August 18, 2015, 11:17 pm / Business

Transneft sells Ukrainian oil product pipeline

The contender for this asset is a little-known German entrepreneur Galina Starinskaya

Now JSC "Yugo-Zapad Transnefteprodukt" belongs to Transneft / E. Egorov / Vedomosti

wanted to buy Ukrainian oil product pipelines Lukoil and then transfer them to a Russian-European consortium. But the deal did not take place - Lukoil itself began to wind down its business in Ukraine: first the Odessa oil refinery was sold, then a network of gas stations (the company only retained Karpatnaftohim). has not yet sold anything Rosneft (it has the Lisichansky Oil Refinery and a network of oil refineries). Earlier, Deputy Minister of Foreign Affairs of Russia Vasily Nebenzya said that the Ministry of Foreign Affairs provides all the necessary support to Russian companies, but only they can decide for them to stay in Ukraine or resell assets: “The conditions there now are not very favorable for doing business” (quote from Interfax ").

The Federal Antimonopoly Service (FAS) yesterday announced the extension of the period for consideration of the application of International Trading Partners AG to purchase 100% of the shares of Yugo-Zapad Transnefteproduct JSC. It owns one foreign asset – PrikarpatZapadtrans, which owns oil product pipelines in Ukraine. Now the company belongs to Transneft. A representative of the state-owned company did not respond to a request yesterday.

International Trading Partners is registered in Switzerland and is controlled by German citizen Anatoly Schaefer. It was not possible to find information in open sources about the company and its owner. There are no contacts of this structure.

Schaefer is a foreign investor, and Yugo-Zapad Transnefteprodukt is a natural monopoly entity of strategic importance for ensuring the country’s defense and state security. This transaction requires prior consent under the investment law, so consideration of the application was extended, the FAS statement explains.

Prikarpatzapadtrans owns the Ukrainian sections of the Samara-Zapadnoye and Grozny-Armavir-Trudovaya oil product pipelines. Their total length is 1433 km. For Transneft this is a problematic asset. For almost 10 years, Ukraine has been trying to challenge the ownership of the Russian monopoly on these pipes. Kyiv believed that in the 1990s. sections of pipes were registered as Russian property illegally. The Prosecutor General's Office of Ukraine achieved a decision to seize pipelines from the possession of a Russian company in three instances. In April, the economic court of the Rivne region, at the request of Prikarpatzapadtrans, sent the case for a new trial. Losses of petroleum products due to theft over five years amounted to 57,900 tons, which corresponds to approximately $62.7 million, Transneft reported. Now a political aspect has been added to these problems, recalls Alfa Bank senior analyst Alexander Kornilov: “It’s easier to sell these pipelines than to own them.”

Prykarpatzapadtrans pumps 1.7 million tons of petroleum products per year, including transit and the Ukrainian market. The main buyer of diesel fuel is the Hungarian MOL. Raiffeisenbank analyst Andrey Polishchuk estimates the cost of the pipe at $200–300 million.