Oil & Gas

Aurelian Gogulescu: Prahova Remains a Magnet for Investments in the Oil Industry

Prahova is the heart of Romanian oil, Ploiesti being the capital of all oil-related activities in Romania and one of the most important centers of petrochemical technology, research and education in the world. With the help of Prahova Chamber of Commerce and Industry (CCIPH) and its President Aurelian Gogulescu, we have conducted an analysis of Prahova economy, with a focus on the advantages attracting companies in this area, known as Romania’s Texas.

Currently, 4 refineries operate in Romania – Petrobrazi, Vega, Petrotel-Lukoil and Petromidia, of which the first 3 are within the municipality of Ploiesti. Also, the Petroleum-Gas University, the only one with this profile in South-Eastern Europe, has been operating in Ploiesti since 1967.

In Prahova there are 24,250 active companies registered with the Trade Register, most of them (41.14%) activating in the industrial sector. The surface of the county is 4,716 km2 (2% of the country’s surface), and the population is 795,931 inhabitants, which leads to a density of 169 inhabitants/km2. The degree of urbanization is 50.5%, Prahova having 2 cities (Ploiesti and Campina), 12 towns (Azuga, Baicoi, Boldesti-Scaieni, Breaza, Busteni, Comarnic, Mizil, Plopeni, Sinaia, Slanic Prahova, Urlati, Valenii de Munte) and 90 communes.

 

The oil industry in the economy of Prahova County

The oil industry accounts for 22% of the economic activity of the county and 65% of the turnover of the industrial sector. The 772 companies in the field have a total turnover of RON 11.9 billion (EUR 2.53 billion), obtained with the 15,000 employees (10% of the employees of companies).

According to the President of Prahova Chamber of Commerce and Industry, Aurelian Gogulescu, “Prahova ranked among the top three counties at national level in terms of value of the Gross Domestic Product. Also, our county is among the top 10 counties of Romania in terms of contribution to national export. Referring to investments, both foreign and domestic, they have continued to develop, even if not at the same level as in the past years, at a time when the issue of energy security at national, regional, European and global level overlaps an economic and financial situation that many characterize as being on the verge of a new crisis”.

In a ranking of the counties of Romania according to the value of the Gross Domestic Product, after the capital Bucharest, Prahova is the third county after Constanta and Cluj, with a GDP of EUR 9.2 billion, that is 4.7% of the national GDP. GDP/capita (in 2018) is EUR 12,470/capita, above the national average, which is EUR 9,500/capita, says Aurelian Gogulescu.

“Another important challenge is the labour force crisis, felt in most economic sectors, but in industry is felt the strongest. CCI Prahova has organized in the last two years a number of actions to identify solutions, together with all the factors involved or the impacted companies, to diminish the effects of this crisis. The immediate solution to diminish the effects of this crisis is import of workforce, to which many Prahova-based companies have already resorted,” Aurelian Gogulescu explains.

“But the sustainable solution is to revive the vocational education, with a focus on the trades for which there is a high demand in the labour market. Also, a current challenge is the decrease in the inflow of foreign investments. It should be noted that, during the economic crisis, which started in 2009, Prahova maintained a good value of foreign investments. During 2011-2012, the peak years of the crisis, our county ranked third at national level, after Bucharest and Timis, in terms of volume of new foreign investments. But over the last two years they are increasingly modest, even in Prahova. Even so, we have to admit that, in the field of oil processing, of production of oil equipment, foreign investments have been and continue to be very important,” the President of CCI Prahova Aurelian Gogulescu also mentioned.

 

Arguments for investors

The main arguments that attract foreign investors in the oil industry in Prahova County are:

  • Proximity to Bucharest, the capital of Romania, which is at a distance of 60 km from the city of Ploiesti;
  • Solid industrial tradition, especially the one related to the oil and gas industry;
  • The existence of 5 industrial parks in public administration and 5 private industrial parks, which offer investors spaces and utilities to the highest standards;
  • The great variety of natural resources, among which oil is the most important, with other resources being extracted as well, such as gas, salt, coal, mineral waters and other minerals and raw materials;
  • Highly-skilled and specialized workforce, involving at the same time relatively low costs;
  • A developed network of educational units that ensures the highly qualified and specialized workforce and the existence in Ploiesti of the Petroleum-Gas University, which represents a nursery for specialists in the field of petroleum engineering, economic sciences, social sciences etc.;
  • Development of the financial-banking market, materialized in the presence of a large number of banks;
  • Strong development of road and rail infrastructure;
  • Modern telecommunications network;
  • Certification of an increasing number of companies on quality management systems, environment etc.

 

Contribution of industrial parks to attracting foreign investors

The advantages of locating/relocating the business in an industrial park are: the preferential tax regime: the absence of taxes on buildings and land; avoiding pollution restrictions – given the tightening of environmental legislation regarding industrial activities in urban areas – which practically forces the relocation of production activities; streamlining of the production structure; concentrating the investment in one place and the possibility of attracting suppliers and customers in the same investment space can result in lower costs.

In Prahova there are 5 industrial parks with public administration: Ploiesti Industrial Park (with 4 locations – Ploiesti, Urlati, Mizil and Ciorani), Plopeni Industrial Park, Brazi Industrial Park, Barcanesti Industrial Park (Administrator: Prahova County Council), Prahova Industrial Park (Administrator: Valenii de Munte Local Council) and 5 industrial parks with private administration: Allianso Business Park, Dibo, WDP, Primus and Meteor.

 

International trade in goods

In 2018, the exports made by the companies from Prahova County totaled EUR 2.43 billion, which represents 3.5% of Romania’s exports (EUR 67.73 billion). Imports amounted to EUR 3.82 billion, accounting for 4.6% of Romania’s import (EUR 82.86 billion). The main partners of Prahova County for the export activity were: Italy (19%), Germany (12.4%), France (6.9%), the United Kingdom (6.2%) and the Republic of Moldova (4.7%).

The main products and services exported by Prahova-based oil companies were: oil, chemical and petrochemical equipment, drilling equipment: offshore and onshore; valves, compressors, gears, moto-reducers, spare parts, in countries such as Saudi Arabia, Oman, Algeria, Republic of Benin, Gabon, Ukraine, Egypt, Congo, Kuwait, Russian Federation, Uzbekistan, Libya, Azerbaijan, Tunisia, Serbia, Turkey, Turkmenistan, Qatar, Bahrain and Iraq. Other chemicals and petrochemicals were exported – car LPG, gasoline, diesel, petroleum coke, naphtha, mineral oils, n-hexane, solvents, sulphur, heavy fuel oil, meta-bisulphite in the Republic of Moldova, Tunisia, Ukraine, Georgia, Cyprus, Malta, Netherlands, Turkey, Kuwait, China, Kazakhstan, Singapore, Turkey, India, Egypt and in the Russian Federation. Other export benchmarks are: heavy bearings (India, China), engineering services in the oil and gas industry – design, construction, industrial installations, technical consultancy and assistance, managerial consulting, technical services; project management, design, technical studies in the field of oil and natural gas.

All of the above make us believe that the oil industry has a good future in Romania, and Prahova will continue to be ‘the Capital of black gold’.

Daniel Lazar

Journalist

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