Page 11 - FSUOGM Week 13 2022

FSUOGM PROJECTS & COMPANIES FSUOGM

Lukoil's trading unit scales

back amid sanctions

EUROPE THE Swiss trading arm of Russia’s Lukoil has Litasco responded to the report by saying
scaled back its operations after its parent cut its there had been a “natural temporary reduction
Lukoil has not been capital supply to guarantee almost $1bn in mar- in our corporate activity in order to make sure
directly targeted by gin after Western sanctions were imposed, Reu- we can operate without our sufficient liquidity
sanctions. ters reported on March 24 citing sources. pool.”
Litasco typically handles 3.6mn barrels According to Reuters, the trading arm was
per day (bpd) of oil, but is now concentrating directed to stop hedging oil in order to preserve
on sending oil to Lukoil’s European refineries action. Litasco itself has said it has a “tactical
and selling refined products, traders told Reu- process that allows for discretionary hedging to
ters. But it has sharply reduced the purchase of facilitate efficient margin utilisation.”
third-party crude for refinery supply or trading, Litasco has also curtailed significantly the
according to the news agency. trade of natural gas, power and carbon emis-
Lukoil owns four refineries in Russia and a sions, which generated it hundreds of millions
further three in Italy, Romania and Bulgaria, plus of dollars in revenues last year, according to one
a 45% stake in a facility in the Netherlands. The trader.
combined oil throughput capacity of these plants ‘Gas and power is a long-term strategy for
is 80.4mn tonnes (1.6mn bpd). Litasco and whilst the intensity of the activities
Neither the US nor its European allies have and capital deployed may vary with market con-
placed sanctions against Lukoil, a private com- ditions, this remains a core strategy going for-
pany with less close ties to the Kremlin compared ward,” Litasco told the news agency.
to state-owned Gazprom and Rosneft. Never- All of Lukoil’s trading of gasoline and die-
theless, sanctions have created indirect compli- sel is carried out by Litascco, and the company
cations for oil trading, and some shippers and will likely retain its traders associated with core
trading houses have self-imposed restrictions energy assets, sources told Reuters. The company
on trading with Russian companies through fear itself has declined to comment on the employ-
of violating future sanctions. ment status of its workforce. ™

China’s Sinopec reportedly suspending

Russian project talks

RUSSIA CHINA’S state-controlled Sinopec Group has According to one of Reuters’ sources, Sino-
reportedly suspended talks on a petrochemical pec suspended talks after Sibur minority share-
Even companies from investment and gas marketing venture in Rus- holder and board member Gennady Timchenko
countries with friendlier sia. This follows a call for caution by the Chinese was sanctioned by the West. The companies had
ties with Russia are government as sanctions mount over the inva- reportedly been in the middle of site selection for
thinking twice about sion of Ukraine. the new project.
investments. Citing sources familiar with the matter, Reu- Sinopec also reportedly suspended talks over
ters reported on March 25 that the move puts the a gas marketing venture with Russian LNG pro-
brakes on what could potentially be a $500mn ducer Novatek, a source told Reuters, linking the
investment in Russia. Beijing has refused to move to concerns that Sberbank, one of Novatek's
condemn Moscow’s actions in Ukraine and has shareholders, is on the latest US sanctions list.
voiced its opposition to the sanctions against According to the sources, China's three state-
Russia, but if Sinopec’s move is confirmed, it owned energy giants – Sinopec, China National
would illustrate the risk of Western-led sanctions Petroleum Corp. (CNPC) and China National
even to China. Offshore Oil Corp. (CNOOC) – have been
Sinopec had been considering investing in a assessing the impact of the sanctions on their
project similar to the Amur gas chemical com- multi-billion-dollar investments in Russia.
plex alongside Russian petrochemical major "Companies will rigidly follow Beijing's for-
Sibur. Sinopec is a 40% shareholder in the Amur eign policy in this crisis," an executive at a state
complex, which is due to come online in 2024, oil company told Reuters. "There's no room
while Sibur owns the remaining 60%. The Chi- whatsoever for companies to take any initiatives
nese company also owns a 10% stake in Sibur. in terms of new investment." ™

Week 13 30•March•2022 www. NEWSBASE .com P11