RusAl to Sue LUKoil Over Coke

United Company RusAl said Wednesday that it was suing LUKoil for cutting the supply of oil coke to its facilities by almost half.

"Since April 2008, LUKoil has reduced the supply of oil coke to RusAl's largest aluminum smelters by almost two times and as a result has not been fulfilling its long-term contractual obligations," RusAl said in a statement.

Oil coke is used in the production of anode paste and anodes at aluminum smelters.

RusAl spokeswoman Yelena Shuliveistrova confirmed that the lawsuit had been filed with the Moscow Arbitration Court.

LUKoil declined to comment on the status of the lawsuit, saying it needed time to look into the matter.

Under the 2006 contract, LUKoil was obliged to send oil coke to RusAl until April 2011. LUKoil, the country's second-biggest oil producer, reduced the supply in April but continued to sell oil coke to other customers, violating the agreement, RusAl said. LUKoil's "representatives are not willing to have a constructive dialogue," RusAl added.

Chirvani Abdoullaev, senior oil analyst at Alfa Bank, described the situation as "a normal commercial dispute that should be settled in court."

RusAl would not disclose the amount of damages it is seeking, but Abdoullaev said whatever they are, LUKoil will not suffer much financially. "Oil coke is a bottom product. It's a small thing for them," he said.