TALLINN - Estonia's two major oil transit firms 's E.O.S. and Pakterminal 's have agreed to merge operations and asked regulators for permission to proceed with a full merger.
Arnout Lugtmeijer, CEO of E.O.S., said a framework merger agreement had been signed by Royal Vopak, sole owner of Pakterminal, and Transportation Investment Holding Ltd. that owns 81.6 percent of the shares in E.O.S.
According to the deal, Royal Vopak is to transfer all Pakterminal shares to E.O.S. and acquire a minimum 25 percent holding in the merged E.O.S., Lugtmeijer explained.
"All that can be said today is that the deal will represent a significant step for E.O.S., Pakterminal and our owners, as well as the whole Estonian transit sector," he said Feb. 15.
"Bringing aboard Royal Vopak, operator of 74 terminals situated near end consumers and major sea routes worldwide, will ensure E.O.S. the necessary stability to continue developing Estonia's oil transit business on the European pattern," Lugtmeijer said.
The two sides began merger talks late last year.
Lugtmeijer said the merger aimed to maximize effectiveness of the terminals' capacities, which are currently underutilized. Strong competition within the industry and changes on the international oil market had spurred the two companies to join forces.
He added that an application had been sent to the competition authorities.
E.O.S. announced on Feb. 15 that it handled a total of 13.7 million tons of heavy fuel oil last year, a year-on-year increase of almost 30 percent.
The company loaded 217 tankers at its two terminals at Maardu and Iru east of Tallinn and the port of Muuga last year.
During the year 221,916 tank cars were unloaded, E.O.S. said.
In 2006 E.O.S. and Trendgate, then an independent company, handled 10.2 million tons of oil products.
Pakterminal has tanks with an overall capacity of 305,200 cubic meters, while the aggregate volume of the storage tanks belonging to E.O.S. is 435,000 cubic meters.
E.O.S. was the only oil transit company whose shipments did not decline after the riots in April 2007 that followed the relocation of a Soviet war monument from downtown Tallinn to a military cemetery.
Other major operators of Russian oil transit suffered a sharp drop in volumes.
Tallinna Sadam (Port of Tallinn) handled 22.4 million tons of liquid cargoes last year.