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New Lukoil head wants to expand in ČR

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The second largest private oil company in the world, Russia’s Lukoil, is changing its key European manager. On January 1, Denis Ryupin, 36, replaced Nazim Suleymanov at the helm of the subsidiary Lukoil CEEB that is headquartered in Prague and that manages activities in the Czech Republic, Poland, Hungary, Slovakia, and Belgium.

Lukoil, controlled by Russian oligarch Vagit Alekperov, entered the central European and Belgian markets three years ago. It bought a petrol stations network from its minority shareholder, the US giant ConnocoPhilips. At present it operates 400 petrol stations in the region, of which 44 in the Czech Republic. With a 2% market share Lukoil is not among the biggest players in the Czech Republic, but its position in Belgium and Poland is stronger.

Ryupin’s main objective in his new post is to maintain Lukoil’s position in the region and to expand here as soon as possible.

We want to grow in Czech Republic

The company would like to expand in particular in the Czech Republic.

“We want to become one of the main market players here,” Ryupin told HN. “We want to achieve at least a 10% share here in five years. We want to increase the number of petrol stations by building new ones as well as by possibly acquiring other companies,” he added.

Ryupin said the Czech market is specific because more than a half of petrol stations is in the hands of minor independent operators.

“They will probably be those most seriously hit by the crisis, so I assume that the consolidation on the Czech market seen in recent years will continue,” said Ryupin who is moving to the Lukoil CEEB new ostentatious headquarters in Prague’s Radlice.

Apart from the purchase of new petrol stations, Lukoil is trying to acquire a stake in some of Czech refineries. And seeks large exclusive orders, similar to the contract signed last year to supply fuels to aircrafts at the Prague Airport.

Expansion during crisis?

However, the time is not much suitable for expansion. Businesses find more difficult to access investment loans and see their profits fall. Ryupin himself admitted: “Demand for fuels is decreasing, and the reason is not just the winter season, but also the growing uncertainty among customers.”

But people from Lukoil’s competitors mostly claim that they take the Russian group’s expansion plans very seriously.

“Like all big oil companies, Lukoil is a rich company that has sizeable financial resources even at the time of crisis. And can afford to buy distribution networks regardless of whether or not they currently have high revenues. When it comes to Lukoil, I can imagine that it would prefer reinforcing its market position to a profit growth,” said a manager of one of the largest fuel distributors in the country.

Big Russian investors find the central European region attractive. The state-run Gazprom has a subsidiary here that is also trying to expand to the neighbouring countries. The Russian engineering concern OMZ, controlled by Gazprom, is the owner of the former nuclear division of Škoda Plzeň. Russia’s Aeroflot is eyeing Czech Airlines in the ongoing privatisation. The steel group Evraz is the only Russian investor leaving the Czech Republic. Seriously hit by the global fall on steel markets, it has offered its Czech unit Vítkovice Steel for sale.

But Europe is distrustful of Russian investors and its distrust is growing after Gazprom has recently halted gas supplies to Europe. “The situation did not help the reputation of Russian companies in Europe. I personally am very sorry for that,” Ryupin said. Although Lukoil is one of the world’s largest gas producers, it does not export natural gas because it respects Gazprom’s monopoly on exports. Whether the managers are satisfied with the situation is not clear – Ryupin gave no answers to this type of questions.

Before coming to Prague, Ryupin was a management member at the Romanian unit. He started his career in Lukoil, but also held managerial posts in Lukoil-Americas&Getty-Marketing and in the Houston headquarters of ConnocoPhilips. His predecessor Suleymanov will head the Lukoil unit in Italy.

Translated with permission by the Prague Daily Monitor.

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