Russia, Italy finalize energy accord on Berlusconi's visit

Other News Materials 6 November 2008 19:30 (UTC +04:00)

Russia oil major Lukoil will sign a 1.35 billion-euro (1.73 billion-dollar) deal to purchase a stake in Italian refiner ERG and enter into a joint venture that would allow it to break into European markets, reported dpa.

The deal was expected to be formalized during Italian Prime Minister Silvio Berlusconi's visit to Moscow Thursday.

"The transaction with ERG will be closed on December 1. Lukoil will pay cash during the year," Lukoil CEO Vagit Alekperov told news agency Interfax on Thursday.

Lukoil, Russia's second largest oil producer, agreed in June to acquire the 49 per cent stake in the Isab refinery in Priolo, Sicily, but the global credit crunch and dropping oil prices threw the deal into question.

Alekperov said Thursday Lukoil had applied to Vneshekonombank for a 1.8 billion-dollar loan toward the purchase of new assets and to help refinance its debts, Interfax reported.

If the purchase goes through it should increase Lukoil's refining capacity and smooth its expansion into Europe, where it already manages refineries in Bulgaria and Romania.

About 30 other bilateral trade deals were on the table to be signed during Berlusconi's one-day visit, a Kremlin official said on the customary condition of anonymity.

Including energy the deals were in the electricity, nuclear and automotive parts and cement, the official said.

Russian President Dmitry Medvedev on Thursday highlighted a 66 per cent growth in bilateral trade with Italy "even during this, not our easiest year."

Trade between the two countries reached 36 billion dollars last year, according to the Kremlin, but is Russia's second largest trade partner in the European Union.

Berlusconi told Medvedev at the Kremlin, "We really hope to become Russia's first trade partners. We are now in second place."