The KMG International Group (KMGI) has registered record results and operations last year, in line with the positive progress started in 2012 – the key moment of the successful completion of the program for upgrading and increasing the processing capacity of its main refinery – Petromidia Navodari. From 2012 to 2017, it has become the largest refinery in Romania and one of the most modern and complex refineries in the Black Sea region.
“2017 represents a milestone in the Group’s progress, not only due to the records achieved, but also due to the fact that we managed to consolidate and transform the Group activities, bring them to the level of a regional leader. Now is the right time - and we are prepared to get to the next level - to focus on our development in Romania and in the Black Sea basin, in the areas where we are already present but also to look confidently to other countries and to their potential to be part of the future Group strategy.” states Zhanat Tussupbekov, CEO of KMG International.
In 2017 KMGI achieved its highest level of operational and financial indicators, a level that has not yet been achieved in the 40 years since the establishment of Rompetrol and the Petromidia Navodari refinery, and 10 years after its takeover and integration into the Kazakhstan's national oil and gas company KazMunayGas.
The operating result (EBITDA) for 2017 amounted to USD 242 million, which is about 20% above the level recorded in 2016, and nearly triple of that recorded in 2012 (USD 79 million). At the same time, the net profit increased six-fold comparatively to the year 2016, reaching USD 80 million and compared to the USD 208 million negative result registered in 2012.
By implementing a set of measures that improve the budget control, developing risk management policies (hedging, exchange rate impact) and adopting a prudent financing strategy, KMGI has succeeded, in the period of 2012-2017, in reducing its total debt from USD 925 million in 2012, to USD 416 million last year, and respectively USD 608 million in 2016.
The consolidation and centralization of facilities have also contributed to the reduction of the net debt by more than three hundred percent (USD 194 million in 2017), and lead to the significant improvement of cash flows, available at Group level.
The Group gross turnover for last year amounted to more than USD 9.5 billion, up by 36% from the levels recorded in 2016.
The results were also backed up by an increase in the volume of processed raw materials and the sales of petroleum products in Romania and in the region, the optimization and efficiency of the processing, logistics and distribution costs, as well as the implementation of some current activity transformation programs to reduce operational expenses and increase profitability.
These programs targeted all areas - production, distribution, financial or support services, and contributed positively to the improvement of the organizational culture. Each employee was actively involved and had an input through various initiatives / proposals, aimed to improve the activities and performance, these benefits being closely linked to the results which were achieved at Company and Group level.
The group's contribution to the Romanian budget from 2007 onward amounts to over USD14.8 billion, of which more than 60% in the period between 2012-2017. Last year, KMGI wired over USD 1.3 billion to central and local budgets.
Refining and petrochemicals
From 2012 to 2017, KMGI has processed 32.3 million tonnes of raw materials, in its 3 production units in Romania - the Petromidia and Vega refineries, as well as in the petrochemicals division. In 2017, the volume of processed raw materials increased by 5% as compared to the 2016 level, up to 6.23 million tonnes.
Due to its investments from 2008 to 2012, amounting to over USD 400 million, aimed at the modernization and increasing the capacity of Petromidia refinery, the volume processed by the Petromidia refinery has increased from 3.8 million tonnes in 2007 to 4 million tonnes in 2012, reaching 5.66 million tonnes in 2017 (up by 5% as compared to 2016).
The daily quantity of processed raw materials has constantly increased, from an average of 10,800 tonnes in 2007 to 11,000 in 2012, respectively 16,763 tonnes in 2017. In December 2017, the refinery units operating on the Black Sea shore have reached an average daily quantity of approximately 19,100 tonnes of raw material - the highest level attained in its 41-year history.
Over 28.5 million of tonnes of finished petroleum products were obtained by the Petromidia refinery since 2012 until now, the volumes growing continuously - from 3.6 million tonnes in 2007 to approximately 3.9 million in 2012 and respectively 5.53 million tonnes in 2017.
The year 2017 was the moment of historical records for Petromidia refinery, both regarding the volume of processed feedstock and the production of fuels (gasoline, diesel) and other petroleum products (jet fuel). On the background of continuing the internal programs aimed at improving the production activity and energy efficiency, the unit on the Black Sea shore obtained the lowest production cost for the past 10 years.
From 2012 to 2017, Petromidia refinery has achieved an improvement of its operational and mechanical availability, as well as a decrease by approximately 14% of the energy intensity index (EII) and a cut down by 44% of the processing cost.
From 2012 to 2017, in synergy with the Petromidia refinery, the Vega Ploiesti refinery has processed a quantity of approximately 1.9 million tonnes of raw materials, from 305,000 tonnes in 2012 to 373,000 tonnes last year. 2017 represents the historical record year in terms of total feedback processed and level of production of bitumen (96,400 tonnes) and ecological solvents (41.000 tonnes).
Vega Ploiesti is currently the oldest processing unit operating in Romania (since 1905) and the only domestic producer of bitumen and hexane.
The Group’s Petrochemicals Division – the only profile unit in Romania - has processed over the 2012-2017 period, over one million tonnes of raw materials (propylene and ethylene). Last year, it produced approximately 7% over the level attained in 2016, amounting to approximately 193,000 tonnes.
The three production units are part of Rompetrol Rafinare SA, which is mainly owned by KMG International (54.63%; directly and indirectly) while the Romanian state owns 44.69% through the Ministry of Energy.
Retail and Wholesale
As part of the strategy initiated by the Group in 2012, the retail segment has recorded a constant growth, both in Romania and in the Black Sea region. On the local level, the volume of sold fuels (petrol, diesel, LPG) has increased from 1.6 million tonnes in 2012 to approximately 2 million tonnes in 2017 (+7% over 2016), supported by a 9% increase of the network - up to 1.028 distribution points and 243 LPG stations.
The progress was supported by continuing the program for extension of the fuel distribution network, by completing the rebranding of the Rompetrol stations but also by consolidation of the Hei and Fill&Go brands.
The Bulgaria, Moldova and Georgia branches achieved over 4.2 million tonnes of fuels sold from 2012 to 2017. The sales volume recorded last year was triple, as compared to the one in 2012, increasing by 9% as compared with the one in 2016, in the context of aligning to the Group standards launched in 2012, along with the introducing of the new concept of the Rompetrol stations.
The networks for distribution of the fuels produced by the Petromidia refinery in the 3 states of the region included 215 stations at the end of last year, by 20% more than the figure in 2012. Recently, the branches in Bulgaria and Moldova have celebrated 15 years of activity, during which they have become important employers (850 employees) and supporters of their local economies, their contribution to the state budgets amounting to approximately USD 1.63 billion (87% during the 2007-2017 period).
The Group is currently the largest petroleum product supplier in the Republic of Moldova, with an estimated share of 48%, being at the same time an important market player in Georgia (19%) and Bulgaria (16%).
The total Group sales of petroleum products in Romania for the 2012-2017 interval amounted to 13.6 million tonnes, from 1.9 million tonnes in 2012 to over 2.6 million tonnes last year (+3% over the 2016 indicator).
On the local level, the fuels obtained by the Petromidia refinery are mainly traded in Romania by the Rompetrol Downstream – the Group’s retail division; the direct sales of refinery petroleum products reached 482,000 tonnes last year, a similar volume to the one in 2016, but over 60% higher than the one in 2012.
At the same time, the petroleum products obtained and delivered internally by the Vega Ploiesti refinery and the petrochemicals division recorded a positive growth last year, of up to 206,000 tonnes, by 9% over the 2016 level and by 64% over the results of 2012.
Direct exports performed by the production units (the Petromidia Navodari and Vega Ploiesti refineries and the petrochemicals division) in the Black Sea region have increased in 2017 by approximately 18% as compared to the 2016 volume (429,000 tonnes), but also by 60% more than the one of 2012.
Trading and supply chain
In 2017, the total volume of raw materials and oil products handled by the Trading division of the Group amounted to 19.3 million tons, which is 18% more than the result of 2016. These volumes include raw materials supplied to the Group's production units, as well as the supply / sale of oil products to its own regional subsidiaries and external partners.
Export sales of the Group's crude oil products to the subsidiaries of the Group and to other regional partners are carried out by the trading and supply chain division of the Group called KazMunayGas Trading (KMGT).
The export of petroleum products sold by KMGT in 2017 reached 1.55 million tons, which is 15% higher than exported volumes in 2016.
KMGT is also a single operator of the export volumes of crude oil produced by NC "KazMunayGas". Thus, KMGT supplies crude oil to the Petromidia refinery and trading operations for the sale of crude oil on international markets.
More than 96% of the crude oil refined by Petromidia during the period between 2012-2017 was loaded through the Group's Midia Marine Terminal, located 8.8 km from the port of Midia in the Black Sea, directly to the storage tanks of the refinery. The finished crude oil products are supplied via roads, rails and the sea (via Port of Navodari).
The improvement in operating costs by 16% compared to 2012 and by 5% compared to 2016, the number of vessels operated last year by the Midia Marine Terminal was 420, which is 20% higher than in 2012.