Lukoil gets rid of problem asset

After a six-month conflict with the Chinese company Sinopec, Lukoil has managed to close a transaction on sale of 50% in Caspian Investments Resources Ltd, which owns assets in Kazakhstan, to it. The amount of the transaction made up $1.087 billion instead of initial $1.2 billion, but against the background of the falling oil prices this is beneficial to Lukoil. The Chinese now will have to invest in the growth of oil recovery at fields of Caspian Investments Resources with the declining production.

Yesterday, Lukoil announced the closing of the deal on sale of 50% of oil producing Caspian Investments Resources Ltd to China's Sinopec for $1.087 billion. This is by 9.4% less than the amount, on which the companies agreed in April 2014 - $1.2 billion. As a result, Sinopec will consolidate 100% of the asset. Lukoil reported to the Kommersant that the company was pleased with the terms of the transaction, but didn’t specify where it was going to invest the money. A source of the Kommersant, familiar with the situation, notes that the sale, even though the price reduction, can be considered very successful for the Russian company against the background of the falling oil prices (yesterday it was $46.95 per barrel of Brent). Another source of the Kommersant notes that the Chinese are considered to be difficult negotiators and until recently the market doubted that the transaction would be closed.