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| Project sponsor and major shareholders of project company |
The project sponsor and guarantor is OAO Lukoil, which accounts for roughly 19% of Russia’s crude oil production or 86.2 million mt in 2004. Throughput at Lukoil’s refineries amounted to 43.8 million mt in 2004. Lukoil's shares are publicly traded on the Russian stock exchanges (RTS, MICEX, SPICEX, SSE) and its ADRs and GDRs trade on the US over-the-counter market and exchanges in London, Berlin, Frankfurt, Munich and Stuttgart. Lukoil became the first Russian company to obtain London Stock Exchange (LSE) listing in 2002.
In September 2004, the Russian Government sold its remaining 7.59% stake in Lukoil to Houston-based ConocoPhillips, who has since indicated it will increase its stake to up to 20% and become a major equity investor.
Following an internal reorganization in 2000, the sponsor’s international assets were placed with Lukoil Overseas Limited B.V. for upstream operations and Lukoil International GmbH for downstream operation. Petrotel’s shares are owned by Lukoil Europe Holding B.V., a wholly-owned subsidiary of Lukoil International GmbH, (93.67%), the investment company S.I.F. Muntenia (3%), former State Property Fund - A.P.A.P.S. (2.59%) and various individuals (0.75%). |
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| Total project cost and proposed IFC investment |
| Lukoil’s investments in Romania are in the range of $367 million, out of which $260 million was invested to expand the gas station network, tank farms and other distribution installations, and $107 million for the modernization of the refinery. At the outset of the project in 2003, Lukoil engaged IFC to provide long term financing. However, in the interest of expediting the refinery modernization, the sponsor provided its own bridge financing to commence project implementation. The refinery re-commenced operations in the fall 2004, and IFC’s loans will replace the sponsor bridge financing. IFC’s proposed investment will consist of a $35 million A loan and a $47 million B loan. |
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| Location of project and description of site |
| The Petrotel refinery is located in Ploesti, a city with 300,000 inhabitants in central Romania. The city is dominated by the Romanian oil industry, there are 4 refineries in the immediate area. Lukoil has 300 gas stations and 8 storage tank farms across the country. |
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| Description of company and purpose of project |
OAO Lukoil is Russia’s largest integrated oil company. In 1998, Lukoil acquired the Petrotel refinery from the Romanian government through a privatization process. Since then, Lukoil has expanded its downstream operations in Romania to include about 300 retail petrol stations, 60 LPG filling skids and 8 petroleum distribution centers throughout the country. Through these targeted investments, Lukoil succeeded in creating a fully-integrated business chain starting at the oil well in Russia and going all the way downstream to the pump in Romania. Apart from the Romanian fuel wholesale and fuel retail market, Lukoil’s Romanian operations also cater to the Moldavian market and other export markets through Lukoil’s international trading company, Litasco International S.A.
The project involves the modernization and revamping program of S.C. Petrotel-Lukoil S.A. (Petrotel), its Romanian refinery. The project is aimed at:
- providing high quality petroleum products to Romanian consumers that comply with European Euro-3 and Euro-4 standards,
- improving refinery operations by increasing the output of higher value petroleum products and reduce emissions and energy consumption; and providing high quality petroleum products to Romanian consumers that comply with European Euro-3 and Euro-4 standards.
This in turn will strengthen the overall long-term competitive position of Lukoil’s entire downstream network. |
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| Environmental and social issues - Category B |
This is a category B project according to IFC's Environmental Review Procedure.
Key environmental issues associated with this project include environmental and social management capacity, soil contamination, air emissions, liquid effluents, solid waste management, fire/explosion safety and emergency response, storage and transport safety, and logistics and safety handling for product distribution system. Occupational health and safety issues include emergency response training and general occupational health and safety. Key social issues include public/community relations and community development including the possibility of implementing SME initiatives.
To view the environmental documents for this project, click here
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| Location of environmental documents in locally affected community |
| The ERS document was released for the requisite 30-day period in July/August 2003 at the Petrotel’s refinery gate and on Lukoil’s website. |
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| To contact the project company, please write to: |
Nikita Orlov, Head of Long-term Finance,
OAO Lukoil, 11, Sretensky Blvd.,
Moscow, 101000 – Russia
Phone: (+7-095) 927-1585,
Fax: (+7-095) 927-8063,
E-mail: orlovnr@lukoil.com |