Lukoil Pivots to Turkey with $1.5B Refinery Deal Amid Sanctions
10.06.2023 By Tank Terminals - NEWS

October 6, 2023 [Oil Price]- Russian Lukoil will lend $1.5 billion to Azerbaijan’s state-run Socar to enable its Turkish STAR refinery to receive Russian crude oil imports again, after sanctions-related financial restrictions forced a cut-off this summer, Reuters reported exclusively on Thursday.


As European refiners halted purchases of Russian oil under the sanctions regime, Lukoil, a private company, is seeking refining customers situated near Russian ports to recapture market share.

Socar’s STAR refinery in Turkey has a 200,000 barrel-per-day refining capacity, but halted Russian crude intake earlier this year due to Western sanctions. While Turkey has not signed on to the European Union’s sanctions rules and does not comply, financial restrictions have made it difficult for STAR to import Russian crude for refining.

Privately owned and operated Lukoil has not been subjected to Western sanctions to the extent that Russia’s state-run entities have. Lukoil has continued to operate gas stations, refineries and its own trading arm in Europe.

“Lukoil has very good lobbies … they have enablers in Brussels and across Europe,” Martin Vladimirov, senior energy researcher at Bulgaria’s Center for the Study of Democracy think tank, told Politico earlier this year. “They have convinced European policymakers that Lukoil is supporting Ukraine and the management of Lukoil is against the war.”

According to Reuters, citing LSEG Eikon data, STAR fully suspended imports of Russia’s flagship crude oil blend, Urals, in August-September and replaced volumes with Kazakhstan’s similar KEBCO blend.

Under the $1.5-billion deal, sources have told Reuters that Lukoil will begin deliveries of approximately 100,000 bpd to STAR this month. LSEG tanker tracking data cited by Reuters also shows three tankers hired by Lukoil currently en route to Turkey, loaded with Urals.

Despite Lukoil’s relatively easy ride through Western sanctions, last week, Bulgaria’s parliament backed a decision to gradually halt Russian oil imports over the course of the next 12 months, dealing a major blow to Lukoil’s refinery there, Bloomberg reports. Lukoil’s Bulgarian refinery, Neftohim, is the largest in southeastern Europe.


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