FORBES: A private-equity company’s new stake in Sunoco could well herald an impending acquisition of the oil refiner and marketer – perhaps to one of Russia’s big energy companies. Late Friday, Harbinger Capital Partners revealed in a filing with the U.S. Securities and Exchange Commission that it had taken a 6.6% stake in Sunoco (nyse: SUN – news – people ), which has been struggling with unfavorable market conditions. Refiners in general have been squeezed by rising crude oil prices, which shot up so quickly this year that gasoline and other petroleum products could not be marked up quite as fast. (See “Needed: A Plug-In Hummer”)
Sunoco suffers from a second problem: its refineries are optimized for light, sweet crude, which is increasingly a smaller part of the overall mix of what is available in the market. Sunoco had sales of $12.8 billion and a loss of $59.0 million in the first quarter of the year. Its refining business lost $123.0 million, which was offset in part by profit in the company’s chemicals and coking-coal divisions. Sunoco, considered one of America’s most trustworthy companies, recently appointed its first female chief executive, Lynn Elsenhans, the former head of U.S. refining at Royal Dutch Shell (nyse: RDS – news – people ), who is due to take the reins in early August. The company’s biggest challenge is its inability to process heavy sour crude—the most profitable kind of petroleum to refine in the current market. Gheit estimated Sunoco would have to spend $10.0 billion to upgrade its refining facilities. There would be little possibility for Harbinger to push for a sale to a U.S. refiner, says Gheit, since the distance between its refineries – in the Philadelphia area, Toledo, Ohio, and Tulsa — would suggest few synergies with the plants of its major competitors, most of which are located elsewhere.
But one option could be a deep-pocketed Russian firm. Lukoil (other-otc: LUKOY – news – people ), for example, has large amounts of cash and a growing retail gas-station network in the United States. Gazprom (other-otc: GZPFY – news – people ), the Russian government-controlled gas giant, could also buy Sunoco’s refineries to obtain a long-sought foothold in the U.S. market. MORE