Romanian President: Government should be prepared to take over Lukoil refinery if Russians decide to shut it down

Romania’s President Traian Basescu said that the pressure by representatives of Russian oil and gas group Lukoil on Romanian authorities are unacceptable and that the Romanian Government should be ready to take over Lukoil’s Petrotel refinery in Ploiesti, should the Russians shut it down. Basescu’s harsh reaction comes after Lukoil’s vice president for refining, marketing and distribution, Vladimir Nekrasov said on Wednesday that the group might permanently close the refinery, as a reaction to the Romanian prosecutors’ decision to seize the company’s assets. Romanian prosecutors are investigating Lukoil Petrotel for tax evasion and money laundering. The investigators found that the Romanian state lost about EUR 230 million due to the company’s illegal activities. Vladimir Nekrasov, Lukoil’s number two, came to Romania and met with prosecutors who investigate the case, as well as with Romanian Government officials. He said that he reached a deal with Romanian prosecutors, but did not go into details. The Russians are asking prosecutors to lift the seizure on Petrotel’s assets, and threaten to close the refinery otherwise. “It would be a pity to stop the refinery. We invested a lot of money here,” Nekrasov said in a press conference on Wednesday. “We consider that the USD 700 million taxes we have paid so far this year are enough insurance,” he added. According to Nekrasov, the prosecutors seized the company’s strategic inventory of oil and oil products, as well as the company’s assets and receivables from other companies in the group. The refinery stopped its production earlier this week. Lukoil’s management will make a decision on Friday, October 10, on whether the Petrotel refinery will be restarted. “Such an approach is unacceptable, and if tomorrow they decide not to restart production, I ask Romania’s government to be ready to take over the refinery in Ploiesti,” President Traian Basescu said in a press conference on Thursday, October 9. He added that the Government should pay the price for which the state initially sold the Petrotel refinery to Lukoil and that the damages from Lukoil’s illegal activities should compensate for the investments the Russians made in the refinery. “We will have to behave like the Russians do. If they say «we close the refinery because we want to» they should think about completely leaving the Romanian market (…) Lukoil must decide: if they want to stay, they must respect Romanian laws, but if they want the Moscow laws, they should go there,” Basescu added. The rough statements in the last two days are likely to exacerbate rather than calm down this conflict, which started last Thursday (October 2), when Romanian law enforcement authorities first raided the Petrotel refinery in Ploiesti. This scandal puts even more pressure on the already tense relations between Russia and Romania. Lukoil in one of the largest foreign groups in Romania. Petrotel Lukoil, the company which operates the refinery in Ploiesti, had sales of EUR 1.25 billion, last year, while Lukoil Romania, which operates the distribution network, had sales of EUR 1.13 billion. The two companies had cumulated losses of EUR 220 million and more than 3,500 employees.