Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

LUKoil Buys 51% Of Petrotel In Romania

Russian oil giant LUKoil announced Tuesday it had bought a majority stake worth $300 million in the Romanian oil refinery Petrotel.

"The deal will allow better access to European and Black Sea markets," LUKoil President Vagit Alekperov said of the company's first acquisition outside the former Soviet Union.

The company's subsidiary, LUKoil Europe Ltd., signed the deal for a 51 percent stake in Petrotel with the State Ownership Fund, or FPS, Romania's main privatization body.

The FPS owns some 70 percent of the refinery located north of Bucharest.

The package includes investment projects, but no details were provided. Sources in the sector said the deal would help LUKoil strengthen its position in Romania's refining sector as it needs additional facilities for its Azeri crude. LUKoil officials in Moscow have said they were interested in acquiring other refineries in Eastern Europe.

Petrotel, one of three refineries outside Ploiesti, has a share capital of 283.25 billion lei ($33.7 million), in shares with a nominal value of 25,000 lei each. It can process 1 million tons of crude a year.

The official Romanian news agency Rompres said Alekperov visited the Petrotel plant Monday and told officials the refinery would receive 250,000 tons of crude from Russia this month and start processing it immediately.

The refinery has pipeline access to the oil terminal in the main Black Sea port of Constanta, which Romania has been promoting as a route preferable to those through Russia or Iran and Turkey.

The refinery has two separate processing trains, one for domestic crude and a second one, built in the late 1970s, for sour crude. Two other distilleries producing 1.2 million tons per year were shut down and mothballed in 1992.

Another local refinery, Rafo SA in northern Romania, said this month that it was negotiating a contract with LUKoil to import an average 150,000 tons of crude oil per month for processing.

Meanwhile in Moscow, Russia's top prosecutor said Monday the government illegally gave LUKoil permission last year to explore hotly contested oil fields of the northern Caspian Sea.

Speaking in an Ekho Moskvy radio interview, Prosecutor General Yury Skuratov said the northern Caspian had been declared a preserve by the Soviet government in 1975.

Because the resolution was never abolished, neither LUKoil nor any other company has the right to develop the area, he said. Skuratov said he informed Prime Minister Viktor Chernomyrdin of his opinion in a letter recently.

Lukoil won exploration rights to the area in a tender last year. Oil giant Yukos, a competitor in the tender, afterward expressed dissatisfaction with the results, and said it would challenge them in court.

Lukoil said up to 4 billion barrels of crude may lie beneath the northern Caspian.