Under the joint venture, LUKoil and ERG have formed a new company worth €2.75 billion that will control ERG’s Isab di Priolo refinery in Sicily, ERG said in a statement. ERG will have 51% of the joint venture. The 320,000 barrels-a-day refinery includes a 99-megawatt power plant and a minimum inventory of 745,000 tons of crude oil and refined products. ERG is Italy’s second-biggest refiner by market share.
“This important joint venture is in line with our strategy of growth characterized by … accords with first-tier international partners that have always represented opportunity for development of our group,” CEO Alessandro Garrone said in a statement. Governance will be shared equally between LUKoil and ERG on major business decisions. An operating accord will guarantee management efficiency and autonomy, it said.
LUKoil and ERG have agreed to develop Isab in coming years in line with ERG’s business plan. ERG will have an option to sell its 51% stake to LUKoil within five years. Garrone said the put option was an instrument to resolve disagreements and there was no intention to exercise the option. (Reuters)
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