Russian oil giant Lukoil plans to resume supplies of Russian crude to the Odessa oil refinery this month, a company spokesman said on March 9.
Lukoil's announcement came just days after the State Property Fund threatened legal action against it, saying the company had broken investment commitments by refusing to import oil.
Lukoil's Dmitry Dolgov told the Post his company will start sending oil to Odessa oil refinery later in March. He said Lukoil would pump about 100,000 tons of crude to the refinery by the end of the month, and that from April the company will send 300,000 tons of crude to the Odessa refinery every month.
The refinery has stood idle for most of this year because of the suspension in oil deliveries.
Earlier, the SPF had threatened to revoke Lukoil's 51.9 percent stake in the Odessa refinery for not having fulfilled its investment commitments.
SPF head Oleksandr Bondar said early this month the fund had sent an official warning to Lukoil for failing to fulfill its investment pledges. Bondar said the fund was preparing to take the case to an arbitration court. Officials at the fund declined to comment on the matter.
Luk-Sintez Oil, a subsidiary of Lukoil, acquired a 51.9 percent stake in the Odessa oil refinery in April last year for Hr 33.2 million. Luk-Sintez Oil pledged to invest $1.2 million in upgrading the plant and, more importantly, supply the refinery with 2.4 million tons of crude per year. The refinery has an annual capacity of 3.8 million tons.
Up until December last year, when Lukoil stopped sending crude to Odessa, the Russian company had supplied 1.8 millions tons of oil to the refinery, according to Dolgov.
Dolgov said there were two main reasons why his company had suspended
oil deliveries to the Odessa refinery a the turn of the year.
First, Lukoil was forced to comply with a Russian government order suspending all crude oil supplies to Ukraine. Russia's Energy Ministry imposed an oil embargo on Ukraine in December after Russian gas giant Gazprom accused Ukraine of stealing Russian gas piped across Ukrainian territory to customers in western Europe.
Ukraine has denied siphoning off more Russian gas than it is allowed to. The country takes some of the piped Russian gas as payment for its transport.
The Russian oil embargo has resulted in a shortage of crude at Ukraine's refineries, which rely heavily on Russian oil imports.
But the main reason Lukoil stopped delivering crude, Dolgov said, was because his company was at a competitive disadvantage to several Ukrainian joint ventures that until recently enjoyed tax breaks on crude oil imported to Ukraine.
'It's in no interest of a foreign company to bring fuel into Ukraine,' he said. 'Nobody would want to sell anything at a loss.'
Several Ukrainian joint ventures involved in fuel imports had since 1992 enjoyed extensive tax privileges granted to them by a law exempting joint ventures from paying excise taxes, customs duties and value added tax on petroleum products. The five companies collectively accounted for some 77 percent and 52 percent, respectively, of gasoline and diesel fuel imports into Ukraine last year.
But this practice, the government now says, has ruined the joint ventures' competitors and cost the state billions of hryvnas in unpaid taxes. Dolgov said Lukoil has repeatedly appealed to Ukrainian government to revoke tax holidays from the Ukrainian joint ventures. Parliament revoked the controversial law last month.
