Government moves ahead on oil sell-off
The move creates Nafta SA, a single holding company made up of the seven state-owned oil refineries and gas distributor CPN SA. Under plans released last week, Nafta could sell to strategic investors 20%-30% stakes apiece in each refinery with a distribution network by next year.
Some private oil sector insiders argue the move is politically motivated and prohibitive to a competitive domestic gas and oil market.
"We are a little afraid of the situation," said Andrzej Szczesniak, director of the Polish Chamber of Liquid Fuels, an association of 90% of the companies in Poland's private oil sector of retailers and distributors. "When one big company is created, it will worsen our position. This is only the reorganizing of the old structure. It is structured to oppose a free market."
Under the consolidation plan, Nafta will have an 89% domestic market share in oil production and refining and, with the addition of CPN, a 45% market share in retail and wholesale distribution, Szczesniak said. Poland's oil sector generates 8.5% of GDP and has annual net profits of $400 million.
When the project is completed in April, Nafta will own 100% of Poland's seven refineries. A 33% stake in CPN, which has a national chain of 1,300 gas stations, would be added to the holding company, and the remaining 66% of CPN would be distributed among the seven refineries.
"We are happy that the consolidation will take place with CPN, and we will have direct access to it," said Marek Foltynowacz, development manager at Rafineria Gdanska SA. Gdanska is the strongest of the refineries and had profits of zl. 94.8 million ($39 million) and processed 1.9 million tons of crude oil.
Foreign oil executives see the inclusion of CPN in the grouping as the government's carrot and stick for strategic investors. To get a bite of distributor CPN, investors will have to take a piece of a refinery.
But "I don't know where they get the idea that CPN is a jewel," said Nick Tillmann, director of business development at Conoco.
CPN is less attractive because foreign investors can put up their own outlets. Conoco already has 11 gas stations opened and plans to open another 10-15 outlets annually over the next few years.
In a move that confounds many in the sector, the government has added its 51% ownership of Ciech SA, the teetering petro-chemical trade conglomerate. According to Trade and Industry Minister Klemens Scierski, Ciech's experience and international credit worthiness are an asset to Nafta. Ciech would act as a middleman in the import of foreign crude oil and export of refined Polish petrol products.
Some foreign oil executives see the inclusion of Ciech, which has strong connections with the Peasants Party (PSL), as politically motivated. The refineries in the consolidation package see Ciech as a potential threat to their own business activity.
Foltynowacz of Rafineria Gdanska said he was not pleased by the Ciech addition. "For the time being we are not going to trade our individual position," he said. "We will continue to purchase crude directly."
But the question remains about whether the consolidation, which looks vaguely like a monopoly, would close the door on the potential for much-needed foreign capital.
"The door was never open," said Tillmann.
Some private oil sector insiders argue the move is politically motivated and prohibitive to a competitive domestic gas and oil market.
"We are a little afraid of the situation," said Andrzej Szczesniak, director of the Polish Chamber of Liquid Fuels, an association of 90% of the companies in Poland's private oil sector of retailers and distributors. "When one big company is created, it will worsen our position. This is only the reorganizing of the old structure. It is structured to oppose a free market."
Under the consolidation plan, Nafta will have an 89% domestic market share in oil production and refining and, with the addition of CPN, a 45% market share in retail and wholesale distribution, Szczesniak said. Poland's oil sector generates 8.5% of GDP and has annual net profits of $400 million.
When the project is completed in April, Nafta will own 100% of Poland's seven refineries. A 33% stake in CPN, which has a national chain of 1,300 gas stations, would be added to the holding company, and the remaining 66% of CPN would be distributed among the seven refineries.
"We are happy that the consolidation will take place with CPN, and we will have direct access to it," said Marek Foltynowacz, development manager at Rafineria Gdanska SA. Gdanska is the strongest of the refineries and had profits of zl. 94.8 million ($39 million) and processed 1.9 million tons of crude oil.
Foreign oil executives see the inclusion of CPN in the grouping as the government's carrot and stick for strategic investors. To get a bite of distributor CPN, investors will have to take a piece of a refinery.
But "I don't know where they get the idea that CPN is a jewel," said Nick Tillmann, director of business development at Conoco.
CPN is less attractive because foreign investors can put up their own outlets. Conoco already has 11 gas stations opened and plans to open another 10-15 outlets annually over the next few years.
In a move that confounds many in the sector, the government has added its 51% ownership of Ciech SA, the teetering petro-chemical trade conglomerate. According to Trade and Industry Minister Klemens Scierski, Ciech's experience and international credit worthiness are an asset to Nafta. Ciech would act as a middleman in the import of foreign crude oil and export of refined Polish petrol products.
Some foreign oil executives see the inclusion of Ciech, which has strong connections with the Peasants Party (PSL), as politically motivated. The refineries in the consolidation package see Ciech as a potential threat to their own business activity.
Foltynowacz of Rafineria Gdanska said he was not pleased by the Ciech addition. "For the time being we are not going to trade our individual position," he said. "We will continue to purchase crude directly."
But the question remains about whether the consolidation, which looks vaguely like a monopoly, would close the door on the potential for much-needed foreign capital.
"The door was never open," said Tillmann.
