"The deal for the refinery will be closed on December 1. LUKoil will pay in cash during the year," LUKoil President Vagit Alekperov said.
The agreement on the JV to operate the ISAB refinery complex in Priolo, Sicily, was signed between Alekperov and ERG CEO Alessandro Garrone in Rome on June 23.
Under the deal, LUKoil will acquire a 49% stake in the JV for 1.35 billion euros ($1.7 billion), excluding inventory. ERG will retain 51%. The transaction provides LUKoil with an option to increase its stake in the future, the Russian oil company earlier said.
"The establishment of a refining joint venture in Italy is a cornerstone of LUKoil's growth 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," Alekperov earlier said.
The ISAB refinery complex 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 united by a pipeline system and integrated in a single refining unit with a total annual refining capacity of 16 million tons (117 million barrels), LUKoil said.
Each partner will procure its share of crude and market its share of products in accordance with its JV equity stake. The ISAB refinery has the flexibility to process crude such as Urals, and LUKOIL intends to fully integrate its share of the refinery into its supply chain, the Russian oil company said.