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Romania suspends plans to sell Romgaz stake

Romania suspended plans to sell a majority stake in state-owned gas producer Romgaz by the end of this year according to a government statement cited by news agency Mediafax on Monday.

Hungary's Mol Rt was one of five companies which expressed interest in the transaction last summer. Mol confirmed its interest in its Q3 report issued last November.

The decision on the suspension of the transaction came late Friday and followed a report by the Economy Ministry suggesting the sale of a majority 51% stake in Romgaz to a strategic investor would be unprofitable for the Romanian state, according to the Monday report. A consortium led by Credit Suisse First Boston has been asked to develop a restructuring program for Romgaz and to propose new privatization strategies.

The sale of Romgaz was part of Romania's efforts to modernize its energy sector ahead of its planned European Union accession in 2007 or 2008. Beside Mol, the companies interested in the privatization of Romgaz included Gaz de France, Ruhrgas AG, the gas unit of German utility E.On, Russia's Lukoil and Germany's Wintershall AG, the Romanian economics minister said in August 2005. Romgaz produces some 7 billion cubic meters of natural gas annually.