Lukoil selling Litasco as it fights Palmali suit

Russian oil group to offload trading and chartering arm facing $2bn tanker claim.

Russian oil giant Lukoil is preparing to sell its trading and vessel chartering arm Litasco, which is facing a $2bn lawsuit from tanker owner Palmali.

The management board has approved draft proposals for the sale, according to president Vagit Alekperov.

He told reporters the issue would be examined in late November or early December, according to the Interfax news agency.

Alekperov said Litasco was a non-core asset. More than half of its oil comes from third parties, but a lot of cash is needed to keep it going, he added.

Litasco is Lukoil's exclusive oil and products trader outside Russia.

Last week it was hit by a lawsuit launched in the UK by Turkey's Palmali.

“The claim concerns an alleged failure by Litasco to provide contractual quantities of cargo under long-term contract between the companies,” Palmali said.

It added the case involved “breach of contract amounting to just under $2bn plus interest and costs.”

But the action has insufficient legal grounds, Alekperov said.

"I think the company's position is pretty strong. The statements that Palmali has made are legally groundless," he added.

Palmali is contesting a long-term contract that ran between 2005 and 2015.

"They interpret it in their own way" said Alekperov. "But we have documents from 2015 in which Palmali states that it has no complaints against our company.

"All the documents are there. We of course will present everything via the courts."