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

. Last Updated: 07/27/2016

LUKoil Turns to Turkey

ANKARA, Turkey -- LUKoil, the country's leading oil company, may build a refinery on Turkey's Black Sea coast and a pipeline to carry gasoline to European markets.

LUKoil started a feasibility study for a refinery at Zonguldak on the Black Sea and a pipeline from there to Izmit, near the sea of Marmara, thus bypassing the Bosporus, the company's press office said Tuesday by telephone. LUKoil has contacted Turkish energy regulators about building a refinery, Nafiz Kaya, a spokesman for the regulator, said Tuesday.

Refining crude at Zonguldak would give LUKoil, which is expanding outside Russia after President Vladimir Putin raised taxes on oil producers, an advantage as it seeks to enter the Turkey's $22 billion fuel retail market. LUKoil has approval from Turkish energy regulators to set up a chain of gas stations and can start operating next month, Kaya said.

"Turkey's a big market, and demand is likely to grow higher," said Oleg Maximov, an analyst at Troika Dialog in Moscow. "Refining margins right now are very high around the world, and with tight capacity they're likely to go higher, so of course LUKoil would want to capitalize."

LUKoil declined to give further details Tuesday, including possible costs.

The company is seeking Kazakh and Turkish partners to form a group for the $2.5 billion project, Milliyet said July 9, citing Nikolai Chyorny, a LUKoil vice president.