4th UPDATE: Lukoil Takes 45% Stake In Total's Dutch Refinery

Russian oil major OAO Lukoil Holdings (LKOH.RS) Friday said it agreed to buy a major stake a Dutch refinery, the latest in a series of deals signaling Russian energy companies' push to strengthen their positions in the European market.

Lukoil, 20%-owned by U.S. oil major ConocoPhillips (COP), said it will pay France's Total SA (TOT) $725 million for a 45% stake in Total Raffinaderij Nederland, or TRN, refinery and that it plans to close the deal by the end of the year.

The deal was announced on the first day of Russian President Dimitry Medvedev's state visit to the Netherlands and reflects the energy giant's open advocacy of foreign expansion by energy companies such as Gazprom OAO (GAZP.RS), which can boost the country's international influence.

Last month, U.S. peer Valero Energy Corp (VLO) said it agreed to buy the same stake from U.S.-based Dow Chemical Co. (DOW), which co-owned the refinery with Total. But the French company exercised its preemptive rights to purchase the stake and simultaneously agreed to sell the stake to Lukoil.

The 153,000 barrels-per-day refinery located in Vlissingen is mainly run on Russian crude oil, and the deal "contributes to the development of a broader strategic partnership between Lukoil and Total," a statement said.

The deal is the latest example Russian oil and gas producers expanding abroad. In November last year, Lukoil, the most active Russian oil company outside the country, took a 49% stake in ERG SpA's (ERG.MI) Isab refinery in Priolo, Sicily.

In April, Russia's Surgutneftegaz purchased a 20% stake in Hungary's national energy company MOL Nyrt. And last year, state-controlled gas giant OAO Gazprom (GAZP.RS) bought Serbia's national oil company NIS, and has formed alliances with European energy firms to build two new pipelines that will pump Russian gas to Northern and Central Europe.

Lukoil, Russia's second-largest oil producer, is striving to fulfill a vow to boost its refining capacity by more than 70% by 2016.

Chief Executive Vagit Alekperov said the acquisition "organically fits in our company's strategy aimed at increasing oil refining capacities located in the immediate proximity to the markets where products with higher added value are sold."

Total has also been trying building relations with Russian energy companies. It holds a stake in Gazprom's Shtokman gas project in the Barents Sea, and has a stake in Russia's northern Kharyaga field.

But analysts at UBS, who rate Lukoil's stock a neutral, were cautious on the company's European expansion.

"We don't see any significant value creation in this deal for the shareholders," said analyst Maria Radina, noting currently low European refining margins.

Lukoil's shares closed up 1.5% at $48.1 each in Moscow.

The company had $3.2 billion of cash on its balance sheet on March 31 and is expected to finance the deal from cash-flow or existing debt facilities, Radina said.

Lukoil already owns refineries in Bulgaria and Romania and runs gas stations in the U.S., Hungary, Finland, Poland, Serbia, Romania, Macedonia, Cyprus and Turkey.

But a number of its recent attempts to buy assets abroad failed, either because the acquisitions were too expensive or due to what the firm described as the unwillingness of the European Union to allow cash-rich Russian firms to buy lucrative assets there.

Last year, Lukoil scaled back its ambition of acquiring a 30% holding in Spanish oil company Repsol-YPF SA (REP), partly due to political unease in Spain over the deal.

Company Web site: www.lukoil.com

-By Jacob Gronholt-Pedersen and Geraldine Amiel, Dow Jones Newswires; [phone]; [e-mail]