MOL and Rotch Energy seen as final bidders for Gdanska
By : Bogda Zukowska
Hungarian oil and gas company MOL and U.K.-based Rotch Energy have placed binding offers to buy Rafineria Gdanska, Poland's second largest oil refiner.
Nafta Polska, the state agency in charge of selling Polish assets in the domestic petrochemical sector, made the announcement last Monday, and as the tender enters its critical stage rumors are mounting about companies linked with the deal.
Rafineria Gdanska has a 22% share of Poland's oil refining market. Last year the company processed 4.2 million tonnes of crude oil and posted a zl. 173 million ($42.2 million) net profit, compared to 1999's zl. 110 million ($26.8 million). Nafta Polska is offering up to a 75% stake in Rafineria Gdanska and aims to complete the deal by mid-year.
According to Nafta Polska spokesman Janusz Kwiatkowski, the state agency will decide in the next two weeks whether to hold negotiations with MOL and Rotch Energy, the energy arm of the U.K.-based conglomerate Rotch Group, or to choose only one company for the tender. Kwiatkowski would not confirm rumors that the agency is considering calling off the whole tender process, or that MOL is planning to team up with the Russian oil company, Yukos, to bid for the tender.
"We have received offers from two solely acting bidders," Kwiatkowski said. "But it is up to companies to decide whether they team up with other partners later on."
"MOL is acting independently in bidding for the Gdansk refinery. Any suggestions linking MOL with Russia's Yukos are inaccurate," said a source very close to the deal, who wanted to remain anonymous. According to the source, such rumors are damaging for the Hungarian bidder and may affect its chance to win the tender.
There is also speculation that Polski Koncern Naftowy Orlen (PKN Orlen) is the company behind the rumors linking MOL with Yukos. Acquiring Gdansk's assets would strengthen PKN Orlen's already dominant position on the domestic oil market, giving it the muscle to challenge emerging international competition after Poland joins the European Union.
Both speculations, though, seem unlikely. So far, MOL and PKN Orlen have been perceived as potential partners in a regional oil industry alliance, and both companies have publicly stated they are interested in cooperation. It seems unlikely, too, that MOL would team up with a Russian company, as only last December PKN Orlen acted to save BorsodChem, a Hungary-based petrochemical manufacturer, from a hostile takeover by another Russian oil giant, Gazprom.
"People are going to use any way or means to block Russian companies coming (into Poland)," commented Klaudius Sobczyk, asset manager at BNP Paribas bank, in the Wall Street Journal Europe last December. He said that after almost 50 years of Soviet domination in Central Europe, a Russian "comeback" is unwelcome due to painful memories.
But according to Robert Jankowski, analyst with CDM Pekao, there is another rationale for stopping Russian expansion into Poland's refinery industry. "As Poland is already dependent on natural gas and crude oil deliveries from Russia, nobody in Poland would accept Russian companies gaining a strong foothold in the oil-processing industry because it would only enhance Poland's dependency from one supplier," he said.
According to MOL's official statement issued last Monday, the Polish market is strategically important for the company's long-term Central European interests. Last year MOL paid $262 million for a 36% stake in Slovnaft, Slovakia's dominant refiner. The combined refining capacity of MOL, Slovnaft and Gdansk would total more than 20 million tonnes. The group would employ 23,700 people and have a distribution network of 1,080 gas stations.
"MOL is a serious partner, and it would be in the Gdansk refinery's favor if MOL would win the bid," Jankowski said when asked about MOL's chances in the bid. Jankowski added, though, that MOL should take a prudent approach to the investment, as market competition from Poland's largest oil company, PKN Orlen, is pushing down profit margins.
"To challenge PKN Orlen, a strategic investor in Gdansk should invest $1 billion-$2 billion," Jankowski said.
Meanwhile, Hungarian analysts are cautious about MOL's chances of winning the bid, as the company committed itself to curbing its debts after acquiring Slovnaft in 2000.
Rotch Energy, which emerged as a second bidder for the Gdansk plant, is new to the oil industry. Its U.K.-based parent company, Rotch Group (www.rotch.com), deals primarily in real estate. The group, established in 1982, is owned jointly by Robert and Vincent Tchenguiz, British citizens of Iranian origin.
Rotch Group's experience in the oil sector has been limited to purchasing and leasing petrol stations, with such partners as Shell and Neste oil conglomerates.
"It looks like Rotch is considering these deals as real-estate transactions, not as an investment in the oil sector," said Nafta's Kwiatkowski.
