Crimean gas stations are up for sale

Photo: Ukrainian photo

Sellers of oil products are seeking buyers for their Crimean assets. There is a classified on the sale of gas stations in Crimea posted on the olx.ua online marketplace. “Overall, 44 gas stations are up for sale with 22 of them owned by WOG,” a salesman named Valeriy told Capital. The price for all gas stations is US $80 mn. Valeriy admits that the price is overstated, because there are eight more intermediaries. He says that petroleum tank farms in Sevastopol are up for sale for US $3 mn and near Kerch for US $0.8 mn.

The second half of the gas stations is most likely owned by Shell as this company controls exactly this number of gas stations on the peninsula. The company’s press service confirmed that Alliance Holding (operator of the Shell gas station chain in Ukraine) is in the process of negotiations on the lease or sale of the gas stations in Crimea.

Change of the market

In 2013 Crimea accounted for 5.35% or 276,300 t of the total sales of oil products in Ukraine, according to the State Statistics Service. After the annexation of Crimea, the legislation on the peninsula began to change. Sellers ran into a brick wall due to the inability to perform non-cash transfers. On May 6, the National Bank of Ukraine prohibited Ukrainian banks from having monetary relations with financial institutions on the peninsula and set a month deadline for the banks to pull out of Crimea. The financial relations between the peninsula and the mainland of Ukraine have not been restored, according to Senior Partner of the Kravets & Partners law firm Rostyslav Kravets. “A company operating in Crimea, which has re-registered based on Russian law, can transfer money to Russia and only then from Russia to Ukraine,” explains the expert.

Along with that a problem with fuel supplies appeared as officers at border checkpoints would not wave through trucks transporting gas from the mainland to the peninsula. Starting from April Russian companies began supplying fuel to Crimea through the ferry passage. “It is impossible to deliver oil products from the mainland of Ukraine to the peninsula. Oil traders are forced to buy fuel on the internal market, which affects the price,” says analyst of UPECO Oleksandr Syrenko.

Due to the failure of the tourist season, demand dropped and Ukrainian operators began revising their plans on the peninsula one after the other. In May, Shell suspended operation of all of its gas stations. The Halnaftogaz Concern (which manages the OKKO chain of gas stations and is controlled by businessman Vitaliy Antonov – Capital) announced its readiness to sell all of its Crimean gas stations if it manages to find a buyer. The major local chains TES, Sovremennik and Russian LUKOIL were also put up for sale. On September 3, the State Council of Crimea nationalized another major player – Privat’s chains UkraNafta, Sentosa Oil, ANP and Avias (a total of 32 gas stations linked to the Dnipropetrovsk Oblast Governor Ihor Kolomoyskiy – Capital) and transferred to the control of the state-owned Feodosiya company for the supply of petroleum products.

Unrecognized business

A Crimean gas station cannot cost US $1.8 mn, as it operates only four-five months of the year, says General Director of A-95 Consulting Company Serhiy Kuyun. “From October till May the sales volume may drop as much as 50%,” confirms Deputy Director of the R&D Center Psykheya Hennadiy Ryabtsev. According to the Syrenko’s calculations, in the current situation the price of a gas station in Crimea is even less than US $1 mn. Only a regional Russian player may be interested in such a purchase as major international companies may be penalized by sanctions for conducting business on the unrecognized territory. “It is more likely that the gas stations will be leased, since it is too risky to buy a business in Crimea,” sums up Syrenko.

As a reminder, of all Crimean gas station chains put up for sale only Russian LUKOIL, which manages 13 stations on the peninsula, managed to find a buyer. LUKOIL President Vagit Alekperov did not disclose the name of the buyer or the sum of the deal, but did say that the price had to be reduced.

“Serhiy Kurchenko’s structures were in talks on the acquisition of the TES chain. However, after TES Corporation Vice President Sergey Beim was appointed General Director of Chornomornaftogaz, the issue of its sale was stricken from the agenda,” says Kuyun.

Representatives of Halnaftogaz informed that all 11 OKKO gas stations in Crimea are currently operating in their standard regime. “If we receive interesting offers from potential buyers, we are ready to consider them,” emphasized the company’s press service. The Continium Company, which manages WOG gas stations owned by MPs Ihor Yeremeyev and Stepan Ivakhiv, did not provide comments.