Shalva Chigirinsky, president of Moscow Oil Co., has succeeded in attracting the British company to the Moscow oil refinery, which has been solely supplied by oil firms LUKoil and Tatneft.
Oil will be supplied to the refinery by Petrokompleks, a joint venture in which BP owns 74 percent and Chigirinsky's ST Group development company owns 26 percent. Petrokompleks is one of the most dynamically developing gas station networks in the Moscow region and includes 28 stations under the BP logo.
"Our business in Russia has reached the stage when we need our own oil products," said Jeff Frank, general director of Petrokompleks.
He said the company will buy oil on the open market and supply it to the Moscow oil refinery, exclusively for the purpose of supplying oil products for its gas stations.
Petrokompleks does not plan to become a fuel wholesaler. The first 35,000-ton shipment of oil is to be bought from the Sidanko oil company and refined at the Moscow refinery in March, Frank said. Future work will depend on the results of this experiment.
BP owns 10 percent of Sidanko.
Many companies have already announced their desire to sell crude to Petrokompleks.
In order to fully cover the present gas station network with its own oil the company must refine 100,000 tons per month. At the moment it makes better financial sense to buy part of the oil products at other factories, Frank said.
He said the profitability of Petrokompleks' retail fuel business will be increased by processing its own oil at the Moscow refinery.
Joint owner Chigirinsky has long expressed his dissatisfaction with the fact that the refinery has only two crude suppliers, namely LUKoil and Tatneft.
But the head of the Moscow Oil Co. could only influence supplies to the refinery after it got hold of the Central Fuel Co. and got rid of its head, Yury Shafranik, who had supported LUKoil's and Tatneft's status.
Immediately after this happened Moscow Oil Co. representatives started saying that they would bring several major extraction companies to the refinery. Almost nothing came of this.
No. 6 oil firm Sibneft has no free resources while No. 3 oil firm Surgutneftegas requires prepayment, which the Moscow Oil Co. is in no position to provide.
And now Petrokompleks has been found. Its general director refused to discuss the conditions under which his company would receive and process the oil. Most likely these conditions will be special since BP essentially runs Sidanko, while Chigirinsky runs Moscow Oil Co.
A highly placed Sidanko manager said Sidanko will not give BP special terms, despite it being a Sidanko shareholder. He also said that so far the company had no contract for supplying oil to Petrokompleks.
President of the Russian Fuel System and owner of a large chain of Moscow filling stations, Sergei Borisov, said that Petrokompleks' project was risky and expensive. "But BP can probably permit itself these experiments," he said.
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