Russia's OAO Lukoil said Friday it will pay $725 million for a stake in a Dutch refinery owned by France's Total SA, blocking a bid for the holding from Valero Energy Corp.
The move is the latest in a series of deals signaling Russian energy companies' push to strengthen their positions in the European market.
Lukoil, which is 20%-owned by U.S. oil major ConocoPhillips, said it plans to close the deal for a 45% stake in Total Raffinaderij Nederland by year end.
The announcement coincides with a state visit by Russian President Dimitry Medvedev to the Netherlands and reflects Russia's open advocacy for foreign expansion by its big energy players, which can boost the country's international influence.
Total has been seeking to build relations with Russian energy companies. It holds a stake in OAO Gazprom's Shtokman gas project in the Barents Sea and also has a stake in Russia's northern Kharyaga field.
U.S.-based Valero said last month that it agreed to buy the 45% stake in the Dutch refinery from Dow Chemical Co., which co-owned the refinery with Total. However, the French oil company exercised its pre-emptive rights to purchase the stake and simultaneously agreed to sell the holding to Lukoil. Total will keep a 55% stake in the refinery.
The 153,000 barrels-a-day refinery located in Vlissingen is mainly run on Russian crude oil.
Lukoil Chief Executive Vagit Alekperov said the acquisition "organically fits in our company's strategy aimed at increasing oil refining capacities located in the immediate proximity to the markets where products with higher added value are sold."
Lukoil is striving to boost its refining capacity by more than 70% by 2016. However, some of its recent attempts to buy assets abroad have failed, either because the deals were too expensive or because of what the company called the European Union's wariness about Russian investment.
Lukoil owns refineries in Bulgaria and Romania and runs gas stations in various European countries and in the U.S..
Meanwhile, PetroChina Co. is in talks with beleaguered British chemicals firm Ineos to invest in a giant oil refinery in Scotland, a move that could mark the Chinese oil company's first venture in European refining.
State-owned PetroChina, the largest Chinese oil producer by output, is one of a number of Chinese companies trying to secure global energy assets to power the country's hungry economy.
Ineos, one of Britain's largest private companies, is heavily in debt. The company said in May that lenders had approved its request for a covenant waiver extension, giving it breathing room to restructure its 7.5 billion euro ($10.47 billion) debt load.
Ineos said in a statement Friday that it was in discussions "with a number of potential partners about growth opportunities" at its Grangemouth refinery.
But it said the talks were "exploratory" and "may or may not lead to investment" in Grangemouth. It said it was committed to the refinery, which remained "a core part" of the Ineos group.
A local councillor in Falkirk, Scotland, Angus Macdonald, said the manager of Grangemouth had told residents at a community meeting that "there was a possibility of PetroChina purchasing part of the plant." The manager also confirmed Ineos was talking with other parties.
Recently, PetroChina's president, Zhou Jiping, said the company wanted to take advantage of relatively low oil prices to actively seek out opportunities overseas.
It is in talks with a number of international oil majors, such as Royal Dutch Shell PLC and Chevron Corp., as well as state-owned energy companies in Qatar and Venezuela, according to company executives.
PetroChina couldn't be reached to comment.
Grangemouth, which Ineos acquired BP PLC in 2005, is strategically important because it is connected to the North Sea Forties pipeline, which carries about a third of the U.K.'s oil to shore.