Unipetrol Buys Out Shell from Czech Refiner for $27.2 Mln

08-Nov-13

Czech downstream oil group Unipetrol has agreed to buy partner Royal Dutch Shell's 16.3% stake in Ceska Rafinerska for US$27.2 mln, boosting its stake in the country's only refinery to 67.6%. The deal completion is expected at the beginning of 2014, as per Reuters. Italy's Eni will be the only minority shareholder in Ceska Rafinerska with a 32.445% stake. Ceska Rafinerska runs refineries in Litvinov and Kralupy and has a total conversion capacity of 8.7 million tons of crude oil per year. "The transaction brings Unipetrol (to the) 67.5 percent threshold, allowing significant improvement of the company's operational management and bringing operational costs savings," Unipetrol's Chief Executive Marek Switajewski said. Unipetrol, majority owned by Poland's PKN Orlen, is targeting a return to an operating profit in 2013 but said last month it would be tough to meet its goals. Like other European refiners, Unipetrol is facing overcapacity in the sector that has squeezed its margins to near zero. Also the Czech economy is just exiting a record long recession, weighing on demand, and Unipetrol has also had unexpected production problems this year. The group is in the early stages of a five-year, nearly $1 billion strategy to invest in plant upgrades and invest in new projects while integrating deeper its refining and petrochemical segments. "The acquisition of Shell's shares (in Ceska Rafinerska) improves feedstock security for petrochemical segment development," Switajewski said. Unipetrol said it used its own cash reserves to buy all 16.335% shares in Ceska Rafinerska AS from Shell Overseas Investments B.V., boosting its stake in the oil refiner to 67.555%, as per wsj.com. Unipetrol already dominates the Czech gasoline retail market through its gas station subsidiary Benzina AS. Ceska Rafinerska supplies refined oil products to virtually all other gas station networks in the country. Unipetrol, which is majority owned by Polski Koncern Naftowy Orlen SA (PKN.WA), or PKN, will boost its full management control of the refiner, allowing it and PKN to solidify their grip on oil refining and fuel sales in the region.