UPDATE 2-Socar eyes Italy plant stake; to up Asia term sales
(Adds more quotes, Eni comment, background)
By Felicia Loo and Judy Hua
SINGAPORE, Nov 4 (Reuters) - Azerbaijan's state oil firm Socar plans to take a "substantial" stake in an Italian oil refinery next year and aims to raise the proportion of term exports of Azeri Light crude to Asia, its chief executive said on Wednesday.
The moves signal Socar's aim to secure outlets for its crude production, and come a month after the company said it was in talks to buy a controlling stake in Ukraine's third-largest refinery by capacity and to build new units.
"We are looking for a refinery in Europe. We are in talks for these projects, in Italy, for example," Valery Golovushkin, chief executive of Socar Trading SA told reporters on the sidelines of the Asia Pacific Petroleum Conference (APPEC).
Asked if he was refering to Eni's Livorno refinery, he said: "I can't say, it's confidential."
He added a controlling stake in the refinery would mean Socar could "participate in decision-making".
"We have the appetite and we are working extensively on the investments," Golovushkin said.
"We will like to get refineries outside Azerbaijan. It's from the risk management point of view," he added, without revealing the investment value.
Last month, Italian oil and gas group Eni (ENI.MI) said it was in preliminary discussions with UK private equity fund Klesch & Co to sell its refinery at Livorno on the Tuscan coast. The 85,000 barrels per day (bpd) simple refinery has been in production since 1936.
When asked if Socar has been in talks with the company, an Eni spokesman declined comment.
TERM EXPORTS IN FOCUS
Golovushkin also said Socar would raise the level of Azeri Light crude exports under term contracts to 80-85 percent of its total shipments to Asia in 2010, from 60 percent this year.
Its overall exports to this region will stay between 5 million and 6 million barrels a month, compared with its monthly global sales of Azeri Light of around 25 million barrels, he added. The rest would go to the United States and Europe.
"Asia is a good market for us," he said.
Socar Trading opened an office in Singapore last year, making it one of the latest newcomers in the city-state, with an aim to secure term contracts for its crude.
Socar Trading, a unit of state oil giant Socar, opened an office in Geneva last year targeted at the European market, and is now looking for Asian term customers, he said.
Golovushkin said on Wednesday that Socar, which now has two crude oil traders in Singapore, aims to hire more. "We are looking for quality traders," he said, without revealing how many more the firm was looking for.
The Singapore office will also look at developing long-term relationships with Asian companies that could lead to upstream joint-ventures, he told the conference.
The Kherson refinery, one of six in Ukraine, had been out of operation and later working at a much reduced capacity since 2005 when the current owners, the Continium group of Ukrainian companies, decided to modernise it.
The Continium group's owner had previously said the refinery was seeking partners and would be able to process about 7.1 million tonnes of crude after completion of a modernisation project at a cost of about $700 million-800 million.
The head of another large Ukrainian refinery, Kremenchug, had also said Socar had agreed to supply it with 240,000 tonnes of Azeri Light crude a month. [ID:nL8691216]. (Additional reporting by Nigel Tutt in MILAN; Writing by Ramthan Hussain;Editing by Sanjeev Miglani; Tel: +65 6870 3824)
