Mariana Gheorghe on corporate governance in Romania | OMV Petrom | Video

World Finance interviews Mariana Gheorghe, CEO of oil and gas group OMV Petrom, on corporate governance in Romania

March 20, 2014

OMV Petrom is the largest oil and gas group in south eastern Europe, with activities in exploration and production, gas and power, and refining and marketing. CEO Mariana Gheorghe talks about OMV Petrom’s potential for further oil exploration in Romania, and how corporate governance is shaping the country’s private sector.

World Finance: Well Mariana, Romania is of course the largest producer of oil and gas in eastern Europe. But how much potential is there still in this region and how are you capitalising on this?

Mariana Gheorghe: Romania has been producing oil and gas for more than 100 years. It’s a matter of size, but a same nature of the business, specific to the business is that we have quite a large basin, 250 fields, but they are quite small. Our objective is twofold. One is to increase the recovery rate of the existing field, and on the other hand we tried to enter into exploration. And the results are there, i.e. we have already established a production, and in 2013 we actually recorded for the first time in the last 10 years an increase of 1000 barrels per day.

As for the larger potential, we need indeed to see the results of the exploration. In 2012, out of the joint venture with ExxonMobil we have made a first discovery, Domino is the name. We hope there are many more to follow. But, in a nutshell, the potential is there, and we need a lot of investments in order to get out and to capture that potential.

World Finance: Well looking more at the company now, and how is OMV Petrom structured?

Mariana Gheorghe: It’s starting with the two-value chain: oil and gas. On the oil side, 100 percent of the production we produce in Romania. For example, it’s processed in a refinery, Petrobrazi, and then all of this is distributed via our own retail network, which is not only in Romania but also in the neighbouring markets.

World Finance: Well in the last 9 years you’ve invested €10bn in your modernisation and efficiency process. How has this revolutionised OMV Petrom?

Everybody talks about CSR, particularly in a country which has started with
the communists

Mariana Gheorghe: From an old asset base, bureaucracy, political interference, over-staffed organisation, to a modern, flexible and agile organisation which has profitable business, which has succeeded to become very efficient based on it’s €10bn investment. But also it has created a sold foundation for the future. The people who have come from an organisation where there were no investments, so the future was quite unclear, and an organisation in which people were not supported in training to upgrade their skills for what is needed in the marketplace they have entered to, to a community of people who are very motivated, who have skills which make them now very competitive on any European labour market.

And the last pillar of this revolution is the relationship with the stakeholders, and that’s where we talk about a totally different approach to the sustainability concept. We started with CSR. Everybody talks about corporate social sesponsibility, particularly in a country which has started with the communists, where everybody was a producer and owner of the assets in that country, it was a revolution when everything has come now in private hands. And that has created a barrier to the way people are thinking, and sustainability has become now part of our strategy, and sustainability means the way you relate, not only with your own employees, which is one key stakeholder, but with all the other stakeholders, how you relate with clients, with suppliers, with government authorities, on pure commercial principles, with a view to reduce your impact on the environment on the one hand, or to increase positive impact on society.

World Finance: Well let’s focus on corporate governance now, and how developed is this in eastern Europe?

Clearly the corporate world in Romania had to understand and then
adjust to it

Mariana Gheorghe: Clearly the corporate world in Romania had to understand and then adjust to it. Romania’s stock exchange, which has been established in the 2000s, has established certain rules at the beginning, and then has also put a corporate governance code. OMV Petrom is a listed company on Romania’s stock exchange, and as such is the blue chip of the Romanian stock exchange. And therefore, we have been driving this agenda of high corporate standards.

World Finance: So what would you say the major challenges are that OMV Petrom faces when it comes to corporate governance?

Mariana Gheorghe: It’s actually to incorporate all these corporate governance principles, as well as all the issues related to the sustainability, in their own strategy, in their activities, and that’s something which we are working on. For that purpose, the stakeholders are a key part of all this process.

World Finance: And looking to the future now, what’s next with OMV Petrom?

Mariana Gheorghe: We are going to consolidate and maximise the value of our portfolio in the upstream, and moreover, we are going to grow in the Black Sea. That’s one area in the western of the Black Sea, it’s one where together with our partner ExxonMobil, we are looking forward to growth opportunities.

And this growth will be supported by the downstream/midstream where we actually monetise our upstream production, and in that direction, what we are focusing in mid and downstream is optimising, creating value added by working with the markets and the clients we have. Doing that is to stay the leading integrated oil and gas company.

Generating profits is going to be challenging, because we depend a lot on what the market offers, be it international markets, where will be the international oil and gas prices, but also in terms of demand both in the country and in the neighbouring markets which are our targeted markets.

World Finance: Mariana, thank you.

Mariana Gheorghe: Thank you very much.