investors are defined as Romanian or foreign entities (individual or consortium) with
experience in operating oil and gas companies. Candidates must provide documentary evidence of
the following:
Annual revenues from oil and gas activities in excess of US$1,000 million for the last three years
Technical and managerial experience of minimum three years in the oil and gas sector, in
accordance with the size and profile of the Strategic Transaction;
A bank reference letter, issued by a referenced bank.
Source: Romanian Government reports
20
Result of Privatisation
OMV Aktiengesellschaft was selected as a strategic partner of PETROM
For the purchase of 51% of Petrom, OMV paid:
1. EUR 669 million to the Government of Romania for the purchase of 33.34%.
2. And additional EUR 830 million as share capital proceeds into the Company such that its stake
post capital increase reaches 51%.
Privatisation Agreement made with OMV include:
1. Obligations on the Purchaser to maintain Petrom as an integrated oil and gas company by
retaining certain core assets in the exploration and production sector so as to enable Petrom to
produce a minimum of 4.2 million tons of crude oil and a minimum of 4.5 billion cubic meters of
natural gas for the next five years.
2. Specific provisions with respect to the use of amounts obtained from share capital increases,
whereby the Purchaser undertakes to use such amounts for the development of Petrom business
activities, in principal, for investments, upgrading, modernizing and environmental protection
purposes.
3. Provisions with respect to the employees of the company, whose number must be maintained
within the limits set forth in the business plan agreed with the Purchaser, attached as Annex to the
Privatization Agreement, as well as the observance of the collective labour bargaining agreement.
4. The Privatization Agreement also has an extensive section to deal with environmental related
issues. OMV, in its capacity as Purchaser, undertakes to comply with all obligations in terms of
environmental regulations post the completion of the transaction. The environmental obligations
resulting from historic contamination, i.e. the contamination that occurred prior to the date of
privatisation, will be undertaken by the Romanian state.
Source: Company reports, Romanian Government reports
21
INA Privatization Process
Transfer of 7% of shares, without a compensation to Croatian war veterans and
members of their families
Sale of maximum 7 % to present and former employees
Sale of maximum 25 % plus one share to INA s strategic investor
Sale of minimum 15% of shares by way of public offering to:
- Croatian citizens with pre-emptive right and preferences conditions
- Croatian legal entities and foreign investor, without any preferential treatment
by way of public offering
Sale of remaining shares to a strategic investor or on the capital market
A necessary number of shares shall be taken from the remaining shares as a
compensation to the former owners
The Republic of Croatia shall retain the direct ownership over at least 25% plus
one share of INA d.d., which shall be privatized upon the admission of the
Republic of Croatia to the EU
Conditions for participation in privatization process:
Strategic investor can be one or more legal entities which carry out activities related to production,
processing and trade of oil and gas
Source: Act of privatization of INA dd
22
Protection of interests of the Republic of Croatia
1. As long as the Republic of Croatia is the owner of 50% of INA d.d. shares or more, INA d.d. or
its governing bodies may, subject to prior consent of the Government of the Republic of Croatia
make decisions or enter into legal transactions or take legal actions relating to the sale or joint
venture with a value exceeding 3% of INA d.d., i.e. 25% as long as the Republic of Croatia is the
owner of 25% of INA d.d. shares.
2. As long as the Republic of Croatia is the owner of one of INA d.d. voting shares or more, INA
d.d or its management bodies may, subject to a prior consent of the Republic of Croatia, make
decisions or enter into legal transactions related to:
- Dissolution of the company
- Waiver of the operating permit or authorization or any concession of interest for the Republic of
Croatia
- Change of company
- Transfer of INA d.d. registered office abroad
3. In the event of forced winding up over INA d.d. or its legal successor, and as long as the
Republic of Croatia is the owner of one INA d.d. voting share or more, the Republic of Croatia
shall have the right of first refusal to purchase all or part of INA d.d. assets at estimated market
value.
Source: Act of privatization of INA dd
23
Result of Privatization
Croatian Government has selected MOL as a strategic partner
For the 25% + one share MOL paid USD 505 million
Contract with a strategic investor among other contains the following provisions:
- Strategic partner does not get the right of first refusal to purchase of remaining shares
- No work- related layoffs will be made within three-year period
- Two refineries - in Sisak and Rijeka
shall continue their operational activities
- Management and supervisory board will be consisted of seven members; five of them being
nominated by the Croatian side and two strategic partner
- Strategic decisions will be made by simply majority of the management board members
- There will not be payment of dividend in the first three years of operations
complete income will
be retained and directed in investments (modernization of the company)
- Policy on dividend defines that after three year period i.e. in the fourth year can be paid 25% of
dividend from that year, but without payments from previous years
- Contracts and business agreements exceeding value of 10 million euros are subject to previous
consent of strategic partner
Source: Croatian Government reports, Company reports
24
NIS PRIVATIZATION MODEL
PRIVATIZATION PROCESS
Vertical privatization model through offer of 51% to strategic partner
Strategic partner must have long-term experience in oil and gas business operations,
proven financial and management resources, as well as technical capacities in order to
ensure future development of NIS company.
One part through sale of shares
Other part through additional
capitalization
10%
To employees and other citizens with
certain privileges
14%
To strategic partner or at the
capital market
25%
Through an offer to strategic
partner or at the capital market
Dead-line for
additional
capitalization
2008.
In short term
In mid term
In long term
25
PROTECTION OF THE STATE INTERESTS
Privatization contract with a strategic partner must ensure the following:
1. NIS has to stay vertically integrated oil and gas company
2. It is necessary to provide modernization of NIS basic operational activities
3. It is needed to ensure continuous using of refining capacities
4. It is required to maintain certain level of oil and gas production
5. It is indispensable that the Government keeps the right to influence decisions
which are crucially important for NIS (golden share or some other way for
protection of the state interests)
6. It is necessary to maintain current employees in next three years along with
mandatory social program for voluntary departure of surplus staff
7. Obligated increase of ecological standards
26
REASONS FOR THIS PRIVATIZATION MODEL
1. All of the oil companies in the region have been already privatized, what
does not live time for long-term, phased privatization
2. Investment through additional capitalization enable immediate investing in
modernization of NIS production capacities
3. Majority ownership enables strategic partner future investments in NIS,
while on the other hand uncertain ownership structure would slow down
investments and development
4. Opposite to diffused ownership, majority ownership of strategic partner
would enable defining of clear strategy for NIS development
5. It would increase level of management and introduce international management
standards
6. It would lead to quick market liberalization
7. Direct foreign investments in Serbia and Montenegro in approximate
amount of 1 billion EUR
8. Positive impact on Serbia and Montenegro credit rating
27
COMPANIES WITH SIGNIFICANT
PRESENCE IN CEE
- POTENTIAL BUYERS OF NIS -
LUKOIL is one of the world's biggest vertically integrated oil & gas companies. Main activities
of the Company are exploration and production of oil & gas, production of petroleum products
and petrochemicals, and marketing of these outputs.
LUKOIL is the second largest private oil Company worldwide by proven hydrocarbon reserves.
The Company has around 1.3% of global oil reserves and 2.1% of global oil production.
LUKOIL dominates the Russian energy sector, with 18% of total Russian oil production and
18% of total Russian oil refining. Most of the Company s exploration and production activity is
located in Russia, and its main resource base is in Western Siberia. LUKOIL proven reserves at
the beginning of 2005 were 15,972 mln barrels of crude oil and 24,598 bcf of natural gas,
totaling 20,072 mln boe.
Total capacity of LUKOIL facilities in Russia is 41.8 mln tons of oil per year. LUKOIL also has
refineries in Ukraine, Bulgaria, and Romania, with total capacity of 16.7 mln tons per year.
By the end of 2004 LUKOIL's sales network covered 17 countries of the world, including
Russia, the CIS, Europe and the USA, and consisted of 199 tank farms and 5.405 filling stations.
Source: Company reports, Datamonitor
28
LUKOIL PRESENCE IN CEE
Petrol stations network:
Bulgaria
Hungary
Czech Republic
Poland
Romania
Serbia & Montenegro
Beopetrol 70%
Petrotel 93%
Nefochim 97,2%
Petrol 18,3%
29
OMV Aktiengesellschaft is an oil and gas exploration, production, and refinement company
operating in Central and Eastern Europe through a number of subsidiaries. The company s
operating segments are exploration and production, refining and marketing (including
petrochemicals), gas, and chemicals.
The company s oil exploration and production operations are mainly concentrated in the
Danube/Adriatic region, the North Sea, North Africa, the Middle East, and Australia/New
Zealand. Approximately one-third of production comes from Austria, and the rest comes from
international stakes in oil and gas fields. Proved reserves at the end of 2004 were 1,4 billion boe
(including Petrom).
In the refining and marketing segment, the company operates through its two refineries located in
Schwechat, Austria and Burghausen, Germany. These two refineries have a combined capacity of
26,4 million tons per year. By the end of 2006 OMV sales network covered 12 countries in
Europe and 2.521 filling stations.
OMV plays a large role in gas transmission in Europe. The company s total pipeline network has
a combined length of about 2000 km.
30
OMV PRESENCE IN CEE
Hungary
Czech Republic
Slovakia
Slovenia
Croatia
Romania
Bulgaria
Serbia & Montenegro
Bosnia & Herzegovina
MOL 10%
PETROM 51%
31
MOL Magyar Olaj-és Gázipari (MOL Hungarian Oil and Gas) is an integrated oil and gas
company. The Hungarian government owns 25% of MOL. The company is primarily involved
in the exploration and production of crude oil and natural gas. It also refines crude oil to
produce motor fuels, oil, lubricants, heating and fuel oils. Other activities include the import,
transportation, storage and wholesale distribution of natural gas and oil refinery products,
olefins and polyolefins in Hungary, Russia, and areas of Central and Eastern Europe.
Proved reserves at the end of 2004 were 240.2 million boe
MOL owns three refineries with a total capacity of about 14,2 million tons per year, and
operates about 812 gas stations, primarily in Hungary, Slovakia, and Romania. About half are in
Hungary and half outside. In addition, the company has over 30 consolidated domestic
subsidiaries and 10 foreign, based in Cyprus, Austria, Netherlands and the Slovak Republic.
The company owns 44.3% of TVK, a Hungarian petrochemical company and the only olefin
and polyolefin producer in Hungary.
32
MOL PRESENCE IN CEE
Hungary
Czech Republic
Slovakia
Slovenia
Croatia
Bulgaria
Romania
Slovnaft 98,4%
Shell Romania 100%
INA 25%
33
HELLENIC PETROLEUM s core business segment is refining, others business segments
include exploration and production, marketing (including petrochemicals), gas and
chemicals. The Greek state owns 27,49% Hellenic Petroleum.
Hellenic Petroleum operates four refineries: at Aspropyrgos, Elefsina, and Thessaloniki in
Greece and Skopje in Macedonia. With a total capacity of about 14,2 million tons per year
It also operates about 1.512 gas stations in Greece, Albania, Bulgaria, Cyprus, Georgia and
Serbia & Montenegro.
34
HELLENIC PETROLEUM PRESENCE IN CEE
Bulgaria
Serbia & Montenegro
Albania
Macedonia
Jugopetrol Kotor 54,35%
Global Petroleum 99,96%
OKTA 81,51%
35

Finding the Best Way to Privatize NIS

Transcription

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