Lukoil Eyes to Buy BP's British Refinery

Russian oil giant LUKOIL is willing to buy out from BP its sole refinery in Britain, Coryton, which has been put up for sale recently, Kommersant reported.

The mandatory requirement of BP is the guarantee for long-term deliveries of fuel from Coryton to the company's fuel stations in Britain. So, even if LUKOIL gets Coryton, it will lack product for retail market campaign in the country. Or it will have to fund the extension of Coryton?s production capacity.

LUKOIL CEO Vagit Alekperov said yesterday he is thinking about the purchase of Coryton refinery from BP. BP?s sole refining asset in Britain, Coryton, accounts for 8 percent of all refining in the country (around 8.6 million tons a year). Coryton produces diesel fuel, automobile fuel and aviation fuel, as well as the liquefied petroleum gas and bitumen. The petrol goes to BP?s fuel stations.

Contrary to BP that is disposing of refining assets, LUKOIL?s policy is to buy refineries worldwide but first of all in Europe. In the recent months, for instance, Russia?s oil giant voiced intention to acquire Slovenian Nafta Lendava, Libyan Tamoil, a Rotterdam refinery owned by Kuwait Petroleum, Serbian Naftna Industrija Srbije and said it was willing to build a refinery in Turkey.

For LUKOIL, it is the usual practice to approach retail markets in countries where it gets refineries. But BP said it won?t drop the retail network and maintain 1250 fuel stations in Britain, the sale of Coryton notwithstanding. The guarantee for long-term fuel deliveries to BP?s stations will be a mandatory provision of the sales deal.

LUKOIL has no retail assets in Britain now.