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Lukoil acquires Beopetrol fuel chain

Belgrade, Sept 26, 2003 - The Serbian Share Fund Director Aleksandar Gracanac and Lukoil's Director for Southeast Europe Valentin Zlatev signed on Friday a contract which made the Russian oil giant the owner of a 79.5 percent stake in Serbia's second largest fuel chain Beopetrol.

Serbian Minister of Economy and Privatisation Aleksandar Vlahovic congratulated the signatories, saying that the deal would ensure further development of Serbia's energy sector.

Vlahovic welcomed what he described as "yet another valuable investment in Serbia, which will increase competitiveness in the oil market and facilitate the privatisation of the parts of Naftna Industrija Srbije (NIS) after its restructuring."

Vlahovic also said that the Beopetrol sale was "a good example of a successful privatisation through a transparent and fair tender" and added that the revenues would not be used for public spending but rather invested into infrastructure projects.

He recalled that the value of this year's foreign direct investment in Serbia has already exceeded $1.1 billion, with privatisation revenues three times as high as expected.

The deal on Lukoil's takeover of Beopetrol is worth €210 million and includes €117 million for the capital, €85 million in investment over five years, and €8 million for a social welfare programme.

According to Beopetrol General Manager Mirko Rasovic, Lukoil will invest €65 million in the modernisation of Beopetrol as soon as next year. He added that the new owner had also promised not to lay off any of Beopetrol's 1,700 employees.

Zlatev said following the ceremony that the acquisition of Beopetrol was "a significant move" for Lukoil, given the importance of the Serbian market as well as its improved investment climate in the past two years.

He added that Lukoil, as a "serious and reliable partner with unquestioned reputation," would consider further investment in Serbia as soon as the implementation of the Beopetrol deal was launched. He also hinted at Lukoil's interest in the privatisation of Serbia's state-owned oil company NIS.

Zlatev also said that the Beopetrol sale was "an example of a deal in which both sides win," and announced that Lukoil President Vagit Alekperov would visit Belgrade on Monday.

Lukoil, the world's sixth largest oil firm, covers 20 percent of oil production and 18 percent of oil refining in Russia. The company employs 150,000 workers and has operations in 30 countries world-wide and 60 Russian regions. It has an annual turnover of some $15 million and a network of 4,076 gas stations.

Beopetrol is Serbia's second largest fuel chain has annual sales of 400,000 tons of oil and oil derivatives. It has a chain of 207 petrol stations and storage facilities of 74,000 cubic metres.

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