Italy: Lukoil Acquires 49% in ERG for €1.35bn
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Wednesday, 25 June 2008 |
ERG of Italy has announced the sale of 49% stake for €1.35 billion to
Lukoil of Russia. Lukoil and ERG agreed a joint venture to control
ERG’s Isab di Priolo refinery on Sicily.
Besides the 320,000-barrels-a-day refinery, the accord includes a 99
megawatt power plant and a minimum inventory of 745,000 tonnes of crude
oil and refined products. Shares in ERG, controlled by the Garrone
family, jumped to a nine-month high in early trading.
Lukoil expects net profit to rise by more than 1% because of the deal,
vice-president Leonid Fedun said in Moscow. “Oil profits from the
refinery will be used in arbitrage operations, mainly in fuel supplies
to the US markets as well as to our petrol stations in the Balkans,” he
told a news conference. “Together with our refinery in Romania we can
in fact dominate the Balkan market.”
ERG will have an option to sell its 51% stake to Lukoil over a period
of five years after the first year following the deal’s closing date.
The Isab site is strategically located in the centre of the
Mediterranean Sea and produces mostly diesel fuel. Russia’s Ural crude
is a big part of its input. Lukoil vowed in 2006 to boost its refining
capacity by more than 70% in 10 years. It has long said it wanted to
expand into refining in Europe and the United States.
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