May this year will see gasworld travel to Kiev, Ukraine for the eagerly awaited East Europe Conference, titled Industrial Gas – East meets West, to provide a deeper understanding of the needs of the region.
The Gasman’s Baltic business memoirs continue in Romania, a typically under-developed industrial gas market. In Part 1, we learned how AGA prepared for its first foray into the Romanian gases market.
Here in Part 2, we join the story with AGA establishing its own industrial gas company in the country, from scratch.
AGA in France was chosen as the supporting company, to provide the technical and marketing expertise. In practice, most of the support was given from AGA in Austria where colleagues were already busy with similar tasks with the new companies in the Czech Republic, Slovakia and Hungary.
As there was no existing industrial gas company to acquire, the only option was to start from scratch by registering a company, done in 1995, as AGA GAZ ROMANIA SRL. We then employed local staff and sought for products.
Almost all technology in Romania came from Russia or East Germany. In Galati, a city on the Danube and near the Black Sea, there existed the biggest steel plant in the country, the oxygen supply for which they had eight oxygen plants from three different suppliers.
In Cluj, in the northwestern part of the country, there was an oxygen plant delivered from KCA in Dresden, an East German gases producer that Linde acquired in the early 1990s.
There were almost no customers for liquid products in the country; liquid products only existed as storage of self-produced products at major consumers.
AGA managed to set-up joint venture (JV) agreements with two producers (one for air gases in Cluj and one for acetylene in Ploiesti) and transferred used 150 bar cylinders from Western Europe, using the same strategy as implemented earlier in the Baltic countries. So when supply of cylinder gases was secured, the marketing could begin.
AGA’s acetylene arrangements
Romania was one of the main producers of calcium carbide within the so-called East Block.
The company Carbide Fox, in Tirnaveni, had a very long tradition of producing carbide, with capacity of 250,000 tonnes per year and a plant load in 1994 of only 100,000 tonnes, of which 50,000 tonnes was consumed within Romania.
In Romania, the two acetylene plants for cylinder filling consumed 1,800 tonnes of carbide, while remaining output was utilised for producing 10,000 tonnes of acetylene in local and mobile generators. Up to 10,000 tonnes of carbide was used in the chemical industry and AGA made an agreement with the acetylene plant in Ploiesti for filling acetylene cylinders.
Around 3,000 acetylene cylinders were manufactured by Mannesmann in Germany and massed in the AGA massing plant in Hamburg.
AGA actually had advanced plans to make a JV with Carbide Fox and export carbide to other AGA markets, while it was also planned to transfer a complete acetylene plant from Norway.
The JV deal was dropped however, as Carbide Fox insisted upon having its own petrol station in the close vicinity.
Although Linde would later acquire AGA, for a period the company was one of a number of our competitors in the country.
Linde started its activities in Romania around six months after AGA, with a seemingly similar strategy. Other competitors in the country included Air Liquide, who established a small company in Romania in 1999, the SIAD Group (the real pioneer in the country’s gas market) and Messer, who had been on the market before AGA and Linde but had this business based on imported products. This was clearly a competitive market, and a market in transition.
Based on initial reports from 1993, the total industrial gas market was estimated to be around $10m, though today the corresponding figure is around $250m – an impressive growth, but the consumption per capita is still far below corresponding markets in Western Europe.
The market leader is Linde, after the acquisition of AGA. Linde also managed, in sharp competition with Air Liquide and SIAD, to obtain the contract for oxygen supply to the Galati steel plant where now, a modern 2000 tpd ASU is under construction.
gasworld would like to thank the gasman, Lars Timner, for the contribution of his memoirs and his efforts in delivering these insights to our readers.
A former AGA employee, Lars was deeply involved with the expansion of AGA into new markets and will continue with his memoirs as the year unfolds. Watch out for more!
As I have not been involved in the development of the Romania gases market of late, I have consulted many friends and colleagues for clarification of actual facts. It has been very interesting to follow up the development of the industrial gas industry in Romania, from the first footsteps in 1993 to today’s multinational market.
Many thanks to those colleagues and friends who helped me with updated facts from Romania.
These include, but are not limited to:
• Nicolae Gherman
• Nils Kraft, formerly in the positions of Marketing Manager of AGA France and MD of AGA Spain