Russian group Lukoil, controlled by billionaire Vagit Alekperov, is currently investigated in Romania for illegally taking money out of its local subsidiary Petrotel-Lukoil. The company operates one of Romania’s largest oil refineries, Petrotel in Ploiesti, and is one of the ten biggest enterprises in the country by turnover.

The Romanian prosecutors working on this case have decided to seize Petrotel-Lukoil’s bank accounts in Romania and abroad, as well as the bank accounts of Lukoil Europe Holdings, an entity registered in the Netherlands through which Lukoil controls the Romanian refinery. The prosecutors seized bank accounts in Britain and the Netherlands, as well as the shares held by Lukoil Europe Holdings in Petrotel-Lukoil.

The investigators have calculated that the total damage in this case amounted to EUR 2 billion, which makes this the biggest investigation ever conducted in Romania.

According to the prosecutors, Petrotel-Lukoil transferred some USD 1.51 billion and EUR 553 million to Lukoil Europe Holdings as loans repayments. The investigators also found that Petrotel-Lukoil’s assets were six times lower than the sums Lukoil said it invested in the company (EUR 48.5 mln, compared to EUR 306 mln).

Lukoil Europe Holdings also made a EUR 480 million capital increase at Petrotel-Lukoil, according to internal documents, but the Romanian company only has a share capital of EUR 106 million. The EUR 480 million entered Petrotel-Lukoil’s bank accounts, but were transferred back the very same day as loan repayments, according to an official statement from the investigators.

The authorities concluded that the Romanian company was decapitalized through these financial operations.

Lukoil’s Petrotel refinery had cumulated losses of over EUR 500 million in the last five years (2010 to 2014) while its total sales passed EUR 7 billion. In 2014, the company had sales of EUR 1.45 billion and EUR 70 million losses. It had 444 employees, down from more than 1,000 in 2008.

Petrotel-Lukoil is Romania’s third largest oil refinery. It processes Russian oil imported from the parent-group. The group’s distribution network in Romania includes over 300 gas stations, which are operated by another company, Lukoil Romania. This company also had EUR 128 million losses in the last five years. It currently has 3,000 employees, down from over 3,600 in 2008.

Lukoil also has exploration operations in Romania’s Black Sea section, covering some 1,000 square kilometers. The group plans to drill to exploration wells in the Black Sea by the end of this year. It will invest over USD 200 million in exploration.

Lukoil also has operations in the renewable energy sector, via Lukerg Energy, a joint venture the Russian group has with German company ERG. Lukerg controls Land Power SA, a local company that operates a wind park in Dobrogea. The company had a turnover of EUR 14.2 million, in 2014.

editor@romania-insider.com