www..com

CEO’s message 07

Important events in 2013 09

Refining and Petrochemicals 03 Rompetrol Rafinare 15

Trading 25 KazMunayGas Trading AG 27 Midia Marine Terminal 28 Byron Shipping 30 Rompetrol Ukraine 31 Commercial activities in 32 Rompetrol Gas 33

Retail 35 Rompetrol Downstream 37 Rompetrol Gas 39 Dyneff France & Spain 41 Rompetrol Georgia 45 Rompetrol 46 Rompetrol 48 contents

Industrial Services and Upstream 49 Rominserv 51 Rominserv Valves Iaifo 55 Rompetrol Quality Control 57 Palplast 61 Rompetrol Well Services 65 Drilling Division 67 Exploration & Production 69

Marketing 71 Corporate Social Responsibility 77 Corporate Governance 93 Financial Results 97 Auditor’s letter 113

Annual Report 2013 • www.rompetrol.com 5 CEO’s message

as well as many new stations to be of the global financial crisis that has built in accordance with the new engulfed the whole world and Europe concept of Rompetrol filling stations. in particular, our company has managed to maintain its position and We managed to have Petromidia overcome adversity. refinery – the heart of all group's operations – to reach its highest One of the turning points during the performance indicators during the year for the group was a resolution of year. White products amounted to the issue with the Government related 85.6 %, also reaching production of to the dispute with regards of the 14,000 tons per day. The last part of Rompetrol Rafinare convertible bonds. the improvement package has been Today we can say with confidence completed at the Petromidia in 2013, that the longstanding dispute with the enabling the refinery to become one state is settled. Series of negotiations of the safest entities of its kind in with the support of the sole Europe, with production of Euro-5 fuel shareholder enabled the parties to reaching 5 mln. tons per year. come to a mutually beneficial agreement, both for the group and It should be noted that the completion the Romanian Government. In the of modernization project would be an following years, the group and the unattainable task without the direct Government will enter into series of participation of a team of investment projects in the energy professionals from Rominserv company sector within the framework of newly – the group’s core engineering entity created investment fund which and the main contractor of the shareholders are the group (80%) and Petromidia refinery modernization the Government (20%) with the project. Moreover, a professionalism purpose to invest in Romanian energy demonstrated by the company in the sector of an investment value up to 1 past enabled Rominserv to become billion USD. the general contractor of the modernization project of Pavlodar Our company will continue a selective Petrochemical Plant in , expansion on core markets and will e have come to achieve of the well-established oil companies work on which has been launched further optimize its current activity in significant results in 2013, in Europe and an important player in during the year. The amount of the order to enhance the Rompetrol even if it has been another the region. project is estimated for about 1 billion brand on the European market and Whard and challenging year for the U.S. dollars, which makes it the largest continue to be a Kazakh flagman on group. Organizational greatness has The Rompetrol brand with a long service contract of the company the foreign markets in the years to been attained by the company history of development introduced to outside Romania so far. come. leaders, effective and focused its customers, business clients and individuals that work in the company. partners the new concept of filling I would like to note that the company's Our people help us to gain and build stations that meats the highest success is largely made possible by the competitive advantage through their standards of service and quality of competent government policy in energy, creativity and local insights. products. All the Rompetrol fuel general and Kazakhstan in particular With over 7.500 employees in 12 distribution stations in Romania are to with a support of the shareholder – the Zhanat Tussupbekov, countries, the Rompetrol Group is one be rebranded in the following years, KazMunayGas group. In difficult times CEO Rompetrol Group

6 Annual Report 2013 • www.rompetrol.com Annual Report 2013 • www.rompetrol.com 7 02

Major performances 2013 10 Major performances in 2013 Annual Report 2013 • www.rompetrol.com in 2013 Major performances the technological works Petrochemicals execute Rompetrol Rompetrol Rafinare and MARCH Pantelimon and Marie S. Curie. hospitals in - Sf. responsibility projects in two implementation of social The Group supports the government. the favour of the Romanian Rompetrol Rafinare bonds to regarding the conversion of the solution and settle the dispute adopt a mutually beneficial Romanian government to understanding with the memorandum of Rompetrol Group concludes a FEBRUARY partnership with SMURD Rompetrol continues January scheduled in the period 1 Romania. enhancement in of relevant activities as part of the programme in the Zegujani perimeter, exploration well located starts drilling an The Upstream Division USD 55 million) (investment value – over March – 8 April 2013 APRIL indirect beneficiaries. people were the direct and approximately 250,000 environmental protection; healthcare and projects in the fields of implementation of 71 in grants and supported the Group extended USD 1 million In the period 2009-2012, the everyone). (Together for each and „Împreună pentru fiecare” responsibility programme edition of the social Rompetrol launches the 5th amounting to USD 53 million). Refinery (investment installation at the Petromidia the carbon-producing completes and commissions Rompetrol Rafinare KazMunayGas Trading AG Vector Energy becomes operations; the trading house commercialisation and oil product trading/ The Group centralises its oil processing. Romania’s capacity of crude oil Petromidia represents 43% of (approximately USD 21/ton). crude oil processing Refinery has the lowest cost of KazMunayGas, the Petromidia sole shareholder – the Rompetrol Group and its Given the investments made by JUNE MAY tons/day) production capacity (14,000 reaches the daily maximum The Petromidia Refinery environmental protection. European standards on attested according to the the first refinery in Romania Rompetrol Rafinare becomes 225,000. implementation thereof was USD allocated for the support and everyone), and the total budget (Together for each and „Împreună pentru fiecare” responsibility programme 16 projects for its social The Rompetrol Group selected Kazakhstan. petrochemical centre in western establishment of an important the project envisages the Karachaganak and Kashagan, million tons) and oilfields - Tengiz,(installed refining capacity – 5.5 near the KazMunayGas Refinery Kazakhstan. Located in Atyrau, petrochemical facility in construction of a large for project management and consultancy service agreement Rominserv concludes a million. investments exceeding USD 50 (Mediterranean Sea), total in the Nouvelle harbour the construction of an oil terminaltogether with the Total Group, Dyneff) and completed, stations (branded Rompetrol and commissioned two new filling subsidiary in France and Spain At the same time, Dyneff – the 2013. stations opened in the first half offilling stations, with 12 new fillingMoldova and Bulgaria to 114 network of fuel distribution in The Rompetrol Group extends its Zărneşti) Vatra Dornei, Năvodari and Mogoşoaia, Şimleul Silvaniei, warehouses (Arad, Craiova, of 9 and 20 cubic metres) and 7 Rompetrol Express, internal bases (owned stations, Partner stations,to its 744 points of fuel distributionfuel sales with 170.000 tons, due registered a record in monthly Rompetrol Downstream JULY SEPTEMBER AUGUST Index) - 95 points. efficiency (Energy Efficiency a new record as to the energy The Petromidia Refinery breaks identity. promotes Romania’s cultural most important event that Enescu International Festival, the Rompetrol supports the George network. standard of the Rompetrol thus defining the new quality of an intense research activity, premium design, this is the result technical solutions. With a expectations and the best customers’ needs and a combination between the Rompetrol filling stations, which is concept in Romania for the The Group launches a new protection. the impact on the environmental product quality as well as reducing productiveness, improving the increasing the refining capacity to 7 million tons a year, aims at extending the processing of Kazakhstan. The programme capacity of the Pavlodar Refinery and increase of the processing USD) regarding the modernisation agreement of aprox. 1,072 billion Rominserv concludes an to USD 1.4 billion. to the state budget amounts the company’s contribution 1.7 billion. At the same time, in a row, with a total of USD Romania for the second year largest oil product exporter of is the Rompetrol Rafinare DECEMBER concept. Rompetrol filling stations alignment with the new The new filling stations are in now counts 59 filling stations. Republic of Moldova, which new filling stations in the The Group extends with two NOVEMBER oil productiveness – 48.9% a new record in terms of gas The Petromidia Refinery breaks works execution supervision. engineering, procurement and project management, consultancy services for company will provide mixed Until the end of 2015, the Shymkent Kazakhstan Refinery. for the modernisation of the provide consultancy services Rominserv is selected to OCTOBER Annual Report 2013 • www.rompetrol.com 11

Major performances in 2013 03

Refining and Petrochemicals 14 Refining and Petrochemicals -Raport anual 2013 • www.rompetrol.com and in other countries, such as Moldova, Ukraine and Georgia), Bulgaria, The Republic of stations are operated (Romania, countries where Rompetrol filling the Black Sea region, both in retail and trading activities in to consolidate and develop its with the necessary foundation Index 10.5) provide the Group degree of complexity (Nelson materials/year, and a raised million tons of raw capacity of the refinery, of 5 Petromidia Refinery. The new processing capacity of the modernizing and increasing the completed a program aimed at Kazakhstan - has successfully and gas company of KazMunayGas, the national oil alongside its sole shareholder - Sea shore. Rompetrol Group, only one located by the Black internal industry unit and the Romania, as it is the largest the actual refining capacity of accounts for more than 40% of of the Group. Petromidia with the Petrochemical Division Vega Ploieşti refineries, along the Petromidia Năvodari and Rompetrol Rafinare operates With its Petrochemical Division, Turkey, or Greece. products in the country - producer of petrochemical Rompetrol Rafinare is the only classic refinery to a producer Refinery has evolved from a density polyethylene. The Vega polypropylene, low and high and supplier of special products Rompetrol Rafinare five new production facilities allowed the construction of production capacity consisted Refinery and in increasing its modernizing Petromidia Investments made in IN 2013 MAJOR PERFORMANCES ROMPETROL RAFINARE - Central and Eastern Europe. indicator for the industry units in reference and performance Petromidia Refinery into a efficiency. All these have turned and improving energy automating production flows demand, optimizing and production costs to the market refining capacity, aligning the those of reaching the rated the refining activity, have been this period, vital for continuing objectives of the company for preservation refineries), the main sector (decommissioned/under Europe, and also in the refining difficult economic situation in Against the backdrop of a added value to be obtained. special products with a high the Black Sea shore, enables Refinery, the refinery located by alongside the Petromidia in an integrated system bitumen in Romania. Being used Refinery is the sole producer of dedicated products). The Vega ecologic heating fuels or other special purpose bitumen, and solutions (ecologic solvents, reached the lowest level of 95, of the Petromidia Refinery has • The Energy Efficiency Index hydrocracking unit; in Romania to operate a mild • Petromidia is the first refinery Authorization; an Integrated Environmental company in Romania to hold • Rompetrol Rafinare is the first major performances in 2013. its investments have led to improving facility operation. All view to enhancing safety and automation systems with a continued to invest in new Rompetrol Rafinare has made in the Petromidia site, technological investments markets. Besides the Romanian and European meets the demands of the into products whose quality processing of raw materials unit contribute to the turned into a diesel hydrofining distillate hydrofining unit (New SRU) and the vacuum exhaust gas treatment unit the sulphur recovery and with the Euro 5 standard. Also, full compliance of production the hydrogen factory ensures diesel yield and output and unit (MHC) ensures increased them, the mild hydrocracking major performances in 2013. Of Petromidia Refinery achieve which have helped the existing facilities, projects and the extension of four million USD, the modernization With a total investment of 53 Modernising the coker unit PETROMIDIA REFINERY COMPLETED IN 2013 INVESTMENT PROJECTS MOST IMPORTANT in the history of the refinery. 85.6% in 2013, being the highest (gasoline, diesel, Jet) reached 46% in 2013, while fuel outputs outputs reached, in average, performances in 2013. Diesel recording very high of 14,000 tons per day, reached its maximum capacity view, Petromidia Refinery From an operational point of security on the Du Pont model. level 3 for health and work safety awareness and achieving continuing the .Lite' program for hazardous waste storage - nitrogen oxide emissions, and with respect to sulphur and environmental requirements national and European • It aligned the refinery to the level; at a domestic and regional consolidating the market share important factor in Refinery has been the most produced by the Petromidia • The quality of the fuels 2013. during September-November by the company. With a total Environmental Authorization held plan set in the Integrated accordance with the action furnaces were replaced, in whereby existing burners of the 2013, it finished the project improving facility operation. In view to enhancing safety and new automation systems with a Rafinare continued to invest in Petromidia site, Rompetrol investments made in the Besides the technological the refinery furnaces Mounting "Low NOx" burners in coke. diesel, heavy - duty diesel and such as gas, petrol, light-duty of obtaining valuable products, distillation unit with the purpose generated by the vacuum coker ensures high conversion of 1.17 million tons per year, the Petromidia site. With a capacity employees working on the as the level of protection for the and safety of the facility, as well increase the degree of reliability same time, modernization helps of energy consumption. At the well as to a significant reduction USD in technological losses, as an annual decrease of 3 million technological consumption, to to a 90% decrease in The modernization process led protection law. observing the environmental the commitments made to standards in compliance with operate at high performance project enables the facility to in accordance with the new equipment of the industrial site works aimed at modernizing the performed the technological Petromidia Refinery successfully In the March-April 2013 period, and pipelines authorizations for equipment and obtaining ISCIR 2013 Overhauling the Refinery in 2013 quality standards. compliant with the European conditions in order to keep them products under optimal project enables the transfer of total value of 370,000 USD, the collector and loader. With a loaded by means of the same Initially, the products were deliver the two products. segregate the facilities that has implemented a project to delivered, Rompetrol Rafinare Euro 5 diesel fuel and fuel oil are the automatic rack, whereby quality of products loaded with With a view to maintaining the automatic rack Segregating fuel oil loading on consumption. lower overall fuel gas air/fuel mixture, which led to a permissiveness to control the furnaces through increased combustion efficiency in all the new burners maximized regulations. At the same time, complied with environmental tests showed that the equipment May 2013, and performance USD, the project was finished in investment of almost 5 million Annual Report 2013 • www.rompetrol.com 15

Refining and Petrochemicals 16 Refining and Petrochemicals Annual Report 2013 • www.rompetrol.com increasing outputs and These objectives aimed at increasing facility reliability. maintenance costs and operating safety, reducing energy efficiency, increasing Refinery focused on improving Rompetrol Rafinare in the Vega The 2013 investments of VEGA REFINERY than96%, obtained 2013.in mechanicavailability higher parameters,thus ensuring a tooperate according toproject overhaulenabled the Refinery Theworks performed during the valves at the Petromidia site. equipment and 545 safety 1,211 pipelines, 371 pieces of re-authorization was issued for million USD; after the overhaul, amounted to more than 55 techno¬logical works The total value of the and European legislation. compliance with the national protection projects, in to conduct environmental provisions in the field, and also and Lifting Equipment) legal Boilers, Pressurized Recipients Inspection for the Control of compliance with ISCIR (State the facilities, to achieve increase the operating safety of purpose of the works was to refinery (5 million tons/year). The processing capacity of the Production Evolution was commissioned - when the first unit in Petromidia Refinery vacuum distillation) Total processed raw materials 1979-2013, atmospheric and since 1979 (year until 2013 tons/year 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 *forecast investment package. the completion of the year raw material confirming process up to 5 million tons per of an increased capacity to crude oil against the backdrop Euro 5 fuel, processing only sour Rafinare produces exclusively modernized items, Rompetrol the new facilities, and using distillation. By commissioning through fuel oil fractional obtaining high quality products tons/day, in 2013, recording maximum capacity of 14,000 reached and operated at its view, the Petromidia Refinery From an operational point of internal market (Bio products). (Euro 5 products) and of the demands of the external market in accordance with the products, petrol and diesel fuel, to diversify and improve final in the processing flow, in order of using additional raw materials of units also included the action operation with an optimal load an optimal continuous The same strategy of ensuring other raw materials. tons of oil and 400,350 tons of million tons, of which 3.78 million processed in 2013 was of 4.18 The quantity of raw materials REFINERY PETROMIDIA – RAFINARE ROMPETROL 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 and almost 30 in 2011. USD/ton from over 28 in 2012 decreased in 2013 below 26 refinery, the processing cost implemented by Petromidia modernization package year. As a result of the refinery to 5 million tons per processing capacity of the modernizing and increasing the 2012, of the program aimed at enabled by the completion, in historical records in 2013 were and the achievement of Its improved operational results November 2013. reached during September- points, the highest level, energy efficiency index to 95 determined a raise in the operational availability the increased mechanic and decreased operating costs and commissioning in 1979. The the refinery since its the highest level reached by million tons of diesel fuel in 2013, Petromidia produced almost 2 refinery. the highest in the history of the Jet, vehicle LPG), these being 75.2% fuel output (petrol, diesel, 46% output for diesel fuel, and very high performances, such as Other raw materials Processed crude oil Total production 1997 2013 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 3.781.270 4.181.620

400.350 2009

tons 2010 2011 2012 2013 2014* finally setting an average price budgeted at 765.53 USD/ton, In 2013, the crude oil price was market (Bio products). products) and of the internal external market (100% Euro 5 quality demands of the and diesel types that meet the focused on producing gasoline The structure of the products is USD/bbl in 2013). compared to about 108.82 was of about 111.67 USD/bbl 2012, the Brent average price by the same percentage (in that crude oil prices decreased compared to 2012, provided seen a 3% decrease in 2013 the value of acquisitions has million tons in 2012). However, tons in 2013 compared to 3,985 sources increased (4,016 million materials coming from external year, the volume of raw Compared to the previous Trading AG. of the group, KazMunayGas means of the trading company were made exclusively by In 2013, crude oil acquisitions RAWMATERIAL SUPPLY protection. made to environmental observing the commitments performance standards, while operated to the highest The facilities of the unit are Compared to finished goods processed quantity Compared to total Other products Sulphur Coke Propylene Fuel oil Diesel Petrol Finished goods 2013 White oil products obtained USD/ton. low values, of approximately 7 of the two products recorded difference between the cracks September- December, the USD/ton. However, throighout recorded in February: 99 the greatest excess value was higher than that of diesel fuel; petrol was approx. 50 USD/ton, the price of oil products) for throughoutof the crude oil and (difference between the price During 2013, the crack by diesel sales. and 64% in 2013 was recorded The difference of 58% in 2012, of 42% in 2012 and 36% in 2013. weight in the vehicle fuel was segment (17%). The petrol higher increase in the diesel 8% compared to 2012, with a increased in 2013 by approx. The quantity of vehicle fuel the increase being of 2.03%. the budget, however slower, ascendant trend compared to products followed the same of 4.04%, and the prices of oil budget, recorded an increase the one estimated in the crude oil market, compared to As shown, the evolution of the USD/ton was set. average price of 882.90 2013 at 865.35 USD/ton, and an products was budgeted for The average value of finished of 796.48 USD/ton. 1.915.345 1.190.470 4.063.277 517.201 209.035 105.885 38.352 86.990 88,08 85,58 tons % compared to 2012 increased by approx. 5% in 2013 The quantity of finished goods Annual Report 2013 • www.rompetrol.com Quantities of gasoline 1,146,548 1,588,700 3,523,820 Volumes of finished and diesel sold [mt] distribution channel 2012 Sales structure by 2012 2012 39% 61% goods sold [mt] market Domestic Gasoline 1,050,398 1,905,620 3,712,727 Export market 2013 2013 42% 58% 2013 Diesel 17

Refining and Petrochemicals Monthly evolution of Brent prices and cracks for gasoline and diesel in 2013

$/mt $/bbl

210 200

170

150

130

Refining and Petrochemicals and Refining $/mt Petrochemicals and Refining

$/bbl $/mt 100 90

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

Brend Dtd $/bbl Gasoline crack 10 ppm to Brent, $/mt Diesel crack 10 ppm to Brent (Dtd), $/mt

The structure of the physical in 2013, when it recorded a net more than 46,000 tons, higher tons were sold through the •Germany, Bulgaria, Poland, ROMPETROL RAFINARE – production of the Vega Refinery positive result of 2.7 million USD due than the previous one, which had external distribution channel, Moldova, Czech Republic for for 2013: VEGA REFINERY to margin improvement and been of almost 45,000 tons. and 119,000 tons on the ecologic solvents; operating costs reduction. internal market. •Bulgaria and Moldova for Operated by Rompetrol Rafinare, Due to the raw materials coming white spirit; 2013 tons the Vega Ploiești Refinery is In 2013, the Vega Refinery recorded from the Petromidia Refinery, the The sales of white oil products •Bulgaria for fuel oil. Finished goods 244.223 focused on producing special an upward trend of the hexane quality of the bitumen produced (naphta petrol, ecologic products: ecologic solvents, outputs against the background by Vega has been improved solvents, hexane and white THE MARkET Petrol + Solvents 108.659 heating fuels, special purpose of an enhanced quality of raw throughout 2013. spirit) account for n-hexane 51.021 bitumen etc. materials transferred from the approximately 68% of the total Total sales in 2013 were of Petromidia Refinery. Thus, Vega OUTLET sales of 2013. 254.573 tons. 135.000 tons were White spirit 4.773 The investments made in the past obtained the refinery's highest sold on the foreign markets and Diesel fuel 2.998 years have mainly targeted to yield for this product, namely 43%. The total sales of 2013 The main external markets are: 119.000 tons on the internal Light-duty fuel increase energy efficiency, amounted to approximately •Turkey, Russia, Belgium, market. White product sales 5.407 type III improve operating safety and Also, the Vega Refinery produced 254,600 tons out of which 55% United Arab Emirates, Moldova (gasoline, naphtha, organic align to the compliance program. more bitumen in 2013, according to external markets, and the for naphta petrol; solvents, hexane and white Fuel oil 25.230 to the market demands. The rest through distribution •India, Hungary, Turkey, Russia, spirit) represented 68% of the Bitumen 46.135 The Vega Refinery turned profitable bitumen production amounted to channels in Romania. 135,000 Ukraine, Bulgaria for hexane; total volume of sales in 2013.

Structure of oil products deliveries in 2013 [tons]

88.859 Structure of finished products Structure of sales [%] sales on markets [%] 80,000

70,000 18,17% Other gasolines 60,000 53.344 34,90% Bitum 50,000 46.261 3,69% Heating fuels 40,000 53% 47% n-hexann 30,000 24.787 25.783 Naphta 20,000

9.384 20,95% Petrol & white spirit 10,000 6.155

10,13% Ecological Solvents Export Domestic 9,74% 2,42%

Tar Other Hexane solvents Bitumen Organic gasoline Petrol and White spirit

Heating oil

18 Annual Report 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 19 20 CorporateRefining SocialandCuvântul Petrochemicals Responsibility CEO-ului Annual Report 2013 • www.rompetrol.com In 2013, the petrochemical DIVISION PETROCHEMICAL - RAFINARE ROMPETROL division of the Petromidia than in 2012, and 55,000 tons of tons of propylene, 10% more refinery has processed 107,000 ethylene, 5% more than in the previous year. The total sales of amounted to 168,000 tons in petrochemical products 2013, trading activities included. 2012. result of 8.1 million USD in USD compared to a negative being positive, of 1.8 million EBITDA operational result June, as well as in Q3, the particular in January and petrochemical products, in influenced by the margins of results were positively Compared to 2012, financial than the 2012 indicator. of 251 million USD, 2% higher Rompetrol Petrochemicals is The 2013 turnover of petrochemical activities In Q4 2013, the integration of the organizational structure. in a single company, simplifying concentration of all operation technological process and the optimization of the entire Rompetrol Rafinare was the petrochemistry within The reason of integrating the second part of 2013. Rompetrol Rafinare started in Chemicals operation within The integration of Rompetrol *including trading Total sales* Processed ethylene Processed propylene polyethylene. The company has the only producer of Romania, since 2010, being also producer of polypropylene in Division, has been the only through its Petrochemical Thus, Rompetrol Rafinare, the net result. however without influencing results of the company, positive impact on the financial Rompetrol Rafinare had a Rompetrol Chemicals) into (previously carried out by Operational exported products compared to the previous year. market conditions. . Also, there was a slight increase in the share of decrease by 1.25% to 135.352 tons in 2013 caused by the general The sales of petrochemicals (PP, LDPE and HDPE) registered a slight 20,000 40,000 60,000 80,000 Domestic versus export sales (2012 and 2013) Domestic PP

LDPE 2012 Export

HDPE [tons]

distribution/delivery routes, strategic positioning on the petrochemicals products, the The quality and diversity of the Romania. (60 kt/y) and HDPE (60 kt/y) in polypropylene (80 kt/y), LDPE the only producer of The petrochemical division is and high density polyethylene). polymers (polypropilene, low of more than 200,000 tons of an annual production capacity Total

PP

LDPE quantity 2013 kt kt kt

HDPE

Total 2013 region. the Mediterranean Sea Eastern Europe, Black Sea and in Romania, Central and our company a trustful partner the technical assistance make •Storage facilities the Black Sea coast. propylene marine terminal on •The first Ethylene and sea access. coast; with road, railway and •Location on the Black Sea ADVANTAGES 5% 5% 168 107 4% 55 6% 3% Annual Report 2013 • www.rompetrol.com 3% 7% Main markets 2013 I Italy Bulgaria Turkey Romania 13% [%] Rep. ofSerbia Spain Poland Greece Ukraine U 2012 177 119 58

33%

21% 21

CorporateRefining Socialand Petrochemicals Responsibility o QUALITY, HEALTH, SAFETY AND produced by Rompetrol ROMPETROL RAFINARE - MAJOR The current organization of the ENVIRONMENT (QHSE) Rafinare - operating unit Vega OBJECTIVES FOR 2014 Petromidia industrial site enables Refinery; the refinery to be competitive, QHSE activities were carried out In 2014, Rompetrol Rafinare will in an unfavorable global by maintaining the integrated n Both programs included in continue to deliver to the economic environment, due to quality- environment- the environmental strategy, internal market only Euro 5 fuels its operational flexibility Refining and Petrochemicals and Refining occupational safety and health and the safety awareness with a biofuel content of (processing capacity, diversity Petrochemicals and Refining management system, raising project for the minimum 4.5% by volume for of raw materials, availability to acknowledged by the re- employees of the Petromidia petrol and minimum 6% by produce the products at certification audit conducted and Vega sites were volume for diesel. European highest quality by representatives of continued. The assortments of Euro 5 fuel standards). Germanischer Lloyd Industrial are the following: Service, June 2013. n Personnel recognition and Petromidia Refinery production motivational actions were •Efix S 98 Gasoline, basket is aligned to the market n System documents taken: •Efix 95 Gasoline evolution, which is (procedures, work •RON 98 Gasoline characterized by an increase in instructions/regulations etc.) •The safety "Drager" Caravan - •Euro Plus Gasoline demand for Jet and diesel, and were maintained/prepared/ presentation of safety •Efix S 55 Diesel by a decrease in demand for revised/checked; equipment; •Efix 51 Diesel petrol and fuel oil. •55 Diesel n Internal audit controls, safety •Fire prevention and fire •Euro 5 Diesel QHSE OBJECTIVES (QUALITY, audit controls and planned fighting contest, for the HEALTH, SAFETY, ENVIRONMENT) inspections were conducted facilities, aimed at testing skills Processing objective: with a view to identifying both and the use of the FPF n "Zero" accidents on the weaknesses and improvement equipment; Petromidia Refinery: Petromidia and Vega sites; opportunities; 5,477,496 tons/year raw •The most active member of materials n To continue the "1 .Life" n Specific statistics and reports the safety sub-committees; (crude oil: 4,835,284 tons/year; program aimed at increasing were prepared, with different auto gasoline: 1,275,888 safety awareness in order to frequencies •Recognition of achievements tons/year; maintain level 3 for (weekly/monthly/quarterly/bi- of sub-committee leaders; jet + auto diesel: 2,808,461 occupational safety and health, annualy/annualy/on demand) tons/year) according to the DuPont matrix; with a view to meeting both •Awarding the most active internal requirements, and internal trainers; Vega Refinery: n To maintain the integrated legal provisions and 304,066 tons/year quality- environment- stakeholders' requests; •Award for "Be Pro-Active" - occupational safety and health «Employee of the year». Petrochemical Division: management system, n The satisfaction of internal 234,495 tons/year acknowledged by the re- clients was monitored and the n CSR projects were organized: certification audit conducted assessment showed that the After 2013, the best year for by representatives of objective related to •Open Day for employees' Rompetrol Rafinare, in terms of Germanischer Lloyd Industrial "maintaining client satisfaction children; operating performances of the Service; indicators to at least 90%" was Petromidia Refinery, following achieved; •Environment Day - cleaning the implementation of the n To continue the programs the Corbu beach and "The project aimed at modernizing included in the environmental n The RAR certification was Cleanest Facility" contest; and increasing its production strategy, and the safety extended for vehicle fuels capacity to 5 million tons per awareness raising project for the produced by Rompetrol •Participation in the national year, 2014 will bring a employees of the Petromidia Rafinare - operating unit environmental campaign "Let's consolidation of the results and Vega sites Petromidia Refinery do it Romania!" with a team of obtained until now and an Operational Objectives - Vega (Năvodari) and additives volunteers. improved operating efficiency. Refinery

22 Annual Report 2013 • www.rompetrol.com Annual Report 2013 • www.rompetrol.com 23 04

Trading & Supply Chain KazMunayGas Trading AG Commercial activities in Romania Trading & Supply Chain Supply & Trading Chain Supply & Trading MAIN ACHIEVEMENTS IN 2013: expected to further develop in Petromidia refinery (from 4 to 5 The local commercial department is part of the trading activity, ensuring the sales of products from • Record Traded Volumes (11,2 2014. mln tons) and further Petromidia refinery, Vega refinery, Petrochemical division and also Rompetrol Gas. mln tons vs. 10.4 mln tons in development on non group 2012) Brent crude quotation was trading volumes. volatile in 2013, with average • Net Profit of $14.8mln vs. at $108.7/bbl vs. 111,6/bbl in $12.4mln in 2012 2012. Brent was lower in the first months of 2013 due to • Successful entry on the Asian difficult economic outlook and Market, expected to continue in a safer geopolitical situation, Net profit (2013 vs 2012) 2014. but went higher in the last [mln USD] months due to better KazMunayGas Trading (KMGT) economic outlook in US and 14.8 continued to manage the low production of crude in 15 trading operations of The Libya. However, on 12.4 Rompetrol Group ensuring medium/long term the continuity of optimum average is more stable. 10 feedstock supply and of oil Ural differential reached the product delivery to/from highest recorded level at Petromidia Refinery, while also +l/bbl, averaging -0.36/bbl vs. 5 expanding its 3rd party -0.91 in 2012. Ural differentials business. In 2013, KMGT fully strengthened due to Russian oil supplied the feedstock for flows redirected to Asia, o Petromidia refinery, mainly tensions in Egypt, Libya and crude from Kazakhstan and (all with impact in heavy also alternative feedstock. crude supply to Europe). 2012 2013

Additionally, 1,3 mln tons of oil In this volatile environment, products have been traded KMGT managed to secure from Petromidia, of which 0.9 competitive prices for mln tons to non group Petromidia refinery for both KMG Trading – total volumes* customers, and the rest going feedstock and oil products, by [kt] to other group entities tight management on all (Rompetrol Bulgaria, supply chain components,

Rompetrol Georgia, Rompetrol including price risk 12000

Ukraine, Rompetrol Moldova). management, optimum 11.153 10.443 inventory levels and The quantity of finished products Romanian market, 82% were Gasoline - Georgia, Ukraine, KMGT continued to build up competitive logistics. 8000 produced by Petromidia refinery diesel fuel sales. Israel, Bulgaria, Turkey,

the non group trading flows, KMGT continued the cost 6.307 increased by 5% in 2013 The external sales were oriented Slovenia, Moldova driven mainly by additional optimization programme compared to 2012, up to to the European Community as crude from KMG traded in the resulting in further $0.5 mln 4000 3.712.727 tons, of which gasoline well as the non EU countries. The Diesel - Turkey, Bulgaria, market (volumes doubled from local cost savings vs previous and diesel accounted for EU deliveries accounted for 21% of Moldova, Greece, Georgia, 2.4mln tons to 4.8 mln tons), year, through optimization on 2.956.000 tons. the total volume of sold products, Ukraine, Lebanon. but also driven by additional all OPEX categories. while the difference represented crude dealstream. The very good performance of The internal market absorbed 58% exports on the non EU markets. Coke - Turkey, Greece, Also, in 2013, KMGT started the KMGT in 2013 is expected to 2011 2012 2013 of the total volume of sold Ukraine trading transactions on the continue in 2014, mainly driven products in 2013. Of the total The sales were oriented to the Asian market. Such trades are by increased throughput in *crude oil and products volume of auto fuels sold on the following destinations: Sulphur - Egypt

26 Annual Report 2013 • www.rompetrol.com Annual Report 2013 • www.rompetrol.com 27 Midia Marine Terminal The main performance indicators reached by Midia Marine Terminal (Midia SPM) in 2013 Trading & Supply Chain Supply & Trading Chain Supply & Trading Total quantity of imported oil through Midia SPM 3,587 mill tons Total number of unloaded ships in Midia SPM 35 Total number of unloading days 59 days

The main performance indicators reached by the berths 9 A, 9B and 9C in 2013 (export and import) Total quantity of handled products 1,500 kt Total number of handled ships 362 Total number of loading/unloading days 272 days

The main performance indicators reached by the berths 1-4 in 2013:

Total quantity of handled products 180 kt Total number of handled ships 9 Total number of loading/unloading days 11.76 days

MAJOR ACHIEVEMENTS IN 2013: different routes. made the link between Midia company has managed to of 400.000 cubic meters, tow boats to assist Midia Marine Terminal is part port and Novorossiysk Russia. recover the investment of 30 receiving oil mainly from the maneuvering the ships handled of the trading division and Thus, by using the marine The company is part of the million USD in 3 years. The marine terminal. by Midia SPM. The total operates the terminals terminal, the routes were KazMunayGas Group - the sole economies for the given revenues from this activity located on berths l-4(oil) and shortened by 33km, while the shareholder of the Rompetrol period reached The total volume of handled oil accounted for 2.12 million USD. berths 9A, 9B and 9C (oil oil flow was strictly monitored, Group. The company approximately 60 million USD. in 2013 reached 7.53 mln tons. products) of the Midia port, as leading to an improvement of extended its oil and oil Thanks to the use of modern Taking into account the specifics PLANS FOR 2014: well as the offshore Midia SPM the refinery tank farm products operations in the terminals of berth 9, endowed of the terminal's activity, •One of the main areas where terminal (oil). management. Black Sea and Mediterranean with efficient metering respecting all of the the SPM operational cost can be Sea regions through the equipment (metering skids) environment related legal improved is using its own tug The investment of 100 million Unloading the Altai tank with a acquisition of two Aframax directly linked to the refinery provisions is a priority. According fleet fully equipped for offshore USD necessary for the capacity of 94.000 tons by the type oil tankers - an tanks, the commercial losses to the maintenance plan, the jobs and also usefull for construction and end of 2013, allowed reaching investment of over 100 million are within the limits of the best entire system was checked and upgrading the SPM operation commissioning of the terminal a level of 15.4 million tons of oil USD. industry practices, the certified (LLOYD'S annual and maintenance performance was recovered 5 years after for Petromidia refinery. This was processes being closely inspection certificate). level, aligned with benchmarks the commissioning due to the 31st tanker to be unloaded Between 2009 - 2013, a total monitored. in offshore industry. optimization of oil transfer, this year in Midia Marine quantity of approx 6.8 million THE MAIN PERFORMANCE reducing time for unloading Terminal and the 182nd from tons of products was The MMT operated terminals INDICATORS OF THE PILOTING, •Improve the company financial time and significant decrease its commissioning in February transferred through the three didn't register any labor TOWING, TYING / UNTYING performance by using berths 1-4 of technological losses. 2009. terminals of berth 9 in 2009 - related incidents, fires or SERVICES IN THE MIDIA PORT AND in Midia Port for commercial use. The Altai tanker, with a 2013. As a result of the refinery pollution incidents in 2013. MIDIA SPM IN 2013, NON-GROUP The cost of raw materials for capacity of 115.000 TDW, capacity increase, the REVENUES •Increase the profit and the refinery decreased by property of the national marine terminals were built with the Midia Marine Terminal optimization of SPM cost may be 7USD/ton compared to the transport company purpose of increasing the operates the refinery's oil tank Midia Marine Terminal made achieved by handling 3rd party previous period when using Kazmortransflot Kazakhstan transfer efficiency. The farm with a storage capacity use of its own resources and shipments via SPM terminal.

28 Annual Report 2013 • www.rompetrol.com Annual Report 2013 • www.rompetrol.com 29 Dyneff France and Spain

Dyneff France Sales by Dyneff France Sales Channel Type (tons) by Main Product Type (tons)

Trading & Supply Chain Supply & Trading 1,200,000 1,400,000 Chain Supply & Trading

1,000,000 1,200,000 1,000,000 800,000 60,6% 59,8% 800,000

600,000 77% 600,000 78,1%

400,000 400,000 11,7% 12,3% 10,1% 200,000 200,000 9,5% 20,4% 18,2% 2,9% 2,8% 18% 17%

Wholesale Detail Trading Retail Gasoline Diesel Heating Oil

2012 2013 2012 2013 1,608 kt 1,662 kt 1,608 kt 1,662 kt

DYNEFF SPAIN n Diesel 407 kt (+ 38% vs 2012) important traffic route in the Dyneff Spain tried to focus on n Gasoline 31 kt (- 4% vs 2012) area, traveled by around margins and managed to 35,000 vehicles per day. The increase its volumes on a Main projects in 2013: station concept is based on Spanish market showing signs of •Completion of Village the sustainable development recovery. The total sales in 2013 Catalan flagship highway model of the company, with were of 438.7 ktons, an increase station with a total investment energy- saving and by 34% vs 2012. in amount of 8.2million USD. environment-protection The premium station is located facilities (alternative power •Dyneff Spain sales by main at the border between France sources with solar panels and product type in 2013: and Spain, on the most wind turbines, water recycling).

Dyneff Spain Sales by Dyneff Spain Sales by DYNEFF FRANCE Major achievements in 2013 n Diesel 1,299 kt (plus 5% vs Channel Type (tons) Product Type (tons) The French market is one of • The total sales of Dyneff 2012) the largest fuel consumer France were of 1,662 kt, ■ Gasoline 158 kt (3% less vs markets in Europe, of about sustained by a better 2012) - the gasoline steady

75 million tons in 2013, 1.5% performance on the wholesale decline was due to tax 400,000 400,000 less than in the previous channel where the sales regulation which promotes year. increased by 19 kt and on the diesel engines. 350,000 350,000 trading channel with 46 kt more ■ Heating Oil 195 kt (2% less vs 300,000 300,000

The main products sold on than in 2012. 2012) - the tax regulation also 250,000 85,1% 250,000 the French market in 2013: accelerated heating Oil 200,000

200,000 92,9%

• 34 million tons of Diesel, an • The overall volumes decline by making non-road 82,8% increase by 0.5% compared increased by 55 kt in 2013 vs use, which showed a 7% 150,000 150,000 90% to previous year results 2012, despite strong price increase. 100,000 100,000 14,3% 12,3% 7,1% • 7 million tons of Gasoline, a competition and difficult 50,000 50,000 10% 2,7% decrease by 2.5% compared market situation throughout the • Increase in market share from 2,5% to previous year results year. 3% to 3.1% due to the launch of • 7.8 million tons of Heating innovative products as Super Oil, +0.1% compared to • Dyneff France sales by main Ethanol, E85 and own branded Wholesale Detail Retail Gasoline Diesel previous year results products type in 2013: Non-Road Diesel, GNR ZERO. 2012 2013 2012 2013 439 kt 327 kt 439 kt 327 kt

30 Annual Report 2013 • www.rompetrol.com Annual Report 2013 • www.rompetrol.com 31 Trading & Supply Chain Supply & Trading Chain Supply & Trading

•Full reconstruction of parking spaces; vacuum environment, Dyneff •GNR-Zero, a non-road diesel, fuel prices at the pump in •Optimize gas stations portfolio to Montpellier airport station with cleaner, car wash and tire developed new high- fully adapted to customers' France to increase; a improve network performance total investment in amount of inflation. component products, thus current needs. Non-road tendency expected to 1.3 million USD. The Dyneff the company became a diesel replaces domestic fuel continue in 2015 as a planned • Reinforce existing partnerships service station, with a modern •Compliance projects: Dyneff pioneer in the French market. oil, which fails to conform to carbon tax and other levies and develop additional ones and contemporary design, is continued to invest 1.3 million European directive will take effect. with both suppliers and clients the only gas station close to USD in maintaining and •Super ethanol E85, a biofuel 2009/30/EC requiring very low the airport. It offers various improving the technical composed of up to 85% sulphur content. •An increase of food-based •Increase Dyneff's bio-fuel services such as fuel standards in the company ethanol and 15% petrol 95. At biofuels from the current level market share and contribution dispensers, convenience store depots and gas stations. this stage, the French Tendencies for 2014, strategy of 7% to 7.7% through the distribution of the under the "Boutique du Soleil" government supports biofuel for the upcoming years. E85 niche product brand: vehicle accessories and Development of operations production and consumption Strategic directions maintenance products, and performances in attune through a variety of policies, Market tendencies •Optimization of the rented •Allocation improvements of souvenirs, drinks; eating area with the business profile including mandatory blending • Due to the VAT increase storage facilities to improve existing medium and small with outdoor terrace managed •In the context of the targets and excise tax from 19.6% to 20% from stock turnover and save rental distribution trucks and reduce by the "Brioche Doree" brand; evolving regulatory exemptions for biofuels. January 1, 2014, it is expected costs. in the total number of rentals

32 Annual Report 2013 • www.rompetrol.com Annual Report 2013 • www.rompetrol.com 33 Byron Shipping Rompetrol Ukraine Trading & Supply Chain Supply & Trading Chain Supply & Trading

BYRON SHIPPING is an year: 385 ships and barges, Byron Shipping The Ukrainian market has a great •one of the largest importers of •negotiations with terminal potential in the Black Sea region products, which are owners; important support company out of which 346 ships in Midia Financial Results [USD] for the Rompetrol Group port and the rest in Constanta with a constant demand for supplied exclusively from trading activity. port; products, of approx. 12 million Petromidia refinery. •development of railway tons/year in the last 10 years. deliveries from Petromidia The company operates as a The gross revenues amounted The trading activity is carried refinery. link between the producer over 1,1 million USD, a10% key achievements in 2013: out by: 1279.788 Rompetrol Ukraine managed to Rompetrol Ukraine (Rompetrol Rafinare, increase compared to 2012. 1.201.530 Petrochemicals or Rompetrol increase by 74% the volumes •the terminal Kherson, located retail and wholesale Gas), the trader (KMG Trading In 2013, BYRON SHIPPING sold on the local market, up to by the Black Sea Total volumes [kt] AG), the offshore terminal, the ranked first in "The National 242 ktons, despite an unstable client and the owners of the Top of private companies in market during 2013. •a terminal located near 250 vessels, providing full - range Romania", from almost 600 000 Ismail, on the Danube 242 ROMPETROL UkRAINE of shipping services. companies participating in 203,7 the competition. The •3 warehouses located in Besides dedicated activity for company also received the Rompetrol Ukraine has the Odessa and Vinnitsa regions. 413.438 The Rompetrol Group, first place in the category of 400.308 highest market expertise in 150 provides professional micro enterprises, the ranking tuning up supply, Main goals for 2014: 139 assistance being established based on transshipment, storage and •Contractual arrangements 103,1 to all major players in the the gross profit obtained by distribution of fuels and its and long-term contracts with Romanian oil/chemicals the company. The top was Total 2012 Total 2013 logistics created an advantage major clients. market. drawn by the National Council on the local market in terms of 50 for Small and Medium Private final prices of the fuels •Development and optimization In 2013, the total number of Enterprises in Romania and delivered. of transshipment base: vessels attended by Byron the Agency for the Net profit 2011 2012 2013 2013 Shipping increased with 12%., Implementation of Projects Total revenues •specialized mainly in •diversity of throughput points; vs.2012 compared to the previous and Programs for SMEs. wholesale activities

34 Annual Report 2013 • www.rompetrol.com Annual Report 2013 • www.rompetrol.com 35 05

Retail 38 Retail Annual Report 2013 • www.rompetrol.com consumption followed the same In terms of fuel, diesel for the last 2 years. was of 55 liters/month, stabilized the Romanian private consumers The average fuel consumption of from the previous year. 73% share in 2013 - recovering 2% segment of the market, with a Retail represents the main year. around 5,8 million tons each stable over the past years, at Romania has been relatively The fuel consumption in 2013 in market Romanian the on Trends Rompetrol Downstream over 5% in the total number of In 2013 there was an increase by market. quantities sold on the local representing 77% of total fuel trend as in the last years, vehicles. the previous year, mainly diesel (approx. 5,98 mln) compared to vehicles registered in Romania the costs). and better control over (improved negotiated prices fleets to W2C solutions migration of customers from competition, but also due to triggered by increasing and wholesale volumes was The slight decrease of retail USD). 39 million USD (2012: 20 million established a record EBITDA of performance, the company Given this operational clients. commercial terms for the based on improved registering an increase by 24% contributed to this record The wholesale channel by 11% compared to 2012. 1,568 ktons, with an increase Downstream amounted to The total sales of Rompetrol 2013 in Downstream Rompetrol of achievements Major modern framework for the network and provides a quality standard for the Rompetrol station sets a new With a premium design, the the pilot station. and Mogosoaia - which was stations located in Otopeni modernization work in the gas following the completion of concept of distribution station company developed a new At the end of 2013, the Networkdevelopment number of depots. logistic activity, increasing the company plans to optimize the increase of the refinery, the market following the capacity volumes to be sold on the local consideration the increase in Vatra Dornei. Taking into Craiova, Simleul Silvaniei and Mogosoaia, Zamesti, Arad, over the country: Navodari, depots, strategically spread all local market is supported by 7 The distribution of fuels on the Logistics meters). bases of 9 and 20 cubic Express” stations and internal “Partner” stations, “Rompetrol points (owned stations, network of 744 fuel distribution Downstream's operated a December 2013, Rompetrol local market.At the end of unique gastro concept in the restaurant services bring a on LED technology and their energy lighting system based with multimedia systems, low latest generation, equipped provided with pumps of the quality materials. Stations are of the interior space, using high architecture and a rearranging includes a modern a distinct ambient, which (logo) of The Rompetrol Group, elements of visual identity are characterized by new restaurant), the new stations service at the pump, Hey of fuels, Fill & Go payment Rompetrol network (Efix range already available in the In addition to the facilities products made in Petromidia. region. retail activities in the Black Sea expand and strengthen the objective of the company to group, thus supporting the subsidiaries of the Rompetrol implemented in the Also, the new concept will be of Romania. North -East, South -East regions and North- West, South-West, Bucharest and llfov regions retail segment will focus on The development plans for the premium concept. the key elements of the 90 stations, by implementing stations and also to re-brand the retail network by 15 new The company plans to increase 2014: for Plans Rompetrol Downstream EBITDA (2011-2013) [m$] Rompetrol Downstream sales in 2011-2013 1,486 2011 36.3 2011 709 778 Retail Wholesale 1,426 2012 20.1 2012 680 746 Annual Report 2013 • www.rompetrol.com Total volume (kt) 1,568 2013 39.1 2013 643 925 10 20 30 40 39

Retail 40 Retail Annual Report 2013 • www.rompetrol.com Rompetrol Gas increase export operations in the allowing Rompetrol Gas to loading and mixing capacities, efficiency, by upgrading trans • resources. operations in term of allocated proximity and optimizing the company, by increasing the products offered by the consumers by promoting all the benefits both to end and business This business decision brings company. channel of the Rompetrol Rompetrol Downstream, the retail • Major achievements in 2013. Increase of Arad terminal Integration of LPG retail assets in • and also to extend the sales in theproducts in safe, new cylinders Rompetrol to offer good quality branded cylinders, which enables • Moldova area. delivery time increased by 20%. production activity and the of the mixing capacities, the Altogether with the optimization by using higher capacity pumps. increased from 15 t/h up to 20 t/hThe trans loading capacity has optimizations among channels. additional margins and for sales Balkan area, creating premises for Due to Petromidia refinery’s Acquisition of 60k Rompetrol In this context, Rompetrol day. cylinders are losing ground day bythe rest of the country the old exclusively in new cylinders and inwhere the LPG product is sold there are regions in Romania cylinders increased significantly; During 2013, the demand for new Market overview only 28 kt. Rompetrol Gas decreased with production, the total sales of previous year. Despite this lower kt to 200.8 kt in 2013 versus the LPG production decreased by 62 overhaul in March-April, the total 53% Approximately half of the quantity169.637 tons in 2013. registered a decrease by 7% to The total sales of LPG in Romania channel. due mainly to the wholesale in volumes compared to 2012, 260 ktons, with a decrease by 11% In 2013, the total sales volume waskey figures in 2013 and flexible services. due to the best product quality supplier for many skids operators share and being the first choice having more than 25% market position in auto gas segment, maintains its market leader Main markets 2013 [%] Turkey Serbia Malawi Romania 2011 7 8 260 289 274 Sales Evolution 2011-2013 [kt] 4% Bulgaria Egypt 5% 14% 2012 LPG 6% 11% 7% 2013 • Gas network • POS) • the new logo of the company • more efficiently • a) Business optimization key directions for 2014-2015 and 391 tanks. Arad and Constanța, 240 skids capacity of 60,000 tons in Bacău, had 3 Filing Plants with a total At the end of 2013, the company through the retail channel. was sold on the local market 40,000 80,000 120,000 160,000 200,000 Decrease operational "costs per Attract key players to Rompetrol Rebrand POS network (8000 Rebrand 129 auto gas skids with Render the LPG current assets LPG Domestic versus export sales in 2012 and 2013 182,127 Total: 288,613 Total 2012 106,486 Domestic 2011 5,3 EBITDA Evolution 2011-2013 [m$] the retail network • stations. • acquiring skid networks • c) Business development marine terminal region by acquiring an LPG LPG market in the Black Sea • share on the retail channels • b) Market share among sales channels through imports and optimization ton" by increasing volumes sold 2012 7,8 Use underground skids across all Install skids in the Rompetrol Enter new markets by Increase our presence in the Increase the existing market Annual Report 2013 • www.rompetrol.com Export 169,637 Total: 260,184 2013 Total 2013 7,4 90,548 41

Retail Retail Retail

Rompetrol Moldova and used for petroleum products;

• Tirnova Depot (1000 CM capacity) - located in the northern part of the country and used for LPG products.

Besides 55 DOCO* stations, the company also owns 4 own stations situated in the northern part of Moldova that sell only LPG.

These assets together with the Depot in Tirnova were included in the company's portfolio in 2011, by taking over the MoldlnterGaz company's activity, part of Rompetrol Gas. In 2013, 8 new DOCO stations started to sell LPG and the total number of stations with LPG fuels reached 20.

Starting with November 2012 Rompetrol Moldova began to import the new range of Major achievements in 2013 environmental standards. companies on the Danube products instead of Alto 101 •Record sales in retail, volumes In addition to the new stations, river. Gasoline and diesel sold and Alto 55: Rompetrol Moldova sales evolution increased by 25,5 % vs. 2012 the company increased the in the distribution network in 2011- 2013 [ktons] number of shops within the retail comply with the Euro 5 •Gasoline EfixS 98 (November 2012) 128 •Record sales in wholesale, network from 8 to 12. standard and are imported 68,4% volumes increased by 124% vs. exclusively from Petromidia. The 2012 As a result of the network LPG is imported from •Diesel EfixS 55 (January 2013) 74 expansion, the total amount of Kazakhstan. • Record EBITDA for the last 5 fuel sold increased by 68,4%, to Plans for 2014 years: 3 million USD 128 ktons in 2013. Currently, Rompetrol Moldova In 2014, Rompetrol Moldova 76 has the best coverage among plans to develop its network in an extensive way, by increasing the In 2013, Rompetrol Moldova The total market share increased competitors in Chişinău, where 58 33 opened 13 new stations, most of from 13% in 2012 to 20% in 2013, 34% of the total number of cars number of filling stations and them located in Chişinău. At while the retail market share in Moldova are located. shops, and in the same time to 24 the end of 2013, the company increased from 9% in 2012 to In 2013 Rompetrol Moldova keep the same level in wholesale 54 43 operated 59 stations. The 12,5% at the end of 2013. operated 2 Depots: channel as in 2013. modernization works consisted in replacing the visual identity On wholesale, the company • Chişinău Depot (5000 MT Thus, plans are to open 6 34 elements with the new concluded commercial capacity) - located in Chişinău stations and 5 shops and Rompetrol logo, modernizing the agreements with the and used for petroleum increase the retail market share equipment and alignment Moldavian Railways Company products; to 14%. Also RPM plans to 2011 2012 2013 increase the number of stations with the safety and and also with the bunkering Retail Wholesale selling LPG from 20 to 24.

*DOCO Dealer Owned – Company Operated station

42 Annual Report 2013 • www.rompetrol.com Annual Report 2013 • www.rompetrol.com 43 Retail Retail

Rompetrol Georgia Rompetrol Bulgaria

Major achievements in 2013: implement the new concept EBITDA [k USD] These measures improved the of distribution station, financial indicators of the •9% increase of the total sales developed by Rompetrol for company, namely EBITDA volumes vs. 2012 its entire network. Thus, increased with 2,3 million USD, up rebranding works started for 7 to aprox 3.7 million USD, while the •Import market share new stations planned to be 11,149 11,272 market share of the company increased from 17% to 19% completed at the beginning increased to 7%. of 2014. Rompetrol Georgia Plans for 2014 6,494 positioned itself on the local Wholesales have increased The main strategic goal of market as a European High during the second part of Rompetrol Bulgaria is to strengthen quality fuels distributor. 2013, due to commercial its position on the market. agreements with other local 2013 was a profitable year for distributors. 2011 2012 2013 In 2014, the company plans to Rompetrol Georgia, despite open 11 new stations and also the increasing pressure on the Also, consolidated strategy for 2014-2018 includes two local market. government tenders won by main goals: Rompetrol Georgia contributed The total amount of fuel sold to the company sales. Sales Evolution 2011-2013 [tons] • increase of the retail market increased by 9%, to 158 ktons share up to 11% by the end of in 2013. The company In December 2013 Compliance 2018. managed to maintain the to ISO 9001, ISO 14001, OHSAS Major achievements in 2013 pronged strategy of profitability 35,697 57,517 •7%market share in 2013 improvement and strict cost retail share of 15%, while the 18001 has been successfully 45,161 • increase of the wholesale import market share passed and corresponding control in order to adequately •4 new stations opened in 2013 (2 face the challenges of the market. market share up to 9% by the end increased from 17% to 19% vs. certificates received. of 2018. 2012. DODO* and 2 CODO**) Despite the tough economic Plans for 2014 and upcoming 100,503 conditions, the total volumes sold 105,657 109,331 The company retail sales years •4% growth in overall Retail sales on the local market was of 156ktons. The optimized network have decreased by 8% as Rompetrol Bulgaria overall market consumption •Increase retail share by The main objective of Rompetrol management and marketing Bulgaria in 2013 was to improve campaigns increased by 4% the sales evolution in 2011 - 2013 of RON 92 gasoline has further network development: (Ktons) decreased due to consumer 10 DOCO stations and 10 the operational model of the retail overall retail sales, up to 80 ktons, further migration to CNG rebranded stations are 2011 2012 2013 business, namely in the dealers while a 7% increase was registered and franchise stations. on the highest profitability channel, 206 (compressed natural gas), a planned. Retail Wholesale cheaper fuel. own stations (CODO). 135 The company focused on 165 •Gain additional l%-4% of 156 Still, Rompetrol Georgia market share based on the implementing measures to Regarding the wholesale channel, increase the profitability of these there was a 12% decrease in the 88 continued to diversify the services and products 76 retail operations, introducing implemented in the channels and also to align the volumes, up to 76ktons, affected Efix S, Euro 5 premium fuels distribution network. stations to the operational by the temporary closing of the Evolution of the number standard and marketing strategy trading channel in 2012, but re- which increased the cash of stations sales by 60% in the Rompetrol •Fulfill obligations and of Rompetrol Bulgaria. established at the end of 2013. A Biodiesel Blending unit will be 80 stations vs 2012. Also, the Fill requirements to supply 71 77 Apart of the network optimization, installed at the company depot in & Go billing module has been Georgian Government with 71 implemented and diesel on retail channel in 69 Rompetrol Bulgaria approved the Ruse, a project to be finalized at 65 successfully launched in 2013, 2014. development strategy until 2018. the beginning of 2014. The purpose being the only solution of this As a consequence, in 2013 two of this installation is to blend the type on the market. new DODO and two new CODO diesel with the bio component stations were opened, in locally, instead of receiving the 2011 2012 2013 Apart from the new products Targovishte, Durankulak, Burgas fuel already blended at Petromidia and services, in 2013 the and Sofia. Rompetrol Bulgaria refinery. This will reduce the cost of continued focusing on a two- the fuel for Rompetrol Bulgaria. Retail Wholesale company started to 2011 2012 2013

*DODO: Dealer Owned – Dealer Operated station **CODO: Company Owned – Dealer Operated

44 Annual Report 2013 • www.rompetrol.com Annual Report 2013 • www.rompetrol.com 45 06

Industrial Services and Upstream 48 Industrial Services Raport anual 2013 • www.rompetrol.com the processing capacity of "Upgrading and increasing most important being with Kazakh companies, the managed to sign 3 contracts management, Rominserv in design and project company's skills and expertise Group, as well as on the contractor of the Rompetrol experience gained as general Capitalizing on the programs for Oil & Gas. investment in national the country's strategic specific business, considering the development of Rominserv which has a great potential for on the Kazakhstan market 2006 - the company focused Petromidia Refinery, started in years - successfully upgrading main objective of the past After attaining Rominserv's kAzAkHSTAN ExPANDINGACTIVITIES IN 2013 MAINACHIEVEMENTS IN Rominserv hydrotreating, FCC, Semiregen Naphtha hydrotreating, VGO residue vacuum distillation, atmospheric distillation, Heavy units shall be upgraded: Crude of this project, several refinery Throughout the implementation environmental requirements. complying with most recent operational safety as well as standards, increasing fuels as per Euro 4 and 5 processing yields, producing aiming to increase crude oil upgrade Pavlodar Refinery, a USD 1.072 billion contract to 1. Rominserv signed in July 2013 Projectskazakhstanin other utilities and facilities. In (conversion of existing DHT) and reformer, Naphtha hydrotreating Kazakhstan. Pavlodar Refinery" in addition, several new units will blending station, Sulfur recovery, tanks, Automatic gasoline splitter, Isomerization product be built: Isomerization, Naphtha hydrotreating, Merox primary regeneration, Kerosene Sour water stripping, Amine petrochemical platform in the building a large integrated management and training for consultancy services for project company will provide signed by Rominserv in 2013, the 3. According to a third contract million. contract amounting to USD 8 work supervision within a engineering, procurement and for project management, combined consultancy services provide by the end of 2015 tons/year. Rominserv shall capacity to 6 million crude oil to increase the processing Euro 4 and 5 standards as well as produce high quality fuels as per out in two phases, which aims to strategic project, to be carried Shymkent Refinery upgrade is a to approx. USD 1.6 billion. The upgrade in, project amounting Kazakhstan Shymkent Refinery for project managementin the consultancy services contract 2. Rominserv signed in 2013 a dewaxing. Diesel hydrotreating and distillation LPG treatment and with the new burners. better adjust the air-fuel ratio result of the possibility to consumption decreased as a parameters, the specific fuel the environmental Apart from compliance with setting the emissions limit. Permit for Rompetrol Rafinare, the Integrated Environmental action programs provided in aimed to comply with the with LOW Nox in Furnaces 2. Replacing Current Burners losses, from 1.67% to 1.46%. component, reducing refinery The project also has a business valve for coke drum. automated top unheading (water, air, soil) and a fully environmental requirements order to align with today's closed blowdown system, in upgrade aimed to set up a 1. Delayed cooker unit Refinery Petromidia Group. contractor of the Rompetrol Refineries as general Petromidia and Vega investment projects in out a number of significant Rominserv continued to carry activity in Kazakhstan, Along with expanding the ROMANIA IN PROJECTS company Sinopec Engineering. construction being Chinese plant, the general contractor for and polypropylene production propane gas dehydrogenation project referred to building the provided in the first phase of the and the consultancy services 2013 alone was USD 5 million, The value of the contract for USD 6 billion. investment amounting to over Karabatau - Kazakhstan region, Vessels and Hoisting Approval of Boilers, Pressure Inspection for Control and per the national ISCIR (State Petromidia Refinery units as and pressurized pipes within number of static equipment re-authorize a significant in 2013 aims to authorize and 4. Another project that started precipitator. set up an electrostatic specialists in this case was to chosen by Rominserv legislation. The solution the Romanian environmental necessary for complying with the Catalytic Cracking Unit Emissions Control System for 3. Setting up a Flue Gas and 340 pipes in 2013). of 307 pieces of equipment with EU PED standards (a total Equipment) norms aligned safety in the refinery. improve the operational AMC equipment and to control system, to reengineer reintegrate the distributed vacuum system, to create a reengineered purpose of the project was to completed in 2013. The Vacuum Distillation Unit, part of upgrading the new vacuum column as a Vega Refinery was to set up a carried out by Rominserv in The most important project VegaRefinery Raport anual 2013 • www.rompetrol.com 49

Industrial Services 50 Industrial Services Raport anual 2013 • www.rompetrol.com conclude new infrastructure and also managed to projects and achievements upward trend in 2013 in terms of Rominserv activity followed an RompetrolGroup Businessdevelopment outside Rafinare. operational costs for Rompetrol - and allowed optimization of as per the Solomon benchmark the West-European average - The reached level exceeded compared to a target of 96%. Petromidia Refinery: 96.18% mechanical availability for in 2013 in providing a higher Rompetrol Group, succeeding Romanian refineries of the maintenance works in the 2 Rominserv performs Services ProfessionalMaintenance to USD 88.50 million. budget 29 projects amounting completed on time and on Romania, Rominserv In 2013, during its operations in regenerator of the Fluid plenum chamber in the replacing the cyclones and Romania. Works, consisting in in Ploiesti, owned by Lukoil in operator of the refinery located Unit of Petrotel Lukoil, the the Fluid Catalytic Cracking a project aiming to upgrade general contractor, completed In April 2013 Rominserv, as Plopeni in Prahova County. networks in Baicoi, Urlati and revamp and expand sewage deadline July 2015 - aims to The project - completion treatment systems in Romania. supply and waste water operators of drinking water one of the largest regional contract with HidroPrahova SA, signed a USD 17.5 million leader of a local joint-venture, In October 2013, Rominserv, as management. and waste water system contracts on drinking water With respect to the impact of standard BS PHSAS 18001:2007. meeting the requirements of Safety Management System as Romniserv Labor Health and audited and re-certified the 2013 Germanischer Lloyd confirmation of this success, in accident-free work hours. As 2013 by almost 1 million guarantee was embodied in Labor Health and Safety ISO 9001:2008. Moreover, the the requirements of standard Germanischer Lloyd as meeting audited and re-certified by Management System was Rominserv Quality Quality Control - in 2013, the constant concern regarding: This was possible by means of a Management System in 2013. preserve an Integrated Rominserv continued to QHSEPerformance budget of USD 2 million. of 39 days, within the targeted carried out in a record period Catalytic Cracking Unit, were Kazakhstan. out by Rominserv in in international projects carried and Environmental Protection and Safety, Quality Control requirements on Labor Health compliance with legal the department in ensuring consisted in the participation of activity of Rominserv for 2013 Germanischer Lloyd. The QHSE to the audit carried out by EN ISO 14001:2009 consequent requirements of standard DIN certified as meeting the Management System was re- 2013 Rominserv's Environment minimum. As a direct result, in company kept waste level to a management processes, the and running efficient waste attitude towards saving power and promoting a proactive observing legal requirements environment, by strictly Rominserv actions on the technical performance is Romniserv's operational and Performance Financial USD 6 billion Kazakh Industries, developer of the Kazakhstan Petrochemical services to clients - management and technical services on project to provide consultancy increase the business volume, company's objective is to supply periods. In addition, the equipment requiring long service supply and delivery of by providing design works, works schedule agreed upon Pavlodar Refinery as per the shall focus on upgrading In 2014, Rominserv's activity OBJECTIVES 2014 profit of USD 1 million. USD 3 million EBITDA and a net In 2013, Rominserv reached its kind in Romania. among the top companies of 2013 places the company The USD 95 million turnover for results of 2013. noticeable in the financial Refinery overhaul. • plan activities for Petromidia ISCIR regulations; pressure equipment as per Unit and to test and inspect the Fluid Catalytic Cracking reduce flue gas emissions from electrostatic precipitator to especially commissioning the with legal requirements, Petromidia Refinery comply projects aiming to make • successfully complete the Maximo and Proplan; management: Primavera, maintenance and contract project management, assets • upgrade main software for operations: impact directly the group's Complete projects that its top priorities for 2014. Group continues to be among refineries owned by Rompetrol maintenance services for Ensuring a high level of Shymkent Refinery operator. PetroKazakhstan Oil Products - petrochemical complex, and Raport anual 2013 • www.rompetrol.com 51

Industrial Services Sales per countries USD 2013 2012 Romania (non group sales) 5.004.713 5.582.093 Germany 1.775.550 1.858.361 Czech Republic 741.056 Other 136.225 121.068

Industrial Services Industrial France 10.487 94.326 Services Industrial Cuvântul CEO-ului Cuvântul Bulgaria 9.378 18.170

being one of the biggest producers in Rominserv in Kazakhstan, for the the area, with a total contribution to modernization of refineries, by Corporate Social Responsibility Social Corporate Corporate Social Responsibility Social Corporate state budget of over 1,9 milion USD. supplying cast iron and steel industrial valves. 2014 OBJECTIVES Also, the objectives for 2014 include promotion and sale of new products The turnover of Rominserv Valves assimilated in 2013, homologation laifo is targeted to increase by 11% and sale of new products, along with in 2014, achieving 9,9 million USD, the development of new markets in compared to the 2013 turnover , Russia, Lithuania and Ukraine. with the support of sales on cast parts, and also increasing number of Increase the capacity of the foundry partners on external market. in the area of manual forming by 15%. The main objectives of Valves laifo in 2014 is to participate in the projects of

Rominserv Valves Iaifo

In 2013, Rominserv Valves laifo was one During 2013, RIS Valves laifo of the biggest producers of cast iron homologated a series of new products, and steel fittings and safety valve such as: spring in Romania. Part of The 1. Assimilation of gate valves class 150 Rompetrol Group, the company DIM 10"; 16" and ball valves class 150 exports annually around 35% of its DN4", electrical operated with production to Germany (80%), Italy, ROTORK actuator; France, Austria and Bulgaria. 2. Assimilation of gate valves class Starting 2014, Rominserv Valves laifo 150;300;600 DIM 1/2"; %";!"; 1 y2" cu products will enter the Czech market, with RF flanges, in variant of forged thus it is expected the export market to body and welded flanges; increase by 15%. 3. Over 40 types of cast parts, The company's products address the assimilated for the companies GEA needs of Refrigeration Germany, Sysmec SRL, • The oil & gas industry, transportation Imatex SRL, Caromet SRL, Lufkin and storage; Industries Romania. • Refinery and petrochemicals; • Energy industry; Rominserv Valves laifo achieved in • Water, steam and heat industries. 2013 a turnover of 8,15 mln USD,

52 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 53 Rompetrol Quality Control – RQC Industrial Services Industrial Services Industrial

the main priorities of TRG and introducing diesel and gasoline necessary procedures for The Laboratory Division of The Petrochemicals, which would activities at the same high RQC. The company operates its on the Romanian market, concluding new contracts on Rompetrol Group, Rompetrol provide a widened service quality standards, RQC activity in compliance with the started in 2005. providing gas analysis required Quality Control - RQC, is one of range and new laboratory attained a major objective in regulations on security and by EU Regulation no.601/2012 in the top companies on the analyses. 2013: maintain the main health protection of employees, •ArcelorMittal Galati by accordance with the Directive national market of laboratory Starting with September 2013, accreditation certificates by implementing the ongoing participating in the 2003/87/CE on monitoring and analysis. Since its establishment following the acquisition of awarded by RENAR and training program for the environment monitoring of the reporting greenhouse gas in 2004, RQC granted an specialized laboratory GERMANISCHER LLOYD. These personnel in the field and by largest steel plant in Romania emissions. ongoing support to its equipment, RQC became certificates provide technical providing optimal conditions for since 2008. customers (both TRG eligible to perform the MTBE competence guarantee, the carrying out activities. Another RQC meets customers demand companies and external analyses necessary for the Light impartiality and integrity of accomplishment of 2013 is the The two relationships that with a wide analysis range in customers) in their efforts to Nafta product delivered by RQC laboratories and achievement of the "zero contributed to the order to satisfy all their needs identify and implement the Vega Refinery. These analyses protection of consumer accidents" objective in the RQC consolidation of the company’s according to the Romanian safest and effective ways in were previously done by a interests. Certificates of laboratories. position on the Romanian and European applicable law order to protect the laboratory in Bulgaria. accreditation represent an market continued in 2013. in this field: environment and provide the Despite the still unfavorable important tool used for The quality of services provided high product quality. economic situation, in 2013 the strengthening relationships with by RQC was acknowledged Attracting new customers •complete analysis of One of the main objectives of company continued to existing customers and year by year by its major clients: outside TRG was and remains petroleum products (crude-oil, RQC for 2014 is the expansion develop and improve its attracting new customers, as one of the main objectives of gasoline, diesel, GPL, kerosene, of its petrochemicals division performance, managing to well. •The Ministry of Economy and the company. The petroleum fractions, cocks and currently conditioned by taking retain current customers and Finance - project monitoring development of the client petroleum sulfur, ecological over the laboratory operated attract new partners. Security and health protection processes funded by the EU on portfolio outside TRG resulted in fuels - biodiesel and bio- by Rompetrol By maintaining business have always been and remain observing common rules of 2013 in the commencement of ethanol, bitumen etc.)

54 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 55 kUSD 2012 2013 Net revenues 5,398 6,475 OPEX (4,134) (5,248) Industrial Services Industrial Services Industrial Gross Profit 799 618 EBITDA 1,265 1,226 Net result 500 307

• complete water analysis national institution that (chemically impure water, certifies standards of process water, drinking water, laboratory activities. Therefore, drainage water, cooling water, RQC analyses are recognized softened water, desalinated in over 70 countries around the water, boiler water, pool world that signed the water, steam, condensate, international recognition phreatic water etc.) • agreements (I.L.A.C, M.L.A., complete soil analysis E.A.) concluded by RENAR. (industrial soils, agricultural • Germanischer Lloyd (2008) soils, industrial sludge) • certified RQC for the complete air analysis (physical Management Integrated and chemical pollutants in the System: Quality (ISO 9001), workplaces and protected Environment (ISO 14001) Labor areas air by determining Protection (QHSAS 18001); appropriate concentrations) • The Romanian Railway •Explosimetric analysis (by Authority (AFER) - licenses for determining explosion testing products used in dangerous potential when railway transport (environment working with open fire in the parameters); industrial environment and • State Inspection for Boilers, closed vessels) Recipients under Pressure and • analysis of physical and Hoisting Units (ISCIR) - licenses chemical pollutants in the for testing boiler water; workplace (by observing • Ministry of Health (Public effective labor protection Health Department) - provisions) authorization to perform •Weather factors, environment professional measurements of and specific microclimates. toxic emissions. Efforts exerted in order to level iinspires trust and analyses of petroleum value of 6,5 million USD, an the total turnover being 11%. Accuracy of carried out improve the company's confidence that RQC products imported / increase by 20% over the The company also aims to processes and analyses are services are confirmed by laboratories constantly provide exported through the port of previous year. maintain the accreditations confirmed by the certificates certificates of excellence and accurate results, which is Constanta and by from RENAR and obtained and maintained by obtained by constant of fundamental importance for performing monitoring of the 2014 OBJECTIVES GERMANISCHER LLOYD and to RQC, which create the participation in international the laboratory itself, for the specific factors for extend them for the new necessary tools for expanding programs of proficiency organization the laboratories companies in most areas of One of the main objectives is analysis types to be carried customer portfolio and testing (proficiency tests - PT) are part of and for the the country through its to maintain market share and out in 2014. Being an consolidating company's and collaboration with beneficiaries and environmental laboratories revenue by providing gas important marketing position in the industrial international research centers accreditation and regulatory monitoring services starting instrument, these analysis market: •RENAR - (Spain, Netherlands). bodies. Company indicators have January 1, 2014 and by certifications play a major Accreditation Association of Participation in PT assessments been influenced by the attracting new customers role both in consolidating Romania. All three laboratories provides a better guarantee RQC managed to retain its economic crisis impacting outside the Group on the relationships with available RQC are accredited in for the company's customers major customer's loyalty, being the business environment in petrochemicals analysis customers and in attracting accordance with the standard ensuring that test results are a competent partner for the Romania since 2008.. market. Achieving this goal new business partners. SR EN ISO 17025:2005, accurate and retain their major companies of However, due to the will ensure company's income certification issued by the integrity when the sample is independent inspectors efficiency of its operations, growth from TRG external Accreditation Association of retested in other laboratories. operating on Constanta port as of end of the financial customers with minimum 9% in Reach "zero accidents" Romania (RENAR), the only Testing at an international platform for its specific year 2013, RQC recorded a 2014, thus the estimation of objective in RQC

56 Annual Report 2013 • www.rompetrol.com Annual Report 2013 • www.rompetrol.com 57 58 Industrial Services Raport anual 2013 • www.rompetrol.com producers. partnerships with agricultural developing new business therefore Palplast is focused on continuously increasing, irrigation networks is rehabilitation and extension of and by the EU in the by the Romanian authorities billion Euro. The interest shown 2013-2017 are estimated at 3.4 water and sewerage during rehabilitation and expansion of In Romania, projects for prices. production costs and the pipe projects and resizing the infrastructure and agriculture demand, focusing on to the evolution of the market the business strategy according this market status by adjusting company managed to achieve increasing market share. The fittings market, with an annually Romanian HDPE pipes and important producers on the Palplast Sibiu is one of the most Palplast Sibiu pipe, higher by 20% than last production of over 2.300 tons of of 5.9 million USD with a In 2013, Palplast had a turnover 2013 vs. 1920 tons in 2012). volumes sold (2.265 tons sold in increased due to higher Palplast's market share accomplishments in 2013 Major performance and 1,100 1,500 (500) (300)

300 700 0 2008 (199) 1,323 0921 0121 032014 2013 2012 2011 2010 2009 (3) 490 Gross Profit 45 (161) (475) 258 process and to a lower raw waste during the production reduction of technological of energy consumption, optimization, due to reduction market as a result of price became competitive on the The company products was 2.265 tons, higher by 18%. year, while volume of sold pipe

312 Net Result 139 524 176 678 505 909 systems in agriculture, rehabilitation of irrigation Romanian Government on European Union and of the Given the focus of the customers. portfolio with 153 new Palplast expanded its client material price.

kusd/ton 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0 0820 0020 0221 2014* 2013 2012 2001 2010 2009 2008 Gross profit/tons pipe *forecast irrigation systems for pieces necessary in • developing pipes and fittings The main directions include indicators of 2013. by exceeding the financial continue the ascending trend, on agriculture, Palplast will networks, and also the focus water, gas and sewerage developing & rehabilitating of Romanian Government in the European Union and by the Due to the interest shown by year. turnover by 17% vs. the previous estimates an increased For 2014, the company thefor upcoming years Tendencies2014,for strategy that are necessary in this sector. reopened production of fittings sales. In this regard, Palplast representing 25% of its total attention to this segment, the company paid special

tons 1000 1500 2000 2500 3000 500 0 0820 0020 0221 2014* 2013 2012 2001 2010 2009 2008 reduction from 1% to 0.85%. • Technological waste reduction by 20% • Utilities of production cost production process technological waste in consumption & reducing Optimizing energy the market. fittings became competitive on costs in this section, Palplast • After reducing production Reopening fittings section trading. order to increase turnover from contracts with suppliers in • Palplast intends to sign new Developing trading activity of Moldova, Ukraine, etc. markets like: Bulgaria, Republic • starting pipe exports in Turkey, etc. direct imports from China, • developing trading through types of pipes & fittings • starting production of new Sales of pipe Raport anual 2013 • www.rompetrol.com *forecast 59

Corporate SocialIndustrial Responsibility Services Upstream Upstream Rompetrol Well Services

Rompetrol Well Services (RWS) is the increasing demand for the Customer Structure The company trained its one of the most important company's services and high 5% employees mainly by means of 3% special well service companies performance, leading to a in-house training programs in 36,369 in Romania. The company record EBIT for the company, of 15% order to get maximum benefits 30,261 provides a wide range of USD 11.3 million, and a net from operating state of the art services for oil and natural gas result exceeding USD 8.7 million. equipment commissioned wells on the domestic market Moreover, the increasing trend 52% during 2013. Evolution of main

7% 11,328 9,411 and in several countries in in well services provided in 8,771 financial figures Eastern Europe and Central Romania led to a growing Annually, the company 6,043 3% Asia. financial performance of the cements in average 400 2012 2013 company. 6% casings and liners, deep Gross Revenues EBITDA Net Result Main Achievements in 2013: 5% 3% 1% between 500 and 4,500 meters, •EBITDA increased by 20%, and Despite the ever growing and carries out consolidation the net result by 45% compared competition, RWS managed to and packing operations for to 2012. increase the market share for OMV Petrom 52% Weatherford 3% over 200 oil and gas wells. cementing and stimulating well program to upgrade current •The company signed, entirely some of the services provided Others (int’l) 1% Amromco 7% production. services, with investments in this Kazahstan 3% Rompetrol 15% or partially, 4 new multiannual in Romania while increasing the RWS supervises all ongoing respect exceeding USD 2.37 Others (Romania) 5% Drilling contractors 3% contracts for the services complexity of the provided OMV Petrom 52% Weatherford 3% projects from the office in •Strengthening market share in million. Thus, high performance 6% 5% provided by RWS in Romania. services. Others (int’l) 1% Amromco 7% Ploiesti, Romania, providing Romania for all types of services equipment shall be purchased •Investments amounting to USD Kazahstan 3% Rompetrol 15% technical support for 13 provided. to carry out cementing, 1.4 million, financed from own The foreign activity, constituting cementing and stimulation andO D locations in Romania and stimulation, casing and various resources of the company, 4% of the company's revenues casing services. Kazakhstan. For best level •Implementing the well workover activities, as well targeting better quality acid in 2013, focused on areas in operations, the company also Development Program focusing as a cementing set with two treatment, cementing and Kazakhstan, Hungary, Bulgaria, RWS focused in 2013 on leases drilling tools. on increasing business in high pumping lines, a mixer for casing services. Kurdistan and Israel. The implementing a new data demand areas. In order to preparing and mixing bulk equipment upgrading program monitoring and recording 2014 Main Objectives strengthen its position on the cement paste set up on a In 2013, Rompetrol Well Services focused on updating system and simulation software • Continuing to upgrade Romanian market, Rompetrol semi¬trailer, drilling equipment registered positive results, given technologies for well for acid treatment services. services, focusing on Well Services shall continue its and tools/grab irons.

60 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 61 Upstream Upstream Drilling Division

Over 30 years of experience in drilling and workover operations Key Business Drivers Dynamics 2013-2014 [m$] in 15 countries stroke a balance between highly qualified staff key Business Drivers 2013 2012 2013 vs. 2012 and efficiency of employed Gross Revenues out of which: 14,3 14,7 97% equipment. The division covers Drilling and Mudlogging Activity - Romania and other location 4,2 4,1 103% a comprehen-sive list of operations, ranging from Workover Activity - Libya Area 10,0 10,7 94% exploration drilling, production well drilling, well cementing, EBITDA 2,7 3,6 74% well-fitting and testing, and up to rehabilitation and stimulation of production.

The skills of adapting to various cultures and environments have turned this department into a Out of total year: Development of Operations and Integrated Management valuable partner both on • 226 days – drilling Performances in 2013 System certifications (ISO traditional and new markets. operations – corresponding Activity in Romania 9001:2008, ISO 14001:2009, The overall experience counts to 7 wells; OHSAS 18001:2007) granted by over 550 wells drilled in Syria, • 114 days - related activities 1. Drilling Germanischer Lloyd. Algeria, Egypt, Iraq, Jordan, (moving, rig up, mobilization, • The activity carried out in Sudan, Greece and over 250 demobilization). accordance with the provisions Tendencies for 2014, strategy for workover wells in Libya. of the Contract concluded with the upcoming years 2. Mudlogging (measurement OMV PETROM Thanks to continuous of the geological parameters Activity in Romania investments in technology, and well drilling). • The contract with OMV 1. Drilling market studies, and a flexible business relations with present • Pumping, testing operations Petrom was not extended due • Development plan to be business vision, the Drilling and future clients. and water wells sand cleaning The activity was performed in to financial performance, implemented, meaning using Division managed to win the • Rig management accordance with: termination starting end of the Rig outside Romania: Iraq, respect of a market involving Rompetrol Drilling Division is a • Manpower provider • provisions of the Mudlogging November 2013; the rig is Kurdistan. tough competition and the member of: • Mudlogging services Services Contract concluded prepared for further contracts 2. Mudlogging (measurement of highest demands as to •International Association of with OMV PETROM up to • Mudlogging (measurement of the geological parameters and competency standards. The Drilling Contractors (IADC) since Major performance and February 2013: Jan-Feb 2013 - the geological parameters and well drilling) high quality service standards 1985 accomplishments in 2013 21 operating days on 4 wells; well drilling) are supported by a •Romanian Association of • for Rompetrol concessions • The activity was performed in • Searching for opportunities to management system, whose Drilling Contractors (RADC) •It is Activity in Romania (E&P projects): accordance with the develop the business outside procedures are certified with ISO 9001, ISO 14001 and BS • One unit working provisions of the Contract Romania, focusing mainly on ISO 9001, ISO 14001 and OHSAS 18001 certified 1.Drilling continuously on KAZ1 entire concluded with OMV PETROM Kurdistan where the company is ISOl8001, by Germanischer Services Portfolio The drilling activity relied on the period Jan - September 23rd up to February 2013 registered with the Ministry of Lloyd. • Drilling oil, gas and water wells drilling program launched by 2013 Natural Resources in order to be • Well completion and OMV PETROM in 2011, which • One unit working • Continued work for Rompetrol able to perform any operations A medium and long-term workover aims at increasing the number continuously on KAZ1 the entire Concessions (E&P projects)until in this country. development plan is followed, • Running casing and tubing of development wells on the Jan - September 23rd 2013 the end of September 2013. which includes development of strings Romanian territory. period Activity in Libya drilling and • Consultancy for drilling and The activity was carried out in • other concessions: Activity in Libya • Maintain all the rigs in working maintenance/workover workover operations accordance with the provisions • One unit worked for 11 • Stable operations for all 3 conditions according to the operations thanks to the • Refurbishing and of the Onshore Drilling Services Urziceni Nord well –DAFLOG workover rigs. existing and negotiated acquisition of new equipment, maintenance of rigs Contract concluded with OMV S.R.L. – November – December • API re-certification for all commercial contract with our maintaining and developing • Equipment and tools rental PETROM. 2013 – 17 operating days three rigs and maintaining the clients.

62 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 63 Rompetrol Exploration Upstream and Production Upstream

The Exploration and in Focsani Block as well as was drilled in Zegujani Block 180 km2 - 3 D seismic data Production Division intensified drilling a new deep well (4.200 where Rompetrol has 100% acquisition in the Satu Mare its activities focusing on meters) in Zegujani Block. working interest Block, together with Winstar exploration of the five blocks Satu Mare. leased by The Rompetrol 2013 key Achievements • In Satu Mare, in 2013 Group in Romania. • The Rompetrol Group interpretation of 80 km2 3D • Find a partner and/or continued exploration seismic data. The process of continue exploration activity in Therefore, E&P upgraded the activities in the five blocks: obtaining permits and Zegujani Block. leads and prospects portfolio Focsani, Zegujani, Satu construction authorization based on seismic processing Mare,Gresu and Nereju. from local authorities was • Start 300 km2 - 3D seismic and interpretation. started data acquisition in Focsani • Rompetrol has fulfilled the Block according to the KazMunayGas, the sole minimum work program on the • In Gresu and Nereju Blocks minimum work program shareholder of The Group phases expiring on December drilling started in December in approved by NAMR. continued drilling the first well 2013 for all the blocks. order to comply with the final outside its borders, in Focsani term granted by NAMR, for • finalize drilling of 2 block, leased by The • Continued drilling program drilling one exploration well on exploration wells together with Rompetrol Group starting 2005. of one deep exploration well each block. Amromco Energy Sri in Gresu Rompetrol Exploration and (5.000 meters) - Kazl - NW well and Nereju Blocks. Production on Focsani Block. NAMR 2014 key Objectives approved entering an • continue exploration • Identify new production The total investment made for additional exploration phase activities in the five blocks: opportunities in the Romanian Rompetrol exploration blocks which ends the mandatory Focsani, Zegujani, Satu mature oil fields and develop in 2013 reached USD 27 million, sub-phase on 30.06.2016. Mare,Gresu and Nereju. production projects in the consisting of finalizing drilling Caspian Region, Middle East one deep well (5.000 meters) • A new deep well (4200m) • Complete drilling 2 wells and and North Africa.

64 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 65 07

Marketing 68 Marketing Raport anual 2013 • www.rompetrol.com with a premium aura. and relaxing café bar atmosphere be found inside. It creates an inviting store with the c-store concept can aerial and warm concept. The hei schemes to create a minimalistic, combines 3D elements with color comprises a modern design that The new filling station concept more airy, young, urban and modern. with. The font makes the logo look attributes Rompetrol identifies itself power, passion and success; an energetic color which symbolizes blue wordmark was changed to red, recognizable element - the logo. The Rompetrol image began with its best The revival/revitalization of the quality "energy" in all of its shapes. Rompetrol continues to offer high the authenticity of the brand - segment. The new image confirms developed to support the retail new filling station concept was products and its refining capacity. A improve the quality of Rompetrol 2007. The aim of the efforts is to shareholder KazMunayGas starting implemented by the majority and refining investments succeeding the major infrastructure change in image is a natural step, will focus on the retail activities. The In the upcoming period Rompetrol identity. Rompetrol brand revitalization of the marked by the year for Rompetrol, 2013 was an important Marketing

Marketing Marketing Marketing

The summer and winter its clients and offered solutions European expansion strategy. promotions were the most to match. The strategic move of building important communication the energy bridge between campaigns of 2013; aimed to Events Kazakhstan and Europe is increase the brand loyalty of During 2013 Rompetrol possible only through the long- residential clients and attract participated in several term commitment and reliable new clients. business to business events as relationships with European exhibitor. The most ample partners. The campaigns were international oil and gas communicated on the most dedicated event took place in The company also important TV and radio Kazakhstan, KAZENERGY participated at Kioge, one of channels, as well as online. The EURASIAN FORUM & the most significant oil and gas idea of the campaigns was EXHIBITION. In 2013 the VIII events in Kazakhstan, where that clients would accumulate edition took place in Astana. It Rompetrol was promoted points and would be rewarded is the main annual within KazMunayGas stand, as with guaranteed prizes. international event in the industrial expert through its Generous prizes were energy sector of Kazakhstan, Rominserv and Well Services awarded by random draw. where the heads of states of companies. different countries and Another highlight was the re- respected experts of the launchof the personal Fill and industry exchange views and Go card in a more attractive experiences on current form. The card was launched questions on Eurasian and in Romania and was mainly global scale. promoted on the highest rated TV channels. The Rompetrol objective was The results of the campaign by to strengthen the importance the end of December 2013 of Rompetrol's strategic role in were impressive showing that KazMunayGas, as Rompetrol is Rompetrol knew the needs of the first step in the Group's

70 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 71 08

Corporate Social Responsibility 74 Corporate SocialCuvântul Responsibility CEO-ului Raport anual 2013 • www.rompetrol.com innovation, passion through success has been built on a global company whose act responsibly in all activities. As The Rompetrol Group seeks to As a leading Corporate Citizen, Mission and Values towards the environment. market place, community and taken within the workplace, continuous responsible actions success through active and direction, ensuring business CSR is a strategic development of the group. into consideration the resources international laws and taking compliance with the activity of the company, in connected with the basic development in the society, voluntary contribution to considers social responsibility as The Rompetrol Group (TRG) wherever we operate – with the Responsibility standards Corporate and Personal leadership, we require high quality and individual business and the quality of life of ultimate aim of improving our through and beyond the life of development which extends 1. Sustainable, responsible We are committed to: those we impact. Responsibility Corporate Social 2. Ongoing Involvement: To and Safety Best Practices; opportunities and Occupational grounded on equal employment practices development opportunities and enhance their life through respect employees and help 1. Respect Employees: To Policy: guiding principles of its CSR Rompetrol defines the following educational pursuits. through entrepreneurial and promoting the spirit of leadership 4. Investing time and energy in suppliers, investors and partners; and regional communities, including our employees, local our communities of stakeholders, governance as it affects all of 3. Best practices in corporate community; employees and partners in the safety, health and welfare of our responsibly with respect for the 2. Operating ethically and our operations; the authorities, community, and involve at an appropriate level other concerned stakeholders in all decisions that affect them; 3. Health and Safety: To ensure the health and safety of our communities in which we employees, suppliers and the operate; • Community • Human Resources • Environment and suppliers • Health & Safety of employees main directions: social activities in the following improvement of the quality of implementation and committed to the ongoing socially responsible company, is The Rompetrol Group, as a corruption. environment and anti- areas of human rights, labor, the Compact’s ten principles in the by the United Nations Global 7. Best practice: We are guided operate; communities in which we customs and values of the the human rights, culture, respect, protect and promote 6. Respect local communities: To entrepreneurship; socially responsible pursuits and activities that encourage involvement and educational people, through civic especially among young promote the spirit of leadership, 5. Education and Leadership: To environment and our business; employees, contractors, the risks to our host communities, assess, manage and mitigate 4. Risk management: To identify, cooperation with the medical workshops which are organized in QHSE requirements, preventive dedicated trainings for specific online training platforms, rate within the Rompetrol entities: further limiting the low accident • Implementing a program for actions, and action plans; non-conformities, corrective Downstream for the monitoring of Petromidia Platform and software at the level of • Implementing a single QHSE highest target: 1.5%; QHS performance indicators - • Maintaining and improving the 2014 Challenges values contractor safety indicator programs resulted in improved • Several contractor safety 2013 • 0 fatalities target was met in rate) target was met in 2013 • 1.5 MVCR (motor vehicle crash cy) target was met in 2013 • 1.5 LTIF (lost time injury frequen - 2013 Main Achievements of the utmost importance. contractors represents a matter safety of our employees and security and that is why the level of risk to health, safety and sector which involves a higher we conduct our business in a We are aware of the fact that Health & Safety TRIR – total recordable incident rate FIR – fatality incident rate prophylaxis based on the predo service provider (for specific disease. pose a high risk of occupational eliminating the workplaces that occupational illnesses, as well as in work incapacity and fatalities and accidents resulting program with the goal of 0 Objective: Workforce Safety warehouses. (log out tag out) in RPD and RPG b. Implementing the LOTO system RPD warehouses, /Petromidia refineries and within a. Work at height, at Vega major risks of: for eliminating or decreasing the • Implementing an action plan m TRIR • • • • • • inant medical diagnoses of 2013) Non-Core Retail Trading Refining Upstream The Rompetrol Group implementing a 0.7 1.4 2.1 2.8 3.5 0 0.780 2010 3.51 0.61 2.05 0,7 0 - dangerous substances. accidents, and exposure to obstacles while walking, road height, accidentally hitting caused by: sliding, falls from occurred in the past were shows that the incidents that An analysis of the indicators resulting in loss of human life. have registered no events Over the past four years we entities and to our subcontractors. policy, both within the group occupa due to applying a uniform We have achieved good results level showed a positive evolution. indicators registered at group safety activity performance All the occupational health and 2011 0.81 0.47 0.31 0.51 0 0 Raport anual 2013 • www.rompetrol.com

tional health and safety 2012 0.21 0.14 0.13 0 0 0 2013 0.26 0.13 1.37 0.34 0 0 75

Corporate Social Responsibility 76

3 Corporate Social Responsibility Raport anual 2013 • www.rompetrol.com • At the level of 2013, 33,962 show the following: In this context, the QHS statistics to 2010. indicators in 2013 as compared in a 50% improvement of these continuous and visible, resulting level of management has been and involvement at the highest The permanent preoccupation accidents (LTIF). lost working days caused by and implicitly in the number of number of accidents / incidents actions led to a decrease in the occupational accidents. Such a solid culture of prevention of Group implements and develops the utmost importance that the most important resource. It is of people are the main and the become aware of the fact that safe work environment and to awareness in order to create a group level for employees’ permanent preoccupation at As of 2010, there has been a training hours have been held; • A number of 4,948 inspections • The checks made by the state have been carried out; Rafinare and Vega Platforms. safety level within Rompetrol a DU PONT 3 occupational campaigns enabled us to reach and soft communication warning, training, inspection increasing the number of Implementing safety audits, authorities numbered 600. LTIF • • • • • • • Yearly Target Non-Core Retail Trading Refining Upstream The Rompetrol Group 0 1 2 3 4 2010 1.92 4.64 7.07 2.93 4.8 4.8 0.9 standards required by the which comply with the implement a series of processes safety of our operations and to efforts to always guarantee the aspect, we make considerable environment. In view of this maintaining a safe work employees, creating and employees, for training the for raising awareness among preoccupation at group level There is a continuous and the environment. and for the interested parties our employees and contractors, safe work environment both for major risks in order to maintain a where possible, eliminating the the workers, minimizing or, monitoring the health state of risks involved in all activities, assessing and monitoring the management programs, occupational health and safety Objective: Safe work and risk assessment constant improvement. safety performances show a development projects and its organization has safety are established. The is showing results; safety priorities committees and subcommittees the activity of safety used for improving the system; corrected in the system and is efficient: any deviation is were fully implemented and are systems are very good, that they Such level shows that the safety 2011 0.93 2.45 1.01 1.6 1.6 0 0 Continuing the 2012 1.08 1.08 0.11 1.44 0.38 0 0 2013 0.23 0.23 0.57 0.27 0.38 0 0 time /1 million worked hours days as compared to the working involving one or more lost working INJURY FREQUENCY LTIF – LOST TIME Pre-start up safety review. and HAZOP, and level 2.5 for Technological Changes (MoC) Management of the were positive: level 2 for the also been assessed. The results Management elements have 3 "new" Process Safety and Bitumen). Rafinare-Vega (Dearomatization installations at Rompetrol risk analysis for 2 technological severity by carrying out HAZOP as to assess their likelihood and and accidental situations, as well resulting from normal operation identify and assess the major risks In 2013, the Group continued to (ALARP). as reasonably practicable" reducing the risk level to "as low occupational risks and in elimination of certain projects resulted in the investments for upgrading action plans and the increase in The implementation of the business development. reputation and even for the important threat for the Group's accident may represent an understands that a major carry out. The Group level in the activities that we and obtain an acceptable risk management, in order to assess identification of threats and risk Group with regard to the The average incident frequency MVCR - motor vehicle crash rate - 2013 the vehicle fleet and to care oblige us to permanently review driving policy, but they also implementing the preventive which have been adopted by us to develop the good practices thus, the good results encourage human life have been registered; No crashes involving loss of no. of 18,3 million km. the crash rate was 0.38 %, for a 19 million km, in 2013, the level of amounted to 2.93% for a no. of thus, while in 2010 the crash rate provoked by our employees; number of motor vehicle crashes the Group. This led to a drop in implemented within Rompetrol preventing driving policy was crash rate. As of 2011, a an acceptable motor vehicle driving policy and to maintain implement the preventive Objective: RoadSafety MVCR • • • • • • Non-Core Retail Trading Refining Upstream The Rompetrol Group ISO Certification OHSAS 18001 confirmed/maintained by Germanischer Lloyd (through Surveillance Third party audit ) • TRG Corporate Center Integrated management system certification based on ISO 9001, ISO 14001,14001, OHSAS 18001 by Germanischer Lloyd • ROMPETROL GEORGIA - Integrated management system certification based on ISO 9001, ISO 14001, OHSAS 18001 by Germanischer Lloyd • ROMPETROL MOLDOVA - Integrated management system certification based on ISO 9001, ISO Continuing to 0,9 2,7 4,5 1,8 3,6 5,4 0 2010 1.92 4.64 7.07 2.93 4.8 0.9 includes updated contract contractors. This standard management standard for operated in order to integrate a procurement teams have co- As of 2012, our work safety and number of contractor accidents. practices and decreasing the conditions, implementing good Objective: ContractorSafety aspects of the process. include theoretical and practical at the wheel, which would platform for preventive conduct plan to initiate a training within the next two years, we continue this line of action and, operation. We would like to priority of any road transport Saving human lives is clearly the safety on the public roads. about the people and their 2011 0.93 2.45 1.01 1.6 0 0 Improving work 2012 1.08 0.11 1.44 0.38 0 0 2013 0.23 0.57 0.27 0.38 0 0 medium risk contracts. objectives for all new high and performance indicators (KPI) and monitoring and to implement key QHSE performance by close contractors' and subcontractors' Our goal is to improve improved performance. activity, as well as to their contractor and subcontractor non-conformities related to accidents and in the number of decrease in the number of measures have led to a subcontractors. All these introduced for contractors and conformities have been procedure for OHS non- procedures, and a penalty procedures, verification contractors. Thus, work of the work conditions for implementation and verification continuous process of The Rompetrol Group is in a the field. well as during inspections/visits in adopted, periodical meetings, as the documents that we measures to contractors through transport); we transmitted our drilling, constructions, and road the high risk activities (such as specific QHSE requirements for Standard, as well as 8 minimum Contractor Management QHSE requirements; we drafted a standardized the contractual instruments. We redefined and permanent evaluation contractor selection and requirements, as well as new Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 77

Corporate Social Responsibility 78 Corporate Social Responsibility Raport anual 2013 • www.rompetrol.com Objective: response Emergency preparation and Emergency situations - operating an emergency courses at group level. have completed first aid and 2013 - over 2000 persons simulation exercises. In 2012 first aid training programs and emergencies, by carrying out our employees for medical Moreover, we have prepared Work Conditions Campaign. as the Ergonomics and Healthy health promoting activities, such well-being, we got involved in In order to encourage health and evaluation of health condition. supplier's clinics and regular higher standards for all by our QHSE strategy include requirements. The objectives set occupational health legal services, including the responsible for ensuring medical The medical service supplier is medical service suppliers. medical standards for our we include health, as well as highObjective: Occupational health In our QHSE strategy, Creating and intervention mechanisms in refinery, in order to verify the at Petromidia Năvodari performed a tactical exercise Constanta County, has Situations Inspectorate of 'Dobrogea' Emergency Group, in partnership with company of the Rompetrol Rompetrol Rafinare, a member performed at group level. simulation exercises were In 2013, 1527 emergency action forces. local and state emergency annually with the participation of MMT - these exercises take place At the warehouses and within exercise and training. involving regularly performed situations is based on a system preparation for emergency risk of fire or explosion. The occupational risks, such as the number of incidents related to system, in order to decrease the emergency management implemented an integrated The Rompetrol Group has emergency intervention. response framework for Such exercises are performed case of serious incidents. the site. have effects within the limits of in case of incidents which intervention forces cooperate accident and also how the procedures in case of an emergency notification to check and evaluate the purpose of the simulation was management knowledge. The upgrading the major accident specialized teams' and in preparedness level of necessary in improving the periodically and they are Vega Petrochemicals Petromidia A. Framing of CO following areas of interest: environmental strategy has the The Rompetrol Group sustainable practices. through conservation and environmental protection, applying the general principles of where TRG has companies, applicable for each country with the environmental legislation its activities in total conformity environmental field is to develop Rompetrol Group in the The main objective of The Environment In February 2013, the evaluation of the CO phase III related to the EU-ETS scheme. For each of the 3 entities of BU Refining, the greenhouse gas permit had the period of validity 2013-2020 verifiers took place (in order to report to the National Environmental Protection Agency). Installations 2 allocated in certificates allowances in EUTL (2012 - 2014) 648,768 No CO 33,771 71,833 2013 2 consumed in certificates 756,755 No CO 40,165 44,690 2013 efficiency improvement and and technologies for energy • Optimization of the operations ones; wastes, especially hazardous quantities of the generated resources consumption and the • Minimization of the natural environmental incidents; • Minimization of the the environmental field; international legal requirements in facilities at national and • Compliance of activities and 2 2 emissions for the year 2012 and their validation by certified be returned to certificates to 107,987 No CO 6,394 EUTL - 2 allowances in Excess of CO 261,357 2012 state authorities, NGOs etc. and with the interested public, communication within the Group • Insurance of excellent specialized personnel in the field; • Permanent training of in all our entities; system (ISO 14001) implemented environmental management • Improvement of the certified gases; emissions, especially greenhouse reduction of different pollutants 2 Raport anual 2013 • www.rompetrol.com allowances in Excess of CO 146,976 2013 2 Excess of CO certificates in 174,119 2014 2 79

Corporate Social Responsibility B. ENVIRONMENTAL INDICATORS

No Indicators Measurement Total 2011 Total 2012 Total 2013 units 1 Discharge of sewage waters m3 7,490,432.2 8,469,836 6,755,164 2 Total waste tons 27,530.7 41,655.88 18,367.77 3 Total water input m3 5,801,273.65 7,022,460.58 7,296,044.78 4 Environmental charges* $ 24,104,130.72 23,553,658.94 21,834,022.72 Corporate Social Responsibility Social Corporate Corporate Social Responsibility Social Corporate 5 The costs of environmental compliance $ 13,517,189 54,807,032.68 19,068,420.30 6 The number of accidental pollutions (spills) units 1 1 1 7 Number of inspections by environmental units 187 193 169 state authorities 8 Charged environmental penalties by $ 35,302 22,203 8,274 environmental state authorities

C. Environmental Achievements • In 2013 a new Integrated Environmental Permit for Petromidia Refinery was issued. In December 2013, EPA Constanta enclosed the Environmental Integrated Permit of Rompetrol Petrochemicals within Petromidia Environmental Biodiversity activities annually: ponds decontamination procedures Integrated Permit due to the The company recognizes the unsettling, waste (PET's) consisted in the enzyme merging of these 2 entities. importance of preserving the collection, rush-bed cut-off. treatment of the contaminated Black Sea biodiversity ( in the area, and were performed in • In November 2013 was issued areal Petromidia refinery is Waste management parallel with the recovery of oil a new revised Environmental In- located) within the context of Rompetrol Refinery has and pumping of clean water tegrated Permit for Vega Refin- energy demand increase, completed the project to for our own treatment plant. ery. The procedure for obtaining sustainable development and remediate a historically Project phases implied initial the Environmental Agreement improved quality of life in the petroleum contaminated site investigations (test performing, for remedial project is ongoing. surrounding areas of its located on Petromidia choosing the appropriate installations. platform, in compliance with treatment option), proper • In 2013 all Rompetrol Group the environmental legislation, execution, corrections of activities/installations with a sig- The Waste Water Treatment Unit The company's investment in enzyme dosages according to nificant impact on environment (WWTP) is located at the border the implementation of the the different degrees of (IPPC activities/installations) of the Danube Delta Biosphere project involving remediation of contamination of land and have been in accordance with with its no. 1 &2 ponds, which the area amounted to 1 million environment reconstruction. European legislation, national represent the tertiary biological USD. After the remediation, the legislation respectively: SC. stage of the waste waters perimeter was grassed over, Rompetrol Rafinare SA – Petro- treatment (before waters Remediation works were surrounded by trees and midia Rafinery; SC Rompetrol evacuation into Black Sea). carried out by specialized handed back for industrial use. Rafinare – Vega Refinery; Petro- These ponds are populated companies and were The project was accomplished chemicals; SC Ecomaster; IaIFO with numerous birds species, an performed over two years in an in respect with the Zalau. important characteristic of the area of 5,000 m2, treating waste Environmental Agreement Biosphere. In order to preserve containing heavy oil products owned by Rompetrol Refinery biodiversity in the area and at concentrations below the for the remediation execution, maintain the efficiency of the accepted threshold, in reaching the targets set by the biological treatment stage, accordance with competent authority in the Rompetrol performs cleaning environmental legislation. The field.

80 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 81 82 Corporate Social Responsibility Raport anual 2013 • www.rompetrol.com Human Resources range. concentrating in the 36-60 years majority of the employees average age is 40 years, the 2458 (33%) females and the includes 5,016 (67%) males and view, the group population From the demographical point of average of 7,474 employees. Rompetrol Group employed an In 2013 the companies of the Demographics financial support. assistance and benefits programs, lifestyle and wellness, car benefits covering health issues, social life, a program of social balance between work and their employees enjoy a healthy In order to ensure that our our pivotal objectives. knowledge and skills are amongst people and improving their Continuously developing our Employees trained 2013 DYNEFF FRANCE 189

DYNEFF SPAIN 26

KMG TRADING 3

BULGARIA 63

GEORGIA 442

MOLDOVA 82

UKRAINE 14

DWS & RML 1208

BYR 2 33% RPL 1 33% 97%

ECO 13 28% GAS 134 2% 3% MMT 83

PAL 2 9%

RIS 510 67% 28% RPP 265

RPSA 75

contract distribution: Type of Labor working for TRG companies (2013) Gender distribution distribution Age

190 7,240(97%) Permanent Temporary 234(3%)

RQC

RR 884

RWS 147

RZL 187

TRG CC 231 Employees trained 2013 on behavioral vs technical skills observed that the technical companies’ profile, it can be Due to the very technical training activity. participated in at least one 4751 employees who In 2013 there were a total of companies). the operation is developed by 15 Rompetrol Romania (in Romania Moldovia, Rompetrol Ukraine and Rompetrol Georgia, Rompetrol Trading, Rompetrol Bulgaria, Dyneff France, Dyneff Spain, KMG looking at all Group companies: within Rompetrol Group we’re When looking at development business context and objectives. skills and abilities relevant for the by equipping its employees with capital development and growth continued to sustain its human In 2013, the Rompetrol Group Training & Development prevent work accidents). related potential hazards and increase awareness of work goal of Dupont courses is to 1897 employees were trained (the internal sessions continued and occupational health and safety platforms the Dupont On Petromidia and Vega specifics. Rompetrol employees are on job skilled and thoroughly prepared This is a good indicator of how Management, etc.). Skills, Communication Skills, Time (Leadership and Management and 908 employees on soft skills certification, CFA, PMP, ACCA, (specific required by law were trained in technical courses ones (18%): 4220 employees compared to the behavioral higher proportion (82%) courses addressed are in a Raport anual 2013 • www.rompetrol.com 83

Corporate Social Responsibility 84 Corporate Social Responsibility Raport anual 2013 • www.rompetrol.com performance. and attitudes associated with focus on results and promotes behaviors to company culture, motivates them to Management Process aligns employees As a result, the Performance desired outcomes. makers to take action in achieving the organizations and enabling decision individuals, teams, departments and visibility into the performance of objectives quantifiable, providing organization overall. KPIs make success of an activity and growth of the result area, important to measure the strategic objective, outcome, or key monitoring the performance of a selected indicators considered key in Performance Indicators (KPIs). These are Group results, by using tools as Key employee to team, company and the individual contribution of each of planning and objectively evaluating Performance Management is the activity Rompetrol Performance2. Management Program in new investment projects). Refinery modernization, revamping and services, EPCM services (Pavlodar consultancy services, maintenance of these projects is as follows: Supervisors, Translators etc. The outcome Engineers, Project Managers, Planners, Project Management areas - Design are mainly focused on Engineering and join Rominserv. The recruitment projects training for the new personnel that will view, in needs of recruitment and projects are reflected, from HR point of have a timeframe of several years. These gained in Romania and abroad, that represented by the projects that were Rominserv business development is Business1. Development Rominserv– Perspectives for 2014 of studies in any European country. European standards and full recognition quality education in accordance with competitive universities which guarantee University of Ploiesti, three internationally Constanta and Petroleum – Gas Economic Studies, Ovidius University of initiated partnerships with Academy of references; therefor the company very good academic performance and Rompetrol targets talented students with aspects obtained during their studies. in order to practice the theoretical internship program within the company and master students can apply for an Rompetrol internship programs. Bachelor supporting this direction relates to the people. One of the objectives bring on board the most talented The Rompetrol Group is committed to Internship3. Program Rompetrolin other criteria. location, hierarchical level, seniority or employees’ regardless of company, applies to all Rompetrol Group Beginning 2014, Performance evaluation evaluated. how his/her performance will be informed on current performance and priorities, needs to be continuously results and behaviors, what are the what is expected of him/her, in terms of every employee should know exactly In order to have superior performance Community collectors, eco plants for water recycling, areas, or the construction of water medical care units in rural and urban which consisted in the restoration of projects had two overlapping parts: one environment projects were financed. All everyone national program " In 2013, within the 5th edition of the Programs and Projects in Romania large. with the local community and society at solidarity and ensure trustfult relationships human resources, strengthen social development, improve relationships with in turn contribute to sustainable and our contribution to CSR issues. This will demand and improve our performance areas where there is greater social future, we aim to focus our attention on amounted to $ 1.5 mln. In the immediate initiatives in Romania and abroad, In 2013, the Group’s investments in CSR " 16 healthcare and Together for each and “ or continued as part of the platform environment protection were developed Several other projects on healthcare and members of the communities. educational and cultural activities for the component which consisted in solar panels for schools, and a second The Rompetrol Group is also involved in helicopters.since 2010. estimated for the operation of the medicalamount of Jet A 1 fuel, the quantity Rafinare, has been providing a monthlyRompetrol Group, through Rompetrol of victims. In this cooperation, the medical personnel and the transportationemergency interventions, the movement ofcontinued the partnership for supporting airGeneral Inspectorate of Aviation (IGAV)Group, Fundatia pentru SMURD and the In the healthcare field, The Rompetrol Energy comes from the heart Raport anual 2013 • www.rompetrol.com ”. 85

Corporate Social Responsibility 86 Corporate Social Responsibility Annual Report 2013 • www.rompetrol.com support the 21st edition of the prestigious Group continued the partnership to George Enescu Festival - In 2013, the NGOs, unions, individuals etc. projects of the year, projects initiated by competition that awards the best (Civil Society Gala) main sponsor for As of 2003, Rompetrol is a partner and children’s rights legislation etc. coupons; enforcement of education and families; incentives in the form of food lunches for children from low-income free school materials, uniforms and hot advocate: school preparation programs, which became effective in 2004 by Ovidiu Ro Association. This partnership Şcoală” (Each Child in School) national campaign Much attention is paid to support the events. projects and programs or arranging social social partnerships, implementing joint ”Gala Societăţii Civile” “Fiecare Copil în – the annual initiated UNICEF, Hospice, among others. employees, or sponsored initiatives of charity activities with the support of completed various social partnerships, Moreover, in 2013, the company Orchestra at the Palace Hall in Bucharest. concerts of the Royal Philharmonic Romanian public the exceptional The company also offered to the "George Enescu Festival". provided financial support for the in the festival. The company also fuel required to operate official cars used company provided the total quantity of support the prestigious cultural event, the music. Within the partnership created to and their products - fuels and quality international vocation of the two brands was meant to strengthen the Rompetrol with such a large scale event through September 29. This association of held in several cities, from September 1 George Enescu International Festival, Annual Report 2013 • www.rompetrol.com 87

Corporate Social Responsibility 09

Corporate Governance 90 Corporate Governance Raport anual 2013 • www.rompetrol.com Governance Corporate As of 31.12.2013, the Company’s Board of Directors is as follows: Chief Executive Officer – CEO) and four non-executive members.The TRG Board of Directors has 5 (five) members out of which one executive (theThe major shareholder of the Group has a unified management system. Administration and decisional regulations Amsterdam, Strawinskylaan 807, Tower A-8, 1077XX, is KMG Investments B.V. (KMG). The sole shareholder of The Rompetrol Group N.V. headquartered in The Netherlands,The Rompetrol Group NV Shareholders documents. the provisions of their own Articles of Association and provisions of any other relevantThe companies within The Rompetrol Group are administrated in accordance with (in case of companies listed on the stock-exchange). about commercial companies and the Law 297/2004 concerning the capital marketthe local ones. In Romania the main applicable regulations are the Law 31/1990Regulations of Articles of Association applicable to these commercial companies are – having their headquarters in 15 countries. and 5 branches and representative offices) – joint stock or limited liability companiesAt the end of 2013 The Rompetrol Group comprised 49 companies (44 legal entities ensuring the transparency of all activities. which The Rompetrol Group (TRG) activates at operational and managing level, thusCorporate Governance provides coherent information concerning the framework inGeneral data non-executive director, independent Johan Frederik Lodewijk Frowein non-executive director Azamat zhangulov non-executive director Saduokhas Meraliyev chief executive officer Mr. zhanat Tussupbekov Chairman, non-executive director Mr. Daniyar Berlibayev system. The majority of commercial companies have implemented the unified managementSubsidiary Remuneration Committee. Directors is in charge with founding specialized committees like Audit Committee orsupervising the management position. In order to support its activities, the Board ofBoard of Directors are responsible for the general policy of the company and forcompany's objectives, strategy and policies. The non-executive members of thegeneral affairs of the company's enterprise, including for setting and achieving theBoard members are together responsible for the company's management, theGeneral Duties and Powers of the Board Deputy Executive Managers specialized in different types of activities of the Group.operations/groups of operations to certain third parties. So, at the TRG level there arecompany. The CEO may delegate his managing function for certainstatutory provisions, CEO shall be the solely authorized person to represent theeveryday management of the company and its subsidiaries. According to theThe CEO is responsible, in accordance with the Articles of Association, with the different decisional levels: The decisional right upon internal operations of every company is divided into General Meeting Shareholders’ organized under the liability company, Production, a limited Rompetrol Exploration & • Incorporation of financial holding activities main object of activity - Netherlands, having as Amsterdam, The Tower A-8, 1077XX, in Strawinskylaan 807, TRG NV) headquartered 2013 (owned 100% by Engineering B.V. in July KazMunayGas • Incorporation of capital of Rom Oil S.A. 99,9998505% of the share S.A. which currently holds S.A. to Rompetrol Rafinare each) held within Rom Oil sold their interests (1 share Servicii Ecologice S.R.L. S.R.L. and Ecomaster- • Rom Oil S.A. – Rominserv extraction of crude oil. activity object the 1st floor having as main Piața Presei Libere no. 3-5, Bucharest, 1st District, headquartered in Romania law provisions, Directors Board of Moldova. shares in Rompetrol • Acquisition of 100% country. industrial services in this of developing the was registered, as a result Kazakhstan in Pavlodar Branch of Rominserv stopped) and also the liquidation process was Kazakhstan (the activity of Rominserv decided to resume the core activity - it was • Regarding the non- and Financial Manager General Manager Raport anual 2013 • www.rompetrol.com 91

Corporate Governance 10

Finance Finance Finance Summary of Significant Accounting Policies

These financial statements have been prepared are expensed and included in administrative S.R.L. the property, plant and equipment that incurred in bringing the inventories to their in accordance with International Financial expenses. was stated at re-valued amounts, being the fair present location and condition. The following Reporting Standards (“IFRS”) effective as of value less any accumulated depreciation and cost formulas were used to determine the cost December 31, 2013, as endorsed by the EU. The interest of non-controlling shareholders in the impairment loss have been restated to the cost applicable to different types of inventories: acquiree is initially measured at the non- model for comparative disclosure. The consolidated financial statements are controlling’s proportion of the net fair value of • the weighted average method for purchased prepared under the historical cost convention. the assets, liabilities and contingent liabilities When assets are sold or retired, their cost and crude oil and petroleum products recognized. Businesses acquired or disposed accumulated depreciation are eliminated from • the first-in-first-out (FIFO) for supplies and The financial statements of the Group are during the year are included in the consolidated the accounts and any gain or loss resulting from materials. prepared on an ongoing concern basis financial statements from the date of acquisition their disposal is included in the income or to date of disposal. statement. Trade receivables are recognized initially at fair The group’s consolidated financial statements value and subsequently measured at amortized are presented in United States Dollar (“US Dollar” The Group's investments in associates and joint Depreciation for property, plant and equipment cost using the effective interest method, less or “USD”), which is the Group’s functional ventures are accounted for using the equity except land and construction in progress is provision for impairment. currency. method of accounting. Under the equity computed using the straight-line method over method, the investment in an associate/joint the following estimated useful lives, between 3 to Cash includes cash on hand, cash with banks The consolidated financial statements comprise venture is carried in the balance sheet at cost 60 years. and checks in course of being cashed. Cash the financial statements of the parent company plus post acquisition changes in the Group's In 2012 the Group reassessed the useful lives for equivalents are short-term, highly liquid and its subsidiaries as of 31 December 2013. share of net assets of the associate/joint venture. the refinery assets held in Rompetrol Rafinare investments that are readily convertible to known After application of the equity method, the (Petromidia and Vega) and for the gas station amounts of cash within remaining three months Control is considered to be achieved where the Group determines whether it is necessary to assets and intangible assets held by Rompetrol or less to maturity from the date of acquisition Group (either directly or indirectly), owns more recognize an additional impairment loss on the Downstream. The new useful lives were applied and that are subject to an insignificant risk of than 50% of the voting rights of the share capital Group's investment in its associates/joint venture. starting January 1, 2012. change in value. of another enterprise and is able to govern the financial and operating policies of an enterprise All intra-group balances, income and expenses At each balance sheet date, the Group reviews Revenue is recognized to the extent that it is so as to obtain benefits from its activities. Non- and unrealized gains and losses resulting from the carrying amounts of its property, plant and probable that the economic benefits will flow to controlling interests represent the portion of the intra-group transactions are eliminated in full. equipment and intangible assets to determine the Group and the revenue can be reliably profit or loss and net assets that is not held by the whether there is any indication that those assets measured. Group and are presented separately in the Goodwill is initially measured at cost being the have suffered impairment. If such indication consolidated income statement and within excess of the aggregate of the consideration exists, the recoverable amount of the asset is Sales of goods are recognized when delivery has equity in the consolidated balance sheet, transferred and the amount recognized for non- estimated in order to determine the extent of the taken place and transfer of significant risks and separately from the parent shareholders’ equity. controlling interest over the net identifiable assets impairment loss (if any). Where it is not possible to rewards has been completed. Revenue acquired and liabilities assumed. Goodwill is estimate the recoverable amount of an comprises the fair value of the sale of goods and Business combinations are accounted for using tested for impairment annually (as of 31 individual asset, the Group estimates the services, net of value-added tax and any excise the acquisition method. The cost of an December) and when circumstances indicate recoverable amount of the cash-generating unit duties and other sales taxes, rebates and acquisition is measured as the aggregate of the that the carrying value may be impaired. to which the asset belongs. discounts. consideration transferred, measured at acquisition date fair value and the amount of Property, plant and equipment are stated at Inventories, including work-in-process are stated Revenue from rendering transportation services any non-controlling interest in the acquiree. For cost. Starting 1 January 2012, the Group at the lower of cost and net realizable value. Net and other services is recognized when services each business combination, the acquirer changed its accounting policy for Rompetrol realizable value is the selling price in the ordinary are rendered. measures the non-controlling interest in the Rafinare S.A. and Rompetrol Petrochemicals course of business, less the costs of completion, acquiree either at fair value or at the S.R.L. from the revaluation model to the cost marketing and distribution. "Cost" comprises Payments to defined contribution retirement proportionate share of the acquiree’s model. As of 31 December 2011 for Rompetrol direct materials and, where applicable, direct benefit plans are charged as an expense as they identifiable net assets. Acquisition costs incurred Rafinare S.A. and Rompetrol Petrochemicals labor costs and those overheads that have been fall due. Payments made to state - managed

94 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 95 Finance Finance Planning and Performance Management (PPM)

retirement benefit schemes are dealt with as Financial assets within the scope of IAS 39 are key 2013 PPM activities: • Optimized Group Performance Monthly reviews defined contribution plans where the Group’s classified as financial assets at fair value through • Annual Coordination of the 5 years budget, package (Flash and GFO reports) on planning & obligations under the scheme are equivalent to profit or loss, loans and receivables, held to continuing the trend of shifting the set-up from budgeting execution reports by increased focus those arising in a defined contribution retirement maturity investments, available-for-sale financial traditional incremental planning process towards on actionable business drivers analysis to allow benefit plan. assets, or as derivatives designated as hedging an activity-based one; the Internal Plan version the optimum data and analysis package, support instruments in an effective hedge, as was also developed with assumptions of very for operational decisions; the variance analysis Income tax charge consists of current and appropriate. Financial liabilities within the scope ambitious operating margins and sales; both versus budget and versus previous year were deferred taxes. The charge for the current tax is of IAS 39 are classified as financial liabilities at fair continuously optimized, offering a detailed based on the results for the period as adjusted value through profit and loss, loans and • Active budget control procedure aiming to understanding of current month and year-to-date for non-deductible and non-taxable items. The borrowings, or as derivatives designated as optimize the budget execution process by results evolution actions on all potential negative tax rates and tax laws used to compute the hedging instruments in an effective hedge, as ensuring a proper approval flow for validating gaps. amount are those that are enacted or appropriate. any updates on budgeted assumptions either substantively enacted, by the reporting date, in from timing perspective or from any new Main 2014 PPM initiatives for implementation the countries where the Group operates and assumptions perspective. along the year on both supply chain & generates taxable income. controlling areas: • Optimized performance management process • Business Intelligence implementation process Deferred tax is provided using the liability by two means: 1. aligning operational & financial with the aims of offering a close to real-time method on temporary differences at the set of KPIs with the new five year-budget decision making tool and creating a single reporting date between the tax bases of assets objectives for all eligible people ; 2. implementing Group master operational and financial and liabilities and their carrying amounts for a quarterly routine process of KPIs achievements performance database repository, to collect all financial reporting purposes. revision, to allow for corrective actions on all relevant business key drivers on both past and potential negative gaps. future period, on daily, monthly, annual, time The Group determinates the classification of its frames, single access point covering most of financial assets and liabilities at initial recognition. • Integrated planning model representing a the quantitative side of entities & Group Financial assets are recognized and Group results planning tool being able to receive management teams reports. derecognized on a trade date where a inputs on key business drivers from all across the purchase or sale of an investment is under a value-chain and to deliver what-if business • Group Performance Monthly reviews contract whose terms require delivery of the scenarios, Group financial results for a real-time package (Flash and GFO reports) execution in investment within the timeframe established by assessment of best economical solutions to alignment with the revised accountability the market concerned and are initially measured undertake. performance parameters drawn by the „New at cost, including transaction costs. operational model” project. • Working capital management detailed Group’s financial assets include cash and cash reporting aiming at having a more robust • Rolling forecast process, a monthly rolling equivalents, trade and other receivables, performance review package, not only limited to planning process for the next twelve months. Its unquoted financial instruments, and derivative Profit & Loss, Capex underlined performance, but goal is to both create a structured routine of financial instruments. Financial liabilities include also performance indicators of cash working out solutions for meeting the annual finance lease obligations, interest-bearing bank management. budget targets and also improve forecast loans and overdrafts and trade and other accuracy on a larger time frame, highly payables and derivative financial instruments. • Benchmark analysis reporting implementation, needed in current economic crisis period. For each item the accounting policies on to assess TRG key performance ratios and recognition and measurement are disclosed in performance dynamics against regional Enhanced margins & OPEX analysis by this note. Management believe that the relevant set of peers in refining & marketing actionable drivers (client level profitability, estimated fair values of these instruments operations. costs drivers), as support for any management approximate their carrying amounts. business decisions

96 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 97 Abbreviated financial statements Derived from the consolidated financial statements as of 31 December 2013 Finance Finance

CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED INCOME STATEMENT December 31, December 31, 2013 2012 2013 2012 Revenue 11,179,332,171 9,259,018,700 Non-current assets 73,752,775 70,078,592 Cost of sales (10,801,787,089) (8,818,041,722) Intangible assets 55,241,231 55,241,231 Goodwill 1,293,167,998 1,290,272,204 Property, plant and equipment 979,738 956,671 Gross profit 377,545,082 440,976,978 Financial investments 21,450,635 20,136,565 Investment in associates 15,081,710 16,677,257 Selling and distribution expenses (264,074,160) (337,056,519) Interest in Joint venture 1,242,897 - General and administrative expenses (134,227,529) (130,564,207) Deferred tax asset 6,681,373 12,736,649 Other operating expenses, net (15,824,475) (68,741,738) Long-term receivable 1,467,598,357 1,466,099,169 Total non-current assets Operating loss (36,581,082) (95,385,486)

Current assets 643,052,191 696,696,558 Finance cost (77,744,318) (59,312,365) Inventories, net 1,009,666,026 962,484,445 Finance income 5,426,462 7,688,841 Trade and other receivables - 2,672,639 Net foreign exchange (losses)/gains (6,102,847) (7,339,346) Derivative Financial Instruments 226,315,267 308,395,372 Cash and cash equivalents 1,879,033,484 1,970,249,014 Share in profits of associates 781,603 898,493 Total current assets Share of profit/(losses) of joint ventures (2,288,230) (3,246,714) 3,346,631,841 3,436,348,183 TOTAL ASSETS Loss before income tax (116,508,412) (156,696,577)

Equity and liabilities Income tax (2,727,215) 750,883

Capital and reserves Net loss for the year (119,235,627) (155,945,694) Issued capital 137,775 122,704 Share premium 2,631,512 2,631,512 Attributable to: Additional paid-in capital 2,020,199,790 2,017,699,790 Equity holders of the parent (78,423,460) (76,781,550) Effect of transfers with equity holders 115,029,358 115,029,358 Non-controlling interests (40,812,167) (79,164,145) Retained earnings (833,603,654) (754,616,268) Current year result (78,423,460) (76,781,549) Translation reserve 11,352,947 9,791,282 CONSOLIDATED INCOME STATEMENT Equity attributable to equity holders of the parent 1,237,324,268 1,313,876,829 2013 2012 Non-controlling interest (288,121,988) (246,084,879) Total equity 949,202,280 1,067,791,950 Net loss for the year (119,235,627) (155,945,694) Other comprehensive income Non-current liabilities Long-term borrowings from banks 257,315,544 253,566,905 Exchange differences on translation of foreign operations 1,576,736 8,378,620 Net obligations under finance lease 4,863,768 5,346,522 Actuarial losses related to defined benefit plan (1,228,785) (1,104,354) Deferred tax liabilities 19,827,604 21,816,340 Provisions 87,106,695 94,341,331 Other comprehensive income/(loss) for the year, net of tax 347,951 7,274,266 Other non-current liabilities 1,723,075 2,496,925 Total non-current liabilities 370,836,686 377,568,023 Total comprehensive income/(loss) for the year, net of tax (118,887,676) (148,671,428)

Current liabilities Attributable to: Trade and other payables 1,341,160,487 1,314,542,178 Equity holders of the parent (78,075,509) (69,507,283) Derivative Financial Instruments 1,901,176 2,468,926 Non-controlling interests (40,812,167) (79,164,145) Net obligations under finance lease 1,694,843 1,267,954 Short-term borrowings banks 681,522,952 670,960,502 Total comprehensive loss for the year, net of tax (118,887,676) (148,671,428) Provisions - current portion 313,417 1,748,650 Total current liabilities 2,026,592,875 1,990,988,210

Total liabilities 2,397,429,561 2,368,556,233 The abbreviated financial information is derived from the Consolidated Financial Statements as of and for the year ended 31 December 2013 and should be read in conjunction with these audited Consolidated Financial Statements. TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3,346,631,841 3,436,348,183 On the full consolidated financial statements an unqualified audit opinion was issued.

98 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 99 CONSOLIDATED STATEMENT OF CASH FLOW 2013 2012

Loss before tax (116,508,412) (156,696,577) 347,951 (657,191) (666,256) (977,052) 7,274,266 2,500,000 Finance Finance Total Total equity equity

Adjustments for: 299,420,779 917,699,790 949,760,966 (155,945,694) (148,671,428) (119,235,627) (118,887,676) Depreciation and amortization 114,238,005 104,950,401 1,067,791,950 Reserves for receivables and inventories and write-offs 2,021,077 62,604,587 Impairment and provisions for property plant and equipment 3,698,276 604,103 Other provisions - - Retirement benefit charged to equity (10,512,073) 59,865,893 - - Late payment interest 196,848 623,575 (666,256) Restated (657,191)

Interest expense, commission and bank charges and collec- 22,411,783 5,503,538 (40,812,167) ling interest ling (79,164,145) (79,164,145) (40,812,167) Non-control- (166,263,543) (287,563,302) tion discounts 55,332,535 45,413,963 (246,084,879) Interest expense shareholders - 8,394,864 Finance income (5,426,462) (7,688,841) Net loss from non-current assets disposals and write-off (395,866) (178,881) - - - Net result from sale of investments - (80,357) - - - - reserve

Unrealised losses/(gains) from derivatives on petroleum prod- 6,287,791 8,949,183 1,561,665 8,376,254 1,415,028 8,376,254 9,791,282 1,561,665 11,352,947 ucts (14,366,128) 16,627,624 Translation Realized losses/(gains) from derivatives on petroleum prod- (781,603) (898,493) ucts 2,288,230 3,246,714 Share in profits of associates (5,088,356) 1,045,499 Share in profits of joint venture 53,395,645 152,286,795 ------

Unrealised foreign exchange (gain)/loss on monetary items of Effect 115,029,358 115,029,358 115,029,358 transfers with transfers

Operating profit before working capital changes holders equity (43,389,712) (342,940,846) Net working capital changes in: 50,560,434 (156,104,071) Receivables and prepayments 18,841,649 269,790,711 ------

Inventories 26,012,371 (229,254,206) tal Trade and other payables 2,500,000 Additional Change in working capital (9,069,827) (1,740,211) 917,699,790 paid-in capi- paid-in 1,100,000,000 2,017,699,790 2,020,199,790 10,110,930 (21,180,573) Income tax paid Cash payments for derivatives, net 80,449,119 (99,888,195) - - - - Net cash provided by operating activities earnings Restated Retained Retained (977,052) (1,228,785) (81,268,493) (132,678,060) (1,104,354) (78,423,460) (79,652,245) (76,781,549) (77,885,903) (831,397,817) (912,027,113) Cash flows from investing activities (29,958,934) (18,688,994) (753,511,914) Purchase of property, plant and equipment (14,910,220) (38,761,105) Purchase of intangible assets 170,116 196,160 Changes in payables for capital expenditures 880,744 589,139 ------Dividends received from associated companies 2,010,000 - Share premium Proceeds from sale of property, plant and equipment (3,150,000) = 2,631,512 2,631,512 2,631,512 Consideration received from non - controlling - - - - Consideration paid for acquisition of non-controlling interests (126,226,787) (189,342,860) - - 2,366 2,366 15,071 Issued Issued 15,071 capital 120,338 122,704 Net cash used in investing activities 137,775 2,500,000 - Cash flows from financing activities (55,332,535) (45,413,964) Consideration received from hybrid loan 5,426,462 7,688,841 Interest and bank charges paid 3,748,639 250,743,640 Interest and other financial income 7,856,102 188,807,323 Movement in long term loans from banks (501,105) (2,897,417) Movement in short-term borrowings (36,302,437) 398,928,423 Repayments of finance leases Net cash from financing activities (82,080,105) 109,777,725

(Decrease)/Increase in cash and cash equivalents 308,395,372 198,617,647

Cash and cash equivalents at the end of the period 226,315,267 308,395,372

The abbreviated financial information is derived from the Consolidated Financial Statements as of and for the year

ended 31 December 2013 and should be read in conjunction with these audited Consolidated Financial Statements. EQUITY IN CHANGES OF STATEMENT CONSOLIDATED 2011 31, December Net loss for 2012 Other comprehensive income income comprehensive Total Dividends payable to minority shareholders Hybrid loan 2012 31, December Net loss for 2013 Other comprehensive income comprehensive incomeTotal Dividends payable to minority shareholders Hybrid loan Changes in Group structure December 31, 2013 On the full consolidated financial statements an unqualified audit opinion was issued.

100 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 101 Finance Finance Analysis of Financial Results

In 2013 The Rompetrol Group (the “Group”, 2014-2018 strategy is to expand distribution 2. Environment refinery extremely efficient due to latest “TRG”) and its subsidiaries engaged in all aspects operations in countries around the Black Sea, to Brent was volatile in 2013. However, long term technologies and size; of the . Its core operations are benefit from increased vertical integration with average was stable, average price in 2013 being • Refinery overcapacity, inefficient capacities in the downstream segment, through its refining operation for improved financial of USD 108.7 compared to USD 111.6 in 2012. are not closed due to political and social competitive Petromidia refinery and strong retail performance through the followings: Brent was lower in first months of 2013 due to reasons. operations in Romania, around the Black Sea depressed economic outlook and safer and in South of France. The Group continued to • Strengthen the Retail network presence geopolitical situation. It went higher in the last From exchange rate perspective, The RON had a pursue its strategy of developing its core refining following the upgrading of the Petromidia months of 2013 due to better economic outlook very good start in 2013, slightly appreciating in and distribution operations, despite a worsening Refinery. in US and low production of crude in Libya. value in report with the euro, supported by economic environment and very low refining • Develop in the rapidly maturing Black Sea Retail positive investors feeling (EUR/RON 4.3072 margin. market. The Group is planning to expand in the Urals differential reached the highest level in reached in March). However, the month of markets where it is presently active (Romania, history +USD1.0/bbl and an average level of December was not favorable to the national 1. Strategy Bulgaria, Ukraine, Moldova and Georgia) and to USD0.36/bbl in 2013 compared to USD 0.91/bbl in currency, as it dropped almost 0.9% in front of To assure competitiveness of the Kazakh crude start-up operations in Turkey. 2012. Urals differential strengthened due to the euro: the dissensions on the domestic based products in the Black Sea market, an • Initiatives to reduce cost in refining with the Russian oil flows redirected to Asia, tensions in political scene affected the economic ambitious upgrade program has been executed purpose to improve Solomon indicators: Libya, Egypt and Iran, all with impact in heavy environment and sent negative signals to to bring the Petromidia refinery in Romania to o The material technological improvements crude supply to Europe. investors concerning a certain instability world-class standards, by increasing the capacity brought by the Refinery Upgrade Package to (EUR/RON reached 4.4847 in December). from 3.8 million tons per year to 5 million tons per increase refinery savings by an additional USD 2 Refinery margins in Europe dropped in the EUR/USD showed strong movement over the year. As a result, in 2013 Petromidia reached million/year in net profit and USD 4 /ton savings in second part of 2013 to record low levels, even course of 2013. January and February were the highest level of refinery run rate of 12.74 k tons processing costs; lower than 2009 having as the main features of months which showed the most volatility due to /day. In addition white products yield (valuable o Further to the technological improvements, the market: the high tensions in the Eurozone. During this products) reported to total feedstock achieved in Petromidia refinery management will continue to • Increased competition from US who benefits time, the EUR/USD exchange rate hit a high of 2013 highest level reached in history of 85.6%, focus on cost competitiveness (further cost from cheaper crude and utilities; 1.37 and a low just below the 1.30 level. From the quantity of diesel produced of 1.915 k tons and reduction initiatives) and energy efficiency for • Increased competition from Russian refineries second part of the year, due to ECB decision to 46% Diesel yield reported to total throughput, optimum refinery performance; who enjoy significant fiscal benefits further ease the monetary policy, the EUR/USD higher with 6% compared with 2012. From • Increased competition from Asian newly built gradually increased ending 2013 at 1.38. processing cost perspective, during 2013 The management believes that the Petromidia refinery reached the lowest processing developments mentioned above will result in an cost per ton of USD 26/ ton. enhancement of the Group's ability to support its 2013 2012 continuing operations. Brent Dated USD/bbl 108.7 111.6 This upgrade makes Petromidia the largest refinery Ural Med USD/bbl 108.3 110.6 in Romania and one of the largest in the Region. Throughout 2013 the Group took/took to term Brent-Ural Differential USD/bbl 0.4 1.0 The refinery is strategically located on the Black additional bank loans and facilities that have Sea shore, with easy access to several markets for provided additional funding for investments and Premium Unleaded 50 ppm FOB Med USD/t 822.2 844.3 which forecasted demand is expected to grow operations. The Group also received confirmation Diesel ULSD 50 ppm FOB Med USD/t 930.8 968.5 over the next years, at the same time offering of KMG Group's continuing support for the next Gasoline Platts USD/t 981.8 1,022.1 certain advantages in each, such as: good twelve months should the need arise for RON/USD Average exchange rate 3.33 3.47 contribution margins or room for additional additional funding to what is or will be available RON/USD Closing exchange rate 3.26 3.36 market share growth. from its own operations and/or third party sources. RON/EURO Average exchange rate 4.42 4.46 The 2014-2018 strategy is a mixture of cost Based on the Group's plans for 2014 and other RON/EURO Closing exchange rate 4.48 4.43 optimization projects for production, network matters mentioned above, it is considered that USD/EURO Closing rate 1.38 1.29 expansion for retail; and rationalization of non- the preparation of the financial statements on a Inflation in Romania 1.55% 3.33% core businesses. The main objective for the ongoing concern basis is appropriate.

102 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 103 Finance Finance 3. Consolidated Accounts continuous improvement of the refinery units USD 6/ton, by eliminating the third party increased thanks to innovative products (E85, The consolidated accounts are fully disclosed in operation and due to maximization of valuable handling/storage/transfer costs and Non-Road Diesel). the next chapter of this report and further analyzed products: 2013 Hexane yield of 43% was the commercial/technological losses. This has in the following sections for each business unit highest achieved in refinery history. resulted in OPEX saving incomes generated from All Non- Core activities, not directly related to (figures in USD million). non -group services: piloting, towing, trading in crude and oil products, refining, and Petrochemicals mooring/unmooring. sales of oil products are grouped together in the 2013 2012 Rompetrol Petrochemicals is the sole Business Unit Non-Core. Net revenues 11,179.33 9,259.02 polypropylene producer in Romania; starting In 2013 the Retail Business Unit managed to Gross profit 377.55 440.98 with 2010 the company was also the sole slightly increase volumes compared to 2012, Rominserv, the Group's engineering company, Capex 1,879.03 151.37 producer of polyethylene, , constantly increasing reaching a total of 4.37 million tons (2012 4.03 completed 29 projects in 2013. A contract signed its market share given the economic million tons) of products sold. in 2013 will bring significant business circumstances on the market. Its dynamic development in Kazakhstan, in the refinery and 4. Operations Review development strategy has secured the company Rompetrol Downstream reached record sales in petrochemical sectors (EPC "turn-key" The consolidated accounts are fully disclosed in a competitive position on the domestic and 2013 of 1.57 million tons, 142 k tons higher Modernization of Pavlodar Refinery, Project the next chapter of this report and further analyzed regional markets - in the Balkans Region. One of compared with last year. Also, Rompetrol Management and Technical Consultancy in the following sections for each business unit the company advantages is determined by its Downstream continued the cost cutting actions Services for Kazakhstan Petrochemical Industries (figures in USD million). proximity to its customers, providing the products in 2013, allowing it to obtain better results Inc. and Shymkent Refinery) required Just - In - Time, as well as offering compared with previous years. Rominserv Valves laifo became a new company Petromidia Refining 2013 2012 technical consulting and monitoring of their within The Rompetrol Group, through the spin-off Feedstock processed Kt 4,182 4,047 production cycle. Consequently, in 2013 the Rompetrol Group had process from Rominserv, in November 2011. It is Gasoline produced Kt 1,055 1,135 the best economic results in recent years, specialized in the design, manufacture and Petrochemicals 2013 2012 despite the decrease in refinery margins to trading of a wide range of steel and iron Diesel & jet fuel produced Kt 2,030 1,728 Propylene processed Kt 107 119 USD25/Mt in 2013 compared to USD39/MT in industrial valves. In 2013, Rompetrol Valves laifo Motor fuels sales – domestic Kt 1,533 1,428 Propylene processed Kt 55 58 2012. During 2013, Rompetrol Moldova opened developed the cooperation with several Motor fuels sales – export Kt 1,422 1,307 13 New DOCO Stations and rebranded 13 other companies such as GEA Germany, IBC Prague, Sold from own production Kt 160 167 Export % 48% 48% stations. The overall volumes sold increased by and extended the contract with OMV Petrom, Sold from trading Kt 9 11 Domestic % 52% 52% 70% in 2013 compared with 2012: record sales in valid until 2014. Total sold Kt 168 177 Retail (volumes increased by 25.5 % vs. 2012) Gross cash refinery margin USD/bbl 5.0 4.4 Export % 59% 56% record sales in Wholesale (volumes increased by In 2013, Palplast's products became competitive Domestic % 52% 44% 124% vs. 2012). Estimated Market Share increased on the market in term of price. That was possible Petromidia Refinery up to 20% from 13% in 2012 and registered a due to reduction of energy consumption and The Petromidia Upgrade program was finalized record EBITDA for the last 5 years, of USD 3 million. technological waste during production process at the beginning of Q3 2012, when the refining The company recorded improved results, and due to acquisition of raw material at capacity was incremented from 3.8 million ton of especially in the second and third quarter of The good net result of Rompetrol Georgia during favorable prices. In 2013 Palplast enriched its crude oil per year to 5 million ton per year. As the 2013, sustained mainly from the polyethylene 2013, of USD 5.6 million, was reached through client portfolio with a number of 153 new result of the Upgrade program implementation business. In 2013 Rompetrol Petrochemicals consistent commercial and OPEX control actions. customers. Volume of produced & sold pipe in white products basket yields achieved during maintained the quality of its products, thus the Compared to 2012, annual total sales volumes 2013 was of 2,203 tons, higher by 20% compared 2013 was of 85.6% - highest ever reached in weight of high quality rated polymers products have increased by 13 K tons. Contribution was with 2012.Given the focus of European Union and history; 46% Diesel yield reported to total remained 98%. less by USD 5 million due to general margins of the Romanian Government on rehabilitation throughput, highest ever reached in the reduction on the market, after the liberalization of irrigation systems from agricultural areas, company history and higher with 6% compared In 2013, the Trading Business Unit strengthened its process. Despite decreased margins, EBITDA was Palplast paid special attention to this segment to the previous year. role of the supply chain optimizer within the in line with prior year. and it represented 25% from total sales. Group, continuing to ensure optimum For the year 2013 the refining average monthly functioning conditions for Petromidia refinery by For Rompetrol Bulgaria main objective in 2013 throughput was higher by 4% compared to2012. placing to profitable third parties the spare was improvement of the model of operation of Rompetrol Quality Control is one of the top During 2013, turnaround activity took place for 35 petroleum products quantities obtained by the retail business. Therefore improvements were companies on the domestic market of laboratory days. Highest level of refinery run rate ever Petromidia Refinery after supplying the developed and implemented in the dealers and analyses. In 2013 it increased the percentage of reached by Petromidia refinery was of - 12.74 Romanian market and the near-abroad franchise models. Retail sales showed steady non-group revenues in total turnover (12.19% kt/day of operation in 2013 subsidiaries. Although volume has more than growth. EBITDA increased with USD 2.3 million in versus 9.32% in 2012). In March 2013, RQC took doubled since 2010, local costs increased only 2013 vs. 2012, reaching the amount of USD 3.68 over the petrochemicals lab from Rompetrol Vega Refinery by 20%, following significant reduction vs. 2012. million. Petrochemicals, optimizing the costs at Group Although the total feedstock processed by Vega In 2013, KMG Trading AG (former Vector Energy level and adding to its range of services new Refinery throughout 2013 was lower by 21% Ltd) successfully entered Asian Markets Dyneff France incurred positive net result (USD type of analyses. Starting with September 2013, compared with 2012 (correlated with the contributing with USD 0.5 million profit. 0.7 million) and far better than last year (USD +7.7 following the acquisition of specialized laboratory operation of Petromidia refinery and low White Midia Marine Terminal through the Crude Oil million vs. 2012). The company increased equipment, RQC became able to perform the Spirit market demand), almost the same financial Tank Farm registered, since opening in January volumes by 3.2% in 2013, while French market MTBE analyses necessary for the Light Nafta results in terms of EBITDA were obtained due to 2009, cost reductions in relation to oil supply of was slightly positive (+ 0.3%). Dyneff Market Share product delivered by Rompetrol Refinery Vega.

104 Raport anual 2013 • www.rompetrol.com Raport anual 2013 • www.rompetrol.com 105 Finance Finance laboratory in Bulgaria. Thus another optimization to be used in its production as well as supplies to Foreign Currency Risk Management Board of Directors of costs was achieved at Group level. its clients. Due to significantly increased volatility The Group 's functional currency is United Zhanat Tussupbekov of crude oil, the management developed a States Dollar (“US Dollars”) and crude oil Daniyar Berlibayev Upstream hedge policy which was presented to the Group's imports and a significant part of petroleum Saduokhas Meraliyev Rompetrol Well Services continued the upward Board of Directors and was approved in its most products are all denominated principally in Johan Frederik Lodewijk Frowein trend recorded in the last four years. In 2013 significant aspects in 2010 and with some further US Dollars, therefore limited foreign currency Azamat Zhangulov EBITDA increased by 20% compared with the year amendments in February 2011. Following this exposure arises in this context. In addition 2012, (USD 11.3 million vs. USD 9.4 million) and Net approval, the Group started in January 2011 to certain assets and liabilities are denominated Result increased by 45% (USD 8.8 million vs. 6.0 hedge commodities held by Rompetrol Rafinare. in foreign currencies, which are retranslated million). Three important multiannual contracts Previously, until January 2011, KMG Trading A.G. at the prevailing exchange rate at each were awarded by OMV Petrom to Well Services and Dyneff Group were the only two companies balance sheet date. The resulting differences following the bidding rounds for Cementing, having in place commodities hedge process. are charged or credited to the income Pumping and Acidizing services. Internationally, statement but do not affect cash flows. besides its ongoing operations in Kazakhstan and According to the hedge policy, on the Group Treasury is responsible for handling the South-East Europe, Well Services started to commodity side, the flat price risk for priced Group foreign currency transactions. provide well services in Kurdistan region. inventories above a certain threshold (called base operating stock) is hedged using future Capital Risk Management Drilling & Workover and Mudlogging Divisions contracts traded on ICE Exchange and some OTC The Group manages its capital to ensure that Drilling & Workover and Mudlogging Divisions instruments for the basis risks. The base operating entities in the Group will be able to continue continued providing services in Romania and stock is the equivalent of priced stocks that are as a going concern while maximizing the abroad. Drilling services continued to be held at any moment in time in the Group, hence return to stakeholders through the provided with RP11RO rig, under OMV Petrom price fluctuations will not affect the cash-flow. The optimization of the debt and equity balance. onshore drilling contract started in November Group started a few transactions of refinery The capital structure of the Group consists of 2011, with a total of 6 wells drilled in 2013. margin hedge during 2012 and the intention is to shareholders loans, bank debt, cash and Mudlogging services were provided onshore for extend refinery margin hedge transactions in cash equivalents and equity attributable to Romanian contractors (OMV Petrom and 2014. In 2013 there was no refinery margin hedge equity holders of the parent, comprising Daflog) and for the Exploration & Production due to the lack of opportunities. issued capital, reserves and retained Division (Feteasca KAZ1 and Lupsa SAT1 wells). earnings. Workover operations continued in Libya with the Trading activities are separated into physical three rigs, on a 12 hours daily program, under (purchase from third parties other than KMG, and 6. Outlook normal conditions. The rigs underwent sales to third parties or Intercompany) and paper To offset prolonged negative impact of recertification processes, according to the trades (for economic hedging purposes). Each depressed downstream market, Management contracts stipulations and international good physical transaction is covered through a related of the Group is committed to further reduce practice, with successful results. futures position according to the exposure costs, complete modernization of the parameters set by management (i.e. based on Petromidia Refinery, restructure the business 5. Financial Instruments and Risk Management physical quantities sold or purchased). The Group and concentrate on core business, close non- Financial instruments in the balance sheet sells or buys the equivalent number of future profitable businesses. include investments, trade receivables and contracts. This paper trade is done only to hedge other receivables, cash and cash equivalents, the risk of the Physical Trade and not to gain from We will fund our plans through a mix of equity short-term and long-term debts, trade and other the trading of these instruments. As of 2013, the and debt, with a support from our payables. The estimated fair values of these net trading position taking into consideration the shareholders. instruments approximate their carrying amounts. realized and unrealized gains and losses on derivatives and physical trades was a net gain of The average headcount across Group The Group’s activities expose it to a variety of USD 1.2 million (2012: net loss of USD 4.7 million). entities during 2013 was 7,474 as compared to risks including the effects of: changes in the 7,448 during 2012. We employ best practices international quotations for crude oil and Interest Rate Risk for attracting, retaining and motivating our petroleum products, foreign currency exchange Interest rate price risk is the risk that the value of a employees, who are the principal contributors rates and interest rates. The Group’s overall risk financial instrument will fluctuate due to changes to the development of our Group. We are fully management main objective is to minimize the in market interest rates relative to the interest rate committed to our responsibilities for their potential adverse effects on the financial that applies to the financial instrument. Interest development and for the communities in performance of the Group companies. rate cash flow risk is the risk that the interest cost which we operate. will fluctuate over time. The Group has long-term As of the date of these financial statements, Commodity Price Risk debt and short-term debt that incur interest at all members of the TRG Board are men. The The Group is affected by the volatility of crude fixed and variable interest rates that exposes the management members have been elected oil, oil product and refinery margin prices. Its Group to both fair value and cash flow risk. based on their experience and professional operations require ongoing purchase of crude oil expertise, rather than their gender.

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Auditor’s letter Audit letter Audit letter Audit

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