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Home / Issue Archive / 2007 / January #1 / EU Antitrust Watchdog OKs Lukoil’s Deal

№ 1 (January 2007)

EU Antitrust Watchdog OKs Lukoil’s Deal

European Commission cleared Russia’s largest private oil company Lukoil’s purchase of a chain of gas stations from ConocoPhillips on Wednesday bringing the deal worth $400 mil closer to being sealed. The deal has cleared the biggest hurdle in passing the antitrust requirements and now only needs the EU’s regulatory approval. The purchase is expected to be completed in the second quarter of 2007.

By Sergei Balashov

European Commission, the EU’s executive body responsible for regulating competition in the Union by examining mergers affecting the Union’s economy, clarified the reasons behind this decision through its official statement asserting that ‘the combined market shares would be relatively low and below a level where the companies could affect either the supply or the prevailing price in the market’ thus not ‘impeding effective competition in the European Economic Area’. 

The deal with ConocoPhillips will give Lukoil 376 Jet brand service stations in 6 European countries. The latest purchase will expand Russian oil giant’s market in Poland with 83 gas stations, in Hungary with 30 and in Finland with 49. Lukoil will also enter new markets in Belgium with 156, in Czech Rep. with 44 and in Slovakia with 14 gas stations. Reuters reports this move will boost Lukoil’s international retail sales approximately by 20%. 

The financial details of the deal were not made available, however Lukoil’s president Vagit Alekperov was quoted by Russian news agency Interfax saying the company was going to pay over $400 mil for the Jet gas filling stations, expected to be re-branded with the Lukoil name within two years after the deal is closed, according to Bloomberg. The news agency reports Lukoil plans on increasing sales of oil products by 1.4 million tons, or 19% in 2007. 

Russia’s biggest private oil company Lukoil is the World’s 2nd largest company in proven hydrocarbon reserves and holds a 1.3% share in World’s proven oil reserves with over 16 bln boe which is 20% more than that of Chevron with approximately 13 billion. Russia’s leading oil producer retails petroleum in over 20 countries worldwide possessing oil refineries in 4 countries. 

Houston-based integrated energy company ConocoPhillips was founded in 2002 as a result of the merger Conoco Inc. and Phillips Petroleum Company. According to the official website, it is the third-largest integrated energy company in proved oil and gas reserves and the second-largest refiner in the United States. Worldwide, of nongovernment-controlled companies, ConocoPhillips has the fifth-largest total of proved reserves. Based on crude oil capacity, it is the World’s fourth-largest refiner. 

ConocoPhillips and Lukoil announced forming a strategic partnership on Sept. 29th 2004, stating they intended to ‘form a broad-based alliance in which ConocoPhillips will become a strategic equity investor in Lukoil’. Today, ConocoPhillips owns about 20% of Lukoil’s shares.

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