Azeri state oil firm Socar will sign a long-term crude oil supply deal with Romania's Rompetrol and is also considering buying a stake in one of its refineries, sources at Socar said on Friday.
One source said oil supplies would start in June and Socar would deliver one million barrels of Azeri Light crude a month either from Black Sea ports or the Turkish Mediterranean port of Ceyhan to Romania's Constanta port.
"Rompetrol is selling 25 percent in one of its refineries, and Socar could buy the entire stake or part of it," one source told Reuters, adding that a Rompetrol delegation will come to Baku for talks next week.
The shares of Rompetrol Rafinare, the refining arm of Romania's second largest oil firm Rompetrol Group NV, were up over 4 percent at 12:00 p.m. GMT.
Socar is seeking to expand its crude oil client base as its production is rising fast as part of a production sharing deal with BP Plc and other oil majors developing large offshore Caspian Sea oil fields.
Earlier this year, Socar signed a one-year deal to sell one million barrels of Azeri Light a month to Thai energy firm PTT. The deal was the first term supply agreement for Socar, which had been offering all its cargoes via tenders.
Socar is holding similar talks with oil companies in China, Japan and some Mediterranean countries.
One source said on Friday Socar would sign a similar long-term deal with a major Indian oil company on direct crude oil sales to one of the firm's refineries before the end of May.
Socar has a 10 percent stake in a BP-led Caspian Sea project, which is expected to produce an average of 700,000 barrels per day this year. Production will rise to over 1 million barrels per day by the end of this decade.
Socar controls two refineries in Azerbaijan with total designed capacity of over 400,000 barrels per day, but which are severely under-used as they are outdated and produce low-quality products.
In March, Socar said it would bid for Turkey's 51 percent stake in petrochemicals firm Petkim and build a 200,000 barrels per day refinery at the Mediterranean port of Ceyhan.
(Reuters, 18/05/2007)