Petrol and Lukoil to Set up Joint Venture in Slovenia
Slovenian oil trader Petrol and Russian oil giant Lukoil signed a framework agreement to establish a joint venture for the sale of oil derivatives in Central and SE Europe, representatives of both companies said after signing the deal in Ljubljana on Monday.
The joint venture named "Petrol Lukoil" and headquartered in Slovenia will be in Petrol's majority ownership (51%), with Lukoil owning the remaining 49%, the two companies' executives added.
According to Petrol CEO Marko Kryzanowski and Lukoil chairman Vagit Alekperov, the Slovenian company and Litasko, Lukoil's subsidiary for trading in oil derivatives, also signed a long-term contract on the purchase of oil derivatives.
The contract will allow Petrol to secure a long-term access to a substantial quantity of oil derivatives under competitive prices for the Slovenian and wider energy markets, Kryzanowski added.
According to Litasko chief exec Gati al Jebouri, the oil derivatives will be shipped from four Litasko factories in Russia and three refineries in Eastern Europe. He pointed to the high quality of the derivatives and their price.
Kryzanowski labelled the framework agreement and the contract as a new milestone in Petrol's history. "The signatures... will allow us to achieve more and ensure stable oil derivatives supply," he added.
He believes that the joint venture will be a success. The company will be the only way in which Petrol and Lukoil will be present in the region. Immediately after being established, the company will control over 565 petrol stations, the largest network of petrol stations in the Balkans.
According to projections, the new company will operate 1,250 petrol stations in the region by 2009, generating sales revenues to the tune of EUR 4.5bn and post EUR 75m of profits.
The joint venture will also serve as a jumping board for operations in the wider region, including Albania, Greece, Italy and Austria. It will include Petrol's subsidiaries in Slovenia, Bosnia and Serbia as well as two Lukoil subsidiaries in the region, Lukoil-Beopetrol from Serbia and Lukoil-Makedonija from Macedonia.
Petrol management board member Bostjan Napast meanwhile said that Lukoil, despite its size, decided to enter the joint company as a minority owner, which was an important fact in Petrol's selection of the Russian company as its partner.
Petrol moreover chose Lukoil because it will allow the Slovenian company to access energy resources, which is vital since such resources are expected to be limited in the future.
Lukoil is the second largest private oil company in the world regarding the proven reserves of hydrocarbons and the first regarding the proven oil reserves. Its oil reserves stood at just under 16 billion of barrels and its natural gas reserves at 696 billion cubic metres at the end of 2005.
Lukiol owns around 1.3% of global oil reserves and 2.1% of global oil production. Its refineries can put out some 60 million tonnes of oil and oil derivatives per year.
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