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Friday, November 07, 2008

LUKoil, ERG set up venture to run refinery in Sicily

ERGRBC, 06.11.2008, Moscow 19:57:22 – LUKoil and ERG S.p.A., Italy, signed a final agreement to set up a joint venture that would run the ISAB oil refinery in Sicily. The document was signed during the extended Russian-Italian governmental consultations chaired today by President Dmitry Medvedev of Russia and Prime Minister Silvio Berlusconi of Italy. In late June 2008, LUKoil and ERG S.p.A. inked an agreement on a joint venture to operate ISAB, in which LUKoil was supposed to own 49 percent, and ERG the remaining 51 percent. The deal was priced at EUR 1.347bn, excluding the value of crude inventory. At that time, the parties announced that the deal would be finally completed in the forth quarter of 2008 (in November) after all approvals had been received and documents finalized. LUKoil will finance the deal with a syndicated loan it is planning to raise, as well as with its own resources. Vice President Leonid Fedun stated that it would also be possible for LUKoil to buy out the remaining stake within the next five years. The partners will be supplying crude to the refinery and selling the output in proportion to their ownership stakes. The plant will expand LUKoil's refining capacity by 13 percent, the company estimates, planning to supply some 8.5m tonnes of oil to the refinery in 2009.

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