Translated material
Gas stations will formally become strangers
LUKOIL sells several dozen gas stations in the USA with the condition of maintaining the brand and fuel supplier
LUKOIL, in its financial statements for last year according to GAAP standards , reported that in May it would sell 162 gas stations in America for $138 million - this is almost a tenth of all the company's stations in the United States. We are talking about gas stations purchased in 2004 from ConocoPhillips - then the deal worth $265.75 million included 795 stations in New Jersey and Pennsylvania. As the head of LUKOIL Americas Corporation Vadim Gluzman told Vremya Novostey yesterday, the company is doing “exactly what all the oil giants operating in America are doing now” - selling gas stations to investors and assigning these gas stations the obligation to operate under the LUKOIL brand for 15 years and trade in fuel produced by LUKOIL plants. In this way, he says, the company will earn “on supplies and royalties,” and one might even say that it will not lose its market share. Mr. Gluzman refused to say who the buyer of the gas stations was, explaining only that it was one investor. The company does not directly say whether the sale is related to lawsuits filed last year against large American gas station operators regarding agreed pricing.LUKOIL entered the American petroleum products market in 2000 by purchasing the Getty Petroleum company with 1,300 gas stations. Then he gradually increased his share of the American market, in particular in 2004 by concluding a deal with ConocoPhillips. This company is known to be the largest shareholder of LUKOIL with a 20 percent stake. And LUKOIL Americas purchases fuel for its gas stations from ConocoPhillips factories. As of the beginning of 2007, LUKOIL had 1,843 gas stations in the United States (the company had a total of 5,793 gas stations at that time). Now, according to Mr. Gluzman, the company has about 1,800 stations. Back in 2006, the company began optimizing its sales network, within which it sold low-efficiency gas stations. It is not reported what parameters she used to determine them, however, for example, in Europe, stations with sales of less than one ton of fuel per day are considered as such. However, a number of gas stations purchased from ConocoPhillips did not meet LUKOIL’s corporate requirements, and now that a buyer has been found, the company has sold them.
As stated in LUKOIL’s financial statements, in February 2008, LUKOIL Americas “concluded a purchase and sale agreement for gas stations with a third-party investor for $138 million. Environmental restoration obligations under this agreement are estimated at approximately $19 million. The Group will continue to supply petroleum products to gas stations under the contract , concluded with the new owners for 15 years. Completion of the transaction is expected in May 2008. As of December 31, 2007, the group recorded these gas stations with a carrying amount of $134 million in the consolidated balance sheet as assets held for sale. Additionally, the group recorded a liability related to assets held for sale in the amount of $14 million.”
“We sell gas stations very profitably,” says Mr. Gluzman. “We made a lot of money on this deal.” When purchasing, the average cost of one gas station was $334 thousand, and when selling - $852 thousand. The proceeds, according to him, will be used to partially repay the loan that LUKOIL Americas took out to purchase a gas station from ConocoPhillips - then 50 million LUKOIL paid itself, and the rest was financed through a six-year loan arranged and provided by Lehman Brothers.
As you know, last year two lawsuits were filed in the Illinois District Court against divisions of LUKOIL Americas and a number of global oil companies (Saudi Aramco, Venezuelan PdVSA, LITASCO, etc.) alleging price fixing to inflate wholesale prices for petroleum products. The main demand of the plaintiffs was to force these companies to sell the assets of their American subsidiaries, which should eliminate their affiliation. It cannot be ruled out that by selling some gas stations, LUKOIL saved itself from the risks associated with the lawsuit.
Mr. Gluzman chose not to say what the strategy is for LUKOIL's future refueling business in America. When asked whether gas stations would be sold or, conversely, bought, he replied: “It all depends on the parameters of the specific transaction.”
LUKOIL-Tsentrnefteprodukt is completing a deal to acquire from RK-Gazsetservis seven operating gas stations and 19 land plots on which new gas stations will be built. The acquired gas stations operate in the Moscow and Kaluga regions under the EPetrol brand; their complete rebranding in accordance with LUKOIL corporate standards is planned to be completed in the third quarter of 2008. LUKOIL-Tsentrnefteprodukt operates in the central region of Russia: in Moscow, Moscow, Tver, Smolensk, Bryansk, Oryol, Kursk, Belgorod, Lipetsk, Tula, Kaluga and Ryazan regions. Branches of the company operate in Smolensk, Tula, Lipetsk. The main activity of the company is the wholesale and retail sale of light and dark petroleum products, packaged oils, retail sale of fuel through its own network of gas stations. The company's structure includes more than 120 gas stations and seven oil depots. AK&M