Lukoil’s Romanian operations under threat
Authorities ordered the Petrotel oil refinery to stop production to investigate money laundering
The Russian oil major Lukoil’s refining operations in Romania are under threat of nationalisation after the authorities ordered the Petrotel oil refinery to halt production and seized inventories. The move comes as prosecutors investigate allegations of tax evasion and money laundering totaling €230 million ($293.3m) at the Lukoil subsidiary.
Lukoil said 13 October that it had restarted production at the refinery, near Ploiesti, after being forced to halt operations following a raid by Romanian prosecutors and police on 2 October. The authorities seized Petrotel’s oil and fuels inventories during the raid.
Russia's ambassador to Romania, Oleg Malginov, said in a statement issued on 6 October that the suspension of operations at the Petrotel refinery near Ploiesti was "jeopardising the functioning of the entire production chain of Lukoil in Romania" and he hoped for a speedy conclusion to the invetigation. "I ... am very concerned about the events happening around the (Petrotel) refinery … and the atmosphere that is generated in response to this situation," Malginov said. "I hope that the investigation will be carried out objectively within the framework of the law, with due regard to the interests of both business and Romanian workers, as well as the interests of Russian-Romanian relations."
The Russians insist that they have provided all financial documents and electronic information resources to Romanian law enforcement agencies, and that no charges had been brought against either Lukoil companies or their employees. The ambassador noted in his statement that in the 15 years that Lukoil has owned the refinery since it acquired it for $53m, the subsidiary “was repeatedly inspected by the Romanian state supervisory bodies. The last inspection was completed in 2013.”
Lukoil’s Petrotel refinery is one of the largest in Central and Eastern Europe, processing 2.4m tonnes a year of Romanian and Russian oil, which is transported by tanker from Novorossiysk, unloaded at an oil terminal in Constanta, and then transported to the refinery by either rail or an underground pipeline.
Given its importance to the Romanian economy, the country’s president, Traian Basescu, has asked the government to prepare to nationalise the refinery in the event Lukoil threatens to shut it down. “You are free to leave Romania if you don’t respect the law,” Bloomberg quoted Basescu as saying. “If, tomorrow, Lukoil decides not to resume production, I ask the government to be prepared to take over the refinery, both from a technical point of view and also to be ready to operate it.”