3rd UPDATE: Lukoil Takes 45% Stake In Total's Dutch Refinery
June 19 2009 - 6:52AM
Dow Jones News
Russian oil major OAO Lukoil Holdings (LKOH.RS) Friday said it
agreed to buy a major stake a Dutch refinery, the latest in a
series of deals signaling Russian energy companies' push to
strengthen their position on the European market.Lukoil, 20%-owned
by U.S. oil major ConocoPhillips (COP), said it will pay France's
Total SA (TOT) $725 million for a 45% stake in Total Raffinaderij
Nederland, or TRN, refinery and that it plans to close the deal by
the end of the year.
Last month, U.S. peer Valero Energy Corp (VLO) said it agreed to
buy the same stake from U.S.-based Dow Chemical Co. (DOW), which
co-owned the refinery with Total. But the French company exercised
its preemptive rights to purchase the stake and simultaneously
agreed to sell the stake to Lukoil.The 153,000 barrels-per-day
refinery located in Vlissingen is mainly run on Russian crude oil,
and the deal "contributes to the development of a broader strategic
partnership between Lukoil and Total," a statement said. The deal
is the latest example of how Russian oil and gas producers seek to
expand abroad. In November last year, Lukoil, the most active
Russian oil company outside the country, took a 49% stake in ERG
SpA's (ERG.MI) Isab refinery in Priolo, Sicily.
In April, Russia's Surgutneftegaz purchased a 20% stake in
Hungary's national energy company MOL Nyrt. And last year,
state-controlled gas giant OAO Gazprom (GAZP.RS) bought Serbia's
national oil company NIS, and has formed alliances with European
energy firms to build two new pipelines that will pump Russian gas
to Northern and Central Europe. Lukoil, Russia's second-largest oil
producer, is striving to fulfill a vow to boost its refining
capacity by more than 70% by 2016.
Chief Executive Vagit Alekperov said the acquisition
"organically fits in our company's strategy aimed at increasing oil
refining capacities located in the immediate proximity to the
markets where products with higher added value are sold."
But analysts at UBS, who rate Lukoil's stock a neutral, were
cautious on the company's European expansion.
"We don't see any significant value creation in this deal for
the shareholders," said analyst Maria Radina, noting currently low
European refining margins.
At 1050 GMT, Lukoil's shares were trading up 1.5% at $48.1 each
in Moscow.
The company had $3.2 billion of cash on its balance sheet on
March 31 and is expected to finance the deal from cash-flow or
existing debt facilities, Radina said.
Lukoil already owns refineries in Bulgaria and Romania and runs
gas stations in the U.S., Hungary, Finland, Poland, Serbia,
Romania, Macedonia, Cyprus and Turkey.
But a number of its recent attempts to buy assets abroad failed,
either because the acquisitions were too expensive or due to what
the firm described as the unwillingness of the European Union to
allow cash-rich Russian firms to buy lucrative assets there.
Last year, Lukoil scaled back its ambition of acquiring a 30%
holding in Spanish oil company Repsol-YPF SA (REP), partly due to
political unease in Spain over the deal.
Company Web site: www.lukoil.com
-By Jacob Gronholt-Pedersen and Geraldine Amiel, Dow Jones
Newswires; +7 495 937 8445; jacob.pedersen@dowjones.com