Tyumen Oil Co., Moscow, said Wednesday that it will boost production at the Lisichansk oil refinery (Linos) in the Ukraine. Tyumen signed papers today finalizing the bid of $9.76 million it made at a public auction for a 67.41% interest in the formerly state-owned facility. The company will also assume $63 million in debt.
Tyumen plans to invest $2.4 million in the refinery's working capital and $11 million to modernize the plant over the next 5 years. The firm wants to boost the refinery's capacity beyond the design capacity of 361,000 b/d.
The Linos refinery marks Tyumen Oil's first acquisition outside Russia. The company said the acquisition also lays the foundation for Tyumen's partners, such as Texaco Inc., to enter the Ukrainian market.
"With this acquisition, we are becoming the top producer of refined petroleum products in the Ukraine,'' said Tyumen Oil Pres. and CEO Simon Kukes.
To maximize the refinery's potential, Tyumen plans to establish a sales and distribution network for Linos's products, which include gasoline, diesel, fuel oil, polypropylene, ethylene, and other chemicals. Tyumen also will sell lubricants in Ukraine through a joint venture with Texaco.
Tyumen also has access to significant crude oil supplies and has been supplying Linos with crude over the past few months to eliminate feedstock shortages.