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2008 June 26   12:06

Lukoil interested in other European refineries

Lukoil (RTS: LKOH), which said earlier this week  it had agreed to buy into an oil refinery in Sicily, is still interested in other downstream assets in Europe, Interfax reports.

"Our  latest  deal  does  not  mean  we  aren't interested in other refineries  in  Europe,"  Leonid  Fedun,  the  Russian  oil major's vice president, told reporters.

"We  hope  to  bring you some good news by the end of the year," he said.

Lukoil  currently  has  60  million  tonnes  of refinery throughput capacity. Fedun said it needed 85 million tonnes to achieve a balance in refining at current rates of oil production.

Lukoil  and Italy's ERG signed an agreement to form a joint venture to operate  the  ISAB  refinery  complex  in Priolo, Sicily. Lukoil will acquire a 49% stake in the joint venture for a cash consideration of EUR 1.347 billion, excluding inventory. ERG will retain 51%. The transaction structure  provides Lukoil with the possibility to increase its stake in future.

The  ISAB  refinery complex is one of the largest in the region and is well  positioned  to  meet  the  growing  middle distillate demand in Europe (mainly  kerosene  and  diesel  fuel).  The ISAB refinery has the flexibility to process crudes such as Urals, and Lukoil said it intended

to fully integrate its share of the refinery into its supply chain.

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