Iakov Goldovskiy took the helm of RAFO Onești at a moment when the refinery, once a cornerstone of Romania’s petrochemical industry, was burdened by debt, legal disputes, and industrial decay. Through his company, Petrochemical Holding GmbH, Goldovskiy aimed to restore RAFO to operational viability, integrate it with nearby Carom and Oltchim plants, and modernize its infrastructure to meet contemporary environmental and production standards. Despite significant investments and strategic planning, persistent legal and fiscal challenges, compounded by an asset freeze, prevented the full realization of this vision, ultimately leading to international arbitration.
RAFO Onești’s Origins and Industrial Significance
Founded in the 1950s, RAFO Onești became operational in 1956 with a design capacity of 3.5 million tonnes per year. It was part of a larger industrial ecosystem, including Carom and Chimcomplex, designed to supply both domestic and Comecon markets. The Borzești platform, with its synthetic rubber production, chlor-alkali facilities, thermal power station, and rail logistics hub, exemplified integrated industrial planning. Intermediate products were systematically recycled across facilities, creating an efficient, interconnected chemical and petrochemical network.
Fragmentation After 1990
The collapse of Comecon disrupted cross-border supply chains, undermining the integrated logic of Borzești. Privatizations in the 1990s and early 2000s transferred control through complex arrangements, often involving politically connected offshore entities. Production units were progressively idled, workforce numbers fell, and supplier networks dissolved. By 2001, strikes had halted refinery operations, and mounting debts to taxes, suppliers, and employees reflected the site’s decline.
Legal and Criminal Challenges
RAFO’s post-privatization period was marked by high-profile criminal cases targeting previous owners. Arrests and convictions of figures such as Marian Iancu and Ovidiu Tender highlighted financial irregularities and tax evasion, further destabilizing operations. The freezing of billions in Swiss accounts, combined with ongoing investigations, heightened operational uncertainty and deterred external financing, while administrative and fiscal interventions created additional obstacles for investors.
Goldovskiy’s Acquisition and Industrial Revival
In 2006, Petrochemical Holding acquired RAFO, taking on a comprehensive industrial strategy:
- Settling debts through conversion to equity and direct repayment
- Preserving a core workforce to maintain operational knowledge
- Modernizing infrastructure, including hydrotreaters, hydrogen and desulphurization plants
- Removing tens of thousands of tonnes of petrochemical waste to comply with EU environmental standards
- Preparing RAFO for integration with Carom and Oltchim plants to re-establish a vertically integrated platform
Between 2007 and 2009, these measures ensured operational readiness, infrastructure preservation, and environmental compliance, marking a departure from prior trading-focused ownership.
Financing and the Missing State Guarantee
A memorandum with the Romanian government promised an 80% guarantee for a €330 million financing package, essential for bank credit. Despite public commitments highlighting job preservation and the reconstitution of a regional petrochemical chain, the guarantee never materialized. Without state support, banks refused to release funds, and the investment plan was reduced to a scaled-back operational and environmental program.
Continued Fiscal Pressure and Administrative Hurdles
RAFO continued to face additional tax and customs claims despite repaying significant amounts. PCH won over 200 court cases challenging new assessments, yet enforcement delays, repeated claims, and administrative interventions impeded the company’s capacity to execute modernization. Political interference amplified operational risks and drained resources, highlighting the asymmetry between judicial outcomes and practical enforcement.
Asset Freeze and Operational Halt
In December 2015, ANAF froze RAFO assets based on criminal proceedings against a minority shareholder holding under 2% of shares. The 13-month freeze effectively stopped refining activity. Goldovskiy maintained approximately 800 employees on payroll to protect critical infrastructure, yet without capital injection and operational freedom, full restoration remained impossible.
International Arbitration
Unable to resolve matters domestically, PCH initiated proceedings at ICSID under the Austria–Romania bilateral investment treaty and the Energy Charter Treaty. On 19 November 2024, the tribunal partially upheld the claim, awarding around €85 million plus costs and interest. Romania’s annulment request in March 2025 faced limited prospects, given the historically low rate of successful ICSID annulments.
Economic, Social, and Environmental Impact
RAFO’s decline had broad consequences:
- Onești’s population fell from 58,810 in 1992 to 32,671 in 2021
- Petrochemical employment dropped from approximately 12,000 to 3,800 between 2007 and 2016
- Municipal tax revenue declined, and public services contracted
- Supplier networks collapsed, causing further economic ripple effects
- Environmental remediation remained incomplete, leaving residual ecological risks
Insolvency and Transition to Logistics
RAFO was declared insolvent in 2019. In July 2020, Roserv Oil acquired the 295-hectare site for approximately $6 million plus VAT. The company plans to repurpose the refinery into a logistics and storage hub with potential hydrogen and biofuel facilities. By late 2024, the site employed around 100 workers for maintenance and dismantling, while refining units remained idle.
Lessons for Investors and Policymakers
The RAFO Onești case demonstrates the interplay between technical feasibility, political risk, and institutional unpredictability. Despite a clear industrial strategy and substantial investments, inconsistent state actions, fiscal pressure, and political interference prevented the revival of a historically significant petrochemical hub. Arbitration provided partial compensation but could not restore lost production, employment, or supply chains. For investors, RAFO highlights the importance of stable governance, credible state commitments, and transparent regulatory frameworks to secure long-term industrial projects.