ELF GROUP TO BUY GERMAN DOWNSTREAM ASSETS
A Franco-German group led by Ste. Nationale Elf Aquitaine will buy a package of refining and marketing assets in eastern Germany and spend 4.7 billion deutschemarks ($2.99 billion) on a big modernization and expansion program.
The assets include the 100,000 b/d Leuna Werke refinery and associated petrochemical plant and the 73,700 b/d Hydrienwerk Zeitz refinery, both in the Saxony-Anhalt region, and the Minol service station chain.
The group, made up of Elf, the Thyssen group of Germany, and Deutsche SB-Kauf, will spend 3.3 billion deutschemarks ($2.1 billion) to modernize Leuna facilities and build a new 200,000-240,000 b/d refinery at Leuna.
Value of the sale has not been disclosed. The amount of additional spending proposed by the buyer's group, known as the TED combine, was the main factor that influenced approval of the sale by Treuhandanstalt, the body in charge of privatizing assets of the former East German state.
An agreement in principle has been signed.
A final purchase contract is expected by June.
WHO WILL DO WHAT
Elf will hold a majority interest in the refining and marketing operations, while the Thyssen group will play a major role in engineering and construction that will emerge from the spending program.
Deutsche SB-Kauf, a joint venture by the Asko and Metro retail companies, will focus on development of shops and ancillary services for the Minol network.
Guarantees for supply of petrochemical feedstocks at competitive prices are part of the agreement between Treuhandanstalt and the TED group, with future refinery participation by petrochemical companies envisioned.
Treuhandanstalt said outlays by the group would lay the foundation for a modern petrochemical industry in Leuna, Bohlen, and Buna. It also said negotiations with companies interested in petrochemical operations in the region are under way, and a similar group solution for privatization is being sought.
Refineries in eastern Germany traditionally have used feedstock from the former Soviet Union. The TED group plans to lay a crude oil pipeline from the Baltic port of Rostock, where expansion is proposed to enable large tankers to unload crude cargoes.
The Leuna refinery and petrochemical plant posted losses of 500 million deutschemarks ($318 million) last year.
The Minol network consists of 933 service stations. The group will spend about 1.4 billion deutschemarks ($890 million) to upgrade them to western European standards.
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