22 September 2009

Global perspectives: Dutch refinery deal passes EC hurdle

By Cris Whetton

Russian energy company OAO LUKoil Holdings gained approval from the European Commission to buy a major stake in a Dutch refinery from France’s Total SA.

LUKoil will buy a 45% stake for $725 million in Total Raffinaderij Nederland, or TRN. Earlier this year, U.S.-based Valero Energy Corp. agreed to buy the same stake from U.S.-based Dow Chemical Co., which co-owned the refinery with Total, but the French company exercised its pre-emptive rights to purchase the stake and simultaneously agreed to sell it to LUKoil. The 153,000 bpd refinery, located in Vlissingen, mainly processes Russian crude.

Also in the Netherlands, Royal Dutch Shell unveiled plans to build a new plant costing $500 million at its 400,000 bpd Pernis refinery. The plant, a hydrodesulphurization unit, should come on stream in the second half of 2011 and will produce low-sulphur fuels at Europe’s biggest oil refinery. Most of the production will be for use as domestic heating oil in German households, which must comply with strict new sulphur content requirements. The project is part of Shell’s plan to expand its downstream activities and focus on larger refining sites; it is also part of planned upgrades for Pernis. Shell wants to shift the focus of the plant towars wider exports.

Meanwhile, Russian Prime Minister Vladimir Putin told a Venezuelan official delegation his country will use the most modern oil extraction and processing technology if it wins access to Venezuela’s oil deposits. A delegation headed by Venezuela’s Energy Minister Rafael Ramirez flew to the Russian resort town of Sochi where Putin was spending his vacation and visited a refinery operated by Rosneft, owned by associates of Putin.

Cris Whetton is InTech’s European correspondent.