By Dmitry Zhdannikov and Denis Dyomkin
MOSCOW, Nov 6 (Reuters) - Russian oil major LUKOIL and Italian refiner ERG finalised on Thursday a 1.35 billion euro ($1.74 billion) deal allowing LUKOIL to break into the western European refining business.
The deal was signed during the Russian-Italian summit in Moscow presided over by Russian President Dmitry Medvedev and Italian Prime Minister Silvio Berlusconi.
A dozen separate deals between Russian and Italian companies were also signed on Thursday during Berlusconi's visit.
They include a deal by Italian power firm Enel to supply Russian Railways with electricity and an agreement with Italian conglomerate Pirelli & C to build a 300 million euro tyre plant in the town of Togliatti on the Volga.
Fiat also signed a deal to produce its models in Russia in partnership with car maker Sollers.
LUKOIL, Russia's No.2 oil producer, signed a deal to buy 49 percent in ERG's Isab di Priolo refinery on Sicily in June, but as the financial crisis limited the company's access to credit resources doubts emerged about its ability to fund the purchase.
On Thursday, LUKOIL said the deal would close on Dec. 1 and by that time it would have paid an upfront amount of 600 million euros. The remaining sum will be deferred and paid in three tranches before the end of September 2009.
LUKOIL President Vagit Alekperov told Reuters in October his company hoped to get between $2 billion and $5 billion in state loans to help refinance its debt and buy new assets.
On Thursday, he said his company had asked for $1.8 billion in state refinancing help but said talks were continuing as the interests on the proposed loan were high.
The deal between LUKOIL and ERG is another example of growing energy ties between Russia and Italy, which has become one of Russia's closest partners in the energy sector.
Italian state-controlled energy company Eni has an agreement to give Russian gas export monopoly Gazprom access to its end users in exchange for a share of Russian reserves and new pipelines.
Enel bought Russian utility OGK-5 for $4 billion this year.
The 320,000 barrel-a-day Isab refinery is strategically located in the centre of the Mediterranean Sea and produces mostly diesel fuel. Russia's Urals crude is a big part of its input.
LUKOIL has four refineries in Russia, one in Ukraine, one in Bulgaria and one in Romania. It can refine 58 million tonnes of crude, or 1.16 million bpd, including 240,000 bpd abroad.
(Reporting by Dmitry Zhdannikov and Denis Dyomkin; Editing by Victoria Bryan and Erica Billingham) ($1=.7779 Euro) Keywords: RUSSIA ITALY/DEALS (dmitri.zhdannikov@reuters.com, + 7 495 775 12 42; Reuters Messaging: dmitri.zhdannikov.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
MOSCOW, Nov 6 (Reuters) - Russian oil major LUKOIL and Italian refiner ERG finalised on Thursday a 1.35 billion euro ($1.74 billion) deal allowing LUKOIL to break into the western European refining business.
The deal was signed during the Russian-Italian summit in Moscow presided over by Russian President Dmitry Medvedev and Italian Prime Minister Silvio Berlusconi.
A dozen separate deals between Russian and Italian companies were also signed on Thursday during Berlusconi's visit.
They include a deal by Italian power firm Enel to supply Russian Railways with electricity and an agreement with Italian conglomerate Pirelli & C to build a 300 million euro tyre plant in the town of Togliatti on the Volga.
Fiat also signed a deal to produce its models in Russia in partnership with car maker Sollers.
LUKOIL, Russia's No.2 oil producer, signed a deal to buy 49 percent in ERG's Isab di Priolo refinery on Sicily in June, but as the financial crisis limited the company's access to credit resources doubts emerged about its ability to fund the purchase.
On Thursday, LUKOIL said the deal would close on Dec. 1 and by that time it would have paid an upfront amount of 600 million euros. The remaining sum will be deferred and paid in three tranches before the end of September 2009.
LUKOIL President Vagit Alekperov told Reuters in October his company hoped to get between $2 billion and $5 billion in state loans to help refinance its debt and buy new assets.
On Thursday, he said his company had asked for $1.8 billion in state refinancing help but said talks were continuing as the interests on the proposed loan were high.
The deal between LUKOIL and ERG is another example of growing energy ties between Russia and Italy, which has become one of Russia's closest partners in the energy sector.
Italian state-controlled energy company Eni has an agreement to give Russian gas export monopoly Gazprom access to its end users in exchange for a share of Russian reserves and new pipelines.
Enel bought Russian utility OGK-5 for $4 billion this year.
The 320,000 barrel-a-day Isab refinery is strategically located in the centre of the Mediterranean Sea and produces mostly diesel fuel. Russia's Urals crude is a big part of its input.
LUKOIL has four refineries in Russia, one in Ukraine, one in Bulgaria and one in Romania. It can refine 58 million tonnes of crude, or 1.16 million bpd, including 240,000 bpd abroad.
(Reporting by Dmitry Zhdannikov and Denis Dyomkin; Editing by Victoria Bryan and Erica Billingham) ($1=.7779 Euro) Keywords: RUSSIA ITALY/DEALS (dmitri.zhdannikov@reuters.com, + 7 495 775 12 42; Reuters Messaging: dmitri.zhdannikov.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.