Essar Oil (UK), the UK refinery owner and operator of the Stanlow oil refinery in Cheshire, has extended a $500m credit facility with Litasco, the oil trading arm of Lukoil, a Russian company whose founder is under UK sanctions.
Despite ceasing Russian fuel imports in 2022, Essar’s arrangement with Litasco raises concerns due to potential implications on the Stanlow Terminals Ltd.
This move comes amidst geopolitical tensions and scrutiny over financial dealings with sanctioned entities.
1. Essar Oil (UK) extends a $500m credit facility with Litasco, the oil trading division of Lukoil, whose founder is under UK sanctions.
2. The two-year deal, initially set to end in May 2023, has been extended until June 2024 for an “unwind and settlement” agreement.
3. Litasco is not under sanctions, but Lukoil’s founder, Alekperov, is subject to UK refinery owner sanctions due to his involvement in sectors of strategic significance to Russia.
4. The extended payment facility allows Essar to buy fuel and defer payment, with $320m due for repayment by March 2023, funded by profits and new loans.
5. Concerns arise over Essar’s financial health and potential implications on the Stanlow Terminals Ltd., a crucial piece of the UK’s energy infrastructure.
6. Despite assurances of compliance with sanctions legislation, the arrangement raises questions about financial dealings with entities linked to sanctioned individuals in the current geopolitical climate.
