ChevronTexaco Exits Russian Joint Venture

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Russian petroleum joint venture TNK-BP has reached an agreement to buy out ChevronTexacos stake in TNK & Texaco Lubricants Co., the companies announced Friday. ChevronTexaco said it will now go it alone in Russias lubricant market.

ChevronTexacos exit from the five-year-old joint venture came as little surprise in the wake of last years hook-up between BP and TNK, Russias third-largest oil company. Moscow-based TNK-BP already has extensive exploration and production operations, along with a network of refineries and gasoline stations.

[T]he decision to dissolve the joint venture was a likely consequence of the TNK-BP partnership, leaving both TNK-BP and ChevronTexaco free to develop their lubricants interests separately, said Tony Roche, general director of TNK & Texaco Lubricants Co., who is now slated to join ChevronTexaco.

The companies did not disclose terms of the deal, which is subject to regulatory approval. ChevronTexaco and TNK-BP said they expect it to be completed within six months.

Texaco and TNK formed a 50-50 joint venture in 1999 to market lubricants in Russia, Ukraine and Belarus. Texaco-branded products were imported from Western Europe, while TNK-branded lubes were produced at the companys plant in Ryazan, Russia.

ChevronTexaco said it achieved the goal it had in entering the joint venture: to gain a foothold in the region. Russia, Ukraine and Belarus have combined annual lubricant demand of more than 2.5 million metric tons.

The joint venture was highly successful in launching TNK-branded lubricants and building the profile of ChevronTexaco lubricant brands Havoline and Ursa, in Russia and Ukraine, Roche said.

A ChevronTexaco spokesman said TNK & Texaco Lubricants Co. sold 260,000 tons of finished lubricants and base oils in Russia last year, claiming 12 percent of that market. Russia is the worlds third- or fourth-largest lubricant market, according to varying estimates.

ChevronTexaco plans to stay in the market and will form a wholly-owned subsidiary, rather than looking for another local partner, spokesman Alex Yelland said. He added that the company will continue importing finished lubes into the region.

TNK & Texaco Lubricants Co. employs approximately 200 people, and all but a few will remain with the operation as it is folded into TNK-BP. TNK-BP will continue blending lubricants at the refinery in Ryazan.

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