OAO Rosneft, Russia’s biggest oil producer, signed an agreement with Saras SpA of Italy with the intention of forming a joint venture.
The 50:50 venture is for the processing of crude, sale of refined products, and trading, Rosneft said today in a statement. The deal was signed in Munich by Igor Sechin, chairman of Rosneft, and Gian Marco Moratti, Saras’s chairman, it said. The agreement will focus on the 300,000 barrel-a-day Sarroch refinery in Sardinia.
“It’s a good deal, it’s about security of supply,” Ehsan Ul-Haq, senior market consultant at KBC Energy Economics, said by phone from Walton-on-Thames in the U.K. “If European refiners are interested in a steady supply of crude, they have to form such partnerships.”
Refiners in Europe have been forced to align with crude producers after falling demand for fuels amid a recession and rising Brent oil prices squeezed profits. Some operators sold plants while others closed them or converted sites to storage.
“Sarroch is a very flexible refinery so there’s no need for any additional investment to process large quantities of Russian oil,” Massimo Vacca, head of investor relations at Saras, said in a telephone interview. The two companies are discussing how the venture would work, he said.
Saras rose 3.5 percent to 1.039 euros in Milan, the highest since Nov. 2.
Italy’s ERG SpA said in August it may sell its remaining 20 percent stake in its ISAB facility in Priolo to OAO Lukoil as it cuts exposure to refining. It also shut its Rome refinery, a venture with Total SA, in September with plans to convert the 85,000 barrel-a-day site into a terminal.