The latest developments regarding the participation of Lukoil, Russia’s biggest oil company, in the development of the Azeri-Tsirag-Günesli (ATG) deposit in the Caspian Sea have boosted doubts about its future expansion plans which also impact on the Greek market. The company has been in negotiations, jointly with Greece’s Petrola, for the acquisition of a 23.17 percent stake in state-owned Hellenic Petroleum (ELPE) since last May. The acquisition would make Lukoil a strategic partner in Greece’s biggest refiner, allowing it to promote plans for expansion in SE Europe where opportunities are considerable. The doubts about the company’s plans arose a few days ago, when Lukoil announced its withdrawal from the ATG project and the sale of its share there for $1.375 billion to Japan’s Inpex Co. During the negotiations with the Greek government, Lukoil put a proposal on the negotiating table for joint operations in the Caspian, possibly including the ATG deposit. According to Lukoil’s chairman, Vagit Alekperov, «the sale of the company’s share in ATG is part of its reorganization program, giving us an excellent opportunity for a fair evaluation of the assets sold… Our company will continue to consider options for withdrawing from programs in which it does not possess the management.» Given that the the Lukoil/Petrola consortium had repeatedly set the assumption of management as a condition for the ELPE deal, Alekperov’s above statement may be interpreted as indicating the company’s intention of withdrawing from the negotiations. According to a different explanation, Lukoil is reorganizing its forces and finances after the ATG sale, with a view to focusing on the deposits it fully controls in the northern Caspian (Tengiz) and in Russia. Whatever the case, the prolonged negotiations for ELPE, in combination with Lukoil’s withdrawal from ATG, leave very little room for optimism that a deal will be concluded. However, it may be that no deal is a better option for ELPE and the Greek State, as the economic and other benefits from an independent course of growth appear much greater than those of being tied to a business scheme that does not appear particularly cohesive or promising in terms of synergies. Recently, particularly in the second half of 2002, ELPE has made an impressive expansion of its activities, boosting its net worth which now includes considerable capital gains. Well-informed circles in the international oil market consider that ELPE’s net worth must have increased by at least one-third since last May, when the Lukoil/Petrola consortium submitted its initial bid. The question arises, therefore, what more a strategic partner could offer to the group’s management today. The Finance Ministry had estimated that a deal for ELPE would have meant revenue of 400-450 million euros, which would have helped balance the budget and public debt. Observers now argue that the sale of a smaller stake (e.g. 10-15 percent) through the stock market would certainly be a preferable option in terms of the revenue it would generate, while also retaining state control of the management. Acquisitions ELPE made two important acquisitions of petroleum companies last October, one in Cyprus and another in Montenegro. In Cyprus, it acquired 100 percent of BP Cyprus, which owns 70 gas stations, a storage complex and 65 percent of lubricants firm SuperLube. In Montenegro, it acquired 54.35 percent of Jugopetrol AD Kotor, a firm with strategically important installations on the Adriatic coast and annual sales of 500,000 tons. Lukoil had been one of the suitors for Jugopetrol Kotor. Another significant move by ELPE last year was the launching of the Thessaloniki-Skopje (FYROM) pipeline and the commencement of construction of two more pipelines to Kosovo, transporting oil from the ELPE-controlled OKTA refinery in Skopje, and with a possible future extension further north in future. Another of the group’s advances last year was the launching of the polypropylene plant in Thessaloniki which now exports part of its production. Costis Stambolis contributed this piece to Kathimerini.