Russia’s Lukoil to send petroleum to Iran in return for oil

Lukoil, Russia's second-largest oil producer, is building up its petroleum supplies and increasing its foreign chains of gas stations, according to vice president Vladimir Nekrasov, who said that the company will begin petroleum deliveries to Iran this year.

Nekrasov said that the amount of petroleum delivered may reach 2 million tons, depending on Iran’s needs. In return the company expects to collect oil in the ports of the Persian Gulf to supply its refineries in Bulgaria, Romania and Sicily. 

This is not the first time Lukoil has worked in the Iranian market. In 2003 it became part of a consortium with the Norwegian company Norsk Hydro with shares of 25 percent and 75 percent, respectively, in an exploration project in the Anaran oil field.

But Lukoil withdrew from the project in 2011 in connection with the imposition of Western economic sanctions against Iran. The company reopened its representative office in the Islamic Republic in April 2015.

Reorienting toward Western Europe

In addition to the Iranian deal, Lukoil plans to buy 250 gas stations in the Netherlands and the Benelux countries in a deal that will be finalized this year. Nekrasov did not specify the value of the deal or the identity of the seller.   

Iran step up defense, economic engagement

In the last two years Lukoil has been actively selling off its gas stations in Eastern Europe. The company now owns about 200 stations in Belgium, in addition to 450 Lukoil stations in Finland and a large network in south-eastern Europe.

According to Nekrasov, Russia's crude oil refining margins are closing in on zero due to the increase of excise tax from the beginning of this year to 2 rubles ($0.03). If excise tax on petroleum is increased by a further 2 rubles from April 1 and prices at the pump fail to rise, petroleum production in Russia will become unprofitable, he said.

The company has already lost 30 billion rubles ($400 million) due to the January increase in excise taxes and may lose the same amount again if they continue to increase.

First published in Russian in Kommersant

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