December 28 (SeeNews) - Slovenian fuel trader Petrol and Russian oil major Lukoil have scrapped their plan to set up a joint company due to differing positions regarding the ratio of investments but still favoured business cooperation, Petrol said on Friday.
In August 2006, Petrol signed a framework agreement with Lukoil to set up a joint venture in line with its plan to become the leading energy group in southeastern Europe. Under the agreement, Petrol would hold a 51% stake of the new company and Lukoil would own the remainder. In March 2007, Petrol said that the two companies were ready to start evaluating the assets to be invested in their proposed joint venture.
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"While coordinating basic assumptions for determining the value of investments in the joint company, it was found that the companies' positions regarding the aforementioned investments were considerably different. At the same time, conditions in financial and capital markets changed," Petrol said in a statement.
"Because the differing positions regarding the definition of the ratio of investments could not be brought in line, the companies withdrew from their intention to establish a joint company," it said.
There was no immediate reaction from Lukoil.
Petrol said that although the two companies had abandoned their joint venture plan they still favoured business cooperation.
"Given the existing desire for mutual cooperation, and taking into account the fact that there have been significant strategic shifts on the oil markets of Central and South-East Europe with the goal of creating comprehensive energy systems which require market players to fundamentally adapt to currently valid business models in key energy segments, the companies have determined that it would be useful to identify and study additional, suitable forms of business cooperation," the statement said.
Shares in blue-chip Petrol fell 0.38% to an average price of 907.58 euro ($1335) on the Ljubljana Stock Exchange on Friday.
($ = 0.68 euro)