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Russia's Lukoil appoints new VP for sales and supplies – sources

December 29, 2016
News

Russia’s second biggest oil producer Lukoil has appointed a new vice-president for sales and supplies after state-owned rival Rosneft clinched several major deals at its expense, three sources told Reuters.

Valery Subbotin, Lukoil’s vice-president for oil sales and supplies, ended his 18-year tenure at the company last week and has been replaced by Vadim Vorobyov, previously Lukoil’s vice-president for oil refining, gas processing and petrochemicals, according to the sources familiar with the matter.

Subbotin, who holds a 0.0152 percent stake in the company, will take a senior management position at Lukoil’s trading arm Litasco, the sources said.

Lukoil’s press office declined to comment and Subbotin did not respond to Reuters requests for comment.

Lukoil is Russia’s biggest private oil firm and its second-largest oil producer behind Rosneft. The two companies have repeatedly clashed over assets.

Rosneft, headed by Igor Sechin, an ally of President Vladimir Putin, has clinched several big deals in the last two months, including the purchase of a controlling stake in mid-sized oil company Bashneft and a stake in India’s biggest refiner Essar.

It also sold a 19.5 percent government stake in itself to Qatar’s sovereign wealth fund and commodities trader Glencore for 10.5 billion euros..

One of the sources said Subbotin’s role change was a result of Lukoil losing the battle for the stake in Bashneft.

“Lukoil closely cooperated with Bashneft, (and it) really wanted to buy it, but Rosneft appeared to get in the way, and after the closing of the deal started to change the oil trading scheme,” said a trader on the Russian oil market.

Since acquiring control of Bashneft, Rosneft has moved to cancel contracts between Bashneft and Lukoil and it stopped buying oil from Lukoil destined for Bashneft’s refineries in the republic of Bashkortostan.

Rosneft spokesman Mikhail Leontyev told TV station “Rain” (Dozhd) on Oct. 12 that Rosneft had a raft of questions for Bashneft, including about its oil sales with Lukoil.

Rosneft told Reuters that any decisions about Bashneft assets would be made on economic grounds.

“The company currently has a contract in force. Its parameters may be changed – Rosneft, proceeding from its business plan, will set out the most efficient supply routes for these products,” it said.

Market players say they are concerned that the change of a top manager in charge of oil supplies might result in Lukoil supplying less oil to the domestic market.

“Lukoil supplied large volumes of oil to the domestic market and now it is unclear if these supplies will decline or not. As of now those firms who worked with Lukoil under swap deals, haven’t received anything for January,” one trader said.

Lukoil used to supply about 700,000-800,000 tonnes of oil per month to the Russian domestic market.

By Olga Yagova and Gleb Gorodyankin

Source: Reuters

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