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NEW YORK, Nov 23 (Reuters) - NARL Refining has inked a newcrude supply deal with Russian oil concern Lukoil atits remote Eastern Canadian refinery, a source said, ending atumultuous relationship with oil major BP PLC that landedthe pair in U.S. federal court.
The new supply agreement gives private-equity backed NARLRefining, which is owned by a trio of former oil traders, morecontrol over what crudes to run at the 115,000 barrel-per-dayrefinery in Come-By-Chance, Newfoundland on Canada's east coast,and also more say on how to market the refined products, thesource said.
Lukoil and NARL Refining could not be immediately reachedfor comment.
NARL Refining in embroiled in a bitter dispute with theexisting supplier, BP PLC, over the selection of its crude slateand how to run the refinery.
The legal fight, first reported by Reuters in March, stemsfrom allegations leveled by BP that NARL Refining ran therefinery at high rates when it was not economical in order toexploit a unique clause in their contract that allowed NARL toearn a higher profit on oil refined in excess of 90,000barrels.
In a counterclaim, NARL alleged that BP made only lessergrades of crude available, resulting in "significant andlong-term damage" to refinery equipment.
The two sides are still in arbitration over the contract,which expires at the end of the year.
In recent months, NARL refining has been building up a crudeand product trading desk, anticipating more control. Earlierthis month, it announced it was laying off up to 130 workers,mostly union staff, due to weak margins that have pummeled theindustry.
The refinery's operators are SilverPeak Financial Partners,a group of Wall Street veterans, including Neal Shear, whohelped build Morgan Stanley's oil trading division; KaushikAmin, former chief executive officer of RBS Sempra Commoditiesand global head of liquid markets for Lehman Brothers; and HarshRameshwar from Merrill Lynch Commodities. (Reporting By Jarrett Renshaw; Editing by Chizu Nomiyama)
