LukOil Romania General Manager, Constantin Tampiza, told Business Standard that the local fuel market dropped 18 percent in January and that he estimates a 10 percent decline in sales by the end of the year.

According to Tampiza, the causes are "economic recession, lack of market liquidity, construction company blockage, and companies that have halted production," Tampiza said.

Rompetrol's Senior Retail Vice President, Eric Kish, estimates a 20 percent decline in sales this year. "Looking at our clients, we see that many are returning their cars to leasing companies. So they are not using fuel," Kish said.

Leasing companies have indeed faced a drop in business lately. Tiriac Leasing, one of the top players on this segment, has no statistics for contracts signed in January, but said that it financed goods worth €217.5 million in 2008, lower than the €224 mln in deals in 2007. The decline began in the second half of last year, when banks applied harsher lending conditions, a smaller first-time registration tax for second-hand cars was enforced, and the impact of the global crisis began to be felt in Romania.

The trend was confirmed by the Banking Leasing Association (ALB), although final data for 2008 has not yet been made public. "As of the third quarter of 2008, the dynamics of leasing financing declined significantly year-on-year. It comes after an average 45 percent increase of the market in the previous three-four years," said ALB Secretary-General Adriana Ahcearliu.

Car sales are dropping in Romania. As opposed to the double digit growth in previous years, the market is currently registering monthly double digit decline.

Furthermore, the decline in fuel sales was also caused by a plunge of the road transportation segment. "The crisis severely affected road transportation on certain segments. The production stoppage at Dacia [Ed. n. car manufacturer] has led to difficulties for transportation companies which had contracts with Dacia or car parts producers," according to the Secretary-General of the National Road Transporters Union (UNTR), Radu Dinescu. He added that production stoppages in the steel industry and on the construction segment also had a significant impact on the market.

According to Dinescu, the transportation business will stagnate this year, in an optimistic scenario. A worst-case scenario foresees a 10-30 percent drop in business.

While Rompetrol and Lukoil are expecting a significant drop in fuel sales, the local oil market leader, Petrom, declined to provide details on fuel sales for the fourth quarter in 2008 and the first month in 2009, or to make a forecast on this year's consumption. The local subsidiary of Hungarian MOL group also declined to comment.

The local fuel market amounted to some €5 billion last year.

Source: Standard.Ro