Russian oil major Lukoil in a recent press statement said it would invest $130 million to complete the modernization of its Bulgarian refinery Neftochim Burgas next year. Lukoil’s President Vagit Alekperov confirmed plans to expand Neftochim’s export markets in Southeast Europe, including Turkey, after modernizing the refinery.
“We have received a license by the Turkish government, allowing imports of Bulgarian fuel,” Alekperov told a news conference in the Black Sea city of Burgas, where its Bulgarian unit is located.
“We are carrying out various projects on acquiring assets for product sales in the European part of Turkey because it is closer to Bulgaria,” Alekperov said, but did not give more details on the possible acquisitions. Last September he said Lukoil was also interested in the wholesale of its products to the Former Yugoslav Republic of Macedonia (FYROM).
The company reported in a statement that its exports to the West would rise 25 percent this year and it was increasing spending on refineries abroad to boost profits.
Lukoil acquired a 58 percent stake in the Neftochim refinery, Bulgaria’s biggest, for $101 million in late 1999 and pledged to invest $408.3 million in it by 2005. It has so far invested $350 million in Neftochim.
Alekperov said Lukoil planned to compele Neftochim’s modernization next year, which would enable it to comply with European Union standards.
Lukoil also plans to upgrade its Bulgarian Burgas refinery in the fourth quarter of this year in line with European requirements on environmental friendly fuels, but will not shut it down completely.
Last month the Russian company signed a deal with Serbia to buy a 79.5 percent stake in Beopetrol, Serbia’s second-largest fuel station chain, for 117 million euros ($136 million). For Lukoil, the purchase signaled a westward expansion in a growing Balkan market. It was Lukoil’s first successful bid for a European firm since 1999, after it failed to acquire assets in Poland, Croatia, Greece, Lithuania and the Czech Republic.
“After purchasing Beopetrol, we have secured our presence in the entire Balkans,” Alekperov said.
Lukoil paid 117 million euros ($133.7 million) for Beopetrol and pledged to invest another 85 million euros over the next five years.
However, Lukoil will not be able to sell its own oil products through Beopetrol as the Serbian market remains closed for such imports, giving leeway to the national monopoly to revitalize its outdated refineries.