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January 26, 2023

“Lukoil Affair” (IV): Petrotel refinery resumes production but parent company needs external financing

by    Constantin Radut

After the political and media show in Bucharest, which included bellicose statements, SC Lukoil SA Romania has announced that it will resume its oil refining activities. Last Friday, October 10, Prahova County Environmental Guard Chief Commissioner Daniela Tudorache stated that the Lukoil refinery issued a notice informing that it will restart the installations located inside the refinery, which were turned off a week before. The document remitted to the Environmental Guard pointed out that the installations will be restarted on Friday and that the company’s representatives commit themselves to respecting all environment protection procedures.
The Petrotel-Lukoil refinery ceased its production and commercial activity on Friday, October 3, announcing that the measure came as a result of the distraint placed by criminal prosecution bodies on its raw materials and oil, adding that the restarting of activity will be announced after the appeal filed in court is solved.
The refinery’s activity was stopped a day after searches were conducted by Ploiesti Court of Appeals prosecutors at the headquarters of Petrotel Lukoil Ploiesti, Lukoil Energy & Gas Romania, Lukoil Lubricants East Europe, Lukom-A-Romania Agency and TP LOG Services, all located in Ploiesti. The Ploiesti Prosecutor’s Office pointed out that the damages caused by these commercial entities to the Romanian state are estimated at RON 1.039 bln (EUR 230 M), of which EUR 112 M in the form of tax evasion and the rest in the form of money laundering. Petrotel Lukoil Director General Andrey Bogdanov has been placed under judicial control, being prosecuted for tax evasion and money laundering.
On the other hand, according to Reuters, last week the Lukoil Russian oil group started talks with a series of banks for a new pre-export loan, set to be a test of the banks’ appetite to offer loans to Russian companies. Sources claim that the banks have taken into consideration Lukoil’s request but for the time being it is not clear whether they will offer the loan considering the fact that Lukoil has been included in the latest round of sanctions introduced by the US and the EU against Russian officials and companies.
In Romania, Lukoil is third on the fuel distribution market, having a network of 301 gas stations and a market share of approximately 20 per cent. Likewise, the company manages nine fuel storage sites. Lukoil Romania has approximately 3,500 employees, 2,500 of them working at Petrotel.

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