x Abu Dhabi, UAESaturday 22 July 2017

Europe refiner majority-owned by Libya rises from ashes

Oilinvest, a European refiner majority-owned by Libya's National Oil Corporation, has long fought a battle on two fronts: battling falling margins and political revolution.

Oilinvest, a European refiner majority-owned by Libya's National Oil Corporation, has fought a battle on two fronts.

Refineries have struggled in recent years to stay afloat on falling margins, particularly in Europe. Add to that a political revolution at home that led to a near shutdown of the industry supplying most of Oilinvest's feedstock and raised the threat of sanctions.

One year later, the company has emerged intact and hopes to reinvent itself to start turning a profit, said Fuad Krekshi, the chairman of Oilinvest. "We are reviewing our strategy and we're going through a process of restructuring the group," said Mr Krekshi on the sidelines of a conference in Dubai. "The aim now is to change this company into a profit-making organisation."

Oilinvest, based in the Netherlands, is unique in the fleet of Libyan state-owned entities. Known as Tamoil to oil traders and drivers refuelling at the group's petrol stations, it was cobbled together in the 1980s from the Italian assets of the American oil majors Amoco and Texaco.

Libyan authorities bought the newly created company and expanded it to include 3,000 petrol stations and three refineries spanning Germany, Switzerland and Italy, fuelling the growth with 250,000 barrels per day of sweet crude from the National Oil Corporation.

But European refiners struggled after the 2008 oil price spike to compete with newer mega-refineries on the US Gulf Coast, India and the Middle East. Oilinvest shut down its Italian refinery. When last year's Libyan uprising led western powers to target the Gaddafi regime with sanctions and asset freezes, Oilinvest created a foundation co-owned by the Dutch government to shelter the company, said Mr Krekshi.

Now the firm is back to its original structure of 70 per cent ownership by the National Oil Corporation and 30 per cent by other Libyan government entities. It is evaluating how to cut costs and move away from refining to the more reliable retail sector.

The outlook in Europe is improving but remains crowded, so Oilinvest will concentrate an expansion in Mediterranean Africa, said Mr Krekshi.

"Europe was the most logical thing because of proximity, because of demand, because of trade relations," he said. "But today, competition in Europe is quite diverse, so we are looking at various parts of the world. Africa, the Mediterranean region, is the most logical where it comes to proximity, so that's what we're focusing on."

 

ayee@thenational.ae