LITASCO GROUP Activities and Functions
Export Marketing
LITASCO SA is responsible for international trading and marketing of LUKOIL's crude oil and refine products.
LITASCO SA takes delivery of LUKOIL system barrels at load ports in the Arctic, Baltic and Black Sea ports. We also manage a significant volume of crude oil that is delivered into Central Europe through the Druzhba pipeline system.
Historically, LITASCO SA sold and delivered hydrocarbons to neighboring regions such as Northwest Europe, the Black Sea and the Mediterranean. Although this continues to be true for many cargoes, LITASCO SA is sending an increasing volume of LUKOIL crude and products to more distant markets such as the United States and Asia.
System Supply
LITASCO SA manages crude oil and other feedstocks purchases and deliveries for LUKOIL's refineries in Bulgaria, Italy, Romania and Ukraine.
Our contribution to the LUKOIL Group is based on providing the system refineries with the most appropriate feedstock that matches the individual refinery configuration and processing needs based on ever-changing prevailing market conditions. We always balance the source of the feedstock from both LUKOIL's own barrels and from third parties.
International Trading
LITASCO SA conducts international entrepreneurial trading (purchases and sales from/to third-parties) of crude oil and refined products both from Geneva and from our network of trading offices worldwide.
LITASCO SA has trading offices in Asia, the Middle East, Europe and the United States. Their function is to solidify the presence of the LITASCO Group while covering local and international businesses in order to accelerate our ongoing expansion into these markets.
TRN
In 2009, September 1, LITASCO SA starts to operate LUKOIL acquired a 45% share in Total Raffinaderij Netherlands (TRN) from Dow Chemical Company.
The refinery is located in the Vlissingen Oost harbor area in the southwest part of the Netherlands, and is one of Europe's top financially performing refineries.
The refinery can process significant quantities of LUKOIL crude oils, straight-run fuel and VGO, as well as a wide variety of third-party crudes and feedstocks. This asset fits perfectly into LUKOIL's vertical integration strategy, processing the company's crude and feedstocks, as well as supplying marketing activities in Northern Europe.
ISAB
In June 2008, Mr. Vagit ALEKPEROV, President of OAO LUKOIL and Mr.Alessandro GARRONE, CEO of ERG S.p.A., Italy, signed an agreement to establish a joint venture.
This joint venture owns the ISAB refinery complex in Priolo, Italy, and has been operating since 1st December, 2008.
As part of the transaction, LUKOIL has acquired a 49% stake in the joint venture for a cash consideration of EUR 1,347 million, ERG will retain 51%.
The transaction structure provides LUKOIL with a possibility to increase its stake in the future.
The ISAB refinery with a NELSON complexity of 9.3, is one of the largest refineries in the region and is well positioned to meet the growing middle distillate demand in Europe (mainly kerosene and diesel fuel).
The refinery includes two sites which are connected by a pipeline system and integrated in a single refining unit with total annual capacity of 16 million tonnes. The refining unit comprises a wide range of sophisticated refining processes.
ISAB also includes three jetties, storage tanks of 3.7 million cubic meters, a 99 MW power generation plant and other related infrastructure.
Commenting on the transaction, Mr. Vagit ALEKPEROV, President of LUKOIL said, "Establishment of a refining joint venture in Italy is a cornerstone of LUKOIL's growth and strategy in the area of developing its downstream operations in Western Europe".
LUKOIL's overall refining capacities will increase by 13% and overseas refining capacities will increase by 60%.
The refinery's advantageous location and an opportunity to process Russian crude make this project very attractive.
LITASCO SA has been mandated to handle all the commercial and trading activities.
Global Risk Management
In order to successfully conduct its business, LITASCO SA must identify and manage several ongoing risks in the fields of trading, logistics, IT systems, HR and geopolitics.
The company is subject to strict Swiss Federal regulation regarding the existence and functioning of Internal Control Systems.
LITASCO SA's compliance with this regulation is certified by an external audit firm.
In the range of existing and perceived risks, particular attention is devoted to the management of price risk and credit risk.