Espreso. Global

British refinery continues to work with Russia's Lukoil

2 January, 2024 Tuesday
21:10

The owner of one of the largest oil refineries in the UK has provided a credit line to a division of the Russian billionaire's Lukoil oil company, which is under sanctions

This is reported by The Guardian.

The British company Essar Oil, which owns and operates the Stanlow refinery, stopped importing Russian fuel in 2022, following Russia's invasion of Ukraine. However, according to a recent filing, the company has extended a credit line to Litasco, the oil trading arm of Moscow-based Lukoil, Russia's second-largest oil company. Litasco itself is not subject to sanctions.

The two-year deal expired in May 2023 but was extended until June 2024, before the money is returned in accordance with a "unwind and settlement" agreement.

Litasco is wholly owned by Lukoil, whose founder and 8.5% shareholder was sanctioned by the UK in April 2022.

"Through his directorship of Lukoil, Alekperov continues to obtain a benefit from and/or continues to support the government of Russia by working as a director […] of entities carrying on business in sectors of strategic significance to the government of Russia, namely the Russian energy sector" the UK government said in a statement on the reasons for the sanctions. 

Alekperov resigned as Lukoil's director shortly after he was sanctioned, but remains a shareholder in the company with an 8.5% stake.

In November, in a dispute between Litasco and a Senegalese oil company, the high court ruled that neither Litasco nor Lukoil can be considered to be under the control of sanctioned persons.

In the case, Le Mond Oil & Gas Africa argued that Litasco should be considered sanctioned because it is controlled by Alekperov or Vladimir Putin. However, Judge Foxton rejected this argument, noting that while Putin could gain control of Litasco if he chose to do so, he had no influence over the company.

"EOUK took immediate action to stop all Russian diesel imports many months ahead of the government deadline and our peers in the sector, by identifying alternate sources and ramping up our own production. We do not import any fuel of Russian origin," said a company spokesman. - "We operate at all times in line with sanctions legislation"

Essar Oil (UK)'s loan agreement with Litasco had previously raised concerns in Westminster because the contract gives the company ownership of Stanlow Terminals Ltd.

Theoretically, this means that the terminal, a vital part of the UK's energy infrastructure, could fall into Litasco's hands if Essar Oil defaults on its debts.

  • Bulgarian parliament passed a law banning the export of fuel produced from Russian oil. Starting from 1 March 2024, Lukoil's refinery will stop processing oil from Russia. 

 
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