Russian strategy to buy up Europe’s refineries exposed

Russia's strategy of buying up oil refineries in Europe could compromise the bloc's energy security, EU officials said in a draft report prepared for the region's leaders.

Europe's refining sector has been weakened by a combination of high oil prices, slack demand and poor profit margins, prompting many companies to sell off refining units, which Russia has been buying.

Russia's Lukoil, for instance, owns refining operations in Italy, the Netherlands, Bulgaria and Romania. Gazprom through its oil arm Gazprom Neft also owns refineries.

In a report prepared ahead of a summit meeting of EU leaders in June, the European Commission is expected next week to make public its vision of how to improve energy security in response to the crisis in Ukraine, the transit route for roughly half the gas Russia exports to the European Union.

Among the many issues it says need to be closely monitored, it cites increased Russian ownership of EU refineries.

"Combined with the dependence on Russian crude oil, and the emerging influence of Russian players, the refinery industry is vulnerable to political interference," a draft seen by Reuters of the Commission's strategy on EU energy security says.

The EU relies on Russia for 27% of its gas consumption and about a third of its oil, the Commission, the EU executive, says.

Europe also receives imports of refined products from the United States, which the International Energy Agency says has overtaken Russia as the EU's leading supplier, although Russia seized back the top spot earlier this year when U.S. refineries were undergoing seasonal maintenance.

For the EU, the biggest gas supply threat is a price dispute between Kiev and Moscow that has led Moscow to warn it could cut supplies to Ukraine, with possible knock-on effects for the EU.

There is no immediate threat to oil supplies, as Russia lacks sufficient capacity to refine the oil it produces and relies therefore on EU refineries, the Commission says.

But Director General for Energy in the Commission Dominique Ristori said the Commission was assessing "all aspects" of energy security, including refining.

"Our main concern will be to increase the preparedness for the next winter," he said on the sidelines of a conference on the EU refining industry on Thursday.

The Commission is expected to call on member states to assess their vulnerability to any supply crisis and to build up inventories.

Longer term, the Commission is seeking to increase fuel efficiency and increase the use of electric vehicles and alternative fuels, such as biofuels. 

http://www.euractiv.com/sections/energy/russian-strategy-buy-europes-refineries-exposed-302329