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13:56
[Saturday 20th October, 2001]
Russia's Lukoil buys 85 pct Of Norsi-Oil
MOSCOW - Russia's top oil producer, LUKOIL , said on Friday it had
bought an 85 percent stake in the Norsi-Oil refinery in a privatisation tender.
Analysts said the acquisition would boost LUKOIL's profitability when the
company increased oil product exports from its new refinery.
LUKOIL said it had bought both lots offered for sale - one of 45.36 percent
and one of 40 percent - for $26 million beating seven other bidders,
including Russia's sixth largest oil firm, Sibneft . The starting price was $21.8
million.
"LUKOIL takes an obligation to pay back 1.5 billion roubles ($51 million)
of the Norsi-Oil debt to the Russian budget and to invest considerable funds
in modernising the refinery," LUKOIL said in a statement.
LUKOIL, which produced 78 million tonnes (1.56 million barrels per day)
of oil in 2000, will now have four refineries in Russia, one in Ukraine, one in
Bulgaria and one in Romania.
It has repeatedly said it needed to boost refining capacity as oil production
was growing after acquisitions.
"This acquisition has been very important for LUKOIL, which is looking to
counterbalance its production and domestic refining," UFG brokerage oil
analyst Dmitry Avdeyev said.
Norsi-Oil refined some 4.5 million tonnes of oil in 2000 and five million
tonnes in the first nine months of 2001, though its annual refining capacity
was designed at some 22 million tonnes.
The refinery has been balancing on the brink of bankruptcy, as private oil
companies have been reluctant to ship their volumes to the state-owned and
cash-strapped plant.
Avdeyev said he expected LUKOIL to slightly increase Norsi-Oil
operations but doubted the oil company could make the plant work at its
maximum capacity.
He also added Norsi-Oil, situated in central Russia, was well placed to
boost oil product exports through the Latvian port of Ventspils.
"Railway shipments (to Ventspils) are quite attractive", he said. /Reuters/
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