MOSCOW, Oct 15: Russian state oil giant Rosneft signed an agreement with Venezuela on Friday to acquire its 50-per cent stake in German refining firm Ruhr Oel GmbH for $1.6 billion.

The agreement was signed by Venezuela’s state-owned oil giant Petroleos de Venezuela (PDVSA) and Rosneft at a ceremony in the Kremlin during a visit by President Hugo Chavez and President Dmitry Medvedev.

The agreement will give Rosneft, Russia’s biggest oil firm, a key foothold in the European market.

Ruhr Oel has been a joint venture between Venezuela and the German arm of British energy firm BP. PDVSA has been involved with Ruhr Oel since 1983, when it was a joint venture with Veba Oel until the latter’s takeover by BP in 2002.

“Rosneft will pay $1.6 billion for the 50 per cent stake,” Rosneft said in a statement.

“As a result of this acquisition, 18pc of Rosneft’s refining capacity will be located in the heart of industrialised Euro-pe,” said Rosneft’s President Eduard Khudainatov.

“This transaction is consistent with our strategy to expand our presence with high quality assets in key international markets.” The statement said Ruhr Oel’s aggregate equity refining capacity in the four plants where it has stakes is 23.2 million tons per year, amounting to approximately 20 per cent of total German refining capacity.

Speaking on national television before his visit, Chavez said PDVSA had agreed to sell a stake in Ruhr Oel as it “frees us from an asset that we do not need.” “It allows us to invest in other areas. It is a very important agreement for both (parties),” he added.

BP Europa said in a statement that it was happy with the deal and Ruhr Oel business would carry on as before. BP already has close cooperation with Rosneft and a 1.4 per cent stake in the company.—AFP