Raport integrat (inclusiv CSR) al KMG International (fostul Grup Rompetrol) 2010

0000

Annual Report

2010

The Rompetrol GroupWorld Trade Center, A-8 TowerStrawinskylaan 8071077 XX AmsterdamThe NetherlandsPhone: + (31) 20 575 2390Fax: + (31) 20 575 [email protected]

RPT_2010 Annual Report_1024x768.indd 1 22/11/2011 10:34 AM

Letter from the CEO

1. Refining and Petrochemicals• RompetrolRafinare

• RompetrolPetrochemicals

• VegaRefinery

2. Trading

3. Retail• RompetrolDownstream

• DyneffFranceandSpain

• RompetrolBulgaria

• RompetrolMoldova

• RompetrolGeorgia

• RompetrolGas

• RompetrolLogistics

4. Business Development • Marketing

• Rominserv

• Drilling

• Ecomaster

• E&P

• RompetrolWellServices

• RQC

• Palplast

• GSS

Corporate Social Responsibility

Corporate Governance

Finance• Financialanalysis

• Financialresults

• PlanningandPerformanceManagement

• Accountingprocedures

Contents

Contents


Refining and Petrochemicals«RompetrolAnnualReport2010//3

DearPartners,

TheOil&Gasindustryhasalwaysbeenasvolatileastherawmaterialsituses:marketsarehighlysensibletoseriouseconomichappenings,tosignificantlocalorregionalpoliticalshiftsortoothersocialeventswithlargescaleimplications.Fortunately,bothTheRompetrolGroupanditssoleshareholder,KazMunayGas,haveonepricelessasset,whichoutranksanyexistingones:theirpeople.Wellpreparedprofessionally,withdecadesofexperienceintheirfieldsofexpertiseandhavingthesupportofsuchpowerfulcorporations,Ithinkourpeoplecanachievewonderfulthings.Evenwithallthedifficulties,Ibelievethecompanymanagedtoshowthatit’scapableofmovingforward,constantlyimprovingitsoperationsandexploringeachviableopportunity.

2010wasayearofchangeforTheRompetrolGroupandcontinuouseffortstowardsexpandingandimprovingourcurrentassetsandbusinesses.ThroughefficientadministrationofouroperationsinRomania,aswellasabroad,wemanagedtoachieveseveralmajorobjectives.Amongsttheseobjectives,probablyoftheutmostimportancewastheturnoverofthePetromidiaRefinery.Scheduledeveryfouryears,thegeneralrevisionwasmanagedbyourgeneralcontractor,Rominserv,andfollowedtheimplementationof61newprojects.Besidestheturnover,wecontinuedtheinvestmentprogramatPetromidia,whichaimsatachievingaprocessingcapacityof5milliontonsofrawmaterialperyearby2011.Tothiseffect,Rompetrolhasinvestedalmosthalfabilliondollarsuntilnow.

Anotherbigstepforthecompanywasthedevelopmentofournewmanagemententity,TheRompetrolGroupCorporateCenter(TRGCC).Itsmainprioritiesweretooptimizethecashflowandenhancethegovernanceofthebusinesses,thusimprovingthedecisionmakingprocess.Thepastyearsweren’teasyonthecompanyandwe’redoingallthatispossibletodiminishtheeffectsoftheinternationalfinancialconstraints.ThefirststepinthisdirectionwasmadewhenalmostalltheemployeesfromtheRomanianentitiesweretransferredtothenewofficesatCityGate,thusimprovingthecommunicationflowandmanagementprocessesinthecompany.

Eventhoughseverelydamagedbythereducedconsumptionandlowermargins,theRetailsector,whichundergoesoperationsin6Europeancountries,managedtopreserveitsactivitiesandkeepitsfinancialfiguresatlevelssimilarto2009.Atthetimebeing,Rompetroloperatesanetworkofapproximately1.100fuelingpointsthroughoutEurope,alevelveryclosetotheoneregisteredayearago.Eventhoughmanyopportunitiesarose,beinginanoptimizationprocessthatinvolvedallthecompaniesintheGroup,manyplansmadefor2010hadtobescheduledfortheupcomingyears.

CorporatesocialresponsibilitywasalsoanimportantcomponentofRompetrol’sstrategyin2010,thecompanycontinuingtoprovidesolutionstoRomania’shealthandenvironmentissues.Inthisdirection,RompetrolmaintaineditspartnershipwithSMURD,theEmergencyMedicalService,byofferingtheneededfuelforitshelicopters.Also,thecompanyfinalizedseveralprojectsthataimedatthemodernizationandrehabilitationofimportanthospitalsinthecountry(Sibiu,București).

Still,despitealltheseaccomplishments,Ifeelthemostinterestingpartisstilltocome:thedevelopmentoftheenergeticbridgebetweenKazMunayGasandTheRompetrolGroup.ThepossibilitiesareendlessandreviewingthelastyearsthatI’vespenthere,Ithinkthatwehavetherightamountofpotential,enthusiasmandskilltoreachourgoals,surpassthemandthinkevenbigger.Whentwocompaniessuchastheseworktogether,syncedatalmosteverylevel,optionsopenatawholedifferentlevel:abridgebetweentwodifferentcountries,twodifferentcontinentsandtwodifferentworlds.

Saduokhas MeraliyevCEOofTheRompetrolGroup

Letter from the CEO

LetterfromtheCEO

Saduokhas Meraliyev,CEOofTheRompetrolGroup


Growth1. Refining and Petrochemicals

RompetrolRafinareregistereda20%higheroperationalresult(EBITDA),reachingtheamountofUSD16,585,372.



RompetrolRafinare,abusinessunitcomposedbythreeproductionentities:PetromidiaandVegarefineriesandRompetrolPetrochemicals,continueditsprogramofcostsoptimizationandinvestments,scheduledlastyears.ThefinalgoalofthesejointprojectsistoimprovetheperformanceoftheRefiningandPetrochemicalsbusinessinordertoreachsimilarlevelstothemostpowerfulunitsofsuchkindfromCentralandSouth-EasternEurope.

PetromidiaistheonlyrefineryinRomaniasituatedontheshoreoftheBlackSea,thushavingacompetitiveadvantageduetoinstantaccesstoseaandrivertransportroutes.Vegarefinery,havinganinstalledprocessingcapacityof450,000tonsperyear,isaflexiblefacility,specializedinprocessing

alternativerawmaterialsandproductionofecologicalsolvents,specialbitumen,ecologicalfuelsforheatingandotherdedicatedproducts.

ThepetrochemicalcomplexonthePetromidiaplatformwasbuiltinthe80thyearsoftheXXthcenturyusingbothRomanianandforeigntechnologies(UOP,Mitsui,Snamprogetti,HeatResearchCorporation,PullmanKelloggetc.)andnowadaysisoneofthemostmodernunits.

Thebusinessunitcomprises2operationalentities:• RompetrolRafinare(PetromidiaRefineryinConstanțaandVegaRefineryinPloiești)• RompetrolPetrochemicals

RefiningandPetrochemicalsBusinessUnit

RompetrolRafinare–PetromidiaRefinery

2010 Major Performances

• RompetrolRafinarecontinuedtheinvestmentsprogramstartedduringthelastyearsinordertoreachthehighesttechnologicallevelatPetromidiaandaprocessingcapacityofabout5milliontonsofrawmaterialperyear.TheTRGinvestmenteffortinthisprojectisestimatedatmorethanUSD370million.• In2010,thegeneralscheduledoverhaulofPetromidiarefinerywasdone,organizedonceeveryfouryears.TheworkswerecoordinatedbyRominserv,thegeneralcontractorfortheRompetrolGroup.Intherefiningandpetrochemicalssectors,worksat600piecesofequipmentand2,000pipelineswereexecuted,while61newprojectswereimplemented.Thetotalamountofinvestments,madeduringtheoverhaul,reachedUSD43million.• Usingabusinessoptimizationandcostreductionplan,alongsidewithscheduledinvestments,RompetrolRafinareregisteredin2010aconsolidatedturnoverofUSD3.5billion,a12%growthincomparisonwiththeresultobtainedin2009.• RompetrolRafinareregistereda20%higheroperationalresult(EBITDA),reachingtheamountof16,585,372USD.• RompetrolRafinarehasfinishedinthelastquarterof2010theconstructionofanLPG(liquefiedpetroleumgas)terminalinMidiaport,thetotalamountoftheinvestmentbeingaboutUSD3.8millionworth.Havingacapacityofapproximately3,000tons/transport,thenewfacilityprovidesareductionbymorethan20%ofthecosts,afferenttoLPGimport/exportactivities,aswellasofthetimeofdeliveryandimplicitlyofthenumberofoperations.

Revamping of the Catalytic Cracker Unit (FCC)

TheaimofreconstructingtheFCCunitwas:• Eliminatingthecapacitylimitationoftherefineryinordertoprovideaprocessingrateof5milliontonsofcrudeoilperyeartogetherwiththe“2010Package”projects.• Obtainingimprovedyieldsinvaluablegasesandgasolineinconditionsofdifferentrawmaterial.• Thereplacementoftheexistingreactor,necessaryduetotheexceedingnumberofexploitationhoursandnumerousmetallurgicalanderosionproblems.

Theunitperformancesaftermodernizationshowusanincreaseofyieldsinvaluableproducts(propylene,gasoline),growthofconversionandimprovementoftheproducts’specifications(growthofgasolineoctanenumber,growthofpropyleneconcentrationinpropane-propylenefraction).

Revamping of the Gas Desulphurization Unit

Theaimoftheprojectwastoexpandtheprocessingcapacityoftheincreasedvolumeofgasesandaminedue

totheincreaseoftherefineryprocessingcapacityupto5milliontonsofcrudeoilperyear,havingasulphurcontentof1.72%,aswellasintroducingintherefinerycircuitoftheMildHydrocrackerUnit(MHC).85%ofthewholeprojectworkshavebeenexecuted.Theprojectwillbefinishedin2011.

Revamping of the Sulphur Recovery Unit

Theaimoftheprojectwastoreducethesulphurdioxide(SO2)emissionsatthesmokestacksof4productionlinesbyprovidingautomaticadjustmentoftheair/hydrogensulphide(H2S)ratioandtemperatureattheentranceinthefirststageofreaction.ForCandDlinestheratioadjustmentwillbedonebothdependingontheoutputofacidgasesandonSO2/H2S,registeredbyanalyzers,mountedonresidualgaseslinesbeforetheentranceintotheincinerators.Moreover,changesmadeonCandDlines,willallowtoburngasesfromstrippingunitwithtransformationofammoniainnitrogen,thusreducingNOxemissionsonsmokestacks.Mainchanges,madeonCandDlinesconsistedofmountingnewblowersofhighercapacity,werethereplacementofKlausheaters,mountingofnewburners,replacementofrecoveryboilers,modificationoftheheatexchangers’ensembleS8-S9inordertotakeovertheincreasedoutputofsteam,modificationofinputnozzlesofseparatingvessels.ThedesigneroftheprojectwastheFrenchcompanyLeGasIntegral(LGI).Recoveringcapacityhasbeenincreasedfrom100to130tons/dayasaresultofacidgasesoutputsincreasingfrom1000upto1250Nm3/hour–H2SgasesfromamineunitforlinesAandB,andupto1500Nm3/hourforlinesCandD(ofwhich1000Nm3/hourH2Sgasesfromamineunitand500Nm3/hourH2Sgasesfromstripping).Finalizingoftheproject(lineA)isestimatedforMarch2011(linesB,C,Darealreadymodernized).

Representative Products and Production Results

RompetrolRafinarehasregisteredin2010analmost15%decreaseofprocessedquantitiesofrawmaterial,from4.03milliontonsdownto3.5milliontons.Inthesameyear,therefiningcapacityutilizationratewas77.56%intheconditionwhenthemechanicalavailabilityoftherefinerywasreduceddueto42daysofgeneraloverhaul.

Quantities of raw material processed annually

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

(thousand tons)

1,153

2,372

3,113 3,0453,302 3,259

3,827

4,394

4,033

3,057

1,000

2,000

3,000

4,000

5,000

3,695



¢ Total p Crude oil

Totals for monthly processed raw material, 2010

jan feb mar apr may jun jul aug sep oct decnov

(thousand tons)

0

50

100

150

200

250

300

350

400

348

337

259

250

345

332

335

322

316

300

343

328

343

327

355

337

222210

1211

282

275

348

337

Total raw material, tons Crude oil, tons

3,507,488 3,367,397

Finishedproducts 3,414,646

Gasoline 1,125,840

Gasoil 1,324,361

Marketplace

Thestrategyofthecompanyregardingcommercialpolicywascontinuouslyfocusedontheoptimizationofthecommercialflowswhilepurchasingrawmaterialsandsellingfinishedproducts.CrudeoilacquisitionswereexclusivelycarriedoutthroughtheGrouptradingcompanyVectorEnergy,whichalsohastakenoverthegreatestpartofgasolineandgasoilvolumessoldonexternalmarkets.ThequalityoftheproductssoldbyRompetrolmettheenvironmentalstandardsintheEUcountriesandledtotheconsolidationofthecompanypositionandpresenceontraditionalreferencemarketsinthepetroleumfield.

Salesin2010werelowerthaninthepreviousyearasaresultofrevampingandoverhaulworks,performedatPetromidiaRefinery,aswellasduetotheeffectsofsocialvolatilityandglobaleconomics.

jan feb mar apr may jun jul aug sep oct nov dec

Total sales 2009 versus 2010

(tons)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

� 2009 � 2010

In2010,theshareofinternalmarketinthetotalityofsoldfinishedproductswashigher(60%)thantheexternalone.

RompetrolproductswerepresentintheRomanianmarketinallgeographicalzonesthroughitsowngas-stationsnetworkandtheinternalmarkethasbeenabsorbedmorethanahalf(53%)ofthetotalvolumeofautomotivefuels,soldduringthewholeair.

0

50,000

100,000

150,000

200,000

250,000

jan feb mar apr may jun jul aug sep oct nov dec

Internal vs. External, 2010

(tons)

� Internal � External

Ontheexternalmarket,productsweresoldbothinCommunityspaceandnon-communityspace.TheCommunityspaceabsorbedmorethan24%fromthetotalamountofsoldfinishedproductsandthe76%differencerepresentsexportsalesonnon-communitymarkets. Almost70%oftheexternalsalesweredirectedtowardsEuropeanmarkets,locatedinRomania’sproximity.

MaindestinationsforexportproductsofRompetrolRafinareareasfollows:

Gasoline Georgia, Ukraine, Turkey, Lebanon, Moldova

Gasoil Bulgaria,Turkey,Georgia,Serbia,Moldova,Lebanon

Coke Ukraine,Greece,Turkey,Serbia

Sulphur Egypt,Ukraine,Greece

Gasoline Gasoil

LIC vs. Export

(tons)

0

200,000

400,000

600,000

800,000

1,000,000

LIC Export

114,745

564,265

108,585

272,681

*LIC=Intra-Communitysupplies

Outofthetotalvolumeofautomotivefuels,distributedontheexternalmarket,morethan43%weredeliveredtotheRompetrolGroupsubsidiaries(Moldova,Bulgaria,Georgia,Ukraine).





0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Gasoline Gasoil

Near abroad vs. Trading

(tons)

Near abroad Trading

249,960

203,263

178,003

429,033

Mainclientsontheinternalmarketwere:RompetrolDownstream,RompetrolGasSRL,RompetrolPetrochemicals,AirBPSales,AirTotalRomania.

Mainexternalclientswere:VectorEnergy,RompetrolMoldova,RompetrolBulgaria,CalviTradeLimited,UnicoalSpaItalia,TransamoniaElveția.

Quality

Allautomotivefuelssoldin2010(GasolineEuroPlusWithoutlead,GasolinePremiumE4,GasolineEuroSuper98withoutlead,GasolineEfix,DieselSuperEuro4,EfixDiesel,DieselEuro5,fuelsforcars–LPG)havebeeninspectedbytheRAR(RomanianAutomobileRegister)accordingthesupervisionplan.

Documentation(ConformityCertificate,License),allowingtheintroductionoftheseproductsinthemarkethasbeenobtained.

Monitoring of products and RAD /ADR inspections

Thequalityofsuppliedproductswaspermanentlysupervisedatreception,ontheproductionflowandondeliveryinordertoensurethecompliancewithlegalandcompanydemands.

2011 Major Objectives

QHSEObjectives(Quality,Health,Safety,Environment)

Safety• MinimizingofthenumberofaccidentsonthePetromidiaplatformuntiltheircompleteelimination;• Improvingtheprogramthataimsattheincreaseofthelevelofsafety(security)cultureandtheattainmentofaminimumlevelof2.6regardinglaborhealthandsafetyinaccordancewithDuPontmatrix;• Improvingthesafetyperformanceindicators,setontheRompetrolGrouplevel,throughthediminishmentoftargetvaluesbyminimum0.5incomparisonwith2010(rateofcaraccidents,frequencyoflabourincapacity,incidentsrate,frequencyandseverityrate).

EnvironmentalObjectives• ElaboratingandimplementingoftheActionPlanforreductionofwaste(WRAP);• Revising/renewingtheIntegratedEnvironmentalPermitsinordertobeincompliancewiththecurrentlegislationandforapplicationofsustainablealternativesconcerningthemasteringofwastesfromsludgelagoons;• Participatinginprojectsofvolunteeringandsocialresponsibilityinneighbouringcommunities.

QualityObjectives• Reducingby5%thenon-qualitycostsforsuppliedandfinishedproductsthroughidentificationofcriticalelements;• FacilitatingoftheSIMdocumentsstudying,specificforworkingpositions,throughcreation/updateofthesedocumentsapplicabilitymatrixuponpositions/departments;• Assessingandimplementing,takingintoconsiderationtheMidia/Vegaplatformsspecific,theRompetrolGroupQHSEinstructions.

OperationalObjectives• Themainobjectivefor2011isfinalizingtheprogram“The2011investmentspackage”.Afterthepackageisclosedandallexecutedworkswillbeimplemented,thePetromidiarefinerywillstarttoprocess,beginningwith2012,over5milliontonsofrawmaterialperyear;• Continuingtheprocessofbusinessoptimizationinordertoreachthehighestpossibleoperationalandfinancialefficiency;• Consolidatingthecurrentactivitiesandassets.

RompetrolRafinare–VegaPloiestiRefinery

RompetrolRafinare–VegaPloieștiisaprocessingunitfocusedonthemanufacturingofspecialproducts:ecologicalsolvents,fuelsforheating,specialbitumen,etc.Startingwith2008,itemphasizedonobtainingproductsfortheretailmarket.

In2011,VegaRefinerywillprocessonlyalternativerawmaterials(suchasnaphthagasoil,fractionC5-C6,slurry,jetandheavyoil)andtheunitsinfunctioningwillbethefollowingones:Hexane,Rectification,Dearomatization,AFP(Products’Blending/Finishing),VacuumDistillationandBitumen.


• Maintainingtheprocessedrawmaterialatthelevelofapproximately302,000tons,notwithstandingdifficultconditionsontheprofilemarket.• Processingaquantityofrawmaterialofapproximately302,000tons.• FinalizingtheworkatthefacilitiesoftheAFPUnit(Products’Blending/Finishing)inordertomanufactureblendsofautomotiveadditivesofCarfluxline(basedonarecipedevelopedinRompetrol).• Increasingthesecurityintherefinerybymountingoffireproofwallswithintheperimeterofexternaltransformers.Thisprojectlowerstherisksofpossibleincidentsintheirproximity.• Decreasingthetechnologicalconsumptionfrom1.90%in2009downto1.81%in2010.Oneoftheactions,thatprovidedthisdecrease,wasthefulfilmentofthetechnologicaloptimizationprogramofthesupplypipelinesoftherectificationunitduringtheoverhaulinOctober,2010.

Representative Products and Production Results

TheVegaRefineryProductionisstructuredingroupsofspecialproducts:• Solvents:ecologicalsolventsRompetrolSE,lightsolventsandn-hexane;• Whitespiritandparaffinoils;• Fuels;• Bitumen.

VegaRefineryisthesoleproducerofn-hexaneintheEasternEurope,usedintheproductionofpolypropyleneandextractionofvegetaloilsinthefoodindustry.Moreover,VegaRefineryistheonlymanufacturerinRomaniaof:• EcologicalsolventsRompetrolSE,providingthroughthereductionofsulphurandaromatichydrocarbonscontentalowerleveloftoxicity;• Specialbitumen,usedformanufacturingofbituminousmasticsandwaterproofworksinconstructions,foranticorrosionprotectionofmetallicpipelines.

VegaRefineryisalsoproducingroadbitumen,modifiedwithpolymers,widelyusedinasphaltingworksoftheintensivelycirculatedroads.Attherefinerytherearealsomanufacturedecologicalheatingfuels.Thesefuelsareinaccordancewithallafferentstandards,imposedbytheEuropeanUnion,beingattheleveloftheHeatingOilclassproducts,soldintheWesternEuropecountries.

In2010,therefineryincreaseditsyieldsofwhiteproducts,whichallowedaconsolidationofitspresenceintheexternalmarkets,especiallyonthemarketofecologicalsolvents,aswellasanalignmentwiththemarketdemands.

Yields 2007 -2010

2008 2009 20102007

(thousand tons)

¢ White products ¢ Black products

0

50

100

150

200

250

300

350

203(77%)

60(23%)

204(70%)

87(30%)

221(71%)

91(29%)

222(73%)

81(27%)

2011 Major Objectives • DoublingoftheN-hexaneUnitcapacity;• Maximizingthenicheproductsmarginsinordertoprovideaplusofvaluetothebusiness;• Developingnewproductsthroughdiversificationofprofileactivities:RoadBitumen35-50,RoadBitumen160-220,ModifiedBitumenwithPolymers25-55–class3,de-aromatizedwhitespirit;• Significantlyreducingofutilitiesandtechnologicalconsumptionbycontinuingtheinvestmentsprograminthissense.

RompetrolPetrochemicals


TheRompetrolPetrochemicalsturnoverhasreachedin2010thelevelofUSD265.7million,agrowthof11%incomparisonwith2009.Thegrowthismainlyduetotheincreasedinternationalquotationsforpetrochemicalproducts.

Incomparisonwith2009,2010hasbroughtsignificantimprovementstofinancialresultsasaconsequenceofpositivemargins,registeredfrompetrochemicalproductssales,aswellasduetothediversificationoftheproductsportfolioandefficiencyincreasingofthecompanyactivity.So,theEBITDAindicatorhasattainedapositivelevelofUSD14millionin2010.



Asaresultofthetemporaryshut-downoftheHDPEUnit,2010representedforRompetrolPetrochemicalsareductionoftheprocessedrawmaterial–from187,000tonsin2009downtoabout150,000tonsin2010.Besides,thecompanyhasimproveditstechnologicalprocessesofqualitycontrol,soitmanagedtoincreasethecompliantproductsshareoutofthetotalofmanufacturedpetrochemicalproductsfrom96%upto97%.

2010meantformanyplayersonthemarketareductionorevenclosureofproductionfacilities,bothinRomaniaandinCentralandEasternEurope.Inspiteoftheunfavourablegeneralpremises,RompetrolPetrochemicalshascontinueditsinvestmentsplansandpreservedtheobjective,setin2007:tobecomeoneofthemainpolymersuppliersandmanufacturersintheregion.Inordertoreachthisobjective,thecompanyhasrestartedtheHDPEUnitinNovember2010whilein2011therevampingprogramofthisunithastobefinished.Oncethisobjectiveisbeingattained,itwillhelpincreasetheunitcapacity,reduceprocessingcosts,diversifytherangeofofferedproducts,aswellasincreasetheoperationssafety.

Inthesameyear,thecompanyhasfinalizedunitsandtheintegrationofalloperationsinthePetromidiaControlCentre(CCR).Byrealizingthisobjective,asaresultofcumulatedinvestmentsworthoverUSD116millionfrom2002tillnowadays,Petrochemicalshasmanagedtoincreaseproductioncapacities,expansionofprofileactivitiesandimprovementofqualityandrangeofofferedproducts.TheControlCentreprovidesthefullsupervisionofoperationsinregardtothecontrolandprotectionoftechnologicalflows,on-linecollectionandsendingofprocessdataandimplicitlyareductionofproductioncosts,thisbeingapremierebothforRomaniaandforSouth-EastEurope.

RompetrolPetrochemicalsisthesoleproducerofpolypropylene,aswellaspolyethylenemanufacturerinRomania.Thecompanymanagedtoincreaseitsmarketsharethroughitsdevelopmentstrategy,whichprovidesforthecompanyacompetitivepositionbothontheinternalandregionalmarkets.

Oneofthecompany’sadvantagesisdeterminedbytheproximityinrespecttothecustomers,therequestedproductsbeingprovidedinJust-in-Timesystem(JIT),atthesametimeconstantlyofferingthemtechnicalconsultancyandassistedmonitoringoftheirproductioncircuit.

2010 Main Technological Aceivements

• Integratingtheunits’automationandoperations’intheControlCentreofthePetromidiaPlatform(CCR).• ImplementingtheProcessInformation(PI)systemforsupervising,archivingandprocessingofoperationsdata.Thisfactresultedintheoptimizationoftheunits’operationprocessonthebasisofsomeanalysisandquickvisualizationofinformation(currentandarchived)fromtheunits,improvementofthedatareportingprocedureandincreaseoftheproducts’quality.

• ModernizingofburnersatsteamboilersC121A/BofPyrolisisUnit,thusreducingthecontentofNOxfromburnedgasesfrom300to120ppm,accordingthedemandsoftheEuropeanlegislationinforce.• Increasingtheoperationcapacityoftheunits:LDPEUnithasexceededwith10%thedesignedcapacityandhasmanufactured66,000tons.• ModernizingtheHDPEgranulationtower,executedthroughthemodificationofdosingsystemandblendingofpowder-stabilizers.Thechangesallowsimultaneousandprecisedosingof3differentadditives,eliminatingthestageofpreparingtheblendofstabilizersandallowingtheoperationofblendingpowder-stabilizerstobedonecontinuouslywithaloweredenergyconsumption.

Production

IIn2010,thepolymersproduction,whichisthebasiccompanyactivity,wasasfollows:• Polypropylene(PP)production–80.526tons/year;• Lowdensitypolyethylene(LDPE))–65,799tons/year;• Highdensitypolyethylene(HDPE)-3,576tons/year.

¢ PP ¢ LDPE ¢ HDPE — Total

2000-2011 Polymers Production

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20112010

(tons)

0

50,000

100,000

150,000

200,000

103,026

18,519

35,915

56,90863,065

73,86274,359

96,958

161,718

196,586187,022

149,901

Commercial

RompetrolPetrochemicalsisthesolepolypropylene(PP)andpolyethyleneproducerinRomania.So,in2010,theRompetrolPetrochemicalsmarketsharefortheinternalmarketwas64%forPPand24%forLDPE,accordingtothedatafromtheInstituteofNationalInstituteofStatistics.TheresultofPPandLDPEsalesconsolidationwasthepreservationoftheinternalmarketshareofRompetrolPetrochemicals,aswellasexpansiontotheneighboringmarketsthroughcompanydistributors,thussecuringthesalesofsomeimportantquantitiesoffinishedproducts.Thecompanydevelopmentstrategy,providingaculturehavingatitsbasisthemaintenanceofahighlevelofquality,ensuresthisstrongpositionbothoninternalandregionalmarkets–zonesoftheBlackandMediterraneanSeas,CentralandEasternEurope–amarketwhereRompetrolPetrochemicalshasbecomeanimportantpresence.

OneofthecompetitiveadvantagesofRompetrolPetrochemicalsisthedirectaccesstotransportroutes(road,

sea,railroad),afactthathasfacilitatedtheadditionofnewdestinationsfromtheBalkanzone(Macedonia),sporadicallyAsiaandMiddleEast,aswellasconsolidationofthecompany’spositionontheregionalmarket(Bulgaria,Serbia,Italy,Greece,Poland,Turkey).

2010 Sales Destinations

May Jun Jul Aug Sep Oct Nov DecJan Feb Mar Apr

(thousand tons)

¢ Intern ¢ Export

0

2,000

4,000

6,000

8,000

10,000

12,000

5,75

39,

116

5,41

810

,032

7,60

511

,385

6,11

910

,895

5,10

57,

276 7,91

5 9,10

9

5,65

67,

728

5,01

69,

216

5,99

79,

158

3,36

72,

231

5,07

35,

098

4,99

210

,811

2010 Sales Volume

2007 2008 2009 2010

(thousand USD)

¢ Own production ¢ Trading

0

50,000

100,000

150,000

200,000

250,000

170,408

15,111

213,606

18,102

221,797

15,839

174,930

20,440

Besidesproductsofitsown,thecompanyperformsasustainedcommercialactivitywithavariousrangeofpetrochemicalproducts,whichatthepresentmomentarenotinthecompany’sportfolio,butforwhichahighdemandontheRomanianmarketexists:specialtypesofpolypropylene,highdensitypolyethylene(HDPE),pipelines,lowdensitypolyethylene(LDPE)andPET.

In2010,thePETtradingactivityledtoobtainingamarketshareof16%.

Quality ThepermanentlinkbetweentheproducerandthefinalprocessorwasoptimizedthroughtheTechnicalAssistanceService,whichhasfocusedontheintegrationofreactions,comingfromtheprocessingdepartments,indevelopmentstrategyandimprovementoftherangeofproducts.TheTechnicalAssistanceDepartmenthascontinuedtheconsolidationofpartnershiprelationswiththecustomersofRompetrolPetrochemicals,throughidentificationofboththeproductbehaviorduringprocessingandtechnicalsolutionswhichcouldleadtowardscontinuousimprovementofitscharacteristics.

In2010,theactivityperformedbytheRompetrolPetrochemicalsLaboratorywasconfirmedbytherenewaloftheaccreditationaccordingtotherequirementsofthereferencestandardSRISOCEI17025/2005.Atthesametime,throughtheactivityperformedduring2010,theQHSEteamhasprovidedthemaintenanceoftheimplementedandcertifiedintegratedmanagementsystem,respectingandimplementationofnewapplicablelegalrequirements.

• Documentsconnectedwiththeintegratedmanagementsystemwererevised/elaboratedandapplicableinstructionswereimplemented.• GLISsupervisingauditwasperformedaccordingtothequalitymanagementsystems–ISO9001:2008,environment–ISO14001:2004,occupationalhealthandsafety–BSOHSAS18001:2007.• TheInternalEmergencyPlanwasrevised,whileadocumentaccordingtowhichtheactivitiescontrolareexecuted,waselaboratedpresentingtherisksofmajoraccidents,wheredangeroussubstancesareinvolved.• ThereevaluationprofessionalaccidentsandillnessriskswasperformedatallRompetrolPetrochemicalsworkingplaces.

Emissionsofgreenhousegas(CO2)havebeenincompliancewithassignedvalues(accordingtotheNationalAllocationPlan).Additionally,specificactivitieshavebeenundertakeninordertofinishthestageofregistrationatECHA(EuropeanChemicalsAgency)ofchemicalsubstances,coveredbyREACH(EuropeanCommunityRegulationonchemicalsandtheirsafeuse)Regulations.

2011 Major Objectives

• ContinuingtheefficientimplementationofastrategicprogramaimedatincreasingthesafetyleveltogetherwithDuPontSafetyResources,accordingtowhichPetromidiaandVegaplatformswouldattainaworkingsafetylevelnotlessthan2.6(accordingDuPontmatrix).• Improvingthesafetyperformanceindicators,setontheRompetrolGrouplevel,bydiminishingthetargetvaluesbyminimum0.5incomparisonwith2010(rateofcaraccidents,frequencyoflabourincapacity,incidentsrate,frequencyandseverityrate).• Reducingby5%thenon-qualitycostsforsuppliedandfinishedproductsthroughidentificationofcriticalelements;• Participatinginprojectsofvolunteeringandsocialresponsibilityinneighboringcommunities.• FinalizingtheHDPEUnitrevampingprojectthroughtheincreaseofproductioncapacityandthedecreaseofcostspertonofproduct,thusresultingintothediversificationoftheproducts’range,aswellastheincreaseofoperationalsecurity.• RegainingtheHDPEmarketbothinternallyandexternallyastheresultofrestartingoftheHDPEUnit.Attainingofa20%shareontheinternalmarket.• ConsolidatingtheRompetrolPetrochemicalspositionontheinternalandBalkanmarkets.• Identifyingandcreatingstrategicpartnerships,basesonsynergies.




Caution2. Trading

Thesalesin2010werelowerthan2009,mainlydueoalongerperiodofturnaroundandalsoduetotheglobaleconomicalcrisis,whilealmost70%oftheexternalsaleshaddestinationsonneighbouringmarkets.


Trading«RompetrolAnnualReport2010//12

VectorEnergyAG

2010 Key Performances

• Decreasingvolumeoftradedcrudeoilversus2009duetochangeinKMGstrategyinthisrespect;• Decreasingby33%theproductexportstothirdparties,duetohighervolumessoldthroughotherchannels(DWSforRomanianmarket&Near-Abroadsubsidiaries);• Decreasingby25%thevolumessoldontheFrench&Spanishmarkets,duetomanagementdecisionthatDyneff

closestermcontractsdirectlywiththesupplier;• EnrichingotherfeedstockbasketbysupplyingETBE(asreplacementforMTBEforRomanianmarket)andBiodiesel(requireddieselblendingmaterialforEUcountries).

ThetotaloilvolumedeliveredbythecompanyinordertoensuretheoilneedsofPetromidiarefinerywas3.36milliontons,withKMGbarrels’shareincreasingfrom59.1%in2009to78.7%in2010.

VectorEnergyAGisthesupplyandtradingsubsidiaryofthe

Trading

RompetrolGroup,withitsmainofficeinZug(Switzerland).Thecompanycontinuedin2010tooptimizetheoverallsupplychainoftheGroup.Vectorestablishedfine-tunedthesynergieswithothercompanieswithintheKMGGroup,namelyKazMunaiGazTradeHouse–themaincrudeoilsupplierforPetromidiarefinery,aimingatanimprovedstocklevel.

In2010,thecompanyhasregistereda33%decreaseofproducts’volumessoldtocompaniesoutsidetheGroupascomparedto2009,whenitregisteredatotalof0.9milliontonnes.ThiswasthedirectresultofincreasedsalesontheRomanianmarket(56%comparedto25%tothirdpartybuyersfromtherefineryoverallproduction).Duringthesameperiod,thecompany’sexportofproductstotheFrench&Spanishmarketsdecreasedby25%,from1.05millionmetrictonsin2009to0.75milliontonsin2010.

Theresponsibilitiesundertakenbythecompanyin2010arepartofthestrategicplanofKMGmother-companytofinalizeintegrationofTRGsustainingforwardmotionregardlessofdifficultgeneralinternationalclimate.Vectorisinchargeofstream-liningoperationsoffuelsaletowardstheGroupsubsidiaries(Bulgaria,GeorgiaandUkraine),effectiveproductstockmanagementinMidiaandConstanta.Inaddition,indepthmarketresearchhasresultedintoextendingTRGbusinessportfolio,byfindingaconstantoutletforourgasolineanddieselproducts,whichdonotcomplywithEurostandards.

InordertoensuretheoptimisationofrawmaterialsupplyoftheGroupcompaniesandtheirsalesoffinishedproducts,VectorEnergyrenewedthededicatedteaminthecompanyandworkedcloselywiththeMaritimeTransportationdepartment.Theteamcontinuestoberesponsiblefordeveloping/implementingnewprocesses,suchasselectionofoptimumoilmixes,establishingtargetstocksofrawmaterial/endproducts.

ThetotaloilvolumedeliveredbythecompanyinordertoensuretheoilneedsofRompetrolRefinerywas3.35milliontonnes,withKMGbarrelsshareincreasingfrom59.1%in2009to78.7%in2010.

Theachievedoperationalresultisdirectlyaffectedbytheadverseinternationalmarketconditionsanddiminishedoperatedvolumes,reachingonlyUSD5.2millionin2010.

For2011,VectorEnergywillbecomethefocalpointofthesupplychain:coveringentirelythefeedstockacquisition;monitoringallstocks(exceptforthoseinthefillingstations);responsibleforensuringprimarylogisticsanddepot/terminaloperationspluslosses(withoutsecondary&fillingstations);tradingkeyaccounts&Dyneff.

Byron2010

ByronShippingLtd,shippingtransportationsubsidiaryofVectorEnergy,continuedin2010tooptimizetheflowsamongTheRompetrolGroupentitiesandRompetrolRafinare.

Vessel

Charterer 2009

Vector Rompetrol Third Parties Total/Ship

WOEmocean - - - -

WODecocean 18,650 - 228,959 247,609

NSClipper 315,776 - 1,313,840 1,629,616

NSConcord 327,225 - 1,235,307 1,562,532

Spotvessels - - - -

Total (mt) 661,651 - 2,778,106 3,439,757

Vessel

Charterer 2010

Byron Rompetrol Third Parties Total/Ship

WOEmocean - - - -

WODecocean - - - -

NSClipper - - - -

NSConcord - - - -

Spotvessels 1,387,385 - - -

Total (mt) 1,387,385 - - 1,387,385

Note: MTWOEmoceanre-deliveredon07/03/10

Starting2010Q4,ByronsignedaContractofAfreightmentapplicableforAframax(80kt+10%)sizevesselsinordertosecurefreightcostsforthecrudesupplyforPetromidiarefineryandalsotoavoidtheTurkishStraitsdemurragerisk.

Restofthefixturesweremadefromthespotmarket,whichledtosavingsofaprox2,5millionUSDforthecompany.

In2011,SeniorManagementapprovedtheestablishmentofByronShippingRomanianBranch,allowingByronShippingtointegrateallshippingrelatedservicesandtostartcreatingsynergiesfromBlackSeatoMediterranian.

Midia Marine Terminal

MidiaMarineTerminal,initiallyasubsidiaryofVectorEnergyAGwastransferredtoTheRompetrolGroupafteracapitalincreaseofUSD20million.ThusitbecameasubsidiaryoftheGroup,startingDecembre2009.ItwascreatedtoconsolidatethelinkbetweentheEasternoilresourcesandtheWesternmarkets,thepresenceofKazMunayGazandRompetrolwithinthegeographicalarchlinkingtheCaspianSeaarea(Kazakhstan,Georgia)adntheBlackSeaarea(Ukraine,Moldova,Romania,Bulgaria)toWesternEurope(FranceandSpain).Inthisrespect,inDecember2008thecompanyhascompletedtheconstructionofanewoff-shoreoilterminalintheBlackSea,some11kmfarfromPetromidiaRefinerycrudeOilTankFarmandinJanuary2009itwasopenedforbusiness.



Thenewterminalallowstehreductionofoilsupplycostwithapprox.USD8/ton.ByeliminatingtheConstantaOilTerminal&CONPEThandling/storage/transfercostsandcommercial/technologicallosses,itoffersthenecessaryframeworkfordevelopingtheRompetrolGrouptradingactivitiesintheregion.

The main performance indicators achieved in 2010 by Off-shore oil terminal (Midia SPM)Total qty of crude imported via Midia SPM 2,999kt

Total number of tankers calling Midia SPM 36

Total days under unloading operations 46 days

Total days under all manoeuvring 72 days

Mooring postponed due to bad weather 12 days

Total ops costs 7,242 mill USD

Handling tariff 2010 Jan-Aug 4 USD/mt

Handling tariff 2010 Sept-Dec 3 USD/mt

Commercial losses (B/L versus OUT Rep.) 0.07 %

Savings recorded by using Midia SPM Instead Oil Terminal Constanța & CONPET about 24 mill USD

Commercial losses (B/L versus OUT Rep.) 0.35 % (in 2008)

ThecompanyisoperatingtheCrudeOilTankFarmwithadesigncapacityof418,000cbm,anetstoragecapacityof391,499cbm,andapumpingtotalvolumeof342,575cbm,receivingcrudemainlyfromMidiaSPM,butalsofromtheOilTerminalConstanțaviaCONPETanddeliveringtorefinerythethreetypeofcrudeoilasperrefinery’sdailydietrequirement.

Thewholevolumehandledbycrudeoiltankfarmin2010was6,856kt(bothreceivedanddelivered).

InJanuary2009,thenewoilterminalsBerths9A,BandCforrefinery’sproductsexportwereopenedforbusinesstoo.

The main performance indicators achieved in 2010 by Port terminal (oil & gas) EXPORT (Berths 9A, 9B and 9C)Total qty of refinery products exported 1,083kt

Total number of tankers calling port terminals 291

Total days under loading/unloading operations

170 days

Total days under all operations 290 days

Berthing postponed due to bad weather nil

Total ops costs 2,415 mill USD

Handling tariff (refinery) 1.04 USD/mt

Handling tariff (petrochemicals; average) 0.69 USD/mt

Savings recorded by using Midia port terminals Instead Oil terminal in Constanța & railways about 10 mill USD

RomanianTradingOperationsDivision

PerformancesandMajorachievementsin2010

Market

In2010,thecompanystrategiesreferringtotradingpolicyfocusedonoptimizingandboostingtradeflowsofrawmaterialpurchasesandproductsales.Crudeacquisitionswereexclusivelycarriedoutbythegrouptrader,VectorEnergy,whotookoverthemostpartofgasolineanddieselvolumessoldonforeignmarkets.ThequalityoftheproductssoldbyRompetrolmettherequirementsandstandardsforqualityandenvironmentinforcewithinEuropeanUnionandledtoastrongerpositionofthecompanyontheinternationaloilmarkets. Thesalesin2010werelowerthanin2009,mainlydueoalongerperiodofturnaroundandalsoduetotheglobaleconomicalcrisis.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Total sales in 2009 vs. 2010

( tons)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000 � 2009 � 2010

In2010,theshareofdomesticmarketintotalsaleswashigher(60%)thanthatofexternalmarket.TheproductsunderRompetrolbrandweremarketedonallRomanianregionsthroughnationalgasstationsnetwork.Morethanhalf(around53%)oftotalsalesofmotorfuelswassoldondomesticmarket.

0

50,000

100,000

150,000

200,000

250,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Domestic vs. External, 2010

( tons) � Domestic � External

Ontheexternalmarkets,salesweredistributedbothonEUmarketsandnon-EUmarkets.SalesonEUmarketsrepresentedaround24%oftotalsales,therestof76%beingsalesonnon-EUmarkets.

Almost70%ofexternalsaleshaddestinationsonneighboringmarkets.

Detailed on countries and products, sales had the following destinations:

Gasoline-Georgia,Ukraine,Bulgaria,Turkey,Lebanon,MoldovaDiesel-Bulgaria,Turkey,Georgia,Serbia,Moldova,LebanonPetroleumCoke-Ukraine,Greece,Turkey,SerbiaSulphur-Egypt,Ukraine,Greece

Gasoline Gasoil

LIC vs. Export

(tons)

0

200,000

400,000

600,000

800,000

1,000,000LIC Export

114,745.136

564,265.128

108,585.083

272,681.69

SalestoRompetrolbrancheslocatedabroad(Moldova,Bulgaria,Georgia,Ukraine)representedabout43%oftotalexternalsales.

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Gasoline Gasoil

Near abroad vs. Trading

(tons)Near abroad Trading

249,960.403

203,263.148

178,003.625

429,033.095

Maindomesticcustomerswere:RompetrolDownstream,RompetrolGasSRL,RompetrolPetrochemicals,AirBPSales,AirTotalRomania.Mainexternalcustomerswere:VectorEnergy,RompetrolMoldova,RompetrolBulgaria,CalviTradeLimited,UnicoalSpaItaly,TransamoniaSwitzerland.

Forecast and developments trends in 2011

For2011,thetargetistomaintaintheexistingmarketsandenterothermarkets.



RompetrolUkraine

Market context in 2010ThemotorfuelsmarketofUkrainein2010wasmarkedbyadramaticpresenceofatax-freecompanywhichimportedthroughcourtdecisionsaround15%ofimportedRON95gasolinewithoutpayingexciseandVATandbyanunprecedentedsmugglingamountingaround6%ofUkraineRON95consumption.Theseeventsdiscriminatedthelegalimportersandunderminedtheprinciplesoffaircompetition.

2010 Key Achievements:

RompetrolUkrainehascontinueditstradingoperations,importingandsellingRompetrolRafinareproducts,mainlyEuroPlusGasolineRON9550ppm.RompetrolRafinarethroughRompetrolUkraineisthebiggestRomanianexporterintoUkraineofRON95.

• BecomingthefourthlargestimporterofRON95ontheUkrainianmarket.ThequantityofRON95importedtoUkraineexceeded105KT,thecompany’ssharerepresentingapproximately9%ofthetotalvolumesofRON95importedbyUkraineoraround5%oftotalRON95consumption• Fromafinancialpointofview,despitetheharshconditionofdoingbusiness,thecompany’sEBITDAregisteredUSD0,6millionandthecompanyrepaidUSD0.5millionUSDofitsloantoTheRompetrolGroupN.V.

Thetradingactivityhasbeencarriedoutthroughnewlocations:oneBlackSeaterminallocatedinKherson,oneDanube-riverterminalnearIsmailandthreein-landdepots,twoofthemlocatedintheOdessaregionandoneintheVinnitsaregion. ThefuelwassoldonCPTterms,deliveringbyrailwaytheproducttotheclients’storages,althoughin2010thecompanydevelopedtheFCAsalesloadingattheterminalsandwarehousestheproducttotheclients’fueltrucks.

Thedevelopmentoftheretailstationnetworkremainsanessentialactivityfor2011forRompetrolUkraine. During2010,nootherfillingstationswerebuiltbesidestheexisting2:1COCO&1DOCOstations.

2011 Key Objectives:

• Identifyingandprovidingthelogisticinfrastructureneededtosecurethenationallyandregionallytradedfueldeliveries;• Increasingtheefficiencyofthelogisticchainandimplementingdeliverymethods;• Developingnewmarketopportunities,bothintradingandretail.

In2011,RompetrolUkraineaimstofurtherconsolidateitspositionontheUkrainianmarketofqualityfueldistribution,especiallyintheSouthernandSouth-Easternareasofthecountry,animportantcommercialareaforthecompany’sdevelopment.


2011

Partnership3. Retail

2010broughtanimportantshiftintoRompetrolnetworkdevelopmentstrategy,byidentifyingstrategicinvestment&developmentgroups(IDG)willingtoinvestintonewRompetrollocationsdevelopment.ThisbusinessmodelallowsRompetroltoexpanditsmarketpresencewithminimumcapitalinvestment,andatthesametimetosecurefuelvolumesandbrandimageintegrityintothemarket.


Retail«RompetrolAnnualReport2010//16

Overall market conditions

InRomania,2010wascharacterizedbyasevereeconomicdownturn(GDPdecreasedin2010byanestimated1.2%vs.2009,afterdroppingayearearlierby7.1%vs.2008).Thisaffectedinanegativemannerindividuals’purchasingpowerandcompanies’generalattitudetowardscosts,withdirectimpactonfuelconsumption.Apartfromreducingfuelusage,morecost-consciousindividualshavealsoshiftedfrompremiumtocheaperfuelproductsandnetworks,whilecompanieshavereliedonimprovedmonitoringoffuelexpensesand,whenpossible,havestartedtouseinternalbasesinsteadoffuelingatgasstations. BasedoninformationsuppliedbytheNationalInstituteofStatistics,totalfuelconsumptioninRomaniain2010hasremainedapproximatelyatthesamelevelrecordedin2009

(5.866ktin2010vs.5.858ktin2009,henceamere0.1%increase),despiteanincreasingnumberofvehicles(+1.8%in2010vs.2009).AccordingtodatafromtheRomanianPetroleumAssociation,andgivenourestimateoftheindependentstationssegment,theretailcomponentofthefuelmarkethasdecreasedin2010vs.2009by4.7%,withfleetsales(fuelsalesoncardsissuedtobusinesses)loweringby4.9%comparedtopreviousyear.Ontheotherhand,thewholesalefuelconsumptionbyend-users(theW2Csegment)hasincreasedin2010tonearly1482kt,fromanestimatedlevelof1263ktin2009(someofthereasonsforthisapparentlysurprisingevolutionshavebeenoutlinedabove).

In2010,thegovernmenthasadoptedseveralmeasureswhichhavefurtherrestrictedindividuals’andcompanies’spending:VATwasraisedonJuly1stfrom19to24percent,whilestateemployees’salarieshavebeenreducedby25percent.In

RompetrolDownstream(Romania)

addition,in2010,thegovernmenthasceasedtosubsidizepartofthefuelcostusedforagriculture.Priortothesemid-yeardecisions,fuelexciseshavebeensignificantlyincreasedstartingJanuary1st,inordertobringexcisesinRomaniainlinewiththoseinotherEUcountries:gasolineexcise(inRON)hasincreasedby18.4%,whiledieselexcise(alsoinRON)hasincreasedby18%(asignificantpartoftheseincreasesisduetotheRON/Euroexchangerate).Probablyasaresultoftheseevolutionsovertheyear,consumershavebecomeincreasinglyunhappywithfuelprices,whichledtosameactionstakenbygroupsofconsumersattheveryendof2010,actionswhichhavereceivedabroadcoverageinthemediaandhavecontinuedinthefirstweeksof2011.

Competition on the Romanian retail market

Competitiontacticsin2010haveshownanincreaseinwholesaleactivityoftwomajorplayers(MolandEni),whohavestartedaddressingmoreindustrialconsumersandindependentpumpers.AnothermajorplayerontheRomanianfuelmarket(Lukoil)hasrestructureditswholesaleactivityandtherelationshipwithitsmajordealers.Inretail,wesawacompleterebrandingofthe124PetromVsites,mostofthemturningintoOMVsites,whilefewhavebeenturnedintoPetromstations.Towardtheendoftheyear,BioromoilhaslaunchedaconceptnewfortheRomanianmarket:AutoMat,acompletelyautomatedandunattendedgasstation.Itisalsoimportanttonotethatthepromotionalactivityofourcompetitorshasincreasedin2010relativetothepreviousyear.Inparticular,ineachandeveryweekof2010,oneormoreofourcompetitorshadapromotioninplace(mostofthemvalueaddedpromotions,Lukoil’sdiscountpromotionbeingtheexception),whilein2009wehaveseenonly38weekscoveredbycompetitionpromotions.

Rompetrol Downstream evolution

In2010,thetotalRompetrolmarketshare(whichtakesintoaccountRompetrolDownstream’sandRompetrolRafinare’ssalestoRomaniancustomers)hasincreasedto24.3%from23.7%in2009.Theincreaseinmarketshareisdueespeciallytotheperformancerecordedinthesecondandthethirdquartersof2010andisalsotheresultofincreasingindirectmarketshare,whichconsiderssalestointermediaries,from8.1%in2009,to8.7%in2010.Ontheotherhand,thedirectmarketshare,whichtakesintoconsiderationsalestoend-consumers,hasremainedstablein2010(15.5%)vs.2009(15.6%)asalsodidtheretailmarketshare(15.9%in2010vs.16%in2009).Despiteretailmarketshareremainingflatatabout16%,Rompetrol’sperformanceinthein2010hasshownpositiveresults:morecost-consciouscustomershavemigratedfrompremiumproductsandnetworkstowardcheaperalternativesavailableonthemarket.Hence,aconstantretailmarketshareisanindicationthatRompetrolhasfoundthewaystopreserveitscustomerbaseinthesedifficulttimes.

Continuingtheoptimizationprocessstartedinthepastyears,severalinitiativeswerestartedandimplementedin2010bothintheOpexandCapexareasdirectlyrelatedwiththeactivityofsupplyanddistribution.DecommissioningtheSimleudepothas

reducedtheoperatingcostsbyUSD1.3millionayearandhasallowedfurtherone-offsavingofadditionalUSD0.67millionofCapex.Alongwiththissignificantsaving,itwasimportantthatthiswouldnotimpactsignificantlyonthecustomerserviceandsalesvolumes.Relocationofmostofthesalesvolumeshasbeensuccessful,sotheoverallimpactofthisimplementationisstillpositive.2010alsomarkedthestartoftheoutsourcingprocessofthePrimaryandSecondarydistribution,whichwillendin2011.TheRailactivitywastransferredinDecemberandtheRoadactivitywillbetransferredinQ12011.Theoverallexpectedoperationalsavingsareintherangeof15%oncomparableyearonyearbasisandwillstartmaterializingin2011.

Major accomplishments in 2010

ThestrategytodevelopthecurrentCOCOnetwork,inordertoachieveabetternationalcoverage,continuedin2010aswell:2newCOCOstationswereopenedandseveralotherpotentiallocationswereidentifiedandarecurrentlyunderevaluationandnegotiation.Investmentproposalsfor2newCOCOstationsandcontractsaretobesignedwithanother2locationsinnegotiation.

2010broughtanimportantshiftintoRompetrolnetworkdevelopmentstrategy,byidentifyingstrategicinvestment&developmentgroups(IDG)willingtoinvestintonewRompetrollocationsdevelopment.ThisbusinessmodelallowsRompetroltoexpanditsmarketpresencewithminimumcapitalinvestment,andatthesametimetosecurefuelvolumesandbrandimageintegrityintothemarket.

InordertocapitalizeefficientlyallIDGopportunities,Rompetrolhasreevaluatedresourcesallocation,creatingadedicatedstaffstructurewhichcoversmainfranchisebusinessaspects:development,construction,IT,marketingandoperations.TwomajorcontractshavebeensignedwithimportantIDGandotherinitiativeshavebeenidentifiedandexploredaswell.Attheendof2010twolocationshavebeenalreadyopenedand30newonesareplannedtobeopenedduring2011.

AsapartofthedevelopmentoftheFranchisenetwork,during2010,acompleteauditprocesswasperformedrelatedtothefranchisenetworkPartner.Theobjectivewastoselectthebestperforminglocations,whichlaterwouldbeupgraded,in2011,tothenextleveloffranchisedevelopedunderthebrandRompetrol.Thisispartofthecontinuousanddeterminedactionplan,targetingtheincreaseofproximityandqualityofRompetrolstationsnetwork.Asaresult,atotalnumberof30stationsfranchisedPartnerwasselected,beingthesubjectofdevelopmenttothenextfranchiselevel,for2011.

InparallelwiththefranchisePartnerassessment,ashorttermprogramfordevelopingnewstationswasperformed,attheendof2010,atotalof10newstationsbeingaddedtotheexistingnetwork(3stationsunderRompetrolbrandand7stationsdevelopedbasedonfranchisePartner).Amongstthem,wesucceededtodevelopthefirstRompetrolfranchisepilot,integratingalsoHEIshop.TheRompetrolfranchisepilotwasdevelopedasapartofanewmarketconcept,realizedundercooperationwithanimportantlocalbusinesspartner.



Thefuelstationisintegratedintoalargeserviceareazonededicatedtotourists,transitcardriversandprofessionaltruckdrivers.AcomplexinvestmentofEuro2millionbyourpartner,besidesRompetrol’sfuelstation,includesalsoa33roomhotel,a restaurantwith100seats,atireserviceandaservicefacilitiesareaincollaborationwithMichellin-Euromaster,acarwashandaparkinglotfortrucksandcoacheswith13.500sqm.surface.Thecomplexislocatedonthenewring-roadwhichbypassesBrașov,servicingoneofthemostcrowdedtrafficareaswehaveinRomania.

Regulatory constraints

Wemanagetheimpactontheenvironmentduringtheentirevaluechainofthebusiness,startingwiththeexploitation,production,refineryandmarketingactivities,andendingwiththequalityoftheproduct.Wetakeactionforanefficientenergyandnaturalresourcesmanagement,aswellasforcontrollingtheemissionsanddischargingintheenvironment.

Regardingtheenvironment,wesustainapreventiveapproach.Ourenvironmentalmanagementsystemensuresacontinuousimprovementoftheperformanceinthisfieldofwork.Thepresentaspectsregardingtheenergyandclimatechangingrepresentmajorchallengesfortheoilandgasindustry.Thisindustryhasaprimaryresponsibilitytocontributetotheenergydeliverysecurityastheenergyrequestislargerandtheresourcesaregettinglimited.Moreover,regardingthediminishingtheeffectoftheclimatechanging,thegasemissionswithgreenhouseeffectmustbereducedinalleconomicalfields.

Theconformitywiththeenvironmentregulationsispermanentlybeingcontrolled,locally,byeverysectionofactivityaswellasbytheentirecorporation.Alltheconformitymeasuresaremanagedinsuchwayastoreachtheaimedresultsassoonaspossible.Ouractivitiesregardingthedurablemanagementoftheresourcesaimtheprofessionaldiminishingoftheimpactofouractivitiesovertheecosystems.Theseeffortsincludeanefficientuseofthewaterresourcesandaproperdepositofthewastes.Aspecialattentiongiveninourobjectiveistoprovidehighqualityproductswhichrespondtotherequirementsofourclients,productsthatmustbeinconformitywiththerigorousstandardsofsafetyandwhichhaveareducedimpacttheenvironment.

TheRompetrolfuelsareinconformitywithEURO5specificregulations,aswellaswiththelegalrequirementsregardingtheBiocomponents.Moreover,startingwith01.01.2011intheGasolineandDieselfuels,thebiofuelpercentageisofminimum5%.Weprovidetoourpartnersandourclientsdetailedinformationregardingourproductsandthematerialsusedduringtheproductionprocessintheareaswithahighbiodiversityandthepreventionoftheharmfulemissions,inconformitywiththelegalregulations.

Objectives in 2011

2011hasasamainfocusontheimprovementofcurrentoperationsandassets,alongwithfurtherdevelopmentofthestrategicpartnershipsstartedin2010.NewCOCOlocationsareidentifiedandevaluated,investmenttobestartedattheendofthefirstsemester.Thetargetof2011isbothtoincreasetheloyaltyofthecurrentconsumerportfolioandalsotoincreaseourmarketshareonthefinalconsumersegment.





DyneffFrance

A.Market/generaleconomicconditionsduring2010

1. General 2010 market descriptionOilproductsdeliveriesdeclinedby-2%incomparisonwith2009inFrance(78,736ktons).RegardingproductssoldbyDyneffFrance(Diesel,Gasoline,HeatingOil),themarketdeclinedby-1%(54,723ktons).• Diesel+2%(33,610ktons),• Gasoline-6%(8,207ktons),• HeatingOilmarketdeclinedby-5%(12,906ktons)but,consideringthatyear2010wascolderthan2009,thedropisinfacta-13%.Pricesincreasedsignificantly(marketincreasecombinedwithEurodropby5%againstUSD)whichhadinimpactondemand:

Excises free Excises included

Diesel 29% 14%

Gasoline 27% 11%

HeatingOil 28% 24%

*%ofpricewithout/withexciseincrease

2. Regulatory constraintsFrenchgovernmentfinallywithdrewits“carbontax”projectbutenforcedregulationonBiofuelsblending,bypromotingUcoMethylEsterandTallowMethylEsterdevelopment.

3. Extraordinary eventsOnemonthlongnationwidestrikestartedinOctoberdeterminedanoilproductssupplychaindisturbance,duetoblockagesinseveralrefineriesanddepots.TheblockageoftheportofMarseille,whichisthemostimportantportinFranceforimportsfromMediterraneanSea,createdstockoutsituationinmanyGasStationsinsouthernFrance.DespitetheFrench’sgovernmentdecisiontosupplyoilcompanieswithstrategicstocktolimittheimpactoneconomy,inearlyNovember,almost40%ofGasStationshadtostoptheiractivitybecauseofstockout.Inthiscontext,Dyneffmanagedtofindsolutions(thankspartlytoitsSpanishsubsidiary,partlytoitsstoragefacilitiesinsouthernFrance)tomaintainitsentirenetworkopenanddelivertocustomers.

4. Changes in competition tacticsTotalGroup,themainactorontheFrenchmarket,startedtoredesignitsrefiningcapacitiesinEuropeaimingtoreducethebreakevenpoint(refineryofDunkerque,inFrance,stoppedoperating,capacityreductionatrefineryofNormadie-France,refineyofLindsey-UK,tobesold).ShellGasStationsnetworkwasacquiredbyPicotyGroup(brandAvia)whichenforceditspositionastheleaderamongstindependentretailersinFrance.

B.Keyachievementsin2010

I. Consolidation of current businesses and development of on-going projects a. Newlocations:Businessstartedlastyearinnewareasconfirmeditsgrowingsuccess(Paris+72%,Strasbourg+33%).b.Newproducts:TheB30,anewmixeddiesel-biodiesel(70%-30%)productwasofferedforprivatefleetsatBordeaux(FrenchAtlanticshore)then,startingJuly,atPortlaNouvelle(FrenchMediterraneanshore).c. OtherPrograms/Projects:AnewmotorwayGasStationwasbuildinwesternFrancetocompletethemotorwaynetworkinthisarea.TheoperationswillstartinearlyJanuary2011.

II. Quality improvements campaignsThisprojectisrecognizedasa“HighQualityEnvironmentalConstruction”byFrenchauthorities,thankstoitsinnovatingsolutiontorecyclewastewateranditshotwaterproducedwithsolartechnology.

III. Others, as neededAdministrativeofficesmovedfromLezignantoNarbonne(100kmsfromHeadquartersinMontpellier)toenforcesynergywithoperations.

C.Keydirectionsfor2011-2015:2011

a) Top priorities» Focus on the most important TRG assetsTwomajorprojectsforthedevelopmentofDyneffwillenterintheimplementationstategeduring2011:•TheconstructionofanewmajordepotinPortlaNouvelle(“Dyneff3”project),•TheconstructionofanewmotorwayGasStationneartheSpanishborder(“VillageCatalan”project).

» Integration with the mother company, KMGDyneffwillcontinuetocomplywithcorporateprocedures,accordingwiththeGroupsbestpractices,inordertoenforcethewell-developmentofcurrentoperationsandriskmanagement.

b) Market share thanksDyneff’sMarketsharerose3.3%(3.1%in2009).

c) New products, locations, and programsTheFrenchoilmarketregulationwillintroduceaNon-roadDiesel(named“GNR”)foragricultural,constructionorotherindustrialusage.Thisnewproductwillbecomemandatorybymid-2011.DyneffpreparedtheswapfromHeatingOil(currentlyusedbyconsumers)to“GNR”,byofferingtankcleaningsolutiontoitscustomers.

DyneffSpain

A.Market/generaleconomicconditionsduring2010

1. General 2010 market descriptionTheSpanishMarkethasdecreasedby-1.7%in2010and-11.1%from2007to2010,inaverydifficulteconomicalcontextinSpain.Inthesameperiod,DyneffSpain’smarketsharehasdroppedby-11.9%,between2010and2009,whileithasgrownwith5.5%between2007and2010.

2. Regulatory constraintsBiofuelobligationhasincreasedfrom3.5%in2009to5,5%in2010.Competitivenesswasaffectedbyuncertaintiesofthelaw,inparticularinthe2ndsemester.Thishadanimpactonourssales,sincewehadtoincludethepaymentofpartofthebiofueltaxinourprices,whileotheroperatorschosetobetonthereductionoftheobligationanddidnotincludeitintheirprice..

3. Extraordinary eventsTherewasnoextraordinaryeventinSpainin2010buttheperiodofstrikeswhichhasaffectedFranceinOctoberandthebeginningofNovemberhadsomerepercussionsinSpainandmostlyforDyneffSpain.Indeed,thepenuryofgasolineinMarseillearealedDyneffFrancetoimportsomegasolinefromDyneffSpaininorderfacethecrisissituation.Therefore,wecansaythatDyneffSpaintookanimportantpartinthemanagementofthisstressfulperiodandwasanactorofthegoodresultsgeneratedinFranceatthetime.

4. Changes in competition tacticsSpanishrefinerieshadmademajorinvestmentsinordertoincreasetheirproductioncapacityofdiesel.Asaconsequencetheyweremorepresentonthedieselmarket

whichisourmainfield.Theyneededtosellmorequantitiesinadecreasingmarket,whichledtostressthecompetitionenvironment.

B.Keyachievementsin2010:

» Consolidation of current businesses and development of on-going projects

a. NewlocationsNonewlocationsin2010aftertheacquisitionoftwotruckgasstationsin2009,whichwasamajorinvestmentforDyneffSpainb.OtherPrograms/ProjectsIn2009,wehadinvestedinabout60cuvesfortheDetailchannel.In2010,westoppedinvestinginnewcuvesinordertoconsolidatetheexistingpark,thusenablingustocontinueitsdevelopmentfrom2011.

C.Keydirectionsfor2011-2015

» Focus on the most important TRG assetsTheobjectivefor2011-2015istoconsolidateourdevelopmentinRetailandDetailwiththeexistingassets.Indeedwehaveinvestedimportantsumsin2gasstationsandseveralcuvesandtheobjectiveof2011-2015istomakeprofitonthem.

» Market shareTheobjectiveistoincreaseourmarketsharebetween2011and2015butespeciallyinDetailandRetail.Wholesalemustalsoincreaseitsvolumesbutonalong-termstrategyWholesalewouldbeawaytomoveimportantvolumesandthereforetogetcompetitivepurchaseandlogisticprices.Basedontheseconditions,RetailandDetailwouldbecomethemainsourceofincomesandprofitabilityinthefuture.



RompetrolBulgaria

Theyear2010wasayearofoperationalimprovement,increasedprofitability,andbetterbrandrecognitionforRompetrolBulgaria.Despiteawellbalanced(intermsofsupplyanddemand)market,theeconomicturmoilinfluencingthelocalindustryhadanimpactonthefuelsector.Operatinginahardeconomicenvironment,thesectorwasprimarilyfocusedonprofitabilityratherthanvolume,andthemajorbrandsreportedfirstdeclinesinsales.TherewerenosignificantchangesinthestructureofthemarketwithLukoil,OMV,andEKOasmajorcompetitors.Theyearwasmarkedbytheintroductionofsomeimportantchangesintheregulatoryframework,withsignificantimpactontheindustry.TheamendmentsintheExciseandFiscalWarehouseActintroducedanewRegulationoftheSpecificTermsandConditionsforDataTransmissionontheformatforonlineconnection,betweenthefiscalflowmetersoffiscalstoragesandtheCustomsAdministration.Alltransactions(inflowsandoutflows)havebeenmonitoredinrealtimebytheCustomsAdministration.Intra-communitydeliveriesdirectlytogasstationswereprohibited,andadirectonlineconnectiontotheNationalRevenueAgencywasrequiredforalloperatinggasstations.Ingeneral,legalbusinessesbenefitedfromtheseregulations.Thegovernmentalcontrolwasdirectedtowardcurbingtheillegalpracticesintheindustry.RompetrolBulgariafocusedonatwo-prongedstrategyofprofitabilityimprovementandcostcontrolinordertoadequatelyfacethechallengesofthemarket.ImprovedperformancemanagementandprudentsiteevaluationinvigoratedtheRetailNetworkandcausedorganicgrowthintheexistingpointsofsalestructure.

¢ COCO stations (Company Owned, Company Operated)

¢ DODO stations (Dealer Owned, Dealer Operated)

¢ Internal bases

Stations, end of period

201020092008

(no.)

0

10

20

30

40

50

60

70

80

20

40

14

24

34

15

26

30

10

TheEfixfuelswereintroducedbyRompetrolBulgariainMarch2010,incombinationwithaneffectivemarketingcampaign.Rompetrolwasthefirstamongstthemajorbrandstoofferabrandedfuelwithaddedvaluewithoutanysurchargesontheprice.ThesestepsincreasedRompetrolbrandawarenessandmarketrecognition.Theoptimizednetworkmanagementandmarketinghavebroughta16%growthinoverallRetailsales,andaremarkable42%increaseinthehighestprofitabilitychannel,ownstations

(COCO).In2010allretailpointsofsalehaveregisteredanincreaseinaveragedailysales.

¢ COCO cash¢ COCO F&G¢ DODO for retail

Retail sales

201020092008

(tons)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

9,808

4,916

32,483

13,205

6,480

34,232

18,318

9,775

34,399

AnothermajoreventinRompetrolRetailintheyear2010wastheintroductionoftheDealerPartnershipbusinessmodel(CODO)inthefourthquarter.Therelatedsitemanagementandqualityofserviceimprovements,combinedwithconsiderablecostsavingswillfullydevelopwithintheyear2011.PortfoliooptimizationcontinuedinWholesaleChannelswithextensiveclientprofitabilitymanagementandtheapplicationofamarkettailoredCommercialPolicy.Asaresult,theavailablefuelvolumesweredistributedthroughsaleschannelsbasedonprofitoptimizationpriorities.

¢ Internal bases ¢ Trading¢ Wholesale to consumer ¢ Wholesale to reseller

Wholesale sales

201020092008

(tons)

0

30,000

60,000

90,000

120,000

150,000

52,760

5,451

31,492

16,692

127,666

4,466

30,898

18,190

60,065

3,696

31,673 29,846

Theotherstrategicdirectionstartedin2010waseffectiveCostManagement.Thecombinationofimprovedcostplanning,procurement,andprojectmanagementwereamongthemostimportantinitiativesthatrealizedsavingsinoperatingexpenses.Theestimatedeffectoftheseinitiativesin2011isa30%overallcostreductionwithincreasingprocessquality.Asaresultofsuccessfulmanagementstrategies,theyear2010endedwithaUSD5.9millionimprovementinNetResultforRompetrolBulgaria.

Main Priorities for 2011:- EstablishmentofanIntegratedManagementSystemand

ISOcertification- FulltransitiontoCODObusinessmodel- OutsourcingOptimizationofSecondaryLogistics- UnceasingFocusonCostManagementandCostControl- ContinuousImprovementsinPortfolioandNetworkmanagement- IncreasedBrandRecognitionandOrganicMarketShareGrowth

¢ Market size¢ Market share

Market size

201320122011

(thousand tons)

Market share (direct & indirect)

(percent)

2,675

2,685

2,695

2,705

2,715

2,725

8.0

7.7

8.3

8.6

8.9

9.2

2,690

2,700

2,7208.32

8.71

9.12

RompetrolMoldova

RompetrolMoldovawasthefifthplayerin2010onthefuelmarketwith30gasstationsbytheendoftheyear.

All stations are DOCO, using 2 business models:

• Withfixedpaymentofrent(6gasstations),usedforgasstationswithbigefficiencypotential;• Basedonprofitshare,usinganaverageproportionof25%forRompetroland75%forthefillingstationowner.Thismodelisthemostsecure,withlowlevelofrisks.

Rompetrol Moldova has sold 55.628 tons of fuel in 2010, out of which:• Retailsales–22.897tons;• Wholesale–32.731tons,ofwhich:a)W2R–18.571tons;b)Salesoncommission–14.160tons.

In2010,RompetrolMoldovahadanincreaseof114%onRetailSalesChannelandanincreaseof18%onWholesaleChannelvs.2009,whichshowstherearegoodopportunitiesforafuturedevelopingnetwork.

RompetrolMoldovamadeasignificantextensionofthegasstationsnetworkin2010,duetotheopportunitiesthatappearedonthemarket.

AllthefuelswhichRompetrolMoldovaissellinginitsnetwork,areimportedexclusivelyfromPetromidiaRefinery:

Atthisstage,RompetrolMoldovadevelopsthenetworkinanextensiveway.Whenthetarget,innumberofgasstationswillbeachieved,RompetrolMoldovawillpasstotheintensivestage,by

eliminatingthelessefficiententitiesandkeepingthestationswithpotential.AsmentionedbeforeRompetrolMoldovausesprofitsharebusinessmodel,sothatitsharesalsotheOperationalExpenses,70%ofthemarepaidbythepartnerstationowner.Evenwhenstationsdon’tregisterprofit,butloss,ourpartnersbecomeautomaticallyourdebtorsandwhenthefillingstationregisterprofitagain,RPMdeductthedebtfrompartner’sprofit.

Duringdifficultperiodsoftime,whensaleswerelow,thistypeofmodelproveditsbenefitsandourcompanyavoidedsignificantoperationallosses.

q Gasoline � Diesel ¢ Gas

Imports of automotive fuel, 2001-2010

2007 2008 2009 20102004 2005 20062001 2002 2003

(UM)

0

50

100

150

200

250

300

350

400

Import and importers in 2010

Company Import volume(thousand,USD) (percent)

LUKoilMoldova 118,130 31.2%

Tirex-Petrol 62,218 16.4%

PetromMoldova 48,587 12.8%

BemolTrading 40,951 10.8%

RompetrolMoldova 29,817 7.8%

Other 79,273.47 21%

Total 378,976 100,0%

Types of petroleum products

Types of petroleum products Tons Share of oil product

A98Alto101 24,405 4.9%

A95Premium95 145,077 29.4%

A92,which: 20,314 4.1%

PetromMoldova 6,304 31.0%

Efix95RompetrolMoldova 5,201 25.6%

LUKoilMoldova 5,049 24.9%

Tirex-Petrol 3,188 15.7%

Other 573 2.8%

A80 4,343 0.9%

Diesel 186,904 37.8%

DieselEfix 8,046 1.6%

RompetrolMoldova 8,046 100.0%

Othertypes 105,129 21.3%

Total 494,218 100.0%



RompetrolGeorgia

A. Market /general economic conditions during 2010

General2010marketdescription:

RompetrolGeorgiahaspositioneditselfontheGeorgianmarketasanEuropeanhighqualityoildistributor.Positioningitselfonthethirdplaceonthemarket,thecompanyownsaround16%ofthemarketshare.ThemaincompetitorsinthischannelareWissol,LocalOilCompany,with25%ofmarketshareandSocar,thestateoilcompanyofAzerbaijanwith19%.

Retail Market Share

others40%

Socar19%

Rompetrol16%

Wissol25%

AsforthemarketshareoftotalimportstoGeorgiathroughout2010,Socarremainstheleader,with50%,outofwhich40%issoldtotheretailchanneland60%towholesale.

RompetrolGeorgiaisnext,with19%onimports,outofwhich66%goestotheretailand34%towholesale.Splittingthewholesalechannel,65%goestotheresellerand14%goestoconsumer,whiletherest21%isdistributedtoRBIandDODO.

Changes in competition tactics:

WissolhasunderwentarebrandingprocessandchangeditslogoinApril2010.ItunrolledPRcampaignsforadvertisingitsnewproductAPI,whichisimportedfromItaly,withtheoctanenumberof95,98andadieselfuel.AsspecialclientsofTheBankofGeorgia,RompetrolGasStationsexclusivelyacceptAmericanExpresscardsoneverystation,whereasWissoloffersasimilaroptioncalledUNICARDwhichenablescustomerstocollectpointsforfutureuseonvariousitems.

2010performanceIn2010,Tbilisiwarehousehasbeentotallyrenovatedandreconstructed,increasingcapacityfrom6,500to9,550tons.Afterthereconstruction,RompetrolGeorgiahasfullcontroloverthefuellossesthatcanoccurduringreceivinganddischargingofproducts.

RompetrolGeorgiadevelopedacampaign,togetherwiththelocalelectroniccompany“ElitElectronics”,whichincreasedthecompany’scashsalesby12%intotalforthatperiod.

ThemainproductsthatwereinfluencedbythiscampaignwereEuroDiesel,whichincreasedby30%,andEfixPremium,by13%.SeveralsuccessfulcampaignsendedbygivingRompetrolGeorgiaapositiveimage:acorporatesocialresponsibilitycampaignnamed“DrawingRompetrol”,fromwhichincomeswereusedtohelporphanages,acorporatequalityimprovementcampaignonqualitycontrolsystem,andsponsorshipoftheGeorgianNationalAutomobileFederation.

Key directions for 2011-2015:

AccordingtotheRompetrolGeorgiastrategicdevelopmentplan,mainprioritiesare:

• Investinginownedassets,costefficiencyandincreasednetworkcoveragethroughdevelopingprofitableCOCO/DOCOstations.IncreasingthenumberofCOCOstationsanddevelopingDODOchannel.• RPGplanstoorientitselfonretailsales,ratherthanwholesale.Becausewholesaletoresellerchannelhaslowercontributionforthecompany,wewouldratherfocusmoreonwholesaletoconsumercustomers.• AutomatingallRPGgasstations,byinstallinganewremotecontrolsystem.• Whileplanningtheexpansionofretailnetwork,additionalwarehousecapacityshouldbeconsideredinordertobeabletokeepupwiththeexpectedsalesincrease.• Additionally,costsavingalternativesshouldbeevaluatedinordertoreacheconomicallybeneficialdecisionsforthecompanyonthelongterm.RompetrolGeorgiaisconsideringtopurchaseanewlocation(outsidethecitylimits)inordertobuildanotherwarehouse.Forallimportedquantiteswithincitylimits,additionalrailwayfeewillbeavoidedandotherlogisticcostswilldecrease.

• Forthenextperiod,retainingtheretailmarketshareof16%till2013isexpected.2013-2015istargetingthe17%inretailmarketshare.• Launchingofnewproductsinaccordancewiththemarketdemand.• Asfornow,theinstallationsofanewaccountingsystemORACLEisplannedandin2013theintegrationofSAP.

RompetrolGas

A. Market /general economic conditions during 2010

General2010marketdescriptionIn2010,consideringtheglobaleconomiccrisis,thetotalLPGconsumptioninRomaniahasdecreasedby7%comparedto2009.Atthesametime,RompetrolGas’marketshareinthetotalLPGmarketreached41%in2010,showing2percentagepointsincreasedcomparedto2009. Outofthe444kmtofLPGconsumedin2010,29%wereconsumedintheretailsegment,whilethewholesalesegmentrepresented71%ofthetotalconsumption.

Total LPG Market evolution

201020092008

(kmt)

0

100

200

300

400

500

489 476444

ChangesincompetitiontacticsDuring2010,thedemandfornewcylindersincreasedsignificantly;thereareregionsinRomaniawheretheproductissoldexclusivelyinnewcylinders,whileintherestofthecountrytheoldcylindersarelosinggrounddaybyday.ThemainRompetrolGascompetitorsoncylindersmarkethavedevelopedintensiveprogramsfortherenewalofthecylinderpools,thusbecomingveryaggressiveonthemarket.

B. Key achievements in 2010 :

Consolidatingofthecurrentbusinessesanddevelopmentofon-goingprojects.

Despitethemarketdecreaseandwithoutmajorinvestments,RompetrolGasmaintainedthesamelevelofsoldvolumesin2010asin2009,managingtoconsolidateitspositionontheRomanianLPGmarket.Awell-balancedchannelssalesstructurepermittedustobeflexibleonLPGdynamicmarkets–locallyandregionally–andtoobtainthemaximumaddedvalueamonganysaleschannel.

¢ Retail ¢ Wholesale ¢ Export

Channels sales structure

201020092008

(percent)

0

20

40

60

80

100

23%31% 35%

69%39% 34%

9%

30% 31%

Thus,theretailsoldvolumesincreasedby10%in2010vs.2009.Seebelowthemarketshareevolutionforeveryretailchannel.

¢ 2009 ¢ 2010

Retail channels - Market share evolution

PROPANE MS %ATG MS %CYLINDERS MS %

(percent)

0

5

10

15

20

25

30

35

40

11% 13%

31%36%

5% 6%



C. Key directions for 2011-2015

Toppriorities» FocusingonthemostimportantTRGassets» Integratingwithin/aligningwiththemothercompany, KMG» Increasingofmarketshare» Developingnewproducts,locations,programs

RompetrolLogistics

Thesalesvolumeshavethesamestructureasitdidthepreviousyear: - PrimaryDistribution(railwaytransportation)–74%; - SecondaryDistribution(roadtransportation)–26%.

¢ Primary ¢ Secondary

Sales Volume by Activity

20102009

(thousand tons)

0

500

1,000

1,500

2,000

2,500

3,000

1,865

671

1,825

653

Primary Distribution

Thetransportedvolumesduring2010slightlydecreasedcomparedto2009(1,825ktonsvs1,865ktons).Thedecrease,beingaround2%(around41ktons),wasmainlydueto: - ShutdownofRompetrolRafinare(PEM)forrepairsandmaintenanceinOctober2010; - OutsourcingtheactivitytotheRomanianRailwayGroupfromthe11thofDecember2010.

¢ Q1 ¢ Q2 ¢ Q3 ¢ Q4

Sales Volume - Railway Distribution (4 Quarters Rolling)

20102009

(thousand tons)

0

100

200

300

400

500

600

419

479501

465449

529 515

331

TheentitymanagedtoincreasedbythevolumestransportedforNon-Groupcompanieswith69%comparedto2009(456

ktonsvs.269ktons),whiletheGroupvolumesdecreasedwithby14%(1,369ktonsvs.1,596ktons).

¢ Group services ¢ Non-Group services

Sales Volume - Non Grup & Group Companies

20102009

(thousand tons)

0

500

1000

1500

2000

269

1,596

456

1,369

ThestructureforthevolumestransportedfortheGroupentitiesremainedthesameaslastyear:RompetrolDownstreamandRompetrolRafinare(MidiaandVega)beingthemainclients,whileothersmallquantitiesweretransportedforRompetrolGASandRompetrolPetrochemicals.

¢ RP Downstream ¢ RP Rafinare - Midia ¢ RP Rafinare - Vega ¢ Other (GAS, RPP)

Sales Volume to Group Companies

20102009

(thousand tons)

19 130

200

400

600

800

1,000

1,200

1,186

152

239

1,035

100

222

During2010,RompetrolLogisticsused783wagons(804wagonsin2009).Thefleetwasstructuredin:423ownedwagons(439in2009)and360rented(365in2009).Also,theprimaryfleetcontained:24ownedlocomotives(24in2009)and5rentedones(6in2009).

¢ Avg Owned locomotives ¢ Avg Rented locomotives

2009

2010

¢ Avg Owned wagons¢ Avg Rented wagons

2009

2010

17%

20%

46%45%

80%

83%

55%

54%

Secondary DistributionThetransportedvolumesduring2010slightlydecreasedcomparedto2009(653ktonsvs671ktons).Thedecrease,beingaround3%(around17ktons),wasmainlyduetothedecreaseofsalesvolumesforbothourclients:RompetrolDownstreamandRomOil.

Sales Volume - Road Distribution (4 Quarters Rolling)

20102009

(thousand tons)

0

50

100

150

200

129

167

195

179

135

169

187

162

¢ Q1 ¢ Q2 ¢ Q3 ¢ Q4

Thestructureperchannelsremainedthesameaslastyear:COCO(66%),Wholesale(13%),Express(8%),InternalBases(8%),DODO(3%)andCuves(2%).

Sales Volume by Channels

20102009

(thousand tons)

¢ COCO ¢ DODO ¢ CUVE ¢ EXPRESS ¢ RBI ¢ W2C & W2R

0

100

200

300

400

500

600

700

444

6 2158

49

92

430

14 19

55

50

86

During2010,RompetrolLogisticsusedinaverage83tankers(71tankersin2009).Thefleetwasstructuredin:43ownedtankers(42in2009)and41rented(29in2009).

¢ Avg Owned tankers ¢ Avg Rented tankers

2009

2010

49%41%

59%

51%

Service Cost

TheServiceCostdecreasedfromUSD58,030thousandin

2009toUSD49,612thousandin2010(about15%-USD8,418thousand).Thedecreaseisinlinewiththetransportedvolumesvariance.Thecoststhathadasignificantimpactinthiswere:Transportation,MaintenanceandSalaries.In2010,arestructuringplanwaslaunchedandmostofthemaintenanceservicestodepotswaspostponedandthencancelledthereforelessmaintenanceexpensesoccurred.Salaryexpensewaslinkedtoheadcountdecrease,whiletherestructuringplanandtransportationexpensesarelinkedtodecreaseofdemandfromRompetrolDownstreamandRomOil.

Service Cost Structure & Variance

201020092009Service Cost

20102009 20102009 20102009 2010 2010Service Cost

2009

(thousand USD)

¢ Consumables & Other ¢ Utilities ¢ Salaries¢ Maintenance ¢ Transportation & Other

0

10,000

20,000

30,000

40,000

50,000

60,000

13,305

2,251

16,694

8,615

17,165

58,030

-606 -186 -1,083

-4,460-2,083

49,612

12,699

2,064

15,611

4,155

15,082

Thestructureremainedthesameastheprioryear:salaries(31%),transportation(31%),consumables&other(26%),maintenance(8%)andutilities(4%).Alsoeachtypeofcostdecreased:consumables&otherwith8%,utilitieswith6%,salarieswith52%,maintenancewith12%andtransportationwith15%..

Summary 2010 and 2011

During2010theentitystartedarestructuringplanasperGroupstrategy: - HandlingOperationsandTechnical&MaintenanceweretransferredtoGroupcompanies(RompetrolRafinareandRompetrolDownstream)fromQ32010; - NonCoreactivities(MetallicManufacture,ServiceAuto)wererestructuredinQ42010; - PrimaryDistributionwasoutsourcedbyRompetrolGrouptoTheRomanianRailwayGroupSA(NonGroupcompany)fromDecember2010.AllthewagonsandlocomotivesownedbyRompetrolLogisticsweresoldandemployeestransferredtoTheRomanianRailwayGroupSA; - ShippingAgencyactivitywastransferredtoByronShippingSRL(Groupcompany)fromMarch2011; - SecondaryDistributionwasoutsourcedbyRompetrolGrouptoTranspecoLogistics&DistributionSA(NonGroupcompany)fromApril2011.AllthetrucksandtankersownedbyRompetrolLogisticsweresoldtoTranspecoLogistics&DistributionSAandforthoseinleasing,thecontractswereclosed.




2011

333 333

Development4. Business Development

Rominservhasstartedin2010animportant2yearprogramme,meanttoachieveTheRompetrolGroup’sstrategicgoalofupgradingPetromidiaRefinerycapacityto5milliontonscrudeoil.


Business Development«RompetrolAnnualReport2010//25

Despitedifficulteconomicenvironmentandroughmarketconditions,TheRompetrolGroupmanagedtousebothconventionalandnon-conventionalmethodstopromoteitsaffiliatedbrands.Thus,usingalimitedbudget,theGroup’smarketingdepartmenthadtofindsolutionstokeepahighlevelofproductawarenessandmaintainthetopimageconnectedtotheRompetrolbrand.

Atthesametime,the2010CorporateCampaignofTheRompetrolGroupbroughtbacktheRompetrolvaluestotheattentionofourcustomers.Thecampaignwantedtobringinfrontthecorporatesocialresponsibilityplatform“Togetherforeachandeveryone”,emphasizingthefollowingvalues:thepassiontomakethingsevolveandtheinvolvementinthecommunity.Thus,Rompetrolismakingastatement,aboutthevalueswebelievein,weappreciateandsupport.Thecampaign’sobjectivesweretoconsolidateourcorporatenameonallthebusinesssegments,thegrowthandconsolidationoftheimage

indicator,theenlargementofourbrandnotoriety.

Alsoin2010,TheRompetrolGroupwasawardedthe“ConsumerSuperbrandAward2010”,within“TheTributeEvent2010”Gala.ThisisthesecondconsecutiveyearthatRompetrolisrewardedwiththeSuperbrandsprize,aftertheonereceivedforthemarketingactivitiesrelatedto2008and2009.Thisisamajoraccomplishment,consideringthefactthatthisprizeisgivenonlytothemostpowerfulbrandsonthemarket.

ThesameyearbroughtanimportantshiftintheRompetrolnetworkdevelopmentstrategybyidentifyingstrategicinvestment&developmentgroups(IDG),whoarewillingtoinvestintonewRompetrollocationsdevelopment.ThisbusinessmodelallowsRompetroltoexpanditsmarketpresencewithminimumcapitalinvestment,whilesecuringfuelvolumesandbrandimageintegrityintothemarket.

Marketing

InordertocapitalizeefficientlyallIDGopportunities,Rompetrolhasreevaluatedresourcesallocation,creatingadedicatestaffstructurewhichcoversmainfranchisebusinessaspects:development,construction,IT,marketingandoperations.

TwomajorcontractshavebeensignedwithimportantIDGandotherinitiativeshavebeenidentifiedandexploredaswell.Attheendof2010twolocationshavebeenalreadyopenedand30newonesareplannedtobeopenduring2011.

InAugust2009,TheRompetrolGrouplaunchedtheLitrobrand–anewpremiumfuelstationconcept.Theproject,initiatedinAugust2007,istheresultofanintensiveactivityofresearchandidentificationofcustomerneeds,aswellasrelatedtechnicalsolutions.ItsupportsthestrategyregardingtheconsolidationanddevelopmentofRompetrolstationsnetworkatanationalandinternationallevel,offeringpremiumservicesandproductsinadistinctarchitecturalambiance,characterizedbyinnovatingsolutionsandadvancedtechnology.InadditiontothemodernfacilitiesalreadyexistingintheRompetrolstations(Fill&Go,restaurant),Litrostationsareprovidedwithmodernequipmentforthereductionofenergyconsumption,offuelvaporemissionsintheair,aswellasadditivesforthereductionoftoxicemissions.

Efix–ThisisthefirstfuelbrandofTheRompetrolGroup,bothfromthepointofviewofthetimewhenitwaslaunchedonthemarket,andofitssalespercentage,providingengineprotectionandconsumptionsavingstotheconsumers.Continuingtheinternationalexpansion,2010wastheyearwhentheEfixbrandwassuccessfullylaunchedinBulgaria.Themarkethadapositivereaction,withanincreasewithinthatsegment,consolidatingthecustomers'optionforRompetrolnetwork.InRomaniaandMoldova,thecommunicationcampaignscontinuedwithverygoodresults.Attheendoftheyear,Efixispresentin4countries:Romania,Moldova,GeorgiaandBulgaria.InSeptember2010,Rompetrollaunchedthefirstviralcampaigninitshistory,fortheEfixbrand–InjectorsConcert.Theviralcampaignwasasuccess,receiving3awardsatInternetics2010:thebestviraloftheyear,thebestautomotiveproductssiteandbronzeforthecampaignsitesgeneralcategory.

Fill&Go–Thisisthebrandofservicesofferingcustomersthepossibilitytobuyfuelsandotherproductsfromstationsfortheirpersonaluseorforthecompanytheyworkfor.Thebusinesssegmentrepresentsthehighestpercentageofthebrandsales.2010isconsideredaconsolidationyearforFill&Go.Attheendoftheyear,thebrandisofferedtothebusinesssegmentin4countries:Romania,France,GeorgiaandBulgaria. Alto101 – Alto 55–Altoisapremiumfuelline,especiallycreatedforthedriverswhoexpectmaximumperformancesfromtheircars.Irrespectiveofthetypeofengineused,whetheritisdieselorgas,RompetroloffersAlto101andAlto55,bothfuelsbeingpreparedaccordingtothehighestqualitystandards,atPetromidiarefinery.Havingahighoctane/cetanenumber,Altorangeprovidessmoothvehiclestarting,evenidlerunningandnovibrationsathighRPM,aswellasquickenginereactionunderdifficultconditions–overtaking,ridingupaslope,high

load.Duetoitshighpuritydegree,itensurescompleteburning,highcalorificvalueand,implicitly,lowerenginewearandtear.

Ecopark–Thisisanewconceptandbrand,launchedandcommunicatedin2010byEcomasterEcologicalServices,thewastemanagementcompanyofTRG.EcoparkstandsfortheIndustrialEcologicalPark,developednearPloiești,thatintegrates3servicesfromthecompanyplatform:COLLECT–TREAT–DEPOSIT,inordertoprovideacompletewastemanagementtotheRomanianhazardouswastegenerators.

Ecoparkoffersmodern&compliantfacilitiesforwastetreatmentandfinaldisposal,withaninitialcapacityof30.000cubicmeters,outofthetotalprojectedcapacityofonemillioncubicmeters.ThetotalinvestmentwillamountUSD12millioninthenextyears.

Eurobitum–ArangeofmodifiedwithpolymersroadtypesofbitumenfromRompetrol.Theproductshaveresistanceandreliabilitymuchovertheusualroadbitumen,usedinmanufacturingasphaltmixtures,andthusprovedawarranteefordurabilityoftheasphaltcovering.Eurobitumwaslaunchedin2007,afteraUSD7millionworthinvestmentforbuildingthefirstunitofroadbitumenmodifiedwithpolymersinRomania,itsbasisbeingatechnologyofitsownofthebitumenenrichmentwithpolymers.

Researchhasbeendone,thatprovedthatbyapplyingthisprocess,theroadbitumengains:• increasedresistancetotemperaturevariations;• longlifeperiod;• betterresistancetodeformationsandwear;• capacitytoreducethenoiseintraffic. Propane Power Station–Itisanenergyunit,basedonpropanefromthecompanyRompetrolGaz,especiallydesignedforprofessionalusers,butalsoforhomeusers,whichprovidesanintegralindependencefromotherenergysources,anincreasedpermanentyield,whichismultifunctionalandensuresanunpollutedenvironmentwithminimalmaintenancecosts,becausetheunitdoesnotcontainimpuritiesandcorrosiveelements.ThePropanePowerStationsystemcouldbeusedforsourcingconsumingdeviceswithmultipleapplications–itcouldbecomposedofoneormorepropanetanks,dependingonthenecessaryamountofenergy. Injection Solutions, Extrusion Solutions, Blow SolutionsIn2007,RompetrolPetrochemicals–theonlypolypropyleneandpolyethylenemanufacturerinRomaniaandoneofthemostdynamicandinnovativedistributorofpolyolefinproducts–hasrepositioneditselffromarawmaterialsproducerintoapartner,offeringintegratedsolutions,adaptedforitscustomers.Thisnewstrategymeantaprocessofcustomers’knowing,ofthecompanynecessitiesandpossibilitiesinordertofurthercreateadaptedsolutionsandofferconsultancyandtechnicalsupport.Thus,providingefficientsolutionsforeverymethodofprocessing(InjectionSolutions,ExtrusionSolutions,BlowSolutions),thecompanyhadreadaptedandreorganizeditsproductsportfolioinaccordancewiththemarketdemands



andhadpositioneditselfasareliablepartnerforthecompanies,manufacturersofplasticmasses.Solutionsofferedforcustomersarebasedbothonitsownproductionandonimportedproducts,everythingdependingonthecustomers’needsanddemands.

Carflux–UsingtheRompetrolRafinareexpertiseinfuels,Rompetrolhascreatedin2010arangeofengineadditives,meetingthedrivers’needs.SpeakingaboutgasolineorDiesel,aboutprotection,power,clearing,reductionoffuelconsumptionoraboutlowtemperatures–theCarfluxrangerepresentsthesolutionforimprovingtheengineperformancesandprolongingitslifetime.

Euroizolir–Acompleterangeofproductsforwaterproofing,onbitumenbasis,containingbitumenmembranes,bitumenshingles,asphaltcardboardandbitumenprimers.

Vegasolv 509–representsthefirstproductfromafuturerangeofsolventsandlacquers.Vegasolv509isasolventforpaints,enamelsandprimersonoilandalkydresinsbasis.Thissolventisaproductbasedonwhite-spirit,anadvantagereflectedinitsevaporationgrade.Italsohelpstheefficientpaintmixing,whichlayseasily,itdegreasesandisalsousedformaintenanceofpaintingequipment.

Car Glance–ItistheRompetrolbrandforthewindshieldfluidavailableinourowngasstationsnetwork.Developedin2008,theproductcontainsanionicsurfactantsprovidinganefficientclearing,protectingthewashingsystemagainstcorrosion,inwinterversion–downto-20ºC.

Ardent and Ultrafoc–Twoproductsofthesameutility,namelyliquidforfirelighting,buthavingdifferentdestination.Ardentisidealforbarbecuesandchimneys,whileUltrafocisrecommendedforfirelightinginheatingsystemsbasedonsolidfuelandforfillingilluminatinglampsbasedonliquidfuel.Bothproductsarerecognizedfortheiradvantageofbeingarapid,easyandcleansolution.

Ecomaster–Supplierofintegratedservicesintheareaofindustrialwastemanagement,providingserviceslikePLAN,COLLECT,TREAT,DEPOSIT,CLEAR.

In2011,thecompanywillalsocontinuetoofferinnovativeproductsandservices,showingresponsibilitytowardstheconsumerandtheenvironment,wereweperformouractivity.

Rominserv

Keyachievementsin2010

• Rominservhasstartedin2010animportant2yearprogram,meanttoachieveTheRompetrolGroup’sstrategicgoalofupgradingPetromidiaRefinerycapacityto5milliontonscrudeoil.• Amongsttheprojectsincludedinthisprogram,twoofthem-PetromidiaRefineryMajorTurnaround(scheduledevery5years)andPetromidiaFCCRevamp–weresuccessfullycompletedin2010andareconsideredprojectswithoutstandingparticularities.• RefineryTurnaroundhadacalculatedplanning,inordertocompletealargeamountofactivitiesinasmallamountoftime.AsuperiormanagementofcostshasleadtosavingsofUSD6.4million,fromtheTurnaroundbudgetofUSD38.9million,whilethedurationwasreducedfromtheplanned42days,to39days.• FCCRevampRominservhadadaringtechnicalapproach,consistinginthereplacementofafullyassembled220tonFCCReactor.Thisledtoamuchshorterplantshutdowntime.ItisalsoworthmentioningthatthisapproachwasapremiereforRomania.• Inlinewiththeabovementionedprogram,duringTurnaround,someotherimportantactivities(suchastie-ins’andpipingreplacing/relocation,newflaresystempreliminaryworks,ClausUnitrevamp–linesB,C&D)havebeencarriedout,preparingtheconditionstofinalizesecondstageoftheprogramattheendof2011,asscheduled.• During2010,Rominservhassuccessfullycompleted66projects,amountingtoUSD87.6million.Mostofthemareplantinvestmentsandfacilitiesintheoilrefiningandpetrochemicalsector.• Rominservhaswon,attheendof2010,animportanttenderorganizedbyBrebuvillageforBuildingWorks,inordertoimplementanewdrinkingwatersysteminBrebu,Aluniș,VarbilauandSlănicvillagesfromPrahovacounty.Thecontract,estimatedatUSD4millionwassignedandtheworks–thatinclude39.2kmofironandPEpipes–aretobefinalizedin3yearstime.• Anotherimportantnongroupcontract,withavalueofapproximatelyUSD2.1million,wassignedin2010withPrioExtraction–partofthePortuguesegroupMartiferSGPS-forbuildingfourvegetableoilstoragetankswithacapacityof4,000cubicmeterseach.WorkswerestartedinMay2010andwillbecompletedinApril2011.• Asaresultofbettermanagementandshiftingfocusfromreactiveactivitiestopreventiveandpredictiveapproach,maintenancerelatedcostsonPetromidiarefinerydecreasedin2010by19%comparedwith2009,whilemechanicavailabilityincreasedby1,02%,allowingrefinerytoprocessbiggerquantityofoilandtoreduceoperationalcosts.• RominservValvesIaifobranchhascontinuedtodiversifyitsrangeofproductsandstartedtoproducenewglobevalvesPN400,DN25-50forpowerstations.During2010RominservValvesbecamethesupplierofGEAGrassoGroup-thebiggeststocklistedengineeringcompanyinGermany-forcomplexcastpartswhichareproducedinZalăufoundry.

• Togetherwiththepositiveresultsobtainedonallprojectshandled,Rominservmanagedtoincreaseitssales,achievingin2010aturnoverofUSD216.3million,anincreaseof22.5%comparedtothelastyear,and2.1%overthebudgetedturnover.

MainObjectivesfor2011

ThemainobjectivesofRominservin2011includethecompletionof“Package2010”,whichwillupgradePetromidiaRefinerycapacityto5milliontons.Theprogramcomprisesnineprojects,outofwhichone(FCCRevamp)hasbeencompletedwithin2010.ThecoreoftheprogramisrepresentedbyMildHydrocrackingandNewHydrogenPlantprojects,scheduledtobecompletedduringQ4-2011.ForthisprogramRominserv,asaGeneralContractor,providestechnicalandprojectmanagementexpertiseandintegratestheservicesprovidedbyvarioussubcontractors.Apartfromthe“Package2010”,other56projectswillbedevelopedduring2011.

• Animportantprojectin2011willbethe2weeksturnoverofPetromidiaplants,scheduledinSeptember/October,consistinginchangesofcatalysts,recertificationofdueequipmentandintegrationofnewprojects.• Takingintoconsiderationthe2010Turnaroundanditseffects,Rominserv’stargetistokeepthesamelevelofmechanicavailabilityin2011asinthepreviousyear.• Anotherimportantobjectivefor2011istogoonimprovingthemaintenanceprogram,withfocusonplanningandpredictive/preventivemaintenance.AtthesametimeRominserv,willincreasinglyapplyalternativesolutionsfortestingandrepairmentofequipmentwithoutstoppageoftheplants,inordertofurtherreducestoppagetimeofplants.• RominservValvesIaifowillcontinuetoincreaseitsrangeofproductswithnewproducts,ballvalveswithfireproofintherangeofDN2-6inchesandDN50–200mmbeingscheduleforhomologationin2011• InvestmentsofUSD287.000willbemadebyRominservValvesduring2011forcompliancetotheEnvironmentProgram.• TheturnoverofRominservValvesistargetedtoincreasewith27%in2011,fromUSD6.5milliontoUSD8.3million,withthesupportofsalesoncastparts,andalsoincreasingordersfromexistingforeignpartnersduetorecoverofWesternEuropeaneconomy.HighersalesonKazakhstanmarketareanticipatedandalsoanincreasedcontributionofvalvesautomationmarket,duetoanagreedpartnershipwithabigactuatorsproducerthatistobeconcludedin2011.• Rominservhasbudgetedin2011aturnoverof288milUSD,anincreaseof33%comparedto2010.Theoptimizationandcostefficiencyprocessstartedin2010willcontinuebyreducingGAcosts,alongwiththerenegotiationsofcontractswithsuppliersforbetterpricesandpaymentstermsandthereorganizationofsomedepartmentstoachieveoptimizedprocessesandflows.



Net revenues 2009 vs. 2010

20102009

(million USD)

0

50

100

150

200

250

176.6

216.3

2011 (estimated)

220

RominservKazakhstan

TheacquisitionoftheRompetrolGroupbyKazMunayGasGroup(KMG)in2007hasbroughtupopportunitiesfortheservicescompanieswithintheGroup,especiallyRominserv,thegeneralentrepreneur,capabletoprovidemaintenanceservicesaswellastodelivercastandironvalvesproducedbyitsbranchinRomania,RominservValves.

Therefore,aRominservsubsidiarywassetupinKazakhstan,attheendof2008,underthenameofRominservKazakhstanLLC.ThestrategicgoalofRominservKazakhstanLLCistobecomeastrongandcompetitivelocalcontractor,furnishingEPCprojectservicesanddelivering“turn-key”projectstoanyclientoperatinginoil,gasorpetrochemicalindustriesinKazakhstan.

ThemainstrengthofRominservKazakhstancomesfromthelargepossibilitiestoutilizeandturnintovaluethecapabilitiesandexpertiseofitsmothercompany,Rominserv-Romania

withmorethan25yearsofinternationalexperienceinoil&gasprojectsasEPCcontractor,aswellastheexpertiseintheentireRompetrolGroupwhichcurrentlyhasdownstream(retail)operationsin6Europeancountries.

In2010,RominservKazakhstanLLCimplementedtwomajorcapitalinvestmentprojectsinAtyrauRefinerybelongingtoKazMunayGasGroup(KMG)amountingtoapprox.USD85million,namely:• Reconstruction&ModernizationoftheAtmospheric&VacuumDistillationUnitswhichisunderfinalpre-commissioningstage,thehandingoverbeingscheduledforApril2011;• Reconstruction&ModernizationofDelayedCookerUnit(thatincludesalsoRevampoftheexistingWasteWaterTreatmentFacility),withincompletiondatescheduledforMay2011.

ThetwoprojectsrepresentafirstphasewithinalargerKMGstrategiccapitalinvestmentprogramofupgradeanddevelopmentoftheAtyrauRefineryaimingtoincreasetheannualprocessingcapacityfrom3.3to5mil.tonsandimprovefuelsqualityaccordingtotheinternationalstandards.

Tothispurpose,RominservKazakhstanLLC,incooperationwithKBCProcessTechnologyLimited-UK,hasprovidedAtyrauRefinerywithaTechnicalSurveyandStudyforRefineryTechnologicalModelling&ExpansionConfigurationSelectionamountingtoapproxUSD0.7million.

StartingNovember2010,RominservKazakhstanLLChasstartedprovidingtechnicalsupervisionservicestoAktauBitumenProject,belongingtoCaspiBitumenCo.,amountingtoapprox.USD0.5million/year.

Also,RominsevKazakhstanLLChasqualified,alongwithTenghizChevronOil-TCO(oneofthelargestoiloperatingcompanyinKazakhstan),aseligiblecontractorsforengineeringservicesandconstructionworksinup-comingtenders.

ProspectsfordevelopmentofRominservKazakhstanLLC:• ParticipatingintheconstructionofAromaticsProductionProjectwithinAtyrauRefineryPlatform;• ParticipatingintheimplementationofHydro-crackingProjectatAtyrauRefinery;• SettingupacollaborationwiththeNationalInstituteforOil&GasfromKazakhstan(KING)onengineeringactivities,fortheimplementationofthemodernizationprojectsofPavlodarRefinery;• SettinguppartnershipwiththeNationalInstituteforOil&GasfromKazakhstan(KING)onEPCcontractorpotentialjobstoKashagan,Tenghiz,Karaceaganakprojects;• Conductingtechnical&technologicalauditsinShimkentandPavlodarrefineries,inviewofelaboratingofinternalproceduresandnormsforturnaroundsandmaintenance.

Thetotalturn-overofRominservKazakhstanLLCattheendof2010amountedtoUSD51million(non-auditedresults).

RompetrolDrillingandWorkover(DRW)

Withmorethan30yearsofexperienceinprovidinglow-costequipmentandover550wellsdrilledinSyria,Algeria,Egypt,Iraq,Jordan,Libya,Sudan,Greeceandover180workoveredwellsinLibya,ROMPETROLS.A.’sDrilling&WorkoverDivisionhasprovidedabalancebetweenthehightechnologyusedandhighlyqualifiedandlongexperiencedoperativecrew.

Basedonitsprojectmanagementexperience,accumulatedfrommanagingprojectsinsomeoftheworld’smostdifficultlocations,DRWhastheabilitytomobilizeresourcesforalmostanyoilandgasprojectaroundtheglobe.Withitsblendofpetroleumservicesexpertiseandinternationalmanagementskills,wehavebuiltastrongreputationforqualityworkinEasternEuropeanmarkets,SouthAmerica,NorthAfricaandtheMiddleEast.

DRWhasamongstthebestspecialistsintheindustryandwemaintainthiswithconstanttrainingtomakesuretheyhavetheknowledge,expertiseandtheexperiencerequiredfordoingthejobright.

In2010,DrillingDivisionhasfocusedoncontinuinganddevelopingthebusinessrelationswiththetraditionalclients,makingeffortstoimproveourperformanceandtoearnnewclients.

In2009,theCAPEXprogramcontinuedin2010withinvestmentsinimprovingouroperationalsupport,witha78%implementationratio(1,184thouUSDactual,vs.1,514thouUSDbudgeted),whiletheturnoverachievedin2010registereda9%increaseagainst2009,whilethenetprofitwas23%lowerthan2009figures.

¢ Turnover ¢ Net Profit

Turnover and Net Profit 2010 vs. 2009

20092010

(thousand USD)

0

3,000

6,000

9,000

12,000

15,000

12,50511,446

1,0001,305

DrillingDivision2010mainachievements

• SigningaservicecontractwithOMVPETROMwiththemainobjectivetoperfrommudloggingservicesinconnectionwiththeclient’sdrillingprogram.ThecontractwassignedonAugust1,2010andhasoneyearvaliditywiththepossibilitytoextenditforoneadditionalyear;

• ClosingaConsultacyAgreementwithZetaPetroleum(UK),inviewofprovidingDrillingSupervisorforawellinRomania,Jimbolia1well;• Increasingnumberofengineersprovidingconsultancyservicesfordifferentoperators;• FollowingJuly2010GermanicherLloydsurveillanceauditinLibya,extendedtheIntegratedManagementSystemcertifications(ISO9001:2008,ISO14001:2004,OHSAS18001:2007;• ExtendingtheregistrationandthelicenseofRompetrolLibyanBranchuptoMarch1st2013.RegistrationCertificateissuedon12.07.2010,underResolutionno.337of2010.

DrillingDivision2011businesstargets

• Businessdevelopmentthroughtheacquisitionofanewdrillingrig;• Re-enteringthemarketofdrillingservicesbywinningpartoftheOMVdrillingbidinJanuary2011,orcontractingtherigoverseas;• Increasingmudloggingactivitybytheacquisitionofanewunit;• FullyrecoveringaftertheLibyancrisis;• DevelopingtheactualbusinessrelationshipsandresumingtheonesputonholdduetothepoliticalsituationexistinginLibya;• Increasingfinancialrevenuesthroughdevelopmentanddiversificationofofferedservices;• MaintainingallIntegratedManagementSystemcertifications.

ECOMASTER

2010KeyAchievements

• LaunchingtheEcopark,theindustrialecologicalparkdesignedtoCOLLECT–TREAT–DEPOSITthehazardouswasteontheRomanianmarket;• DevelopingofNationalPartnershipProgramwithregionalwastecollectors;• ObtainingEcoparkQHSEconformity(IntegratedEnvironmentAuthorization);• Businessoptimization&companyreorganization(PetromidiabranchofEcomasterintegratedinRompetrolRefining).

Ecopark&PartnershipProgramdevelopment

Ecomaster,theecologicalservicescompanyoftheRompetrolGroup,haslaunchedin2010Ecopark,anenvironmentalprojectfortheentireecologicalRomanianmarket.

Ecopark,developednearPloiesti,isbasedona“one-stop-shop”approach,byintegratingtheCOLLECT,TREATandDEPOSITservicesfromEcomasterserviceplatform,inordertoensure





acompletehazardouswastemanagementforthewastegenerators.

In2009-2010,EcomasterinvestedUSD2.5millioninEcopark’sinfrastructure,forthestartupofthefirststoragemicro-cellof30.000cubicmeters.ThetotaldesignedcapacityforEcoparkwillbeof1millioncubicmetersandtotalinvestmentwillreachUSD12millioninthenextyears.

In2010,thecompanyhassignedcontractswith20largewastegeneratorsfortheservicesprovidedbytheecologicalpark.Moreover,intheNationalPartnershipprogram,Ecomasterhassignedpartnershipswith15regionalcollectorsforwastedepositingtoEcopark.

Ecopark’sdevelopmentrepresentsamilestonefortheRomanianenvironmentalmarket,becauseoftheshortageinexistingcompliantdisposalfacilitiesandduetothemodern&safedepositingconditionprovidedatEcopark.Theinvestmentwasappreciatedbytoplevelenvironmentalauthorities,majorwastegenerators,mass-media,bothattheEcoparklaunchandalsobyvotingEcoparkasthe“Besthazardouswasteproject”attheInfomediuEuropaGala2010.

EcoparkQHSEconformity

Ecomasterobtainedin2010theEnvironmentalIntegratedAuthorizationIPPCforEcoparkactivity,asitownscompetitivemonitoringandcontrolsystems:individualmicro-cellswithimperviousperimeterdikes,sensorsystemforelectroniccontroloftheimperviousnesssystem,permanentmonitoringprogramofenvironmentalfactorsintheneighboringarea,controlledcollectionofallwatergeneratedonsite,minimizingtheamountofrainwaterbyuseofprotectivecap,installingaleachatecollectionsystem.Ecoparkoperateswithstrictproceduresformonitoringandprotectionofenvironmentalfactors.Furthermore,Ecomasterhasmadea“Zeropoint”studyontheenvironmentalfactorsinEcoparkneighborhoodbeforestartingtheactivity,inordertomonitorpermanentlyanysignificantchangeinwater,soil,air,duringEcoparkfunctioning.

Ecomasteralsomanagedtoobtainenvironmentalpermitsforhazardouswastetreatment,wastewatersprocessingandsoildecontaminations,aswellaspermitstocollectandtransporthazardousandnon-hazardouswaste.

Businessoptionsanalysis&companyreorganization

Inordertooptimizeitsactivities,theRompetrolgroupmanagementdecidedin2010theintegrationofEcomaster’sactivitiesonthePetromidiaplatforminRompetrolRefining(RR)Constanța,thisreorganizationprocessleadingtomoreefficientoperationsbothforthecompanyandalsoattheGrouplevel.

2011 Key Objectives

• ApplyingTREATcapabilitiesinlargetreatmentanddecontaminationprojects• Reviewingenvironmentalpermittoincludenewtreatmentactivities• Ecoparkdevelopment(increaserevenuesandnewinvestments)• Strategicpartnershipstoincreasemarketshareandpenetrationinlargeenvironmentalprojects

TREAT capabilities in large projects

Thetreatmenttechnologiesandknow-howdevelopedbyEcomasterinthelastyearspermittedtheprocessingandneutralizationofmorethan160,000tonshazardouswasteuntilnow.EcomasterintendstoimplementTREATcapabilitiesinfurthergroupornon-grouplargedecontaminationprojects,forbudgetedrevenuesofmorethanUSD600,000.

Inthisrespect,in2011EcomasterhasforeseenthereviewoftheEnvironmentalIntegratedAuthorization,forintroductionofadditionaltreatingtechnologiesandactivitiesatEcopark.

Ecopark development

In2011,EcomasterintendstoinvestanotherUSD2.14million,25%indevelopingthesecondmicrocellforwastedepositingandtherestforendowmentofaTREATareaatEcopark,inordertoensurein2011theproperconditionsforcollecting,treatinganddepositingofmorethan35,000tonsfromthewasteonthemarket.Furthermore,Ecomasterhashighinterestindevelopingstrategicpartnershipswithimportantregionalmarketkeyplayers,inordertostrengthenthetechnologicalcapabilityofthecompany.

Mainfinancialindicators(USD)

2009 Actual

2010 Actual

2011 Budget

Gross Revenues, out of which: 10,010,824 4,408,791 6,132,503

GROUP 8,993,482 3,759,704 -

NON-GROUP 1,017,342 649,087 6,132,503

NetRevenues 10,010,824 4,408,791 6,132,503

EBITDA 1,713,117 (1,934,332) 1,676,833

EBIT 1,166,495 (2,535,887) 1,264,861

Net Result 953,502 (2,832,612) 1,047,498

RompetrolExplorationandProduction

ExplorationandProductiondivisionfocuseditsstrategyonupgradingthecurrentleadsandprospectsportfolioestimatedtovalueover100MMbblprospectiveresources,basedonseismicprocessingandinterpretation.

Anotherobjectivein2010fortheExploration&ProductionDivisionwastoattractnewpartnerswithfinancialpotentialandtechnicalcapabilitiesinthedevelopmentofongoingandprospectprojects.Inthisregard,inOctober2010,aDataroomwasopenedfora6month’ssession,thecompanyestablishingcontactswithmorethan10companies.

ThetotalinvestmentmadeforRompetrolexplorationblocksin2010reachedUSD2million,consistinginseismicprocessingandacquisitionofgeologicalstudies.

2010KeyAchievements

• TheRompetrolGroupcontinuedtheexplorationactivitiesonSatuMare,Zegujani,Greșu,NerejuandFocșaniblocks,wherethecompanyisoperatorstarting2004;• OnGreșu&Nerejublocks,in2010theE&PdivisionconcludedaJointStudyAgreement(JSA)withTOTALE&P(France),identifyingahighprospectivearea;• OnFocșaniBlock,thedivisionreprocessed2Dseismicdatacoveringadistanceof100/500km.Basedontheresult,itwillperformaGeologicandGeophysicsReport“HydrocarbonsDiscoveryPotentialinFocșaniBlock”;

• IntheSatuMareblock,anexplorationprograminpartnershipwithWinstarResources(Canada)wasperformed.OnMay2010thePhase1.2wascompletedbyperforming“TheEasternPanonnianBasinStudy”,aRegionalgeologicalReport.Theregionalstudyhighlightedtwoprospectiveareasreadytobeexploredbydrilling:MădărașwithoilpotentialandMoftinuwithgasoccurrences.109MădărașWellDrillingProjectwasimplemented.ExpectedSpuddateQ22011.• ZegujaniBlock–DuringNovember-December2010period,Rompetrolsuccessfullycompletedasurveycampaigncomprisingover120km2Ddetailedseismicprogram,focusedon4(four)mostprospectiveareas.

2011KeyObjectives

• FindingandconcludingFarm-inAgreementsinallremainingexplorationblocks:Zegujani,Greșu,NerejuandFocșani;• Successfullydrillingof109MădărașwellandfindcommercialoilaccumulationinLowerMioceneformation;• CompletingseismicinterpretationonZegujaniblockanddefining2-3drillablelowtomediumriskprospectsreadytobeexploredbywellsin2012-2013;• DefiningleadsandprospectsinGreșu,NerejuandFocșani.Preparinggeologic/drillingprojectsforminimum2-3prospectiveareas:“Trianglezone(Nereju),Shallowformationsin“TrustBeltFold”(Greșu)andPlioceneMiocenegasaccumulations(Focșani);• IdentifyingnewproductionopportunitiesintheRomanianmatureoilfieldsordevelopingproductionprojectsintheCaspianRegion,MiddleEastandNorthAfrica.



RompetrolWellServices

2010KeyAchievements

• Revenuesincreasedby10%comparedto2009;• TheKazakhstanBranchstartedthecooperationwithKMGE&Pcompanies;• InvestmentworthUSD1.8milliontoimprovecementing,sandcontrolandnitrogenservices.

RompetrolWellServices(RWS)isoneoftheleadingcompaniesonthespecificmarketsegmentinRomania,offeringawiderangeofservicesforoilandgaswells:cementing,consolidationandsandcontrolservices,stimulations,testing,slick-line,casingrunningoperations.ThecompanyhasoperationsinothercountrieslocatedinEasternEuropeandCentralAsia.

Onaninternationallevel,2010markedasignificantincreaseofdrillingservicesforoilandgasproductionactivities,especiallyinthesecondhalfoftheyear,linkedtothecrudeoilpriceincrease.AlthoughinRomaniatheincreaseddemandforwellserviceswasnotsignificant,RompetrolWellServicessucceededincapitalizingonthegreatervolumeofworkandrecordedrevenueandoperatingprofitgrowthofover10%comparedtothepreviousyear.

TheoverseasactivitywasstronglyinfluencedbythecollaborationofKazakhstanBranchoftheRompetrolWellServiceswithKMGE&PcompaniesfortheirupstreamoperationsintheWestKazakhstanregions.

Thecompanyrecordedin2010totalrevenuesofalmostUSD25million,anoperationalprofit(EBITDA)ofoverUSD7.3millionandanetprofitofoverUSD3million.

RWScontinueditstechnologiesandequipmentmodernizationprogramwiththeaimtoachievetheperformancestandardsofthemultinationalwellservicescompaniesbytheyear2014.

In2010,thestrategyofinvestmentswasfocusedontheupgradeofcementslurriesmixingandpumping,sandcontrolandnitrogenservices.Astate-of-the-artcementmixingandpumpingequipmenthasbeenaddedtothecompanyfleet,enablingtheprovisionofverycomplexcementingservices.

AnewmobilewaterfilteringsystemandanewSandBlenderwereputintooperation,enablingRWStoprovidehighstandardssandcontrolandacidtreatmentservices.Fournewunitsfortransportandsupplyofliquidnitrogenandacids,builtaccordingtothelatestEuropeanenvironmentalstandards,werealsoputintooperationsin2010.

In2010,thecompanycontinuedthedevelopmentofitsqualifiedpersonnel:atotalofsevenspecialitytrainingcourseswereconductedduringtheyearinvolvingover70%oftheoperatingstaff.

RWSoverseesallongoingprojectsfromitsmainofficeinPloieşti,Romania,offeringtechnicalsupportfor13locationsinRomania,KazakhstanandBulgaria.

Evolution of the main Financial figures

(thousand USD)

0

10,000

5,000

15,000

20,000

25,000

2010

24,849

3,061

2009

3,848

22,574

¢ Gross Revenues ¢ Net Profit

Clients Structure

(thousand USD)

¢ Petrom¢ Romgaz¢ Independent Operators¢ Drilling Contractors

¢ Kazakhstan¢ Russia¢ Bulgaria¢ Others

1,386 18

Domestic market Overseas

15,884

3,472

3,225

137

126

28

2010KeyAchievements

• Improvingcementingtechnologybyimplementingautomaticdensitycontrolforcementslurrypreparation;continuetechnologicalimprovementforsandcontrol,slicklineandtestingservices;• ExpandingsalesofwellservicesinCentralandWesternEurope;• ConsolidatingoperationcapabilityinKazakhstantoachieveatotalcapacityof8/10equivalentcementingjobspermonth;• CompletingtheInvestmentPlanofUSD3.9million.

Theyear2011willprobablyrecordanoscillatingevolutionofthewellservicesmarketinrelationwiththeevolutionofcrudeoilpricesandoildemandintheemergingmarkets.

Inthismarketenvironment,thecompanywillfocusontheimprovementofoperatingprofitsbytechnologicaldevelopmentandprocessoptimization,consolidationofdomesticmarketanddevelopmentoftheKazakhstanBranch.Throughjointoperationsagreementwithmajorupstreamservicescompanies,RWSwillseektotakeadvantageofnewbusinessopportunitiesinCentralandEasternEurope.Theinvestmentprogramwillconsistofconsolidationoftheoperationalfleetbyincreasingthecapacityandimprovingtheequipmentperformance.

RompetrolQualityControl

RompetrolQualityControl–RQC–thelaboratorydivisionofTheRompetrolGroup,isoneoftheleadingcompaniesonthedomesticmarketoflaboratorytesting.Sinceitsestablishmentin2004,RQCconstantlysupportstheeffortofitsclients(bothcompanieswithintheRompetrolGroupandthird-partycustomers)toidentifyandimplementsafeandefficientmethodstoprotecttheenvironmentandensuretheproductquality.

Regardlessoftheeconomicdifficultiescausedbythefinancialcrisis,theyear2010reflectsapositivetrendofthecompanyconcerningboththedevelopmentandimprovementofitsbusinessactivities,aswellasitsfinancialresults.RQChasmanagedtokeepitsmajorclientsandattractnewones,eveniftheobjectiveofeveryfirmconfrontingsuchunfavourablemarketconditionswastoreducethecosts,includingtheonesrelatedtolaboratoryanalyses.

Majorachievementsin2010

• Enteringanewmarketnicheandimplementednewtypesofanalysesaccordingtothespecificlegislationandclientsneeds;• Turnoverincreaseandbusinessconsolidation;• ObtainingexcellentscoresbyRQC’slaboratoriesthroughtheparticipationtovariousinternationalinter-laboratoryproficiencytests.

In2010,RQCcontinuedtodevelopitsbusinessactivitiesbyimplementingnewtypesofanalysesandacquiringtheappropriatecertifications,inordertomeetitsclientschangingneedsandaccordingtothespecificRomanianandEuropeanlegislation:

- stabilitydeterminationofdieseloxidizing(Rancimatmethod)- ethanolcontentdeterminationfromgasoline- manganesecontentdeterminationfromgasoline- bioethanolanalyses(alcoholcontent,acidity,metals,non-volatilesubstancescontent,mono-saturatedalcoholsC3-C5andmethanol)- coalanalyses(power,humidity,volatile,ash,sulfur,metals).

ThiswasaddedtothewiderangeofanalysespreviouslyperformedbyRQCthroughouttime,whichinclude:

• Completeoilproductsanalysis(crudeoil,gasoline,dieseloils,LPG,kerosene,petroleumcuts,cokeandpetroleumsulphur,ecologicalfuels-biodieselandbioethanol,bitumen,etc.)• Completewateranalysis(contaminatedchemicalwater,processingwater,drinkablewater,drainagewater,coolingwater,softenedwater,desaltingwater,boilerwater,swimming-poolwater,steam,condensewater,undergroundwater,etc.)• Completesoilanalysis(industrialsoils,agriculturalsoils,andindustrialmud)• Completeairanalysis(physicalandchemicaltoxic

substancesfromtheworkingplacesairandfromprotectedareasbydeterminingthecorrespondingconcentrations)• Explosionmeteringanalysis(determinationofexplosionhazardpotentialwhenworkingwithopenfireinindustrialspacesandclosedvessels)• Medicalandbio-toxicologicalanalysis(forquantitativeandqualitativedeterminationofvariousspecificcomponents)• Analysisofphysicalandchemicaltoxicemissionsatworkingplaces(byobservingtheprovisionsoftheapplicablelabourprotectionnorms)• Analysisofweatherfactors,environmentandspecificmicroclimates• Chemicalanalysisonmetalmaterials

Asamajorachievementin2010,RQChasenteredthemarketofcoallaboratoryanalysisthroughcross-checksandanauditprocess.Thespecificanalysesforcoal(power,humidity,volatile,ash,sulfur,metals)aremainanalysesusedinthecalculationofcombustionpowerandgasemissioncontrolintheatmosphere.Theentrancetothismarketnichehascontributedtotheincreaseoftherevenuesobtainedfromthird-partycustomersandconsolidatedourmarketshare.

TheaccuracyoftheprocessesandanalysesperformedisconfirmedbythecertificationsRQCobtainedandhasmanagedtomaintain,creatingthetoolstoenlargetheportfolioofthirdpartycustomersandconsolidatethecompany’spositiononthespecificmarket:

• RENAR-RomanianAccreditationAssociation.AllRQClaboratoriesareaccreditedaccordingtothestandardSRENISO17025:2005,acertificationgrantedbyRENAR,theonlyinstitutionatnationallevelcertifyingthestandardsoflaboratoryactivities.Hence,analysesperformedbyRQCareacknowledgedinover70countriessignersoftheagreementsforinternationalacknowledgement(I.L.A.C,M.L.A.,E.A.)concludedbyRENAR;• GermanischerLloyd(2008)certifiedRQCfortheIntegratedManagementSystem:Quality(ISO9001),Environment(ISO14001)andWorkplaceSafety(QHSAS18001)• AFER-RomanianRailwayAuthority–licensesforrailwayproductstrials(diesel,oilsandenvironmentalparameters)• ISCIR-RomanianInspectionAuthorityforControlofBoilers,PressureVesselsandLiftingEquipment-licenseformetallic-graphictrialsandboilerwatertests• MinistryofHealth(PublicHealthDepartment)-Authorizationtoconductprofessionaltoxicemissionsmeasurements



In2010,RQCfinalisedtheprojectoflaboratoryactivitycomputerizationbyimplementingLIMS(LABORATORYINFORMATIONMANAGEMENTSYSTEM),aninformationalprogrammeanttoincreasetheaccuracy,efficiencyandproductivityofourbusinessactivities.TheinvestmentamountedtoapproximatelyUSD220,000,RQCbeingthefirstcompanyonthespecificRomanianmarkettoimplementthisinternationallyrenownedprogram.

Ongoingeffortstoimprovethequalityofourservicesarealsoconfirmedbythecertificatesofexcellence.Theywereobtainedthroughconstantparticipationtovariousinternationalproficiencytesting(PT)programsandcollaborationswithinternationalresearchcentres(Spain,TheNetherlands).

RQCmanagedtomaintainthefidelityofitsmajorclientsandconcludenewpartnerships,regardlessoftheunfavourablebusinessconditions.Thus,RQCcontinuestobeapartnerforthemostsignificantindependentinspectioncompaniesactivatingintheConstanțaportplatform,intermsofspecificanalysesofimported/exportedoilproductsthroughtheport.

RQC Net Revenues

(thousand RON)

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2005

16.547

2006

18.652

2007

16.668

2008

17.107

2009

19.004

2010

19.489

2011*

19.889

RQC Net Revenues (RON)

DespitethedifficultperiodthatRomaniapassedthrough,RQCrecordedin2010apositiveevolutionofitsturnoveranditsfinancialresults.Itisworthmentioningthe19%raiseofitsthird-partyrevenues,the3%increaseofitstotalturnoverandpositiveevolutionoftheprofitmargin,from2%in2009upto3%in2010.

Dynamics of revenues from third party customersas percentage in total turnover

4%

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12%

2005 2006 2007 2008 2009 2010 2011*(budgeted)

RQC Net Revenues (RON)

Majorachievementsin2010

• Expandingourrangeofservicesbyaddingnewtypesofanalyses;

• RenewingofourmainaccreditationcertificatesfromRENARandGERMANISCHERLLOYD.Asapowerfulmarketingargument,thisobjectiveaimstoconsolidatetherelationswiththethird-partyclientsalreadyexistingintheportfolioandtoattractnewcustomersbyofferingconfidenceinthetechnicalcompetence,impartialityandintegrityofourlaboratoriesandprotectionofconsumer'sinterests;

• Extendingouraccreditationforthenewanalysismethodsandinspectionservices,particularlyforalltypeofwasteanalyses.CapitalizingonnewmarketopportunitiesinordertoconsolidateRQC’smarketshareandincreaseourprofitabilityandthepercentageoftheturnoverfromthird-partycustomers.

• Concludenewpartnershipswithmajordomesticcompanies,asOMVPETROM(monthlymonitoringprogramoffuelqualityingasstations)andthenationalrailwaymerchandisetransporter(CFRMarfă)relatedtoenvironmentanalyses;

• Optimizingouroperationalcosts;

• Havingzeroaccidentsinourlaboratoriesandinthelocationswherewecarryonourbusinessactivities.Thisobjectivewillbetargetedbya100%implementationofthepersonneltrainingplanonoccupationalhealthandsafety,whichincludesDuPontSafetyResources.

Palplast

2010KeyAchievements:

• ImprovingtheHDPEpolymerproperties,inordertodevelopHDPEgranulesforpipesusedinpressureapplications.• Reducinglogisticcostsbyredesigningthepackingofproducts.Thetotaltransportcostwasreducedwithapprox.1.23%.• Increasingdirectdistributionby25.56%versus2009,byenlargingtheproductrange.• Designingandequippingthestationaryweldingmachineswithadaptorsenablingthecompanytoproducefittingswithbiggerdiameters.

Palplastproducesacompleterangeofhigh-densitypolyethylenepipesandfittingswithapplicabilityinthefieldsofdistributingwater,gas,crudeoil,seweragesandprotectionofopticfibercables.Besides,Palplastoffersirrigationsystemsthroughsprinklersanddripping,aswellasthroughjoiningservicesorrehabilitationofthecentralizedirrigationsystems.

Thegeneralmarketconditions,influencedbytheinternationaleconomiccrisis,havecausedmajorchangesintheactivityofalleconomicagents.Regardingthepipemanufacturing,Palplasthasadjusteditsbusinessstrategyaccordingtothemarketdemand,thesizeoftheongoinginfrastructureprojects,aswellasthepriceofrawmaterialsandtheproductioncost.In2010,PalplastSibiumaintainedtheproductionactivityofopticalfiberprotectiontube,inadditiontocarryingoutwaterandsewageinfrastructureprojects.

Inadditiontotheseachievements,thecompany’sstrategyhasincludedaseriesofcostcontrolandbusinessoptimizationactions,aswellastheimplementationofeffectivebusinessstrategiesinitsrelationwithsuppliersandcustomers.

2011KeyObjectives

Palplastwillcontinueitsinvestmentprogramin2011aswell,butwilladjustittotheproductionneedsrelatedtotheprojectsthatthecompanyhasalreadyundertakenin2010,aswellastoensurethequalitystandardthatthecompanyhasimposedonthemarket.

Thus,thecompanywillinvestinrevampingtheproductioncapacities,whichwillresultinoptimizedproductivity,costreductionandtheminimizeoftheenvironmentalimpact.

In2010,PalplasthadaturnoverofapproximatelyUSD3.7million.For2011,thecompanyestimatesitwillmaintainasimilarlevel,baseduponaseriesofactivitiesthatthecompanyintendstoimplement:diversifyingtherangeofproductsbytradingactivities,selling&manufacturingcomplexproductswithhighmargins(irrigationvalves,customizedvalvesadaptorsetc.);improvingoiltransportationpipes,settingupstrategicpartnershipsforsupplementingtherangeofproducts,freeconsultingservicesforobtainingthefundsallocatedtoagricultureanddevelopingnewproductswithspecialapplications,forexampleinthefieldofopticalfiber.

Graphicsrepresentingtheevolutionofthemainindicators(sales/production,etc.)

Direct distribution (import)

20102009

(USD)

0

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300,000

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365,847

459,374

Directdistributionincreasedby25.56%versustheyear2009.

Logistic Costs

Actual 2010Budget 2010

(tons)

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65 64

Decreasedlogisticcostswith1,23%.

Welding machines stocks

December 31, 2010January 1, 2010

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28

14

Weldingmachinesstocksdecreased;14weldingmachinessoldin2010.



GSS

GLOBALSECURITYSISTEMSA(GSS),memberofTheRompetrolGroup,isacompanyprovidingspecializedsecurityandfireservices.

In2010,GSShascontinuedtosupportcoreoperationsofallmostallcompaniesinRompetrolGroupintermsofensuringasafeandprotectedenvironmenttotheirassets,operationsandpeoples.Inaddition,during2010GSShasextendeditspoolofcustomersfromoutsidetheRompetrolGroupfrom12%in2009,upto35%.

Inregardtoqualityoftheprovidedservices,in2010,GSShadmetitscustomers’expectationsatanincreasedleveli.e.thepercentageofcustomer’ssatisfactionroseby9%morethancomparedto2009.SuchagoodperformancewassupportedbytheachievementsaccountedineachofGSS’lineofbusiness.

Incomparisonto2009,thevolumeofGSSGuardingoperationshadexpandedin2010by8.90%.In2010,GSSguardingofficershadintervenedtostop66theftattemptsandGSSsecurityinterventionteamsheverespondedtoother321alarmsituations.Asaresult,anumberof38offenderswereapprehendedbyGSSsecuritystaffandfurtherhandedovertotheauthorities.

TheGSSfirefightingoperationshavecontributedtotheGSSoverallperformanceaswell.In2010,theGSSfirefightingteamshadintervenedto7fireincidents.NohumancasualtiesandnosignificantdamageswererecordedespeciallyasaresultofGSSfirefightingteamsinterventions.Consideringthecriticalmissionofitsfirefightingservices,GSSispermanentlycommittedtocontinuouslyincreasingtheprofessionalpreparednessofitsfirefighters.Inthisregard,in2010,GSShadconductedqualificationcoursesfor48firefighters,andprofessionalrescuingandevacuationcoursesfor11firefighters.

GSS’ security technology related operations

In2010,GSStechnicianshadcompletedsome400ofnewinstallationprojects.Some,93,25%ofthetechnicalprojectsbeneficiarieswerefromoutsideTheRompetrolGroup.Furthermore,theGSStechnicaldivisionhadmanagetoattain100%andmoreofitsKPIsinregardoftechnicalmaintenanceservices.


Community5. Corporate Social Responsibility

Asaglobalcompanywhosesuccesshasbeenbuiltoninnovation,passionandindividualleadership,werequirehighCorporateandPersonalResponsibilitystandardswhereverweoperate–withtheultimateaimofimprovingourbusinessandthequalityoflifeofthoseweimpact.


Corporate Social Responsibility«RompetrolAnnualReport2010//34

TheRompetrolGroup(TRG)considerssocialresponsibilityasavoluntarycontributiontothedevelopmentofthesociety,connectedwiththebasicactivityofthecompany,theinternationallawsandtheresourcesofthegroup.

Mission and Values

AsaleadingCorporateCitizen,TheRompetrolGroupseekstoactresponsiblyinallactivities.Asaglobalcompanywhosesuccesshasbeenbuiltoninnovation,passionthroughqualityandindividualleadership,werequirehighCorporateandPersonalResponsibilitystandardswhereverweoperate–withtheultimateaimofimprovingourbusinessandthequalityoflifeofthoseweimpact. Wearecommittedto: 1.Sustainable,responsibledevelopmentwhichextendsthroughandbeyondthelifeofouroperations; 2.Operatingethicallyandresponsibly,withrespectforthesafety,healthandwelfareofouremployeesandpartnersinthecommunity; 3.Bestpracticesincorporategovernance,asitaffectsallofourcommunitiesofstakeholders,includingouremployees,

ourlocalandregionalcommunities,suppliers,investorsandpartners; 4.Investingtimeandenergyinpromotingthespiritofleadershipthroughentrepreneurialandeducationalpursuits.

OurcommitmenttoCSRprovidesaguidingframeworkforallourmanagementdecisionsandwefocusparticularlyonharnessingindustrybestpracticebyencouragingCompanyandCommunityparticipationincorporatecitizenshipprojectsfocusedonraisingthestandardsintheareasof:Businesssuccess,Environment,HealthandSafety,CommunityResponsibility,YouthEducationandLeadership.

Guiding Principles

ThespiritofTheRompetrolGroup’sapproachtowardsCSRisreflectedinourcorporatemotto,“EnergyforLife,”whichisacalltoongoing,activeinvolvementinprojectsthatmeetourCSRgoals. Rompetroldefinesthefollowingguidingprinciplesofits CSRPolicy:

1. Respect Employees:Torespectemployeesandhelp

enhancetheirlifethroughdevelopmentopportunitiesandemploymentpracticesgroundedonequalopportunitiesandOccupationalandSafetyBestPractices.2. Ongoing Involvement:Toinvolveatanappropriateleveltheauthorities,thecommunity,andotherconcernedstakeholdersinalldecisionsthataffectthem.3. Health and Safety:Toensurethehealthandsafetyofouremployees,suppliersandthecommunitiesinwhichweoperate.4. Risk management:Toidentify,assess,manageandmitigateriskstoourhostcommunities,employees,contractors,theenvironmentandourbusiness.5. Education and Leadership:Topromotethespiritofleadership,especiallyamongyoungpeople,throughcivicinvolvementandeducationalactivitiesthatencouragesociallyresponsiblepursuitsandentrepreneurship.6. Respect local communities:Torespect,protectandpromotethehumanrights,culture,customsandvaluesofthecommunitiesinwhichweoperate.7. Best practice:WeareguidedbytheUnitedNationsGlobalCompact’stenprinciplesintheareasofhumanrights,labor,theenvironmentandanti-corruption.

TheRompetrolGroup,asasociallyresponsiblecompany,iscommittedtotheongoingimplementationandimprovementofthequalityofsocialactivitiesinthefollowingmaindirections:

• ExternalSocialResponsibility- SocialPartnershipandSponsorship- EnvironmentProtection

• InternalSocialResponsibility- DevelopmentofHumanResourcespotential- SocialCausessupportedbyRompetrolemployees

InordertocomplywiththeguidingprinciplesoftheGroup,thefollowingruleswillbeapplied:1. AllCSRprojectswillbeundertakeninthespiritoftransparency,fairness,andrespectforhumanrights,laborandanti-corruptionpractices.2. AllCSRprojectsrequireapro-activeinputbyallemployeesandarecoordinatedbyCorporateCommunicationandPublicAffairsDepartment.3. AllCSRprojectsarereviewed,monitoredandmeasuredonanongoingbasis.4. TheCompanywillseekprojectsthatpromotethedevelopmentofsocialcapitalbetweenourstakeholders.

ExternalSocialResponsibility

1.SocialPartnershipandSponsorship

Toprovidesupportandfinancialaidtosociallyvulnerablesectors,TheRompetrolGroupgathereditsinitiativeswithintheCSRplatform“Energy comes from the heart”(launchedinMay2009)-whichincludesanationalprogram,“Together for each and everyone”,andseparateprogramsinthefieldsof

healthcareandenvironmentprotection,thetwodirectionstheGrouphasdecidedtosupport.AttheGrouplevel,in2010,theinvestedamountinsocialcausesexceeded1millionUSD.

In2010,thenationalprogram“Togetherforeachandeveryone”considered509projects(sixtimesmoreascomparedto2009)registeredonthewebsite www.impreunapentrufiecare.rountilJune13,2010(323inthehealthcarefieldand188inenvironmentprotection).Aftertheevaluationperiod,20projectswerefinanced(13inhealthcareand7inenvironmentprotection)incountiesasAlba,Arad,Argeş,Bacău,Bihor,Braşov,Buzău,Caraş-Severin,Constanța,Galați,Hunedoara,Mureş,Sălaj,SibiuandBucharest.Allprojectshadtwooverlappingparts:onewhichconsistedintherestorationofmedicalcareunitsinruralandurbanareas,ortheconstructionofwatercollectors,ecoplantsforwaterrecycling,solarpanelsforschools,andasecondcomponentwhichconsistedineducationalandculturalactivitiesforthemembersofthecommunities.Thetotalinvestedamountfortheimplementationofthe20selectedprojectsexceededUSD300,000.

Severalprojectsonhealthcareandenvironmentprotectionweredevelopedin2010aspartoftheplatform“Energycomesfromtheheart”.

Inthehealthcarefield,TheRompetrolGroup,TheSMURDFoundationandtheGeneralInspectorateofAviation(IGAV)enteredapartnershipforsupportingairemergencyinterventions,themovementofmedicalpersonnelandthetransportationofvictims.Inthiscooperation,theRompetrolGroup,throughRompetrolRafinare,providedin2010amonthlyamountof30tonsofJetA1fuel,thequantityestimatedfortheoperationofthetwohelicoptersinBucharestandTârguMureş,thetotalvalueofthesupportprovidedamountingtoapproximatelyUSD240,000.

Inthefieldofenvironmentprotection,theRompetrolGroupandtheTouristAssociation“TheGuidesofRomania”supportedandorganizedinJuly2010theprojecttitledMONTANIADA,thefirstMountain OlympicsofRomania.Themainobjectivewastocombineecologywitheducationalactivities,civicandsportsspirit.

Inthefieldofenvironmentprotection,Ecomaster,companymemberofTheRompetrolGroup,supportedthe first Waste Museum in Europe.ItwaslaunchedinNovember2010,undertheMinistryofEnvironmentandForestspatronage,andinonly2monthsattractedmorethan5,000visitorsandhostedover30seminarsandeventsonenvironmentalprotectionissues.Bysupportingthisinitiativeasoneofthemainpartners,Ecomasterintendstogivetheindustrialandhazardouswastethedeservedimportance,besidethehouseholdwaste,andtoinitiatethepublic,massmedia,NGOsandauthoritiesontheefficientwastemanagementandtreatingtechnologiesownedbythecompany.

TheRompetrolGroup,aspartofitsCSRplatform„Energy


Corporate Social Responsibility«RompetrolAnnualReport2010//35

comesfromtheheart”,launchedinNovemberacharityproject“What good deed do you want to do for Christmas?” whichsupportedthecommunityandthosewhowantedtodoagoodbeforeChristmas.Thus,10proposalsregisteredonthewebsitewww.impreunapentrufiecare.roreceived10,000eurofortheirinitiativeswhichhadasbeneficiarieschildrenfromorphanagesorhospitals,abandonedelders.

Also,RompetrolDownstream,theretaildivisionofthegroup,launchedonthe1stofDecemberthemostimportantcampaignoftoycollectingwithinitsgasstations–“Offer a toy! Christmas is for all children”.Specialboxeswereplaced,undertheChristmastreesfrom130gasstations,wheretheRompetrolclientsandemployeescouldbringthegifts.Thecollectedtoysweredonatedtolocalorphanages.

Sponsorship

TheRompetrolGroupisinvolvedinsocialpartnerships,implementingjointprojectsandprogramsororganizingsocialevents.Muchattentionispaidtosupportthenationalcampaign“FiecareCopilînŞcoală”(EachChildinSchool)initiatedbyOvidiuRomAssociation.Thispartnershipwhichbecameeffectivein2005,advocates:schoolpreparationprograms,freeschoolmaterials,uniformsandhotlunchesforchildrenfromlow-incomefamilies;incentivesintheformoffoodcoupons;enforcementofeducationandchildren’srightslegislationetc.

Asasof2003,RompetrolisapartnerandmainsponsorofTheCivilSocietyGala–theannualcompetitionthatawardsthebestprojectsoftheyear,projectsinnitiatedbyNGOs,unions,individualsetc.

Alsoin2010,TheRompetrolGroupsponsoredtheAeronauticsandCosmonauticsRomanianAssociation(ARCA),ontheoccasionofthelaunchingofthefirstRomanianspacerocket,Helen2,aneventwhichtookplaceonOctober1.ThesuccessofthisoperationhasopenedthewayforRomaniatoouterspace,realizingatthesametimethefirstflightoftheGoogleLunarXPrizeCompetition,whichaimsatsendingarobotmadebyacompanyonthesurfaceoftheMoon.

Additionally,thecompanycompletedin2010varioussocialpartnershiporsponsorshipinnitiativeswithJuniorAchievementRomania(leadershipprojectsforhighschoolteenagers),LeadersFoundation,HabitatforHumanityRomania,FreedomHouseRomania,St.DamianFoundation,tonamebutafew.

2.EnvironmentProtection

TheRompetrolGroupcarriesoutenvironmentprotectioninfullconformitywiththerequirementsofthenatureprotectionlegislationoftheEuropeanUnion.

In2010,TheRompetrolGroupsetitsmainenvironmentobjectiveinensuringthecomplianceofplantsinallitsentitieswithapplicableEuropeandirectives.

TheGrouphas5IPPCplantswhichmettheirobjectivesfor2010:2oilrefiningplants(PetromidiaandVegaRefineries),1petrochemicalsplant(RompetrolPetrochemicals),1plantinthemetallurgyindustry(RominservIAIFOZalău)and1wastelandfill(Ecopark–hazardouswastelandfill,inauguratedin2010).Novalueswereregisteredinexcessoftheemissionthresholdsforthespecificpollutantswhichweremonitored.

Specialattentionispaidtothemonitoringofenvironmentfactors.Thus,forrigorouscontroloftoxicsubstances,theARIAsoftware,installedonthePetromidiaoilplatformin2010,providesanonlinemodelofpollutantdiffusionintotheatmosphere,inordertoidentifysourcesofpollutionandtoreducethem.Theapplicationallowsthepresentationofdiffusionresultsintheformofreports,graphsandconcentrationmaps,inbothhardandsoftcopies.

TheimplementationoftheARIAsoftwarestandsproofofthecommitmentofRompetrolRafinaretotheimprovementofitsenvironmentperformanceand,atthesametime,outlinestheimpactofRompetrolRafinareactivitiesonairquality,ascomparedtootherpotentialpollutersinthearea.

GreenhousegasemissionsresultingfromtheEU-ETSmarketingschemeinstallationsrangedwithinthevaluesallocatedfor2010.

AsofDecember1,2010,theEuropeanUnionimplementednewrulestoensurethatthemanufacturinganduseofchemicalproductsissaferandlessdamagingtotheenvironment.

Since2008TheRompetrolGroupisamemberofCONCAWE(ConservationofCleanAirandWaterinEurope),anorganizationfoundedin1963whichresearchesmultipleaspectsofenvironmentalprotectionintheoilindustry.OnceaffiliatedtoCONCAWE,alloftheGroup’smembercompaniesbenefitfromassistancetocomplywiththeEuropeanREACHRegulation(Registration,Evaluation,AuthorizationandRestrictionofChemicals).

Thisis,byfar,thelargestlegislativeprojectadoptedbytheEuropeanUnioninthepastyearswhichaimsatestablishingaconsistent,transparentandsafermanagementofchemicalsintheE.U.Chemicalsubstanceswhichpresentrisksareidentifiedandgraduallyreplacedbysaferalternatives,basedontheprincipleofprecaution.Atthesametime,theREACHregulationneedstointensifytheoperationoftheinternalmarketwithintheEuropeanUnion,inordertocreateanactiondomainatEuropeanlevel,whichwouldresultinenhancedinnovationandcompetitivenessofthebusinessenvironment.

Attheendof2010,whichwasthedeadlineforregistration,accordingtotheREACHRegulation,ofproductsinexcessof1,000t,TRGregistered40products,thusfullycomplyingwiththisnewlegalrequirement.

Allcompanies,membersofTheRompetrolGroup,maintainedtheirGermanischerLloydcertificationsfortheirintegratedmanagementsystems(ISO9001:2008,ISO14001:2004andOHSAS18001:2007).

InternalSocialResponsibility

1.HumanResourcesDevelopment

TheRompetrolGrouppaysparticularattentiontohumanresourcesdevelopmentandtraining.Inlinewiththebusinessstrategyandobjectives,atrainingprocedurewascreatedin2010whichaimsatplanningandprioritizingtheneedsoftheemployees.

Thus,thecompanyprovidedadvancedtrainingandimprovementofprofessionalskillstomorethan1,900employees,basedontherequestsoftheirpositionswithintheGroup(MAs–incooperationwiththeOil&GasUniversity,Ploieşti;ACCAandMBAprograms,IFRS,projectmanagement;technicalcoursesinthefieldofoil&gas;coursesinforeignlanguagesforexpatsorlocalsetc.).

Rompetrolhashadthesameconsistentapproachtowardstheeducationandyouthdevelopment,bytheirinvolvementinactivitieswithincompaniesoftheGroup.In2010,onthePetromidiaoilplatform,thecompaniesRompetrolRafinare,RompetrolPetrochemicalsandRominservhaveconductedprogramsforselectingstudentswithhighpotential,offeringthemanorganizedenvironmentforprofessionaldevelopment.

Internship 2010

2010wastheeightconsecutiveyearsinwhichtheRompetrolGrouphasorganizedandconductedthisprogramdedicatedtofreshgraduatesoftechnicaluniversitiesorhigh-schools.Theprogramconsistsofactivepracticewithinthecompany,for2months,finalizedwithanassessment,basedonwhichapartoftheparticipantsareselectedforthe“Trainee”program.Theprogram,thattookplacebetweenAugust–September2010,included60studentsfromfiveuniversitycenters(Constanța,Cluj,Iaşi,Bucharest,Ploieşti),and16graduatesfromConstanțatechnicalhigh-schools.

Trainee Program 2010

TheTraineeProgramrepresentsthefinalselectionstageofthemostcompetentparticipants.Itsdurationisof6months,fromOctober1,2010throughMarch31,2011,duringwhichthestudentshadthepossibilitytoputtheirknowledgeintopracticeinvariousdepartmentsonPetromidiaoilplatform.Thisexperiencewasfollowedbyafinalperformanceassessmentandhiringthebestintheorganizingcompanies.AttheendoftheTraineeProgram,27studentswerehiredbyRompetrolRafinare,RompetrolPetrochemicalsandRominserv.

2.SocialCausessupportedbyRompetrolemployees

TheRompetrolGroupemployeesaredeeplycommittedtoconductingbusinessinasociallyresponsibleandethicalmanner,puttingtheireffortstocontinuallyimprovingthecompany’sperformancesandbestpractices.Thus,2010representedanewopportunityforcommunityprojectsdevelopedbytheemployees–WorldTheatreDaycelebratedonMarch27anddedicatedtochildrenfromorphanages,InternationalChildren’sDay–markedbytoyscollectionandfundraisingdonatedtoimpoverishedkids,asocialcampaignconductedintheHQtosupporttheactivitiesoftheLittlePeopleAssociation(havingasdirectbeneficiarythechildrensufferingfromcancer,from5pediatric-oncologyhospitalsfromRomania)etc.

CSR Objectives for 2011:

1. Communityleadershipandcivicinvolvementactivities;2. Improvingthequalityoflifeinthecommunitiesweimpactorinfluencethroughenvironmental,publichealthandeducationalprojectsdevelopedaspartoftheCSRplatform“Energycomesfromtheheart”;3. Youtheducationandpromotingapro-active,entrepreneurialspirit;4. PromotingaresponsiblebehavioroftheRompetrolemployees,byencouraginginternalsocialinitiativesandbylaunchinganinternalCSRprogram“Lucrurilemicicarecontează”(Smallthingsthatmatter).Theprogramwouldfocusontheenvironmentprotection,healthcareandeducationandwouldinclude,amongothers,paperrecycling,blooddonationsandeducationalactivities.


2011

333 333

Integration6. Corporate Governance

RompetrolGroupcurrentlyincludes41companies,jointstockorlimitedliabilitycompanies,headquarteredintwelvecountries.


Corporate Governance«RompetrolAnnualReport2010//37

General information

CorporategovernanceprovidescoherentinformationontheframeworkwithinwhichTheRompetrolGroup(TRG)activatesatoperationalandmanagementlevel,thusensuringtransparencyintheactivitiesitcarriesout.RompetrolGroupcurrentlyincludes41companies,jointstockorlimitedliabilitycompanies,headquarteredintwelvecountries.Thestatutorylawsapplicabletothesecompaniesarethelocalones.InRomania,themainapplicableregulationsareLaw31/1990regardingtradingcompaniesandLaw297/2004regardingthestockmarket(forcompanieslistedonthestockexchange). ThecompaniesoftheRompetrolGrouparemanagedincompliancewiththestatutoryprovisionsundertheirownarticlesofincorporationandunderanyandallotherrelevantdocuments.

Shareholders

ThesoleshareholderofTheRompetrolGroupN.V.isKazMunaiGazPKOPInvestmentsB.V.(KMG),headquarteredinAmsterdam,theNetherlands.

Administration and decision rights

AttheleveloftheGroup’smajorityshareholder,thereisaunifiedmanagementsystem.TheTRGBoardofDirectorshasfivemembers,ofwhichoneexecutivemember(ChiefExecutiveOfficer–CEO)andfournon-executivemembers.TheCEOisincharge,accordingtotheArticlesofIncorporation,ofthedailymanagementofthecompanyanditsaffiliates.TheothermembersoftheBoardofDirectorsareinchargeofthecompany’sgeneralpolicyandmanagementpositionsupervision.

Tosupportitsactivity,theBoardofDirectorssetsupspecialistcommittees,suchastheAuditCommitteeandtheRemunerationCommittee.

TheCEOmaydelegateitsmanagementpositionforspecificoperations/groupsofoperationstothirdparties.Thus,attheleveloftheTRGthereareDeputyCEOsspecializingindifferentareasoftheGroup’sactivity.

AttheleveloftheGroup’scompanies,themanagementcanbeperformedunderdual/unifiedsystem,mostcompanieshavingimplementedtheunifiedmanagement.Thedecisionrightregardingtheinternaloperationsofeachcompanyisfragmentedusingthedecision-makingthresholds:CEO,BoardofDirectors,andGeneralAssemblyofShareholders.

Major performances and achievements in the area of Corporate Governance in 2010

2010hasbeenfullofeventsinwhatregardscorporategovernanceatGrouplevel,alistofthemostsignificantperformancesincluding:

1. Mandatory Public Tender Offer (MPTO) for Rompetrol Well Services S.A. and for Rompetrol Rafinare S.A. were finalized. Hence,duringthemandatoryofferforRompetrolWellServices,TRGacquired57,694,162shares,foratotalpriceofRON24,808,489.66andnowholds199,571,650shares,namely71.74%ofthesharecapitalofRompetrolWellServices(withatotalshareheldatgrouplevel,togetherwithRompetrolFinancialGroup,of203,110,150shares,namely73.01%ofthesharecapitalofRompetrolWellServices).DuringthemandatoryofferforRompetrolRafinareS.A.,TRGbought4,772,687,313shares,theirtotalpaidpricebeingofRON358,097,513.52.

2. Convertible bonds conversion: OnSeptember30,2010,theGeneralExtraordinaryMeetingofShareholdersofRompetrolRafinareS.A.adoptedresolutionswherebyitapprovedtheconversionofanumberof20,652,098bondsthathadnotbeenredeemedbyRompetrolRafinareS.A.untilSeptember30,2010.ThroughtheResolutionno.29/2010itwasapprovedtheincreaseofthesharecapitalofRompetrolRafinareS.A.withtheamountcorrespondingtothenon-redeemedbonds.Followingthesharecapitalincrease,theRomanianStaterepresentedbytheMinistryofPublicFinancesbecameshareholderowning44.6959%ofthesharecapitalofRompetrolRafinareS.A.

3. THE ROMPETROL GROUP CORPORATE CENTER,anewcompanyoftheGroup,wasincorporatedinSeptember2010,inordertoachieveacentralisedcontrolovertheactivitiesperformedbytheentitiesoftheRompetrolgroupofcompanies,todefineaclearorganizationalstructureandtoincreaseexpertisewithinthegroupentitiesbydevelopingexpertisecentresthroughoutfinance,IT,HR,Legal,MarketingandQHSEfunctions.

Major achievements in integration

In2010,theintegrationprocessofTRGintoKMGwascontinuedbyadoptingandimplementingwithintheGroupofthefollowinginternalprocedures,policiesandrules:

1. Human Resources Area, such as:JobDescriptionOverviewProcedure,RecruitmentandSelectionProcedureandInductionProcedure,PayandBenefitsProcedure,TrainingProcedure,RelocationProcedure,DisciplinaryActionProcedureandJobGradingProcedure;2. Finance Area, such as:HedgePolicy,Rulesforcoordination,approvalandmonitoringofcapitalexpendituresintheRompetrolGroup,MaterialityThresholdMethodology,AccrualsPolicy,PerformanceManagementProcedureandCorporateAuditPolicyandRegulation;

3. Legal Area, such as:LegalContractingProcedureandRegulationfortheAcquisitionofInterestsofOtherCompaniesandtheCreationofNewLegalEntitiesofTheRompetrolGroupN.V.;4. Administrative Area:BusinessTravelProcedure,DocumentManagementProcedure(Chancellery)andInsurancePolicy.

Creation of the new Rompetrol corporate brand

TheBoardofDirectorsofTRGapprovedduringthemeetingheldonMay26,2010thenewcorporatebrandofRompetrol,andthetrademarkregistrationprocesswasinitiated.ThelogowasdesignedtovisuallyhighlightthemembershipofTheRompetrolGrouptotheparentcompanyKazMunayGas–thenationalOil&GascompanyofKazakhstan.

Development of operations and business activities specific to Corporate Governance

During2010,thedivestmentcontinuedduringtherestructuringprogramofTRG,asfollows:

-FinGroup,acompanyofferingnon-bankingcreditstoconsumers,wassoldtoacompanyoutsideoftheRompetrolgroup,inJune2010;-Romcalor,acompanyoftheRompetrolgroupinchargewithsaleofproductsrepresentingecologicalheatingoils,afteroperationalintegrationintoRompetrolDownstream,wascloseddown,inMay2010;-Rompetrol Industrial Parks,acompanyinchargewithleasingandsub-leasingofimmovableorrentedgoods,wasvoluntarilyliquidatedandcloseddowninSeptember2010;-Saleof60%TRGsharesinGeopetsaServiciosPetrolerosS.A.,acompanyoperatinginEcuador,wasapprovedduringtheBoardofDirectorsmeetingheldonSeptember13,2010;-Palplast MoldovaparticipationsownedbytheRompetrolgroupcompaniesweresoldtoacompanyoutsideoftheRompetrolgroupinDecember2010.

Guidance and development trends for 2011 and the immediate future

TRGwillcontinuetoimplementthestandardgovernance,policiesbyadoptinginternalprocedures,rules,policiesandregulationsdocumentsandstandards,inaccordancewithbestpracticeinthisarea.

ThecreationofthesharesservicescentreatgrouplevelwillbefurthercontinuedonbasisofTheRompetrolGroupCorporateCenter,newlyincorporatedcompanyofthegroup,byfurtherconsolidationandcentralizationofgroupsharedfunctions.


Strength7. Finance

TheincreaseofGroupNetrevenuesin2010comparedwith2009washighlyinfluencedbythehigherpetroleumproductssellingpricesfollowingtheproductsquotations.


Finance«RompetrolAnnualReport2010//39

Introduction

In2010,TheRompetrolGroup(the“Group”,“TRG”)anditssubsidiariesengagedinallaspectsofthepetroleumindustry.Itscoreoperationsareinthedownstreamsegment,throughitscompetitivePetromidiarefineryandstrongretailoperationsinRomania,aroundtheBlackSeaandintheSouthofFrance.TheGroupcontinuedtopursueitsstrategyofdevelopingitscorerefininganddistributionoperations,despiteaworseningeconomicenvironmentandverylowrefiningmargin.

Inthemiddleof2009,theGroup’smajorshareholder–KazMunaiGas(KMG)acquiredtheremaining25%ofshares,becomingthesoleshareholderoftheGroup.

Strategy

In2010,theGroupcontinuedthelargeinvestmentprogramtoexpandtherefinery’sprocessingcapacitywhichhasasmainobjectivestoincreasecrudeprocessedtoaround5milmtperyearandtoincreasedieselyieldsby8%,increaseflexibilityincrudedietselectionbybeingabletoprocessonlysourcrudeandensurecompliancewithfutureproductspecifications,according

toEUlegislation.OnSeptemberandOctober2010,theGroupsuccessfullyfinalizedthegeneralturnaroundofPetromidiaRefinery.Nextgeneraloverhaulisscheduledfor2014.

ThroughitswhollyownedsubsidiaryMidiaMarineTerminal,in2009theGroupstartedoperatingitstradingplatformintheBlackSea-themarineterminaloffshorePetromidiarefinery,whichwasconstructedin2008.Theterminalservesasanimportanthubforcrudetradingandbringssignificantsavingsinlogisticscostsfortherefinerycrudesupply.During2010,anadditionaldecreaseinoperatingcostsofUSD1.5/tonhasbeenrealizedbyMMTandmorethan90%ofthecrudesupplytoRefineryarrivedviaBuoy,therestcomingfromOilTerminal/CONPET.

Aftertheacquisitionoftheremaining25%stakeintheGroup,KMGprovidedsubstantialfundstotheGroup,enablingittofinanceinvestmentprogramandalsotodecreasethelevelofbankdebt.AnamountUSD300millionhasbeendrawnduring2010.Duringlastquarterof2010,thelegalprocedureswerefinalizedandtheUSD1.1billionadvancereceivedonAugust2009fromKazMunaiGazPKOPInvestmentB.V.hasbeenconvertedintoAdditionalPaidinCapital.

AnalysisoftheFinancialResults

BusinessEnvironment

AverageBrentpricein2010(USD79.5/bbl)hasincreasedby29%ascomparedto2009(USD61.59/bbl).Theoveralltrendin2010wasincreasingfromUSD78.8/bblatthebeginningoftheyeartoUSD92.55/bblasoftheendof2010,withahighofUSD94/bblrecordedonDecember29,2010andalowofUSD67.58/bblon25May2010.TheincreasewassupportedbysignificantdecreaseofstocksinOECDcountries,upwarddemandrevisionsbyIEAandOPEC,positivemarketdevelopmentsinAsiaandimprovedrefinerymargins.

TheUralsdiscounttoBrenthasbeenonaverageatUSD1.34/bblahigherlevelcomparedwithUSD0.74/bblasof2009,withahighestlevelofUSD3.43/bblon7May2010andaclosinglevelofUSD1.75/bblasoftheendof2010.

Fromthelowlevelsinthebeginningoftheyear,gasolinecrackingmarginshaveonaverageincreasedin2010.Averagegasolinecrackingmarginin2010wasatUSD127.58/mt(asof2009wasatUSD116.2/mt)reachingitshighofUSD175.61/mtonMarch19,2010.Averagegasolinecrackingmarginin2010was10%higherthanin2009.

Dieselcrackingmarginshaveonaverageincreasedin2010,startingfromUSD51.02/mtasofDecember2009tillUSD89.71/mtasofDecember31,2010.Averagedieselcrackingmarginin2010wasatUSD80.63/mt(asof2009wasatUSD66.16/mt)reachingitshighofUSD106.73/mtonOctober22,2010.Averagegasolinecrackingmarginin2010was22%higherthanin2009.

Theupwardtrendincrackshelpedrefinerymarginstoincrease,especiallyatyearend,bringingtheresultsof2010slightlybetterthan2009.

TheUSdollarstrengthenedagainsttheEuroandRomanianLeithroughouttheyear.Bytheyearend,RomanianRONdepreciatedbyalmost9%againstUSDandby1%againstEUR.Averageexchangeratein2010hasincreasedby4%forRON/USDandhasdecreasedby15%forRON/EUR.

2010 2009BrentDated USD/bbl 79.50 61.59UralMed USD/bbl 78.16 60.76Brent-UralDifferential USD/bbl 1.34 0.74PremiumUnleaded50ppmFOBMed

USD/t 729 583

DieselULSD50ppmFOBMed

USD/t 682 533

RON/USDAverageexchangerate

3.17 3.05

RON/USDClosingexchangerate

3.20 2.94

RON/EUROAverageexchangerate

4.21 4.24

RON/EUROClosingexchangerate

4.28 4.23

USD/EUROClosingrate 1.34 1.44InflationinRomania 6.09% 4.74%

FinancialResults

Theconsolidatedaccountsarefullydisclosedinthenextchapterofthisreportandfurtheranalyzedinthefollowingsectionsforeachbusinessunit(figuresinUSDmillion).

2010 2009Netrevenues 5,070.66 4,688.94Grossprofit 363.41 360.00Capex 226.59 220.4

2010 Refining Retail TradingNon-Core

and Others

Consolidat-ing

AdjustmentsConsoli-

datedNetrevenues 572.5364 3,488.49 900.34 109.30 5,070.66

Grossprofit 7.74 299.44 21.42 57.32 (22.52) 363.41

Capex 184.41 19.77 0.47 27.41 (5.47) 226.59

2009 Refining Retail TradingNon-Core

and Others

Consolidat-ing

AdjustmentsConsoli-

datedNetrevenues 473.34 2,859.66 1,284.97 70.97 0.00 4,688.94

Grossprofit (25.72) 299.44 30.41 80.55 (39.37) 360.00

Capex 115.30 89.06 5.21 15.32 (4.48) 220.4

TheincreaseofGroupNetrevenuesin2010comparedwith2009washighlyinfluencedbythehigherpetroleumproductssellingpricesfollowingtheproductsquotations.

Increasedcrackingmarginsresultedincomparablegrossprofitasof2010against2009,evenifthetotalgasolineanddieselproductsobtainedbytheGroupdecreasedby15%and16%,respectively,asaresultofplannedgeneraloverhaulsuccessfullyfinalizedbyPetromidiaRefineryfor6weeksduringSeptemberandOctober2010.Despitethisdecreaseinproduction,totalsalesontheRomanianmarketwerehigherwith1%versus2009,alsoduetothefactthatourtradingcompanyVectorEnergymanagedtosupplyfromtheexternalmarketthenecessaryvolumes.

Anotherreasonfor2010higherNetRevenuesistheincreasedvolumessoldinFranceagainst2009(morethan60kt)andduetothepositiveeffectthatthestrikeinFrancehadoverourbusiness–inthestrikeperiod,DyneffFrancemanagedtosellwithamargin4timeshigherthanusual.

Analysisofoperations

Refining & Petrochemicals

2010 2009

Feedstockprocessed Kt 3,507 4,033

Gasolineproduced Kt 970 1,142

Dieselproduced Kt 1,308 1,551

Motorfuelssales-domestic Kt 1,283 1,386

Motorfuelssales-export Kt 1,060 1,347

Domestic % 54.8% 51%

Export % 45.2% 49%

Grosscashrefinerymargin USD/bbl 4.75 4.11



In2010,theoperationalandfinancialresultswerestronglyinfluencedbytheglobalfinancialcrisis,bycrudeoilandfuelquotationsandalsobydomesticmacroeconomicfactorssuchasRONcurrencydepreciation.Fora6weeksperiodstartingwithSeptember20,2010,thePetromidiarefinerycarriedonthegeneraloverhaul.Asaresult,thefeedstockprocesseddecreasedby13%comparedwith2009,whilegasolineanddieselsalesdecreasedby15%and16%,respectively.Nevertheless,theUral/Brentdifferentialincreased,leadingtoimprovedoperatingresults.

Significantperformancesin2010:•Successfullyfinalizingtheplannedgeneraloverhaul(thenextoverhaulisscheduledfor2014),3daysearlierthanplanned;•Increasingproductionofgasolineanddieselwithbio-componentsfordomesticmarket,accordingtoEUrequirements;•ContinuingtheCapexinvestments,aspartofincreasingtheprocessingcapacityasof5milliontons/year;•HigherutilizationrateofownloadingfacilitiesinMidiaHarbour;•AligningtotheEuropeanStandardsregardingEuro5fuels.

2010 2009

Propyleneprocessed Kt 107 107

Ethyleneprocessed Kt 72 107

Soldfromownproduction Kt 175 222

Soldfromtrading Kt 20 16

Totalsold Kt 195 238

Export percent 55% 63%

Domestic percent 45% 37%

RompetrolPetrochemicalsgrossrevenuesreachedUSD265.7millionin2010,by11%highercomparedwiththesameperiodlastyear.Theincreaseingrossrevenuesismainlytheresultofhigherinternationalquotationsforpetrochemicalproducts.

In2010,comparedwith2009,thecompany’sfinancialresultsimprovedsignificantlyduetopositivemarginsfrompetrochemicalproductssales,diversificationofproductportfolioandstreamliningofthecompany’sactivity.ImprovedgrossmargininPetrochemicalscamefromincreasedpolymersprices,butalsoduetothegoodcombinationregardingtermcontractsandspotethylene.In2010,RompetrolPetrochemicalsimprovedthequalityofitsproducts,thustheweightofhighqualityratedproductsreached97%comparedtoanaverageof96%in2009.

InDecember2010,theHDPEunitwasstoppedduetoafireincidentinOctober2009.

RompetrolPetrochemicalsisthesolepolypropyleneproducerinRomania;in2009and2010,thecompanywasalsothesoleproducerofpolyethylene,giventheeconomiccircumstancesonthemarket,thusconstantlyincreasingitsmarketshare.

In2010,RompetrolPetrochemicalssuccessfullycompletedtheautomationofplantsandtheintegrationofoperationsintotheCommandandControlCenterofthePetromidiaplatform(CCR).TheintegrationoftheautomatedcontrolofpetrochemicalplantsintotheCommandCentersupportsthecompany’sobjectivetobecomeoneofthemainpolymersuppliersandproducersintheregionandalsorepresentsanaturalcontinuationoftheinvestmentsamountingtooverUSD107millionmadesince2002anduntilpresentinordertoincreasethespecificactivities,theproductioncapacities,thequalityandtherangeofproductsprovided.Thenewcenterallowsfulltrackingofoperations–thecontrolandprotectionoftechnologicalflows,thecollectionandonlinetransmissionofprocessdataand,implicitly,thereductionofproductioncosts,whichisafirstforRomania,aswellasfortheSouth-EasternpartofEurope.

Trading

TheBusinessUnitTradinghasbeenstrengtheningitsroleasthesupplychainoptimizerwithintheGroup,continuingtoensureoptimumfunctioningconditionsforPetromidiarefinerybymovinganimportantpartoftheproductvolumesthatcannotbeabsorbedonRomanianmarketorbyNear-AbroadsubsidiariestoNon-Groupdestinations.

During2010,thecompanyhasaccomplishedanewphaseofteamintegration,VectorandRetailcompanieswiththepurposeofimprovinginventorymanagement,crudeandproductschedulingandexploitingmarketopportunitiesastheyarise.

Coordinatedeffortstranslatedintoimportantvolumessoldontheinternationalmarket,toanexpandingclientportfolio,andtoincreasingsecurityofsupplytoDyneff’soperations.

Duetotheevolutionoffreightmarketleadingtoverylowlevelscomparedto2008,in2009themanagementofByronShippingLtdconsideredendingtimechartercontractsearlierandfocussingonspotmarket.ThisalsoledtoasignificantlyreductionoflossesinByroncomparedwith2009,duetomovementfromtimechartertospotvesselsbenefitingfromlowerfreightcosts.MidiaMarineTerminalthroughtheCrudeOilTankFarminsuredsinceopeninginJanuary2009costreductionsinrelationtooilsupplyofUSD4-5/ton,byeliminatingthethirdpartyhandling/storage/transfercostsandcommercial/technologicallosses.During2010,theoperatingcostshavebeendecreasedbyanadditionalUSD1.5/ton.

Despitetheharshconditionsofdoingbusiness,RompetrolUkrainemanagedtobecomethefourthlargestimporterofRON95ontheUkrainianmarket.ThequantityofRON95importedtoUkraineexceeded105KT,thecompany’ssharerepresentingapproximately9%ofthetotalvolumesofRON95country’simportsoraround5%oftotalRON95consumption.Thetradingactivityhasbeencarriedoutthroughnewlocations:oneBlackSeaterminallocatedinKherson,oneDanube-riverterminalnearIsmailandthreein-landdepots,twoofthemlocatedintheOdessaregionandoneintheVinnitsaregion.Thefuelwassold

onCPTterms,deliveringbyrailwaytheproducttotheclients’storages,althoughin2010thecompanydevelopedtheFCAsales,loadingattheterminalsandwarehousestheproducttotheclients’fueltrucks..

Retail

DespiteprolongednegativeeffectsofthefinancialcrisisandtheplannedgeneraloverhaulcarriedonatPetromidiaRefineryfor6monthsduringSeptemberandOctober2010,theGroupwasabletoincreasethevolumesofpetroleumproductssoldbyRetailBusinessUnitwithinRomanianmarketby2%ascomparedto2009.Thisincreasewasencounteredagainstthemarketnegativeexpectationsforanestimateddecreaseof4-6%.

ThegoodresultsoftheRetailBUonamarkethighlyaffectedbytheinternationalcrisisweredrivenalsobysignificantimprovementsofRompetrolBulgariaresults.

During2010,asignificantDyneffperformanceimprovementtookplaceastheresultofgoodcrisismanagementinDyneffduringstrikesinFrance,ascontinuityinoperationswassecured(afterreachinganagreementwithUnions)andstrategicdepotspositionwasmaximizedtoensuredeliveriesathigherthannormalmargins.

Non-Core and Other Activities

Allactivitiesnotdirectlyrelatedtotradingincrudeandoilproducts,refining,andsalesofoilproductsaregroupedtogetherintheBusinessUnitNon-Core.

Rominserv,theGroup’sengineeringcompany,hasincreaseditstechnicalcapabilities,beingabletosuccessfullycompletecomplexprojectsatthehighestqualitystandardsandontime.Rominservisthegeneralcontractorforallupgradeprojectsintherefinery.DuringSeptemberandOctober2010,RominservsuccessfullyfinalizedthegeneraloverhaulfromRompetrolRafinareSA.

RominservKazakhstanwasfullyoperationalduring2010,comparedtoonly1monthofoperationsin2009,ensuringanincreaseofGroupnetrevenuesbyUSD51million,throughtheinvestmentscarriedonatAtyrauOilProcessingCompanyfromKazakhstan.During2010,RompetrolLogisticsstartedtherestructuringplanandsuccessfullyfinalizedtheexternalizationofprimarytransportationsegmentattheendof2010.

EcomasterincreaseditseffortsputintotheGroup’senvironmentalprojects,demonstratingthehighimportancegiventoecologicalfriendlysolutionstotheproductionanddistributionofoilproducts.

Restructuring

During2010,theGrouphasfurtherdefinedtherestructuringplan.During2010,theGroupdisposeditsinterestinFingroup

CreditSA.andliquidatedtwocompanies:RomcalorOilServicesSAandRompetrolIndustrialParkSA.OnDecember2010,aspartoftheGroup’srestructuringplan,RompetrolLogisticsfinalizedtheexternalizationoftheprimarylogisticsegmentfortheRomanianretailandwholesalecompanies.During2011,theGroupintendstocontinuetherestructuringofthenon-coreactivitiesandwillassesstheoptionstostreamlineitsstructure.

Financialinstrumentsinthebalancesheetincludeinvestments,tradereceivablesandotherreceivables,cashandcashequivalents,short-termandlong-termdebts,tradeandotherpayables.Theestimatedfairvaluesoftheseinstrumentsapproximatetheircarryingamounts.

TheGroup’sactivitiesexposeittoavarietyofrisks,includingtheeffectsof:changesintheinternationalquotationsforcrudeoilandpetroleumproducts,foreigncurrencyexchangeratesandinterestrates.TheGroup’soverallriskmanagementmainobjectiveistominimisethepotentialadverseeffectsonthefinancialperformanceoftheGroupcompanies.

Commodity Price Risk

TheGroupisexposedtochangesincommoditypricesforpurchasesofcrudeoilandsalesofpetroleumproducts.Thepricesofcrudeoilandpetroleumproductsboughtorsoldaredeterminedbyreferencetoorstronglyinfluencedbyinternationalquotations.Duetosignificantlyincreasedvolatilityofcrudeoil,themanagementdevelopedariskmanagementpolicywhichwaspresentedtotheGroup’sBoardofDirectorsandwasapprovedinitsmostsignificantaspectsin2010andinamoreextensivemannerinFebruary2011.Atthebeginningof2011,theGroupstartedtheimplementationofHedgepolicy.

Interest Rate Risk

Interestratepriceriskistheriskthatthevalueofafinancialinstrumentwillfluctuateduetochangesinmarketinterestratesrelativetotheinterestratethatappliestothefinancialinstrument.Interestratecashflowriskistheriskthattheinterestcostwillfluctuateovertime.TheGrouphaslong-termdebtandshort-termdebtthatincurinterestatfixedandvariableinterestratesthatexposestheGrouptobothfairvalueandcashflowrisk.

Foreign Currency Risk Management

TheGroup'sfunctionalcurrencyistheUnitedStatesDollar(“USD”),whereascrudeoilimportsandasignificantpartofpetroleumproductsarealldenominatedinforeigncurrencies,mainlyUSDollars.Inaddition,certainassetsandliabilitiesaredenominatedinforeigncurrencies,whichareretranslatedattheprevailingexchangerateateachbalancesheetdate.Theresultingdifferencesarechargedorcreditedtotheincomestatement,butdonotaffectcashflows.GroupTreasuryisresponsibleforhandlingtheGroupforeigncurrencytransactions.



Capital Risk Management

TheGroupmanagesitscapitaltoensurethatentitiesintheGroupwillbeabletocontinueasagoingconcernwhilemaximizingthereturntostakeholdersthroughtheoptimizationofthedebtandequitybalance.ThecapitalstructureoftheGroupconsistsofshareholdersloans,bankdebt,cashandcashequivalentsandequityattributabletoequityholdersoftheparent,comprisingissuedcapital,reservesandretainedearnings.

Overview

Tooffsetprolongednegativeimpactofadepresseddownstreammarket,theManagementoftheGroupiscommittingtofurtherreducecosts,completemodernizationofthePetromidiaRefinery,restructurethebusinessandconcentrateoncorebusiness,aswellastoclosenon-profitablebusinesses.

Wewillfundourplansthroughamixofequityanddebt,withasupportfromourshareholders.

TheaverageheadcountacrossGroupentitiesduring2010was8,739,ascomparedto9,426during2009,followingtheGroup’srestructuringactivitiescarriedon2010.Weemploybestpracticesforattracting,retainingandmotivatingouremployees,whoarethemaincontributorstothedevelopmentofourGroup.Wearefullycommittedtoourresponsibilitiesfortheirdevelopmentandforthecommunitiesinwhichweoperate.

Financial results

Seeannexedfilesonpage43.

Planning and Performance Management

IntermsofPlanningandPerformanceManagement,activitiesweresplitintwomaincategoriesinordertohelpmanagementtotakebetterdecisions:SupplyChainandControlling.

Supply Chain Activities:

• DevelopedBackcastingprocess,whichaddressesthreemainissues: - ifrightfeedstockwasprocessedpreviousmonthintheRefinery -ifrunrateofthepreviousmonthwastheoptimum -startedBackcastingprocessforPetrochemicalsandVega• Crudeselectionprocess,whichgivesustheoptimumcrudeslatethatweshoulduseintheRefinery,allowingTradingtoknowwellinadvancewhatcrudetobuyandwhen;• ImprovementoftheMassBalanceprocess,whichitgivesustheforwardviewofthestocksintheTRG,thusallowingustocheckiftheyareinthelimitsoftargetstocksapprovedbyTopManagement;• FurtherdevelopmentoftheThreeMonthsOperatingPlan(MOP3M)andMOPupdate(increaseordecreasetherefinery

runrateduringthemonth);• ImprovementofGroupDailyReportOil&Gas,thepurposebingtogiveusoperationalandfinancialdataattheGrouplevelonadailybasis;thiswayTopManagementwillhaveaclearviewwellinadvanceofthemonthlyresultsandwillbeabletotaketherightoperationaldecisionsduringthemonth;• Developed‘WhatifAnalysis’andvariousoptimizationscenariosinthesupplychainareainordertoimproveoperationalresults.

Controlling Activities:

• GroupFinancialOutlook(GFO)–monthlyanalysisoftheGroupresultsversuslastyear'sresultsandversusbudget;• Coordinated5YearsBusinessPlanprocess;• ImprovedKeyPerformanceIndicators(KPI)process;• DevelopedstandardreportingprocessesforTradeHouseKMG,TRG’sshareholder–therearemonthly,quarterlyandyearlyreports;• DevelopedtheReforecastprocess–onceperyearitisdoneaBudgetReforecastforthecurrentyear;• Coordinatedtheproposalandimplementationofthe‘RescuePlan’;• IntroducedtheDoAOPEXapproval.

Summary of Significant Accounting Policies

ThesefinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(“IFRS”)effectiveasofDecember31,2010,asendorsedbytheEU.

Theconsolidatedfinancialstatementsarepreparedunderthehistoricalcostconvention.AnexceptionisforRompetrolRafinareS.AandRompetrolPetrochemicalsS.R.L.,whereproperty,plantandequipmentarestatedatrevaluedamountsbeingthefairvalueasatDecember31,2003andDecember31,2005respectivelylessanyaccumulateddepreciationandaccumulatedimpairmentloss,withacquisitionssubsequenttotheindicatedrevaluationdatesbeingatacquisitiondatehistoriccost.ThefinancialstatementsoftheGrouparepreparedonagoingconcernbasis.

Thegroup’sconsolidatedfinancialstatementsarepresentedinUnitedStatesDollar(“USDollar”or“USD”),whichistheGroup’sfunctionalcurrency.

TheconsolidatedfinancialstatementscomprisethefinancialstatementsoftheparentcompanyanditssubsidiariesasatDecember31,2010.

ControlisconsideredtobeachievedwheretheGroup(eitherdirectlyorindirectly),ownsmorethan50%ofthevotingrightsofthesharecapitalofanotherenterpriseandisabletogovernthefinancialandoperatingpoliciesofanenterprisesoastoobtainbenefitsfromitsactivities.Non-controllinginterestsrepresenttheportionoftheprofitorlossandnetassetsthatisnotheldbytheGroupandarepresentedseparatelyintheconsolidatedincomestatementandwithinequityintheconsolidatedbalancesheet,separatelyfromtheparentshareholders’equity.



Businesscombinationsareaccountedforusingtheacquisitionmethod.Thecostofanacquisitionismeasuredastheaggregateoftheconsiderationtransferred,measuredatacquisitiondatefairvalueandtheamountofanynon-controllinginterestintheacquiree.Foreachbusinesscombination,theacquirermeasuresthenon-controllinginterestintheacquireeeitheratfairvalueorattheproportionateshareoftheacquiree’sidentifiablenetassets.Acquisitioncostsincurredareexpensedandincludedinadministrativeexpenses.Acquisitionsofthenon-controllinginterestsareconsideredasequitytransactions.

TheGroup’sinvestmentsinassociatesareaccountedforusingtheequitymethodofaccounting.Undertheequitymethod,theinvestmentinanassociateiscarriedinthebalancesheetatcostpluspostacquisitionchangesintheGroup’sshareofnetassetsoftheassociate.Afterapplicationoftheequitymethod,theGroupdetermineswhetheritisnecessarytorecogniseanadditionalimpairmentlossontheGroup’sinvestmentinitsassociates.

Allintra-groupbalances,incomeandexpensesandunrealisedgainsandlossesresultingfromintra-grouptransactionsareeliminatedinfull.

Goodwillisinitiallymeasured,atcostbeingtheexcessoftheaggregateoftheconsiderationtransferredandtheamountrecognisedfornon-controllinginterestoverthenetidentifiableassetsacquiredandliabilitiesassumed.Goodwillistestedforimpairmentannually(asatDecember31)andwhencircumstancesindicatethatthecarryingvaluemaybeimpaired.

Property,plantandequipmentarestatedatcost,exceptfortheRompetrolRafinareS.A.,wheretheproperty,plantandequipmentarestatedatrevaluedamounts,beingthefairvaluelessanyaccumulateddepreciationandaccumulatedimpairmentloss.Whenassetsaresoldorretired,theircostandaccumulateddepreciationareeliminatedfromtheaccountsandanygainorlossresultingfromtheirdisposalisincludedintheincomestatement.

Depreciationforproperty,plantandequipment,exceptlandandconstructioninprogress,iscomputedusingthestraight-linemethodoverthefollowingestimatedusefullives,between3to60years.

AteachbalancesheetdatetheGroupreviewsthecarryingamountsofitsproperty,plantandequipmentandintangibleassetstodeterminewhetherthereisanyindicationthatthoseassetshavesufferedimpairment.Ifsuchindicationexists,therecoverableamountoftheassetisestimatedinordertodeterminetheextentoftheimpairmentloss(ifany).Whereitisnotpossibletoestimatetherecoverableamountofanindividualasset,theGroupestimatestherecoverableamountofthecash-generatingunittowhichtheassetbelongs.

Inventories,includingwork-in-processarestatedatthelowerofcostandnetrealisablevalue.Netrealisablevalueisthesellingpriceintheordinarycourseofbusiness,lessthecostsof

completion,marketinganddistribution.Costcomprisesdirectmaterialsand,whereapplicable,directlabourcostsandthoseoverheadsthathavebeenincurredinbringingtheinventoriestotheirpresentlocationandcondition.Thefollowingcostformulaswereusedtodeterminethecostapplicabletodifferenttypesofinventories:

-Theweightedaveragemethodforpurchasedcrudeoilandpetroleumproducts -Thefirst-in-first-out(FIFO)forsuppliesandmaterials.

Tradereceivablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,lessprovisionforimpairment.

Cashincludescashonhand,cashwithbanksandchecksincourseofbeingcashed.Cashequivalentsareshort-term,highlyliquidinvestmentsthatarereadilyconvertibletoknownamountsofcashwithintheremainingthreemonthsorlesstomaturityfromthedateofacquisitionandthataresubjecttoaninsignificantriskofchangeinvalue.

RevenueisrecognisedtotheextentthatitisprobablethattheeconomicbenefitswillflowtotheGroupandtherevenuecanbereliablymeasured.

Salesofgoodsarerecognisedwhendeliveryhastakenplaceandtransferofsignificantrisksandrewardshasbeencompleted.Revenuecomprisesthefairvalueofthesaleofgoodsandservices,netofvalue-addedtaxandanyexcisedutiesandothersalestaxes,rebatesanddiscounts.

Revenuefromrenderingtransportationservicesandotherservicesisrecognisedwhenservicesarerendered.

Paymentstodefinedcontributionretirementbenefitplansarechargedasanexpenseastheyfalldue.Paymentsmadetostate-managedretirementbenefitschemesaredealtwithasdefinedcontributionplanswheretheGroup’sobligationsundertheschemeareequivalenttothosearisinginadefinedcontributionretirementbenefitplan.

Incometaxchargeconsistsofcurrentanddeferredtaxes.Thechargeforthecurrenttaxisbasedontheresultsfortheperiodasadjustedfornon-deductibleandnon-taxableitems.Thetaxratesandtaxlawsusedtocomputetheamountarethosethatareenactedorsubstantivelyenacted,bythereportingdate,inthecountrieswheretheGroupoperatesandgeneratestaxableincome.

Deferredtaxisprovidedusingtheliabilitymethodontemporarydifferencesatthereportingdatebetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsforfinancialreportingpurposes.

TheGroupdeterminestheclassificationofitsfinancialassetsandliabilitiesatinitialrecognition.Financialassetsarerecognisedandderecognisedonatradedatewhereapurchaseorsaleofaninvestmentisunderacontractwhosetermsrequiredeliveryof

theinvestmentwithinthetimeframeestablishedbythemarketconcernedandareinitiallymeasuredatcost,includingtransactioncosts.

TheGroup’sfinancialassetsincludecashandcashequivalents,tradeandotherreceivables,unquotedfinancialinstruments,andderivativefinancialinstruments.Financialliabilitiesincludefinanceleaseobligations,interest-bearingbankloansandoverdraftsandtradeandotherpayablesandderivativefinancialinstruments.Foreachitemtheaccountingpoliciesonrecognitionandmeasurementaredisclosedinthisnote.Managementbelievethattheestimatedfairvaluesoftheseinstrumentsapproximatetheircarryingamounts.FinancialassetswithinthescopeofIAS39areclassifiedasfinancialassetsatfairvaluethroughprofitorloss,loansandreceivables,heldtomaturityinvestments,available-for-salefinancialassets,orasderivativesdesignatedashedginginstrumentsinaneffectivehedge,asappropriate.FinancialliabilitieswithinthescopeofIAS39areclassifiedasfinancialliabilitiesatfairvaluethroughprofitandloss,loansandborrowings,orasderivativesdesignatedashedginginstrumentsinaneffectivehedge,asappropriate.



AbbreviatedfinancialstatementsDerived from the consolidated financial statements as of December 31, 2010

Consolidated Statement of Financial Position

December 31,2010

December 31, 2009

Non-current assets

Intangibleassets 58,280,764 67,220,987

Goodwill 55,241,231 55,241,231

Property,plantandequipment 1,228,811,319 1,154,753,566

Availableforsalefinancialinvestments 1,489,055 1,888,977

Investmentsinassociates 20,154,955 21,808,587

Deferredtaxasset 412,188 861,764

Long-termreceivable 16,438,263 16,065,999

Total non current assets 1,380,827,775 1,317,841,111

Current assets

Inventories,net 633,007,698 485,342,085

Tradeandotherreceivables,net 614,077,330 616,285,432

Cashandcashequivalents 220,924,420 267,501,391

Total current assets 1,468,009,448 1,369,128,908

TOTAL ASSETS 2,848,837,223 2,686,970,019

Equity and liabilities

Capital and reserves

Issuedcapital 133,712 144,010

Sharepremium 2,631,512 2,631,512

Revaluationreserve 20,625,249 20,625,249

Otherreserves - 146,823,448

Additionalpaid-incapital 1,100,000,000 1,100,000,000

Effectoftransferswithequityholders 115,029,358 -

Retainedearnings (487,528,262) (241,655,817)

Currentyearresult (151,120,945) (120,347,988)

Translationreserve (1,826,333) (933,946)

Equityattributabletoequityholdersoftheparent

597,944,291 907,286,468

Non-controllinginterests (47,844,946) 22,331,941

Total equity 550,099,345 929,618,409

Non-current liabilities

Long-termborrowingsfromshareholders 896,000,000 595,968,302

Long-termborrowingsfrombanks 5,739,039 10,353,571

Netobligationsunderfinancelease 12,045,744 18,704,066

Deferredtaxliabilities 32,248,488 27,731,611

Provisions 38,828,654 25,096,403

Othernon-currentliabilities 7,846,356 12,002,387

Total non-current liabilities 992,708,281 689,856,340

Currentliabilities

Tradeandotherpayables 926,749,364 788,589,438

DerivativeFinancialInstruments 5,183,543 997,455

Netobligationsunderfinancelease 7,563,095 10,950,800

Short-termborrowingsbanks 366,533,595 244,356,013

Hybridinstruments-currentportion - 22,601,564

Total current liabilities 1,306,029,597 1,067,495,270

Total liabilities 2,298,737,878 1,757,351,610

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

2,848,837,223 2,686,970,019

TheabbreviatedfinancialinformationisderivedfromtheConsolidatedFinancialStatementsasofandfortheyearendedDecember31,2010andshouldbereadinconjunctionwiththeseauditedConsolidatedFinancialStatements.Onthefullconsolidatedfinancialstatements,anunqualifiedauditopinionwasissued.

Consolidated Income Statement

2010 2009

Continuing operations

Revenue 5,070,656,915 4,688,936,476

Costofsales (4,707,251,055) (4,328,936,211)

Gross profit 363,405,860 360,000,265

Sellinganddistributionexpenses (269,951,607) (255,779,375)

Generalandadministrativeexpenses (163,122,570) (181,524,881)

Otheroperatingexpenses,net (31,482,778) 12,531,511

Operating loss (101,151,095) (64,772,480)

Financecost (62,920,106) (105,549,235)

Financeincome 5,915,775 11,243,992

Netforeignexchangegain/(losses) (10,173,427) 3,742,502

Share in profits of associates 553,824 631,142

Loss before income tax (167,775,029) (154,704,079)

Incometax (10,346,219) (7,057,471)

Loss (178,121,248) (161,761,550)

Attributableto:

Equityholdersoftheparent (151,120,945) (120,347,988)

Non-controllinginterests (27,000,303) (41,413,562)

Loss Group (178,121,248) (161,761,550)

TheabbreviatedfinancialinformationisderivedfromtheConsolidatedFinancialStatementsasofandfortheyearendedDecember31,2010andshouldbereadinconjunctionwiththeseauditedConsolidatedFinancialStatements.Onthefullconsolidatedfinancialstatementsanunqualifiedauditopinionwasissued.

Consolidated Statement of Comprehensive Income

2010 2009

Net loss for the year (178,121,248) (161,761,550)

Othercomprehensiveincome

Exchangedifferencesontranslationofforeignoperations

(902,685) (659,571)

Actuariallossesrelatedtodefinedbenefitplan (2,448,866) -

Other comprehensive income/(loss) for the year, net of tax

(3,351,551) (659,571)

Total comprehensive income/(loss) for the year, net of tax

(181,472,799) (162,421,121)

Attributableto:

Equityholdersoftheparent (154,472,496) (121,007,559)

Non-controllinginterests (27,000,303) (41,413,562)

Total comprehensive loss for the year, net of tax

(181,472,799) (162,421,121)


Consolidated Statement of Cash Flow

2010 2009

Loss before tax (167,775,029) (154,704,079)

Adjustments for:

Depreciationandamortisation 130,977,627 130,125,751

Reservesforreceivablesandinventoriesandwrite-offs 12,394,016 (5,760,051)

Impairmentandprovisionsforproperty,plant&equipment 7,211,722 14,210,338

Otherprovisions 11,740,763 (21,997,666)

Latepaymentinterest 11,590,236 18,217,095

Unwindingofdiscountonhybridinstruments 1,084,943 (15,546,188)

Interestexpense,commissionandbankchargesandcollectiondiscounts 36,625,531 85,165,534

Interestexpenseshareholders 13,619,396 17,712,794

Financeincome (5,915,775) (11,243,992)

Netlossfromnon-currentassetsdisposalsandwrite-off 517,671 25,734

NetlossfromsaleofGroupsubsidiariesandfinancialinvestments 423,382 -

Unrealisedlossesfromderivativesonpetroleumproducts 4,510,298 20,951,561

Realizedlossesfromderivativesonpetroleumproducts 5,314,460 10,748,842

Shareinprofitsofassociates (553,824) (631,142)

Negativegoodwill - (577,456)

NetresultfromliquidationofGroupinvestments 71,693 -

Unrealisedforeignexchange(gain)/lossonhybridinstrumentsandothermonetaryitems 9,461,589 1,308,852

Operating profit before working capital changes 71,298,699 88,005,927

Net working capital changes in:

Receivablesandprepayments (7,001,660) 46,724,764

Inventories (144,363,352) (110,472,672)

Tradeandotherpayables 89,687,402 (24,507,729)

Change in working capital (61,677,610) (88,255,637)

Incometaxpaid (4,580,619) (12,059,497)

Cashpaymentsforderivatives,net (5,314,460) (10,748,842)

Net cash provided by operating activities (273,990) (23,058,049)

Cash flows from investing activities

Purchaseofproperty,plantandequipment (211,973,005) (189,116,356)

Purchaseofintangibleassets (14,609,004) (31,279,811)

Changesinpayablesforcapitalexpenditures 39,818,676 (61,286,917)

Dividendsreceivedfromassociatedcompanies 279,269 751,395

Proceedsfromsaleofproperty,plantandequipment 1,961,762 2,904,589

Cashofsubsidiariesbeingdisposedoff (240,707) -

Proceedsfromliquidation/salesofsubsidiaries/investments (275,657) -

Cashofsubsidiariesbeingliquidated 62,340 -

Considerationpaidforacquisitionofnon-controllinginterest (126,436,203) (12,065,899)

Net cash used in investing activities (311,412,529) (290,092,999)

Cash flows from financing activities

Cashandcashequivalentsasaresultofcapitalinjection - 1,100,000,000

Dividendspaidtonon-controllinginterests - (1,256,140)

Hybridpartialpayment (71,024,745) -

Couponpaidonhybridinstruments (22,498,405) (22,885,609)

Interestandbankchargespaid (54,848,055) (108,066,612)

Interestreceivedandotherfinancialincome 5,915,775 10,818,305

Drawingsoflongtermborrowingsfromshareholders 300,000,000 82,842,682

Repaymentsoflongtermborrowingsfromshareholders - (133,333,334)

Repaymentsoflongtermloansfrombanks (4,614,532) (30,989,766)

Movementinshort-termborrowings 122,209,280 (482,961,751)

Repaymentsoffinanceleases (10,029,770) (4,737,818)

Net cash from financing activities 265,109,548 409,429,957

(Decrease)/Increase in cash and cash equivalents (46,576,971) 96,278,909

Cashandcashequivalentsatthebeginningofperiod 267,501,391 171,222,482

Cash and cash equivalents at the end of the period 220,924,420 267,501,391




Consolidated Statement of Changes in Equity

Issued capital Share premium Retaine earnings Revaluation reserves Additional paid-in capital Effect of transfers with equity holders

Other reserves Translation reserve Non-controlling interests Total equity

December 31, 2009 144,010 2,631,512 (362,003,805) 20,625,249 1,100,000,000 - 146,823,448 (933,946) 22,331,941 929,618,409

Netlossfor2010 - - (151,120,945) - - - - - (27,000,303) (178,121,248)

Othercomprehensiveincome/loss (10,298) - (2,448,866) - - - - (892,387) - (3,351,551)

Total comprehensive income (10,298) - (153,569,811) - - - - (892,387) (27,000,303) (181,472,799)

Dividendspayabletonon-controllinginterest - - - - - - - - (375,379) (375,379)

ChangesinGroupstructure-acquisitionofRompetrolBulgarianon-controllinginterests

- - (2,083,238) - - - - - 2,083,238 -

ChangesinGroupstructure-acquisitionofRompetrolRafinarenon-controllinginterests

- - (119,853,528) - - - - - 2,192,131 (117,661,397)

ChangesinGroupstructure-acquisitionofRompetrolWellServicesnon-controllinginterests

- - (636,021) - - - - - (7,588,787) (8,224,808)

ChangesinGroupstructure-acquisitionofRompetrolGeorgianon-controllinginterests

- - (502,804) - - - - - (47,196) (550,000)

HybridconversionintoShareCapitalandSharePremiumofRompetrolRafinareSA

- - - - - 39,230,655 - - (39,230,655) -

Effectoftransferswithequityholders - - - - - 75,798,703 (146,823,448) - - (71,024,745)

OtherChanges - - - - - - - - (209,936) (209,936)

December 31, 2010 133,712 2,631,512 (638,649,207) 20,625,249 1,100,000,000 115,029,358 - (1,826,333) (47,844,946) 550,099,345





DistributionMapoftheRompetrolGroup inRomania MM

BN

MS HR

NT

IS

VSBC

CVVN

BZBR TL

GLBVSB

VL AGDB

PH

SV

BTSM

SJ

CJ

AB

BH

AR

TM

CS

HD

GJ

MH

DJOT

TRGR

CL

ILIFB

CT

V`lenii de Munte

TIMI{OARA

ARAD

Salonta

N`dlac

B`ile Felix

Zimbor

TileagdBor[

Huedin

Petro[ani

Motru

Turda

Flore[ti

Ludu[

S`vâr[in

Re[i]a

Aiud

Abrud

Or`[tieHunedoara

ZAL~U

Gole[ti

Bran

One[ti

Comarnic

Z`rne[ti

Blejoi

Merei

Albe[ti

Caracal

Dr`g`ne[ti - Olt

Afuma]i

Glina

Aduna]ii Cop`ceni

Voluntari

Mogo[oaia

Media[

Sebe[

MiercureaSibiului

Sighi[oara

Satu Mare Sighetul Marma]iei

Vatra Dornei

Secuienii Noi

Roman

Bârlad

Pa[cani

Tg. Neam]

Târgu Secuiesc

Sinaia

Râmnicu S`rat

Baia

N`vodari

Lazu

Ion CorvinBasarabi

OvidiuMedgidia

Urziceni

Fete[ti

Gura Humorului

Reghin

ORADEA

BAIA MARE

BISTRI}A

SUCEAVA

PIATRA NEAM}

TÂRGU MURE{

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LUGOJ

ALBA IULIA

SFÂNTU GHEORGHE

CLUJ NAPOCA

MIERCUREA CIUC

BOTO{ANI

GALA}I

TULCEABUZ~U BR~ILA

PLOIE{TITÂRGOVI{TE

PITE{TI

RÂMNICU VÂLCEA

DROBETA TURNU SEVERIN

BUCURE{TISLOBOZIAA2

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C~L~RA{I CONSTAN}A

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BAL{

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TÂRGU JIU

CARANSEBE{

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Foc[ani Tecuci

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PiperaChiajna

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Alexandria

Odorheiul Secuiesc

F`g`ra[

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Rompetrol Stations

Rompetrol Partener Stations

Expres Stations

Refineries

Warehouses


Engineering

Raport integrat (inclusiv CSR) al KMG International (fostul Grup Rompetrol) 2010