Lukoil, ERG form refinery joint venture

Uchenna Izundu
International Editor

LONDON, June 27 -- OAO Lukoil reported it will pay €1.3 billion to acquire a 49% stake in a new joint venture with Italian refiner ERG SPA. The JV will jointly operate ERG's Isab refining complex at Priolo, Sicily.

ERG will have a 51% share in the JV and Lukoil may be able to increase its stake in the future under the agreement. Both parties require approval from the European Commission and other antitrust bodies.

The complex 320,000 b/d Isab refinery is on the coast and will meet growing middle distillate demand in Europe, mainly kerosine and diesel fuel.

According to their equity stake, ERG and Lukoil will source its own share of oil to refine and market the products. "The Isab refinery has the flexibility to process crudes such as Urals, and Lukoil intends to fully integrate its share of the refinery into its supply chain," Lukoil said.

Lukoil Pres. Vagit Alekperov said the company's refining capacity would increase by 13% and its overseas refining capacity by 60%. "The refinery's advantegeous location and an opportunity to process Russian crude make this project very attractive. In ERG, Lukoil acquires an experienced and reliable partner in one of the world's energy centers."

ERG Chief Executive Officer Alessandro Garrone said ERG would use the money from this deal to "strengthen its capital structure and increase its financial flexibility to exploit potential growth opportunities in its areas of activity, both in Italy and abroad."

The deal is expected to be completed in the fourth quarter.

Contact Uchenna Izundu at uchennai@pennwell.com.

Related Articles

USW union workers add two BP refineries to strike list

02/09/2015 Union workers at two BP PLC-owned refineries in Indiana and Ohio have joined the United Steelworkers union’s (USW) unfair labor practice (ULP) stri...

Chevron details scheduled maintenance for Cape Town refinery

02/09/2015 Chevron South Africa (Pty.) Ltd., a subsidiary of Chevron Corp., has reported it will begin one of the biggest routine maintenance and safety inspe...

Chinese regulators approve Sinopec’s plan for grassroots refinery

02/06/2015 China’s National Development and Reform Commission (NDRC) has approved Sinopec Beijing Yanshan Petrochemical Co. Ltd., a subsidiary of China Nation...

Union strike ongoing at US refineries as negotiations continue

02/06/2015 A strike by union workers at nine US refining and petrochemical production plants remains under way as the United Steelworkers Union (USW) continue...

Goodlatte reintroduces bills to repeal, reform RFS

02/05/2015 Calling it “a true ‘kitchen table’ issue,” US Rep. Bob Goodlatte (R-Va.) reintroduced a pair of bills to address problems in the federal Renewable ...

Regulators approve Phillips 66’s California refinery improvement project

02/04/2015 The governing board of California’s Contra Costa County has approved a permit for Phillips 66 to move forward with a proposed project that would en...

CNOOC lets contract for Huizhou refinery expansion

02/03/2015 CNOOC Oil & Petrochemicals Co. Ltd., a subsidiary of China National Offshore Oil Corp. (CNOOC), has let a contract to Porvair Filtration Group ...

Williams reports another delay for Geismar ethylene sales

02/03/2015 An unexpected maintenance setback in the final stages of start-up at Williams Partners LP’s newly rebuilt Geismar, La., olefins plant has led to an...

MOL absorbs Eni’s Romanian retail assets

02/02/2015

MOL Group, Budapest, has completed the acquisition of Eni Romania, including 42 service stations to be rebranded under the MOL name.

White Papers

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by
Available Webcasts